1
NINTH LECTURE VIDEO prosecuted. The insurer refused to pay the proceeds of the
Q. Where assault or murder is excepted in the life
insurance policy, will the insurer be automatically
exempted from liability for violent death of the insured?
NO.
A. In a life insurance policy where death of the insured by
"assault or murder, or intentional killing" is excepted from its
coverage, the mere fact that the insured suffered a violent
death by the hands of another person will not necessary
relieve the insurer of liability.
The insurer's liability in such case will depend on whether the
insured's death was intended or not.
Thus, if the insured was killed by another person
intentionally the insurer is not liable, but where the insured
was not an intended victim of felonious assault the insurer is
still liable.
Q. What are facts and issue in the case of Calanoc vs
Court of Appeals?
Illustrations:
(a) Insurer still liable.
Q. Philippine American Life Insurance Co. issued a life
insurance policy on the life of with a Melencio Basilio, a
security guard, supplementary contract covering death by
accident. The policy excepted from its coverage, death caused
by "assault or murder'". Basilio was on duty as a watchman on
January 25, 1951. Atty. Ojeda whose residence was a block
away from Basilio's station asked for the latter's noticed
something Ojeda help because suspicious in his house. Basilio
refused because he was not a regular policemen. Ojeda then
secured the help of a traffic policeman who prompted Basilio to
come along. While they were standing in front of the main gate
of Ojeda's residence, a shot was fired by a robber. Basilio was
hit in the abdomen and died. It was discovered that Ojeda's
house was ransacked by robbers who were later arrested and
policy on the ground that Basilio's death was caused by
"murder of assault" and, therefore, excepted from the policy.
Question: Was the insurer liable?
Answer: The insurer was still liable. There was no proof that
Basilio's death was caused by murder or assault nor can it be
said that the killing was intentional for there was the possibility
that the robber fired the shot merely to scare away the people
around and not necessarily to kill the victim. The happening
was pure accident on the part of the victim. It cannot be
pretended that the robber aimed at the diseased precisely
because he wanted to take his life.
(2). Carlie Surposa was insured with Finman General
Assurance under a personal accident insurance policy. While
the policy was in full force and effect, the insured died as a
result of a stub wound inflicted by one of three unidentified
men without provocation and warning on the part of the former
as he and his cousin, Winston Surposa were waiting for a ride
way home after attending the their on celebration of the
"Maskarra Annual Festival. The beneficiaries filed a claim with
the insurerbwhich refused to pay on the ground that murder
and assault were not within the scope of the coverage of the
personal accident insurance. Question: Was the death of the
insured covered by the policy?
Answer: The death of the insured was covered by the policy.
The cause of death was purely accidental insofar as the
insured was concerned there being no showing that the
malefactor aimed at the insured precisely because the killer
wanted to take the life of the insured. The insured died from an
event that proceeded from an unusual effect of a known cause
and therefore, not expected. Neither can it be said that there
was a capricious desire on the part of the insured to expose his
life to danger considering that he was just going home after
attendinga festival. Where 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 the policies

insuring against death or injury from accident.
(b) Insurer not liable.
Q. A Co. issued a life insurance policy on the life of B with an
"Accidental Death Benefit Clause", providing that an additional
sum of P5,000.00 would be payable to the beneficiary if the
death was due to accidental means but excepting death
resulting from injury "intentionally inflicted by a third party". The
insured died from a bullet wound inflicted, without provocation
by C, who was found guilty of murder. Question: Was A Co.
liable under the "Accidental Death Benefit Clause"?
Answer: The insurer was not because B's death was due to
murder which was a third undoubtedly inflicted intentionally by
a third party and, therefore excepted by the policy.
Q. What are facts in the case of Biagtan vs Insular Life
Assur. Co., Ltd?
Q. Biagtan was insured with Insular Life Assurance Co., and
under a supplementary contract, an additional sum of P5,000
would be paid if the death of the insured resulted from an
accident. However, death due to injury "intentionally inflicted by
a third party" was expressly excepted. While the policy was in
force, the house of Biagtan was robbed. In committing the
robbery, the robbers rushed towards the doors of the second
floor room where they suddenly met a person near the door of
one of the rooms who turned out to be Biagtan. Biagtan was
stabbed nine times. Five of the wounds inflicted caused the
death of Biagtan. The robbers were apprehended, charged and
2
convicted of robbery with homicide. The and insurer refused to
pay the additional sum of P5,000 under the accidental benefit
clause on the ground that the insured's death resulted from
injuries intentionally inflicted by third parties and therefore, not
covered by the policy. Question: Was the insurer liable?
Answer: The insurer was not liable because the nine wounds
inflicted on the insured were intentionally caused. "Where a
gang of robbers enter a house and coming face to face with
the owner, even if unexpectedly, stab him repeatedly, it is
contrary to all reason and logic to say that his injuries were not
intentionally inflicted." This case was different from the Calanoc
case where it was found that the victim was not intentionally
killed for there was the possibility that the robber had fired the
shot to Scare the people around for his Own protection and not
and not necessarily to kill or hit the victim. While a single shot
fired from a distance, and by a person who was not even seen
aiming at the victim, Could have been fired without intent to kill
or injure, nine wounds inflicted with bladed weapons at cannot
be considered as innocent close range insofar as such intent is
concerned.
NOTE: The diff. between the Calanoc and Biagtan case, is that
in Calanoc, a single shot was fired, Basilio the insured was hit,
and there was no proof that he was intentionally killed as the
victim. In the case of Biagtan, it cannot be said that Biagtan
was not the intended victim, he was stabbed 9 times.
So the insurance co. in this case, was not liable.
Q. Is the insurer liable if the person insured was executed
for a crime he committed?
A. A policy of life insurance does not insure against the legal
execution of the insured for crime even though he may in fact
have been innocent, and therefore unjustly convicted and
executed and furthermore, it is against public policy.
CHIKA CHIKA.. Under the Insurance Act, and the former
Insurance Code of 1978, there was no provi in the law about
suicide, and because of the confusion whether suicide is

compensable or not. And sir nani introduced a bill about
suicide. Later it was copied in the Insurance, and adopted in
the present Insurance Code.
RULES TO BE FOLLOWED IN THE CASE OF SUICIDE
Q. Is the life insurer liable in case the insured committed
suicide?
A. The insurer in a life insurance contract shall be liable in
case of suicide only when it is committed after the policy has
been in force for a period of two (2) years from the date of its
issue or of its last reinstatement, unless the policy provides a
shorter period: Provided, however, That suicide committed in
the state of insanity shall be compensable regardless of the
date of commission.
This section is a copy of Section 180-A of the Insurance Code
of 1978. There was no similar provision in the Insurance Act.
Parliamentary Bill No. 1342 which later became Batas
Pambansa Blg. 874 inserted Section 180-A in the Insurance
Code of 1978. It was introduced by Assemblyman H. B. Perez
who explained the purpose of the amendment as follows:
"The present Insurance Code of 1978 like the previous
Insurance Act failed to provide for consequences of suicide.
Whether the life the insurer should be liable or not in case the
insured the subject of commits suicide has been conjectures
and speculations. To clarify the legal consequences of suicide
and put an end to speculations, approval of this bill is earnestly
recommended."
Q. When are the proceeds of a life insurance policy
payable to the insured's estate considered as conjugal
assets?
A. The proceeds of the lnsurance policy payable to the
insured's estate, on which premiums were paid by the conjugal
partnership, constitute conjugal property and belong one-half
to the husband exclusively and the other half to the wife. If the
3
premiums were paid partly with conjugal funds, the proceeds
are in like proportion paraphernal or separate property and
conjugal, However, where the proceeds are payable to an
belong irrevocable beneficiary, such proceeds belong
exclusively to the beneficiary and not to the conjugal estate of
the person whose life was insured although the premiums were
paid out of conjugal funds.
*****NASA SLIDES AS REFRESHER, PERO NI COPY KO
NA DIN.*****
NOTE: What is Industrial Life Insurance? Insurance for the
poor. Insurance of the poorest of the poor.
Q. What is industrial life insurance?
A. Industrial life insurance means that form of life insurance
under which the premiums are payable monthly or oftener, if
the face amount of insurance provided in any policy is not
more than five hundred times that of the current statutory daily
wage of the City of Manila, and if the words industrial policy"
are printed upon the policy as part of the descriptive matter.
Such kind of policy shall not lapse for non-payment of premium
if such non-payment was due to the failure of the insurer to
send its representative or agent to the insured at residence of
the insured or someplace indicated by him for the purpose of
collecting such premium. However, this does not apply when
the premium on the policy remains unpaid for a period of three
months or twelve weeks after the grace period has expired.
Industrial life insurance is usually acquired by those without a
fixed income or belonging to the low income bracket.
Q. What is Industrial Life Insurance?
A. Industrial life insurance means that form of life insurance
under which the premiums are payable monthly or oftener,
if the face amount of insurance provided in any policy is not
more than five hundred times that of the current statutory daily
wage of the City of Manila, and if the words industrial policy are
printed upon the policy as part of the descriptive matter.

Such kind of policy shall not lapse for non- payment of
premium if such non-payment was due to the failure of the
insurer to send its representative or agent, to the insured at the
residence of the insured or someplace indicated by him for the
purpose of collecting such premium.
However, this does not apply when the premium on the policy
remains unpaid for a period of three months or twelve weeks
after the grace period has expired.
Industrial life insurance is usually acquired by those without a
fixed income or belonging to the low income bracket.
Q. Distinguish Microinsurance from Industrial Life
Insurance.
A. Industrial Life Insurance may be distinguished from
Microinsurance as follows:
1.) The maximum amount of Industrial Life Insurance
is 500 times that of the current statutory daily wage in
the City of Manila while
Micro insurance’s maximum is 1000 times of the
current daily minimum wage in. Metro Manila.
Thus, while Micro insurance is for the "risk protection
of the poor",
Industrial Life Insurance is for the protection of the
poorer people.
2.) Industrial Life Insurance shall not lapse for non-
payment of premium. if such non-payment was due to
the failure of the insurer to send its representative or
agent to the insured at the residence of the insured or
someplace indicated by him for the purpose of
collecting such premium," while failure to collect the-
premium of Micro insurance is not an excuse for non-
payment of premium and the policy will lapse if the
premium is not paid;"
4
3.) In Industrial Life Insurance, the insured has a grace
period of thirty days within which to pay the
succeeding premium while no such privilege is
provided in Micro insurance."
4.) Premiums of Industrial Life Insurance are payable
monthly or oftener" while such scheme is not provided
for in Micro insurance.
Q. Can a life insurance policy be assigned?
A. A life insurance is property in the nature of nonnegotiable
chose in action even before the death of the insured. It has all
the characteristics of personal property and can be delivered
and transferred as other personal property. The transferee of
the life policy need not have insurable interest and notice to the
insurer of such assignment need not be given unless expressly
required by the policy.
Illustration:
A, a partner in A & Co., obtained a life insurance policy on his
own life. Later on, he borrowed money from the partnership
and executed a document stating that he assigned his policy to
the partnership so that the proceeds would go to the
partnership in whatever amount was needed to satisfy his
obligation. Such document was a valid assignment of the
policy.
Q. Distinguish assignment of life insurance policy from
change of beneficiary.
A. An assignment of a policy is to be distinguished from a
change of beneficiary in that assignment rests on contract
rather than merely on the exercise of a power of appointment.
Being based on contract, assignment must be supported by a
consideration while the change of beneficiary need not be
based on a valid consideration.

An assignment of the policy with the consent of the beneficiary
where the latter was designated irrevocably or even without the
consent of the revocable beneficiary, extinguishes the interest
of the beneficiary since an assignment has the effect of a
change of beneficiary.
Q. Is consent of the beneficiary in life insurance necessary
to the assignment of the said life insurance policy?
A. (1) In case the designation of beneficiary is irrevocable:
Where the policy is payable to a beneficiary other than the
insured or his estate or personal representatives, and the right
to change the beneficiary is expressly waived, the consent of
such beneficiary to the assignment of the policy must be
obtained since the beneficiary, in such case, has a vested
right on the policy that cannot be defeated by an assignment or
transfer without his consent.
(2) In case the designation of beneficiary is revocable: On
the other hand, the consent of the beneficiary to an
assignment by the insured is not necessary where the
insured has not expressly waived the right to change the
beneficiary, for in such case the beneficiary has no vested right
as the insured may still change him.
MOTOR VEHICLE LIABILITY INSURANCE
Q. What is necessary to be provided by the operator or
owner of a motor vehicle to operate it in highways?
A. It is unlawful for any land transportation operator or owner of
a motor vehicle to operate the same in highways unless there
is: (a) a policy insurance, or (b) guaranty in cash, or (c) surety
bond, to indemnify the death or bodily injury of a third-party or
passenger arising from the use. Section 387 now includes in
the compulsory third party liability coverage damage to
property of a third-party or passenger instead of limiting the
same to death or bodily injuries arising from motor vehicle
accidents.
Violation of the aforesaid provision shall be punished
5
by a fine of not less than Five hundred pesos (P500.00) and/or
imprisonment for not more than six (6) months. The violation of
Section 390 by a land transportation operator shall be a
sufficient cause for the revocation of the certificate of public
convenience issued by the Land Transportation Franchising
and Regulatory Board covering the vehicle concerned.
The motor vehicle cannot be registered nor the
registration renewed with the Land Transportation Office
unless the motor vehicle is covered by insurance, cash deposit
or surety bond as previously mentioned.
Q. In case of a third-party liability insurance or motor
vehicle liability insurance, may a third person directly, sue
the insurer of the motor vehicle?
NOTE: We studied that insurance should be applied
exclusively to the proper interest of the person in whose name
it is insured. We have learned that only the insured or the
beneficiary may file an action against the insurer as a general
rule.
The reason why a third person cannot sue the insurer is
because there is no privity of contract between the insurer and
the person insured.
However, there are instances where a third party may sue the
insurer.
1.) When there is stipulation in favor of a third
person.
2.) When an insurance is against liability.
MOTOR VEHICLE INSURANCE is an insurance against
liability.
A. Since a third-party liability insurance insures against liability
to third persons, the injured party for whom the contract of
insurance is intended can directly sue the insurer. Thus, in a
vehicular accident, a person injured by the motor vehicle
covered by third-party liability insurance directly sue the
insurer. The general purpose of statutes enabling an injured

person to proceed directly against the insurer is to protect
injured persons against the insolvency of the insured who
causes such injury, and to give such injured person certain
beneficial interest in the proceeds of the policy and statutes are
to be liberally construed so that their intended purpose may be
accomplished. Such a provision creates a contractual relation,
which inures to the benefit of any and every person who may
be negligently injured by the insured, as if such injured persons
were specifically named in the policy. In such case, the liability
of the insurer to such third person is based on contract while
the liability of the insured to the third party is based on tort.
Q. Shafer obtained a third-party liability insurance policy
from Makati Insurance Company over his Ford Laser car.
During the effectivity of the policy, an information for
reckless imprudence resulting in damage to property and
serious physical injuries was filed against Shafer for
bumping a Volkswagen car resulting to damage to said car
and injuries to its passenger. The owner of the damaged
Volkswagen filed a separate civil action against Shafer.
Shafer filed a third-party complaint against his insurer,
Makati Insurance co. The insurer filed a motion to dismiss
on the ground that the third-party complaint was
premature because the criminal case against Shafer was
not yet terminated. Question: Must Shafer wait for his
conviction before filing a case against the insurer?
A. There is no need for the insured to wait for the decision of
the court finding him guilty of reckless imprudence before filing
a case against the insurer.. The occurrence of the injury to the
third party immediately gives rise to the liability of the insurer
under its policy."
Q. In a motor vehicle liability insurance, is the insurer
solidarily liable with the insured?
A. While it is true that where the insurance contract provides
for indemnity against liability to third persons, such third
persons can directly sue the insurer, however, the direct
6
liability of the insurer under indemnity contracts against third-
party liability does not mean that the insurer can be held
solidarily liable with the insured and/or the other parties found
at fault. The liability of the insurer is based on contract; that of
the insured is based on tort.
Q. What are the facts and issue in the case of Vda. De
Maglana vs Consolacion?
NOTE: Ire recite daw to.
Illustrations:.
(1) Lope Maglana was on his way to work driving a
motorcycle. A PUJ jeep driven by Pepito Ito and owned by
Destrajo, bumped the motorcycle driven by Maglan
aMaglana while overtaking another passenger jeep. As a
result of the accident, Maglana died. The PUJ jeep of
Destrajo was insured for P20,000 with AFISCO against
third-party liability. The heirs of Maglana after receiving
P5,000 from AFISCO under the "no fault indemnity"
clause, filed a civil case against Destr ajoDestrajo and
AFISCO. Question: What is the nature of the liability of
AFISCO to the heirs of Maglana?
Answer: The liability of AFISCO based on the
insurance contract is direct, but not solidary with that of
Destrajo which is based on torts. As such, the heirs of Maglana
have the option either to claim the amount of P15,000
(insurance coverage of P20,000 less P5,000 already paid
under the "no fault indemnity" clause) from AFISCO and the
balance of their claims from Destrajo or enforce the entire
judgment from Destrajo who has right of reimbursement from
AFISCO to the extent of the insurance coverage.
(2) A truck driven by Corbeta and owned by
National Food Authority (NFA) collided with a Toyota
Tamaraw owned by Uy.The Toyota Tamaraw was insured
with Mabuhay Insurance and Guaranty, Co. (MIGC) while
NFA's truck was insured with GSIS against liabilities for
death and injuries to third persons for the maximum
indemnity of P12,000 Five passengers died and ten others

were injured in the accident. All of them were passengers
of the Toyota Tamaraw. A case was filed by the injured
parties against Corbeta, NFA, Uy, Uy, GSIS and MIGC.
Judgment was rendered by the trial court ordering
Corbeta, NFA, GSIS and MIGC jointly and severally liable
to pay damages to the victims of the collision, after
finding that the negligence of Corbeta was the proximate
cause of the collision. GSIS claimed that it was not
solidarily liable with NFA. Question: Can GSIS be held
solidarily liable with its insured, NFA?
Answer: GSIS cannot be made solidarily liable with
NFA. While it is true that where the insurance contract provides
for indemnity against liability to third persons, the latter can
directly sue the insurer however, the insurer cannot be held
liable in solidum with the insured and/or the other parties found
at fault. The liability of the insurer is based on contract; that of
the insured carrier or vehicle owner is based on tort. The
liability of GSIS based on the insurance contract is direct, but
not solidary with that of the NFA. The latter's liability is based
separately on Article 2180 (quasi-delict) of the Civil Code.
Furthermore, although the victims may proceed directly against
GSIS as insurers the extent of the amountfor indemnity, the
third party liability is only, covered by the insurance policy.
Q. How can / When is an insurer be held liable under the
"no fault indemnity" clause in motor vehicle liability
insurance?
NOTE: This has been asked many times in bar.
A. An insurer may be held liable under the “no fault indemnity"
provision without the necessity of proving fault or negligence of
any kind provided the following requisites are present:
(a) The claim is for death or injury to any passenger or
third party;
(b)The total indemnity in respect of any one person
does not exceed P15,000; and.
(c) The necessary proof of loss under oath to
substantiate the claim must be submitted.
7
NOTE: That this claim, applies only to physical injuries or
death, it does NOT apply to damage to property. So, there is
no need for the injured party to prove who is guilty. The mere
fact that they filed a claim against the insurer is enough to
make the insurer is liable.
Q. What are the rules on claims under the "no fault
indemnity" clause?
A. The following rules on claims under the "no fault indemnity"
provision where proof of fault or negligence is not necessary
for payment of any claim for death or injury to a passenger or a
third party are established:.
1. A claim may be made against one motor vehicle
only.
2. If the victim is an occupant of a vehicle, the claim
shall lie against the insurer of the vehicle in which he is riding,
mounting of dismounting from.
3. In any other case, (i. e. if the victim is not an
occupant of a vehicle), the claim shall lie against the insurer of
the directly offending vehicle.
4. In all cases, the right of the party paying the claim to
recover against the owner of the vehicle responsible for the
accident shall be maintained. 1276.
Q. What are the facts and issue in the case of Perla
Compania de Seguros, Ins. vs. Ancheta?
Q. On December 27, 1977, in a collision between the IH
Scout in which Ramos, et. al. were riding and a Superlines
bus along Sta. Elena, Camarines Norte, Norte, plaintiffs
Ramos et al. sustained physical injuries. The injured
parties filed a case against Superlines, the bus driver and
Perla Cia. De Seguros, the insurer of the bus. The bus was
insured with Perla Cia. De Seguros for P50,000 for
passenger liability and P50,000 for third party liability. The
IH Scout was insured with Malayan Insurance. Even before
the service of summons, respondent Judge issued an

order granting plaintiffs' prayer to order Perla Cia. De
Seguros to immediately pay P5,000 under the "no fault
indemnity" provision of Section 378. Perla Cia. De Seguros
claimed that the insurer liable under the "no fault"
provision was Malayan Insurance, the insurance of the
vehicle the plaintiffs were riding at the time of the
accident, and not Perla Cia. De Seguros. Question: Which
insurer was liable to the plaintiffs' for the "no fault”
indemnity?
A. The plaintiffs are not free to choose from which insurer they
will claim the "no fault indemnity".
By using the word "shall" the law makes it mandatory that the
claim be made against the insurer of the vehicle in which the
occupant is riding, mounting, or dismounting from. Irrespective
of whether or not fault or negligence lies with the driver of the
Superlines bus, as plaintiffs were not occupants of the bus,
they cannot claim the “no fault indemnity" from the insurer of
the bus. The claim should be made against Malayan
Insurance, the insurer of the vehicle plaintiffs were riding.
Q. What is the "collateral source rule"?
A. Under this rule, if an injured person receives compensation
for his injuries from a source wholly independent of the
tortfeasor, the payment should not be deducted from the
damages which he would otherwise collect from the tortfeasor.
The collateral source rule applies in order to place the
responsibility for losses on the party causing them. Its
application is justified so that "the wrongdoer should not benefit
from the expenditures made by the injured party or take
advantage of contracts or other relations that may exist
between the injured party and third persons."
Q. Is a driver's license on the part of the authorized driver
of the insured motor vehicle necessary? Yes.
CHIKA CHIKA..Q. The driver has no valid license and he met
an accident, would the insurer of the vehicle be made liable?
8
A. It is a common practice of the insurers to provide in the
policy that the authorized drivers of the vehicle insured are the
insured himself, or a person permitted or ordered by him to
drive who has a license to do so.
It means if the insured, the owner of the vehicle is the one
driving and he has expired license, and he met an accident,
then the insurance co. is nonetheless liable.
But if the vehicle is being driven by someone who is authorized
by the owner, and he has no valid driver’s license at the time of
the accident, then the insurance co. is NOT liable.
Q. When is driver's license not necessary to hold the
insurer in a motor vehicle insurance liable?
À, Driver's license is not necessary to hold the insurer of the
motor vehicle liable in the following cases:
(1) If the insured himself is the driver of the vehicle
insured, he has the right to recover the damage
thereto even if he has no driver's license or the same
had expired at the time of the accident.
Illustration:
Q. Palermo insured his car with Pyramid Insurance against
loss or damage and third-party liability, While Palermo
was driving his car, a La Carlota City fire truck bumped
said car head-on causing injuries to palermo, thus death
of his father who was then a passenger, and total damage
of the car insured. At the time of the accident, the license
of Palermo was expired. The insurer refused to pay the
proceeds of the insurance on the ground that the insured
was not an authorized driver since his license had expired
at the time of the accident. Question: Is the insurer’s
refusal to pay meritorious?
Answer: There is no merit in the insurer's allegation that
the insured was not authorized to drive the insured motor
vehicle because his driver's license had expired. The driver of
the insured vehicle at the time of the accident was the insured
himself, hence, an "authorized driver” under the policy. While
the Motor Vehicles Law prohibits a person from operating a
motor vehicle on the highway without a license or with an

expired license, an infraction of the Motor Vehicles Law on the
part of the insured, is not a bar to recovery under the insurance
contract. It however, renders him subject to the penal
sanctions of the Motor Vehicles Law. The requirement in the
policy that the driver must be licensed to drive under the law
does not apply when the person driving is the insured himself.
(2) When a motor vehicle is covered by a comprehensive
policy that includes theft, the insurer is liable for the
damage to the motor vehicle in case such damage is
sustained on the occasion of or while the theft is being
committed even if the thief is not licensed to drive. This
principle applies notwithstanding the provision in the
policy that requires the driver at the time of the
accident to be duly licensed.
When the thief had expired license when the car insured was
stolen, the insurer is nonetheless liable because there is no
causal connection between the possession of a valid driver's
license and the loss of a vehicle. To rule otherwise would
render car insurance practically a sham since an insurance
company can easily escape liability by citing restrictions which
are not applicable or germane to the claim, thereby reducing
indemnity to a shadow.
Illustration:
Lacson insured his car under a comprehensive car policy
which covered loss due to theft. Lacson brought his car
for repairs to a repair shop. While at the shop, Mahinay
together with his co-employees in the shop took and
drove the car insured as a result of which it met an
accident causing damage thereto. The insurer refused to
pay the damage on the ground that the driver was not a
duly licensed driver in violation of the policy which
required the driver of the car to be insured, Mahinay was
charged of qualified theft to which he pleaded guilty.
Question: was the insurer liable?
Answer: The insurer was liable. The taking of the vehicle by
another person without permission or authority from the owner
or person in charge thereof is sufficient to place it within the
policy and therefore, compensable. The damages were
sustained in the course of the unlawful taking.
9
In case the insurance on the motor vehicle does not include
theft or comprehensive, then the driver of the vehicle, if a
person other than the owner, must duly be licensed to drive
otherwise, the insurer is not liable.
NOTE: Pero yung ni carnap moa ng kotse, na aksidente, tapos
yung carnapper walang valid license, THE INSURANCE CO.
IS STILL LIABLE BECAUSE IT IS PART OF THE
INSURANCE AGAINST THIEF.
Q. Is the authority of the authorized driver affected by
unauthorized trip?
EXAMPLE: Ginamit yung kotse ni driver at yaya, biglang liko
sabay yuko, nabangga yung kotse. The insurance co. refused
to pay because the trip was not authorized, the driver was
authorized, but he was not authorized to bring the car to the
motel. Is the insurance co. liable? YES, because where the
driver is authorized to drive, the purpose of the trip is not
material.
A. A car Owner who entrusts his car to an established car
service and repair shop necessarily entrusts his car key to the
shop owner and employees who are presumed to have the
insured's permission to drive the car for legitimate purposes of
checking or road-testing the car. The happenstance that the
employee of the shop owner diverts the use of the car to his
own illicit or unauthorized purpose in violation of the trust
purposed in the shop by the insured car owner does not mean
that the authorized driver clause has been violated such as to
bar recovery, provided that such employee is duly qualified to
drive under a valid drivers license.
When the driver is authorized to drive, the fact that the purpose
of the trip was not authorized will not affect the right of the
owner-insured to recover from the insurer should the vehicle
be damaged during the unauthorized trip.
Illustration:
X was the owner of a car which he brought to Y Repair
Shop for general checkup and repairs. Said car was
insured under a comprehensive policy with A Co. While
the car was in the custody of Y Repair Shop,Z, an
employee of Y Repair Shop together with five persons

brought the car out of the shop and drove to Montalban,
Rizal. The car was damaged in a vehicular accident. The
insurer refused to pay the damage on the ground that Z
was not an authorized driver of the insured. Question:
Was the insurer's refusal to pay correct?
Answer: The refusal of the insurer to pay was not correct. A
car owner who delivers his car to a repair shop is presumed to
have authorized the shop owner and his employees to drive
the car. The unauthorized purpose of trip does not mean that
the driver is unauthorized The situation is not different from the
regular or family driver, who instead of carrying out the owner's
order to fetch the children from school takes out his girl friend
instead for a joy ride and wrecks the car. There is no question
of his being an "authorized driver" which allows recovery of the
loss although his trip was for a personal or illicit purpose
without the owner's authorization.
Q. What are the facts and issue in the case of Stokes vs.
Malayan Ins. Co., Inc.?
The insured obtained a car insurance policy covering own
damage and third-party liability. He authorized an Irish tourist
to drive the car insured. Said tourist had been in the
Philippines for more than 90 days and had a valid Irish driver’s
license but without a Philippine driver’s license. While being
driven by said tourist, the car insured collided with another
vehicle. The insurer denied the claim on the ground that the
tourist was not an “authorized driver” under the policy which
required the person authorized by the insured to drive the car
to be licensed to drive the vehicle.
ISSUE: Was the insurer liable?
A: The insurer was not liable because the driver did not have a
valid license to drive in the Philippines. Under the law, a tourist
duly licensed to drive in his country is allowed to drive in the
Philippines during but not after 90 days of his sojourn in the
Philippines. The tourist had been in the Philippines for more
than 90 days and therefore, he was not an authorized driver
under the term of the insurance contract.
Q. Within what time should notice of claim he filed by the
insured in a motor vehicle insurance and what is the
period of prescription in a motor vehicle insurance?
10
CHIKA CHIKA, Dini delay yung claim ng insurance co. until
matapos yung 1 year, para mag prescribed. Pero si Sir nani,
nag pasa ng amendment ng batas, that the period of the
prescription, should be counted not from the date of the
accident, but from the denial of the claim.
Now, the claim should be filed within one (1) year from denial
of the claim.
A, Any person having any claim upon the policy issued
pursuant to this chapter shall, without any unnecessary delay,
present to the insurance company concerned a written notice
of claim setting forth the nature, extent and duration of the
injuries sustained as certified by a duly licensed physician.
Notice of claim must be filed within six (6) months from the
date of accident, otherwise, the claim shall be deemed waived.
Action or suit for recovery of damage due to loss or injury must
be brought, in proper cases, with the Commissioner or the
courts within one (1) year from denial of the claim,
otherwise, the claimant's right of action shall prescribe."
This section is a copy of Section 384 of the Insurance Code of
1978, as amended. The original provision of Section 384 was
that the action or built for recovery of damage due to injury
under this chapter must be brought within one year from the
date of accident. This was amended by Batas Pambansa Blg.
874 by providing that the period of prescription should be
counted from the date of denial of the claim by the insurer
instead of counting the period from the date of the accident As
explained by Assemblyman H.B. Perez! in Parliamentary Bill
No. 1343 which later became Sec. 4 of B.P. BLg. 874;
The period of prescription of insurance claims should be
counted from the denial or rejection of the claim by the insurer
and not from the time of loss. However, in motor vehicle liability
insurance, Section 384 of the Insurance Code of 1978 as
amended, makes the period of prescription run not from the
denial of the insurance claim but from the date of the accident.
The said provision places an insurance claimant at a very great
disadvantage. He could not sue the insurer until the latter
denies the claim because before denial of the claim, there is no
cause of action against the insurer. But if the insurer denies the
claim only after one year from the accident has elapsed, the
claimant's cause of action will accrue only when it has already
 11

prescribed.

The period of prescription should be made to run from the

denial of the claim and not from the date of the loss."

The notice of claim under the compulsory motor vehicle

insurance must be filed within six months from the date of the
accident while the action to enforce the claim for loss or injury
sustained must be filed within one year from denial of the
claim,

Illustration:

An extra-judicial demand was made by the insured on the

insurer but the latter failed to respond to the same.
Nevertheless, the complaint was filed even before a denial of
the claim was made by the insurer. For all legal intents, the
one-year prescriptive period provided for in Section 384 of the
Insurance Code has not begun to run. The cause of action
arises only and starts to run upon the denial of the claim by the
insurer.