Western Guaranty v CA G.R. No. 91666 July 20, 1990

J. Feliciano

Facts:

Priscilla Rodriguez was struck by a bus owned by De Dios. She was hospitalized and her face was permanently disfigured. Western Guaranty, the insurance company of the bus line, was obliged to pay due to the bodily injury caused by the bus. Rodriguez was able to earn a money judgment from the court to the tune of 3000 for actual damages, 1500 for loss of earning capacity, and 20000 for moral damages and attorney’s fees.  De Dios filed a complaint against Western to indemnify the amount. Western lost the case in the appellate court, hence this petition.

Issue: Is Western liable for paying loss of earnings, moral damages and attorney's fees even if  these items are not among those included in the Schedule of Indemnities set forth in the insurance policy.

Held: Yes. Petition dismissed.

Ratio:

The policy states:

Section 1. Liability to the Public — Company will, subject to the Limits of Liability, pay all sums necessary to discharge liability of the insured in respect of —

(a)          death of or bodily injury to or damage to property of any passenger as defined herein.

There was also a schedule of indemnities that specified a certain amount for a certain type of injury as well as hospital service payments.

In this case, the limits on the amount payable for certain kinds of expenses were not considered by the court as “excluding liability for any other type of expense or damage or loss even though actually sustained or incurred by the third party victim.”

The court noted that the limits of the liability was at 50,000 per person per accident. Construing this with section 1 means that all kinds of damages allowable by law were also to be covered by the policy once it was shown that liability has arisen.

The schedule of indemnities was not a closed enumeration of the kinds of damages Western can award.

Western should have used far more specific language, not the “pay all sums necessary to discharge liability” clause.

Insurance contracts must be read by the courts with a jaundiced eye to prevent the insurer from escaping from its obligation. Also, contracts of adhesion such as policies msut be construed against the party who made them, in this case western.