Title
Supreme Court
Malayan Insurance Co., Inc. vs. Stronghold Insurance Co., Inc.
Case
G.R. No. 203060
Decision Date
Jun 28, 2021
Insurer dispute over liability limits: Stronghold’s indemnity schedule capped at P42,714.83; Malayan liable for excess P57,603.25, with legal interest imposed.

Case Digest (G.R. No. 124535)
Expanded Legal Reasoning Model

Facts:

  • Parties and Insurance Policies
    • Petitioner:
      • Malayan Insurance Company, Inc. – A corporation engaged in motor vehicle and other types of insurance.
    • Respondents:
      • Stronghold Insurance Company, Inc. – A corporation engaged in the business of non-life insurance.
      • Rico J. Pablo – The insured driver who procured insurance policies.
    • Insurance Coverage Details:
      • Compulsory Third Party Liability (CTPL) Policy from Stronghold
        • Certificate of Cover No. 380623, effective January 16, 2007 to January 16, 2010.
ii. Limit of liability set at ₱100,000.00. iii. Contained a Schedule of Indemnities outlining per-item limits.
  • Excess Cover for Third Party Bodily and Death Liability from Malayan
    • Indicated in Private Vehicle Policy No. PV-0159-200880003.
ii. Amount of excess coverage: ₱200,000.00.
  • The Accident and Claim Initiation
    • Incident Description:
      • In 2008, while driving his insured vehicle (a 2007 Mitsubishi Adventure GLX Diesel Wagon), Pablo sideswiped a pedestrian.
      • The pedestrian, a six-year-old, sustained bodily injuries and was hospitalized.
    • Financial Claim:
      • Pablo incurred hospital and medical expenses amounting to ₱100,318.08.
      • Subsequently, Pablo filed third party liability claims for reimbursement under both the CTPL and Excess policies.
    • Computation of Liabilities by the Insurers:
      • Stronghold computed its liability based on the Schedule of Indemnities, arriving at ₱29,000.00.
      • The excess amount of ₱71,318.08 (from the total claim) was attributed to be covered by Malayan under the Excess Cover.
  • Proceedings Before the Insurance Commission (IC)
    • Initiation of Proceedings:
      • Pablo sought the IC’s assistance by sending a letter dated October 3, 2008.
    • IC Decisions and Rulings:
      • May 21, 2009 Resolution:
        • Ruled in favor of Malayan by ordering Stronghold to pay ₱100,000.00 and Malayan to pay ₱318.08.
ii. The ruling was based on an interpretation of the Schedule of Indemnities, primarily referencing the Western Guaranty case.
  • November 17, 2009 Order:
    • Denied Stronghold’s motion for reconsideration but modified the earlier resolution by amending the Schedule of Indemnities.
ii. Added language clarifying that the payment by Stronghold is “as their liability under the EXCESS BODILY INJURY COVERAGE of the policy.”
  • May 25, 2010 Ruling:
    • Denied Stronghold’s subsequent clarificatory motion with a second motion for reconsideration.
  • Court of Appeals (CA) Involvement
    • CA Decision (March 21, 2012):
      • Reversed and set aside the IC’s orders.
      • Ordered reimbursement to Pablo as follows:
        • Stronghold: ₱42,714.83
ii. Malayan: ₱57,603.25
  • Based its ruling on the applicability of the Western Guaranty case, emphasizing that:
    • Liability for items listed in the Schedule of Indemnities is limited to the stated limits.
ii. For damages not covered by the schedule, the overall insurance coverage applies.
  • Subsequent Developments:
    • Both insurance companies filed motions for reconsideration which were ultimately denied.
    • The CA affirmed its decision in its August 13, 2012 Resolution.
  • Aftermath and Petition to the Supreme Court
    • Malayan’s Petition for Review on Certiorari:
      • Filed on October 8, 2012, challenging the CA decision.
      • Argued that the CA ruling misapplied Western Guaranty and misconstrued the nature of Excess Insurance Coverage by insisting that the CTPL overall limit should be exhausted prior to invoking excess coverage.
    • The Disputed Issue:
      • The extent of Stronghold’s liability under the CTPL policy and the resultant excess liability incurred by Malayan.

Issues:

  • Extent of Liability Under the CTPL Policy
    • Whether Stronghold’s liability should be limited strictly to the amounts specified in the Schedule of Indemnities (₱29,000.00 originally computed) or extended up to the overall CTPL limit (₱100,000.00), subject to the per-item limits.
  • Interpretation and Applicability of the Schedule of Indemnities
    • Whether the Schedule of Indemnities is to be regarded as an exclusive enumeration of covered damages or a limit-setting mechanism for certain items only.
    • The effect of the Schedule on determining which damages fall under the primary CTPL policy versus those subject to Excess Cover.
  • Control Case Precedents
    • The applicability and relevance of the Western Guaranty ruling in interpreting the limits of liability in CTPL policies.
    • The contention regarding the GSIS case and its purported supersession of Western Guaranty.
  • Procedural Issues
    • Whether Stronghold’s filing of a second motion for reconsideration before the IC, and the subsequent timing in filing the petition before the CA, affect or bar the claim.
    • Malayan’s argument regarding the belated filing of the petition before the CA and whether such issue should be entertained.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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