G.R. No. 203060 , June 28, 2021
Malayan Insurance Company, Inc., Petitioner, vs. Stronghold Insurance Company, Inc., and Rico J. Pablo, Respondents.

FACTS

Respondent Rico J. Pablo obtained a Compulsory Third Party Liability (CTPL) insurance policy for his vehicle from respondent Stronghold Insurance Company, Inc., with a coverage limit of P100,000.00 and containing a schedule of indemnities. He also obtained an Excess Cover for Third Party Bodily and Death Liability from petitioner Malayan Insurance Company, Inc., for an additional P200,000.00. During the policies’ effectivity, Pablo sideswiped a pedestrian, incurring medical expenses of P100,318.08. Stronghold computed its liability based on its policy’s schedule of indemnities at P29,000.00, claiming the excess of P71,318.08 should be covered by Malayan’s excess policy. Malayan refused to pay. Pablo sought assistance from the Insurance Commission (IC). The IC ruled in favor of Malayan, ordering Stronghold to pay Pablo P100,000.00 (the full CTPL limit) and Malayan to pay only P318.08, applying the case of Western Guaranty Corp. v. Court of Appeals and finding the schedule of indemnities contrary to it. The Court of Appeals reversed the IC, ruling that Western Guaranty remained applicable but did not invalidate schedules of indemnities. It held Stronghold’s liability was limited to the amounts specified in its schedule for listed items, with Malayan liable for the excess. The CA ordered Stronghold to pay P42,714.83 and Malayan to pay P57,603.25. Both companies moved for reconsideration, which was denied.

ISSUE

What is the extent of liability of Stronghold pursuant to the insurance policy it issued, and consequently, what is the amount of Malayan’s liability under its excess coverage?

RULING

The Supreme Court affirmed the findings of the Court of Appeals with modification. The Court held that the schedule of indemnities in Stronghold’s CTPL policy is valid and binding. The ruling in Western Guaranty Corp. v. Court of Appeals, which emphasized an insurer’s liability for “all sums necessary to discharge liability,” was distinguished. The Court found the policy clause in Western Guaranty was broader, explicitly stating the company would pay “all sums necessary to discharge liability of the insured” subject to limits, and then specifically referencing the Schedule of Indemnities for per-victim limits. In contrast, Stronghold’s policy contained a standard provision agreeing to indemnify the insured against third-party liability up to P100,000.00 “per accident,” with liability for death or bodily injury “subject to the limits of indemnity set forth in the schedule.” The Court ruled that Stronghold’s liability is limited to the amounts specified in its schedule of indemnities for the listed injuries. For medical expenses (an item listed in the schedule), Stronghold’s liability is limited to the amount stated therein. The overall P100,000.00 limit per accident applies to the total liability for all claims arising from one accident, not to a single victim’s claim exceeding the per-item schedule limits. Consequently, Malayan’s excess coverage is liable for the amount exceeding the limits in Stronghold’s schedule of indemnities, without need to first exhaust Stronghold’s overall P100,000.00 limit. The Court modified the CA’s computation, ordering Stronghold to pay P29,000.00 (based on its schedule) and Malayan to pay P71,318.08 (the excess), for the total actual medical expense of P100,318.08 incurred by Pablo.