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Republic of the Philippines

SUPREME COURT

Manila

EN BANC

R. No. L-25579 March 29, 1972

ILIA T. BIAGTAN, JUAN T. BIAGTAN, JR., MIGUEL T. BIAGTAN, GIL T. BIAGTAN and GRACIA T.AGTAN, plaintiffs-appellees,

E INSULAR LIFE ASSURANCE COMPANY, LTD., defendant-appellant.

nopo, Millora, Serafica, and Saez for plaintiff-appellees.

aneta, Mendoza and Papa for defendant-appellant.

AKALINTAL, J.:p

s is an appeal from the decision of the Court of First Instance of Pangasinan in its Civil Case No. D-1700

e facts are stipulated. Juan S. Biagtan was insured with defendant InsularLife Assurance Company undericy No. 398075 for the sum of P5,000.00 and, under a supplementary contract denominated "Accidentalath Benefit Clause, for an additional sum of P5,000.00 if "the death of the Insured resulted directly from b

ury effected solely through external and violent means sustained in an accident ... and independently of aer causes." The clause, however,expressly provided that it would not apply where death resulted from an

ury"intentionally inflicted by another party."

the night of May 20, 1964, or during the first hours of the following day a band of robbers entered the hohe insured Juan S. Biagtan. What happened then is related in the decision of the trial court as follows:

...; that on the night of May 20, 1964 or the first hours of May 21, 1964, while the said life policy and

supplementary contract were in full force and effect, the house of insured Juan S. Biagtan was robbed byband of robbers who were charged in and convicted by the Court of First Instance of Pangasinan for robwith homicide; that in committing the robbery, the robbers, on reaching the staircase landing on the secofloor, rushed towards the door of the second floor room, where they suddenly met a person near the doooneof the rooms who turned out to be the insured Juan S. Biagtan who received thrusts from their sharppointed instruments, causing wounds on the body of said Juan S. Biagtan resulting in his death at about on the same day, May 21, 1964;

intiffs, as beneficiaries of the insured, filed a claim under the policy. The insurance company paid the bas

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ount of P5,000.00 but refused to pay the additional sum of P5,000.00 under the accidental death benefituse, on the ground that the insured's death resulted from injuries intentionally inflicted by third parties andrefore was not covered. Plaintiffs filed suit to recover, and after due hearing the court a quo renderedgment in their favor. Hence the present appeal by the insurer.

e only issue here is whether under the facts are stipulated and found by the trial court the wounds receiveinsured at the hands of the robbers nine in all, five of them mortal and four non-mortal were inflicte

entionally. The court, in ruling negatively on the issue, stated that since the parties presented no evidencebmitted the case upon stipulation, there was no "proof that the act of receiving thrust (sic) from the sharp-nted instrument of the robbers was intended to inflict injuries upon the person of the insured or any otherrson or merely to scare away any person so as to ward off any resistance or obstacle that might be offere

pursuit of their main objective which was robbery."

e trial court committed a plain error in drawing the conclusion it did from the admitted facts. Nine wounds cted upon the deceased, all by means of thrusts with sharp-pointed instruments wielded by the robbers.

a physical fact as to which there is no dispute. So is the fact that five of those wounds caused the death oured. Whether the robbers had the intent to kill or merely to scare the victim or to ward off any defense heght offer, it cannot be denied that the act itself of inflicting the injuries was intentional. It should be noted t

exception in the accidental benefit clause invoked by the appellant does not speak of the purpose whmicidal or not of a third party in causing the injuries, but only of the fact that such injuries have beenentionally" inflicted this obviously to distinguish them from injuries which, although received at the han

hird party, are purely accidental. This construction is the basic idea expressed in the coverage of the clauelf, namely, that "the death of the insured resulted directly from bodily injury effected solely through externd violent means sustained in an accident... and independently of all other causes." A gun which dischargle being cleaned and kills a bystander; a hunter who shoots at his prey and hits a person instead; an ath

a competitive game involving physical effort who collides with an opponent and fatally injures him as a res

se are instances where the infliction of the injury is unintentional and therefore would be within the coveran accidental death benefit clause such as thatin question in this case. But where a gang of robbers enteuse and coming face to face with the owner, even if unexpectedly, stab him repeatedly, it is contrary to alson and logic to say that his injuries are not intentionally inflicted, regardless of whether they prove fatal . As it was, in the present case they did prove fatal, and the robbers have been accused and convicted o

me of robbery with homicide.

e case ofCalanoc vs. Court of Appeals, 98 Phil. 79, is relied upon by the trial court in support of its decisie facts in that case, however, are different from those obtaining here. The insured there was a watchmantain company, who happened to be invited by a policeman to come along as the latter was on his way toestigate a reported robbery going on in a private house. As the two of them, together with the owner of thuse, approached and stood in front of the main gate, a shot was fired and it turned out afterwards that thetchman was hit in the abdomen, the wound causing his death. Under those circumstances this Court heldould not be said that the killing was intentional for there was the possibility that the malefactor had fired thot to scare people around for his own protection and not necessarrily to kill or hit the victim. A similar posclearly ruled out by the facts in the case now before Us. For while a single shot fired from a distance, and rson who was not even seen aiming at the victim, could indeed have been fired without intent to kill or injue wounds inflicted with bladed weapons at close range cannot conceivably be considered as innocent ins

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such intent is concerned. The manner of execution of the crime permits no other conclusion.

urt decisions in the American jurisdiction, where similar provisions in accidental death benefit clauses inurance policies have been construed, may shed light on the issue before Us. Thus, it has been held that

entional" as used in an accident policy excepting intentional injuries inflicted by the insured or any otherrson, etc., implies the exercise of the reasoning faculties, consciousness and volition. 1 Where a provisionpolicy excludes intentional injury, it is the intention of the person inflicting the injury that is controlling. 2 If

uries suffered by the insured clearly resulted from the intentional act of a third person the insurer is relievem liability as stipulated. 3

he case ofHutchcraft's Ex'r v. Travelers' Ins. Co., 87 Ky. 300, 8 S.W. 570, 12 Am. St. Rep. 484, the insus waylaid and assassinated for the purpose of robbery. Two (2) defenses were interposed to the action toover indemnity, namely: (1) that the insured having been killed by intentional means, his death was not

cidental, and (2) that the proviso in the policy expressly exempted the insurer from liability in case the insd from injuries intentionally inflicted by another person. In rendering judgment for the insurance company

urt held that while the assassination of the insured was as to him an unforeseen event and thereforecidental, "the clause of the proviso that excludes the (insurer's) liability, in case death or injury is intentioncted by another person, applies to this case."

Butero v. Travelers' Acc. Ins. Co., 96 Wis. 536, 65 Am. St. Rep. 61, 71 S.W. 811, the insured was shot thes by a person unknown late on a dark and stormy night, while working in the coal shed of a railroadmpany. The policy did not cover death resulting from "intentional injuries inflicted by the insured or any otrson." The inquiry was as to the question whether the shooting that caused the insured's death was accidntentional; and the Court found that under the facts, showing that the murderer knew his victim and that hd with intent to kill, there could be no recovery under the policy which excepted death from intentional injcted by any person.

HEREFORE, the decision appealed from is reversed and the complaint dismissed, without pronouncemencosts.

divar, Castro, Fernando and Villamor, JJ., concur.

kasiar, J., reserves his vote.

eparate Opinions

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ARREDO, J., concurring

ring the deliberations in this case, I entertained some doubts as to the correctness and validity of the viewheld in the main opinion penned by Justice Makalintal. Further reflection has convinced me, however, tha

re are good reasons to support it.

first blush, one would feel that every death not suicidal should be considered accidental, for the purposesaccident insurance policy or a life insurance policy with a double indemnity clause in case death results f

cident. Indeed, it is quite logical to think that any event whether caused by fault, negligence, intent of a thirty or any unavoidable circumstance, normally unforeseen by the insured and free from any possiblennivance on his part, is an accident in the generally accepted sense of the term. And if I were convinced tuding in the policy the provision in question, both the insurer and the insured had in mind to exclude ther

m the coverage of the policy only suicide whether unhelped or helped somehow by a third party, I wouldregard the American decisions cited and quoted in the main opinion as not even persuasive authorities. Bamining the unequivocal language of the provision in controversy and considering that the insured accept

policy without asking that it be made clear that the phrase "injury intentionally inflicted by a third party" sunderstood to refer only to injuries inflicted by a third party without any wilful intervention on his part (of thured) or, in other words, without any connivance with him (the insured) in order to augment the proceeds policy for his benificiaries, I am inclined to agree that death caused by criminal assault is not covered by

icies of the kind here in question, specially if the assault, as a matter of fact, could have been more or lesicipated, as when the insured happens to have violent enemies or is found in circumstances that would mlife fair game of third parties.

to the rest, I have no doubt that the killing of the insured in this case is as intentional as any intentional an be, hence this concurrence.

EHANKEE, J., dissenting:

e sole issue at bar is the correctness in lawof the lower court's appealed decision adjudging defendanturance company liable, under its supplementary contract denominated "Accidental Death Benefit Clausedeceased insured, to plaintiffs-beneficiaries (excluding plaintiff Emilia T. Biagtan) in an additional amoun000.00 (with corresponding legal interest) and ruling that defendant company had failed to present anydence to substantiate its defense that the insured's death came within the stipulated exceptions.

fendant's accidental death benefit clause expressly provides:

ACCIDENTAL DEATH BENEFIT. (hereinafter called the benefit). Upon receipt and approval of due proothe death of the Insured resulted directly from bodily injury effected solely through external and violent m

sustained in an accident, within ninety days after the date of sustaining such injury, and independently ofother causes, this Company shall pay, in addition to the sum insured specified on the first page of this Pofurther sum equal to said sum insured payable at the same time and in the same manner as said sum insprovided, that such death occurred during the continuance of this Clause and of this Policy and before thsixtieth birthday of the Insured." 1

ong list of exceptions and an Automatic Discontinuance clause immediately follow thereafter, thus:

EXCEPTIONS. The Benefit shall not apply if the Insured's death shall result, either directly or indirectly, f

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any one of the following causes:

(1) Self-destruction orself-inflicted injuries, whether the Insured be sane or insane;

(2) Bodily or mental infirmity or disease of any kind;

(3) Poisoning or infection, other than infection occurring simultaneously with and in consequence of a cuwound sustained in an accident;

(4) Injuries of which there is no visible contusions or wound on the exteriorof the body, drowning and intinjuries revealed by autopsy excepted;

(5) Any injuries received(a) while on police dutyin any military, naval or police organization; (b) in any ricommotion, insurrectionor waror any act incident thereto; (c) while travellingas a passenger or otherwisany form of submarine transportation, or while engaging in submarine operations; (d) in any violation of tby the Insured or assault provoked by the Insured; (e) that has been inflicted intentionally by a third partyeither with or without provocation on the part of the Insured, and whether or not the attack or the defensethe third party was caused by a violation of the law by the Insured;

(6) Operating or riding in or descending from any kind of aircraftif the Insured is a pilot, officer or membethe crew of the aircraft or is giving or receiving any kind of training or instruction or has any duties aboardaircraft or requiring descent therefrom; and

(7)Atomic energy explosion of any nature whatsoever.

The Company, before making any payment under this Clause, shall have the right and opportunity to exathe body and make an autopsy thereof.

AUTOMATIC DISCONTINUANCE. This Benefit shall automatically terminate and the additional premiumtherefor shall cease to be payable when and if:

(1) This Policy is surrendered for cash, paid-up insurance or extended term insurance; or

(2) The benefit under the Total and Permanent Disability Waiver of Premium Certificate is granted to theinsured; or

(3) The Insured engages in military, naval or aeronautic service in time of war; or

(4) The policy anniversary immediately preceding the sixtieth birthday of the Insured is reached. 2

s undisputed that, as recited in the lower court's decision, the insured met his death, as follows: "that on thht of May 20, 1964 or the first hours of May 21, 1964, while the said life policy and supplementary contracre in full force and effect, the house of insured Juan S. Biagtan was robbed by a band of robbers who wearged in and convicted by the Court of First Instance of Pangasinan for robbery with homicide; that inmmitting the robbery, the robbers, on reaching the staircase landing of the second floor, rushed towards tors of the second floor room, where they suddenly met a person near the door of one of the rooms who tu

to be the insured Juan S. Biagtan who received thrust from their sharp-pointed instruments, causing wothe body of said Juan S. Biagtan resulting in his death at about 7 a.m. on the same day, May 21, 1964. "

fendant company, while admitting the above-recited circumstances under which the insured met his deat

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claimed liability under its accidental death benefit clause under paragraph 5 of its stipulated "Exceptions"theory that the insured's death resulted from injuries "intentionally inflicted by a third party," i.e. the robbeo broke into the insured's house and inflicted fatal injuries on him.

e case was submitted for decision upon the parties' stipulation of facts that (1) insurance companies suchLincoln National Life Insurance Co. and Sun Life Assurance Co. of Canada with which the deceased insan S. Biagtan was also insured for much larger sums under similar contracts with accidental death benefivisions have promptly paid the benefits thereunder to plaintiffs-beneficiaries; (2) the robbers who causedured's death were charged in and convicted by the Court of First Instance of Pangasinan for the crime ofbery with homicide; and (3) the injuries inflicted on the insured by the robbers consisted of five mortal and

n-mortal wounds. 4

e lower court thereafter rendered judgment against defendant, as follows:

There is no doubt that the insured, Juan S. Biagtan, met his death as a result of the wounds inflicted upoby the malefactors on the early morning of May 21, 1964 by means of thrusts from sharp-pointed instrum

delivered upon his person, and there is likewise no question that the thrusts were made on the occasion robbery. However, it is defendants' position that the killing of the insured was intentionally done by themalefactors, who were charged with and convicted of the crime of robbery with homicide by the Court of Instance of Pangasinan.

It must be noted here that no evidence whatsoever was presented by the parties who submitted the caseresolution upon the stipulation of facts presented by them. Thus, the court does not have before it prooftact of receiving thrust(s) from the sharp-pointed instrument of the robbers was intended to inflict injuriesthe person of the insured or any other person ormerely to scare away any person so as to ward off anyresistance or obstacle that might be offeredin the pursuit of their main objective which was robbery. It wathat where a provision of the policy excludes intentional injury, it is the intention of the person inflicting thinjury that is controlling ... and to come within the exception, the act which causes the injury must be whointentional, not merely partly.

The case at bar has some similarity with the case ofVirginia Calanoc vs. Court of Appeals, et al., L-8151promulgated December 16, 1965, where the Supreme Court ruled that "the shot (which killed the insuredmerely to scare away the people around for his own protection and not necessarily to kill or hit the victim

In the Calanoc case, one Melencio Basilio, a watchman of a certain company, took out life insurance fromPhilippine American Life Insurance Company in the amount of P2,000.00 to which was attached asupplementary contract covering death by accident. Calanoc died of gunshot wounds on the occasion ofrobbery committed in the house of a certain Atty. Ojeda in Manila. The insured's widow was paid P2,000the face value of the policy, but when she demanded payment of the additional sum of P2,000.00 represthe value of the supplemental policy, the company refused alleging, as main defense, that the deceased because he was murdered by a person who took part in the commission of the robbery and while makingarrest as an officer of the law which contingencies were (as in this case) expressly excluded in the contrahave the effect of exempting the company from liability.

The facts in the Calanoc case insofar as pertinent to this case are, as found by the Court of Appeals in itdecision which findings of fact were adopted by the Supreme Court, as follows:

"...that on the way to the Ojeda residence (which was then being robbed by armed men)policeman and Atty. Ojeda passed by Basilio (the insured) and somehow or other invitedlatter to come along; that as the three approached the Ojeda residence and stood in fronthe main gate which was covered by galvanized iron, the fence itself being partly concre

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partly adobe stone, a shot was fired; ... that it turned out afterwards that the special watcMelencio Basilio was hit in the abdomen, the wound causing his instantaneous death ..."

The Court of Appeals arrived at the conclusion that the death of Basilio, although unexpected, was not caby an accident, being a voluntary and intentional act on the part of the one who robbed, or one of those w

robbed, the house of Atty. Ojeda.

In reversing this conclusion of the Court of Appeals, the Supreme Court said in part:

"... Nor can it be said that the killing was intentional for there is the possibility that themalefactors had fired the shot merely to scare away the people around for his own proteand not necessarily to kill or hit the victim. In any event, while the act may not exempt thtriggerman from ability for the damage done, the fact remains that the happening was a accidentt on the part of the victim."

With this ruling of the Supreme Court, and the utter absence of evidence in this case as to the real intentthe malefactors in making a thrust with their sharp-pointed instrument on any person, the victim in particuthe case falls squarely within the ruling in the Calanoc vs. Court of Appeals case.

It is the considered view of this Court that the insured died because of an accidentwhich happened on thoccasion of the robbery being committed in his house. His death was not sought (at least no evidence w

presented to show it was), and therefore was fortuitous. "Accident" was defined as that which happens bchance or fortuitously, without intention or design, and which is unexpected, unusual and unforeseen, or which takes place without one's foresight or expectation an event that proceeds from an unknown cauis an unusual effect of a known cause, and therefore not expected. (29 Am. Jur. 706).

There is no question that the defense set up by the defendant company is one of those included among risks excluded in the supplementary contract. However, there is no evidence here that the thrusts with sh

pointed instrument(which led to the death of the insured) was "intentional," (sic) so as to exempt the comfrom liability. It could safely be assumed that it was purely accidentalconsidering that the principal motivthe culprits was robbery, the thrusts being merely intended to scare away persons who might offer resistor might obstruct them from pursuing their main objective which was robbery. 5

s respectfully submitted that the lower court committed no error in law in holding defendant insurancempany liable to plaintiffs-beneficiaries under its accidental death benefit clause, by virtue of the followingnsiderations:

The case ofCalanoccited by the lower court is indeed controlling here. 6 This Court, there construing a siuse, squarely ruled that fatal injuries inflicted upon an insured by a malefactor(s) during the latter'smmission of a crime are deemed accidental and within the coverage of such accidental death benefit claud the burden of proving that the killing was intentional so as to have it fall within the stipulated exception oving resulted from injuries "intentionally inflicted by a third party" must be discharged by the insurance

mpany. This Court there clearly held that in such cases where the killing does not amount to murder, it muheld to be a "pure accident" on the part of the victim, compensable with double-indemnity, even though thlefactor is criminally liable for his act. This Court rejected the insurance-company's contrary claim, thus:

Much less can it be pretended that Basilio died in the course of an assault or murder considering the vernature of these crimes. In the first place, there is no proof that the death of Basilio is the result of either cforthe record is barren of any circumstance showing how the fatal shot was fired. Perhaps this may be cin the criminal case now pending in court a regards the incident but before that is done anything that mig

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said on the point would be a mere conjecture. Nor can it be said that the killing was intentional for there ipossibility that the malefactor had fired the shot merely to scare away the people aroundfor his own protand not necessarily to kill or hit the victim. In any event, while the act may not exempt the triggerman fromliabilityfor the damage done, the fact remains that the happening was a pure accident on the part of the The victim could have been either the policeman or Atty. Ojeda for it cannot be pretended that the malefa

aimed at the deceased precisely because he wanted to take his life . 7

Defendant company patently failed to discharge its burden of proving that the fatal injuries were inflicted udeceased intentionally, i.e. deliberately. The lower court correctly held that since the case was submitted

on the parties' stipulation of facts which did not cover the malefactors' intent at all, there was an "utter absevidence in this case as to the real intention of the malefactors in making a thrust with their sharp-pointedtrument(s) on any person, the victim in particular." From the undisputed facts, supra, 8 the robbers had "ru

wards the doors of the second floor room, where they suddenly met a person ... who turned out to be theured Juan S. Biagtan who received thrusts from their pointed instruments." The thrusts were indeed propmed "purely accidental" since they seemed to be a reflex action on the robbers' part upon their being surpthe deceased. To argue, as defendant does, that the robbers' intent to kill must necessarily be deduced f

four mortal wounds inflicted upon the deceased is to beg the question. Defendant must suffer thensequences of its failure to discharge its burden of proving by competent evidence, e.g. the robbers' orewitnesses' testimony, that the fatal injuries were intentionally inflicted upon the insuredso as to exempt m liability.

Furthermore, plaintiffs-appellees properly assert in their brief that the sole error assigned by defendantmpany, to wit, that the fatal injuries were not accidental as held by the lower court but should be held to hen intentionally inflicted, raises a question of fact which defendant is now barred from raising, since itpressly limited its appeal to this Court purely "on questions of law", per its noitice of appeal, 9 Defendant isrefore confined to "raising only questions of law" and "no other questions" under Rule 42, section 2 of thees of Court 10 and is deemed to have conceded the findings of fact of the trial court, since he thereby wai

questions of facts.

11

t has long been an established rule of construction of so-called contracts of adhesion such as insurancentracts, where the insured is handed a printed insurance policy whose fine-print language has long beenected with great care and deliberation by specialists and legal advisers employed by and acting exclusiveinterest of the insurance company, that the terms and phraseology of the policy, particularly of any exce

uses, must be clearly expressed so as to be easily understood by the insured and any "ambiguous, equivuncertain terms" are to be "construed strictly and most strongly against the insurer and liberally in favor oured so as to effect the dominant purpose of indemnity or payment to the insured, especially where afeiture is involved.

e Court so expressly held inCalanoc

that:

... While as a general rule "the parties may limit the coverage of the policy to certain particular accidents risks or causes of loss, and may expressly except other risks or causes of loss therefrom" (45 C.J.S. 781however, it is to be desired that the terms and phraseology ofthe exception clause be clearly expressedto be within the easy grasp and understanding of the insured, for if the terms are doubtful or obscure themust of necessity be interpreted or resolved against the one who has caused the obscurity. (Article 1377Civil Code) And so it has been generally held that the "terms in an insurance policy, which are ambiguouequivocal, or uncertain ... are to be construed strictly and most strongly against the insurer, and liberally favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especia

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where a forfeiture is involved" (29 AM. Jur., 181), and the reason for this rule is that the "insured usually voice in the selection or arrangement of the words employedand that the language of the contract is selewith great care and deliberation by experts and legal advisers employed by, and acting exclusively in theinterest of, the insurance company." (44 C.J.S., p. 1174)

Insurance is, in its nature, complex and difficult for the layman to understand. Policies are prepared by exwho know and can anticipate the bearing and possible complications of every contingency. So long asinsurance companies insist upon the use of ambiguous, intricate and technical provisions, which conceathan frankly disclose, their own intentions, the courts must, in fairness to those who purchase insuranceconstrue every ambiguity in favor of the insured." (Algoe vs. Pacific Mut. L. Ins. Co., 91 Wash. 324 LRA 11237.)

"An insurershould not be allowed, by the use ofobscure phrases and exceptions, to defeat the very purpfor which the policy was procured." (Moore vs. Aetna Life Insurance Co., LRA 1915D, 164). 12

e Court has but recently reiterated this doctrine in Landicho vs. GSIS 13 and again applied the provisions icle 1377 of our Civil Code that "The interpretation of obscure words or stipulations in a contract shall not

party who caused the obscurity."

The accidental death benefit clause assuring the insured's beneficiaries of double indemnity, upon paymeextra premium, in the event that the insured meets violent accidental death is contractually stipulated asows in the policy: "that the death of the insured resulted directly from bodily injuryeffected solely throughernal and violent means sustained in an accident," supra. The policy then lists numerous exceptions, why be classified as follows:

Injuries effected through non-external means which are excepted: self-destruction, bodily or mental infirmease, poisoning or infection, injuries with no visible contusions or exterior wounds (exceptions 1 to 4 of puse);

Injuries caused by some act of the insured which is proscribedby the policy, and are therefore similarlyepted: injuries received while on police duty, while travelling in any form of submarine transportation, or inlation of law by the insured or assault provoked by the insured, or in any aircraft if the insured is a pilot ormber; [exceptions 5 (a), (c) and (d), and 6 of the policy clause]; and

Accidents expressly excluded: where death resulted in any riot, civil commotion, insurrection or war or atergy explosion. (Exceptions 5[b] and 7 of policy clause).

e only exception which is notsusceptible of classification is that provided in paragraph 5 (e), the veryception herein involved, which would also except injuries "inflicted intentionally by a third party, either with

hout provocation on the part of the insured, and whether or notthe attack or the defense by the third partused by a violation of the law by the insured."

s ambiguous clause conflicts with all the other four exceptions in the same paragraph 5 particularly thatmediately preceding it in item (d) which excepts injuries received where the insured has violated the law ovoked the injury, while this clause, construed as the insurance company now claims, would seemingly exo all other injuries, intentionally inflicted by a third party, regardless of any violation of law or provocation insured, and defeat the very purpose of the policy of giving the insured double indemnity in case of accid

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ath by "external and violent means" in the very language of the policy."

s obvious from the very classification of the exceptions and applying the rule of noscitus a sociis that theuble-indemnity policy covers the insured against accidental death, whether caused by fault, negligence o

ent of a third party which is unforeseen and unexpected by the insured. All the associated words and conche policy plainly exclude the accidental death from the coverage of the policy only where the injuries are cted or attended by some proscribed act of the insured or are incurred in some expressly excluded calam

ch as riot, war or atomic explosion.

ally, the untenability of herein defendant insurer's claim that the insured's death fell within the exception iher heightened by the stipulated fact that two other insurance companies which likewise covered the inswhich larger sums under similar accidental death benefit clauses promptly paid the benefits thereof tointiffs-beneficiaries.

ote accordingly for the affirmance in toto of the appealed decision, with costs against defendant-appellant

ncepcion, C.J. and Reyes, J.B.L., J., concur.

parate Opinions

ARREDO, J., concurring

ring the deliberations in this case, I entertained some doubts as to the correctness and validity of the viewheld in the main opinion penned by Justice Makalintal. Further reflection has convinced me, however, thare are good reasons to support it.

first blush, one would feel that every death not suicidal should be considered accidental, for the purposesaccident insurance policy or a life insurance policy with a double indemnity clause in case death results f

cident. Indeed, it is quite logical to think that any event whether caused by fault, negligence, intent of a thirty or any unavoidable circumstance, normally unforeseen by the insured and free from any possiblennivance on his part, is an accident in the generally accepted sense of the term. And if I were convinced tuding in the policy the provision in question, both the insurer and the insured had in mind to exclude ther

m the coverage of the policy only suicide whether unhelped or helped somehow by a third party, I would

regard the American decisions cited and quoted in the main opinion as not even persuasive authorities. Bamining the unequivocal language of the provision in controversy and considering that the insured acceptpolicy without asking that it be made clear that the phrase "injury intentionally inflicted by a third party" s

understood to refer only to injuries inflicted by a third party without any wilful intervention on his part (of thured) or, in other words, without any connivance with him (the insured) in order to augment the proceeds policy for his benificiaries, I am inclined to agree that death caused by criminal assault is not covered by

icies of the kind here in question, specially if the assault, as a matter of fact, could have been more or lesicipated, as when the insured happens to have violent enemies or is found in circumstances that would m

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life fair game of third parties.

to the rest, I have no doubt that the killing of the insured in this case is as intentional as any intentional an be, hence this concurrence.

EHANKEE, J., dissenting:

e sole issue at bar is the correctness in lawof the lower court's appealed decision adjudging defendanturance company liable, under its supplementary contract denominated "Accidental Death Benefit Clausedeceased insured, to plaintiffs-beneficiaries (excluding plaintiff Emilia T. Biagtan) in an additional amoun000.00 (with corresponding legal interest) and ruling that defendant company had failed to present anydence to substantiate its defense that the insured's death came within the stipulated exceptions.

fendant's accidental death benefit clause expressly provides:

ACCIDENTAL DEATH BENEFIT. (hereinafter called the benefit). Upon receipt and approval of due proothe death of the Insured resulted directly from bodily injury effected solely through external and violent msustained in an accident, within ninety days after the date of sustaining such injury, and independently ofother causes, this Company shall pay, in addition to the sum insured specified on the first page of this Pofurther sum equal to said sum insured payable at the same time and in the same manner as said sum insprovided, that such death occurred during the continuance of this Clause and of this Policy and before thsixtieth birthday of the Insured." 1

ong list of exceptions and an Automatic Discontinuance clause immediately follow thereafter, thus:

EXCEPTIONS. The Benefit shall not apply if the Insured's death shall result, either directly or indirectly, fany one of the following causes:

(1) Self-destruction orself-inflicted injuries, whether the Insured be sane or insane;

(2) Bodily or mental infirmity or disease of any kind;

(3) Poisoning or infection, other than infection occurring simultaneously with and in consequence of a cuwound sustained in an accident;

(4) Injuries of which there is no visible contusions or wound on the exteriorof the body, drowning and intinjuries revealed by autopsy excepted;

(5) Any injuries received(a) while on police dutyin any military, naval or police organization; (b) in any ricommotion, insurrectionor waror any act incident thereto; (c) while travellingas a passenger or otherwis

any form of submarine transportation, or while engaging in submarine operations; (d) in any violation of tby the Insured or assault provoked by the Insured; (e) that has been inflicted intentionally by a third partyeither with or without provocation on the part of the Insured, and whether or not the attack or the defensethe third party was caused by a violation of the law by the Insured;

(6) Operating or riding in or descending from any kind of aircraftif the Insured is a pilot, officer or membethe crew of the aircraft or is giving or receiving any kind of training or instruction or has any duties aboardaircraft or requiring descent therefrom; and

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(7)Atomic energy explosion of any nature whatsoever.

The Company, before making any payment under this Clause, shall have the right and opportunity to exathe body and make an autopsy thereof.

AUTOMATIC DISCONTINUANCE. This Benefit shall automatically terminate and the additional premiumtherefor shall cease to be payable when and if:

(1) This Policy is surrendered for cash, paid-up insurance or extended term insurance; or

(2) The benefit under the Total and Permanent Disability Waiver of Premium Certificate is granted to theinsured; or

(3) The Insured engages in military, naval or aeronautic service in time of war; or

(4) The policy anniversary immediately preceding the sixtieth birthday of the Insured is reached. 2

s undisputed that, as recited in the lower court's decision, the insured met his death, as follows: "that on thht of May 20, 1964 or the first hours of May 21, 1964, while the said life policy and supplementary contracre in full force and effect, the house of insured Juan S. Biagtan was robbed by a band of robbers who wearged in and convicted by the Court of First Instance of Pangasinan for robbery with homicide; that inmmitting the robbery, the robbers, on reaching the staircase landing of the second floor, rushed towards tors of the second floor room, where they suddenly met a person near the door of one of the rooms who tu

to be the insured Juan S. Biagtan who received thrust from their sharp-pointed instruments, causing wothe body of said Juan S. Biagtan resulting in his death at about 7 a.m. on the same day, May 21, 1964. "

fendant company, while admitting the above-recited circumstances under which the insured met his deatclaimed liability under its accidental death benefit clause under paragraph 5 of its stipulated "Exceptions"

theory that the insured's death resulted from injuries "intentionally inflicted by a third party," i.e. the robbeo broke into the insured's house and inflicted fatal injuries on him.

e case was submitted for decision upon the parties' stipulation of facts that (1) insurance companies suchLincoln National Life Insurance Co. and Sun Life Assurance Co. of Canada with which the deceased ins

an S. Biagtan was also insured for much larger sums under similar contracts with accidental death benefivisions have promptly paid the benefits thereunder to plaintiffs-beneficiaries; (2) the robbers who causedured's death were charged in and convicted by the Court of First Instance of Pangasinan for the crime ofbery with homicide; and (3) the injuries inflicted on the insured by the robbers consisted of five mortal and

n-mortal wounds. 4

e lower court thereafter rendered judgment against defendant, as follows:

There is no doubt that the insured, Juan S. Biagtan, met his death as a result of the wounds inflicted upoby the malefactors on the early morning of May 21, 1964 by means of thrusts from sharp-pointed instrumdelivered upon his person, and there is likewise no question that the thrusts were made on the occasion robbery. However, it is defendants' position that the killing of the insured was intentionally done by themalefactors, who were charged with and convicted of the crime of robbery with homicide by the Court of Instance of Pangasinan.

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It must be noted here that no evidence whatsoever was presented by the parties who submitted the caseresolution upon the stipulation of facts presented by them. Thus, the court does not have before it prooftact of receiving thrust(s) from the sharp-pointed instrument of the robbers was intended to inflict injuriesthe person of the insured or any other person ormerely to scare away any person so as to ward off anyresistance or obstacle that might be offeredin the pursuit of their main objective which was robbery. It wa

that where a provision of the policy excludes intentional injury, it is the intention of the person inflicting thinjury that is controlling ... and to come within the exception, the act which causes the injury must be whointentional, not merely partly.

The case at bar has some similarity with the case ofVirginia Calanoc vs. Court of Appeals, et al., L-8151promulgated December 16, 1965, where the Supreme Court ruled that "the shot (which killed the insuredmerely to scare away the people around for his own protection and not necessarily to kill or hit the victim

In the Calanoc case, one Melencio Basilio, a watchman of a certain company, took out life insurance fromPhilippine American Life Insurance Company in the amount of P2,000.00 to which was attached asupplementary contract covering death by accident. Calanoc died of gunshot wounds on the occasion ofrobbery committed in the house of a certain Atty. Ojeda in Manila. The insured's widow was paid P2,000the face value of the policy, but when she demanded payment of the additional sum of P2,000.00 repres

the value of the supplemental policy, the company refused alleging, as main defense, that the deceased because he was murdered by a person who took part in the commission of the robbery and while makingarrest as an officer of the law which contingencies were (as in this case) expressly excluded in the contrahave the effect of exempting the company from liability.

The facts in the Calanoc case insofar as pertinent to this case are, as found by the Court of Appeals in itdecision which findings of fact were adopted by the Supreme Court, as follows:

"...that on the way to the Ojeda residence (which was then being robbed by armed men)policeman and Atty. Ojeda passed by Basilio (the insured) and somehow or other invitedlatter to come along; that as the three approached the Ojeda residence and stood in fronthe main gate which was covered by galvanized iron, the fence itself being partly concrepartly adobe stone, a shot was fired; ... that it turned out afterwards that the special watc

Melencio Basilio was hit in the abdomen, the wound causing his instantaneous death ..."

The Court of Appeals arrived at the conclusion that the death of Basilio, although unexpected, was not caby an accident, being a voluntary and intentional act on the part of the one who robbed, or one of those wrobbed, the house of Atty. Ojeda.

In reversing this conclusion of the Court of Appeals, the Supreme Court said in part:

"... Nor can it be said that the killing was intentional for there is the possibility that themalefactors had fired the shot merely to scare away the people around for his own proteand not necessarily to kill or hit the victim. In any event, while the act may not exempt thtriggerman from ability for the damage done, the fact remains that the happening was a accidentt on the part of the victim."

With this ruling of the Supreme Court, and the utter absence of evidence in this case as to the real intentthe malefactors in making a thrust with their sharp-pointed instrument on any person, the victim in particuthe case falls squarely within the ruling in the Calanoc vs. Court of Appeals case.

It is the considered view of this Court that the insured died because of an accidentwhich happened on thoccasion of the robbery being committed in his house. His death was not sought (at least no evidence w

presented to show it was), and therefore was fortuitous. "Accident" was defined as that which happens bchance or fortuitously, without intention or design, and which is unexpected, unusual and unforeseen, or

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which takes place without one's foresight or expectation an event that proceeds from an unknown cauis an unusual effect of a known cause, and therefore not expected. (29 Am. Jur. 706).

There is no question that the defense set up by the defendant company is one of those included among risks excluded in the supplementary contract. However, there is no evidence here that the thrusts with sh

pointed instrument(which led to the death of the insured) was "intentional," (sic) so as to exempt the comfrom liability. It could safely be assumed that it was purely accidentalconsidering that the principal motivthe culprits was robbery, the thrusts being merely intended to scare away persons who might offer resistor might obstruct them from pursuing their main objective which was robbery. 5

s respectfully submitted that the lower court committed no error in law in holding defendant insurancempany liable to plaintiffs-beneficiaries under its accidental death benefit clause, by virtue of the followingnsiderations:

The case ofCalanoccited by the lower court is indeed controlling here. 6 This Court, there construing a siuse, squarely ruled that fatal injuries inflicted upon an insured by a malefactor(s) during the latter'smmission of a crime are deemed accidental and within the coverage of such accidental death benefit claud the burden of proving that the killing was intentional so as to have it fall within the stipulated exception oving resulted from injuries "intentionally inflicted by a third party" must be discharged by the insurancempany. This Court there clearly held that in such cases where the killing does not amount to murder, it muheld to be a "pure accident" on the part of the victim, compensable with double-indemnity, even though thlefactor is criminally liable for his act. This Court rejected the insurance-company's contrary claim, thus:

Much less can it be pretended that Basilio died in the course of an assault or murder considering the vernature of these crimes. In the first place, there is no proof that the death of Basilio is the result of either cforthe record is barren of any circumstance showing how the fatal shot was fired. Perhaps this may be cin the criminal case now pending in court a regards the incident but before that is done anything that migsaid on the point would be a mere conjecture. Nor can it be said that the killing was intentional for there i

possibility that the malefactor had fired the shot merely to scare away the people aroundfor his own prot

and not necessarily to kill or hit the victim. In any event, while the act may not exempt the triggerman fromliabilityfor the damage done, the fact remains that the happening was a pure accident on the part of the The victim could have been either the policeman or Atty. Ojeda for it cannot be pretended that the malefaaimed at the deceased precisely because he wanted to take his life . 7

Defendant company patently failed to discharge its burden of proving that the fatal injuries were inflicted udeceased intentionally, i.e. deliberately. The lower court correctly held that since the case was submitted

on the parties' stipulation of facts which did not cover the malefactors' intent at all, there was an "utter absevidence in this case as to the real intention of the malefactors in making a thrust with their sharp-pointedtrument(s) on any person, the victim in particular." From the undisputed facts, supra, 8 the robbers had "ru

wards the doors of the second floor room, where they suddenly met a person ... who turned out to be the

ured Juan S. Biagtan who received thrusts from their pointed instruments." The thrusts were indeed propmed "purely accidental" since they seemed to be a reflex action on the robbers' part upon their being surpthe deceased. To argue, as defendant does, that the robbers' intent to kill must necessarily be deduced ffour mortal wounds inflicted upon the deceased is to beg the question. Defendant must suffer the

nsequences of its failure to discharge its burden of proving by competent evidence, e.g. the robbers' orewitnesses' testimony, that the fatal injuries were intentionally inflicted upon the insuredso as to exempt m liability.

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Furthermore, plaintiffs-appellees properly assert in their brief that the sole error assigned by defendantmpany, to wit, that the fatal injuries were not accidental as held by the lower court but should be held to hen intentionally inflicted, raises a question of fact which defendant is now barred from raising, since itpressly limited its appeal to this Court purely "on questions of law", per its noitice of appeal, 9 Defendant is

refore confined to "raising only questions of law" and "no other questions" under Rule 42, section 2 of thees of Court 10 and is deemed to have conceded the findings of fact of the trial court, since he thereby waiquestions of facts. 11

t has long been an established rule of construction of so-called contracts of adhesion such as insurancentracts, where the insured is handed a printed insurance policy whose fine-print language has long beenected with great care and deliberation by specialists and legal advisers employed by and acting exclusiveinterest of the insurance company, that the terms and phraseology of the policy, particularly of any exce

uses, must be clearly expressed so as to be easily understood by the insured and any "ambiguous, equivuncertain terms" are to be "construed strictly and most strongly against the insurer and liberally in favor oured so as to effect the dominant purpose of indemnity or payment to the insured, especially where a

feiture is involved.

e Court so expressly held in Calanocthat:

... While as a general rule "the parties may limit the coverage of the policy to certain particular accidents risks or causes of loss, and may expressly except other risks or causes of loss therefrom" (45 C.J.S. 781however, it is to be desired that the terms and phraseology ofthe exception clause be clearly expressedto be within the easy grasp and understanding of the insured, for if the terms are doubtful or obscure themust of necessity be interpreted or resolved against the one who has caused the obscurity. (Article 1377Civil Code) And so it has been generally held that the "terms in an insurance policy, which are ambiguouequivocal, or uncertain ... are to be construed strictly and most strongly against the insurer, and liberally favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especiawhere a forfeiture is involved" (29 AM. Jur., 181), and the reason for this rule is that the "insured usually

voice in the selection or arrangement of the words employedand that the language of the contract is selewith great care and deliberation by experts and legal advisers employed by, and acting exclusively in theinterest of, the insurance company." (44 C.J.S., p. 1174)

Insurance is, in its nature, complex and difficult for the layman to understand. Policies are prepared by exwho know and can anticipate the bearing and possible complications of every contingency. So long asinsurance companies insist upon the use of ambiguous, intricate and technical provisions, which conceathan frankly disclose, their own intentions, the courts must, in fairness to those who purchase insuranceconstrue every ambiguity in favor of the insured." (Algoe vs. Pacific Mut. L. Ins. Co., 91 Wash. 324 LRA 11237.)

"An insurershould not be allowed, by the use ofobscure phrases and exceptions, to defeat the very purpfor which the policy was procured." (Moore vs. Aetna Life Insurance Co., LRA 1915D, 164). 12

e Court has but recently reiterated this doctrine in Landicho vs. GSIS 13 and again applied the provisions icle 1377 of our Civil Code that "The interpretation of obscure words or stipulations in a contract shall notparty who caused the obscurity."

The accidental death benefit clause assuring the insured's beneficiaries of double indemnity, upon paymeextra premium, in the event that the insured meets violent accidental death is contractually stipulated asows in the policy: "that the death of the insured resulted directly from bodily injuryeffected solely through

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ernal and violent means sustained in an accident," supra. The policy then lists numerous exceptions, why be classified as follows:

Injuries effected through non-external means which are excepted: self-destruction, bodily or mental infirm

ease, poisoning or infection, injuries with no visible contusions or exterior wounds (exceptions 1 to 4 of puse);

Injuries caused by some act of the insured which is proscribedby the policy, and are therefore similarlyepted: injuries received while on police duty, while travelling in any form of submarine transportation, or inlation of law by the insured or assault provoked by the insured, or in any aircraft if the insured is a pilot ormber; [exceptions 5 (a), (c) and (d), and 6 of the policy clause]; and

Accidents expressly excluded: where death resulted in any riot, civil commotion, insurrection or war or atergy explosion. (Exceptions 5[b] and 7 of policy clause).

e only exception which is notsusceptible of classification is that provided in paragraph 5 (e), the veryception herein involved, which would also except injuries "inflicted intentionally by a third party, either withhout provocation on the part of the insured, and whether or notthe attack or the defense by the third partused by a violation of the law by the insured."

s ambiguous clause conflicts with all the other four exceptions in the same paragraph 5 particularly thatmediately preceding it in item (d) which excepts injuries received where the insured has violated the law ovoked the injury, while this clause, construed as the insurance company now claims, would seemingly exo all other injuries, intentionally inflicted by a third party, regardless of any violation of law or provocation insured, and defeat the very purpose of the policy of giving the insured double indemnity in case of accid

ath by "external and violent means" in the very language of the policy."

s obvious from the very classification of the exceptions and applying the rule of noscitus a sociis that theuble-indemnity policy covers the insured against accidental death, whether caused by fault, negligence oent of a third party which is unforeseen and unexpected by the insured. All the associated words and conche policy plainly exclude the accidental death from the coverage of the policy only where the injuries are cted or attended by some proscribed act of the insured or are incurred in some expressly excluded calam

ch as riot, war or atomic explosion.

ally, the untenability of herein defendant insurer's claim that the insured's death fell within the exception iher heightened by the stipulated fact that two other insurance companies which likewise covered the inswhich larger sums under similar accidental death benefit clauses promptly paid the benefits thereof to

intiffs-beneficiaries.

ote accordingly for the affirmance in toto of the appealed decision, with costs against defendant-appellant

ncepcion, C.J. and Reyes, J.B.L., J., concur.

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Republic of the Philippines

SUPREME COURT

Manila

EN BANC

R. No. L-22042 August 17, 1967

ONISIA, EULOGIO, MARINA, GUILLERMO and NORBERTO all surnamed GUINGON, plaintiffs-appell

UMINADO DEL MONTE, JULIO AGUILAR and CAPITAL INSURANCE and SURETY CO., INC., defend

APITAL INSURANCE and SURETY CO., INC., defendant-appellant.

neroso Almario and Associates for plaintiffs-appellees.

hacoso and Associates for defendant-appellant.

NGZON, J.P., J.:

o Aguilar owned and operated several jeepneys in the City of Manila among which was one with plate number PUnila, 1961. He entered into a contract with the Capital Insurance & Surety Co., Inc. insuring the operation of his jee

inst accidents with third-party liability. As a consequence thereof an insurance policy was executed by the Capital

urance & Surety Co., Inc., the pertinent provisions of which in so far as this case is concerned contains the followin

tion II LIABILITY TO THE PUBLIC

1. The Company, will, subject to the limits of liability, indemnify the Insured in the event of accident caused by

arising out of the use of the Motor Vehicle/s or in connection with the loading or unloading of the Motor Vehicagainst all sums including claimant's costs and expenses which the Insured shall become legally liable to pay in

respect of:

a. death of or bodily injury to any person

b. damage to property

ring the effectivity of such insurance policy on February 20, 1961 Iluminado del Monte, one of the drivers of the

pneys operated by Aguilar, while driving along the intersection of Juan Luna and Moro streets, City of Manila, bum

h the jeepney abovementioned one Gervacio Guingon who had just alighted from another jeepney and as a consequ

latter died some days thereafter.

orresponding information for homicide thru reckless imprudence was filed against Iluminado del Monte, who plead

lty. A penalty of four months imprisonment was imposed on him.

a corollary to such action, the heirs of Gervacio Guingon filed an action for damages praying that the sum of P82,7paid to them jointly and severally by the defendants, driver Iluminado del Monte, owner and operator Julio Aguilar

Capital Insurance & Surety Co., Inc. For failure to answer the complaint, Del Monte and Aguilar were declared in

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ault. Capital Insurance & Surety Co., Inc. answered, alleging that the plaintiff has no cause of action against it. Dur

trial the following facts were stipulated:

COURT: The Court wants to find if there is a stipulation in the policy whereby the insured is insured against li

to third persons who are not passengers of jeeps.

ALMARIO: As far as I know, in my honest belief, there is no particularization as to the passengers, whether th

passengers of the jeep insured or a passenger of another jeep or whether it is a pedestrian. With those, we can s

the stipulation.

SIMBULAN: I admit that. (T.s.n., p. 21, Jan. 23, 1962; p. 65 Rec. on Appeal)

August 27, 1962, the Court of First Instance of Manila rendered its judgment with the following dispositive portion

WHEREFORE, judgment is rendered sentencing Iluminado del Monte and Julio Aguilar jointly and severally t

plaintiffs the sum of P8,572.95 as damages for the death of their father, plus P1,000.00 for attorney's fees plus

The defendant Capital Insurance and Surety Co., Inc. is hereby sentenced to pay the plaintiffs the sum of Five

Thousand (P5,000.00) Pesos plus Five Hundred (P500.00) Pesos as attorney's fees and costs. These sums ofP5,000.00 and P500.00 adjudged against Capital Insurance and Surety Co., Inc. shall be applied in partial satis

of the judgment rendered against Iluminado del Monte and Julio Aguilar in this case.

SO ORDERED.

e case was appealed to the Court of Appeals which appellate court on September 30, 1963 certified the case to Us b

appeal raises purely questions of law.

e issues raised before Us in this appeal are (1) As the company agreed to indemnify the insured Julio Aguilar, is it o

insured to whom it is liable? (2) Must Julio Aguilar first show himself to be entitled to indemnity before the insuran

mpany may be held liable for the same? (3) Plaintiffs not being parties to the insurance contract, do they have a causon against the company; and (4) Does the fact that the insured is liable to the plaintiffs necessarily mean that the in

iable to the insured?

he discussion of the points thus raised, what is paramount is the interpretation of the insurance contract with the aim

w of attaining the objectives for which the insurance was taken. The Rules of Court provide that parties may be joinher as plaintiffs or defendants, as the right to relief in respect to or arising out of the same transactions is alleged to e

c. 6, Rule 3). The policy, on the other hand, contains a clause stating:

E.Action Against Company

No action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully

complied with all of the terms of this Policy, nor until the amount of the Insured's obligation to pay shall have bfinally determined either by judgment against the Insured after actual trial or by written agreement of the Insure

claimant, and the Company.

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Any person or organization or the legal representative thereof who has secured such judgment or written agreem

shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by the Policy. No

contained in this policy shall give any person or organization any right to join the Company as a co-defendant iaction against the Insured to determine the Insured's liability.

Bankruptcy or insolvency of the Insured or of the Insured's estate shall not relieve the Company of any of its

obligations hereunder.

pellant contends that the "no action" clause in the policy closes the avenue to any third party which may be injured

ident wherein the jeepney of the insured might have been the cause of the injury of third persons, alleging the freedtracts. Will the mere fact that such clause was agreed upon by the parties in an insurance policy prevail over the Ru

urt which authorizes the joining of parties plaintiffs or defendants?

e foregoing issues raise two principal: questions: (1) Can plaintiffs sue the insurer at all? (2) If so, can plaintiffs sue

urerjointly with the insured?

e policy in the present case, as aforequoted, is one whereby the insurer agreed to indemnify the insured "against all

which the Insured shall become legally liable to pay in respect of: a. death of or bodily injury to any person . . . ." Cl

refore, it is one for indemnity against liability;1 from the fact then that the insured is liable to the third person, such tson is entitled to sue the insurer.1wph1.t

e right of the person injured to sue the insurer of the party at fault (insured), depends on whether the contract of insu

ntended to benefit third persons also or only the insured. And the test applied has been this: Where the contract prov

indemnity against liability to third persons, then third persons to whom the insured is liable, can sue the insurer. Wcontract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer, the

tract being solely to reimburse the insured for liability actually discharged by him thru payment to third persons, sa

d persons' recourse being thus limited to the insured alone.

2

e next question is on the right of the third person to sue the insurer jointly with the insured. The policy requires, as aed, that suit and final judgment be first obtained against the insured; that only "thereafter" can the person injured re

the policy; it expressly disallows suing the insurer as a co-defendant of the insured in a suit to determine the latter's

bility. As adverted to before, the query is which procedure to follow that of the insurance policy or the Rules of C

e "no action" clause in the policy of insurance cannot prevail over the Rules of Court provision aimed at avoidingltiplicity of suits. In a case squarely on the point,American Automobile Ins. Co. vs. Struwe, 218 SW 534 (Texas CC

s held that a "no action" clause in a policy of insurance cannot override procedural rules aimed at avoidance of

ltiplicity of suits. We quote:

Appellants filed a plea in abatement on the grounds that the suit had been prematurely brought against the insurcompany, and that it had been improperly joined with Zunker, as said insurance company, under the terms of th

policy, was only liable after judgment had been awarded against Zunker. . . .

* * * That plea was properly overruled, because under the laws of Texas a dual suit will always be avoided wh

all parties can have a fair trial when joined in one suit. Appellee, had he so desired, could have prosecuted his cto judgment as against Zunker and then have sued on that judgment against the insurance company, but the law

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not make it imperative that he should do so, but would permit him to dispose of the whole matter in one suit.

The rule has often been announced in Texas that when two causes of action are connected with each other, or g

out of the same transaction, they may be properly joined, and in such suit all parties against whom the plaintiff

asserts a common or an alternative liability may be joined as defendants. . . . Even if appellants had presented aplea in abatement as to joinder of damages arising from a tort with those arising from a contract, it could not, u

the facts of this case, be sustained, for the rule is that a suit may include an action for breach of contract and on

tort, provided they are connected with each other or grew out of the same transaction.

milarly, in the instant suit, Sec. 5 of Rule 2 on "Joinder of causes of action" and Sec. 6 of Rule 3 on "Permissive jointies" cannot be superseded, at least with respect to third persons not a party to the contract, as herein, by a "no acti

use in the contract of insurance.

herefore, the judgment appealed from is affirmed in toto. Costs against appellant. So ordered.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

R. No. L-16666 April 10, 1922

OMULO MACHETTI, plaintiff-appelle,

OSPICIO DE SAN JOSE, defendant-appellee, and

DELITY & SURETY COMPANY OF THE PHILIPPINE ISLANDS, defendant-appellant

ss and Laurence and Wolfson & Scwarzkopf for appellant.briel La O for appellee Hospicio de San Jose.

appearance for the other appellee.

TRAND, J.:

ppears from the evidence that on July 17, 1916, one Romulo Machetti, by a written agreement undertook to construlding on Calle Rosario in the city of Manila for the Hospicio de San Jose, the contract price being P64,000. One of

ditions of the agreement was that the contractor should obtain the "guarantee" of the Fidelity and Surety Company

lippine Islands to the amount of P128,800 and the following endorsement in the English language appears upon thetract:

MANILA,July 15, 1916.

For value received we hereby guarantee compliance with the terms and conditions as outlined in the above con

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FIDELITY AND SURETY COMPANY OF THE PHILIPPINE ISLANDS.

(Sgd) OTTO VORS

Vice-Pres

chetti constructed the building under the supervision of architects representing the Hospicio de San Jose and, as thegressed, payments were made to him from time to time upon the recommendation of the architects, until the entire

tract price, with the exception of the sum of the P4,978.08, was paid. Subsequently it was found that the work had

n carried out in accordance with the specifications which formed part of the contract and that the workmanship was

he standard required, and the Hospicio de San Jose therefore answered the complaint and presented a counterclaim mages for the partial noncompliance with the terms of the agreement abovementioned, in the total sum of P71,350. A

ue was thus joined, Machetti, on petition of his creditors, was, on February 27, 1918, declared insolvent and on Mar

8, an order was entered suspending the proceeding in the present case in accordance with section 60 of the Insolvenw, Act No. 1956.

e Hospicio de San Jose on January 29, 1919, filed a motion asking that the Fidelity and Surety Company be made crendant to the exclusion of Machetti and that the proceedings be continued as to said company, but still remain susp

o Machetti. This motion was granted and on February 7, 1920, the Hospicio filed a complaint against the Fidelity aety Company asking for a judgement for P12,800 against the company upon its guaranty. After trial, the Court of F

tance rendered judgment against the Fidelity and Surety Company for P12,800 in accordance with the complaint. T

e is now before this court upon appeal by the Fidelity and Surety Company form said judgment.

will be seen, the original action which Machetti was the plaintiff and the Hospicio de San Jose defendant, has beenverted into an action in which the Hospicio de San Jose is plaintiff and the Fidelity and Surety Company, the origin

intiff's guarantor, is the defendant, Machetti having been practically eliminated from the case.

t in this instance the guarantor's case is even stronger than that of an ordinary surety. The contract of guaranty is wrihe English language and the terms employed must of course be given the signification which ordinarily attaches to hat language. In English the term "guarantor" implies an undertaking of guaranty, as distinguished from suretyship

y true that notwithstanding the use of the words "guarantee" or "guaranty" circumstances may be shown which conv

contract into one of suretyship but such circumstances do not exist in the present case; on the contrary it appearrmatively that the contract is the guarantor's separate undertaking in which the principal does not join, that its rests

arate consideration moving from the principal and that although it is written in continuation of the contract for the

struction of the building, it is a collateral undertaking separate and distinct from the latter. All of these circumstanctinguishing features of contracts of guaranty.

w, while a surety undertakes to pay if the principal does not pay, the guarantor only binds himself to pay if the prin

not pay. The one is the insurer of the debt, the other an insurer of the solvency of the debtor. (Saint vs. Wheeler &lson Mfg. Co., 95 Ala., 362; Campbell, vs. Sherman, 151 Pa. St., 70; Castellvi de Higgins and Higgins vs. Sellner, 4l., 142; ;U.S. vs. Varadero de la Quinta, 40 Phil., 48.) This latter liability is what the Fidelity and Surety Company

umed in the present case. The undertaking is perhaps not exactly that of a fianza under the Civil Code, but is a perfe

id contract and must be given the legal effect if ordinarily carries. The Fidelity and Surety Company having bound pay only the event its principal, Machetti, cannot pay it follows that it cannot be compelled to pay until it is shown t

chetti is unable to pay. Such ability may be proven by the return of a writ of execution unsatisfied or by other mean

ot sufficiently established by the mere fact that he has been declared insolvent in insolvency proceedings under our

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utes, in which the extent of the insolvent's inability to pay is not determined until the final liquidation of his estate.

e judgment appealed from is therefore reversed without costs and without prejudice to such right of action as the cro

mplainant, the Hospicio de San Jose, may have after exhausting its remedy against the plaintiff Machetti. So ordered

aullo, C.J., Malcolm, Villamor, Johns and Romualdez, JJ., concur.