SIMEON DEL ROSARIO, PLAINTIFF AND APPELLEE VS. THE EQUITABLE INSURANCE AND “CASUALTY CO., INC., DEFENDANT AND APPELLANT.

On February 7, 1957, the defendant Equitable Insurance and Casualty
Co., Inc., issued Personal Accident Policy No. 7136 on the life of
Francisco del Rosario, alias Paquito Bolero, son of herein
plaintiff-appellee, binding itself to pay the sum of P1,000.00 to
P3,000.00, as indemnity for the death of the insured. The pertinent
provisions of the Policy, recite:

Part I—Indemnity for Death

If the insured sustains any bodily injury which is effected solely
through violent, external, visible and accidental means, and which
shall result, independently of all other causes and within sixty (60)
days from the occurrence thereof, in the Death of the Insured, the
Company shall pay the amount set opposite such injury:

SECTION 1. Injury sustained other than those specified below unless excepted hereinafter ………………………..P1.000.00

SECTION
2. Injury sustained by the wrecking or disablement of a railroad
passenger car or street railway car in or on which the insured is
travelling as a fare-paying passenger
„……………………………………. P1.500.00

SECTION
3. Injury sustained by the burning of a church, theatre, public library
or municipal administration building while the Insured is therein at
the commencement of the fire
„………………………………………….. P2,000.00

SECTION
4. Injury sustained by the wrecking or disablement of a regular
passenger elevator car in which the Insured is being conveyed as a
passenger (Elevator in mines excluded)
……………………………………………. P2.500.00

SECTION 5. Injury sustained by a stroke of lightning or by a cyclone ……………………………P3.000.00

Part VI—Exceptions

This
policy shall not cover disappearance of the Insured nor shall it cover
Death, Disability, Hospital fees, or Loss of Time, caused to the
insured:

* * * (h) By drowning except as a consequence of the
wrecking or disablement in the Philippine waters of a passenger steam
or motor vessel in which the Insured is travelling as a fare-paying
passenger;

A rider to the Policy contained the following:

“IV. Drowning

It is hereby declared and
agreed that exemption clause letter (k) embodied in Part VI of the
policy is hereby waived by the company, and to form a part of the
provision covered by the policy.”

On February 24, 1957, the insured Francisco del Ecsario alias
Paquito Bolero, while on board the motor launch “ISLAMAM together with
33 others, including his beneficiary in the Policy, Remedios Jayme,
were forced to jump off said launch on account of fire which broke out
on said vessel, resulting to the death by drowning, of the insured and
beneficiary in the waters of Jolo.

On April 13, 1957, Simeon del Rosario, father of the insured, and as
the sole heir, filed a claim for payment with defendant company, and on
September 13, 1957, defendant company paid to him (plaintiff) the sum
of P1,000.00, pursuant to Section 1 of Part 1 of the policy. The
receipt signed by plaintiff reads—

“RECEIVED OF THE EQUITABLE INSURANCE & CASUALTY
CO., INC., THE SUM OF PESOS—ONE THOUSAND (P1,000.00) Philippine
Currency, being settlement in full for all claims and demands against
said Company as a result of an accident which occurred on February 26, 1957, insured under our Accident Policy No. 7136, causing the death of the Assured.

In view of the foregoing, this policy is hereby surrendered and Cancelled.

LOSS COMPUTATION

Amount of Insurance…………………………………………………………….. P1,000.00″

On the same date (September 13, 1957), Atty. Vicente J. Francisco,
wrote defendant company acknowledging receipt by his client (plaintiff
herein), of the P1,000.00, but informing said company that said amount
was not the correct one. Atty. Francisco claimed—

“The amount payable under the policy, I believe
should be P1500.00 under the provision of Section 2, part 1 of the
policy, based on the rule of pari materia as the death of the insured occurred under the circumstances similar to that provided under the aforecited section.”

Defendant company, upon receipt of the letter, referred the matter
to the Insurance Commissioner, who rendered an opinion that the
liability of the company was only P1,000.00, pursuant to Section 1,
Part 1 of the Provisions of the policy (Exh. F, or 3). Because of the
above opinion, defendant insurance company refused to pay more than
P1,000.00. In the meantime, Atty. Vicente Francisco, in a subsequent
letter to the insurance company, asked for P3,000.00 which the Company
refused to pay. Hence, a complaint for the recovery of the balance of
P2,000;00 more was instituted with the CFI of Rizal (Pasay City, Branch
VIII), praying for a further sum of P10,000.00 as attorney’s fees,
expenses of litigation and costs.

Defendant Insurance Company presented a Motion to Dismiss, alleging
that the demand or claim as set forth in the complaint had already been
released, plaintiff haying received the full amount due as appearing in
the policy and as per opinion of the Insurance Commissioner. An
opposition to the motion to dismiss was presented by plaintiff, and
other pleadings were subsequently filed by the parties. On December 28,
1957, the trial court deferred action on the motion to dismiss until
termination of the trial of the case, it appearing that the ground
thereof was not indubitable. In the Answer to the complaint, defendant
company practically admitted all the allegations therein, denying only
those which stated that under the policy its liability was P3,000.00.

On September 1, 1958, the trial court promulgated an amended Decision, the pertinent portions of which read—

“* * * * * * *

Since the
contemporaneous and subsequent acts of the parties show that it was not
their intention that the payment of P1,000.00 to the plaintiff and the
signing of the loss receipt exhibit ‘1’ would be considered as
releasing the defendant completely from its liability on the policy in
question, said intention of the parties should prevail over the
contents of the loss receipt ‘1’ (Articles 1370 and 1371, New Civil
Code).

*** * * Under the terms of this policy, defendant
company agreed to pay P1,000.00 to P3,000.00 as indemnity for the death
of the insured. The insured died of drowning. Death by drowning is
covered by the policy the pertinent provisions of which reads as
follows:

* * * * * * *

‘Part
I of the policy fixes specific amounts as indemnities in case of deaths
resulting from bodily injury which is effected solely thru violence,
external, visible and accidental means’ but, Part I of the Policy is
not applicable in case of death by drowning because death by drowning
is not one resulting from bodily injury which is affected solely thru
violent, external, visible and accidental means as Bodily Injury means
a cut, a bruise, or a wound and drowning is death due to suffocation
and not any cut, bruise or wound.

“* * * * * * *

Besides,
on the face of the policy Exhibit ‘A’ itself, death by drowning is a
ground for recovery a part from the bodily injury because death by
bodily injury is covered by Part I of the policy while death by
drowning is covered by Part VI thereof. But while the policy mentions
specific amounts that may be recovered for death for bodily injury,
yet, there is no specific amount mentioned in the policy for death thru
drowning although the latter is, under Part VI of the policy, a ground
for recovery thereunder. Since the defendant has bound itself to pay
P1,000.00 to P3,000.00 as indemnity for the death of the insured but
the policy does not positively state any definite amount that may be
recovered in case of death by drowning, there is an ambiguity in this
respect in the policy, which ambiguity must be interpreted in favor of
the insured and strictly against the insurer so as to allow a greater
indemnity.

* * * plaintiff is therefore entitled to recover
P3,000.00. The defendant had already paid the amount of P1,000.00 to
the plaintiff so that there still remains a balance of P2,000.00 of the
amount to which plaintiff is entitled to recover under the policy
exhibit

The plaintiff asks for an award of P10,000.00 as
attorney’s fees and expenses of litigation. However, since it is
evident that the defendant had not acted in bad faith in refusing to
pay plaintiff’s claim, the Court cannot award plaintiff’s claim for attorney’s fees and expenses of litigation.

IN
VIEW OF THE FOREGOING, the Court hereby reconsiders and sets aside its
decision dated July 21, 1958 and hereby renders judgment ordering the
defendant to pay plaintiff the sum of Two Thousand (P2,000.00) Pesos
and to pay the costs.”

The above judgment was appealed to the Court of Appeals on three (3)
counts. Said Court, in a Resolution dated September 29, 1959, elevated
the case to this Court, stating that the genuine issue is purely legal
in nature.

All the parties agree that indemnity has to be paid. The conflict
centers on how much should the indemnity be. We believe that under the
proven facts and circumstances, the findings and conclusions of the
trial court are well taken, for they are supported by the generally
accepted principles or rulings on insurance, which enunciate that where
there is an ambiguity with respect to the terms and conditions of a
policy, the same will be resolved against the one responsible thereof.
It should be recalled in this connection, that generally, the insured,
has little, if any, participation in the preparation of the policy,
together with the drafting of its terms and conditions. The
interpretation of, obscure stipulations in a contract should not favor
the party-who caused the obscurity (Art. 1377, N.C.C.), which, “in the
case at bar, is the insurance company.

“* * * And so it has been generally held that the
‘terms in an insurance policy, which are ambiguous, equivocal or
uncertain * * * are to be construed strictly against, the insurer, and
liberally in favor of the insured so as to effect the dominant purpose
of indemnity or payment to the insured, especially where a forfeiture
is involved,’ (29 Am. Jur. 181) and the reason for this rule is that
the ‘insured usually has no voice in the selection or arrangement of
the words employed and that the language of the contract is selected
with great care and deliberation by expert and legal advisers employed
by, and acting exclusively in the interest of, the insurance company’
(44 C. J. S. 1174). Calanoc vs. Court of Appeals, et al. 98 Phil., 79.”

“*
* * Where two interpretations, equally fair, of languages used in an
insurance policy may be made, that which allows the greater indemnity
will prevail. (L’Engel vs. Scotish Union & Nat. F. Ins. Co. 48 Fla. 82, 37 So. 462, 67 LRA 581, 111 Am. St. Rep. 70, 5 Ann. Cas. 749).”

At any event, the policy under consideration, covers death or
disability by accidental means, and the appellant insurance company
agreed to pay P1,000.00 to P3,000.00, as indemnity for death of the
insured.

In view of the. conclusions reached, it would seem unnecessary to discuss the other issues raised in the appeal.

The judgment appealed from is hereby affirmed. With out costs.

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera, Dizon, and Regala, JJ., concur.