Paramount Insurance v. Japzon
REITERATIONFacts
The Antecedents: On May 27, 1978, Jose Lara and Arsenio Paed were passengers of a jeepney owned by Willy Garcia and driven by Emilio Macasieb. While cruising the National Highway, the jeepney was sideswept by a Ford truck driven by Willy Manuel, which was overtaking another vehicle. As a consequence, Lara and Paed sustained physical injuries. The Ford truck was insured by Paramount Insurance Corporation (petitioner). Procedural History: After the accident, the insurer of the truck, Paramount, made payments for hospitalization and medical expenses to Paed and the hospital. Lara and Paed filed a criminal case against Manuel for Reckless Imprudence, wherein Manuel pleaded guilty and was sentenced. During the pendency of the criminal case, Lara reserved the right to file a separate civil action. Subsequently, Lara and Paed filed a civil case for damages against Garcia, Macasieb, Manuel, Natividad (owner of the jeepney), and Paramount Insurance Corporation as the insurer of the truck. A certain Atty. Segundo Gloria filed a notice of appearance and an answer for defendants Natividad, Manuel, and Paramount. The records of the case were later destroyed by fire and subsequently reconstituted. The court declared Natividad, Manuel, and Paramount in default for failure to appear during trial and allowed the plaintiffs to present their evidence. The Regional Trial Court (RTC) rendered a decision ordering the defendants to pay Lara and Paed damages. A copy of the decision was served on petitioner's counsel. No appeal was filed, and the judgment became final and executory. A writ of execution was issued. Paramount Insurance Corporation then filed a motion to set aside the decision, arguing that the court had not acquired jurisdiction over its person. The Petition: Paramount Insurance Corporation filed a petition for certiorari and prohibition with preliminary injunction, assailing the RTC decision and writ of execution, primarily on the ground that the court had not validly acquired jurisdiction over its person, alleging that Atty. Segundo Gloria was not its retained counsel nor authorized to appear for it. Petitioner also contended that certain damages were not recoverable from it.
Issue(s)
Whether the Regional Trial Court validly acquired jurisdiction over the person of petitioner Paramount Insurance Corporation. Whether the damages awarded by the Regional Trial Court are recoverable from petitioner, and if so, to what extent. Whether the liability of petitioner is limited by the terms of the insurance policy.
Ruling
The petition is dismissed, and the temporary restraining order is lifted. The decision of the Regional Trial Court is affirmed with modification regarding the amount of liability. Petitioner is held liable to pay respondents Jose Lara and Arsenio Paed the amount of P50,000.00 each, which is the limit of its liability under the insurance policy, minus the amounts already paid for hospitalization and medical expenses.
Ratio Decidendi
On the issue of jurisdiction over the person of petitioner: The Court held that jurisdiction over the person of a defendant is acquired either by voluntary appearance or by service of summons. Petitioner's contention that it was not properly served with summons and that Atty. Segundo Gloria was not authorized to appear for it was found untenable. The Court noted that petitioner failed to substantiate its allegation of improper service of summons, thus giving rise to the disputable presumption that official duty was regularly performed. Furthermore, Atty. Gloria filed a notice of appearance and an answer for petitioner, creating a presumption of authority to appear. This presumption, according to the Court, can only be rebutted by clear and positive proof, which petitioner failed to provide. The Court also pointed out that petitioner's delay in questioning the jurisdiction (almost six years) and the fact that the decision had become final and executory further militated against its claim. The Court reiterated its ruling in a previous case (G.R. No. 68066, Paramount Insurance Corp. v. Luna) that the filing of an answer with crossclaim raises a presumption of authority to appear, which is rebuttable only by clear and positive proof. The Court found it incredible that a counsel would vigorously defend a case without authorization. On the issue of recoverable damages: While the RTC awarded various damages, including medical expenses, moral, exemplary, and compensatory damages, the Supreme Court ultimately limited petitioner's liability based on the insurance policy. The Court did not explicitly rule on the recoverability of each type of damage from the petitioner in the context of the RTC's award, but rather focused on the extent of the insurer's obligation under the policy. On the issue of limitation of liability: The Court found merit in petitioner's contention that its liability is limited to P50,000.00 as stated in Insurance Policy No. CV-3466. The policy clearly stipulated this limit for damages arising from death or bodily injury sustained by one person in one accident. This amount complied with the minimum legal requirement under Section 377 of Presidential Decree No. 6123 (now P.D. No. 1460). The Court emphasized that the terms of the insurance contract constitute the measure of the insurer's liability, provided they are not contrary to law, morals, good customs, public order, or public policy. Therefore, the stipulation limiting liability to P50,000.00 per person was upheld.
Main Doctrine
A court acquires jurisdiction over a party either by voluntary appearance or by valid service of summons. The filing of an answer by counsel creates a presumption of authority to appear, which can only be rebutted by clear and positive proof. A judgment that has become final and executory cannot be reopened, except under specific legal grounds not present in this case. The liability of an insurer is limited by the terms of the insurance policy, provided such terms are not contrary to law, morals, good customs, public order, or public policy.