1. Andrew Palermo vs. Pyramid Insurance Co., Inc., G.R. No. L-36480.

May 31, 1988

I. Parties to the contract of insurance:
a. Insurer: Pyramid Insurance Co., Inc.,
b. Insured: Andrew Palermo
c. Beneficiary
II. Policy applied for: type of insurance: Car Policy
III. Case filed: payment of his claim under a Private Car Comprehensive Policy
IV. Facts & Argument of the parties
- only question involved is the interpretation of the provision of the insurance contract regarding the “authorized driver”
of the insured motor vehicle.
- 1969 Palermo, filed a complaint in the Court of First Instance of Negros Occidental against Pyramid Insurance Co., Inc.,
for payment of his claim under a Private Car Comprehensive Policy MV-1251 issued by the defendant
- Pyramid Insurance Co., Inc.,
o Disallowed the claim
o At the time of the accident, insured was driving his car with an expired driver’s license
- CFI
o Order PICI to pay Palermo 20k (value of insurance of the motor
- Facts as to CFI
o Palermo purchased a brand new Nissan sedan car and insured the same against any loss or damge for 20k and
against 3rd party liab. For 10k
 Premium for 1 year (361.34)
o Palermo met a violent accident
 He sustained PI, father was likewise injured
 Car was totally wrecked
o Insurance policy grants option unto PICI either to indemnify the plaintiff in case of loss/damage or replace the
damage car in case of accident
 PICI refused to take either
 Bec. Insured palermo violated the terms of the policy –driving with expired license
o Private Car Comprehensive Policy MV-1251:
 “AUTHORIZED DRIVER;
 Any of the following:
 The Insured.
 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 and is not disqualified from driving such motor vehicle by order of a Court of
law or by reason of any enactment or regulation in that behalf.”

V. Main issue: WON Palermo is entitled for the payment of his claim under the Private Car Comprehensive Policy
VI. Supreme court ruling

- The driver of the insured motor vehicle at the time of the accident was the insured himself, hence an “authorized driver”
under the policy.
- an infraction of the Motor Vehicle Law on the part of the insured, is not a bar to recovery under the insurance contract.
- Private Car Comprehensive Policy MV-1251:“AUTHORIZED DRIVER;
o does not apply when the person driving is the insured himself.
- Cited case : Villacorta vs. Insurance Commission
o “The main purpose of the ‘authorized driver’ clause, as may be seen from its text, is that a person other than
the insured owner, who drives the car on the insured’s order, such as his regular driver. or with his permission,
such as a friend or member of the family or the employees of a car service or repair shop, must be duly
licensed drivers and have no disqualification to drive a motor vehicle.”
- Jurisprudence cited (Drew C. Drewfield McMahon vs. Hannah Pearlman)
o Supreme Court of Massachusetts
o Operating an automobile on a public highway without a license, which act is a statutory crime is not precluded
by public policy from enforcing a policy indemnifying her against liability for bodily injuries inflicted by use of
the automobile.”
- appealed decision is affirmed with costs against the defendant-appellant.

VII. Doctrine

1. The driver of the insured motor vehicle at the time of the accident which was the insured himself was the
“authorized driver” under the policy.—There is no merit in the appellant’s allegation that the plaintiff was not
authorized to drive the insured motor vehicle because his driver’s license had expired. The driver of the insured
motor vehicle at the time of the accident was the insured himself, hence an “authorized driver” under the policy.
2. An infraction of the Motor Vehicle Law by the insured, is not a bar to recovery under the insurance contract,
although he is subject to penal sanctions.
3. The requirement that the driver be permitted in accordance with the law and the regulations to drive the motor
vehicle and is not disqualified from driving the vehicle by order of a court or by reason of enactment or regulation
applies only when the driver is driving on the insured’s order or permission; When requirement not applicable
4. Where the insured himself was personally operating the vehicle but without license to operate it, her license having
expired before issuance of the policy, she is not precluded from enforcing a policy indemnifying her against liability
for bodily injuries inflicted by the use of the vehicle

2. Agapito Gutierrez vs. Capital Insurance & Surety Co., Inc., G.R. No. L-26827, June 29, 1984
3. Lao vs. Standard Insurance Company, Inc., 409 SCRA 43
4. Perla Compania De Seguros, Inc., vs. Hon. Constante A. Ancheta, Presiding Judge of the Court of First Instance of
Camarines Norte, Branch III, et al., G.R. No. L-49699, August 8, 1988