SUMMIT GUARANTY & INSURANCE COMPANY, INC., PETITIONER, VS. THE HONORABLE COURT OF APPEALS (TENTH DIVISION), HONORABLE GREGORIA CRUZ ARNALDO, IN HER CAPACITY AS INSURANCE COMMIS­…

Summit Guaranty and Insurance Company versus Court of Appeals

The Case

This is a petition for certiorari, prohibition and mandamus brought by Summit Guaranty and Insurance Company against the Court of Appeals and the Insurance Commissioner. The insurer asks the Supreme Court to annul the resolutions of the Court of Appeals in a petition for review of an Insurance Commissioner's decision, to restrain the Commissioner from further proceeding, and to dismiss the complaint for indemnity. The case matters for two reasons. First, it fixes where appeals from the Insurance Commissioner lie after the amendatory decree transferred that jurisdiction to the Supreme Court. Second, it applies the doctrine of estoppel by laches against a party who invokes a court's jurisdiction, loses, and only then denies that same jurisdiction.

Procedural History

Leonardo Certeza filed a complaint for indemnity with the Insurance Commission against Summit Guaranty and Insurance Company. After appropriate proceedings, the Insurance Commissioner rendered judgment against the insurance company, ordering it to indemnify the complainant, with interest, attorney's fees and costs.

The insurance company appealed to the Court of Appeals by notice of appeal and a petition for review. The Court of Appeals dismissed the petition, and later denied the insurer's motion for reconsideration. It was only then, in this petition before the Supreme Court, that the insurer raised for the first time the question of the Court of Appeals' lack of jurisdiction. The insurer came to the Supreme Court on a petition for certiorari, prohibition and mandamus with a prayer for a restraining order.

Facts

Certeza and Sons, Incorporated acquired a Toyota jeep from Felipe Uy. The vehicle was insured with Summit Guaranty and Insurance Company under a private car comprehensive policy for third party liability in the amount of 20,000 pesos, for the period from October 19, 1976 to October 19, 1977. The policy was endorsed by the insurance company to Certeza and Sons, Incorporated, effective January 13, 1977.

On August 20, 1977, the insured vehicle, driven by Rico Certeza, sideswiped a pedestrian and collided with a jeepney along E. Lopez Street in Jaro, Iloilo. The accident caused the death of George Certeza, a passenger in the insured vehicle, injuries to the pedestrian Tony Posa, and injuries to passengers in the jeepney. The injured were taken to two hospitals, and the medical and hospitalization expenses amounted to about 15,000 pesos. Leonardo Certeza settled these by executing two promissory notes in favor of the hospitals.

Demand was then made upon the insurance company for the hospitalization and medical expenses and for indemnity for the death of George Certeza in the amount of 20,000 pesos. When the insurance company failed to pay, a complaint was filed with the Insurance Commission. The Commissioner rendered judgment against the insurance company, and the insurer's appeal to the Court of Appeals was dismissed.

Issues

• Whether or not the Court of Appeals had appellate jurisdiction over decisions, orders and rulings of the Insurance Commissioner.
• Whether or not the petitioner is estopped from raising the plea of lack of jurisdiction after submitting itself to the jurisdiction of the Court of Appeals and assailing it only after an adverse judgment.
• Whether or not the insurance company is exempt from liability under the excepted risk provision of the policy.

Applicable Provisions

Section 416 of the Insurance Code, as amended by Presidential Decree Number 1455, provides:

Any decision, order or ruling rendered by the Commissioner after a hearing shall have the force and effect of a judgment. Any party may appeal from a final order, ruling or decision of the Commissioner by filing with the Commissioner within thirty days from receipt of copy of such order, ruling or decision a notice of appeal and with the Supreme Court twelve printed or mimeographed copies of a petition for certiorari or review of such order, ruling or decision, as the case may be. A copy of the petition shall be served upon the Commissioner and upon the adverse party, and proof of service thereof attached, to the original of the petition.

This provision is decisive because it lodges the appeal with the Supreme Court, not the Court of Appeals, and it took effect on June 11, 1978, long before the Commissioner rendered the adverse decision on February 9, 1979.

Section 1 of Rule 131 of the Revised Rules of Court provides:

Each party must prove his own affirmative allegation.

This rule governs the insurer's defense, because the insurer alleges an affirmative matter in avoidance of the claim and must therefore establish it by proof.

Ruling

On the first issue, the Court held that the contention is meritorious. Under Section 416 of the Insurance Code, as amended, appeals from decisions, orders and rulings of the Insurance Commissioner should be addressed to the Supreme Court. The Court of Appeals therefore had no appellate jurisdiction over the Commissioner's decision.

On the second issue, the Court nevertheless held that the petitioner is estopped, on ground of public policy, from invoking the plea of lack of jurisdiction. The amendatory decree was enacted on June 11, 1978, long before the Commissioner rendered the adverse decision on February 9, 1979. Yet the petitioner filed a notice of appeal to the Court of Appeals, sought and obtained an extension of time, and filed its petition for review there without ever raising the question of jurisdiction. Even in its motion for reconsideration it maintained that the Court of Appeals had acquired jurisdiction from the time the notice of appeal was filed. Only in this petition did it raise the issue. Quoting the doctrine of laches, the Court said:

A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.

On the third issue, the Court held that the defense of exemption from liability is without merit. The excepted risk provision of the policy reads:

death of or bodily injury to any person in the employment of the insured arising out of and in the course of such employment or death or bodily injury to any person being a member of the Insured's household who is a passenger in the Motor Vehicle.

There is no evidence that the deceased George Certeza was an employee of the insured, or that his death arose out of and in the course of employment. The insurer's claim that it is the burden of the private respondent to prove that George Certeza is not an employee of the family corporation is untenable, because each party must prove his own affirmative allegation. There is likewise no evidence that the deceased was a member of the household of the insured. While Leonardo Certeza, the father of the deceased, is an officer of the corporation, it cannot be implied that the deceased is a member of the household of the insured, since the insured is a corporation with a personality separate and distinct from its officers and stockholders.

Doctrine

First, under Section 416 of the Insurance Code, as amended, appeals from final decisions, orders and rulings of the Insurance Commissioner are taken to the Supreme Court, not to the Court of Appeals.

Second, a party may be estopped by laches and public policy from questioning a court's jurisdiction. One who invokes that jurisdiction to secure affirmative relief, submits to it, and raises the objection only after an adverse judgment cannot be heard to repudiate the same jurisdiction.

Third, under Section 1 of Rule 131, each party must prove his own affirmative allegation. An insurer pleading an exception to its liability bears the burden of proving the facts bringing the loss within the excepted risk.

Fourth, a corporation has a personality separate and distinct from its officers and stockholders, so an officer's household is not the corporation's household for purposes of an excepted risk clause.

Disposition

The petition was denied, the judgment of the Insurance Commission was affirmed, and the temporary restraining order was lifted and set aside, with costs against the petitioner.

Remember This

Memorize the rule that appeals from the Insurance Commissioner lie with the Supreme Court under Section 416 as amended, and that a party who invokes a court's jurisdiction and loses cannot later deny it. Examiners use this case to test jurisdiction over Insurance Commission decisions and the doctrine of estoppel by laches.