CASUALTY

ZENITH INSURANCE CORPORATION vs.CA and FERNANDEZ G.R. No. 85296 May 14,
1990

FACTS:

On January 25, 1983, private respondent Lawrence Fernandez insured with the
insurer his car for "own damage". The car figured in an accident and suffered actual
damages in the amount of P3,640.00. The insurer offered to pay the claim of
Fernandez pursuant to the terms and conditions of the contract which, the private
respondent rejected. After allegedly being given a run around by Zenith for two (2)
months, Fernandez filed a complaint with the Regional Trial Court for sum of money
and damages resulting from the refusal of Zenith to pay the amount claimed. Aside
from actual damages and interests, Fernandez also prayed for moral damages in the
amount of P10,000.00, exemplary damages of P5,000.00, attorney's fees of P3,000.00
and litigation expenses of P3,000.00.

On June 4, 1986, a decision was rendered by the trial court ordered the insurance
company to pay the insured the damage incurred plus interest at the rate of twice the
prevailing interest rates, moral damages (20,000, that is twice the amount the
insured prayed for), exemplary damages, attorney's fees, litigation expenses respondent within the two-month period was that the parties could not come to an
and costs. The CA affiremed the decision of the trial court. agreement as regards the amount of the actual damage on the car.

ISSUE: On the other hand, exemplary or corrective damages are imposed by way of example
or correction for the public good (Art. 2229, NCC). In the case of Noda v. Cruz-Arnaldo,
Whether the insurer is liable to the insured for moral and exemplary damages as
G.R. No. 57322, June 22,1987; 151 SCRA 227, exemplary damages were not awarded
ordered by the trial court
as the insurance company had not acted in wanton, oppressive or malevolent manner.
The same is true in the case at bar.

HELD:

The decision of the lower court is modified to which, the moral damages is
reduced to 10,000 and the award of exemplary damages is deleted

In case of unreasonable delay in the payment of the proceeds of an insurance

policy, the damages that may be awarded are: 1) attorney's fees; 2) other
expenses incurred by the insured person by reason of such unreasonable denial
or withholding of payment; 3) interest at twice the ceiling prescribed by the
Monetary Board of the amount of the claim due the injured; and 4) the amount
of the claim. (Insurance Code Sec. 244)

In awarding moral damages in case of breach of contract, there must be a

showing that the breach was wanton and deliberately injurious or the one
responsible acted fraudently or in bad faith.The act of petitioner of delaying
payment for two months cannot be considered as so wanton or malevolent to
justify an award of P20,000.00 as moral damages, taking into consideration the
actual damage. The reason for petitioner's failure to indemnify private
PERLA COMPANIA DE SEGUROS, INC V RAMOLETE 16 NOV

G.R. No. L-60887 | November 13, 1991 | J. Feliciano

Facts:

On June 1976, a Cimarron PUJ owned by Nelia Enriquez, and driven by Cosme Casas,
was travelling from Cebu City to Danao City. While passing through Liloan, Cebu, the
Cimarron PUJ collided with a private jeep owned by the late Calixto Palmes (husband
of private respondent Primitiva Palmes) who was then driving the private jeep. The
impact of the collision was such that the private jeep was flung away to a
distance of about thirty (30) feet and then fell on its right side pinning down
More than two (2) years later, the present Petition for Certiorari and Prohibition was
Calixto Palmes. He died as a result of cardio-respiratory arrest due to a crushed
filed with this Court alleging grave abuse of discretion on the part of respondent
chest. The accident also caused physical injuries on the part of 2-year-old
Judge Ramolete in ordering garnishment of the third-party liability insurance contract
Adeudatus Borbon.
issued by petitioner Perla in favor of the judgment debtor, Nelia Enriquez. The
Petition should have been dismissed forthwith for having been filed way out of time
but, for reasons which do not appear on the record, was nonetheless entertained.
Private respondents Primitiva and Honorato Borbon, Sr. (father of Adeudatus)
filed a complaint against Cosme and Nelia before the then Cebu CFI claiming
actual, moral, nominal and exemplary damages as a result of the accident. The
claim of Borbon, Sr. was excluded from the complaint due to jurisdiction.

Issue:
The CFI ruled in favor of Primitiva, ordering common carrier Nelia to pay her
damages and attorney’s fees. The judgment of the trial court became final and
executory and a writ of execution was issued, which however, returned
unsatisfied, prompting the court to summon and examine Nelia. She declared W/N there is GADALEJ on the part of the respondent judge
that the Cimarron PUJ was covered by a third-party liability insurance policy
issued by petitioner Perla.
W/N there insurance policy may be subject to garnishment

Palmes then filed a motion for garnishment praying that an order of

garnishment be issued against the insurance policy issued by petitioner in favor
of the judgment debtor. Respondent Judge then issued an Order directing the
Provincial Sheriff or his deputy to garnish the third-party liability insurance policy.
Petitioner filed for MR and quashal of the writ of garnishment on the ground Held:
that Perla was not a party to the case and that jurisdiction over its person had
never been acquired by the trial court by service of summons or by any process.
The trial court denied petitioner’s motion.An Order for issuance of an alias writ
of garnishment was subsequently issued.
1. No. The SC found no grave abuse of discretion or act in excess of or without
jurisdiction on the part of respondent Judge Ramolete in ordering the
garnishment of the judgment debtor’s third-party liability insurance.
2. Yes. Garnishment has been defined as a species of attachment for reaching
any property or credits pertaining or payable to a judgment debtor. In legal
contemplation, it is a forced novation by the substitution of creditors: the
judgment debtor, who is the original creditor of the garnishee is, through service
of the writ of garnishment, substituted by the judgment creditor who thereby
becomes creditor of the garnishee. Garnishment has also been described as a
warning to a person having in his possession property or credits of the judgment
debtor, not to pay the money or deliver the property to the latter, but rather to
appear and answer the plaintiff’s suit.
In order that the trial court may validly acquire jurisdiction to bind the person of
the garnishee, it is not necessary that summons be served upon him. The
garnishee need not be impleaded as a party to the case. All that is necessary for
the trial court lawfully to bind the person of the garnishee or any person who
has in his possession credits belonging to the judgment debtor is service upon
him of the writ of garnishment.
Rule 39, Section 15 and Rule 57, Section 7(e) of the ROC themselves do not
require that the garnishee be served with summons or impleaded in the case in
order to make him liable.
In the present case, there can be no doubt, therefore, that the trial court actually
acquired jurisdiction over petitioner Perla when it was served with the writ of
garnishment of the third-party liability insurance policy it had issued in favor of
judgment debtor Nelia Enriquez. Perla cannot successfully evade liability thereon by
such a contention.
In a third-party liability insurance contract, the insurer assumes the obligation of
paying the injured third party to whom the insured is liable. The insurer becomes
liable as soon as the liability of the insured to the injured third person attaches. Prior
payment by the insured to the injured third person is not necessary in order that the
obligation of the insurer may arise. From the moment that the insured became liable
to the third person, the insured acquired an interest in the insurance contract, which
interest may be garnished like any other credit.
A separate action is not necessary to establish petitioner’s liability.
Petition for Certiorari and Prohibition is hereby DISMISSED for having been filed out
of time and for lack of merit. Judgment AFFIRMED.
SUN INSURANCE OFFICE, LTD. vs. CA and NERISSA LIM G.R. No. 92383 July 17, 1992
FACTS:
The petitoner issued personal accident insurance policy to Felix Lim Jr with face
value of P200,000. Lim died two months later. It was on October 6, 1982, Lim, on a
happy mood, was playing with his handgun from which he had previously
removed the magazine. He pointed the gun to his secretary who pushes it aside
saying that it might be loaded. Lim assured her its not and pointed to his temple.
The next moment there was an explosion and Lim slumped to the floor. He was
dead before he fell. As beneficiary, his wife Nerissa Lim sought payment on the
policy but her claim was rejected. The petitioner agreed that there was no
suicide. It argued, however that there was no accident either.
The widow sued the petitioner in the Regional Trial Court of Zamboanga City and
was sustained. The trial court rendered a decision in favor of private respondent.
ISSUE:
Whether the insurer is liable to the insured under the insurance contract
HELD:
YES. 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 case, and therefore not expected. An accident is an event
which happens without any human agency or, if happening through human
agency, an event which, under the circumstances, is unusual to and not
expected by the person to whom it happens. It has also been defined as an
injury which happens by reason of some violence or casualty to the injured
without his design, consent, or voluntary co-operation. In light of these
definitions, the Court is convinced that the incident that resulted in Lim's death
was indeed an accident.
Lim was unquestionably negligent and that negligence cost him his own life. But it
should not prevent his widow from recovering from the insurance policy he obtained
precisely against accident. 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. Indeed, most accidents are caused by negligence. It
bears noting that insurance contracts are as a rule supposed to be interpreted
liberally in favor of the assured.
Jewel Villacorta vs. The Insurance Commission, et al.,
G.R. No. 54171. October 28, 1980
The main purpose of the “authorized driver” clause 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.
The mere happenstance that the employee(s) of the shop owner diverts the use of the
car to his own illicit or unauthorized purpose in violation of the trust reposed in the
shop by the insured car owner does not mean that the “authorized driver” clause has
been violated such as to bar recovery, provided that such employee is duly qualified to
drive under a valid driver’s license. It is the theft clause, not the “authorized driver”
clause that applies.
JEWEL VILLACORTA vs. THE INSURANCE COMMISSION of the policy. Assuming, despite the totally inadequate evidence, that thetaking was
“temporary” and for a “joy ride”, the Court sustains as the better view that which
G.R. No. L-54171, 28 October 1980100 SCRA 467
holds that when a person, either with the object of going to a certain place, or
learning how to drive, or enjoying a free ride, takes possession of a vehicle belonging
to another, without the consent of its owner, he I
FACTS: Villacorta had her Colt Lancer car insured with Empire Insurance sguilty of theft because by taking possession of the personal property belonging to
Company against own damage, theft and 3rd party liability. While the car was in another and using it, his intent to gain is
the repair shop, one of the employees evident since he derives therefrom utility, satisfaction,enjoymet and pleasure.
of the said repair shop took it out for a joyride after which itfigured in a vehicular ACCORDINGLY, the appealed decision is set aside and
accident. This resulted to the death of the judgmentis hereby rendered sentencing private respondent to paypetitioner the sum
driver and some of the passengers as well as to extensivedamage to the car. of P35,000.00 with legal interest from the filing of the complaint until full payment is
Villacorta filed a claim for total loss with the said insurance company. made and to pay the costs of suit.

However, it denied the claim on the ground that the accident did not fall within
the provisions of the policy either
forthe Own Damage or Theft coverage, invoking the policy provision on G.R. No. 173773 November 28, 2012
“Authorized Driver Clause”. This was upheld by the Insurance Commission
PARAMOUNT INSURANCE CORPORATION, Petitioner,
further stating that the car was not stolen and therefore not covered by
the Theft Clause because it is not evident that the person who took the car for a vs.
joyride intends to permanently deprive the insured of his/ her car.
SPOUSES YVES and MARIA TERESA REMONDEULAZ, Respondents.

FACTS:
ISSUE: Whether or not the insurer company should pay the said claim
On May 26, 1994, respondents insured with petitioner their 1994 Toyota Corolla
sedan under a comprehensive motor vehicle insurance policy for one year. During the
effectivity of said insurance, respondents’ car was unlawfully taken. Respondents
HELD: Yes. Where the insured’s car is wrongfully taken without the insured’s
alleged that a certain Ricardo Sales (Sales) took possession of the subject vehicle to
consent from the car service and repair shop to whom it had been entrusted for
add accessories and improvements thereon, however, Sales failed to return the
check-up and repairs (assuming that such taking was for a joy ride, in the course
subject vehicle within the agreed three-day period. Then, respondents notified
of which it wastotally smashed in an accident), respondent insurer is liable and
must pay insured for the total loss of the insured vehicle under the Theft Clause
petitioner to claim for the reimbursement of their lost vehicle. However, Records would show that respondents entrusted possession of their vehicle only to
petitioner refused to pay. the extent that Sales will introduce repairs and improvements thereon, and not to
permanently deprive them of possession thereof. Since, Theft can also be committed
Accordingly, respondents lodged a complaint for a sum of money against
through misappropriation, the fact that Sales failed to return the subject vehicle to
petitioner before the Regional Trial Court of Makati City but dismissed the
respondents constitutes Qualified Theft. Hence, since repondents’ car is undeniably
complaint filed by respondents. Not in conformity with the trial court’s Order,
covered by a Comprehensive Motor Vehicle Insurance Policy that allows for recovery
respondents filed an appeal to the Court of Appeals and in its decision the
in cases of theft, petitioner is liable under the policy for the loss of respondents’
appellate court reversed and set aside the Order issued by the trial court.
vehicle under the "theft clause."
Petitioner, thereafter, filed a motion for reconsideration against said Decision,
but the same was denied by the appellate court.

Hence this Petition for Review on Certiorari.

ISSUE:

Whether or not Paramount Insurance Corporation is liable under the insurance

policy for the loss of respondents’ vehicle.

RULING:

The Supreme Court DENIED the motion of Paramount Insurance Company and
AFFIRMED the Decision of the Court of Appeals entirely.

Paramount Insurance Corporation is liable under the insurance policy.

In People v. Bustinera,8 this Court had the occasion to interpret the "theft
clause" of an insurance policy. In this case, the Court explained that when one
takes the motor vehicle of another without the latter’s consent even if the
motor vehicle is later returned, there is theft – there being intent to gain as the
use of the thing unlawfully taken constitutes gain.

Also, in Malayan Insurance Co., Inc. v. Court of Appeals,9 this Court held that the
taking of a vehicle by another person without the permission or authority from
the owner thereof is sufficient to place it within the ambit of the word theft as
contemplated in the policy, and is therefore, compensable.