Far Eastern Surety Insurance Co. v Socorro Dancel
Vda. De Misa
G.R. No. L-24377 | October 26,1968
Motor Vehicle Insurance | Reyes,J.B.L., J. | Guanco, E.
Facts
1. On September 3, 1957, respondents Socorro Dancel
Vda. De Misa and Araceli Pinto, hired a taxicab
operated by respondent La Mallorca in Quezon City.
2. While proceeding south toward the Archbishop’s
Palace in Shaw Boulevard, the taxicab collided with a
gravel and sand truck, driven by one Faustino Nabor,
that was proceeding in the opposite direction.
3. As a result, the two passengers of the La Mallorca
taxicab were injured, and filed suit for damages
agaisnt the taxicab company and the CFI.
4. The CFI of QC awarded to Vda. De Misa and
Pinto actual, moral and exemplary damages and
attorney’s fees, payable by the taxicab operator,
La Mallorca; and sentenced the insurance
company to pay La Mallorca P10,000 on its third
party liability insurance.
5. On appeal, the Court of Appeals, while holding that
the collision was due to the fault of the driver of the
sand truck, nevertheless held the taxicab operator
liable in damages to the passengers of its motor
vehicle on the strength of its representation that
the passengers were insured against accidents,
as shown by the sticker affixed to the taxica b;
the appellate court adjudged the said insurer liable to
La Mallorca in view of its third party liability insurance
contract.
6. Far Eastern Surety appealed to the SC but La
Mallorca did not.
Issues/Ratio
1. W/N the appellant insurer is liable to the insured on its
policy of insurance
 Far Eastern Surety cannot be answerable to
the full extent of its maximum liability of
P5,000 per passenger.
 The Far Easter Surety’s liability under the
insurance contract does not extent to moral,
compensatory and exemplary damages, and
attorney’s fees. Its insurance liability is
limited to actual physical injuries.
 Under the Common Carrier’s Accident
Insurance and its Third Party Liability
Insurance Rider, the liability of the Far
Eastern Surety is defined as follows:
“1. The Company will subject to the Limits of
Liability indemnify the Insured in the event of
accident caused by or arising out of the use
of the Motor Vehicle or in connection with
the loading or unloading of the Motor
Vehicle against all sums including claimant's
costs and expense 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 ”
 The above quoted stipulation exempts
the Far Eastern Surety from paying
damages other than actual bodily
injuries sustained by third parties.
 The CA decision shows that the indemnity
awarded to the passengers of the La
Mallorca taxicab was not because of the
accident but was exclusively predicated
on the representation made by the
taxicab company to its passengers that
the latter were insured against
accidents.
 La Mallorca was in estoppel because it
bound itself, in its contract of carriage, with
that additional stipulation therein indicated,
that the passengers were ‘insured’, and if
there be any ambiguity in its meaning, such
ambiguity must be construed most strongly
against the party causing the ambiguity (Art.
1377 NCC).
 While La Mallorca was in estoppel, it does
not necessarily follow that the estoppel,
likewisem applied to the appellant insurer.
 As it does not appear that the insurance
company authorized or consented to, or
even knew of, the representation made by
the taxicab company to its passengers, it
follows that the source of the award of
damages against the taxicab company to its
passengers, the source of the award of
damages against the taxicab company was
beyond the contemplation of the parties to
the contract of Accident Insurance No. CCA
106. Far Eastern Surety may not be held
liable for such damages.
Ruling
CA decision is MODIFIED. Award agaisnt Far Eastern
Insurance Co., Inc, in favor of La Mallorca, is eliminated. Costs
of litigation exclusively borne by La Mallorca.