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COMMREV - INSURANCE

3 CASES
G.R. No. L-17312

III. CLASSES OF INSURANCE - CTPL

November 29, 1965

ARTURO R. TANCO, JR., plaintiff-appellee, vs. THE PHILIPPINE


GUARANTY COMPANY, defendant-appellant.
MAKALINTAL, J.:
Plaintiff's automobile, while being driven at the southern approach
of the Jones bridge by his brother Manuel Tanco on September 1,
1959, figured in a collision with a pick-up delivery van, as a result of
which both vehicles were damaged. Plaintiff paid for repairs the
total sum of P2,536.99 and then filed his claim with defendant
company under a car insurance policy issued by the latter. The
claim was rejected, whereupon suit was commenced in the
Municipal Court of Manila, whence it was elevated on appeal to the
Court of First Instance of Manila, which gave judgment for plaintiff
in the amount stated, plus interest at 8% and P500.00 as attorney's
fees. Appeal was taken by defendant directly to this Court, there
being no dispute as to the facts.
The policy sued upon covers, up to a certain limit, loss or damage
to the insured vehicle as well as damage to property of third
persons as a consequence of or incident to the operation of said
vehicle. There is an exception clause, however, which provides that
"the company shall not be liable in respect of any accident, loss,
damage or liability caused, sustained or incurred ... whilst (the
insured vehicle) is ... being driven by or is for the purpose of being
driven by him in the charge of any person other than an Authorized
Driver." The policy defined the term "Authorized Driver" to be the
insured himself and "(b) any person driving on the Insured's order
or with his permission, provided that the person driving is permitted
in accordance with the licensing or other laws or regulations to
drive the Motor Vehicle or has been permitted and is not
disqualified by order of a court of law or by reason of any
enactment or regulation in that behalf from driving such Motor
Vehicle."
At the time of the collision plaintiff's brother who was at the wheel,
did not have a valid license, the one he had obtained for the year

1958 not having been renewed on or before the last working day of
February 1959, as required by section 31 of the Motor Vehicle Law,
Act No. 3992. That section states that any license not so renewed
"shall become delinquent and invalid," and section 21 states that
"except as otherwise specifically provided in this Act no person
shall operate any motor vehicle on the public highways without
having procured a license for the current year, nor while such
license is delinquent, invalid, suspended or revoked."
In rendering judgment for plaintiff the trial court adverted to the
absence of evidence that Manuel Tanco had been "disqualified by
order of a court of law or by reason of any enactment or regulation
in that behalf from driving such motor vehicle," and ruled that if
there is any ambiguity in the definition of the term "authorized
driver" in the policy the ambiguity should be construed in favor of
plaintiff, since the policy had been prepared in its entirety by
defendant. The trial court's advertence is true as a matter of fact;
and its ruling is correct as a matter of law. But neither one nor the
other is relevant in this case. Appellant does not rely on the portion
of the proviso in the policy quoted by the court but on that which
states that "the person driving is permitted in accordance with the
licensing or other laws." And as to this there is no ambiguity
whatsoever, because the Motor Vehicle Law expressly prohibits any
person from operating a motor vehicle on the highways without a
license for the current year or while such license is delinquent or
invalid. That Manuel Tanco renewed his license on September
8,1959, one week after the accident did not cure the delinquency or
revalidate the license which had already expired.
We are not aware that the question presented here has been
decided by this Court in any previous case. Indeed all the
authorities cited by the parties consist of decisions Courts United
States. We note, however, that those relied upon by appellee are
not in point by reason of material differences in the facts or issues
presented. In Messersmith vs. American Fidelity Co., 187 App. Div.
35, 175 N.Y. Supp. 169; and Fireman's Fund Insurance Co. vs.
Haley, 129 Miss. 525, 90 So. 635, the question was whether the
insured could recover on an automobile policy for damage
sustained in a collision which occurred while the vehicle was being
driven in violation of law in the first case by an infant at the
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instance of the insured, and in the second by the insured himself
beyond the statutory speed limit. In neither case was there a
provision in the policy expressly excluding liability by reason of the
particular violation involved. We have no reason to disagree with
the pronouncement of the court in the second case, after citing the
first, that "if such a defense (that the vehicle was being driven in
violation of law) were permissible automobile insurance would be
practically valueless."
In MacMahon vs. Pearlman, 13 N.E. 154-156, a Massachusetts case,
the defense of the insurer was also the violation of law by the
insured, namely, that she was driving without a license; but as
stated in the decision, "the casualty company does not urge that
the unlawful conduct is forbidden in express terms, (but) that
because of public policy it ought not to be compelled to pay
damages." The court, citing Messersmith v. American Fidelity Co.,
supra, similarly allowed recovery, saying that to restrict such
insurance to cases where there has been no violation of criminal
law or ordinance would reduce indemnity to a shadow.
In the case before Us now appellant's defense does not rest on the
general proposition that if a law is violated at the time of the
accident which causes the damage or injury there can be no
recovery, but rather on a specific provision in the policy that
appellant shall not be liable if the accident occurs while the vehicle
is being driven by any person other than an authorized driver and
that an authorized driver, if not the insured himself, is one who is
acting on his order or with his permission, provided he is permitted
to drive under the licensing laws.

III. CLASSES OF INSURANCE - CTPL


person prohibited by law from driving," the insurance company was
absolved, the Supreme Court of Michigan saying: "To require a
person to secure an operator's license and meet certain
requirements before driving an automobile is a regulation for the
protection of life and property, the wisdom of which can scarcely be
questioned. The Legislature has also provided that every three
years such licenses expire and may be renewed under certain
conditions. If one fails to comply with the regulation, the statute
says, he or she shall not drive a motor vehicle upon the highway.
Under the terms of the contract, while under such statutory
prohibition, plaintiff could not recover under his policy. To permit
such recovery, notwithstanding the lack of a driver's license, would
tend to undermine the protection afforded the public by virtue of
Act No. 91."
The exclusion clause in the contract invoked by appellant is clear. It
does not refer to violations of law in general, which indeed would
tend to render automobile insurance practically a sham, but to a
specific situation where a person other than the insured himself,
even upon his order or with his permission, drives the motor vehicle
without a license or with one that has already expired. No principle
of law or of public policy militates against the validity of such a
provision.
The judgment appealed from is reversed, with costs.

The cases cited by appellant are apropos. In Crahan v. Automobile


Underwriters, Inc., et al., 176 A. (Pa.) 817, a clause in the policy
excluding loss while the motor vehicle "is being operated by any
person prohibited by law from driving an automobile" was held to
be free from doubt or ambiguity, reasonable in its terms and in
furtherance of the policy of the law prohibiting unlicensed drivers to
operate motor vehicles. In Zabonick v. Ralston, et al., 261 N.W.
(Mich.) 316, the insured was driving with an expired license, in
violation of law (Act No. 91 of the Public Acts of 1931), when the
accident occurred. Under a provision in the policy that the insurer
"shall not be liable while the automobile is operated ... by any
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3 CASES

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The case had its origin in an unfortunate vehicular accident. Two (2)
children ran across the path of a vehicle as it was running along the
national highway at barrio Makiling Calamba, Laguna. They were
killed.
The vehicle, a Chevrolet "Carry-All", belonged to a partnership
known as Diman & Company, and was then being driven by its
driver, Perfecto Amar. It was insured with the Empire Insurance Co.,
Inc. under a so-called 'comprehensive coverage" policy, loss by
theft excluded. The policy was in force at the time of the accident.
Placida Peza, the managing partner of Diman & Co. filed a claim
with the insurance company, hereafter simply, Empire, for payment
of compensation to the family of the two (2) children who died as a
result of the accident. Empire refused to pay on the ground that the
driver had no authority to operate the vehicle, a fact which
expressly excepted it from liability under the policy. What Peza did
was to negotiate directly with the deceased children father for an
out-of-court settlement. The father agreed to accept P 6,200.00 in
fun settlement of the liability of the vehicles owner and driver, and
Peza paid him this sum.
Peza thereafter sued Empire to recover this sum of P6,200.00 as
actual damages, as well as P20,000.00 as moral damages,
P10,000.00 as exemplary damages, and P10,000.00 as attorney's
fees. She amended her complaint shortly thereafter to include
Diman & Co. as alternative party plaintiff. 1

G.R. No. L-29749 April 15, 1988


PLACIDA PEZA et al., petitioners, vs. HON.
ALIKPALA, etc., et al., respondents.

FEDERICO

C.

NARVASA, J.:
Presented in the proceeding at bar is the sorry situation of the loss
by a party of the right to argue the merits of a cause on appeal due
to an obsessive pre-occupation with a question of admissibility of
evidence, like a man who, it is said, "fails to see the forest for the
trees."

Empire's basic defense to the suit was anchored on the explicit


requirement in the policy limiting the operation of the insured
vehicle to the "authorized driver" therein defined, namely, (a) the
insured, or (b) any person driving on the insured order or with his
permission, provided that... that the person driving is permited in accordance with the
licensing or other laws or regulations to drive the Motor
vehicle or has been so permitted and is not disqualified by
order of the Court of Law of by reason of any enactment or
regulation in that behalf from driving such Motor Vehicle.3

COMMREV - INSURANCE
3 CASES
It appearing, according to Empire, that at the time of the mishap,
the driver Perfecto Amar only had a temporary operator's permit
(TVR) already expired his drivers license having earlier been
confiscated by an agent of the Land Transportation Commission for
an alleged violation of Land Transportation and Traffic Rules, he was
not permitted by law and was in truth disqualified to operate any
motor vehicle; and this operated to relieve it (Empire) from liability
under its policy.
The fact of Amar's having only an expired TVR at the time of the
accident was duly established during the trial. It does not seem to
have been seriously disputed by the plaintiffs. What plaintiff's
counsel attempted to do, to neutralize that fact, was to offer
rebuttal testimony (1) to explain the circumstances attending the
issuance of the TVR by the LTC officer to Amar in proof of the
proposition that there was no reason for confiscation of Amar's
license and the issuance to him of a TVR, and the LTC agent was
wrong in doing so, and also, to (2) prove that, "contrary to the
implication' of one of Empire's exhibits, Amar's license had not
expired, but had been renewed. The respondent Judge however
sustained the objection of Empire's councel to the evidence on the
ground that it was irrelevant to the issue. 2 The Judge also denied
plaintiffs' request for time to present additional rebuttal evidence in
proof of the same propositions. 3
The plaintiffs having moved for reconsideration, and the Court
having refused, said plaintiffs have come to this Court seeking
communication on certiorari of the above describe orders, assailing
them as being tainted by grave abuse of discretion.
It would seem fairly obvious that whether the LTC agent was correct
or not in his opinion that driver Amar had violated some traffic
regulation warranting confiscation of his license and issuance of a
TVR in lieu thereof, this would not alter the undisputed fact that
Amar's licence had indeed been confiscated and a TVR issued to
him, and the TVR had already expired at the time that the vehicle
being operated by him killed two children by accident. Neither
would proof of the renewal of Amar's license change the fact that it
had really been earlier confiscated by the LTC agent. The plaintiffs'
proferred proof therefore had no logical connection with the facts
thereby sought to be refuted, the proof had no rational tendency to

III. CLASSES OF INSURANCE - CTPL


establish the improbability of the facts demonstrated by Empire's
evidence. The proofs were thus correctly by the respondent Judge
as being irrelevant.
Even positing error in the Judge's analysis of the evidence
attempted to be introduced and his rejection thereof, it is clear that
it was at most an error of judgment, not such an error as may be
branded a grave abuse of discretion, i.e., such capricious and
whimsical exercise of judgment as is equivalent to lack of
jurisdiction, against which the writ of certiorari will lie. 4 In any
event, the established principle is "that ruling of the trial court on
procedural questions and on admissibility of evidence during the
course of the trial are interlocutory in nature and may not be the
subject of separate appeal or review on certiorari, but are to be
assigned as errors and reviewed in the appeal properly taken from
the decision rendered by the trial court on the merits of the case. 5
In the meantime, respondent Judge Alikpala rendered judgment on
the merits, since the case was then already ripe for adjudication.
The judgment ordered dismissal of the case for failure on the part
of the plaintiff to prove their cause of action against Empire. Notice
of the judgment was served on the parties in due course. The
plaintiffs did not appeal. instead, they filed a motion praying that
Judge Alikpala be declared guilty of contempt of court for having
decided the case on the merits despite the pendency in this Court
of the the certiorari action instituted by the plaintiffs.
It is elementary that the mere pendency of a special civil action
for certiorari, commenced in relation to a case pending before a
lower Court, does not interrupt the course of the latter when there
is no writ of injunction restraining it. This was particularly true in
the case of the respondent Judge in the light of the requirement of
the Judiciary Act that a case be decided within ninety (90) days
from date of submission. 6 As His Honor has pointed out, he but did
his duty under the law, and hence, by no stretch of the imagination
may his act be regarded as contempt of court, much less an 'affront
to the Tribunal.' He is right, and must therefore be absolved of any
responsibility for contempt.
In their eagerness to prove the respondent Judge wrong in
sustaining objections to their proffered proofs, and to have him
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punished for contempt for rendering judgment on the merits


adversely to them despite his being a respondent in their certiorari
suit before this Court, the plaintiff failed to perfect an appeal from
that judgment on the merits. Judge Alikpala's judgment has thus
become and executory, and this is an additional factor precluding
relief to the petitioners.
WHEREFORE, the petition is DISMISSED for lack of merit, without
pronouncement as to costs.

G.R. No. L-49699 August 8, 1988


PERLA COMPANIA de SEGUROS, INC., petitioner, vs. HON.
CONSTANTE A. ANCHETA, Presiding Judge of the Court of
First instance of Camarines Norte, Branch III, ERNESTO A.
RAMOS and GOYENA ZENAROSA-RAMOS, for themselves and
as Guardian Ad Litem for Minors JOBET, BANJO, DAVID and
GRACE all surnamed RAMOS, FERNANDO M. ABCEDE, SR.,
for himself and Guardian Ad Litem for minor FERNANDO G.
ABCEDE, JR., MIGUEL JEREZ MAGO as Guardian Ad Litem for
minors
ARLEEN
R.
MAGO,
and
ANACLETA
J.
ZENAROSA., respondents.
CORTES, J.:
The instant petition for certiorari and prohibition with preliminary
injunction concerns the ability of insurers under the "no fault
indemnity" provision of the Insurance Code. *
On December 27, 1977, in a collision between the IH Scout in which
private respondents were riding and a Superlines bus along the
national highway in Sta. Elena, Camarines Norte, private
respondents sustained physics injuries in varying degrees of
gravity. Thus, they filed with the Court of First Instance of
Camarines Norte on February 23,1978 a complaint for damages
against Superlines, the bus driver and petitioner, the insurer of the
bus [Rollo, pp. 27-39.] The bus was insured with petitioner for the
amount of P50,000.00 as and for passenger liability and P50,000.00
as and for third party liability. The vehicle in which private
respondents were riding was insured with Malayan Insurance Co.
Even before summons could be served, respondent judge issued an
order dated March 1, 1978 [Rollo, pp. 40-41], the pertinent portion
of which stated:
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The second incident is the prayer for an order of this court
for the Insurance Company, Perla Compania de Seguros,
Inc., to pay immediately the P5,000.00 under the "no fault
clause" as provided for under Section 378 of the Insurance
Code, and finding that the requisite documents to be
attached in the record, the said Insurance Company is
therefore directed to pay the plaintiffs (private respondents
herein) within five (5) days from receipt of this order.
Petitioner denied in its Answer its alleged liability under the "no
fault indemnity" provision [Rollo, p. 44] and likewise moved for the
reconsideration of the order. Petitioner held the position that under
Sec. 378 of the Insurance Code, the insurer liable to pay the
P5,000.00 is the insurer of the vehicle in which private respondents
were riding, not petitioner, as the provision states that "[i]n the
case of an occupant of a vehicle, claim shall lie against the insurer
of the vehicle in which the occupant is riding, mounting or
dismounting
from."
Respondent
judge,
however,
denied
reconsideration. A second motion for reconsideration was filed by
petitioner. However, in an order dated January 3, 1979, respondent
judge denied the second motion for reconsideration and ordered
the issuance of a writ of execution [Rollo, p. 69.] Hence, the instant
petition praying principally for the annulment and setting aside of
respondent judge's orders dated March 1, 1978 and January 3,
1979.
The Court issued a temporary restraining order on January 24,1979
[Rollo pp. 73-74.]
The sole issue raised in this petition is whether or not petitioner is
the insurer liable to indemnify private respondents under Sec. 378
of the Insurance Code.

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(i) The indemnity in respect of any one person shall not
exceed five thousand pesos;
(ii) The following proofs of loss, when submitted under oath,
shall be sufficient evidence to substantiate the claim:
(a) Police report of accident, and
(b) Death certificate and evidence sufficient to
establish the proper payee, or
(c) Medical report and evidence of medical or
hospital disbursement in respect of which refund is
claimed;
(iii) Claim may be made against one motor vehicle only. In
the case of an occupant of a vehicle, claim shall lie against
the insurer of the vehicle in which the occupant is riding,
mounting or dismounting from. In any other case, claim
shall lie against the insurer of the directly offending vehicle.
In all cases, the right of the party paying the claim to
recover against the owner of the vehicle responsible for the
accident shall be maintained. [Emphasis supplied.]
From a reading of the provision, which is couched in straightforward and unambiguous language, the following rules on claims
under the "no fault indemnity" provision, where proof of fault or
negligence is not necessary for payment of any claim for death Or
injury to a passenger or a third party, are established:
1. A claim may be made against one motor vehicle only.

The key to the resolution of the issue is of courts e Sec. 378, which
provides:

2. If the victim is an occupant of a vehicle, the claim shall lie


against the insurer of the vehicle. in which he is riding,
mounting or dismounting from.

Sec. 378. Any claim for death or injury to any passenger or


third party pursuant to the provision of this chapter shall be
paid without the necessity of proving fault or negligence of
any kind. Provided, That for purposes of this section

3. In any other case (i.e. if the victim is not an occupant of a


vehicle), the claim shall lie against the insurer of the directly
offending vehicle.
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3 CASES
4. In all cases, the right of the party paying the claim to
recover against the owner of the vehicle responsible for the
accident shall be maintained.
The law is very clear the claim shall lie against the insurer of the
vehicle in which the "occupant" ** is riding, and no other. The
claimant is not free to choose from which insurer he will claim the
"no fault indemnity," as the law, by using the word "shall, makes it
mandatory that the claim be made against the insurer of the
vehicle in which the occupant is riding, mounting or dismounting
from.
That said vehicle might not be the one that caused the accident is
of no moment since the law itself provides that the party paying the
claim under Sec. 378 may recover against the owner of the vehicle
responsible for the accident. This is precisely the essence of "no
fault indemnity" insurance which was introduced to and made part
of our laws in order to provide victims of vehicular accidents or
their heirs immediate compensation, although in a limited amount,
pending final determination of who is responsible for the accident
and liable for the victims'injuries or death. In turn, the "no fault
indemnity" provision is part and parcel of the Insurance Code
provisions on compulsory motor vehicle ability insurance [Sec. 373389] and should be read together with the requirement for
compulsory passenger and/or third party liability insurance [Sec.
377] which was mandated in order to ensure ready compensation
for victims of vehicular accidents.

III. CLASSES OF INSURANCE - CTPL


Irrespective of whether or not fault or negligence lies with the
driver of the Superlines bus, as private respondents were not
occupants of the bus, they cannot claim the "no fault indemnity"
provided in Sec. 378 from petitioner. The claim should be made
against the insurer of the vehicle they were riding. This is very clear
from the law. Undoubtedly, in ordering petitioner to pay private
respondents the 'no fault indemnity,' respondent judge gravely
abused his discretion in a manner that amounts to lack of
jurisdiction. The issuance of the corrective writ of certiorari is
therefore warranted.
WHEREFORE, the petition is GRANTED and respondent judge's order
dated March 1, 1978, requiring petitioner to pay private
respondents the amount of P5,000.00 as "no fault indemnity' under
Sec. 378 of the Insurance Code, and that of January 3, 1979,
denying the second motion for reconsideration and issuing a writ of
execution, are ANNULLED and SET ASIDE. The temporary
restraining order issued by the Court on January 24, 1979 is made
permanent.
SO ORDERED.