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Republic of the PhilippinesSUPREME COURTManila
EN BANC
G.R. No. L-16215 June 29, 1963
SIMEON DEL ROSARIO, plaintiff-appellee, vs.THE EQUITABLE
INSURANCE AND CASUALTY CO., INC., defendant-appellant.
Vicente J. Francisco and Jose R. Francisco for
plaintiff-appellee.K. V. Faylona for defendant-appellant.
PAREDES, J.:
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 farepaying 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. . . . . . . .
P3,000.00x x x x x x x x x
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 farepaying
passenger; . . . .
A rider to the Policy contained the following:
IV. DROWNING
It is hereby declared and agreed that exemption clause Letter
(h) 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.
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On February 24, 1957, the insured Francisco del Rosario, alias
Paquito Bolero, while on board the motor launch "ISLAMA" 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 in the death of drowning, of
the insured and beneficiary in the waters of Jolo. 1wph1.t
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 I
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 out 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__________v v v v v
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
P1,500.00 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 I 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 Court of First Instance of Rizal (Pasay City, Branch VII),
praying for it 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 is set forth in the complaint had
already been released, plaintiff having received the full amount
due as appearing in 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 file 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
x x x x x x x x x
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:
x x x x x x x x x
"Part I of the policy fixes specific amounts as indemnities in
case of death 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
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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 to any
cut, bruise or wound."
x x x x x x x x x
Besides, on the face of the policy Exhibit "A" itself, death by
drowning is a ground for recovery apart 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 not 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 P1000.00 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 greater
indemnity.
x x x x x x x x x
. . . 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
"A".
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 the 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
cause 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 v. Court of
Appeals, et al., G.R. No. L-8151, Dec. 16, 1955.
. . . . 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 v. 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. is 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. Without
costs.
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Republic of the PhilippinesSUPREME COURTManila
EN BANC
G.R. No. L-23491 July 31, 1968
TAURUS TAXI CO., INC., FELICITAS V. MONJE, ET AL.,
plaintiffs-appellees, vs.THE CAPITAL INSURANCE & SURETY CO.,
INC., defendant-appellant.
Vergara and Dayot for plaintiffs-appellees. Achacoso, Nera and
Ocampo for defendant-appellant.
FERNANDO, J.:
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 as 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 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 employee of plaintiff Taurus Taxi Co., Inc., 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. A88637 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.
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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 that 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 whatever
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 for
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.
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Republic of the PhilippinesSUPREME COURTManila
EN BANC
G.R. No. L-25920 January 30, 1970CCC INSURANCE CORPORATION,
petitioner, vs.COURT OF APPEALS (Fourth Division) and CARLOS F.
ROBES, respondents.Kalaw and Felipe for petitioner.
Adalia B. Francisco for respondents.
REYES, J.B.L., J.:Petition for review of the decision of the
Court of Appeals, affirming that of the Court of First Instance of
Rizal (Quezon City) allowing insurance indemnification of plaintiff
for his damaged car and the payment of attorney's fees.
The following facts are not in dispute:
On 1 March 1961, Carlos F. Robes took an insurance, with the CCC
Insurance Corporation, on his Dodge Kingsway car against loss or
damage through accident for an amount not exceeding P8,000.00
(Policy No. M1156). On 25 June 1961, and during the effectivity of
the policy, the insured vehicle, while being driven by the owner's
driver, became involved in a vehicular collision along Rizal Avenue
Extension, Potrero, Malabon, Rizal. The car was damaged, and the
repair was estimated to cost P5,300.00.
As the insurance company refused either to pay for the repair or
to cause the restoration of the car to its original condition,
Robes instituted Civil Case No. Q-6063 in the Court of First
Instance of Rizal for recovery not only of the amount necessary for
the repair of the insured car but also of actual and moral damages,
attorneys' fees and costs. Resisting plaintiff's claim, the
insurance company disclaimed liability for payment, alleging that
there had been violation of the insurance contract because the one
driving the car at the time of the incident was not an "authorized
driver."
After due hearing, judgment was rendered for the plaintiff, and
defendant insurer was ordered to pay unto the former the cost of
repair of the car in the sum of P5,031.28; the sum of P150.00, for
the hauling and impounding of the car at the repair shop; P2,000.00
as actual damages; and P1,000.00 as attorneys' fees, plus
costs.
The insurance company went to the Court of Appeals, raising
inter alia the questions of the qualification of plaintiff's driver
to operate the insured vehicle and the correctness of the trial
court's award to plaintiff of the amount of P5,013.28 as cost of
repairs, and of actual damages and attorneys' fees. In its decision
of 31 January 1966, the Court of Appeals affirmed the ruling of the
lower court except the award of actual damages in the sum of
P2,000.00, which was eliminated on the ground that it was too
speculative. Not content, the insurance company filed the present
petition for review of the aforesaid decision of the Court of
Appeals on two grounds: (1) that the proceedings observed in the
trial court were irregular and invalid; and (2) that the damage to
the insured car was not covered by the insurance policy because at
the time of the accident it was being driven by one who was not an
authorized driver.
The second issue constitutes the main contention of herein
appellant, and will be considered first. It is vigorously urged by
the insurer that the one driving the insured vehicle at the time of
the accident was not an authorized driver thereof within the
purview of the following provision of the insurance policy:
AUTHORIZED DRIVER:
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 licensing laws or regulations to drive the motor
vehicle covered by this Policy, or has been so permitted and is not
disqualified by order of a court of law or by reason of any
enactment or regulation from driving such Motor Vehicle. (Emphasis
ours)
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It has been found as a fact by the Court of Appeals that Domingo
Reyes, the, driver who was at the wheel of the insured car at the
time of the accident, does not know how to read and write; that he
was able to secure a driver's license, without passing any
examination therefor, by paying P25.00 to a certain woman; and that
the Cavite agency of the Motor Vehicles Office has certified not
having issued Reyes' purported driver's license No. 271703 DP.
In holding that the damage sustained by the car comes within the
coverage of the insurance policy, the Court of Appeals argued that
since Reyes' purported driver's license (Exhibit "A") bears all the
earmarks of a duly issued license, then it is a public document,
and petitioner insurance company then has the burden of disproving
its genuineness, which the latter has failed to do. In this respect
the Court of Appeals ruled:
... . The fact that the Cavite Agency of the Motor Vehicles
Office states that Driver's License No. 271703 DP was not issued by
that office, does not remove the possibility that said office may
have been mistaken or that said license was issued by another
agency. Indeed Exhibit 13 shows that a certain Gloria Presa made
the notation thereon "no license issued" and which notation was the
basis of the 1st Indorsement, Exhibit 12, signed by the MVO Cavite
City Agency's officer-in-charge. Neither Gloria Presa nor the
officer-in-charge Marciano A. Monzon was placed on the witness
stand to be examined in order to determine whether said license is
indeed void. As it is, as heretofore pointed out, the fact remains
that Domingo Reyes is in possession of a driver's license issued by
the Motor Vehicles Office which on its face appears to have been
regularly issued.
In effect, the Court of Appeals found that the driver's license
No. 271703 DP was genuine, that is, one really issued by the Motor
Vehicles Office or its authorized deputy; and this finding of fact
is now conclusive and may not be questioned in this appeal.
Nevertheless, the appellant insurer insists that, under the
established facts of this case, Reyes, being admittedly one who
cannot read and write, who has never passed any examination for
drivers, and has not applied for a license from the duly
constituted government agency entrusted with the duty of licensing
drivers, cannot be considered an authorized driver.
The fatal flaw in appellant's argument is that it studiously
ignores the provisions of law existing at the time of the mishap.
Under Section 24 of the Revised Motor Vehicles Law, Act 3992 of the
Philippine Legislature, as amended by Republic Acts Nos. 587, 1204
and 2863,1
An examination or demonstration to show any applicant's ability
to operate motor vehicles may also be required in the discretion of
the Chief, Motor Vehicles Office or his deputies. (Emphasis
supplied)
and reinforcing such discretion, Section 26 of the Act
prescribes further:
SEC. 26. Issuance of chauffeur's license; professional badge:
If, after examination, or without the same, the Chief, Motor
Vehicles Office or his deputies, believe the applicant to possess
the necessary qualifications and knowledge, they shall issue to
such applicant a license to operate as chauffeur ... (Emphasis
supplied)
It is thus clear that the issuance of a driving license without
previous examination does not necessarily imply that the license
issued is invalid. As the law stood in 1961, when the claim arose,
the examinations could be dispensed with in the discretion of the
Motor Vehicles Office official officials. Whether discretion was
abused in issuing the license without examination is not a proper
subject of inquiry in these proceedings, though, as a matter of
legislative policy, the discretion should be eliminated. There is
no proof that the owner of the automobile knew that the
circumstance surrounding such issuance showed that it was
irregular.
The issuance of the license is proof that the Motor Vehicles
Office official considered Reyes, the driver of the insured-
appellee, qualified to operate motor vehicles, and the insured was
entitled to rely upon such license. In this connection, it should
be observed that the chauffeur, Reyes, had been driving since
1957,2 and without mishap, for all the record shows. Considering
that, as pointed out by the Court of Appeals, the weight of
authority is in favor of a liberal interpretation of the insurance
policy for the benefit of the party insured, and strictly against
the insurer, We find no reason to diverge from the conclusion
reached by the Court of Appeals that no breach was committed of the
above-quoted provision of the policy.
The next issue assigned is anchored on the fact that the
decision of the trial court was based on evidence presented to and
received by the clerk of court who acted as commissioner, although
allegedly, there was no
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written court order constituting him as such commissioner, no
written request for his commission was made by the parties; he did
not take an oath prior to entering into the discharge of his
commission; no written report of his findings was ever submitted to
the court; and no notice thereof was sent to the parties, contrary
to the specific provisions of Rule 33 of the Rules of Court.
Actually there is nothing basically wrong with the practice of
delegating to a commissioner, usually the clerk of court, who is a
duly sworn court officer, the reception of both parties and for him
to submit a report thereon to the court. In fact, this procedure is
expressly sanctioned by Revised Rule 33 of the Rules of Court.3
Petitioner's objection in this case, however, is directed not
against its referral to the clerk of court but against the alleged
non-observance of the prescribed steps in connection with such
delegation.
We find no cause sufficient to invalidate the proceedings had in
the trial court. We note that this issue was brought up by the
appellant insurance company or the first time only in its motion
for reconsideration filed in the Court of Appeals. It was not
raised in the trial court, where the defect could still be
remedied. This circumstance precludes ventilation of the issue of
validity of the hearing at this stage; for, if such irregularity is
to vitiate the proceeding, the question should have been seasonably
raised, i.e., either before the parties proceeded with the hearing
or before the court handed down its ruling.4 It is a procedural
point that can be waived by consent of the parties, express or
implied.5
For the same reason, appellant cannot insist now on the
annulment of the proceeding on the basis of alleged lack of written
consent of the parties to the commission, or of an order appointing
the clerk as commissioner, or of notice of the submission of his
report to the court. Furthermore, appellant has presented no proof
that the clerk of court committed any mistake or abuse in the
performance of the task entrusted to him, or that the trial court
was not able to properly appreciate the evidence in the case
because it was received by another person. If indeed there were
errors at all, they would be non-prejudicial and could not justify
the holding of a new trial, as urged by herein petitioner. 6
WHEREFORE, the decision of the Court of Appeals is affirmed,
with costs against appellant CCC Insurance Corporation.
-
FIRST DIVISION
[G.R. No. L-28772. September 21, 1983.]
ASSOCIATION OF BAPTISTS FOR WORLD EVANGELISM, INC., Plaintiff,
v. FIELDMENS INSURANCE CO., INC., Defendant-Appellant.
SYLLABUS
1. MERCANTILE LAW; INSURANCE; COMPREHENSIVE POLICY; UNLAWFUL AND
WRONGFUL TAKING OF VEHICLE FOR A JOY RIDE CONSTITUTES THEFT WITHIN
THE MEANING OF INSURANCE POLICY; RECOVERY FOR DAMAGE NOT BARRED BY
THE ILLEGAL USE OF THE VEHICLE. The Comprehensive Policy issued by
the insurance company includes loss of or damage to the motor
vehicle by "burglary . . . or theft." It is settled that the act of
Catiben in taking the vehicle for a joy ride to Toril, Davao City,
constitutes theft within the meaning of the insurance policy and
that recovery for damage to the car is not barred by the illegal
use of the car by one of the station boys.
2. ID.; ID.; ID.; ID.; ID.; LIABILITY OF INSURER UNDER THE THEFT
CLAUSE OF AN INSURANCE POLICY; PRIOR CONVICTION NOT REQUIRED IN AN
ACTION FOR RECOVERY ON AN AUTOMOBILE INSURANCE; CASE AT BAR. There
need be no prior conviction for the crime of theft to make an
insurer liable under the theft clause of the policy. Upon the facts
stipulated by the parties it is admitted that Catiben had taken the
vehicle for a joy ride and while the same was in his possession he
bumped it against an electric post resulting in damages. That act
is theft within a policy of insurance. In a civil action for
recovery on an automobile insurance, the question whether a person
using a certain automobile at the time of the accident stole it or
not is to be determined by a fair preponderance of evidence and not
by the rule of criminal law requiring proof of guilt beyond
reasonable doubt (Villacorta v. Insurance Commission, 100 SCRA 467
[1980]). Besides, there is no provision in the policy requiring
prior criminal conviction for theft.
R E S O L U T I O N
MELENCIO-HERRERA, J.:
This case for "Indemnity for Damages and Attorneys Fees" was
elevated to this Tribunal by the then Court of Appeals on a
question of law.
The Stipulation of Facts submitted by the parties before the
Court of First Instance of Davao, Branch I, in Case No. 3789, reads
as follows:jgc:chanrobles.com.ph
"COMES the parties in the above entitled case, through their
respective counsels and to this Honorable Court respectfully submit
the following stipulations of facts:chanrob1es virtual 1aw
library
1. That plaintiff is a religious corporation duly organized and
registered under the laws of the Philippines, while defendant is
also a domestic corporation duly organized and existing under the
laws of the Philippines;
2. That plaintiff, having an insurable interest in a Chevrolet
Carry-all, 1955 Model, with Motor No. 032433272555 and Plate No.
E-73317 covered by Registration Certificate No. 288141 Rizal,
issued by the Davao Motor Vehicles Office Agency No. 20 and owned
by Reverend Clinton Bonnel, insured said vehicle with the defendant
under Fieldmens Insurance Co., Inc. Private Car Comprehensive
Policy No. 22 Jl 1107, attached hereto as Annex A to A-2 against
loss or damage up to the amount of P5,000.00;
3. That in the latter part of 1961, through plaintiffs
representative, Dr. Antonio Lim, the aforementioned Chevrolet
Carry-all was placed at the Jones Monument Mobilgas Service Station
at Davao City, under the care of said stations operator, Rene Te so
that said carry-all could be displayed as being for sale, with the
understanding that the latter or any of his station
-
boys would receive a 2% commission should they sell said
vehicle.
4. That on the night of January 18, 1962, Romeo Catiben one of
the boys at the aforementioned Jones Monument Service Station and a
nephew of the wife of Rene Te who is residing with them, took the
aforementioned chevrolet carry-all for a joy ride to Toril, Davao
City, without the prior permission, authority or consent of either
the plaintiff or its representative Dr. Antonio Lim, or of Rene Te,
and on its way back to Davao City, said vehicle, due to some
mechanical defect accidentally bumped an electric post causing
actual damages valued at P5,518.61.
5. That the issue before the Honorable Court is whether or not
for the damage to the abovementioned Chevrolet Carry-all to be
compensable under the aforementioned Fieldmens Private Car
Comprehensive Policy No. 22 JL 11107, there must be a prior
criminal conviction of Romeo Catiben for theft.
WHEREFORE, it is respectfully prayed that this Honorable Court
render judgment on the facts and issues above stipulated after the
parties shall have submitted their respective memoranda."cralaw
virtua1aw library
The Trial Court rendered judgment based on the facts stipulated
and ordered defendant insurance company to pay plaintiff
association the amount of P5,000.00 as indemnity for the damage
sustained by the vehicle, P2,000.00 for attorneys fees, and costs.
Dissatisfied, the insurance company interposed an appeal to the
Appellate Court, docketed as CA-G.R. No. 33543-R, which as above
stated, elevated it to this instance.chanrobles.com:cralaw:red
We affirm. The Comprehensive Policy issued by the insurance
company includes loss of or damage to the motor vehicle by
"burglary . . . or theft." It is settled that the act of Catiben in
taking the vehicle for a joy ride to Toril, Davao City, constitutes
theft within the meaning of the insurance policy and that recovery
for damage to the car is not barred by the illegal use of the car
by one of the station boys.
". . . where a car is admittedly as in this case unlawfully and
wrongfully taken by some people, be they employees of the car shop
or not to whom it had been entrusted, and taken on a long trip to
Montalban without the owners consent or knowledge, such taking
constitutes or partakes of the nature of theft as defined in
Article 308 of the Revised Penal Code, viz.(W)ho are liable for
theft. Theft is committed by any person who, with intent to gain
but without violence against or intimidation of persons nor force
upon things, shall take personal property of another without the
latters consent, for purposes of recovering the loss under the
policy in question."cralaw virtua1aw library
". . . the Court sustains as the better view that which holds
that when a person, either with the object of going to a certain
place, or learning how to drive, or enjoying a free ride, takes
possession of a vehicle belonging to another, without the consent
of its owner, he is guilty of theft because by taking possession of
the personal property belonging to another and using it, his intent
to gain is evident since he derives therefrom utility,
satisfaction, enjoyment and pleasure. Justice Ramon C. Aquino cites
in his work Groizard who holds that the use of a thing constitutes
gain and Cuello Calon who calls it hurto de uso. 1
There need be no prior conviction for the crime of theft to make
an insurer liable under the theft clause of the policy. Upon the
facts stipulated by the parties it is admitted that Catiben had
taken the vehicle for a joy ride and while the same was in his
possession he bumped it against an electric post resulting in
damages. That act is theft within a policy of insurance. In a civil
action for recovery on an automobile insurance, the question
whether a person using a certain automobile at the time of the
accident stole it or not is to be determined by a fair
preponderance of evidence and not by the rule of criminal law
requiring proof of guilt beyond reasonable doubt. 2 Besides, there
is no provision in the policy requiring prior criminal conviction
for theft.chanroblesvirtualawlibrary
ACCORDINGLY, finding no error in the judgment appealed from, the
same is hereby affirmed.
Costs against defendant Fieldmens Insurance Co., Inc.
SO ORDERED.
-
Republic of the PhilippinesSUPREME COURTManila
EN BANC
G.R. No. L-28866 March 17, 1972FE DE JOYA LANDICHO, in her own
behalf and as judicial guardian of her minor children, RAFAEL J.
LANDICHO and MA. LOURDES EUGENIA LANDICHO,plaintiffs-appellees,
vs.GOVERNMENT SERVICE INSURANCE SYSTEM,defendant-appellant.
.Vedasto J. Hernandez for plaintiffs-appellees.Government Corporate
Counsel Leopoldo M. Abellera and Trial Attorney Arsenio J. Magpale
defendant-appellant.
CONCEPCION, C.J.:pAppeal of the Government Service Insurance
System hereinafter referred to as GSIS, for the sake of brevity
from a decision of the Court of First Instance of Manila directing
said defendant to pay to the plaintiffs-appellees, Fe de Joya
Landicho and her minor children, Rafael J. and Maria Lourdes
Eugenia, both surnamed Landicho, the sum of P15,800, with interest
thereon, at the legal rate, from September 26, 1967, until fully
paid, in addition to the sum of P1,000, as and for attorney's fees,
and the costs.
The facts are not in dispute. On June 1, 1964, the GSIS issued
in favor of Flaviano Landicho, a civil engineer of the Bureau of
Public Works, stationed at Mamburao, Mindoro Occidental, optional
additional life insurance policy No. OG-136107 in the sum of
P7,900. The policy states on its face:
This insurance is granted subject to the terms and conditions
hereinafter set forth and in consideration of the "Information"
therefor and of the payment on the day this Policy takes effect of
the monthly premiums stated above, due from and payable by the
Insured, and the like payments on the last day of every month
during the lifetime of the Insured until maturity of this Policy or
until prior death of the Insured.
On page 2 of said policy, condition No. 1 provides, in part:
.
1. PAYMENT OF PREMIUMS: .
... . Premiums are due and payable at the Office of the System
in Manila or at any of its branches. When any premium or
installment thereof remains unpaid after its due date, such due
date is the date of default in payment of premiums. The mere
possession of this Policy does not imply that it is in force unless
the premiums due thereon are paid on time or the policy has
sufficient cash value to keep it in force.
Condition No. 18, on page 8 of the policy, is of the following
tenor: .
18. ENTIRE CONTRACT IN THIS POLICY: .
This Policy together with the "Information" sheet signed by the
Insured, a copy of which is attached hereto, is issued under the
provisions of Commonwealth Act No. 186, as amended, and constitutes
the entire contract.
All statements made by the Insured shall, in the absence of
fraud, be deemed representations and no warranties, and no
statement shall void the Policy or be used as a defense to claim
hereunder unless it be contained in written information and a copy
of such information be endorsed upon or attached to the Policy when
issued.
Before the issuance of said policy, the insured had filed an
application, by filing and signing a printed form of the GSIS on
the basis of which the policy was issued. Paragraph 7 of said
application States:
7. I hereby declare that all the above statements and answers as
well as those I may make to the System's Medical Examiner in
continuation of this application, to be true and co direct to the
best of my knowledge and belief, and I hereby agree as follows:
.
-
a. That this declaration, with the answers to be given by me to
the Medical Officer, shall be made the basis the policy and form
part of the same; .
b. That acceptance of my policy issued on this application will
constitute a ratification by me of any correction or addition to
this application made by the System; .
c. That this application serves as a letter of authority to the
Collecting Officer of our Office thru the GSIS to deduct from my
salary the monthly premium in the amount of P33.36, beginning the
month of May, 1964, and every month thereafter until notice of its
discontinuance shall have beenreceived from the System; .
d. That the failure to deduct from my salary the month premiums
shall not make the policy lapse, however, the premium account shall
be considered as indebtedness which, I bind myself to pay the
System; .
e. That my policy shall be made effective on the first day of
the month next following the month the first premium is paid;
provided, that it is not more ninety (90) days before or after the
date of the medical examination,was conducted if required." .
While still under the employment of the Bureau of Public Works,
Mr. Landicho met his death, on June 29, 1966, in an airplane crash
in Mindoro. Thereupon, Mrs. Landicho, in her own behalf and that of
her co-plaintiffs and minor children, Rafael J. and Maria Lourdes
Eugenia, filed with the GSIS a claim for P15,800, as the double
indemnity due under policy No. OG-136107, because of the untimely
death of the insured owing to said accident. The GSIS denied the
claim, upon the ground that the policy had never been in force
because, pursuant to subdivision (e) of the above-quoted paragraph
7 of the application, the policy "shall be ... effective on the
first day of the month next following the month the first premium
is paid," and no premium had ever been paid on said policy. Upon
refusal of the GSIS to reconsider its stand, this action was filed,
September 22, 1967, in the Court of First Instance of Manila, in
which the GSIS reiterated its aforementioned defense. Thereafter
submitted by both parties for judgment on the pleadings, upon the
ground thatthe case involve purely questions of law, said court
rendered, in due course, its abovementioned decision, from which
the GSIS has taken the present appeal.
The main issue therein is whether or not the insurance policy in
question has ever been in force, not a single premium having been
paid thereon. In support of the affirmative, plaintiffs invoke the
stipulation in the policy to the effect that the information
contained in the application filed by the insured shall form part
of the contract between him and the GSIS, and, especially,
subdivisions (c) and (d) of paragraph 7 of said application stating
that the same shall serve "as a letter of authority to the
Collecting Officer of our Office" the Bureau of Public Works "thru
the GSIS to deduct from my salary the monthly premium in the amount
of P33.36 beginning the month of May, 1964, and every month
thereafter," and that "failure to deduct from my salary the monthly
premiums shall not make the policy lapse, however, the premium
account shall be considered as indebtedness which, I" the insured
"bind myself to pay the System." 1 The GSIS maintains, however, the
negative, relying upon subdivision (e) of the same paragraph No. 7,
which provides that the "policy shall be made effective on the
first day of the month next following the month the first premium
is paid." Under this theory, subdivisions (c) and (d) of said
paragraph 7 would not apply unless and until the first premium
shall have been actually paid, pursuant to subdivision (e) of the
same paragraph.
Although it may not be entirely farfetched, this view is not
likely to be in accord with the understanding of many, if not most,
government employees who obtain an optional additional life
insurance policy. As a consequence, the actual receipt by them of
their full pay without any deduction for premiums on their optional
additional life insurance policies may not impart to them the
warning which, otherwise, it would necessarily convey that said
policy is not, as yet, in force, for they are liable to believe
"that failure to deduct" from the salary of the insured "the
monthly premiums shall not" in the language of subdivision (d)
"make the policy lapse" and that "the premiums account shall be
considered as indebtedness," to be paid or deducted later, because,
after all, the so called "payment" of premiums is nothing but a
"paper" or "accounting" process, whereby funds are merely
transferred, not physically, but constructively, from one office of
the government to another. In other words, the language, of
subdivisions (c), (d) and (e) is such as to create an ambiguity
that should be resolved against the party responsible therefor
defendant GSIS, as the party who prepared and furnished the
application form and in favor of the party misled thereby, the
insured employee.
Indeed, our Civil Code provides:
The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the obscurity. 2
-
This is particularly true as regards insurance policies, in
respect of which it is settled that the " "terms in an insurance
policy, which are ambiguous, equivocal, or uncertain ... are to be
construed strictly and most strongly 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 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 experts
and legal advisers employed by, and acting exclusively in the
interest of, the insurance company." (44 C.J.S., p. 1174.) 3.
The equitable and ethical considerations justifying the
foregoing view are bolstered up by two (2) factors, namely:
(a) The aforementioned subdivision (c) states "that this
application serves as a letter of authority to the Collecting
Officer of our Office" the Bureau of Public Works "thru the GSIS to
deduct from my salary the monthly premium in the amount of P33.36."
No such deduction was made and, consequently, not even the first
premium "paid" because the collecting officer of the Bureau of
Public Works was not advised by the GSIS to make it (the deduction)
pursuant to said authority. Surely, this omission of the GSIS
should not inure to its benefit. .
(b) The GSIS had impliedly induced the insured to believe that
Policy No. OG-136107 was in force, he having been paid by the GSIS
the dividends corresponding to said policy. Had the insured had the
slightest inkling that the latter was not, as yet, effective for
non-payment of the first premium, he would have, in all
probability, caused the same to be forthwith satisfied.
WHEREFORE, the decision appealed from should be, it is hereby
affirmed, with costs against the defendant-appellant, Government
Service Insurance System. It is so ordered. .
-
EN BANC
[G.R. No. L-20383. May 24, 1967.]
THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY,
Petitioner-Appellee, v. SOCIAL SECURITY COMMISSION,
Respondent-Appellant.
Solicitor General Arturo A. Alafriz, Solicitor Camilo D.
Quiason, L. L. Javellana & L. B. Topacio for
Respondent-Appellant.
Manuel Lim, Manuel Macias, Ricardo T. Bancod and Associates for
Petitioner-Appellee.
SYLLABUS
1. COURT OF FIRST INSTANCE; JURISDICTION TO ISSUE PROHIBITION
WITH PRELIMINARY INJUNCTION AGAINST THE SSC. A writ of prohibition
may be issued only by a superior court to an inferior court,
corporation, board or person, to prevent the latter from usurping
or exercising a jurisdiction or power it does not have (Moran on
Rules of Court, 1963 ed. p. 157). Section 5(a) of Republic Act No.
1161 confers on the Social Security Commission the power to
determine and settle claims, which power partakes of a
quasi-judicial function. In the exercise of said power, the
Commission is not inferior to courts of first instance, in much the
same way as the Public Service Commission, as a board performing
quasi judicial functions, is not inferior to said courts. The
quasi-judicial nature of the functions of the Social Security
Commission is emphasized by its authority, expressly granted by
said Section 5 (a), to promulgate rules and regulations governing
"the filing, determination and settlement of claims." Hence, the
lower court had no jurisdiction to issue the writ of prohibition
therein prayed for by the appellee.
2. SOCIAL SECURITY COMMISSION; WHEN SHALL IT BE SUED IN COURTS
OF FIRST INSTANCE. The Commission performs administrative, as well
as quasi-judicial functions. Although, it can sue and be sued in
courts of first instance, either as regards its administrative
functions, or in the otherwise when the act complained of forms
part of its quasi-judicial functions.
3. ID.; CIRCULAR DOES NOT CONSTITUTE DECISION. Although Circular
No. 34 bears the approval of the Chairman of the Commission, said
approval does not constitute a "decision" thereof, as the term is
used in section 5, which regulates the judicial review of such
decision. Indeed, a "decision" connotes the adjudication or
settlement of a controversy, and the same did not exist between the
System and the plaintiff when the Chairman of the Commission
affixed his signature to said Circular No. 34 on or before November
6, 1960.
4. ID.; DUTY OF COMPLAINING ENTITY OF PERSON TO SUBMIT HIS OR
HER OBJECTION TO THE SYSTEM FOR DETERMINATION BEFORE THE SAME IS
SUBMITTED FOR JUDICIAL REVIEW. It is only fair and just, as well as
administratively expedient, that before judicial review could be
sought, appellees objection to the aforementioned circular be
previously submitted to and to and passed upon by the Commission,
for, pursuant to Section 5(b) the Social Security Act, the judicial
review of "any decision of the Commission shall be permitted only
after any party claiming to be aggrieved thereby has exhausted his
remedies before the Commission."
5. ID.; PROHIBITION, ACTION FOR; REQUISITE. The general rule
applicable to actions for certiorari and prohibition against
tribunal, board or officer is that the aggrieved party must seek
therefrom a reconsideration of the decision complained of so that
the latter will have an opportunity to correct the error or mistake
complained of. No such reconsideration has been asked by plaintiff
herein. Hence, it has no cause of action for prohibition, which
does not lie except in the absence of appeal or any other plain,
speedy and adequate remedy in the ordinary course of law.
6. ID.; QUESTION OF COVERAGE; JURISDICTION. Rep. Act No. 4857,
Sec. 2 of which amended Sec. 5 (c) of Rep. Act No. 1161 provides
that "any dispute arising under this Act with respect to coverage,
etc. shall be cognizable by the Commission . . ." Hence, there can
be no question that any dispute with respect to coverage is
cognizable by the Commission.
D E C I S I O N
-
CONCEPCION, C.J.:
Appeal, taken by the Social Security Commission, from a decision
of the Court of First Instance of Manila, the dispositive part of
which reads:jgc:chanrobles.com.ph
"IN VIEW OF THE FOREGOING, judgment is hereby rendered (1)
holding that plaintiffs agents, solicitors or under writers are not
employees of plaintiff. The Philippine American Life Insurance
Company and that plaintiff is not their employer as the plaintiffs
said insurance agents, solicitors or underwriters do not fall under
the compulsory coverage of the Social Security System; (2)
commanding defendant Social Security Commission to desist
absolutely from taking criminal action against plaintiffs officers
under the provisions of Section 28(e) and (f) of the Social
Security Act, and from requiring plaintiff to remit contributions
to the defendant Social Security Commission or its administrative
arm, the Social Security System, to be applied to the coverage of
plaintiffs said agents, solicitors or underwriters under the Social
Security Act, without pronouncement as to costs."cralaw virtua1aw
library
On November 6, 1960, the Social Security System hereinafter
referred to as the System issued, with the approval of the Chairman
of the Social Security Commission hereinafter referred to as the
Commission Circular No. 34 (Exhibit A), requiring all insurance
firms to submit immediately the names of their agents, solicitors
or underwriters, who, pursuant to the Social Security Act 1
hereinafter referred to as the Act are employees of said firms,
subject to compulsory coverage of the System, and to pay the
corresponding premiums, based on the actual commissions received by
each agent during each month.
Sometime later, the System, through the manager of its
Production Department, sent to the Philippine American Life
Insurance Company hereinafter referred to as the plaintiff the
communication Exhibit B, dated February 11, 1961, enclosing
therewith SSS Form R-1-A.1, advising plaintiff that, pursuant to
said Circular No. 34, the insurance agents thereof are considered
its employees, subject to compulsory coverage under said Act, and
urging plaintiff to accomplish said SSS Form (for the purpose of
supplying the necessary data concerning said agents, solicitors and
underwriters) and to submit the same, within ten (10) days, to
avoid the penalties provided for by law. This "advice" was
reiterated in another letter (Exhibit B-1 of the same officer,
dated March 3, 1961. Plaintiff replied to these letters with a
communication (Exhibit C), dated March 7, 1961, objecting to the
aforementioned compulsory coverage upon the ground that plaintiffs
insurance agents, solicitors or underwriters are not its employees.
Still, on May 14, 1961, the System sent to plaintiff another letter
(Exhibit D), with several copies of SSS Form R-1-A.1, with the
request that these forms be accomplished and submitted, as soon as
possible, to facilitate early adjudication of the coverage of its
agents under the System.
Instead of complying with this request, on May 30, 1961,
plaintiff commenced, in the Court of First Instance of Manila, the
present action, for prohibition with preliminary injunction against
the Commission to restrain the latter 1) from compelling plaintiff
to remit contributions to the administrative branch of the System,
as an incident of the alleged inclusion of plaintiffs agents,
solicitors or underwriters in the compulsory coverage of the
System, and 2) from prosecuting plaintiff and its officers for
their refusal to make the aforementioned contributions upon the
theory that said agents of the plaintiff are not employees
thereof.
After appropriate proceedings, the lower court rendered the
aforementioned decision. Hence, the present appeal to this Court,
since questions purely of law are involved therein, namely: 1)
whether or not the trial court had jurisdiction to hear and decide
this case; 2) whether plaintiff has a cause of action against the
Commission; and 3) whether insurance agents of a life insurance
company, like plaintiff herein, are its employees, for purposes of
the compulsory coverage under the System.
The System maintains that the first two issues should be
resolved in the negative, upon the ground, inter alia, that
decisions of the Commission may not be reviewed by courts of first
instance, not only because the two have the same rank, but, also,
because said decisions are, pursuant to the Act 2 reviewable by the
Court of Appeals, on questions of law and fact, or by the Supreme
Court, on questions purely of law; that plaintiff has no cause of
action against the Commission, inasmuch as the former has not
appealed to the latter from the action taken by the System upon the
question of coverage, under the Act; and that plaintiff has not
exhausted the administrative remedies available thereto under the
same. 3
Upon the other hand, plaintiff urges an affirmative answer, upon
the theory that the Commission is, at least, a board within the
meaning of Rule 67 of the Rules of Court of 1940; 4 that being
empowered by law to sue and be sued, the Commission may sue and be
sued in any court of the Philippines; that Section 5 of Republic
Act No. 1161 is inapplicable to the case at
-
bar, because the question of coverage, herein involved, is not a
"claim" within the purview of said section; that the issue whether
a given person is an employee of a particular firm and subject to
coverage under the said Act, is not one that plaintiff is bound to
submit to the Commission in the first instance; that where the
employer-employee relationship is contested, the ruling of the
Commission to the effect that such relationship exists presents a
legal dispute, which may not be decided unilaterally by the
Commission; that the theory of the Commission to the effect that is
has the same rank as courts of first instance may be true insofar
only as the settlements of "claims," but not as regards the
question of compulsory coverage; that an appeal from the System to
the Commission would have been an empty gesture, for all actions of
and proceedings in the System are under the direction and control
of the Commission, and Circular No. 34 (Exhibit A) bears the
approval of the Commission, through its chairman, apart from the
fact that the Commission was poised to take criminal action against
the plaintiff and its officers to compel them to obey the ruling
complained of; and that the insistence of the Commission on
enforcing its ruling regarding said coverage amounts to an act
performed without or in excess of jurisdiction or with grave abuse
of discretion.
We find that the appeal taken by the Commission is well-founded
for the present action is one for a writ of prohibition, which may
be issued only by a superior court to an inferior court,
corporation, board or person, to prevent the latter from usurping
or exercising a jurisdiction or power it does not have (3 Moran on
Rules of Court, 1963 ed., p. 157). Section 5 (a) of the Act
acknowledges in the Commission the power to determine and settle
claims, which partakes of a quasi-judicial function, in the
exercise of which, the Commission is not inferior to courts of
first instance, in much the same way as the Public Service
Commission, as a board performing quasi-judicial functions, is not
inferior to said courts. 5 The quasi-judicial nature of the
functions of the Commission is emphasized by its authority,
expressly granted by said Section 5 (a), to promulgate rules and
regulations governing "the filing, determination and settlement of
claims." Hence, the lower court had no jurisdiction to issue the
writ of prohibition prayed for.
Besides, the Commission performs administrative, as well as
quasi-judicial, functions. Although it can sue and be sued in
courts of first instance, either as regards its administrative
functions, or in the enforcement and protection of its private
rights, the rule is otherwise when the act complained of forms part
of its quasi-judicial functions. For this reason, Section 5 (c) of
said Act, explicitly provides, in connection with "decisions" of
the Commission, or the determinations thereof in the exercise of
said functions, that the same "may be reviewed both upon the law
and the facts by the Court of Appeals," or, "if the decision of the
Commission involves only questions of law, . . . by the Supreme
Court."cralaw virtua1aw library
What is more, pursuant to Section 5 (b) of said Act, the
judicial review of "any decision of the Commission . . . shall be
permitted only after any party claiming to be aggrieved thereby has
exhausted his remedies before the Commission." In the case at bar,
plaintiff has not exhausted its remedies before the Commission. The
Commission has not even been given a chance to render a decision on
the issue raised by plaintiff herein, because the latter has not
appealed to the Commission from the action taken by the System in
insisting upon the enforcement of Circular No. 34 (Exh. A).
It is true that the same bears the approval of the Chairman of
the Commission. Even if this fact were construed as an approval of
the Circular by the Commission itself, such approval would not
constitute a "decision" thereof; as the term is used in said
section 5, which regulates the judicial review of such decision.
Indeed, a "decision" connotes the adjudication or settlement of a
controversy, and the same did not exist between the System and the
plaintiff when the Chairman of the Commission affixed his signature
to said Circular No. 34, on or before November 6, 1960. The issue
did not arise until March 7, 1961, when plaintiff expressed its
objection to the circular upon the ground that the agents,
solicitors and underwriters thereof are not its employees. It is
only fair and just, therefore, as well as administratively
expedient, that before a judicial review could be sought, said
issue be previously submitted to and passed upon by the Commission,
on appeal from the action taken or contemplated to be taken by the
System, since, prior to such submission to and determination by the
Commission, the same had no occasion to consider the specific
reasons adduced by the plaintiff in support of its objection to
said Circular No. 34.
But, even if the approval of the circular by the Chairman of the
Commission were hypothetically regarded as a decision or proof of a
decision of the Commission itself, still section 5 (b) ordains
positively that a judicial review of said decision "shall be
permitted only after any party claiming to be aggrieved thereby has
exhausted his remedies before the Commission." In other words, he
must first seek therefrom a reconsideration of the decision
complained of. This, by the way, is the general rule applicable to
actions for certiorari and prohibition against a tribunal, board or
officer, who must first be given, through a motion for
reconsideration, an opportunity to correct the error or mistake
complained of. No such reconsideration has been asked by plaintiff
herein. Hence, it has no cause of action for prohibition, which
does not lie except in the absence of appeal or any other plain,
speedy and adequate remedy in the ordinary course of law.
It is surged that the Commission had already made clear its
intention to prosecute criminally the plaintiff and its
officers.
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This is not true. The one which no more than intimated such
intention was not the Commission, but the System. Precisely, an
appeal from the latter to the former, which admittedly has control
over the System, would have been a plain, speedy and adequate
remedy in the ordinary course of law. Moreover, it appeared from
the acts of the System the danger of prosecution was not imminent
or even proximate. Indeed, the letter Exhibit B, urging plaintiff
to" please accomplish and submit the enclosed SSS Form R-1-A. 1 . .
. within ten days . . . to avoid the penalties provided by law,"
was written by the "Manager, Production Department" of the System,
which is not in charge of the prosecution of violators of the Act.
Then, again, over two (2) months after plaintiff had objected to
the compulsory coverage of its agents, solicitors and underwriters,
or on May 14, 1961, the System wrote to the plaintiff the letter
Exhibit D, enclosing therewith several copies of SSS Form R-1-A.1,
with the entreatment that the same be "please" accomplished and
submitted to "facilitate early adjudication of the compulsory
coverage" of its agents "under the system," and winding up with the
"hope" of receiving the "form properly accomplished as soon as
possible." The System thus implied that plaintiff could then seek
an adjudication or decision on said coverage by the Commission. At
any rate, had plaintiff appealed to the Commission, the latter
could have restrained the System from causing the plaintiff and its
officers from being prosecuted criminally, during the pendency of
the appeal. In short, once again, the same was a plain, speedy and
adequate remedy in the ordinary course of law.
Inasmuch as the lower court had no jurisdiction to hear and
decide this case and, at any rate, plaintiff has no cause of action
against the Commission, it is unnecessary to pass upon the third
issue raised by plaintiff herein. In fact, said issue has become
moot on account of the approval of Republic Act No. 4857, on
September 1, 1966, section 2 of which amended section 5 (a) of
Republic Act No. 1161, to read as follows:jgc:chanrobles.com.ph
"Any dispute arising under this Act with respect to coverage,
entitlement to benefits, collection and settlement of premium
contributions and penalties hereon, or any other matter related
thereto, shall be cognizable by the Commission, and any case filed
with the Commission with respect thereto shall be heard by the
Commission, or any of its members, or by hearing officers duly
authorized by the Commission, and decided within twenty days after
the submission of the evidence. The filing, determination and
settlement of claims shall be governed by the rules and regulations
promulgated by the Commission." (Emphasis supplied.).
Hence, there can be no question not that any dispute with
respect to coverage is cognizable by the Commission.
Wherefore, the decision appealed from is hereby reversed and
another one shall be entered, dismissing the complaint herein, with
costs against plaintiff-appellee the Philippine American Life
Insurance Company. It is so ordered.
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FIRST DIVISION
[G.R. No. 138941. October 8, 2001]
AMERICAN HOME ASSURANCE COMPANY, petitioner, vs. TANTUCO
ENTERPRISES, INC., respondent.
D E C I S I O N
PUNO, J.:
Before us is a Petition for Review on Certiorari assailing the
Decision of the Court of Appeals in CA-G.R. CV No. 52221
promulgated on January 14, 1999, which affirmed in toto the
Decision of the Regional Trial Court, Branch 53, Lucena City in
Civil Case No. 92-51 dated October 16, 1995.
Respondent Tantuco Enterprises, Inc. is engaged in the coconut
oil milling and refining industry. It owns two oil mills. Both are
located at its factory compound at Iyam, Lucena City. It appears
that respondent commenced its business operations with only one oil
mill. In 1988, it started operating its second oil mill. The latter
came to be commonly referred to as the new oil mill.
The two oil mills were separately covered by fire insurance
policies issued by petitioner American Home Assurance Co.,
Philippine Branch.[1] The first oil mill was insured for three
million pesos (P3,000,000.00) under Policy No. 306-7432324-3 for
the period March 1, 1991 to 1992.[2] The new oil mill was insured
for six million pesos (P6,000,000.00) under Policy No.
306-7432321-9 for the same term.[3] Official receipts indicating
payment for the full amount of the premium were issued by the
petitioner's agent.[4]
A fire that broke out in the early morning of September 30,1991
gutted and consumed the new oil mill. Respondent immediately
notified the petitioner of the incident. The latter then sent its
appraisers who inspected the burned premises and the properties
destroyed. Thereafter, in a letter dated October 15, 1991,
petitioner rejected respondents claim for the insurance proceeds on
the ground that no policy was issued by it covering the burned oil
mill. It stated that the description of the insured establishment
referred to another building thus: Our policy nos. 306-7432321-9
(Ps 6M) and 306-7432324-4 (Ps 3M) extend insurance coverage to your
oil mill under Building No. 5, whilst the affected oil mill was
under Building No. 14.[5]
A complaint for specific performance and damages was
consequently instituted by the respondent with the RTC, Branch 53
of Lucena City. On October 16, 1995, after trial, the lower court
rendered a Decision finding the petitioner liable on the insurance
policy thus:
WHEREFORE, judgment is rendered in favor of the plaintiff
ordering defendant to pay plaintiff:
(a) P4,406,536.40 representing damages for loss by fire of its
insured property with interest at the legal rate;
(b) P80,000.00 for litigation expenses;
(c) P300,000.00 for and as attorneys fees; and
(d) Pay the costs.
SO ORDERED.[6]
Petitioner assailed this judgment before the Court of Appeals.
The appellate court upheld the same in a Decision promulgated on
January 14, 1999, the pertinent portion of which states:
WHEREFORE, the instant appeal is hereby DISMISSED for lack of
merit and the trial courts Decision dated October 16, 1995 is
hereby AFFIRMED in toto.
SO ORDERED.[7]
Petitioner moved for reconsideration. The motion, however, was
denied for lack of merit in a Resolution promulgated on June 10,
1999.
Hence, the present course of action, where petitioner ascribes
to the appellate court the following errors:
(1) The Court of Appeals erred in its conclusion that the issue
of non-payment of the premium was beyond its jurisdiction because
it was raised for the first time on appeal.[8]
(2) The Court of Appeals erred in its legal interpretation of
'Fire Extinguishing Appliances Warranty' of the policy.[9]
(3) With due respect, the conclusion of the Court of Appeals
giving no regard to the parole evidence rule and the
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principle of estoppel is erroneous.[10]
The petition is devoid of merit.
The primary reason advanced by the petitioner in resisting the
claim of the respondent is that the burned oil mill is not covered
by any insurance policy. According to it, the oil mill insured is
specifically described in the policy by its boundaries in the
following manner:
Front: by a driveway thence at 18 meters distance by Bldg. No.
2.
Right: by an open space thence by Bldg. No. 4.
Left: Adjoining thence an imperfect wall by Bldg. No. 4.
Rear: by an open space thence at 8 meters distance.
However, it argues that this specific boundary description
clearly pertains, not to the burned oil mill, but to the other
mill. In other words, the oil mill gutted by fire was not the one
described by the specific boundaries in the contested policy.
What exacerbates respondents predicament, petitioner posits, is
that it did not have the supposed wrong description or mistake
corrected. Despite the fact that the policy in question was issued
way back in 1988, or about three years before the fire, and despite
the Important Notice in the policy that Please read and examine the
policy and if incorrect, return it immediately for alteration,
respondent apparently did not call petitioners attention with
respect to the misdescription.
By way of conclusion, petitioner argues that respondent is
barred by the parole evidence rule from presenting evidence (other
than the policy in question) of its self-serving intention (sic)
that it intended really to insure the burned oil mill, just as it
is barred by estoppel from claiming that the description of the
insured oil mill in the policy was wrong, because it retained the
policy without having the same corrected before the fire by an
endorsement in accordance with its Condition No. 28.
These contentions can not pass judicial muster.
In construing the words used descriptive of a building insured,
the greatest liberality is shown by the courts in giving effect to
the insurance.[11] In view of the custom of insurance agents to
examine buildings before writing policies upon them, and since a
mistake as to the identity and character of the building is
extremely unlikely, the courts are inclined to consider that the
policy of insurance covers any building which the parties
manifestly intended to insure, however inaccurate the description
may be.[12]
Notwithstanding, therefore, the misdescription in the policy, it
is beyond dispute, to our mind, that what the parties manifestly
intended to insure was the new oil mill. This is obvious from the
categorical statement embodied in the policy, extending its
protection:
On machineries and equipment with complete accessories usual to
a coconut oil mill including stocks of copra, copra cake and copra
mills whilst contained in the new oil mill building, situate (sic)
at UNNO. ALONG NATIONAL HIGH WAY, BO. IYAM, LUCENA CITY
UNBLOCKED.[13] (emphasis supplied.)
If the parties really intended to protect the first oil mill,
then there is no need to specify it as new.
Indeed, it would be absurd to assume that respondent would
protect its first oil mill for different amounts and leave
uncovered its second one. As mentioned earlier, the first oil mill
is already covered under Policy No. 306-7432324-4 issued by the
petitioner. It is unthinkable for respondent to obtain the other
policy from the very same company. The latter ought to know that a
second agreement over that same realty results in its
overinsurance.
The imperfection in the description of the insured oil mills
boundaries can be attributed to a misunderstanding between the
petitioners general agent, Mr. Alfredo Borja, and its policy
issuing clerk, who made the error of copying the boundaries of the
first oil mill when typing the policy to be issued for the new one.
As testified to by Mr.Borja:
Atty. G. Camaligan:
Q: What did you do when you received the report?
A: I told them as will be shown by the map the intention really
of Mr. Edison Tantuco is to cover the new oil mill that is why when
I presented the existing policy of the old policy, the policy
issuing clerk just merely (sic) copied the wording from the old
policy and what she typed is that the description of the boundaries
from the old policy was copied but she inserted covering the new
oil mill and to me at that time the important thing is that it
covered the new oil mill because it is just within one compound and
there are only two oil mill[s] and so just enough, I had the policy
prepared. In fact, two policies were prepared having the same date
one for the old one and the other for the new oil mill and exactly
the same
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policy period, sir.[14] (emphasis supplied)
It is thus clear that the source of the discrepancy happened
during the preparation of the written contract.
These facts lead us to hold that the present case falls within
one of the recognized exceptions to the parole evidence rule. Under
the Rules of Court, a party may present evidence to modify, explain
or add to the terms of the written agreement if he puts in issue in
his pleading, among others, its failure to express the true intent
and agreement of the parties thereto.[15] Here, the contractual
intention of the parties cannot be understood from a mere reading
of the instrument. Thus, while the contract explicitly stipulated
that it was for the insurance of the new oil mill, the boundary
description written on the policy concededly pertains to the first
oil mill. This irreconcilable difference can only be clarified by
admitting evidence aliunde, which will explain the imperfection and
clarify the intent of the parties.
Anent petitioners argument that the respondent is barred by
estoppel from claiming that the description of the insured oil mill
in the policy was wrong, we find that the same proceeds from a
wrong assumption. Evidence on record reveals that respondents
operating manager, Mr. Edison Tantuco, notified Mr. Borja (the
petitioners agent with whom respondent negotiated for the contract)
about the inaccurate description in the policy. However, Mr. Borja
assured Mr. Tantuco that the use of the adjective new will
distinguish the insured property. The assurance convinced
respondent that, despite the impreciseness in the specification of
the boundaries, the insurance will cover the new oil mill. This can
be seen from the testimony on cross of Mr. Tantuco:
"ATTY. SALONGA:
Q: You mentioned, sir, that at least in so far as Exhibit A is
concern you have read what the policy contents.(sic)
Kindly take a look in the page of Exhibit A which was marked as
Exhibit A-2 particularly the boundaries of the property insured by
the insurance policy Exhibit A, will you tell us as the manager of
the company whether the boundaries stated in Exhibit A-2 are the
boundaries of the old (sic) mill that was burned or not.
A: It was not, I called up Mr. Borja regarding this matter and
he told me that what is important is the word new oil mill. Mr.
Borja said, as a matter of fact, you can never insured (sic) one
property with two (2) policies, you will only do that if you will
make to increase the amount and it is by indorsement not by another
policy, sir."[16]
We again stress that the object of the court in construing a
contract is to ascertain the intent of the parties to the contract
and to enforce the agreement which the parties have entered into.
In determining what the parties intended, the courts will read and
construe the policy as a whole and if possible, give effect to all
the parts of the contract, keeping in mind always, however, the
prime rule that in the event of doubt, this doubt is to be resolved
against the insurer. In determining the intent of the parties to
the contract, the courts will consider the purpose and object of
the contract.[17]
In a further attempt to avoid liability, petitioner claims that
respondent forfeited the renewal policy for its failure to pay the
full amount of the premium and breach of the Fire Extinguishing
Appliances Warranty.
The amount of the premium stated on the face of the policy was
P89,770.20. From the admission of respondents own witness, Mr.
Borja, which the petitioner cited, the former only paid it
P75,147.00, leaving a difference of P14,623.20. The deficiency,
petitioner argues, suffices to invalidate the policy, in accordance
with Section 77 of the Insurance Code.[18]
The Court of Appeals refused to consider this contention of the
petitioner. It held that this issue was raised for the first time
on appeal, hence, beyond its jurisdiction to resolve, pursuant to
Rule 46, Section 18 of the Rules of Court.[19]
Petitioner, however, contests this finding of the appellate
court. It insists that the issue was raised in paragraph 24 of its
Answer, viz.:
24. Plaintiff has not complied with the condition of the policy
and renewal certificate that the renewal premium should be paid on
or before renewal date.
Petitioner adds that the issue was the subject of the
cross-examination of Mr. Borja, who acknowledged that the paid
amount was lacking by P14,623.20 by reason of a discount or rebate,
which rebate under Sec. 361 of the Insurance Code is illegal.
The argument fails to impress. It is true that the asseverations
petitioner made in paragraph 24 of its Answer ostensibly spoke of
the policys condition for payment of the renewal premium on time
and respondents non-compliance with it. Yet, it did not contain any
specific and definite allegation that respondent did not pay the
premium, or that it did not pay the full amount, or that it did not
pay the amount on time.
Likewise, when the issues to be resolved in the trial court were
formulated at the pre-trial proceedings, the question of the
supposed inadequate payment was never raised. Most significant to
point, petitioner fatally neglected to present, during the whole
course of the trial, any witness to testify that respondent indeed
failed to pay the full amount of the premium. The thrust of the
cross-examination of Mr. Borja, on the other hand, was not for the
purpose of proving this fact. Though it
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briefly touched on the alleged deficiency, such was made in the
course of discussing a discount or rebate, which the agent
apparently gave the respondent. Certainly, the whole tenor of Mr.
Borjas testimony, both during direct and cross examinations,
implicitly assumed a valid and subsisting insurance policy. It must
be remembered that he was called to the stand basically to
demonstrate that an existing policy issued by the petitioner covers
the burned building.
Finally, petitioner contends that respondent violated the
express terms of the Fire Extinguishing Appliances Warranty. The
said warranty provides:
WARRANTED that during the currency of this Policy, Fire
Extinguishing Appliances as mentioned below shall be maintained in
efficient working order on the premises to which insurance
applies:
- PORTABLE EXTINGUISHERS
- INTERNAL HYDRANTS
- EXTERNAL HYDRANTS
- FIRE PUMP
- 24-HOUR SECURITY SERVICES
BREACH of this warranty shall render this policy null and void
and the Company shall no longer be liable for any loss which may
occur.[20]
Petitioner argues that the warranty clearly obligates the
insured to maintain all the appliances specified therein. The
breach occurred when the respondent failed to install internal fire
hydrants inside the burned building as warranted. This fact was
admitted by the oil mills expeller operator, Gerardo Zarsuela.
Again, the argument lacks merit. We agree with the appellate
courts conclusion that the aforementioned warranty did not require
respondent to provide for all the fire extinguishing appliances
enumerated therein. Additionally, we find that neither did it
require that the appliances are restricted to those mentioned in
the warranty. In other words, what the warranty mandates is that
respondent should maintain in efficient working condition within
the premises of the insured property, fire fighting equipments such
as, but not limited to, those identified in the list, which will
serve as the oil mills first line of defense in case any part of it
bursts into flame.
To be sure, respondent was able to comply with the warranty.
Within the vicinity of the new oil mill can be found the following
devices: numerous portable fire extinguishers, two fire hoses,[21]
fire hydrant,[22] and an emergency fire engine.[23] All of these
equipments were in efficient working order when the fire
occurred.
It ought to be remembered that not only are warranties strictly
construed against the insurer, but they should, likewise, by
themselves be reasonably interpreted.[24] That reasonableness is to
be ascertained in light of the factual conditions prevailing in
each case. Here, we find that there is no more need for an internal
hydrant considering that inside the burned building were: (1)
numerous portable fire extinguishers, (2) an emergency fire engine,
and (3) a fire hose which has a connection to one of the external
hydrants.
IN VIEW WHEREOF, finding no reversible error in the impugned
Decision, the instant petition is hereby DISMISSED.
SO ORDERED.
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