ANDREW PALERMO vs. PYRAMID INSURANCE CO., INC.
FACTS:
On March 7, 1969, the insured, Andrew Palermo, filed a complaint in the
Court of First Instance of Negros Occidental against Pyramid Insurance Co., Inc., for
payment of his claim under a Private Car Comprehensive Policy MV-1251 issued by the
defendant. However, Pyramid Insurance Co., Inc., alleged that it disallowed
the claim because at the time of the accident, the insured was driving his car with an
expired driver's license.
The court rendered judgment on October 29, 1969 ordering the defendant "to pay the plaintiff
the sum of P20,000.00, value of the insurance of the motor vehicle in question and to pay the
costs. The plaintiff filed a "Motion for Immediate Execution Pending Appeal." It was opposed by
the defendant, but was granted by the trial court.
BACKGROUND:
After having purchased a brand new Nissan Cedric de Luxe Sedan car from the Ng Sam Bok
Motors Co. in Bacolod City, plaintiff insured it with the defendant insurance company against
any loss or damage for P20,000.00 and against third party liability fo P10,000.00.
Plaintiff paid the defendant P361.34 premium for one year, for which defendant issued Private
Car Comprehensive Policy.
The automobile was, however, mortgaged by the plaintiff with the vendor, Ng Sam Bok Motors
Co., to secure the payment of the balance of the purchase price, which explains why the
registration certificate in the name of the plaintiff remains in the hands of the mortgagee, Ng
Sam Bok Motors Co. While driving the automobile in question, the plaintiff met a violent
accident. The La Carlota City fire engine crashed head on, and as a consequence, the plaintiff
sustained physical injuries, his father, Cesar Palermo who was with him in the car at the time
was likewise seriously injured and died shortly thereafter, and the car in question was totally
wrecked.
"The defendant was immediately notified of the occurrence, and upon its orders, the damaged
car was towed from the scene of the accident to the compound of Ng Sam Bok Motors in
Bacolod City where it remains deposited up to the present time. "The insurance policy, grants
an option unto the defendant, in case of accident either to indemnify the plaintiff for loss or
damage to the car in cash or to replace the damaged car. The defendant, however, refused to
take either of the above-mentioned alternatives for the reason as alleged, that the insured
himself had violated the terms of the policy when he drove the car in question with an expired
driver's license.
ISSUE: WON plaintiff was not authorized to drive the insured motor vehicle because his driver's
license had expired.
RULING:
There is no merit in the appellant's allegation that the plaintiff was not authorized to drive the
insured motor vehicle because his driver's license had expired. The driver of the insured motor
vehicle at the time of the accident was, the insured himself, hence an "authorized driver"
under the policy. While the Motor Vehicle Law prohibits a person from operating a motor
vehicle on the highway without a license or with an expired license, an infraction of the Motor
Vehicle Law on the part of the insured, is not a bar to recovery under the insurance contract. It
however renders him subject to the penal sanctions of the Motor Vehicle Law. The requirement
that the driver be "permitted in accordance with the licensing or other laws or regulations to
drive the Motor Vehicle and is not disqualified from driving such motor vehicle by order of a
Court of Law or by reason of any enactment or regulation in that behalf," applies only when the
driver" is driving on the insured's order or with his permission." It does not apply when the
person driving is the insured himself.
EXTRA:
This view may be inferred from the decision of this Court in Villacorta vs. Insurance
Commission, 100 SCRA 467, where it was held that:
"The main purpose of the 'authorized driver' clause, as may be seen from
its text, is that a person other than the insured owner, who drives the car on the
insured's order, such as his regular driver, or with his permission, such as a friend
or member of the family or the employees of a car service or repair shop, must be
duly licensed drivers and have no disqualification to drive a motor vehicle.
