TAURUS TAXI CO., INC., FELICITAS V. MONJE, ET AL., PLAINTIFFS-APPELLEES, VS. THE CAPITAL INSURANCE & SURETY CO., INC., DEFENDANT-APPELLANT.

The principal legal question in this appeal from a lower court
decision, ordering defendant-appellant The Capital Insurance & Surety Co,
Inc. to pay the plaintiff-appellee Taurus Taxi Co.,
Inc. as well as plaintiffs-appellees, widow and
children of the deceased Alfredo Monje, who, in his
lifetime, was employed as a taxi driver of such plaintiff-appellee,
“the sum of P5, 000.00 with interest thereon at the legal rate from the
filing of the complaint until fully paid,” with P500.00 as attorney’s fees
and the costs of the suit, is whether or not a provision in the insurance
contract that defendant-appellant will indemnify any authorized driver pro­vided
that [he] is not entitled to any indemnity under any other policy, it being
shown that the deceased was paid his workman’s compensation from another insurance
policy, should defeat such a right
to recover under the insurance contract subject of this suit.  The lower court answered in the
negative.  Its holding cannot be
successfully impugned.

The appealed decision stated at the outset that the motion for
judgment on the pleadings filed by the plaintiffs was granted, the defendant
having no objection and the issue presented being capable of resolution without
the need of presenting any evidence.

Then the decision continues: 
“Alfredo Monje, according to the
complaint, was employed a taxi driver by the Plaintiff Taurus Taxi Co„ Inc.   On December
6, 1962, the taxi he was driving collided with a Transport taxicab
at the intersection of Old Sta. Mesa, and V. Mapa streets, Manila
resulting in his death.  At the time of
the accident, there was subsisting and in force Commercial Vehicle Comprehensive
Policy No. 101,737 * * * issued by the defend­ant to the Taurus Taxi Co.,
Inc.  The amount for which each
passenger, including the driver, is insured is P5, 000. 00.  After the issuance of policy No. 101, 737,
the defendant issued the Taurus Taxi Co., inc. Indorsement
No, 1 which forms part of the policy * *,”^[1]
Reference was then made to plaintiff- appellee Felicitas Monje being the widow of the taxi driver,
the other plaintiffs-appellees with the exception
of the Taurus Taxi Co. Inc., being the children of the couple.  After which it was noted that plaintiff
Taurus Taxi Co., Inc. made representations “for the payment of the insurance
of the insurance benefit corresponding to her and her children since it was
issued in its name, benefit
corresponding to her and her children, * * but despite demands * * * the
defendant refused and still refuses to pay them.”^[2]

On the above facts, the liability apparently clear, the defenses
interposed by defendant insurance company being in the opinion of the lower court without
merit, the aforesaid judgment was rendered. 
This being a direct appeal to us on questions of law, the facts as found
by the lower court cannot be controverted.

Defendant-appellant Capital Insurance & Surety Co., Inc. alleged
as the first error of the lower court its failure to hold
“that in view of the fact that the deceased Alfredo Monje
was entitled
to indemnity under another insurance policy issued by Ed.  A. Keller Co., Ltd., the heirs of the said
deceased are not entitled to indemnity under the insurance policy issued by appellant for
the reason that the latter policy
contains a stipulation that ‘the company will
indemnify any authorized driver provided that such authorized driver is
not entitled to indemnity under any other policy.'”^[3]  In the discussion of the above error,
defendant- appellant stated the following: 
“The, facts show that at the time of his death, the deceased Alfredo Monje,
as authorized driver and employees of plaintiff
Taurus Taxi Co.,
was entitled to indemnity under another insurance policy, then
subsisting, which was Policy No. 50PH-1605 issued by Ed. A. Keller Co., Ltd.  To plaintiff Taurus Taxi Co., Inc.  As a matter of fact, the indemnity to which
the deceased Alfredo Monje was entitled under the
said Policy No. 50PH-1605 was paid by Ed A. Keller Co.  Ltd. to the heirs of Alfredo Monje on December
28, 1962, as evidenced by the records of W. C. C. Case No. A-88637
entitled Felicitas V. Monje,
et al. vs. Taurus Taxi Co., Inc., Regional Office No. 4, Department of Labor,
Manila * * *.”^[4]

The, above defense, based on a fact which was not disputed, was
raised and rightfully rejected by the lower court.  From its own version, defendant-appellant
would seek to escape liability on the plea that the workman’s compensation to
which the deceased driver was rightfully entitled was settled by the employer
through a policy issued by another insurance firm.  What was paid therefore was not indemnity but
compensation.

Since what is prohibited by the insurance policy in question is
that any “authorized driver of plaintiff Taurus Taxi Co., Inc.”
should not be “entitled to any indemnity under any policy”, it would
appear indisputable that the obligation of defendant-appellant under the policy
had not in any wise been extinguished. 
It is too well-settled to need the citation of authorities that what the
law requires enters into and forms part of every contract, The Work­men’s
Compensation Act explicitly requires that an employee suffering any injury or
death arising out of or in the course of employment be compensated.  The fulfillment of such statutory obligation
cannot be the basis for evading the clear, explicit and mandatory terms of a
policy.

 In the same way as was held
in Benguet Consolidated, Inc., v., Social Security System,^[5]
sickness benefits under the Social Security Act may be recovered simultaneously
with disability benefits under the Workmen’s Compensation Act, the previous
payment made of the compensation under such legislation is no obstacle by
virtue of a clause like that invoked by defendant-appellant to the payment of
indemnity under the insurance policy.

Assuming however that there is a doubt concerning the liability
of defendant-appellant insurance firm, nonetheless, it should be resolved
against its pretense and in favor of the insured.  It was the holding in Eagle Star Insurance,
Ltd. v. Chia Yu^[6]
that courts are to regard “with extreme jealousy” limitations of
liability found in insurance policies and to construe them in such a way as to
preclude the insurer from non-compliance with his obligation.

In other words, to quote a noted authority on the subject,
“a contract of insurance couched in language chosen, by the insurer is, if open to the construction
contended for by the insured, to be construed most strongly, or strictly,
against the insurer and liberally in favor of the contention of the insured,
which means in accordance with the rule contra proferentem.”^[7]  Enough has been said there­fore to dispose of
the first assigned error.

The point is made in the second alleged error that the lower
court ought to have held “that by joining the heirs of Alfredo Monje as a party plaintiff, plaintiff Taurus Taxi Co., Inc. committed a breach of policy
condition and thus forfeited what ever benefits, if any, to which it might be
entitled under appellant’s policy.”^[8]  The basis for such an allegation is one of
the conditions set forth in the policy. 
Thus: “5.  No admission,
offer, promise or pay­ment shall be made by or on behalf of the insured without
the written consent of the Company which shall be entitled if it so desires to
take over and conduct in his name the defense or settlement of any claim or to
prosecute in his name far its own benefit any claim for indemnity or damages or
otherwise and shall have full discretion
in the conduct of any proceedings and in the settlement of any claim and the
Insured shall give all such information and assistance as the Company may
require * * *.”^[9]

Such a plea is even less persuasive.  It is understandable then why the lower court refused to be swayed by it.  The plaintiff Taurus Taxi Co., Inc. had to
join the suit on, behalf of the real beneficiaries, the heirs of the deceased
driver, who are the other plaintiffs as it was a party to the policy.

Moreover, as noted in the decision appealed from: “The
institution of the action cannot possibly be construed as an admission, offer,
promise, or payment by the company, for it merely seeks to enforce, by court
action, the only legal remedy available to it, its rights under the contract of
insurance to which it is a party.  To
consider, furthermore, the commencement of an action by the insured, alone or
with others, as a breach of the policy, resulting In forfeiture of the benefits
thereunder, to place in the hands of the insurer the
power to nullify at will the whole contract of insurance by the simple
expedient of refusing to make payment and compelling the insured to bring a
suit to enforce the policy.^[10]

To so construe the policy to yield a contrary result is to put a
premium on technicality.  If such a defense is not frowned upon and
rejected, the time will come when the confidence on the part of the public in
the good faith of insurance firms would be minimized, if not altogether
lost.  Such a deplorable consequence
ought to be avoided and a construction of any stipulation that would be fraught
with such a risk repudiated.  What the
lower court did then cannot be characterized as error.

The third error assigned, namely, that the lower court should
have considered the filing of the complaint against defendant-appellant as
unjust and unwarranted, is, in the light of the above, clearly without merit.

WHEREFORE, the appealed decision of the lower court
ordering defendant-appellant “to pay the plaintiffs the sum of P5, 000. 00
with interest thereon at the legal rate from the filing of the complaint until
fully paid, P500.00 as attorney’s fees,”^[11]
with costs is affirmed.  Costs against
defendant-appellant.

Concepcion,
C.J.., Reyes, JBL, Dizon, Makalintal,
Zaldivar, Sanchez, and
Angeles, JJ., concur.

Ruiz Castro, J. did not take
part.

^[1]
Decision of the lower court of July
20, 1964, Record on.  Appeal,
pp. 100-101.

^[2]
Ibid, p. 101.

^[3]
Brief for Appellant, p. 11.

^[4]
Ibid, p. 13.

^[5]
L-19254, March 31, 1964,
affirmed in Rural Transit Employees Asso. v. Bachrach Transportation Co., L-21441, Dec. 15,1967.

^[6]  96 Phil. 696 (1955).

^[7]  Couch on Insurance, Vol. I,  pp. 393-400 (1929).  See
also Couch on Insurance, Vol. 1, 2nd ed., p. 777 (1959).  Ogilvie v.
Aetna Life Insurance Co., 26 ALR
116, 189 Cal. 406, 209 P. 26 (1922); Ocean
Accident & Guarantee Corp., Ltd. v. Industrial Accident Commission,
228 P. 1 (1924); Siskin v.
Alliance Ins. Co. v. Netherlands Fire & Life Ins. Co., 251 P. 922
(1926); Ogburn v. Travelers’ Ins. Co.,
207 Cal. 50, 276 P. 1004 (1929); First National Trust & Savings Bank of San
Diego v. Industrial Accident Commission, 2 P2d 347 (1931) and New
York Life Insurance Co. v. Hollender,
237 P2d 510 (1951).

^[8]  Brief for Appellant, p. 22.

^[9]
Ibid, pp. 22-23.

^[10]
Decision of the lower court, Record on Appeal, pp. 103-104.

^[11]
Ibid, p. 104.