CASUALTY INSURANCE
) Liability for quasi-delict or non-fulfillment of
Section 176. Casualty insurance is insurance covering loss
or liability arising from accident or mishap, // excluding
certain types of loss which by law or custom are
considered as falling exclusively within the scope of other
types of insurance such as fire or marine. // It includes,
but is not limited to, // employer’s liability insurance,
motor vehicle liability insurance, plate glass insurance,
burglary and theft insurance, // personal accident and
health insurance as written by non-life insurance
companies, and other substantially similar kinds of
insurance.
CASUALTY INSURANCE DEFINED
Includes all forms of insurance against loss or liability arising
from accident or mishap excluding certain types of loss or
liability which are not within the scope of other types of
insurance, namely: marine, fire, suretyship, and life.
RISKS OR LOSSES COVERED
Note: Without the exclusion of the other types of insurance,
casualty insurance would apply to almost any kind of insurance.
1.) Accepting “casualty” to mean “accident” – a violent
mishap proceeding from an unknown or unexpected
cause.
- Casualty insurance might be presumed to include
any loss or damage when an accident is the cause
of the loss.
2.) Except with respect to compulsory motor vehicle
liability insurance, the Insurance Code contains no
other provisions applicable to casualty insurance or to
robbery insurance in particular. These contracts are,
therefore, governed by the general provisions
applicable to all types of insurance.
TWO GENERAL DIVISIONS OF CASUALTUY
INSURANCE
1.) Insurance against specified perils which may affect the
person and/or property of the insured.
2.) Insurance against specified perils which may give rise
to liability on the part of the insured for claims for
injuries to others or for damage to their property.
LIABILITY INSURANCE DEFINED
A contract of indemnity for the benefit of the insured and
those in privity with him, or those to whom the law upon the
grounds of public policy extends the indemnity against liability.
LIABILITY INSURABLE
1.
contract
- Liability involving the commission of a quasi-
delict or tort is a civil injury, and not a felony or
crime which is a public injury. (liability, is
financial responsibility that one party has to
another party as a consequence of doing or failing
to do something)
2.) Liability for criminal negligence
- Liabilities arising out of acts of negligence
which are also criminal are also insurable on the
ground that such acts are accidental.
Note: liability consequences of deliberate criminal acts are not
insurable
INSURABLE INTEREST IN LIABILITY
INSURANCE
The insurable interest is to be found in the interest the insured
has in the safety of persons who may maintain, or in the
freedom from damage of property which may become the
basis of suits against him in case of their injury or destruction.
WHEN LIABILITY INSURANCE IN POLICY IS
PAYABLE
The general distinction between an insurance against liability
and one against actual loass is that the coverage or liability of
the insurer under the first attaches when the liability of the
insured to the injures third party attaches, regardless of actual
loss at that time. While under the second, an action against the
insurer does not lie until an actual loss is sustained by the
insured.
RIGHT OF INJURED PERSON TO SUE INSURER
OF PARTY AT FAULT
The right of the person injured to sue the insurer of the party
at fault depends on whether the contract of insurance is
intended to benefit third persons also or only the insured.
1.) Indemnity against third party liability
- Where the contract provides for indemnity
against liability to third persons, then third
persons to whom the insured is liable, can sue
directly the insurer upon the occurrence of the
injury or event upon which the liability depends.
To protect injured party from insolvency of the
insured.
2.) Indemnity against actual loss or payment
- Where the contract is for indemnity against actual
loss or payment, then third persons cannot
proceed against the insurer, the contract being
solely to reimburse the insured for liability
actually discharged by him through payment to
MNM III 1
 third persons, said third person’s recourse being
thus limited to the insured alone.
BASIS AND EXTENT OF INSURER’S LIABILITY
1.) Contract of insurance
- The liability of the insurer to the third party is
based on contract particularly, the insurance
policy while that of the insured is based on tort in
accordance with the provisions of the Civil Code.
2.) Sum limited in the contract
- the third party liability of the insurer is only up to
the extent of the insurance policy and that
required by law. Any award beyond the insurance
coverage would already be the sole liability of the
insured and/or the other parties, if any, at fault.
ACCIDENT AND HEALTH INSURANCE
1.) Closely related purpose of coverages
- In both kinds of insurance, the insured is
reimbursed for medical and hospital expenses
and, in the case of accident insurance and
sometimes health insurance, earnings as a result
of the incapacity
2.) Combination of coverages
- Accident and health coverages are often
combined in the same policy thereby protecting
the insured from loss from either kind of
disability. Also, accident insurance is frequently
offered as a supplement to life insurance.
3.) Burden of proof
- In accident insurance, the insured’s beneficiary
has the burden of proof in determining that the
cause of death is due to the covered peril.
MEANING OF “ACCIDENT” AND “ACCIDENTAL”
AS USEDIN ACCIDENT POLICY
The terms have been taken to mean that which happens by
chance or fortuitously, without intention or design, and which
is unexpected, unusual and unforeseen. This presupposes the
lack of intention to commit the wrong resulting from the event
that happens.
1.) Happening from known or unknown cause
unusual and unexpected
- It is an event which happens without any human
agency or, if happening through human agency,
an event which, under the circumstances, is
unusual to and not expected by the person to
whom it happens. It need not be an event that is
sudden.
2.) Cause may be attributable to fault or negligence
- The terms do not, without qualification, exclude
events resulting in damage or loss due to the fault,
recklessness or negligence of third parties.
RULE AS TO DEATH OR INJURY RESULTING
FROM ACCIDENTAL OR ACCIDENTAL MEANS
1.) Terms considered as legally synonymous
- The two concepts are so difficult to distinguish
that they will be treated as essentially the same in
their jurisdictions.
2.) General rule
- 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.
3.) Exception
- 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 policies insuring
against death or injury from accident.
SUICIDE AND WILLFUL EXPOSURE TO
NEEDLESS PERIL
The only difference is in degree, as suicide imports a positive
act of ending such life whereas the second act indicates a
reckless risking of it that it is almost suicidal in intent.
NOTE: Voluntary exposure to a known danger is generally
held to negate the accidental character of whatever followed
from the known danger.
MEANING OF “INTENTIONAL” AS USED IN
ACCIDENT POLICY
Implies the exercise of the reasoning faculties, consciousness,
and volition. If the injuries suffered by the insured clearly
resulted from the intentional act of a third person, the insurer
is relieved from liability as stipulated.
EFFECT OF “NO ACTION” CLAUSE IN POLICY OF
LIABILITY INSURANCE
“No action” clause in the policy cannot prevail over the Rules
of Court provisions aimed at avoiding multiplicity of suits.
CASES
Biagtan vs. The Insular Life Assurance Company
GR No. L-25579
MNM III 2
March 29, 1972
FACTS:
Juan S. Biagtan was insured with defendant Insular Life
Assurance company for the sume of P5,000 and, under a
supplementary contract denominated “Accidental Death
benefit Clause” for and additional sum of P5,000 if the “The
death of thee insured resulted directly from bodily injury
effected solely through external and violent means
sustained in an accident .. and independently of all other
causes.” The clause, however expressly provided that it
would not apply where the death resulted from an injury
“intentionally inflicted by another party.”
On the night of May 20, 1964, or during the first hours of the
following day a band of robbers entered the house of the
insured Juan S. Biagtan, in the course of the said robbery, the
latter died from the thrusts made by the robbers to the body
of the insured.
Plaintiffs, as beneficiaries of the insured, filed a claim under the
policy. The insurance company paid the basic amount of
P5,000 but refused to pay the additional sum of P5,000
under the accidental death benefit clause, on the ground
that the insured’s death resulted from injuries
intentionally inflicted by third parties and therefore was
not covered.
ISSUE:
Whether or not the petitioners are entitled to the said
proceeds under the accidental death benefit clause.
HELD: NO
It should be noted that the exception in the accidental benefit
clause invoked by the appellant does not speak of the purpose
– whether homicidal or not – of a third party in causing the
injuries, but only of the fact that such injuries have been
“intentionally” inflicted – this obviously to distinguish them
from injuries which, although received at the hands of a third
party, are purely accidental. This construction is the basic idea
expressed in the coverage of the clause itself, namely, that “the
death of the insured resulted directly from bodily injury
effected solely through external and violent means
sustained in an accident. And independently of all other
causes.” 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 are not intentionally inflicted, regardless of whether
they prove fatal or not. As it was, in the present case they did
prove fatal, and the robbers have been accused and convicted
of the crime of robbery with homicide.
Zenith Insurance Corporation vs. CA and Lawrence
Fernandez
GR. No. 85296
May 14, 1990
FACTS:
On January 25, 1983, private respondent Lawrence Fernandez
insured his car for “own damage” with petitioner Zenith
Incurance Corporation. On July 6, 1983, the care figured in an
accident and suffered actual damages in the amount of P3,640.
After allegedly being given a run around by Zenith for 2
months, Fernandez filed a complaint for sum of money and
damages resulting from the refusal of the petitioner to pay the
amount claimed.
Zenith filed an answer alleging that it offered to pay the claim
of Fernandez pursuant to the terms and conditions of the
contract which, the private respondent rejected.
ISSUE
Whether or not the award of moral and exemplary
damages should be upheld.
HELD: YES
As regards the award of moral and exemplary damages, the
rules under the civil code shall govern.
The purpose of moral damages is essentially indemnity or
reparation, not punishment or correction, moral damages are
emphatically not intended to enrich a complaint at theexpense
of a defendant, they are awarded only to enable the injured
party to obtain means, diversions, or amusements that will
serve to elleviate the moral suffering he has undergone by
reason of the defendant’s culpable action.
In the instant case, there was a finding that private respondent
was given a “run-around” for two months, which is the basis
for the award of the damages granted under the Insurance
Code for unreasonably delay in the payment of the claim.
However, the act of petitioner of delaying payment for two
months cannot be considered as so wanton or malevolent to
justify an award of P20,000 as moral damages, taking into
consideration also the fact that the actual damage on the car
was only P3,460. The reason for petitioner’s failure to
indemnify private respondent within the two0month period
was that the parties could not come to an agreement as regards
the amount of the actual damage on the car. The amount of
P10,000 prayed for by private respondent as moral damages is
equitable.
MNM III 3
Perla Compania De Seguros, Inc. vs. HON. Jose
Ramolete, Honorato Borbon
GR No. L-60887
November 13, 1991
FACTS:
In the afternoon of June 1 1976, a Cimarron PUJ owned and
registered in the name of Nelia Enriquez, and driven by Cosme
Casas, was travelling from Cebu City to Danao City. While
passing through Lilao, Cebu, the Cimmaron PUJ collided with
a private jeep owned by the late Calixtio Palmes who was then
driving the private jeep. The impact of the collissionwas such
that the private jeep was flung away to a distance of about thirty
feet and then fell on its right side pinning down Clalixto
Palmes. He died as a result of cardio-respiratory arrest due to
a crushed heart. The accident also caused physical injuries on
the part of Adeudatus Borbon who was then only 2 years old.
Respondents filed a compliant against Cosme Casas and Nelia
Enriquez as a result of the accident.
The claim of private respondent Honorato Borbon being
distinct and separate from that of co-plaintiff Primitiva Palmes,
and the amount thereof falling properly within the jurisdiction
of the inferior court respondent Judge Jose Ramlete ordered
the Borbon claim excluded from the Complaint, without
prejudice to its being filed with the proper inferior court.
The court of First instance rendered a decision in favor of
private respondent Primitiva Palmes, ordering common carrier
Nelia Enriquez to pay her damages.
On 6 August 1979, respondent Judge issued an order directing
the Provincial Sheriff or his deputy to garnish the third-party
liability insurance policy.
Petitioner then appeared and contended that the writ was void
on the ground that it was not a party to the case and that
jurisdiction over its person had never been acquired by the trial
court by service of summons or by any process. Perla further
argues that the writ of garnishment had been issued solely on
the basis of the testimony of the judgment debtor during the
examination on 23 July 1979 to the effect that the Cimarron
PUJ was covered by a third party liability insurance issued by
Perla, without granting it the opportunity to set up any
defenses which it may have under the insurance contract.
ISSUE:
Whether or not the respondent judge committed grave
abuse of discretion, thus making the petitioner NOT
liable.
HELD: NO.
The judgment debtor, who is the original creditor of the
garnishee is, through service of the writ of garnishment,
substituted by the judgment creditor who thereby becomes
creditor of the garnishee. Garnishment has also been described
as a warning to a person having in possession of property or
credits of the judgment debtor, not to pay the money or deliver
the property to the latter, but rather to appear and answer to
the plaintiff’s suit.
In order that the trial court may validly acquire jurisdiction to
bind the person of the garnishee, it is not necessary that
summons be served upon him. The garnishee need not be
impleaded as a party to the case. All that is necessary for the
trial court lawfully to bind the person of the garnishee or any
person who has in his possession credits belonging to the
judgment debtor is service upon him of the writ of
garnishment.
In the instant case, the judgment debtor Nelia Enriquez
clearly had an interest in the proceeds of third-party
liability insurance contract. In a third-party liability
insurance contract, the insurer assumes the obligation of
paying the injured third party to whom the insured is
liable. The insurer becomes liable as soon as the liability
if the insured to the injured third person attaches. Prior
payment by the insured to the injured third person is not
necessary in order that the obligation of the insurer may
arise. From the moment that the insured became liable to
third person, the insured acquired an interest in the
insurance contract, which interest may be garnished like
any other credit.
Sun Insurance Office LTD vs. CA and Nerissa Lim
GR No. 92383
July 17, 1992
FACTS:
The petitioner issued Personal Accident Policy to Felix Lim, Jr.
with a face value of P200,000. Two months later, he was dead
with a bullet wound on his head. As beneficiary, his wife
Nerissa Lim sought payment on the policy but her claim was
rejected. The petitioner agreed that there was no suicide. It
argued, however that there was no accident either.
According to the Assistant of Lim, the latter was in a happy
mood and was playing with his handgun, from which he had
previously removed the magazine. As she watched television,
he stood in front of her and pointed the gun at her. She pushed
it aside and said it might be loaded. He assured her it was not
and then pointed it to his temple. The next moment there was
MNM III 4
an explosion and Lim slumped to the floor. He was dead
before he fell.
ISSUE:
Whether or not the event is considered to be an accident
making the petitioner liable.
HELD: YES
The words “accident” and “accidental” have never acquired
any technical signification in law, and when used in an
insurance contract are to be construed and considered
according to the ordinary understanding and common usage
and speech of people generally. In substance, the courts are
practically agreed that the words “accident” and “accidental”
mean that which happens by chance or fortuitously, without
intention or design, and which is unexpected, unusual, and
unforeseen.
An accident is an event which happens without any
human agency or, if happening through human agency,
an event which, under the circumstances, is unusual to
and not expected by the person to whom it happens. It
has also been defined as an injury which happens by
reason of some violence or casualty to the injured without
his design, consent, or voluntary co-operation.
In light of these definitions, the Court is convinced that the
incident that resulted in Lim’s death was indeed an accident.
The petitioner contends that the insured willfully exposed
himself to needless peril and thus removed himself from the
coverage of the insurance policy. By the mere act of pointing
the gun to his temple, Lim had willfully exposed himself to
needless peril and so came under the exception. The theory is
that a gun per se is dangerous and should therefore be handled
cautiously in every case.
As the secretary testified, Lim had removed the magazine from
the gun and believed it was no longer dangerous. He expressly
assured her that the gun was not loaded. It is submitted that
Lim did not willfully expose himself to needless peril when he
pointed the gun to his temple because the fact is that he
thought it was not unsafe to do so. The act was precisely
intended to assure Nalagon that the gun was indeed harmless.
Jewel Villacorta vs. The Insurance Commission and
Empire Insurance Company
GR No L-54171
October 28, 1980
FACTS:
Complainant [petitioner] was the owner of a Colt Lancer,
Model 1976, insured with respondent company under Private
Car Policy No. MBI/PC-0704 for P35,000.00 — Own
Damage; P30,000.00 — Theft; and P30,000.00 — Third Party
Liability, effective May 16, 1977 to May 16, 1978. On May 9,
1978, the vehicle was brought to the Sunday Machine Works,
Inc., for general check-up and repairs. On May 11, 1978, while
it was in the custody of the Sunday Machine Works, the car
was allegedly taken by six (6) persons and driven out to
Montalban, Rizal. While travelling along Mabini St., Sitio
Palyasan, Barrio Burgos, going North at Montalban, Rizal, the
car figured in an accident, hitting and bumping a gravel and
sand truck parked at the right side of the road going south. As
a consequence, the gravel and sand truck veered to the right
side of the pavement going south and the car veered to the
right side of the pavement going north. The driver, Benito
Mabasa, and one of the passengers died and the other four
sustained physical injuries. The car, as well, suffered extensive
damage. Complainant, thereafter, filed a claim for total loss
with the respondent company but claim was denied. Hence,
complainant, was compelled to institute the present action.
The comprehensive motor car insurance policy for P35,000.00
issued by respondent Empire Insurance Company admittedly
undertook to indemnify the petitioner-insured against loss or
damage to the car (a) by accidental collision or overturning, or
collision or overturning consequent upon mechanical
breakdown or consequent upon wear and tear; (b) by fire,
external explosion, self-ignition or lightning or burglary,
housebreaking or theft; and (c) by malicious act.
Respondent insurance commission, however, dismissed
petitioner's complaint for recovery of the total loss of the
vehicle against private respondent, sustaining respondent
insurer's contention that the accident did not fall within the
provisions of the policy either for the Own Damage or Theft
coverage, invoking the policy provision on "Authorized
Driver" clause.1
ISSUE:
Whether or not the insurance company should be held
liable despite the “authorized driver” clause.
HELD: YES
First, respondent commission's ruling that the person who
drove the vehicle in the person of Benito Mabasa, who,
according to its finding, was one of the residents of the Sunday
Machine Works, Inc. to whom the car had been entrusted for
general check-up and repairs was not an "authorized driver" of
petitioner-complainant is too restrictive and contrary to the
established principle that insurance contracts, being contracts
MNM III 5
of adhesion where the only participation of the other party is
the signing of his signature or his "adhesion" thereto,
"obviously call for greater strictness and vigilance on the part
of courts of justice with a view of protecting the weaker party
from abuse and imposition, and prevent their becoming traps
for the unwary.2
The main purpose of the "authorized driver" clause, as may be
seen from its text, supra, is that a person other than the insured
owner, who drives the car on the insured's order, such as his
regular driver, or with his permission, such as a friend or
member of the family or the employees of a car service or
repair shop must be duly licensed drivers and have no
disqualification to drive a motor vehicle.
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 mere happenstance that the
employee(s) of the shop owner diverts the use of the car to his
own illicit or unauthorized purpose in violation of the trust
reposed in the shop by the insured car owner does not mean
that the "authorized driver" clause has been violated such as to
bar recovery, provided that such employee is duly qualified to
drive under a valid driver's license.
The situation is no 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 instead 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.
Assuming, despite the totally inadequate evidence, that the
taking was "temporary" and for a "joy ride", the Court sustains
as the better view that which holds that when a person, either
with the object of going to a certain place, or learning how to
drive, or enjoying a free ride, takes possession of a vehicle
belonging to another, without the consent of its owner, he is
guilty of theft because by taking possession of the personal
property belonging to another and using it, his intent to gain is
evident since he derives therefrom utility, satisfaction,
enjoyment and pleasure. Justice Ramon C. Aquino cites in his
work Groizard who holds that the use of a thing constitutes
gain and Cuello Calon who calls it "hurt de uso. "
Paramount Insurance Corporation vs. Spouses Yves
GR No. 173773
November 28, 2012
FACTS:
On May 26, 1994, respondents insured with petitioner their
1994 Toyota Corolla sedan under a comprehensive motor
vehicle insurance policy for one year.
During the effectivity of said insurance, respondents’ car was
unlawfully taken. Hence, they immediately reported the theft
to the Traffic Management Command of the PNP who made
them accomplish a complaint sheet. In said complaint sheet,
respondents alleged that 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, respondents notified petitioner to claim for the
reimbursement of their lost vehicle. However, petitioner
refused to pay.
Accordingly, respondents 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.
TRIAL COURT
They alleged 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.
It appears, however, that plaintiff had successfully prosecuted
and had been awarded the amount claimed in this action, in
another action (Civil Case No. 95-1524 entitled Sps. Yves and
Maria Teresa Remondeulaz versus Standard Insurance
Company, Inc.), which involved the loss of the same vehicle
under the same circumstances although under a different
policy and insurance company. 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.
In its Decision dated April 12, 2005, the appellate court
reversed and set aside the Order issued by the trial court.
Petitioner argues that the loss of respondents’ vehicle is not a
peril covered by the policy. It maintains that it is not liable for
the loss, since the car cannot be classified as stolen as
respondents entrusted the possession thereof to another
person.
ISSUE:
Whether or not the Court of Appeals decided the case a quo
in a way not in accord with law and/or applicable jurisprudence
when it promulgated in favor of the respondents
MNM III 6
Remondeulaz, making Paramount liable for the alleged "theft"
of respondents’ vehicle.
HELD:

In the instant case, Sales did not have juridical possession over
the vehicle. Hence, it is apparent that the taking of repondents’
vehicle by Sales is without any consent or authority from the
former.

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 repondents’ car is undeniably
covered by a Comprehensive Motor Vehicle 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."

All told, Sales’ act of depriving respondents of their motor

vehicle at, or soon after the transfer of physical possession of
the movable property, constitutes theft under the insurance
policy, which is compensable.

MNM III 7