Thursday, July 12, 2012

Perla v CA G.R. No. 96452 May 7, 1992

The Lim spouses opened a chattel mortgage and bought a Ford Laser from Supercars for Php 77,000 and insured it with Perla Compania de Seguros. The vehicle was stolen while Evelyn Lim was driving it with an expired license. The spouses requested for a moratorium on payments but this was denied by FCP, the assignee of rights over collection of the mortgage amount of the car. The spouses also called on the insurance company to pay the balance of the mortgage due to theft but this was denied by the company due to the spouses’ violation of the Authorized Driver clause stating (driving with an expired license before being carnapped):
 Any of the following: (a) The Insured (b) Any person driving on the Insured's order, or with his permission. Provided that the person driving is permitted, in accordance with the licensing or other laws or regulations, to drive the Scheduled Vehicle, or has been permitted and is not disqualified by order of a Court of Law or by reason of any enactment or regulation in that behalf.
Since the spouses didn’t pay the mortgage, FCP filed suit against them. The trial court ruled in its favor ordering spouses to pay. The appellate court reversed their decision. FCP and Perla appealed to the SC.

1.Was there grave abuse of discretion on the part of the appellate court in holding that private respondents did not violate the insurance contract because the authorized driver clause is not applicable to the "Theft" clause of said Contract?
2. Whether or not the loss of the collateral exempted the debtor from his admitted obligations under the promissory note particularly the payment of interest, litigation expenses and attorney's fees.

Held: No, No. Petition dismissed.

1. The car was insured against a malicious act such as theft. Therefore the “Theft” clause in the contract should apply and not the authorized driver clause. The risk against accident is different from the risk against theft. 
The appellate court stated: The "authorized driver clause" in a typical insurance policy is in contemplation or anticipation of accident in the legal sense in which it should be understood, and not in contemplation or anticipation of an event such as theft. The distinction — often seized upon by insurance companies in resisting claims from their assureds — between death occurring as a result of accident and death occurring as a result of intent may, by analogy, apply to the case at bar.
There was no connection between valid possession of a license and the loss of a vehicle. Ruling in a different way would render the policy a sham because the company can then easily cite restrictions not applicable to the claim.
2.  The Supreme Court stated:
“The chattel mortgage constituted over the automobile is merely an accessory contract to the promissory note. Being the principal contract, the promissory note is unaffected by whatever befalls the subject matter of the accessory contract. Therefore, the unpaid balance on the promissory note should be paid, and not just the installments due and payable before the automobile was carnapped, as erronously held by the Court of Appeals.”
The court, however, construed the insurance, chattel mortgage, and promissory note as interrelated contracts, hence eliminating the payment of interests, litigation expenses, and attorney’s fees stated in the promissory note. The promissory note required securing a chattel mortage which in turn required opening an insurance contract. The insurance was made as an accessory to the principal contract, making sure that the value in the promissory note will be paid even if the car was lost. The insurance company promised to pay FCP for loss or damage of the property.
CA didn’t err in requiring Perla to pay the spouses, but the spouses must pay FCP for the balance in the note.

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