Dela Cruz vs. Capital Insurance & Surety Co., GR. No.

L-21574, June 30, 1966 Topic: Life Insurance

Ponente: Barrera, J.

Author: Revy Neri Link:

http://www.lawphil.net/judjuris/juri1966/jun1966/gr_l-21574_1966.html

FACTS: 1.

Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc Mines, Inc. in Baguio, was the holder of
an accident insurance policy (No. ITO-BFE-170) underwritten by the Capital Insurance & Surety Co., Inc.,
for the period beginning November 13, 1956 to November 12, 1957.

2. On January 1, 1957, the Itogon-Suyoc Mines, Inc. sponsored a boxing contest for general
entertainment.

3. Insured Eduardo de la Cruz, a non-professional boxer participated.

4.In the course of his bout with another person, likewise a non-professional, of the same height, weight,
and size, Eduardo slipped and was hit by his opponent on the left part of the back of the head, causing
Eduardo to fall, with his head hitting the rope of the ring.

5. He was brought to the Baguio General Hospital the following day. The cause of death was reported as
hemorrhage, intracranial, left.

6. Simon de la Cruz, the father of the insured and who was named beneficiary under the policy, filed a
claim with the insurance company for payment of the indemnity under the insurance policy.

7. As the claim was denied, De la Cruz instituted the action in the Court of First Instance of Pangasinan
for specific performance.

8. Defendant insurer set up the defense that the death of the insured, caused by his participation in
a boxing contest, was not accidental and, therefore, not covered by insurance.

9. After due hearing the court rendered the decision in favor of the plaintiff which is the subject of
the present appeal.

10. Eduardo was insured "against death or disability caused by accidental means".

11. Appellant insurer now contends that while the death of the insured was due to head injury, said
injury was sustained because of his voluntary participation in the contest.

12. It is claimed that the participation in the boxing contest was the "means" that produced the injury
which, in turn, caused the death of the insured. And, since his inclusion in the boxing card was voluntary
on the part of the insured, he cannot be considered to have met his death by "accidental means".

ISSUE: 1. WON the death of Eduardo de la Cruz is covered by accident insurance policy.

HELD: 1.Yes. While the participation of the insured in the boxing contest is voluntary, the injury was
sustained when he slid, giving occasion to the infliction by his opponent of the blow that threw him to
the ropes of the ring.

RATIO: 1. The terms "accident" and "accidental", as used in insurance contracts, have not acquired any
technical meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the
terms have been taken to mean that which happen by chance or fortuitously, without intention and
design, and which is unexpected, unusual, and unforeseen. An accident is an event that takes place
without one's foresight or expectation

an event that proceeds from an unknown cause, or is an unusual effect of a known cause and,
therefore, not expected.
2. The generally accepted rule is that, death or injury does not result from accident or accidental means
within the terms of an accident-policy if it is the natural result of the insured's voluntary act,
unaccompanied by anything unforeseen except the death or injury.

3. Death or disablement resulting from engagement in boxing contests was not declared outside of
the protection of the insurance contract. Failure of the defendant insurance company to include death
resulting from a boxing match or other sports among the prohibitive risks leads inevitably to the
conclusion that it did not intend to limit or exempt itself from liability for such death.

DOCTRINE

In other words, where the death or injury is not the natural or probable result of the insured's voluntary
act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting
death is within the protection of policies insuring against death or injury from accident.

Sun v CA G.R. No. 92383 July 17, 1992

J. Cruz

Facts:

Lim accidentally killed himself with his gun after removing the magazine, showing off, pointing the gun
at his secretary, and pointing the gun at his temple. The widow, the beneficiary, sued the petitioner and
won 200,000 as indemnity with additional amounts for other damages and attorney’s fees. This was
sustained in the Court of Appeals then sent to the Supreme court by the insurance company.

Issue:

1. Was Lim’s widow eligible to receive the benefits?

2. Were the other damages valid?

Held:

1. Yes 2. No

Ratio: 1. There was an accident.

De la Cruz v. Capital Insurance says that "there is no accident when a deliberate act is performed unless
some additional, unexpected, independent and unforeseen happening occurs which produces or brings
about their injury or death." This was true when he fired the gun.

Under the insurance contract, the company wasn’t liable for bodily injury caused by attempted suicide
or by one needlessly exposing himself to danger except to save another’s life.

Lim wasn’t thought to needlessly expose himself to danger due to the witness testimony that he took
steps to ensure that the gun wasn’t loaded. He even assured his secretary that the gun was loaded.

There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed
upon if the insured is shown to have contributed to his own accident.

2. “In order that a person may be made liable to the payment of moral damages, the law requires that
his act be wrongful. The adverse result of an action does not per se make the act wrongful and subject
the act or to the payment of moral damages. The law could not have meant to impose a penalty on the
right to litigate; such right is so precious that moral damages may not be charged on those who may
exercise it erroneously. For these the law taxes costs.”

If a party wins, he cannot, as a rule, recover attorney's fees and litigation expenses, since it is not the
fact of winning alone that entitles him to recover such damages of the exceptional circumstances
enumerated in Art. 2208. Otherwise, every time a defendant wins, automatically the plaintiff must pay
attorney's fees thereby putting a premium on the right to litigate which should not be so. For those
expenses, the law deems the award of costs as sufficient.”
Ty v. Filipinas Compañia de Seguros - Insurance Policy

17 SCRA 364

Facts:

> Ty was employed as a mechanic operator by Braodway Cotton Factory at Grace Park, Caloocan.

> In 1953, he took personal accident policies from 7 insurance companies (6 defendants), on different
dates, effective for 12 mos.

> On Dec. 24. 1953, a fire broke out in the factory were Ty was working. A hevy object fell on his hand
when he was trying to put out the fire.

> From Dec. 1953 to Feb. 6, 1954 Ty received treatment at the Nat’l Orthopedic Hospital for six listed
injuries. The attending surgeon certified that these injuries would cause the temporary total disability of
Ty’s left hand.

> Insurance companies refused to pay Ty’s claim for compensation under the policies by reason of said
disability of his left hand. Ty filed a complaint in the municipal court who decided in his favor.

> CFI reversed on the ground that under the uniform terms of the policies, partial disability due to loss
of either hand of the insured, to be compensable must be the result of amputation.

Issue:

Whether or not Ty should be indemnified under his accident policies.

Held.

NO.

SC already ruled in the case of Ty v. FNSI that were the insurance policies define partial disability as loss
of either hand by amputation through the bones of the wrist, the insured cannot recover under said
policies for temporary disability of his left hand caused by the fractures of some fingers. The provision is
clear enough to inform the party entering into that contract that the loss to be considered a disability
entitled to indemnity, must be severance or amputation of the affected member of the body of the
insured.

Calanoc v. CAG.R. No. L-8151 December 16, 1955J. Bautista Angelo

Doctrine: In case of ambiguity in an insurance contract covering accidental death, the Supreme Courtheld that such terms
shall be construed strictly against the insurer and liberally in favor of the insured inorder to effect the
purpose of indemnity.Facts:Melencio Basilio, a watchman of the Manila Auto Supply, secured a life insurance policy
fromthe Philippine American Insurance Company in the amount of P2,000 to which was attached asupplemental
contract covering death by accident. He later died from a gunshot wound on the occasionof a robbery
committed; subsequently, his widow was paid P2,000 representing the face value of thepolicy. The widow
demanded the payment of the additional sum of P2,000 representing the value of thesupplemental policy which the
company refused because the deceased died by murder during therobbery and while making an arrest
as an officer of the law which were expressly excluded in the

contract. The company’s contention which was upheld by the Court of Appeals provides that

the

circumstances surrounding Basilio’s death was caused by one of the risks excluded by the

supplementary contract which exempts the company from liability.Issue:Is the Philippine American Life Insurance
Co. liable to the petitioner for the amount covered by thesupplemental contract?Held:Yes.

The circumstances of Basilio’s death cannot be taken as purely intentional on the part of
Basilio to expose himself to the danger. There is no proof that his death was the result of intentionalkilling because there
is the possibility that the malefactor had fired the shot merely to scare away the

people around. In this case, the company’s defense points out that Basilio’s

is included among the risksexcluded in the supplementary contract; however, the terms and phraseology of the exception
clauseshould be clearly expressed within the understanding of the insured. Art. 1377 of the New Civil Codeprovides that in
case ambiguity, uncertainty or obscurity in the interpretation of the terms of thecontract, it shall be
construed against the party who caused such obscurity. Applying this to thesituation, the ambiguous or
obscure terms in the insurance policy are to be construed strictly against theinsurer and liberally in favor
of the insured party. The reason is to ensure the protection of the insuredsince these insurance
contracts are usually arranged and employed by experts and legal advisers actingexclusively in the
interest of the insurance company. As long as insurance companies insist upon the useof ambiguous,
intricate and technical provisions, which conceal their own intentions, the courts must, infairness to those
who purchase insurance, construe every ambiguity in favor of the insured.

Biagtan vs. The Insular Life Assurance Company, Ltd. (winner) 44 SCRA 58

Facts:

Juan S. Biagtan was insured with defendant Insular Life Assurance Company under Policy No. 398075 for
the sum of P5,000.00 and, under a supplementary contract denominated "Accidental Death Benefit
Clause, for an additional sum of P5,000.00 if "the death of the Insured resulted directly from bodily
injury effected solely through external and violent means sustained in an accident . . . and independently
of all other causes." The clause, however, expressly provided that it would not apply where death
resulted from an injury "intentionally inflicted by a third party."library

On the night of May 20, 1964 or during the first hours of the following day a band of robbers entered
the house of the insured Juan S. Biagtan.

Issue:

Whether the wounds received by the insured at the hands of the robbers were inflicted intentionally.

Held:

Yes. But where a gang of robbers enter a house and coming face to face with the owner, even if
unexpectedly, stab him repeatedly, it is contrary to all reason and logic to say that his injuries are not
intentionally inflicted, regardless of whether they prove fatal or not. As it was, in the present case they
did prove fatal, and the robbers have been accused and convicted of the crime of robbery with
homicide. Under the circumstance, the insurance company was correct in refusing to pay the additional
sum of P2,000.00 under the accidental death benefit clause which expressly provided that it would not
apply where death resulted from an injury "intentionally" inflicted by a third party.

FINMAN GENERAL ASSURANCE CORPORATION v. CA, GR No. 100970, 1992-09-02

Facts:

October 22, 1986, deceased Carlie Surposa was insured with petitioner Finman General Assurance
Corporation under Finman General Teachers Protection Plan Master Policy No. 2005 and Individual
Policy No. 08924 with his parents, spouses

Julia and Carlos Surposa and brothers Christopher, Charles, Chester and Clifton, all surnamed Surposa,
as beneficiaries.

While said insurance policy was in full force and effect, the insured Carlie Surposa, died on October 18,
1988 as a result of a stab wound inflicted by one of the three (3) unidentified men without provocation
and warning on the part of the former as... he and his cousin, Winston Surposa, were waiting for a ride
on their way home along Rizal-Locsin Streets, Bacolod City after attending the celebration of the
"Maskarra Annual Festival."... private respondent and the other beneficiaries of said insurance policy
filed a written notice of claim with the petitioner insurance company which denied said claim
contending that murder and assault are not within the scope of the coverage of the insurance... policy.

Insurance Commission ruled in favor of insured/beneficiaries

On February 24, 1989, private respondent filed a complaint with the Insurance Commission

"In the light of the foregoing, we find respondent liable to pay complainant the sum of P15,000.00
representing the proceeds of the policy with interest. As no evidence was submitted to prove the claim
for mortuary aid in the sum of P1,000.00, the same... cannot be entertained.

On July 11, 1991, the appellate court affirmed said decision.

petitioner filed this petition alleging grave abuse of discretion on the part of the appellate court in
applying the principle of "expresso unius exclusion alterius" in a personal accident insurance policy...
since death resulting from murder and/or assault are impliedly excluded in said insurance policy
considering that the cause of death of the insured was not accidental but rather a deliberate and
intentional act of the assailant in killing the former as indicated by the location... of the lone stab wound
on the insured.

Therefore, said death was committed with deliberate intent which, by the very nature of a personal
accident insurance policy, cannot be indemnified.

Issues:

WON the death of the insured was committed...... with deliberate intent which, by the very nature of a
personal accident insurance policy, cannot be indemnified

Ruling:

We do not agree.

In the case at bar, it cannot, be pretended that Carlie Surposa died in the course of an assault or murder
as a result of his voluntary act considering the very nature of these crimes.

the personal accident insurance policy, involved herein specifically enumerated only ten (10)
circumstances wherein no liability attaches to petitioner insurance company for any injury, disability or
loss suffered by the insured as a result of any of the... stipulated causes. The principle of "expresso unius
exclusio alterius" -- the mention of one thing implies the exclusion of another thing -- is therefore
applicable in the instant case since murder and assault, not having been expressly included in the
enumeration of the... circumstances that would negate liability in said insurance policy cannot be
considered by implication to discharge the petitioner insurance company from liability for any injury,
disability Or loss suffered by the insured.

Thus, the failure of the petitioner insurance company... to include death resulting from murder or
assault among the prohibited risks leads inevitably to the conclusion that it did not intend to limit or
exempt itself from liability for such death.

Principles:

The terms 'accident' and 'accidental', as used in insurance contracts have not acquired any technical
meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms
have been taken to mean that which happen by chance or... fortuitously, without intention and design,
and which is unexpected, unusual, and unforeseen. An accident is an event that takes place without
one's foresight or expectation -- an event that proceeds from an unknown cause, or is an unusual effect
of a known cause and, therefore,... not expected."
The generally accepted rule is that, death or injury does not result from accident or accidental means
within the terms of an accident-policy if it is the natural result of the insured's voluntary act,
unaccompanied by anything unforeseen except the death or... injury.

Qua Chee Gan v. Law Union Rock - Breach of Warranty

98 PHIL 85

Facts:

> Qua Chee Gan, a merchant, owned 4 warehouses in Albay which were used for the storage or copra
and hemp in which the appelle deals with exclusively.

> The warehouses together with the contents were insured with Law Union since 1937 and the loss
made payable to PNB as mortgagee of the hemp and copra.

> A fire of undetermined cause broke out in July 21, 1940 and lasted for almost 1 whole week.

> Bodegas 1, 3, and 4 including the merchandise stored were destroyed completely.

> Insured then informed insurer of the unfortunate event and submitted the corresponding fire claims,
which were later reduced to P370T.

> Insurer refused to pay claiming violations of the warranties and conditions, filing of fraudulent claims
and that the fire had been deliberately caused by the insured.

> Insured filed an action before CFI which rendered a decision in favor of the insured.

Issues and Resolutions:

(1) Whether or not the policies should be avoided for the reason that there was a breach of warranty.

Under the Memorandum of Warranty, there should be no less than 1 hydrant for each 150 feet of
external wall measurements of the compound, and since bodegas insured had an external wall per
meter of 1640 feet, the insured should have 11 hydrants in the compound. But he only had 2.

Even so, the insurer is barred by estoppel to claim violation of the fire hydrants warranty, because
knowing that the number of hydrants it demanded never existed from the very beginning, appellant
nevertheless issued the policies subject to such warranty and received the corresponding
premiums. The insurance company was aware, even before the policies were issued, that in the
premises there were only 2 hydrants and 2 others were owned by the Municipality, contrary to the
requirements of the warranties in question.

It should be close to conniving at fraud upon the insured to allow the insurer to claim now as void the
policies it issued to the insured, without warning him of the fatal defect, of which the insurer was
informed, and after it had misled the insured into believing that the policies were effective.

Accdg to American Jurisprudence: It is a well-settled rule that the insurer at the time of the issuance of
a policy has the knowledge of existing facts, which if insisted on, would invalidate the contract from its
very inception, such knowledge constitutes a waiver of conditions in the contract inconsistent with
known facts, and the insurer is stopped thereafter from asserting the breach of such conditions. The
reason for the rule is: To allow a company to accept one’s money for a policy of insurance which it
knows to be void and of no effect, though it knows as it must that the insured believes it to be valid and
binding is so contrary to the dictates of honesty and fair dealing, as so closely related to positive fraud,
as to be abhorrent to fair-minded men. It would be to allow the company to treat the policy as valid
long enough to get the premium on it, and leave it at liberty to repudiate it the next moment.

Moreover, taking into account the well-known rule that ambiguities or obscurities must strictly be
interpreted against the party that cause them, the memorandum of warranty invoked by the insurer
bars the latter from questioning the existence of the appliances called for, since its initial expression
“the undernoted appliances for the extinction of fire being kept on the premises insured hereby..”
admits of the interpretation as an admission of the existence of such appliances which insurer cannot
now contradict, should the parole evidence apply.

(2) Whether or not the insured violated the hemp warranty provision against the storage of gasoline
since insured admitted there were 36 cans of gasoline in Bodega 2 which was a separate structure and
not affected by the fire.

It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the so-
called hemp warranty. The clause relied upon by the insurer speaks of “oils”. Ordinarily, oils mean
lubricants and not gasoline or kerosene. Here again, by reason of the exclusive control of the insurance
company over the terms of the contract, the ambiguity must be held strictly against the insurer and
liberally in favor of the insured, specially to avoid a forfeiture.

Furthermore, the gasoline kept was only incidental to the insured’s business. It is a well settled rule that
keeping of inflammable oils in the premises though prohibited by the policy does NOT void it if such
keeping is incidental to the business. Also, the hemp warranty forbade the storage only in the building
to which the insurance applies, and/or in any building communicating therewith; and it is undisputed
that no gasoline was stored in the burnt bodegas and that Bodega No. 2 which was where the gasoline
was found stood isolated from the other bodegas.

Del Rosario v. Equitable Insurance - Life Insurance Policy

118 PHIL 349

Facts:

> Equitable Insurance issued a life Insurance policy to del Rosario binding itself to pay P1,000 to P3,000
as indemnity.

> Del Rosario died in a boating accident. The heirs filed a claim and Equitable paid them P1,000.

> The heir filed a complaint for recovery of the balance of P2,000, claiming that the insurere should pay
him P3,000 as stated in the policy.

Issue:

Whether or not the heir is entitled to recover P3,000.

Held:

YES.

Generally accepted principles or ruling on insurance, enunciate that where there is an ambiguity with
respect to the terms and conditions of the policy, the same shall be resolved against the one responsible
thereof. The insured has little, if any, participation in the preparation of the policy. The interpretation
of obscure stipulations in a contract should not favor the party who cause the obscurity.
Insurance Case Digest: Del Rosario v. Equitable Ins. and Casualty Co., Inc. (1963)

G.R. No. L-16215 June 29, 1963

Lessons Applicable: Ambiguous Provisions Interpreted Against Insurer (Insurance)

FACTS:

April 13, 1957: Simeon del Rosario, father of the insured who died from drowning filed a claim for
payment with Equitable Ins. and Casualty Co., Inc. but it refused to pay more than P1,000 php so a case
was filed with the RTC for the P2,000 balance stating that under the policy they are entitled to P1,000 to
P3,000 as indemnity

RTC: entitled to recover P3,000 - policy does not positively state any definite amount, there is an
ambiguity in this respect in the policy, which ambiguity must be interpreted in favor of the insured and
strictly against the insurer so as to allow greater indemnity

ISSUE: W/N Simeon is entitled to recover P3,000

HELD: YES.

terms in an insurance policy, which are ambiguous, equivocal or uncertain are to be construed strictly
against, the insurer, and liberally in favor of the insured so as to effect the dominant purpose of
indemnity or payment to the insured, especially where a forfeiture is involved

reason for this rule is that the "insured usually has no voice in the selection or arrangement of the words
employed and that the language of the contract is selected with great care and deliberation by expert and
legal advisers employed by, and acting exclusively in the interest of, the insurance company

Verendia v. CA - Insurance Policy

217 SCRA 1993

Facts:

> Fidelity and Surety Insurance Company (Fidelity) issued Fire Insurance Policy No. F-18876 effective
between June 23, 1980 and June 23, 1981 covering Rafael (Rex) Verendia's residential in the amount of
P385,000.00. Designated as beneficiary was the Monte de Piedad & Savings Bank.

> Verendia also insured the same building with two other companies, namely, The Country Bankers
Insurance for P56,000.00 and The Development Insurance for P400,000.00.

> While the three fire insurance policies were in force, the insured property was completely destroyed
by fire.

> Fidelity appraised the damage amounting to 385,000 when it was accordingly informed of the loss.
Despite demands, Fidelity refused payment under its policy, thus prompting Verendia to file a complaint
for the recovery of 385,000

> Fidelity, averred that the policy was avoided by reason of over-insurance, that Verendia maliciously
represented that the building at the time of the fire was leased under a contract executed on June 25,
1980 to a certain Roberto Garcia, when actually it was a Marcelo Garcia who was the lessee.

Issue:

Whether or not Verendia can claim on the insurance despite the misrepresentation as to the lessee and
the overinsurance.
Held:

NOPE.

The contract of lease upon which Verendia relies to support his claim for insurance benefits, was
entered into between him and one Robert Garcia, a couple of days after the effectivity of the insurance
policy. When the rented residential building was razed to the ground, it appears that Robert Garcia was
still within the premises. However, according to the investigation by the police, the building appeared to
have "no occupants" and that Mr. Roberto Garcia was "renting on the otherside of said compound"
These pieces of evidence belie Verendia's uncorroborated testimony that Marcelo Garcia whom he
considered as the real lessee, was occupying the building when it was burned.

Ironically, during the trial, Verendia admitted that it was not Robert Garcia who signed the lease
contract but it was Marcelo Garcia cousin of Robert, who had also been paying the rentals all the while.
Verendia, however, failed to explain why Marcelo had to sign his cousin's name when he in fact he was
paying for the rent and why he (Verendia) himself, the lessor, allowed such a ruse. Fidelity's conclusions
on these proven facts appear, therefore, to have sufficient bases: Verendia concocted the lease contract
to deflect responsibility for the fire towards an alleged "lessee", inflated the value of the property by the
alleged monthly rental of P6,500) when in fact, the Provincial Assessor of Rizal had assessed the
property's fair market value to be only P40,300.00, insured the same property with two other insurance
companies for a total coverage of around P900,000, and created a dead-end for the adjuster by the
disappearance of Robert Garcia.

Basically a contract of indemnity, an insurance contract is the law between the parties. Its terms and
conditions constitute the measure of the insurer's liability and compliance therewith is a condition
precedent to the insured's right to recovery from the. As it is also a contract of adhesion, an insurance
contract should be liberally construed in favor of the insured and strictly against the insurer company
which usually prepares it.

Considering, however, the foregoing discussion pointing to the fact that Verendia used a false lease
contract to support his claim under Fire Insurance Policy, the terms of the policy should be strictly
construed against the insured. Verendia failed to live by the terms of the policy, specifically Section 13
thereof which is expressed in terms that are clear and unambiguous, that all benefits under the policy
shall be forfeited "if the claim be in any respect fraudulent, or if any false declaration be made or used in
support thereof, or if any fraudulent means or devises are used by the Insured or anyone acting in his
behalf to obtain any benefit under the policy". Verendia, having presented a false declaration to support
his claim for benefits in the form of a fraudulent lease contract, he forfeited all benefits therein by virtue
of Section 13 of the policy in the absence of proof that Fidelity waived such provision

There is also no reason to conclude that by submitting the subrogation receipt as evidence in court,
Fidelity bound itself to a "mutual agreement" to settle Verendia's claims in consideration of the amount
of P142,685.77. While the said receipt appears to have been a filled-up form of Fidelity, no
representative of Fidelity had signed it. It is even incomplete as the blank spaces for a witness and his
address are not filled up. More significantly, the same receipt states that Verendia had received the
aforesaid amount. However, that Verendia had not received the amount stated therein, is proven by the
fact that Verendia himself filed the complaint for the full amount of P385,000.00 stated in the policy. It
might be that there had been efforts to settle Verendia's claims, but surely, the subrogation receipt by
itself does not prove that a settlement had been arrived at and enforced. Thus, to interpret Fidelity's
presentation of the subrogation receipt in evidence as indicative of its accession to its "terms" is not
only wanting in rational basis but would be substituting the will of the Court for that of the parties

Insurance Case Digest: Fortune Insurance and Surety Co., Inc. v. CA (1995)

G.R. No. 115278 May 23, 1995

Lessons Applicable: Stipulations Cannot Be Segregated (Insurance)

FACTS:
Producers Bank of the Philippines insured with Fortune Insurance and Surety Co. P725,000 which was lost
during a robbery of Producer's armored vehicle while it was in transit from Pasay City City to its Makati
head office.

The armored car was driven by Benjamin Magalong Y de Vera, escorted by Security Guard Saturnino
Atiga Y Rosete.

After an investigation conducted by the Pasay police authorities, the driver Magalong and guard Atiga
were charged, together with Edelmer Bantigue Y Eulalio, Reynaldo Aquino and John Doe, with violation
of P.D. 532 (Anti-Highway Robbery Law)

Upon claiming, Fortune refused stating that it is not liable since under the general exceptions of the
policy:

any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee,
partner, director, trustee or authorized representative of the Insured whether acting alone or in
conjunction with others. . . .

RTC: favored Producers Bank since Driver and Security Guard were merely assigned

CA: Affirmed RTC

ISSUE: W/N the driver and security guard are employees under the general exception

HELD: YES. Petition is granted.

It is clear to us that insofar as Fortune is concerned, it was its intention to exclude and exempt from
protection and coverage losses arising from dishonest, fraudulent, or criminal acts of persons granted or
having unrestricted access to Producers' money or payroll. When it used then the term "employee," it
must have had in mind any person who qualifies as such as generally and universally understood, or
jurisprudentially established in the light of the four standards in the determination of the employer-
employee relationship, 21 or as statutorily declared even in a limited sense as in the case of Article 106
of the Labor Code which considers the employees under a "labor-only" contract as employees of the
party employing them and not of the party who supplied them to the employer

Producers entrusted the three with the specific duty to safely transfer the money to its head office, with
Alampay to be responsible for its custody in transit; Magalong to drive the armored vehicle which would
carry the money; and Atiga to provide the needed security for the money, the vehicle, and his two other
companions.

A "representative" is defined as one who represents or stands in the place of another; one who
represents others or another in a special capacity, as an agent, and is interchangeable with "agent."

Misamis Lumber v Capital InsuranceG.R. No. L-21380; May 20, 1966, Reyes, J.B.L., J.Digest

FACTS:

Misamis Lumber Corp insured its Ford Falcon motor car with Capital Insurance and SuretyCompany Inc.
with the following stipulations:

Par 2 - At its option,

Capital Insurance may pay or may repair, reinstate or replace

The motor vehicle or any part. The liability of Capital insurance

shall not exceed the value of the parts lost or damaged and the reasonable cost of fitting such parts

Par 4 -

Misamis Lumber may authorize the repair

of motor vehicle necessitated bydamage for which Capital insurance may be liable provided that the
estimated cost of
such repair does not exceed the authorized repair limit of P150

While travelling along Aurora Blvd, the motor vehicle passed over a water hole, which caused the car’s
crankcase and flyhouse to break. The car was towed and repaired by Morosi Motors.

After the repairs, Misamis Lumber made a report of the accident to Capital Insurance, but the latter
refused to pay for the total cost of the repairs.

A case filed in the municipal court did not exonerate Capital Insurance for the excess (beyondP150)
because (1) its absolution would render the insurance contract one-sided, and (2) saidinsurer had not
shown that the cost of the repairs is unreasonable.

ISSUE/HELD:WON Capital Insurance is liable for the amount in excess of the authorized repair limit of
P150

NO

RATIO:

The insurance policy clearly stipulated that if the insured authorizes the repair the liability of the insurer
is limited to P150. The literal meaning of this stipulation must control, it being the actual contract,
expressly and plainly provided for in the policy.

The option to undertake the repairs is accorded to Capital Insurance per Par 2. The insurer was deprived
of the option because Misamis Lumber took it upon itself to have the repairs made, and only notified
Capital insurance when the repairs were done. As a consequence, Par 4, which limits the liability to
P150, applies.

The insurance contract may rather be one-sided, as the lower court put it, but that does not justify the
abrogation of its express terms which is the law between the contracting parties.

To require Capital Insurance to prove that the cost of repairs is unreasonable without beinggiven the
opportunity to inspect and assess the damage before the repairs were done iscontrary to elementary
justice and equity.

Judgement Modified. Capital Insurance ordered to pay not more than P150 to Misamis Lumber.