Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-8151 December 16, 1955 VIRGINIA CALANOC, petitioner, vs. COURT O APPEALS !"# T$E P$ILIPPINE AMERICAN LI E INSURANCE CO., respondents. %AUTISTA ANGELO, J.: This suit involves the collection of P2,000 representin the value of a supple!ental polic" coverin accidental death #hich #as secured b" one MelencioBasilio fro! the Philippine A!erican $ife %nsurance Co!pan". The case ori inated in the Municipal Court of Manila and &ud !ent bein favorable to the plaintiff it #as appealed to the court of first instance. The latter court affir!ed the &ud !ent but on appeal to the Court of Appeals the &ud !ent #as reversed and the case is no# before us on a petition for revie#. MelencioBasilio #as a #atch!an of the Manila Auto 'uppl" located at the corner of Avenida Ri(al and )urbaran. *e secured a life insurance polic" fro! the Philippine A!erican $ife %nsurance Co!pan" in the a!ount of P2,000 to #hich #as attached a supple!entar" contract coverin death b" accident. +n ,anuar" 2-, ./-., he died of a unshot #ound on the occasion of a robber" co!!itted in the house of Att". +&eda at the corner of +ro0uieta and )urbaan streets. 1ir inia Calanoc, the #ido#, #as paid the su! of P2,000, face value of the polic", but #hen she de!anded the pa"!ent of the additional su! of P2,000 representin the value of the supple!ental polic", the co!pan" refused
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alle in , as !ain defense, that the deceased died because he #as !urdered b" a person #ho too2 part in the co!!ission of the robber" and #hile !a2in an arrest as an officer of the la# #hich contin encies #ere e3pressl" e3cluded in the contract and have the effect of e3e!ptin the co!pan" fro! liabilit". The pertinent facts #hich need to be considered for the deter!ination of the 0uestions raised are those reproduced in the decision of the Court of Appeals as follo#s4 The circu!stances surroundin the death of MelencioBasilio sho# that #hen he #as 2illed at about seven o5cloc2 in the ni ht of ,anuar" 2-, ./-., he #as on dut" as #atch!an of the Manila Auto 'uppl" at the corner of Avenida Ri(al and )urbaran6 that it turned out that Att". Antonio +&eda #ho had his residence at the corner of )urbaran and +ro0uieta, a bloc2 a#a" fro! Basilio5s station, had co!e ho!e that ni ht and found that his house #as #ell7li hted, but #ith the #indo#s closed6 that ettin suspicious that there #ere culprits in his house, Att". +&eda retreated to loo2 for a police!an and findin Basilio in 2ha2i unifor!, as2ed hi! to acco!pan" hi! to the house #ith the latter refusin on the round that he #as not a police!an, but su estin that Att". +&eda should as2 the traffic police!an on dut" at the corner of Ri(al Avenue and )urbaran6 that Att". +&eda #ent to the traffic police!an at said corner and reported the !atter, as2in the police!an to co!e alon #ith hi!, to #hich the police!an a reed6 that on the #a" to the +&eda residence, the police!an and Att". +&eda passed b" Basilio

and so!eho# or other invited the latter to co!e alon 6 that as the tree approached the +&eda residence and stood in front of the !ain ate #hich #as covered #ith alvani(ed iron, the fence itself bein partl" concrete and partl" adobe stone, a shot #as fired6 that i!!ediatel" after the shot, Att". +&eda and the police!an sou ht cover6 that the police!an, at the re0uest of Att". +&eda, left the pre!ises to loo2 for reinforce!ent6 that it turned out after#ards that the special #atch!an MelencioBasilio #as hit in the abdo!en, the #ound causin his instantaneous death6 that the shot !ust have co!e fro! inside the "ard of Att". +&eda, the bullet passin throu h a hole #aist7hi h in the alvani(ed iron ate6 that upon in0uir" Att". +&eda found out that the savin s of his children in the a!ount of P80 in coins 2ept in his aparador contained in stoc2in s #ere ta2en a#a", the aparador havin been ransac2ed6 that a !onth thereafter the correspondin investi ation conducted b" the police authorities led to the arrest and prosecution of four persons in Cri!inal Case No. .-.09 of the Court of :irst %nstance of Manila for 5Robber" in an %nhabited *ouse and in Band #ith Murder5. %t is contended in behalf of the co!pan" that Basilio #as 2illed #hich ;!a2in an arrest as an officer of the la#; or as a result of an ;assault or !urder; co!!itted in the place and therefore his death #as caused b" one of the ris2s e3cluded b" the supple!entar" contract #hich e3e!pts the co!pan" fro! liabilit". This contention #as upheld b" the Court of Appeals and, in reachin this conclusion, !ade the follo#in co!!ent4
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:ro! the fore oin testi!onies, #e find that the deceased #as a #atch!an of the Manila Auto 'uppl", and, as such, he #as not boud to leave his place and o #ith Att". +&eda and Police!an Ma sanoc to see the trouble, or robber", that occurred in the house of Att". +&eda. %n fact, accordin to the findin of the lo#er court, Att". +&eda findin Basilio in unifor! as2ed hi! to acco!pan" hi! to his house, but the latter refused on the round that he #as not a police!an and su ested to Att". +&eda to as2 help fro! the traffic police!an on dut" at the corner of Ri(al Avenue and )urbaran, but after Att". +&eda secured the help of the traffic police!an, the deceased #ent #ith +&eda and said traffic police!an to the residence of +&eda, and #hile the deceased #as standin in front of the !ain ate of said residence, he #as shot and thus died. The death, therefore, of Basilio, althou h une3pected, #as not caused b" an accident, bein a voluntar" and intentional act on the part of the one #h robbed, or one of those #ho robbed, the house of Att". +&eda. *ence, it is out considered opinion that the death of Basilio, thou h une3pected, cannot be considered accidental, for his death occurred because he left his post and &oined police!an Ma sanoc and Att". +&eda to repair to the latter5s residence to see #hat happened thereat. Certainl", #hen Basilio &oined Patrol!an Ma sanoc and Att". +&eda, he should have reali(ed the dan er to #hich he #as e3posin hi!self, "et, instead of re!ainin in his place, he #ent #ith Att". +&eda and Patrol!an Ma sanoc to

see #hat #as the trouble in Att". +&eda5s house and thus he #as fatall" shot. <e dissent fro! the above findin s of the Court of Appeals. :or one thin , Basilio #as a #atch!an of the Manila Auto 'uppl" #hich #as a bloc2 a#a" fro! the house of Att". +&eda #here so!ethin suspicious #as happenin #hich caused the latter to as2 for help. <hile at first he declied the invitation of Att". +&eda to o #ith hi! to his residence to in0uire into #hat #as oin on because he #as not a re ular police!an, he later a reed to co!e alon #hen pro!pted b" the traffic police!an, and upon approachin the ate of the residence he #as shot and died. The circu!stance that he #as a !ere #atch!an and had no dut" to heed the call of Att". +&eda should not be ta2en as a capricious desire on his part to e3pose his life to dan er considerin the fact that the place he #as in dut"7bound to uard #as onl" a bloc2 a#a". %n volunteerin to e3tend help under the situation, he !i ht have thou ht, ri htl" or #ron l", that to 2no# the truth #as in the interest of his e!plo"er it bein a !atter that affects the securit" of the nei hborhood. No doubt there #as so!e ris2 co!in to hi! in pursuin that errand, but that ris2 al#a"s e3isted it bein inherent in the position he #as holdin . *e cannot therefore be bla!ed solel" for doin #hat he believed #as in 2eepin #ith his dut" as a #atch!an and as a citi(en. And he cannot be considered as !a2in an arrest as an officer of the la#, as contended, si!pl" because he #ent #ith the traffic police!an, for certainl" he did not o there for that purpose nor #as he as2ed to do so b" the police!an. Much less can it be pretended that Basilio died in the course of an assault or !urder considerin the ver" nature of these cri!es. %n the first place, there is no proof
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that the death of Basilio is the result of either cri!e for the record is barren of an" circu!stance sho#in ho# the fatal shot #as fired. Perhaps this !a" be clarified in the cri!inal case no# pendin in court as re ards the incident but before that is done an"thin that !i ht be said on the point #ould be a !ere con&ecture. Nor can it be said that the 2illin #as intentional for there is the possibilit" that the !alefactor had fired the shot !erel" to scare a#a" the people around for his o#n protection and not necessaril" to 2ill or hit the victi!. %n an" event, #hile the act !a" not e3ce!pt the tri er!an fro! liabilit" for the da!a e done, the fact re!ains that the happenin #as a pure accident on the part of the victi!. The victi! could have been either the police!an or Att". +&eda for it cannot be pretended that the !alefactor ai!ed at the deceased precisel" because he #anted to ta2e his life. <e ta2e note that these defenses are included a!on the ris2s e3luded in the supple!entar" contract #hich enu!erates the cases #hich !a" e3e!pt the co!pan" fro! liabilit". <hile as a eneral rule ;the parties !a" li!it the covera e of the polic" to certain particular accidents and ris2s or causes of loss, and !a" e3pressl" e3cept other ris2s or causes of loss therefro!; =9- C. ,. '. >?.7>?2@, ho#ever, it is to be desired that the ter!s and phraseolo " of the e3ception clause be clearl" e3pressed so as to be #ithin the eas" rasp and understandin of the insured, for if the ter!s are doubtful or obscure the sa!e !ust of necessit" be interpreted or resolved a anst the one #ho has caused the obscurit". =Article .8>>, ne# Civil Code@ And so it has bene enerall" held that the ;ter!s in an insurance polic", #hich are a!bi uous, e0uivacal, or uncertain . . . are to be construed strictly and most strongly against the

insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especiall" #here a forfeiture is involved; =2/ A!. ,ur., .?.@, and the reason for this rule is that he ;insured usuall" has no voice in the selection or arran e!ent of the #ords e!plo"ed and that the lan ua e of the contract is selected #ith reat care and deliberation b" e3perts and le al advisers e!plo"ed b", and actin e3clusivel" in the interest of, the insurance co!pan".; =99 C. ,. '., p. ..>9.@ %nsurance is, in its nature, co!ple3 and difficult for the la"!an to understand. Policies are prepared b" e3perts #ho 2no# and can anticipate the bearin s and possible co!plications of ever" contin enc". 'o lon as insurance co!panies insist upon the use of a!bi uous, intricate and technical provisions, #hich conceal rather than fran2l" disclose, their o#n intentions, the courts !ust, in fairness to those #ho purchase insurance, construe ever" a!bi uit" in favor of the insured. =Al oe vs. Pacific Mut.$. %ns. Co., /. <ash. 829, $RA ./.>A, .28>.@la#phi..net An insurer should not be allo#ed, b" the use of obscure phrases and e3ceptions, to defeat the ver" purpose for #hich the polic" #as procured. =Moore vs. Aetna $ife %nsurance Co., $RA ./.-A, 2B9.@ <e are therefore persuaded to conclude that the circu!stances unfolded in the present case do not #arrant the findin that the death of the unfortunate victi! co!es #ithin the purvie# of the e3ception clause of the supple!entar" polic" and, hence, do not e3e!pt the co!pan" fro! liabilit".
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<herefore, reversin the decision appealed fro!, #e hereb" order the co!pan" to pa" petitioner7appellant the a!ount of P2,000, #ith le al interest fro! ,anuar" 2B, ./-. until full" paid, #ith costs.

G.R. No. 1&&9'& Se()ember *, 199* INMAN GENERAL ASSURANCE CORPORATION, petitioner, vs. T$E $ONORA%LE COURT O APPEALS !"# +ULIA SURPOSA, respondents. NOCON, J.: This is a petition for certiorari #ith a pra"er for the issuance of a restrainin order and preli!inar" !andator" in&unction to annul and set aside the decision of the Court of Appeals dated ,ul" .., .//., 1 affir!in the decision dated March 20, .//0 of the %nsurance Co!!ission * in orderin petitioner :in!an Ceneral Assurance Corporation to pa" private respondent ,ulia 'urposa the proceeds of the personal accident %nsurance polic" #ith interest. %t appears on record that on +ctober 22, ./?B, deceased, Carlie'urposa #as insured #ith petitioner :in!an Ceneral Assurance Corporation under :in!an Ceneral Teachers Protection Plan Master Polic" No. 200- and %ndividual Polic" No. 0?/29 #ith his parents, spouses ,ulia and Carlos 'urposa, and brothers Christopher,

Charles, Chester and Clifton, all surna!ed, 'urposa, as beneficiaries. , <hile said insurance polic" #as in full force and effect, the insured, Carlie'urposa, died on +ctober .?, ./?? as a result of a stab #ound inflicted b" one of the three =8@ unidentified !en #ithout provocation and #arnin on the part of the for!er as he and his cousin, <inston 'urposa, #ere #aitin for a ride on their #a" ho!e alon Ri(al7$ocsin 'treets, Bacolod Cit" after attendin the celebration of the ;Mas2arra Annual :estival.; Thereafter, private respondent and the other beneficiaries of said insurance polic" filed a #ritten notice of clai! #ith the petitioner insurance co!pan" #hich denied said clai! contendin that !urder and assault are not #ithin the scope of the covera e of the insurance polic". +n :ebruar" 29, ./?/, private respondent filed a co!plaint #ith the %nsurance Co!!ission #hich subse0uentl" rendered a decision, the pertinent portion of #hich reads4 %n the li ht of the fore oin .#e find respondent liable to pa" co!plainant the su! of P.-,000.00 representin the proceeds of the polic" #ith interest. As no evidence #as sub!itted to prove the clai! for !ortuar" aid in the su! of P.,000.00, the sa!e cannot be entertained. <*ERE:+RE, &ud !ent is hereb" rendered orderin respondent to pa" co!plainant the su! of P.-,000.00 #ith le al interest fro! the date of the filin of the co!plaint until full" satisfied. <ith costs.-

+n ,ul" .., .//., the appellate court affir!ed said decision. *ence, petitioner filed this petition alle in rove abuse of discretion on the part of the appellate court in appl"in the principle of ;expressouniusexclusioalterius; in a personal accident insurance polic" since death resultin fro! !urder andDor assault are i!pliedl" e3cluded in said insurance polic" considerin that the cause of death of the insured #as not accidental but rather a deliberate and intentional act of the assailant in 2illin the for!er as indicated b" the location of the lone stab #ound on the insured. Therefore, said death #as co!!itted #ith deliberate intent #hich, b" the ver" nature of a personal accident insurance polic", cannot be inde!nified. <e do not a ree. The ter!s ;accident; and ;accidental; as used in insurance contracts have not ac0uired an" technical !eanin , and are construed b" the courts in their ordinar" and co!!on acceptation. Thus, the ter!s have been ta2en to !ean that #hich happen b" chance or fortuitousl", #ithout intention and desi n, and #hich is une3pected, unusual, and unforeseen. An accident is an event that ta2es place #ithout one5s foresi ht or e3pectation E an event that proceeds fro! an un2no#n cause, or is an unusual effect of a 2no#n cause and, therefore, not e3pected. . . . The enerall" accepted rule is that, death or in&ur" does not result fro! accident or accidental !eans #ithin the ter!s of an accident7polic" if it is the natural result of
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the insured5s voluntar" act, unacco!panied b" an"thin unforeseen e3cept the death or in&ur". There is no accident #hen a deliberate act is perfor!ed unless so!e additional, une3pected, independent, and unforeseen happenin occurs #hich produces or brin s about the result of in&ur" or death. %n other #ords, #here the death or in&ur" is not the natural or probable result of the insured5s voluntar" act, or if so!ethin unforeseen occurs in the doin of the act #hich produces the in&ur", the resultin death is #ithin the protection of the policies insurin a ainst death or in&ur" fro! 5 accident. As correctl" pointed out b" the respondent appellate court in its decision4 %n the case at bar, it cannot be pretended that Carlie'urposa died in the course of an assault or !urder as a result of his voluntar" act considerin the ver" nature of these cri!es. %n the first place, the insured and his co!panion #ere on their #a" ho!e fro! attendin a festival. The" #ere confronted b" unidentified persons. The record is barren of an" circu!stance sho#in ho# the stab #ound #as inflicted. Nor can it be pretended that the !alefactor ai!ed at the insured precisel" because the 2iller #anted to ta2e his life. %n an" event, #hile the act !a" not e3e!pt the un2no#n perpetrator fro! cri!inal liabilit", the fact re!ains that the happenin #as a pure
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accident on the part of the victi!. The insured died fro! an event that too2 place #ithout his foresi ht or e3pectation, an event that proceeded fro! an unusual effect of a 2no#n cause and, therefore, not e3pected. Neither can it be said that #here #as a capricious desire on the part of the accused to e3pose his life to dan er considerin that he #as &ust oin ho!e after attendin a festival. 6 :urther!ore, the personal accident insurance polic" involved herein specificall" enu!erated onl" ten =.0@ circu!stances #herein no liabilit" attaches to petitioner insurance co!pan" for an" in&ur", disabilit" or loss suffered b" the insured as a result of an" of the sti!ulated causes. The principle of ; expressouniusexclusioalterius; E the !ention of one thin i!plies the e3clusion of another thin E is therefore applicable in the instant case since !urder and assault, not havin been e3pressl" included in the enu!eration of the circu!stances that #ould ne ate liabilit" in said insurance polic" cannot be considered b" i!plication to dischar e the petitioner insurance co!pan" fro! liabilit" for, an" in&ur", disabilit" or loss suffered b" the insured. Thus, the failure of the petitioner insurance co!pan" to include death resultin fro! !urder or assault a!on the prohibited ris2s leads inevitabl" to the conclusion that it did not intend to li!it or e3e!pt itself fro! liabilit" for such death. Article .8>> of the Civil Code of the Philippines provides that4

The interpretation of obscure #ords or stipulations in a contract shall not favor the part" #ho caused the obscurit". Moreover, it is #ell settled that contracts of insurance are to be construed liberall" in favor of the insured and strictl" a ainst the insurer. Thus a!bi uit" in the #ords of an insurance contract should be interpreted in favor of its beneficiar". ' <*ERE:+RE, findin no irreversible error in the decision of the respondent Court of Appeals, the petition for certiorari #ith restrainin order and preli!inar" in&unction is hereb" AEN%EA for lac2 of !erit. '+ +RAEREA.

G.R. No. 9*,8, +./0 1', 199* SUN INSURANCE O ICE, LTD., petitioner, vs. T$E $ON. COURT O APPEALS !"# NERISSA LIM, respondents. CRU1, J.: The petitioner issued Personal Accident Polic" No. 0-B?> to :eli3 $i!, ,r. #ith a face value of P200,000.00. T#o !onths later, he #as dead #ith a bullet #ound in his head. As beneficiar", his #ife Nerissa $i! sou ht pa"!ent on the polic" but her clai! #as re&ected. The petitioner a reed that there #as no suicide. %t ar ued, ho#ever that there #as no accident either.

PilarNala on, $i!5s secretar", #as the onl" e"e#itness to his death. %t happened on +ctober B, ./?2, at about .0 o5cloc2 in the evenin , after his !other5s birthda" part". Accordin to Nala on, $i! #as in a happ" !ood =but not drun2@ and #as pla"in #ith his hand un, fro! #hich he had previousl" re!oved the !a a(ine. As she #atched television, he stood in front of her and pointed the un at her. 'he pushed it aside and said it !i ht he loaded. *e assured her it #as not and then pointed it to his te!ple. The ne3t !o!ent there #as an e3plosion and $i! slu!ped to the floor. *e #as dead before he fell. 1 The #ido# sued the petitioner in the Re ional Trial Court of )a!boan a Cit" and #as sustained. *The petitioner #as sentenced to pa" her P200,000.00, representin the face value of the polic", #ith interest at the le al rate6 P.0,000.00 as !oral da!a es6 P-,000.00 as e3e!plar" da!a es6 P-,000.00 as actual and co!pensator" da!a es6 and P-,000.00 as attorne"5s fees, plus the costs of the suit. This decision #as affir!ed on appeal, and the !otion for reconsideration #as denied. ,The petitioner then ca!e to this Court to fault the Court of Appeals for approvin the pa"!ent of the clai! and the a#ard of da!a es. The ter! ;accident; has been defined as follo#s4 The #ords ;accident; and ;accidental; have never ac0uired an" technical si nification in la#, and #hen used in an insurance contract are to be construed and considered accordin to the ordinar" understandin and co!!on usa e and speech of people enerall". %n7 substance, the courts are practicall" a reed that the #ords ;accident; and ;accidental; !ean that #hich happens b" chance or fortuitousl", #ithout intention or desi n, and #hich is une3pected, unusual, and
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unforeseen. The definition that has usuall" been adopted b" the courts is that an accident is an event that ta2es place #ithout one5s foresi ht or e3pectation E an event that proceeds fro! an un2no#n cause, or is an unusual effect of a 2no#n case, and therefore not e3pected. An accident is an event #hich happens #ithout an" hu!an a enc" or, if happenin throu h hu!an a enc", an event #hich, under the circu!stances, is unusual to and not e3pected b" the person to #ho! it happens. %t has also been defined as an in&ur" #hich happens b" reason of so!e violence or casualt" to the in&ured #ithout his desi n, consent, or voluntar" co7operation. 5 %n li ht of these definitions, the Court is convinced that the incident that resulted in $i!5s death #as indeed an accident. The petitioner, invo2in the case of De la Cruz v. Capital Insurance, 6 sa"s that ;there is no accident #hen a deliberate act is perfor!ed unless so!e additional, une3pected, independent and unforeseen happenin occurs #hich produces or brin s about their in&ur" or death.; There #as such a happenin . This #as the firin of the un, #hich #as the additional une3pected and independent and unforeseen occurrence that led to the insured person5s death. The petitioner also cites one of the four e3ceptions provided for in the insurance contract and contends that the private petitioner5s clai! is barred b" such provision. %t is there stated4 E3ceptions E The co!pan" shall not be liable in respect of .. Bodil" in&ur" 333333333 b. conse0uent upon
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i@ The insured person atte!ptin to co!!it suicide or #illfull" e3posin hi!self to needless peril e3cept in an atte!pt to save hu!an life. To repeat, the parties a ree that $i! did not co!!it suicide. Nevertheless, the petitioner contends that the insured #illfull" e3posed hi!self to needless peril and thus re!oved hi!self fro! the covera e of the insurance polic". %t should be noted at the outset that suicide and #illful e3posure to needless peril are in parimateriabecause the" both si nif" a disre ard for one5s life. The onl" difference is in de ree, as suicide i!ports a positive act of endin such life #hereas the second act indicates a rec2less ris2in of it that is al!ost suicidal in intent. To illustrate, a person #ho #al2s a ti htrope one thousand !eters above the round and #ithout an" safet" device !a" not actuall" be intendin to co!!it suicide, but his act is nonetheless suicidal. *e #ould thus be considered as ;#illfull" e3posin hi!self to needless peril; #ithin the !eanin of the e3ception in 0uestion. The petitioner !aintains that b" the !ere act of pointin the un to hip te!ple, $i! had #illfull" e3posed hi!self to needless peril and so ca!e under the e3ception. The theor" is that a un is per se dan erous and should therefore be handled cautiousl" in ever" case. That posture is ar uable. But #hat is not is that, as the secretar" testified, $i! had re!oved the !a a(ine fro! the un and believed it #as no lon er dan erous. *e e3pressl" assured her that the un #as not loaded. %t is sub!itted that $i! did not #illfull" e3pose hi!self to needless peril #hen he pointed the un to his te!ple because the fact is that he thou ht it #as not unsafe to

do so. The act #as precisel" intended to assure Nala on that the un #as indeed har!less. The contrar" vie# is e3pressed b" the petitioner thus4 Accident insurance policies #ere never intended to re#ard the insured for his tendenc" to sho# off or for his !iscalculations. The" #ere intended to provide for contin encies. *ence, #hen % !iscalculate and &u!p fro! the Fue(on Brid e into the Pasi River in the belief that % can overco!e the current, % have #ilfull" e3posed !"self to peril and !ust accept the conse0uences of !" act. %f % dro#n % cannot o to the insurance co!pan" to as2 the! to co!pensate !e for !" failure to s#i! as #ell as % thou ht % could. The insured in the case at bar deliberatel" put the un to his head and pulled the tri er. *e #ilfull" e3posed hi!self to peril. The Court certainl" a rees that a dro#ned !an cannot o to the insurance co!pan" to as2 for co!pensation. That !i ht fri hten the insurance people to death. <e also a ree that under the circu!stances narrated, his beneficiar" #ould not be able to collect on the insurance polic" for it is clear that #hen he braved the currents belo#, he deliberately e3posed hi!self to a known peril. The private respondent !aintains that $i! did not. That is #here she sa"s the analo " fails. The petitioner5s h"pothetical s#i!!er 2ne# #hen he dived off the Fue(on Brid e that the currents belo# #ere dan erous. B" contrast, $i! did not 2no# that the un he put to his head #as loaded.

$i! #as un0uestionabl" ne li ent and that ne li ence cost hi! his o#n life. But it should not prevent his #ido# fro! recoverin fro! the insurance polic" he obtained precisel" a ainst accident. There is nothin in the polic" that relieves the insurer of the responsibilit" to pa" the inde!nit" a reed upon if the insured is sho#n to have contributed to his o#n accident. %ndeed, !ost accidents are caused b" ne li ence. There are onl" four e3ceptions e3pressl" !ade in the contract to relieve the insurer fro! liabilit", and none of these e3ceptions is applicable in the case at bar. 22 %t bears notin that insurance contracts are as a rule supposed to be interpreted liberall" in favor of the assured. There is no reason to deviate fro! this rule, especiall" in vie# of the circu!stances of this case as above anal"(ed. +n the second assi ned error, ho#ever, the Court !ust rule in favor of the petitioner. The basic issue raised in this case is, as the petitioner correctl" observed, one of first i!pression. %t is evident that the petitioner #as actin in ood faith then it resisted the private respondent5s clai! on the round that the death of the insured #as covered b" the e3ception. The issue #as indeed debatable and #as clearl" not raised onl" for the purpose of evadin a le iti!ate obli ation. <e hold therefore that the a#ard of !oral and e3e!plar" da!a es and of attorne"5s fees is un&ust and so !ust be disapproved. %n order that a person !a" be !ade liable to the pa"!ent of !oral da!a es, the la# re0uires that his act be #ron ful. The adverse result of an action does not per se !a2e the act #ron ful and sub&ect the act or to the pa"!ent of !oral da!a es. The
9

la# could not have !eant to i!pose a penalt" on the ri ht to liti ate6 such ri ht is so precious that !oral da!a es !a" not be char ed on those #ho !a" e3ercise it erroneousl". :or these the la# ta3es costs.
'

M+A%:%EA #ith the deletion of all a#ards for da!a es, includin attorne"5s fees, e3cept the costs of the suit. '+ +RAEREA.

The fact that the results of the trial #ere adverse to Barreto did not alone !a2e his act in brin in the action #ron ful because in !ost cases one part" #ill lose6 #e #ould be i!posin an un&ust condition or li!itation on the ri ht to liti ate. <e hold that the a#ard of !oral da!a es in the case at bar is not &ustified b" the facts had circu!stances as #ell as the la#. %f a part" #ins, he cannot, as a rule, recover attorne"5s fees and liti ation e3penses, since it is not the fact of #innin alone that entitles hi! to recover such da!a es of the e3ceptional circu!stances enu!erated in Art. 220?. +ther#ise, ever" ti!e a defendant #ins, auto!aticall" the plaintiff !ust pa" attorne"5s fees thereb" puttin a pre!iu! on the ri ht to liti ate #hich should not be so. :or those e3penses, the la# dee!s the a#ard of costs as sufficient. 8 <*ERE:+RE, the challen ed decision of the Court of Appeals is A::%RMEA in so far as it holds the petitioner liable to the private respondent in the su! of P200,000.00 representin the face value of the insurance contract, #ith interest at the le al rate fro! the date of the filin of the co!plaint until the full a!ount is paid, but
10

G.R. No. 11--*' ebr.!r0 6, 1995 ARMANDO GEAGONIA, petitioner, vs. COURT O APPEALS !"# COUNTR3 %AN4ERS INSURANCE CORPORATION, respondents. DAVIDE, +R., J.: :our our revie# under Rule 9- of the Rules of Court is the decision 1 of the Court of Appeals in CA7C.R. 'P No. 8./.B, entitled ;Countr" Ban2ers %nsurance Corporation versus Ar!ando Cea onia,; reversin the decision of the %nsurance Co!!ission in %.C. Case No. 8890 #hich a#arded the clai! of petitioner Ar!ando Cea onia a ainst private respondent Countr" Ban2ers %nsurance Corporation. The petitioner is the o#ner of Nor!an5s Mart located in the public !ar2et of 'an :rancisco, A usandel 'ur. +n 22 Aece!ber ./?/, he obtained fro! the private respondent fire insurance polic" No. :7.9B22 * for P.00,000.00. The period of the polic" #as fro! 22

Aece!ber ./?/ to 22 Aece!ber .//0 and covered the follo#in 4 ;'toc27in7trade consistin principall" of dr" oods such as RT<5s for !en and #o!en #ear and other usual to assured5s business.; The petitioner declared in the polic" under the subheadin entitled C+7%N'GRANCE that Mercantile %nsurance Co., %nc. #as the co7insurer for P-0,000.00. :ro! ./?/ to .//0, the petitioner had in his inventor" stoc2s a!ountin to P8/2,.80.-0, ite!i(ed as follo#s4 )enco 'ales, %nc. Cebu Tesin Te3tiles P--,B/?.00 2-0,000.00 EEEEE P8/2,.80.-0 The polic" contained the follo#in condition4 8. The insured shall ive notice to the Co!pan" of an" insurance or insurances alread" affected, or #hich !a" subse0uentl" be effected, coverin an" of the propert" or properties consistin of stoc2s in trade, oods in process andDor inventories onl" hereb" insured, and unless such notice be iven and the particulars of such insurance or insurances be stated therein or endorsed in this polic" pursuant to 'ection -0 of the %nsurance Code, b" or on behalf of the Co!pan" before the occurrence of an" loss or da!a e, all benefits under this polic" shall be dee!ed forfeited, provided however, that this
11

:. $e aspi Cen. Merchandise ?B,982.-0 =on credit@

condition shall not appl" #hen the total insurance or insurances in force at the ti!e of the loss or da!a e is not !ore than P200,000.00. +n 2> Ma" .//0, fire of accidental ori in bro2e out at around >480 p.!. at the public !ar2et of 'an :rancisco, A usandel 'ur. The petitioner5s insured stoc27in7trade #ere co!pletel" destro"ed pro!ptin hi! to file #ith the private respondent a clai! under the polic". +n 2? Aece!ber .//0, the private respondent denied the clai! because it found that at the ti!e of the loss the petitioner5s stoc2s7in7trade #ere li2e#ise covered b" fire insurance policies No. CA72?.9B and No. CA72?.99, for P.00,000.00 each, issued b" the Cebu Branch of the Philippines :irst %nsurance Co., %nc. =hereinafter P IC!., These policies indicate that the insured #as ;Messrs. Aiscount Mart =Mr. Ar!ando Cea onia, Prop.@; #ith a !ort a e clause readin 4 M+RTCACE4 $oss, if an" shall be pa"able to Messrs. Cebu Tesin Te3tiles, Cebu Cit" as their interest !a" appear sub&ect to the ter!s of this polic". C+7%N'GRANCE AEC$AREA4 P.00,000. E Phils. :irst CEBD: 29>-?. The basis of the private respondent5s denial #as the petitioner5s alle ed violation of Condition 8 of the polic". The petitioner then filed a co!plaint 5 a ainst the private respondent #ith the %nsurance Co!!ission =Case No. 8890@ for the recover" of P.00,000.00 under fire insurance polic" No. :7.9B22 and for attorne"5s fees and costs of liti ation. *e attached as Anne3 ;AM; 6 thereof his letter of .? ,anuar" .//. #hich as2ed for the reconsideration of the denial. *e ad!itted in the said

letter that at the ti!e he obtained the private respondent5s fire insurance polic" he 2ne# that the t#o policies issued b" the P:%C #ere alread" in e3istence6 ho#ever, he had no 2no#led e of the provision in the private respondent5s polic" re0uirin hi! to infor! it of the prior policies6 this re0uire!ent #as not !entioned to hi! b" the private respondent5s a ent6 and had it been !entioned, he #ould not have #ithheld such infor!ation. *e further asserted that the total of the a!ounts clai!ed under the three policies #as belo# the actual value of his stoc2s at the ti!e of loss, #hich #as P.,000,000.00. %n its ans#er, ' the private respondent specificall" denied the alle ations in the co!plaint and set up as its principal defense the violation of Condition 8 of the polic". %n its decision of 2. ,une .//8, 8 the %nsurance Co!!ission found that the petitioner did not violate Condition 8 as he had no 2no#led e of the e3istence of the t#o fire insurance policies obtained fro! the P:%C6 that it #as Cebu Tesin Te3tiles #hich procured the P:%C policies #ithout infor!in hi! or securin his consent6 and that Cebu Tesin Te3tile, as his creditor, had insurable interest on the stoc2s. These findin s #ere based on the petitioner5s testi!on" that he ca!e to 2no# of the P:%C policies onl" #hen he filed his clai! #ith the private respondent and that Cebu Tesin Te3tile obtained the! and paid for their pre!iu!s #ithout infor!in hi! thereof. The %nsurance Co!!ission then decreed4 <*ERE:+RE, &ud !ent is hereb" rendered orderin the respondent co!pan" to pa" co!plainant the su! of P.00,000.00 #ith le al interest fro! the ti!e the co!plaint #as filed until full" satisfied plus the a!ount of P.0,000.00 as attorne"5s
12

fees. <ith costs. The co!pulsor" counterclai! of respondent is hereb" dis!issed. %ts !otion for the reconsideration of the decision 9 havin been denied b" the %nsurance Co!!ission in its resolution of 20 Au ust .//8, 1& the private respondent appealed to the Court of Appeals b" #a" of a petition for revie#. The petition #as doc2eted as CA7C.R. 'P No. 8./.B. %n its decision of 2/ Aece!ber .//8, 11 the Court of Appeals reversed the decision of the %nsurance Co!!ission because it found that the petitioner 2ne# of the e3istence of the t#o other policies issued b" the P:%C. %t said4 %t is apparent fro! the face of :ire Polic" CA 2?.9BD:ire Polic" No. 2?.99 that the insurance #as ta2en in the na!e of private respondent Hpetitioner hereinI. The polic" states that ;A%'C+GNT MART =MR. ARMANA+ CEAC+N%A, PR+P@; #as the assured and that ;TE'%NC TEJT%$E'; H#asI onl" the !ort a ee of the oods. %n addition, the pre!iu!s on both policies #ere paid for b" private respondent, not b" the Tesin Te3tiles #hich is alle ed to have ta2en out the other insurance #ithout the 2no#led e of private respondent. This is sho#n b" Pre!iu! %nvoices nos. 9BB82 and 9BB80. =Anne3es M and N@. %n both invoices, Tesin Te3tiles is indicated to be onl" the !ort a ee of the oods insured but the part" to #hich the" #ere issued

#ere the ;A%'C+GNT MART =MR. ARMANA+ CEAC+N%A@.; %n is clear that it #as the private respondent Hpetitioner hereinI #ho too2 out the policies on the sa!e propert" sub&ect of the insurance #ith petitioner. *ence, in failin to disclose the e3istence of these insurances private respondent violated Condition No. 8 of :ire Polic" No. .9B2. . . . %ndeed private respondent5s alle ation of lac2 of 2no#led e of the provisions insurances is belied b" his letter to petitioner Hof .? ,anuar" .//.. The bod" of the letter reads as follo#s6I 333333333 Please be infor!ed that % have no 2no#led e of the provision re0uirin !e to infor! "our office about !" prior insurance under :CA7 2?.9B and :7CEB729>-?. Kour representative did not !ention about said re0uire!ent at the ti!e he #as convincin !e to insure #ith "ou. %f he onl" die or even in0uired if % had other e3istin policies coverin !" establish!ent, % #ould have told hi! so. Kou #ill note that at the ti!e he tal2ed to !e until % decided to insure #ith "our co!pan" the t#o policies
13

afore!entioned #ere alread" in effect. Therefore % #ould have no reason to #ithhold such infor!ation and % #ould have desisted to part #ith !" hard earned peso to pa" the insurance pre!iu!s HifI % 2no# % could not recover an"thin . 'ir, % a! onl" an ordinar" business!an interested in protectin !" invest!ents. The actual value of !" stoc2s da!a ed b" the fire #as esti!ated b" the Police Aepart!ent to be P.,000,000.00 =Please see 3ero3 cop" of Police Report Anne3 ;A;@. M" %nco!e 'tate!ent as of Aece!ber 8., ./?/ or five !onths before the fire, sho#s !" !erchandise inventor" #as alread" so!e P-/-,9--.>-. . . . These #ill support !" clai! that the a!ount clai!ed under the three policies are !uch belo# the value of !" stoc2s lost. 333333333 The letter contradicts private respondent5s pretension that he did not 2no# that there #ere other insurances ta2en on the stoc27

in7trade and seriousl" puts in 0uestion his credibilit". *is !otion to reconsider the adverse decision havin been denied, the petitioner filed the instant petition. *e contends therein that the Court of Appeals acted #ith rave abuse of discretion a!ountin to lac2 or e3cess of &urisdiction4 A E . . . <*EN %T RE1ER'EA T*E :%NA%NC' +: :ACT' +: T*E %N'GRANCE C+MM%''%+N, A FGA'%7 ,GA%C%A$ B+AK C*ARCEA <%T* T*E AGTK +: AETERM%N%NC %N'GRANCE C$A%M ANA <*+'E AEC%'%+N %' ACC+RAEA RE'PECT ANA E1EN :%NA$%TK BK T*E C+GRT'6 B E . . . <*EN %T C+N'%AEREA A' E1%AENCE MATTER' <*%C* <ERE N+T PRE'ENTEA A' E1%AENCE AGR%NC T*E *EAR%NC +R TR%A$6 ANA C E . . . <*EN %T A%'M%''EA T*E C$A%M +: T*E PET%T%+NER *ERE%N ACA%N'T T*E PR%1ATE RE'P+NAENT. The chief issues that crop up fro! the first and third rounds are =a@ #hether the petitioner had prior 2no#led e of the t#o insurance policies issued b" the P:%C #hen he obtained the fire insurance polic" fro! the private respondent, thereb", for not disclosin such fact, violatin Condition 8 of the polic", and =b@ if he had, #hether he is precluded fro! recoverin therefro!. The second round, #hich is based on the Court of Appeals5 reliance on the petitioner5s letter of reconsideration of .? ,anuar" .//., is #ithout !erit. The petitioner clai!s that the said letter #as not offered in
14

evidence and thus should not have been considered in decidin the case. *o#ever, as correctl" pointed out b" the Court of Appeals, a cop" of this letter #as attached to the petitioner5s co!plaint in %.C. Case No. 8990 as Anne3 ;M; thereof and !ade integral part of the co!plaint.1* %t has attained the status of a &udicial ad!ission and since its due e3ecution and authenticit" #as not denied b" the other part", the petitioner is bound b" it even if it #ere not introduced as an independent evidence. 1, As to the first issue, the %nsurance Co!!ission found that the petitioner had no 2no#led e of the previous t#o policies. The Court of Appeals disa reed and found other#ise in vie# of the e3plicit ad!ission b" the petitioner in his letter to the private respondent of .? ,anuar" .//., #hich #as 0uoted in the challen ed decision of the Court of Appeals. These diver ent findin s of fact constitute an e3ception to the eneral rule that in petitions for revie# under Rule 9-, onl" 0uestions of la# are involved and findin s of fact b" the Court of Appeals are conclusive and bindin upon this Court. 1<e a ree #ith the Court of Appeals that the petitioner 2ne# of the prior policies issued b" the P:%C. *is letter of .? ,anuar" .//. to the private respondent conclusivel" proves this 2no#led e. *is testi!on" to the contrar" before the %nsurance Co!!issioner and #hich the latter relied upon cannot prevail over a #ritten ad!ission !ade ante litem motam. %t #as, indeed, incredible that he did not 2no# about the prior policies since these policies #ere not ne# or ori inal. Polic" No. CA72?.99 #as a rene#al of Polic" No. :729>-?, #hile Polic" No. CA7 2?.9B had been rene#ed t#ice, the previous polic" bein :729>/2.

Condition 8 of the private respondent5s Polic" No. :7 .9B22 is a condition #hich is not proscribed b" la#. %ts incorporation in the polic" is allo#ed b" 'ection >- of the %nsurance Code15 #hich provides that ;HaI polic" !a" declare that a violation of specified provisions thereof shall avoid it, other#ise the breach of an i!!aterial provision does not avoid the polic".; 'uch a condition is a provision #hich invariabl" appears in fire insurance policies and is intended to prevent an increase in the !oral ha(ard. %t is co!!onl" 2no#n as the additional or ;other insurance; clause and has been upheld as valid and as a #arrant" that no other insurance e3ists. %ts violation #ould thus avoid the polic". 16 *o#ever, in order to constitute a violation, the other insurance !ust be upon sa!e sub&ect !atter, the sa!e interest therein, and the sa!e ris2. 1' As to a !ort a ed propert", the !ort a or and the !ort a ee have each an independent insurable interest therein and both interests !a" be one polic", or each !a" ta2e out a separate polic" coverin his interest, either at the sa!e or at separate ti!es. 18 The !ort a or5s insurable interest covers the full value of the !ort a ed propert", even thou h the !ort a e debt is e0uivalent to the full value of the propert". 19 The !ort a ee5s insurable interest is to the e3tent of the debt, since the propert" is relied upon as securit" thereof, and in insurin he is not insurin the propert" but his interest or lien thereon. *is insurable interest is prima facie the value !ort a ed and e3tends onl" to the a!ount of the debt, not e3ceedin the value of the !ort a ed propert". *& Thus, separate insurances coverin different insurable interests !a" be obtained b" the !ort a or and the !ort a ee.
15

A !ort a or !a", ho#ever, ta2e out insurance for the benefit of the !ort a ee, #hich is the usual practice. The !ort a ee !a" be !ade the beneficial pa"ee in several #a"s. *e !a" beco!e the assi nee of the polic" #ith the consent of the insurer6 or the !ere pled ee #ithout such consent6 or the ori inal polic" !a" contain a !ort a e clause6 or a rider !a2in the polic" pa"able to the !ort a ee ;as his interest !a" appear; !a" be attached6 or a ;standard !ort a e clause,; containin a collateral independent contract bet#een the !ort a ee and insurer, !a" be attached6 or the polic", thou h b" its ter!s pa"able absolutel" to the !ort a or, !a" have been procured b" a !ort a or under a contract dut" to insure for the !ort a ee5s benefit, in #hich case the !ort a ee ac0uires an e0uitable lien upon the proceeds.
*1

%n the polic" obtained b" the !ort a or #ith loss pa"able clause in favor of the !ort a ee as his interest !a" appear, the !ort a ee is onl" a beneficiar" under the contract, and reco ni(ed as such b" the insurer but not !ade a part" to the contract hi!self. *ence, an" act of the !ort a or #hich defeats his ri ht #ill also defeat the ri ht of the !ort a ee. ** This 2ind of polic" covers onl" such interest as the !ort a ee has at the issuin of the polic". *, +n the other hand, a !ort a ee !a" also procure a polic" as a contractin part" in accordance #ith the ter!s of an a ree!ent b" #hich the !ort a or is to pa" the pre!iu!s upon such insurance. *- %t has been noted, ho#ever, that althou h the !ort a ee is hi!self the insured, as #here he applies for a polic", full" infor!s the authori(ed a ent of his interest, pa"s the pre!iu!s, and obtains on the assurance that it insures hi!, the polic" is

in fact in the for! used to insure a !ort a or #ith loss pa"able clause. *5 The fire insurance policies issued b" the P:%C na!e the petitioner as the assured and contain a !ort a e clause #hich reads4 $oss, if an", shall be pa"able to ME''R'. TE'%NC TEJT%$E', Cebu Cit" as their interest !a" appear sub&ect to the ter!s of this polic". This is clearl" a si!ple loss pa"able clause, not a standard !ort a e clause. %t !ust, ho#ever, be underscored that unli2e the ;other insurance; clauses involved in "eneral Insurance and #urety Corp. vs. $g %ua*6 or in Pioneer Insurance & #urety Corp. vs. 'ap, *' #hich read4 The insured shall ive notice to the co!pan" of an" insurance or insurances alread" effected, or #hich !a" subse0uentl" be effected coverin an" of the propert" hereb" insured, and unless such notice be iven and the particulars of such insurance or insurances be stated in or endorsed on this Polic" b" or on behalf of the Co!pan" before the occurrence of an" loss or da!a e, all benefits under this Polic" shall be forfeited. or in the ./80 case of #anta (na vs. Commercial )nion (ssurance Co. *8 #hich provided ;that an" outstandin insurance upon the #hole or a portion of the ob&ects thereb" assured !ust be declared b" the insured in #ritin and he !ust cause the co!pan" to add or insert it in the polic", #ithout #hich such
16

polic" shall be null and void, and the insured #ill not be entitled to inde!nit" in case of loss,; Condition * in the private respondent5s polic" No. :7.9B22 does not absolutel" declare void an" violation thereof. %t e3pressl" provides that the condition ;shall not appl" #hen the total insurance or insurances in force at the ti!e of the loss or da!a e is not !ore than P200,000.00.; %t is a cardinal rule on insurance that a polic" or insurance contract is to be interpreted liberall" in favor of the insured and strictl" a ainst the co!pan", the reason bein , undoubtedl", to afford the reatest protection #hich the insured #as endeavorin to secure #hen he applied for insurance. %t is also a cardinal principle of la# that forfeitures are not favored and that an" construction #hich #ould result in the forfeiture of the polic" benefits for the person clai!in thereunder, #ill be avoided, if it is possible to construe the polic" in a !anner #hich #ould per!it recover", as, for e3a!ple, b" findin a #aiver for such forfeiture. *9 'tated differentl", provisions, conditions or e3ceptions in policies #hich tend to #or2 a forfeiture of insurance policies should be construed !ost strictl" a ainst those for #hose benefits the" are inserted, and !ost favorabl" to#ard those a ainst #ho! the" are intended to operate. ,& The reason for this is that, e3cept for riders #hich !a" later be inserted, the insured sees the contract alread" in its final for! and has had no voice in the selection or arran e!ent of the #ords e!plo"ed therein. +n the other hand, the lan ua e of the contract #as carefull" chosen and deliberated upon b" e3perts and le al advisers #ho had acted e3clusivel" in the interest of the insurers and the technical lan ua e

e!plo"ed therein is rarel" understood b" ordinar" la"!en. ,1 <ith these principles in !ind, #e are of the opinion that Condition 8 of the sub&ect polic" is not totall" free fro! a!bi uit" and !ust, perforce, be !eticulousl" anal"(ed. 'uch anal"sis leads us to conclude that =a@ the prohibition applies onl" to double insurance, and =b@ the nullit" of the polic" shall onl" be to the e3tent e3ceedin P200,000.00 of the total policies obtained. The first conclusion is supported b" the portion of the condition referrin to other insurance ;coverin an" of the propert" or properties consistin of stoc2s in trade, oods in process andDor inventories onl" hereb" insured,; and the portion re ardin the insured5s declaration on the subheadin C+7%N'GRANCE that the co7insurer is Mercantile %nsurance Co., %nc. in the su! of P-0,000.00. A double insurance e3ists #here the sa!e person is insured b" several insurers separatel" in respect of the sa!e sub&ect and interest. As earlier stated, the insurable interests of a !ort a or and a !ort a ee on the !ort a ed propert" are distinct and separate. 'ince the t#o policies of the P:%C do not cover the sa!e interest as that covered b" the polic" of the private respondent, no double insurance e3ists. The non7disclosure then of the for!er policies #as not fatal to the petitioner5s ri ht to recover on the private respondent5s polic". :urther!ore, b" statin #ithin Condition 8 itself that such condition shall not appl" if the total insurance in force at the ti!e of loss does not e3ceed P200,000.00, the private respondent #as a!enable to assu!e a co7 insurer5s liabilit" up to a loss not e3ceedin P200,000.00. <hat it had in !ind #as to discoura e over7insurance. %ndeed, the rationale behind the incorporation of ;other
17

insurance; clause in fire policies is to prevent over7 insurance and thus avert the perpetration of fraud. <hen a propert" o#ner obtains insurance policies fro! t#o or !ore insurers in a total a!ount that e3ceeds the propert"5s value, the insured !a" have an induce!ent to destro" the propert" for the purpose of collectin the insurance. The public as #ell as the insurer is interested in preventin a situation in #hich a fire #ould be profitable to the insured. ,* <*ERE:+RE, the instant petition is hereb" CRANTEA. The decision of the Court of Appeals in CA7C.R. 'P No. 8./.B is 'ET A'%AE and the decision of the %nsurance Co!!ission in Case No. 8890 is RE%N'TATEA. Costs a ainst private respondent Countr" Ban2ers %nsurance Corporation. '+ +RAEREA.

G.R. No. 115*'8 M!0 *,, 1995 ORTUNE INSURANCE AND SURET3 CO., INC., petitioner, vs. COURT O APPEALS !"# PRODUCERS %AN4 O T$E P$ILIPPINES, respondents. DAVIDE, +R., J.: The funda!ental le al issue raised in this petition for revie# on certiorari is #hether the petitioner is liable

under the Mone", 'ecurit", and Pa"roll Robber" polic" it issued to the private respondent or #hether recover" thereunder is precluded under the eneral e3ceptions clause thereof. Both the trial court and the Court of Appeals held that there should be recover". The petitioner contends other#ise. This case be an #ith the filin #ith the Re ional Trial Court =RTC@ of Ma2ati, Metro Manila, b" private respondent Producers Ban2 of the Philippines =hereinafter Producers@ a ainst petitioner :ortune %nsurance and 'uret" Co., %nc. =hereinafter :ortune@ of a co!plaint for recover" of the su! of P>2-,000.00 under the polic" issued b" :ortune. The su! #as alle edl" lost durin a robber" of Producer5s ar!ored vehicle #hile it #as in transit to transfer the !one" fro! its Pasa" Cit" Branch to its head office in Ma2ati. The case #as doc2eted as Civil Case No. .?.> and assi ned to Branch .9B thereof. After &oinder of issues, the parties as2ed the trial court to render &ud !ent based on the follo#in stipulation of facts4 .. The plaintiff #as insured b" the defendants and an insurance polic" #as issued, the duplicate ori inal of #hich is hereto attached as E3hibit ;A;6 2. An ar!ored car of the plaintiff, #hile in the process of transferrin cash in the su! of P>2-,000.00 under the custod" of its teller, MaribethAla!pa", fro! its
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Pasa" Branch to its *ead +ffice at ?>8> Paseo de Ro3as, Ma2ati, Metro Manila on ,une 2/, ./?>, #as robbed of the said cash. The robber" too2 place #hile the ar!ored car #as travelin alon Taft Avenue in Pasa" Cit"6 8. The said ar!ored car #as driven b" Ben&a!in Ma alon K de 1era, escorted b" 'ecurit" Cuard 'aturninoAti a K Rosete. Ariver Ma alon #as assi ned b" PRC Mana e!ent '"ste!s #ith the plaintiff b" virtue of an A ree!ent e3ecuted on Au ust >, ./?8, a duplicate ori inal cop" of #hich is hereto attached as E3hibit ;B;6 9. The 'ecurit" Cuard Ati a #as assi ned b" Gnicorn 'ecurit" 'ervices, %nc. #ith the plaintiff b" virtue of a contract of 'ecurit" 'ervice e3ecuted on +ctober 2-, ./?2, a duplicate ori inal cop" of #hich is hereto attached as E3hibit ;C;6 -. After an investi ation conducted b" the Pasa" police authorities, the driver

Ma alon and uard Ati a #ere char ed, to ether #ith Edel!erBanti ue K Eulalio, Re"naldo A0uino and ,ohn Aoe, #ith violation of P.A. -82 =Anti7*i h#a" Robber" $a#@ before the :iscal of Pasa" Cit". A cop" of the co!plaint is hereto attached as E3hibit ;A;6 B. The :iscal of Pasa" Cit" then filed an infor!ation char in the aforesaid persons #ith the said cri!e before Branch ..2 of the Re ional Trial Court of Pasa" Cit". A cop" of the said infor!ation is hereto attached as E3hibit ;E.; The case is still bein tried as of this date6 >. Ae!ands #ere !ade b" the plaintiff upon the defendant to pa" the a!ount of the loss of P>2-,000.00, but the latter refused to pa" as the loss is e3cluded fro! the covera e of the insurance polic", attached hereto as E3hibit ;A,; specificall" under pa e . thereof, ;Ceneral E3ceptions; 'ection =b@, #hich is !ar2ed as E3hibit ;A7.,; and #hich reads as follo#s4
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CENERA$ EJCEPT%+N' The co!pan" shall not be liable under this polic" in report of 333333333 =b@ an" loss caused b" an" dishonest, fraudulent or cri!inal act of the insured or an" officer, employee, partner, director, trustee or authorized representative of the %nsured #hether actin alone or in con&unction #ith others. . . . ?. The plaintiff opposes the contention of the defendant and contends that Ati a and Ma alon are not its ;officer, e!plo"ee, . . . trustee or authori(ed representative . . . at the ti!e of the robber". 1 +n 2B April .//0, the trial court rendered its decision in favor of Producers. The dispositive portion thereof reads as follo#s4

<*ERE:+RE, pre!ises considered, the Court finds for plaintiff and a ainst defendant, and =a@ orders defendant to pa" plaintiff the net a!ount of P-90,000.00 as liabilit" under Polic" No. 020> =as !iti ated b" the P90,000.00 special clause deduction and b" the recovered su! of P.9-,000.00@, #ith interest thereon at the le al rate, until full" paid6 =b@ orders defendant to pa" plaintiff the su! of P80,000.00 as and for attorne"5s fees6 and =c@ orders defendant to pa" costs of suit. All other clai!s and counterclai!s are accordin l" dis!issed forth#ith.
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'+ +RAEREA.* The trial court ruled that Ma alon and Ati a #ere not e!plo"ees or representatives of Producers. %t 'aid4 The Court is satisfied that plaintiff !a" not be said to have selected and en a ed Ma alon and Ati a, their services as ar!ored car driver and as securit" uard havin been !erel" offered b" PRC Mana e!ent and b" Gnicorn 'ecurit" and #hich latter fir!s assi ned the! to plaintiff. The #a es and salaries of both Ma alon and Ati a are presu!abl" paid b" their respective fir!s, #hich alone #ields the po#er to dis!iss the!. Ma alon and Ati a are assi ned to plaintiff in fulfill!ent of a ree!ents to provide drivin services and propert" protection as such E in a conte3t #hich does not i!press the Court as translatin into plaintiff5s po#er to control the conduct of an" assi ned driver or securit" uard, be"ond perhaps entitlin plaintiff to re0uest are replace!ent for such driver uard. The findin is accordin l" co!pelled that neither Ma alon nor Ati a #ere plaintiff5s ;e!plo"ees; in avoidance of defendant5s liabilit" under the polic", particularl" the eneral e3ceptions therein e!bodied. Neither is the Court prepared to accept the proposition that driver Ma alon and uard Ati a #ere the ;authori(ed representatives; of plaintiff. The" #ere !erel" an assi ned ar!ored car driver and securit" uard,

respectivel", for the ,une 2/, ./?> !one" transfer fro! plaintiff5s Pasa" Branch to its Ma2ati *ead +ffice. Fuite plainl" E it #as teller MaribethAla!pa" #ho had ;custod"; of the P>2-,000.00 cash bein transferred alon a specified !one" route, and hence plaintiff5s then desi nated ;!essen er; adverted to in the polic". , :ortune appealed this decision to the Court of Appeals #hich doc2eted the case as CA7C.R. C1 No. 82/9B. %n its decision - pro!ul ated on 8 Ma" .//9, it affir!ed in totothe appealed decision. The Court of Appeals a reed #ith the conclusion of the trial court that Ma alon and Ati a #ere neither e!plo"ees nor authori(ed representatives of Producers and ratiocinated as follo#s4 A polic" or contract of insurance is to be construed liberall" in favor of the insured and strictl" a ainst the insurance co!pan" =Ne# $ife Enterprises vs. Court of Appeals, 20> 'CRA BB/6 'un %nsurance +ffice, $td. vs. Court of Appeals, 2.. 'CRA --9@. Contracts of insurance, li2e other contracts, are to be construed accordin to the sense and !eanin of the ter!s #hich the parties the!selves have used. %f such ter!s are clear and una!bi uous, the" !ust be ta2en and understood in their plain, ordinar" and popular sense =Ne# $ife Enterprises Case, supra, p. B>B6 'un %nsurance +ffice, $td. vs. Court of Appeals, ./- 'CRA ./8@. The lan ua e used b" defendant7appellant in the above 0uoted stipulation is plain,
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ordinar" and si!ple. No other interpretation is necessar". The #ord ;e!plo"ee; !ust be ta2en to !ean in the ordinar" sense. The $abor Code is a special la# specificall" dealin #ithDand specificall" desi ned to protect labor and therefore its definition as to e!plo"er7e!plo"ee relationships insofar as the applicationDenforce!ent of said Code is concerned !ust necessaril" be inapplicable to an insurance contract #hich defendant7appellant itself had for!ulated. *ad it intended to appl" the $abor Code in definin #hat the #ord ;e!plo"ee; refers to, it !ustDshould have so stated e3pressl" in the insurance polic". 'aid driver and securit" uard cannot be considered as e!plo"ees of plaintiff7 appellee ban2 because it has no po#er to hire or to dis!iss said driver and securit" uard under the contracts =E3hs. ? and C@ e3cept onl" to as2 for their replace!ents fro! the contractors. 5 +n 20 ,une .//9, :ortune filed this petition for revie# on certiorari. %t alle es that the trial court and the Court of Appeals erred in holdin it liable under the insurance polic" because the loss falls #ithin the eneral e3ceptions clause considerin that driver Ma alon and securit" uard Ati a #ere Producers5 authori(ed representatives or e!plo"ees in the transfer of the !one" and pa"roll fro! its branch office in Pasa" Cit" to its head office in Ma2ati. Accordin to :ortune, #hen Producers co!!issioned a uard and a driver to transfer its funds fro! one branch

to another, the" effectivel" and necessaril" beca!e its authori(ed representatives in the care and custod" of the !one". Assu!in that the" could not be considered authori(ed representatives, the" #ere, nevertheless, e!plo"ees of Producers. %t asserts that the e3istence of an e!plo"er7e!plo"ee relationship ;is deter!ined b" la# and bein such, it cannot be the sub&ect of a ree!ent.; Thus, if there #as in realit" an e!plo"er7e!plo"ee relationship bet#een Producers, on the one hand, and Ma alon and Ati a, on the other, the provisions in the contracts of Producers #ith PRC Mana e!ent '"ste! for Ma alon and #ith Gnicorn 'ecurit" 'ervices for Ati a #hich state that Producers is not their e!plo"er and that it is absolved fro! an" liabilit" as an e!plo"er, #ould not obliterate the relationship. :ortune points out that an e!plo"er7e!plo"ee relationship depends upon four standards4 =.@ the !anner of selection and en a e!ent of the putative e!plo"ee6 =2@ the !ode of pa"!ent of #a es6 =8@ the presence or absence of a po#er to dis!iss6 and =9@ the presence and absence of a po#er to control the putative e!plo"ee5s conduct. +f the four, the ri ht7of7control test has been held to be the decisive factor. 6 %t asserts that the po#er of control over Ma alon and Ati a #as vested in and e3ercised b" Producers. :ortune further insists that PRC Mana e!ent '"ste! and Gnicorn 'ecurit" 'ervices are but ;labor7onl"; contractors under Article .0B of the $abor Code #hich provides4 Art. .0B. Contractor or subcontractor. E There is ;labor7onl"; contractin #here the person suppl"in #or2ers to an e!plo"er does not have substantial capital or invest!ent in the for! of tools, e0uip!ent,
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!achineries, #or2 pre!ises, a!on others, and the #or2ers recruited and placed b" such persons are perfor!in activities #hich are directl" related to the principal business of such e!plo"er. %n such cases, the person or inter!ediar" shall be considered !erel" as an a ent of the e!plo"er #ho shall be responsible to the #or2ers in the sa!e !anner and e3tent as if the latter #ere directl" e!plo"ed b" hi!. :ortune thus contends that Ma alon and Ati a #ere e!plo"ees of Producers, follo#in the rulin in International +imber Corp. vs. $,-C' that a findin that a contractor is a ;labor7onl"; contractor is e0uivalent to a findin that there is an e!plo"er7e!plo"ee relationship bet#een the o#ner of the pro&ect and the e!plo"ees of the ;labor7onl"; contractor. +n the other hand, Producers contends that Ma alon and Ati a #ere not its e!plo"ees since it had nothin to do #ith their selection and en a e!ent, the pa"!ent of their #a es, their dis!issal, and the control of their conduct. Producers ar ued that the rule in International +imber Corp. is not applicable to all cases but onl" #hen it beco!es necessar" to prevent an" violation or circu!vention of the $abor Code, a social le islation #hose provisions !a" set aside contracts entered into b" parties in order to ive protection to the #or2in !an. Producers further asseverates that #hat should be applied is the rule in (merican President ,ines vs. Clave, 8 to #it4 %n deter!inin the e3istence of e!plo"er7 e!plo"ee relationship, the follo#in ele!ents are enerall" considered, na!el"4

=.@ the selection and en a e!ent of the e!plo"ee6 =2@ the pa"!ent of #a es6 =8@ the po#er of dis!issal6 and =9@ the po#er to control the e!plo"ee5s conduct. 'ince under Producers5 contract #ith PRC Mana e!ent '"ste!s it is the latter #hich assi ned Ma alon as the driver of Producers5 ar!ored car and #as responsible for his faithful dischar e of his duties and responsibilities, and since Producers paid the !onthl" co!pensation of P.,900.00 per driver to PRC Mana e!ent '"ste!s and not to Ma alon , it is clear that Ma alon #as not Producers5 e!plo"ee. As to Ati a, Producers relies on the provision of its contract #ith Gnicorn 'ecurit" 'ervices #hich provides that the uards of the latter ;are in no sense e!plo"ees of the C$%ENT.; There is !erit in this petition. %t should be noted that the insurance polic" entered into b" the parties is a theft or robber" insurance polic" #hich is a for! of casualt" insurance. 'ection .>9 of the %nsurance Code provides4 'ec. .>9. Casualt" insurance is insurance coverin loss or liabilit" arisin fro! accident or !ishap, e3cludin certain t"pes of loss #hich b" la# or custo! are considered as fallin e3clusivel" #ithin the scope of insurance such as fire or !arine. %t includes, but is not li!ited to, e!plo"er5s liabilit" insurance, public liabilit" insurance, !otor vehicle liabilit" insurance, plate lass insurance, burglary and theft insurance, personal accident and health insurance as #ritten b" non7life insurance co!panies,

and other substantially similar kinds of insurance. =e!phases supplied@ E3cept #ith respect to co!pulsor" !otor vehicle liabilit" insurance, the %nsurance Code contains no other provisions applicable to casualt" insurance or to robber" insurance in particular. These contracts are, therefore, overned b" the eneral provisions applicable to all t"pes of insurance. +utside of these, the ri hts and obli ations of the parties !ust be deter!ined b" the ter!s of their contract, ta2in into consideration its purpose and al#a"s in accordance #ith the eneral principles of insurance la#. 9 %t has been aptl" observed that in bur lar", robber", and theft insurance, ;the opportunit" to defraud the insurer E the !oral ha(ard E is so reat that insurers have found it necessar" to fill up their policies #ith countless restrictions, !an" desi ned to reduce this ha(ard. 'eldo! does the insurer assu!e the ris2 of all losses due to the ha(ards insured a ainst.; 1& Persons fre0uentl" e3cluded under such provisions are those in the insured5s service and e!plo"!ent. 11 The purpose of the e3ception is to uard a ainst liabilit" should the theft be co!!itted b" one havin unrestricted access to the propert". 1* %n such cases, the ter!s specif"in the e3cluded classes are to be iven their !eanin as understood in co!!on speech. 1, The ter!s ;service; and ;e!plo"!ent; are enerall" associated #ith the idea of selection, control, and co!pensation. 1A contract of insurance is a contract of adhesion, thus an" a!bi uit" therein should be resolved a ainst the insurer, 15or it should be construed liberall" in favor of the insured and strictl" a ainst the insurer. 16 $i!itations of liabilit" should be re arded #ith e3tre!e &ealous" and
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!ust be construed in such a #a", as to preclude the insurer fro! non7 co!pliance #ith its obli ation. 1' %t oes #ithout sa"in then that if the ter!s of the contract are clear and una!bi uous, there is no roo! for construction and such ter!s cannot be enlar ed or di!inished b" &udicial construction. 18 An insurance contract is a contract of inde!nit" upon the ter!s and conditions specified therein. 19 %t is settled that the ter!s of the polic" constitute the !easure of the insurer5s liabilit". *& %n the absence of statutor" prohibition to the contrar", insurance co!panies have the sa!e ri hts as individuals to li!it their liabilit" and to i!pose #hatever conditions the" dee! best upon their obli ations not inconsistent #ith public polic". <ith the fore oin principles in !ind, it !a" no# be as2ed #hether Ma alon and Ati a 0ualif" as e!plo"ees or authori(ed representatives of Producers under para raph =b@ of the eneral e3ceptions clause of the polic" #hich, for eas" reference, is a ain 0uoted4 CENERA$ EJCEPT%+N' The co!pan" shall not be liable under this polic" in respect of 333333333 =b@ an" loss caused b" an" dishonest, fraudulent or cri!inal act of the insured or an" officer, employee, partner, director, trustee or authorized representative of the %nsured #hether actin alone or in con&unction #ith others. . . . =e!phases supplied@
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There is !ar2ed disa ree!ent bet#een the parties on the correct !eanin of the ter!s ;e!plo"ee; and ;authori(ed representatives.; %t is clear to us that insofar as :ortune is concerned, it #as its intention to e3clude and e3e!pt fro! protection and covera e losses arisin fro! dishonest, fraudulent, or cri!inal acts of persons ranted or havin unrestricted access to Producers5 !one" or pa"roll. <hen it used then the ter! ;e!plo"ee,; it !ust have had in !ind an" person #ho 0ualifies as such as enerall" and universall" understood, or &urisprudentiall" established in the li ht of the four standards in the deter!ination of the e!plo"er7 e!plo"ee relationship, *1 or as statutoril" declared even in a li!ited sense as in the case of Article .0B of the $abor Code #hich considers the e!plo"ees under a ;labor7onl"; contract as e!plo"ees of the part" e!plo"in the! and not of the part" #ho supplied the! to the e!plo"er. ** :ortune clai!s that Producers5 contracts #ith PRC Mana e!ent '"ste!s and Gnicorn 'ecurit" 'ervices are ;labor7onl"; contracts. Producers, ho#ever, insists that b" the e3press ter!s thereof, it is not the e!plo"er of Ma alon . Not#ithstandin such e3press assu!ption of PRC Mana e!ent '"ste!s and Gnicorn 'ecurit" 'ervices that the drivers and the securit" uards each shall suppl" to Producers are not the latter5s e!plo"ees, it !a", in fact, be that it is because the contracts are, indeed, ;labor7onl"; contracts. <hether the" are is, in the li ht of the criteria provided for in Article .0B of the $abor Code, a 0uestion of fact. 'ince the parties opted to sub!it the case for &ud !ent on the basis of their

stipulation of facts #hich are strictl" li!ited to the insurance polic", the contracts #ith PRC Mana e!ent '"ste!s and Gnicorn 'ecurit" 'ervices, the co!plaint for violation of P.A. No. -82, and the infor!ation therefor filed b" the Cit" :iscal of Pasa" Cit", there is a paucit" of evidence as to #hether the contracts bet#een Producers and PRC Mana e!ent '"ste!s and Gnicorn 'ecurit" 'ervices are ;labor7onl"; contracts. But even rantin for the sa2e of ar u!ent that these contracts #ere not ;labor7onl"; contracts, and PRC Mana e!ent '"ste!s and Gnicorn 'ecurit" 'ervices #ere trul" independent contractors, #e are satisfied that Ma alon and Ati a #ere, in respect of the transfer of Producer5s !one" fro! its Pasa" Cit" branch to its head office in Ma2ati, its ;authori(ed representatives; #ho served as such #ith its teller MaribethAla!pa". *o#soever vie#ed, Producers entrusted the three #ith the specific dut" to safel" transfer the !one" to its head office, #ith Ala!pa" to be responsible for its custod" in transit6 Ma alon to drive the ar!ored vehicle #hich #ould carr" the !one"6 and Ati a to provide the needed securit" for the !one", the vehicle, and his t#o other co!panions. %n short, for these particular tas2s, the three acted as a ents of Producers. A ;representative; is defined as one #ho represents or stands in the place of another6 one #ho represents others or another in a special capacit", as an a ent, and is interchan eable #ith ;a ent.; *, %n vie# of the fore oin , :ortune is e3e!pt fro! liabilit" under the eneral e3ceptions clause of the insurance polic".

<*ERE:+RE , the instant petition is hereb" CRANTEA. The decision of the Court of Appeals in CA7C.R. C1 No. 82/9B dated 8 Ma" .//9 as #ell as that of Branch .9B of the Re ional Trial Court of Ma2ati in Civil Case No. .?.> are RE1ER'EA and 'ET A'%AE. The co!plaint in Civil Case No. .?.> is A%'M%''EA. No pronounce!ent as to costs.

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