Feb 25, 2021

Fortune Insurance and Surety Co. Inc. vs. Court of Appeals CA - CASE DIGEST - INSURANCE - COMMERCIAL LAW

 

Fortune Insurance and Surety Co. Inc. vs. Court of Appeals GR 115278, 23 May 1995

Facts: Producers Bank of the Philippines was insured by the Fortune Insurance and Surety Co Inc and an insurance policy was issued. An armored car of Producers was robbed while in the process of transferring cash in the sum of P725k under the custody of its teller, Alampay. The said armored car was driven by Magalong, escorted by Security Guard Atiga.

After an investigation conducted by the Pasay police authorities the driver Magalong and guard Atiga were charged with violation of PD 532 (Anti-Highway Robbery Law)

Demands were made by Producers upon Fortune to pay the amount of the loss of P725k, but the latter refused to pay as the loss is excluded from the coverage of the insurance policy, under the policy, the insurance company shall not be liable in respect of any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others.

Producers opposed the contention of Fortune and contended that Atiga and Magalong are not its "officer, employee, trustee or authorized representative at the time of the robbery.

Trial court ordered Fortune to pay Producers.

Issue: Whether Fortune is liable under the Money, Security, and Payroll Robbery policy it issued

Held: No. A contract of insurance is a contract of adhesion thus any ambiguity therein should be resolved against the insurer, or it should be construed liberally in favor of the insured and strictly against the insurer. That if the terms of the contract are clear and unambiguous, there is no room construction and such terms cannot be enlarged or diminished by judicial construction.

It is settled that the terms of the policy constitute the measure of the insurer's liability. In the absence of statutory prohibition to the contrary, insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent with public policy.

Insofar as Fortune is concerned it was its intention to exclude and exempt from protection and coverage losses arising from dishonest fraudulent or criminal acts of persons granted or having unrestricted access to Producers' money or payroll. When it used then the term “employee " it must have had in mind any person who qualifies  es such as generally and universally understood or jurisprudentially established in the light of the four  standards in the determination of the employer-employee relationship or as statutorily declared even in a  limited sense which considers the employees under a "labor-only" contract as employees of the party employing them and not of the party who supplied them to the  employer. Still, Producers entrusted the three with the specific duty to safely transfer the  money to its head office with Alampay to be responsible for its custody in transit Magaring to dove the  armored vehicle which would carry the money and Atiga to provide the needed security for the money the  vehicle and his two other companions. In short for these particular tasks the three acted as agents of Producers. A "representative- is defined as one who represents or stands in the place of another one who represents others or another in a special capacity as an agent and is interchangeable with “agent”.

Fortune is exempt from liability under the general exceptions clause of the insurance policy.

 

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