INSURANCE – CLASSES OF INSURANCE

I. MARINE INSURANCE

Cathay Insurance Co. v. Court of Appeals and REMINGTON INDUSTRIAL SALES CORPORATION,
G.R. No. 76145, [June 30, 1987]

FACTS:
Originally, this was a complaint filed by private respondent corporation against petitioner (then defendant) company
seeking collection of the sum of P868,339.15 representing private respondent's losses and damages incurred in a
shipment of seamless steel pipes under an insurance contract in favor of the said private respondent as the insured,
consignee or importer of aforesaid merchandise while in transit from Japan to the Philippines on board vessel SS
"Eastern Mariner." The total value of the shipment was P2,894,463.83 at the prevailing rate of P7.95 to a dollar in
June and July 1984, when the shipment was made.
Ruling of the Trial Court
The trial court decided in favor of private respondent corporation by ordering petitioner to pay it the sum of
P866,339.15 as its recoverable insured loss equivalent to 30% of the value of the seamless steel pipes;

Respondent in its comment on the petition, contends that: (Remington)

1. Coverage of private respondent's loss under the insurance policy issued by petitioner is unmistakable.
2. Alleged contractual limitations contained in insurance policies are regarded with extreme caution by courts and are
to be strictly construed against the insurer; obscure phrases and exceptions should not be allowed to defeat the very
purpose for which the policy was procured.
3. Rust is not an inherent vice of the seamless steel pipes without interference of external factors.
4. No matter how petitioner might want it otherwise, the 15-day clause of the policy had been foreclosed in the pre-
trial order and it was not even raised in petitioner's answer to private respondent's complaint.
5. The decision was correct in not holding that the heavy rusting of the seamless steel pipes did not occur during the
voyage of 7 days from July 1 to July 7, 1981.
6. The alleged lack of supposed bad order survey from the arrastre capitalized on by petitioner was more than clarified
by no less than 2 witnesses.
7. The placing of notation "rusty" in the way bills is not only private respondent's right but a natural and spontaneous
reaction of whoever received the seamless steel pipes in a rusty condition at private respondent's bodega.

8. XXX
9. XXX
The petitioner however maintains that: (Cathay)
(1) Private respondent does not dispute the fact that, contrary to the finding of the respondent Court (that petitioner
has failed "to present any evidence of any viable exception to the application of the policy") there is in fact an express
exception to the application of the policy.
(2) As adverted to in the Petition for Review, private respondent has admitted that the questioned shipment is
not covered by a "square provision of the contract," but private respondent claims implied coverage from the phrase
"perils of the sea" mentioned in the opening sentence of the policy.
(3) The insistence of private respondent that rusting is a peril of the sea is erroneous.
(4) Private respondent inaccurately invokes the rule of strict construction against insurer under the guise of
construction in order to impart a non-existing ambiguity or doubt into the policy so as to resolve it against the
insurer.
(5) Private respondent while impliedly admitting that a loss occasioned by an inherent defect or vice in the insured
article is not within the terms of the policy, erroneously insists that rusting is not an inherent vice or in the nature of
steel pipes.
(6) Rusting is not a risk insured against, since a risk to be insured against should be a casualty or
some casualty, something which could not be foreseen as one of the necessary incidents of
adventure.
 INSURANCE – CLASSES OF INSURANCE

(7) A fact capable of unquestionable demonstration or of public knowledge needs no evidence. This fact of
unquestionable demonstration or of public knowledge is that heavy rusting of steel or iron pipes cannot occur within
a period of a seven (7) day voyage. Besides, petitioner had introduced the clear cargo receipts or tally sheets indicating
that there was no damage on the steel pipes during the voyage.
(8) The evidence of private respondent betrays the fact that the account of P868,339.15 awarded by the respondent
Court is founded on speculation, surmises or conjectures and the amount of less has not been proven by competent,
satisfactory and clear evidence.
ISSUE: Whether Cathay Insurance Company is liable (YES)

RULING:
We find no merit in this petition.
There is no question that the rusting of steel pipes in the course of a voyage is a "peril of the sea" in view of the toll on
the cargo of wind, water, and salt conditions. At any rate if the insurer cannot be held accountable therefor, we would
fail to observe a cardinal rule in the interpretation of contracts, namely, that any ambiguity therein should be
construed against the maker/issuer/drafter thereof, namely, the insurer. Besides the precise purpose of insuring
cargo during a voyage would be rendered fruitless. Be it noted that any attack of the 15-day clause in the policy was
foreclosed right in the pre-trial conference.
Finally, it is a cardinal rule that save for certain exceptions, findings of facts of the appellate tribunal are binding on
us. Not one of said exceptions can apply to this case.

ISABELA ROQUE, doing busines under the name and style of Isabela Roque Timber Enterprises and
ONG CHIONG, petitioners, vs. HON. INTERMEDIATE APPELATE COURT and PIONEER INSURANCE
AND SURETY CORPORATION, respondent.
G.R. No. L-66935 November 11, 1985
FACTS:

On February 19, 1972, the Manila Bay Lighterage Corporation (Manila Bay), a common carrier, entered into
a contract with the petitioners whereby the former would load and carry on board its barge Mable 10 about 422.18
cubic meters of logs from Malampaya Sound, Palawan to North Harbor, Manila. The petitioners insured the logs
against loss for P100,000.00 with respondent Pioneer Insurance and Surety Corporation (Pioneer).

On February 29, 1972, the petitioners loaded on the barge, 811 pieces of logs at Malampaya Sound, Palawan
for carriage and delivery to North Harbor, Port of Manila, but the shipment never reached its destination because
Mable 10 sank with the 811 pieces of logs somewhere off Cabuli Point in Palawan on its way to Manila. As alleged by
the petitioners in their complaint and as found by both the trial and appellate courts, the barge where the logs were
loaded was not seaworthy such that it developed a leak. The appellate court further found that one of the hatches was
left open causing water to enter the barge and because the barge was not provided with the necessary cover or
tarpaulin, the ordinary splash of sea waves brought more water inside the barge.

On March 8, 1972, the petitioners wrote a letter to Manila Bay demanding payment of P150,000.00 for the
loss of the shipment plus P100,000.00 as unrealized profits but the latter ignored the demand. Another letter was
sent to respondent Pioneer claiming the full amount of P100,000.00 under the insurance policy but respondent
refused to pay on the ground that its hability depended upon the "Total loss by Total Loss of Vessel only". Hence,
petitioners commenced Civil Case No. 86599 against Manila Bay and respondent Pioneer.

On January 30, 1984, the appellate court modified the trial court's decision and absolved Pioneer from
liability after finding that there was a breach of implied warranty of seaworthiness on the part of the
petitioners and that the loss of the insured cargo was caused by the "perils of the ship" and not by the "perils of the
sea". It ruled that the loss is not covered by the marine insurance policy.

The petitioners maintain, that the loss of the cargo was caused by the perils of the sea, not by the perils of the
ship because as found by the trial court, the barge was turned loose from the tugboat east of Cabuli Point "where it
was buffeted by storm and waves."
 INSURANCE – CLASSES OF INSURANCE

ISSUE:

Whether the loss is covered by the marine insurance policy.

RULING:

Yes.

Section 99 of the same Code also provides in part.

Marine insurance includes:

(1) Insurance against loss of or damage to:

(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, ...

There can be no mistaking the fact that the term "cargo" can be the subject of marine insurance and that
once it is so made, the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo
whether he be the shipowner or not.

Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine
insurance, it becomes the obligation of a cargo owner to look for a reliable common carrier which keeps its vessels in
seaworthy condition. The shipper of cargo may have no control over the vessel but he has full control in the choice of
the common carrier that will transport his goods. Or the cargo owner may enter into a contract of insurance which
specifically provides that the insurer answers not only for the perils of the sea but also provides for coverage of perils
of the ship.

It is quite unmistakable that the loss of the cargo was due to the perils of the ship rather than the perils of the
sea. In the case at bar, there is no finding that the loss was occasioned by the willful or fraudulent acts of the vessel's
crew. There was only simple negligence or lack of skill.

II. FIRE INSURANCE

MALAYAN INSURANCE COMPANY, INC., vs. PAP CO., LTD. (PHIL. BRANCH)
G. R. No. 200784. August 7, 2013

FACTS:

On May 13, 1996, Malayan issued Fire Insurance Policy to PAP for the latter’s machineries and equipment
located at Sanyo Bldg., Cavite.The insurance, which was for P15 MIllion and effective for a period of one year, was
procured by PAP for RCBC, the mortgagee of the insured machineries and equipment. PAP renewed the policy before
it expired on an “as is” basis and a renewal policy was issued for the period May 13, 1997 to May 13, 1998.

On October 12, 1997, the insured property were totally lost by fire. Hence, PAP filed a fire insurance claim with
Malayan. Malayan denied the claim on Dec. 15, 1997 upon the ground that, at the time of the loss, the insured
property were transferred by PAP to a location different from that indicated in the policy. Specifically, that the
insured machineries were transferred in September 1996 from the Sanyo Building to the Pace Pacific Bldg. Contesting
the denial, PAP argued that Malayan cannot avoid liability as it was informed of the transfer by RCBC, the party duty-
bound to relay such information. However, Malayan reiterated its denial of PAP’s claim. Distraught, PAP filed the
complaint below against Malayan.

The RTC rendered a judgment in favor of PAP stating that Malayan failed to prove that the change in the
condition of the thing insured resulted in the increase of the risk insured against. Furthermore, PAP’s notice to RCBC
 INSURANCE – CLASSES OF INSURANCE

sufficiently complied with the notice requirement under the policy considering it was RCBC that procured the
insurance. Not contended Malayan appealed to the CA. CA affirmed stating that Malayan failed to show proof that
there was a prohibition on the transfer of the insured properties or that its consent was needed before carrying out
such transfer.

Malayan filed a petition for review stating PAP committed concealment, misrepresentations and breach of an
affirmative warranty under the renewal policy when it transferred the location of the insured properties without
informing it.

ISSUE:

Whether or not Malayan is liable for the insurance claim

RULING:

No. Malayan cannot be held liable for the loss of the insured properties under the insurance policy.

The original fire insurance policy expressly stated that the insured properties were in the Sanyo Bldg., that
before its expiration, the policy was renewed on an “as is” basis for another year. During the effectivity of the renewal
policy a fire broke out at the Pace Pacific Bldg (factory) which totally burned the insured properties. The renewal
policy forbade the removal of the insured properties unless sanctioned by Malayan. PAP failed to notify, and to obtain
the consent of Malayan regarding the removal. What PAP did to prove that Malayan was notified was to show that it
relayed the fact of transfer to RCBC, the entity which made the referral and the named beneficiary in the policy.
Malayan and RCBC might have been sister companies, but such fact did not make one an agent of the other. The fact
that RCBC referred PAP to Malayan did not clothe it with authority to represent and bind the said insurance
company. After the referral, PAP dealt directly with Malayan.

The transfer of the insured properties also increased the risk and due to the lack of consent from Malayan, PAP
shall bear the risk of loss. It can also be said that with the transfer of the location of the subject properties, without
notice and without Malayan’s consent, after the renewal of the policy, PAP clearly committed concealment,
misrepresentation and a breach of a material warranty as stated under Sec. 26 of the Insurance Code. Under Sec. 27
the injured party is entitled to rescind the contract.

Moreover, under Section 168 of the Insurance Code, the insurer is entitled to rescind the insurance contract in
case of an alteration in the use or condition of the thing insured. Section 168 of the Insurance Code provides, as
follows:

Section 68. An alteration in the use or condition of a thing insured from that to which it is limited by the policy
made without the consent of the insurer, by means within the control of the insured, and increasing the risks, entitles
an insurer to rescind a contract of fire insurance.

Accordingly, an insurer can exercise its right to rescind an insurance contract when the following conditions are
present, to wit:

1) the policy limits the use or condition of the thing insured;

2) there is an alteration in said use or condition;

3) the alteration is without the consent of the insurer;

 INSURANCE – CLASSES OF INSURANCE

4) the alteration is made by means within the insured’s control; and

5) the alteration increases the risk of loss.

In the case at bench, all these circumstances are present. It was clearly established that the renewal policy
stipulated that the insured properties were located at the Sanyo factory; that PAP removed the properties without the
consent of Malayan; and that the alteration of the location increased the risk of loss

III. COMPULSORY THIRD PARTY LIABILITY

PARAMOUNT INSURANCE CORPORATION, Petitioner,

vs.
SPOUSES YVES and MARIA TERESA REMONDEULAZ, Respondents.

G.R. No. 173773 November 28, 2012

Facts:

On May 26, 1994, respondents insured(Remondeulaz) with petitioner(Paramount Insurance) 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 by a certain Ricardo Sales (Sales) took possession of the subject
vehicle to add accessories and improvements thereon, however, Sales failed to return the subject vehicle within the
agreed three-day period.

As a result, Remondeulaz notified Paramount Insurance to claim for the reimbursement of their lost vehicle.
However, petitioner refused to pay. Remondeulaz lodged a complaint for a sum of money against petitioner before the
Regional Trial Court of Makati City (trial court) praying for the payment of the insured value of their car plus
damages on April 21, 1995.

RTC ruling: the trial court dismissed the complaint filed by Remondeulaz. The loss of the vehicle and claimed the
same to be covered by the policy’s provision on "Theft." Defendant disagreed and refused to pay. Remondeulaz had
successfully prosecuted and had been awarded the amount claimed in this action, in another action. This, considered
with the principle that an insured may not recover more than its interest in any property subject of an insurance,
leads the court to dismiss this action.

CA ruling: the appellate court reversed and set aside the Order issued by the trial court, to wit:

Indeed, the trial court erred when it dismissed the action on the ground of double recovery since it is clear that the
subject car is different from the one insured with another insurance company, the Standard Insurance Company. In
this case, defendant-appellee herein petitioner denied the reimbursement for the lost vehicle on the ground that the
said loss could not fall within the concept of the "theft clause" under the insurance policy

Issue: Whether Paramount Insurance is liable under the insurance policy for the loss of the vehicle?

Held: Yes.

In People v. Bustinera, 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, 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.

Records would show that respondents entrusted possession of their vehicle only to 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 through misappropriation, the fact that Sales failed to return the subject vehicle to respondents
constitutes Qualified Theft. Hence, since Remondeulaz’ car is undeniably covered by a Comprehensive Motor Vehicle
 INSURANCE – CLASSES OF INSURANCE

Insurance Policy that allows for recovery in cases of theft, petitioner is liable under the policy for the loss of
respondents’ vehicle under the "theft clause."

ARTURO R. TANCO, JR. vs.THE PHILIPPINE GUARANTY COMPANY

G.R. No. L-17312, November 29, 1965, MAKALINTAL, J.

Facts:
Plaintiff Arturo R.Tanco's automobile, while being driven at the southern approach of the Jones bridge by his brother
Manuel Tanco on September 1, 1959, figured in a collision with a pick-up delivery van, as a result of which both
vehicles were damaged. He paid for repairs the total sum of P2,536.99 and then filed his claim with The Philippine
Guaranty Company under a car insurance policy issued by the latter which was rejected.

The policy covers, up to a certain limit, loss or damage to the insured vehicle as well as damage to property of third
persons as a consequence of or incident to the operation of said vehicle. There is an exception clause, however,
which provides that "the company shall not be liable in respect of any accident, loss, damage or liability caused,
sustained or incurred ... whilst (the insured vehicle) is ... being driven by or is for the purpose of being driven
by him in the charge of any person other than an Authorized Driver." The policy defined the term
"Authorized Driver" to be the insured himself and "(b) any person driving on the Insured's order or with his
permission, provided that the person driving is permitted in accordance with the licensing or other laws or
regulations to drive the Motor Vehicle or has been permitted and is not disqualified by order of a court of law or by
reason of any enactment or regulation in that behalf from driving such Motor Vehicle."

At the time of the collision Arturo Tanco's brother who was at the wheel, did not have a valid license, the one he had
obtained for the year 1958 not having been renewed on or before the last working day of February 1959, as required
by section 31 of the Motor Vehicle Law, Act No. 3992. That section states that any license not so renewed "shall
become delinquent and invalid," and section 21 states that "except as otherwise specifically provided in this Act no
person shall operate any motor vehicle on the public highways without having procured a license for the current year,
nor while such license is delinquent, invalid, suspended or revoked."

Arturo Tanco filed a suit in the Municipal Court of Manila, elevated on appeal to the Court of First Instance of Manila,
which gave judgment for Tanco in the amount stated, plus interest at 8% and P500.00 as attorney's fees.

In rendering judgment for Tanco, the trial court adverted to the absence of evidence that Manuel Tanco had been
"disqualified by order of a court of law or by reason of any enactment or regulation in that behalf from driving such
motor vehicle," and ruled that if there is any ambiguity in the definition of the term "authorized driver" in the policy
the ambiguity should be construed in favor of plaintiff, since the policy had been prepared in its entirety by The
Philippine Guaranty Company.

The Philippine Guaranty Company filed an appeal and contended that it does not rely on the portion of the proviso in
the policy quoted by the court but on that which states that "the person driving is permitted in accordance
with the licensing or other laws and as to this there is no ambiguity because the Motor Vehicle Law expressly
prohibits any person from operating a motor vehicle on the highways without a license for the current year or while
such license is delinquent or invalid. Manuel Tanco’s renewal his license on September 8,1959, one week after the
accident did not cure the delinquency or revalidate the license which had already expired.

Issue:
Whether or not the insured could recover on an automobile policy for damage sustained in a collision which occurred
while the vehicle was being driven in violation of law.

Held:
No.

In the case , appellant The Philippine Guaranty Company's defense does not rest on the general proposition that if a
law is violated at the time of the accident which causes the damage or injury there can be no recovery, but rather on a
specific provision in the policy that appellant The Philippine Guaranty Company shall not be liable if the accident
occurs while the vehicle is being driven by any person other than an authorized driver and that an authorized driver, if
 INSURANCE – CLASSES OF INSURANCE

not the insured himself, is one who is acting on his order or with his permission, provided he is permitted to drive
under the licensing laws.

The cases cited by appellant Tanco are apropos. In Crahan v. Automobile Underwriters, Inc., et al., 176 A. (Pa.) 817, a
clause in the policy excluding loss while the motor vehicle "is being operated by any person prohibited by law from
driving an automobile" was held to be free from doubt or ambiguity, reasonable in its terms and in furtherance of the
policy of the law prohibiting unlicensed drivers to operate motor vehicles.

In Zabonick v. Ralston, et al., 261 N.W. (Mich.) 316, the insured was driving with an expired license, in violation of
law (Act No. 91 of the Public Acts of 1931), when the accident occurred. Under a provision in the policy that the
insurer "shall not be liable while the automobile is operated ... by any person prohibited by law from driving," the
insurance company was absolved, the Supreme Court of Michigan saying: "To require a person to secure an operator's
license and meet certain requirements before driving an automobile is a regulation for the protection of life and
property, the wisdom of which can scarcely be questioned. The Legislature has also provided that every three years
such licenses expire and may be renewed under certain conditions. If one fails to comply with the regulation, the
statute says, he or she shall not drive a motor vehicle upon the highway. Under the terms of the contract, while under
such statutory prohibition, plaintiff could not recover under his policy. To permit such recovery, notwithstanding the
lack of a driver's license, would tend to undermine the protection afforded the public by virtue of Act No. 91."

The exclusion clause in the contract invoked by appellant is clear. It does not refer to violations of law in general,
which indeed would tend to render automobile insurance practically a sham, but to a specific situation where a person
other than the insured himself, even upon his order or with his permission, drives the motor vehicle without a license
or with one that has already expired. No principle of law or of public policy militates against the validity of such a
provision.

The judgment appealed from is reversed, with costs.

PLACIDA PEZA et al., vs. HON. FEDERICO C. ALIKPALA, etc., et al.,

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

FACTS:

The case had its origin in an unfortunate vehicular accident. Two (2) children ran across the path of a vehicle as it was
running along the national highway at barrio Makiling Calamba, Laguna. They were killed.

The vehicle, a Chevrolet "Carry-All", belonged to a partnership known as Diman & Company, and was then being
driven by its driver, Perfecto Amar. It was insured with the Empire Insurance Co., Inc. The policy was in force at the
time of the accident.

Placida Peza, the managing partner of Diman & Co. filed a claim with the insurance company. Empire refused to pay
on the ground that the driver had no authority to operate the vehicle, a fact which expressly excepted it from liability
under the policy. What Peza did was to negotiate directly with the deceased children father for an out-of-court
settlement. The father agreed to accept P 6,200.00 in fun settlement of the liability of the vehicles owner and driver,
and Peza paid him this sum. Peza thereafter sued Empire to recover this sum of P6,200.00 as actual damages.

Empire's basic defense to the suit was anchored on the explicit requirement in the policy limiting the operation of the
insured vehicle to the "authorized driver"

... that the person driving is permited in accordance with the licensing or other laws or regulations
to drive the Motor vehicle or has been so permitted and is not disqualified by order of the Court of
Law of by reason of any enactment or regulation in that behalf from driving such Motor Vehicle.-

It appearing, according to Empire, that at the time of the mishap, the driver Perfecto Amar only had a temporary
operator's permit (TVR) — already expired — his drivers license having earlier been confiscated by an agent of the
Land Transportation Commission for an alleged violation of Land Transportation and Traffic Rules, he was not
permitted by law and was in truth disqualified to operate any motor vehicle; and this operated to relieve it (Empire)
from liability under its policy.
 INSURANCE – CLASSES OF INSURANCE

ISSUE:

WON empire (insurer) is liable. YEP

RULING:

The fact of Amar's having only an expired TVR at the time of the accident was duly established during the trial. It does
not seem to have been seriously disputed by the plaintiffs.

It would seem fairly obvious that whether the LTC agent was correct or not in his opinion that driver Amar had
violated some traffic regulation warranting confiscation of his license and issuance of a TVR in lieu thereof, this would
not alter the undisputed fact that Amar's licence had indeed been confiscated and a TVR issued to him, and the TVR
had already expired at the time that the vehicle being operated by him killed two children by accident. Neither would
proof of the renewal of Amar's license change the fact that it had really been earlier confiscated by the LTC agent. The
plaintiffs' proferred proof therefore had no logical connection with the facts thereby sought to be refuted, the proof
had no rational tendency to establish the improbability of the facts demonstrated by Empire's evidence. The proofs
were thus correctly by the respondent Judge as being irrelevant.

Perla Compania v. Ancheta

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

FACTS: A collision between the IH Scout which Ramos, et al. was riding and a Superlines bus along the national
highway in Sta. Elena, Camarines Norte. Ramos, et al. sustained physical injuries in varying degrees of gravity. Thus,
they filed with the CFI a complaint for damages against Superlines.

The bus was insured with petitioner for the amount of P50,000.00 as and for passenger liability and P50,000.00 as
and for third party liability. The vehicle in which private respondents were riding was insured with Malayan
Insurance Co.

Even before summons could be served, respondent judge issued an order directing Perla Compania to pay Ramos, et
al. immediately the P5,000.00 under the "no fault clause" as provided for under Section 378 of the Insurance Code.

Perla Compania denied its alleged liability under the "no fault indemnity" provision. Perla Compania held that under
Sec. 378 of the Insurance Code, the insurer liable to pay the P5,000.00 is the insurer of the vehicle in which private
respondents were riding, not petitioner, as the provision states that “in the case of an occupant of a vehicle, claim
shall lie against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from."
Respondent judge, however, denied reconsideration.

A second motion for reconsideration was filed by petitioner. However, respondent judge denied the second motion for
reconsideration and ordered the issuance of a writ of execution.

ISSUE: Whether Perla Compania is liable to indemnify Ramos, et al. under the “no fault clause”

RULING: NO, The law is very clear — the claim shall lie against the insurer of the vehicle in which the
"occupant" ** is riding, and no other. The claimant is not free to choose from which insurer he will claim the "no fault
indemnity," as the law, by using the word "shall, makes it mandatory that the claim be made against the insurer of the
vehicle in which the occupant is riding, mounting or dismounting from.

Sec. 378. Any claim for death or injury to any passenger or third party pursuant to the provision of this chapter shall
be paid without the necessity of proving fault or negligence of any kind. Provided, That for purposes of this section —

xxx

iii) Claim may be made against one motor vehicle only. In the case of an occupant of a vehicle, claim shall lie
against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from. In any other case,
 INSURANCE – CLASSES OF INSURANCE

claim shall lie against the insurer of the directly offending vehicle. In all cases, the right of the party paying the
claim to recover against the owner of the vehicle responsible for the accident shall be maintained.

That said vehicle might not be the one that caused the accident is of no moment since the law itself provides that the
party paying the claim under Sec. 378 may recover against the owner of the vehicle responsible for the accident. This
is precisely the essence of "no fault indemnity" insurance which was introduced to and made part of our laws in order
to provide victims of vehicular accidents or their heirs immediate compensation, although in a limited amount,
pending final determination of who is responsible for the accident and liable for the victims'injuries or death. In turn,
the "no fault indemnity" provision is part and parcel of the Insurance Code provisions on compulsory motor vehicle
ability insurance [Sec. 373-389] and should be read together with the requirement for compulsory passenger and/or
third party liability insurance [Sec. 377] which was mandated in order to ensure ready compensation for victims of
vehicular accidents.

Irrespective of whether or not fault or negligence lies with the driver of the Superlines bus, as private respondents
were not occupants of the bus, they cannot claim the "no fault indemnity" provided in Sec. 378 from petitioner. The
claim should be made against the insurer of the vehicle they were riding. This is very clear from the law. Undoubtedly,
in ordering petitioner to pay private respondents the 'no fault indemnity,' respondent judge gravely abused his
discretion in a manner that amounts to lack of jurisdiction. The issuance of the corrective writ of certiorari is
therefore warranted.

IV. CASUALTY INSURANCE

SIMON DE LA CRUZ vs. THE CAPITAL INSURANCE and SURETY CO., INC.

G.R. No. L-21574 June 30, 1966

FACTS:

Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc Mines, Inc. in Baguio, was the holder of an accident
insurance policy by the Capital Insurance & Surety Co., Inc., for the period beginning Nov 13, 1956 to Nov 12, 1957.

On January 1, 1957, in connection with the celebration of the New Year, the Itogon-Suyoc Mines, Inc. sponsored a
boxing contest for general entertainment wherein the insured Eduardo de la Cruz, a non-professional boxer
participated. In the course of his bout with another person, likewise a non-professional, of the same height, weight,
and size, Eduardo slipped and was hit by his opponent on the left part of the back of the head, causing Eduardo to fall,
with his head hitting the rope of the ring. He was brought to the Baguio General Hospital the next day. The cause of
death was reported as hemorrhage, intracranial, left.

Simon de la Cruz, the father of the insured and who was named beneficiary, filed a claim with the insurance company
for payment of the indemnity under the policy. The claim was denied. Defendant insurer set up the defense that the
death of the insured, caused by his participation in a boxing contest, was not accidental and, therefore, not covered by
insurance. The trial court rendered the decision in favor of the plaintiff which is the subject of the present appeal.

ISSUE:

Whether Simon is entitled to receive the payment under the policy.

RULING:

YES. While the participation of the insured in the boxing contest is voluntary, the injury was sustained when he slid,
giving occasion to the infliction by his opponent of the blow that threw him to the ropes of the ring. Without this
unfortunate incident - the unintentional slipping of the deceased - perhaps he could not have received that blow in the
head and would not have died. The fact that boxing is attended with some risks of external injuries does not make any
injuries received in the course of the game not accidental. In boxing as in other equally physically rigorous sports,
such as basketball or baseball, death is not ordinarily anticipated to result. If, therefore, it ever does, the injury or
death can only be accidental or produced by some unforeseen happening or event as what occurred in this case.
 INSURANCE – CLASSES OF INSURANCE

Appellant insurer contends that while the death of the insured was due to head injury, said injury was sustained
because of his voluntary participation in the contest. It is claimed that the participation in the boxing contest was the
"means" that produced the injury. Since his inclusion in the boxing card was voluntary on the part of the insured, he
cannot be considered to have met his death by "accidental means".

The terms "accident" and "accidental", as used in insurance contracts, have not acquired any technical meaning
and are construed by the courts in their ordinary a acceptation. The terms are taken to mean that which happen by
chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An accident
is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause,
or is an unusual effect of a known cause and, therefore, not expected.

Appellant however, would like to make a distinction between "accident or accidental" and "accidental means", which
is the term used in the insurance policy involved here. It is argued that to be considered within the protection of the
policy, what is required to be accidental is the means that caused or brought the death and not the death itself. It may
be mentioned in this connection, that the tendency of court decisions in the United States in recent years is to
eliminate the fine distinction between the terms "accidental" and "accidental means" and to consider them as legally
synonymous. But, even if we take appellant's theory, the death of the insured in the case at bar would still be entitled
to indemnification. In boxing, death is not ordinarily anticipated to result. If it ever does, the injury or death can only
be accidental or produced by some unforeseen happening or event as what occurred in this case.

The generally accepted rule is that, death or injury does not result from accident or accidental means within the terms
of an accident-policy if it is the natural result of the insured's voluntary act, unaccompanied by anything unforeseen
except the death or injury. There is no accident when a deliberate act is performed unless some additional,
unexpected, independent, and unforeseen happening occurs which produces or brings about the result of injury or
death. In other words, where the death or injury is not the natural or probable result of the insured's voluntary act, or
if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the
protection of insurance coverage.

Furthermore, the policy involved herein specifically excluded from its coverage —

(e) Death or disablement consequent upon the Insured engaging in football, hunting, pigsticking,
steeplechasing, polo-playing, racing of any kind, mountaineering, or motorcycling.

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