Week 7 Case 21 G.R. No. 203060 Flashcards
Topic: Excess Insurance Coverage
Respondent Pablo incurred medical expenses after side-swiping a pedestrian.
He obtained a Compulsory Third Party Liability (CTPL) from Stronghold, the limit of which is Php 100,000.00.
He also obtained a Third Party Bodily and Death Liability from Malayan, the limit of which is Php 200,000.00.
Pablo’s total incurred expenses stood at Php 100, 318.08. Stronghold computed its liability from the CTPL insurance policy, and arrived at Php 29,000.00. Stronghold now posits that Malayan should cover the excess, to which it did not agree.
Was Malayan’s petition granted by the court?
No.
Malayan’s petition was denied by the Court.
What is the purpose of a compulsory motor vehicle liability insurance (CMVLI)?
The purpose of CMVLI is to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of the negligent operation and use of motor vehicles. The victims or their dependents are assured of immediate financial assistance, regardless of the financial capacity of motor vehicle owners.
What were the facts in the Western Guaranty case, which was the basis of the ruling of the CA and IC?
In Western Guaranty, a pedestrian was hit by a passenger bus that was insured with Western Guaranty Corporation. The policy provided that the company’s liability in cases of death, injury, or damage to property of any party shall not exceed the limits of liability set forth, and that the payment per victim in any one accident shall not exceed the limits indicated in the Schedule of Indemnities provided for excluding additional medical or burial expenses that might have been incurred. The pedestrian filed a complaint for damages against the bus company, which in turn filed a third-party complaint against petitioner therein. The Regional Trial Court ruled in favor of the pedestrian and ordered the payment of actual damages, compensation for loss of earning capacity, moral damages, and attorney’s fees. On appeal, the CA affirmed the trial court’s ruling in its entirety. Petitioner therein further appealed to this Court and contended that as the schedule therein limits the amount payable for certain kinds of expenses, that schedule should be read as excluding liability for any other type of expense or damage or loss even though actually sustained or incurred by the third-party victim.
What was the ruling of the Court in the Western Guaranty case? What are the bases of the Court?
The Court ruled against petitioner insurance provider.
Firstly, the Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen.
Secondly, the reading urged by Western of the Schedule of Indemnities comes too close to working fraud upon both the insured and the third[-]party beneficiary of Section 1 of Stronghold Policy (Liability to the Public).
The Court ruled that the schedule does not restrict the kinds of damages that petitioner therein may be made to pay as long as liability is shown to have arisen and the requisites for each kind of damages are present. The schedule is not an enumeration of the specific kinds of damages that may be awarded. Its purpose was to set limits to the amounts the insurance company would be liable for in cases of “claims for death, bodily injuries of, professional services and hospital charges, for services rendered to traffic accident victims”; it does not limit or exclude claims for other kinds of damages. The Court added that petitioner therein should have used a more specific and precise language to reflect its intentions as presented in its arguments.
What is the jurisprudential significance of the Western Guaranty case?
Western Guaranty clarifies the applicability of the limits provided in the Schedule of Indemnities to injuries listed therein and allows claims for other kinds of damages not otherwise indicated in the schedule against CMVLI policy providers, as long as liability is established and the requisites for the kind of damages claimed are present.
Did the CA err in applying the Western Guaranty case?
The CA did not err in applying Western Guaranty. Upon examination of Stronghold’s policy in the instant case, the Court finds that the appellate court is correct in finding that the subject policy is similar—and in fact identical—with the policy in Western Guaranty.
It is clear that Stronghold’s policy is identical with the assailed policy in Western Guaranty.
As the appellate court have held, the limit of liability with regard to the items listed in the Schedule of Indemnities is the amount provided therein; the limit of liability with regard to other kinds of damages not listed in the same Schedule of Indemnities is the total amount of insurance coverage. It then follows that the amounts in excess of the limits of liability in the schedule for items listed therein are not covered by the total coverage. Such excess is already for the personal account of the insured or an excess coverage provider. This interpretation upholds the purpose of indicating limits of liability on the specific injuries listed in the schedule.
Was Stronghold’s liability limited?
YES.
Stronghold’s liability with regard to injuries provided in its policy’s Schedule of Indemnities is subject to the limits provided therein. Any excess will not be for its account, and will be for the account of the excess coverage provider—Malayan in this case.
Why was the GSIS case and the Guaranty case different from each other?
As to Stronghold’s contention that GSIS is the applicable case, the Court agrees with the CA that it is not the applicable case. The insurance policy therein is different from the policy in Western Guaranty (and Stronghold’s policy in the instant case). There was no determination that the policy in GSIS contained the same wording and all-encompassing clause embodied in the policy assailed in Western Guaranty. Moreover, the issues in GSIS are different from Western Guaranty and the instant case; in GSIS, the issues pertained to the insurer’s solidary liability with the insured, and the prescription of an action to file an insurance claim.
