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SUPREME COURT having procured a license for the current year, nor
Manila while such license is delinquent, invalid, suspended or
revoked."
EN BANC
In rendering judgment for plaintiff the trial court
G.R. No. L-17312 November 29, 1965 adverted to the absence of evidence that Manuel Tanco
had been "disqualified by order of a court of law or by
reason of any enactment or regulation in that behalf
ARTURO R. TANCO, JR., plaintiff-appellee, from driving such motor vehicle," and ruled that if
vs. there is any ambiguity in the definition of the term
THE PHILIPPINE GUARANTY COMPANY, defendant- "authorized driver" in the policy the ambiguity should
appellant. be construed in favor of plaintiff, since the policy had
been prepared in its entirety by defendant. The trial
Manuel Y. Macias and Julio R. Vicencio for plaintiff- court's advertence is true as a matter of fact; and its
appellee. ruling is correct as a matter of law. But neither one nor
Rufino Y. Luna and Josue H. Gustilo for defendant- the other is relevant in this case. Appellant does not
appellant. rely on the portion of the proviso in the policy quoted
by the court but on that which states that "the person
MAKALINTAL, J.: driving is permitted in accordance with the licensing or
other laws." And as to this there is no ambiguity
whatsoever, because the Motor Vehicle Law expressly
Plaintiff's automobile, while being driven at the prohibits any person from operating a motor vehicle on
southern approach of the Jones bridge by his brother the highways without a license for the current year or
Manuel Tanco on September 1, 1959, figured in a while such license is delinquent or invalid. That Manuel
collision with a pick-up delivery van, as a result of Tanco renewed his license on September 8,1959, one
which both vehicles were damaged. Plaintiff paid for week after the accident did not cure the delinquency or
repairs the total sum of P2,536.99 and then filed his revalidate the license which had already expired.
claim with defendant company under a car insurance
policy issued by the latter. The claim was rejected,
whereupon suit was commenced in the Municipal Court We are not aware that the question presented here has
of Manila, whence it was elevated on appeal to the been decided by this Court in any previous case.
Court of First Instance of Manila, which gave judgment Indeed all the authorities cited by the parties consist of
for plaintiff in the amount stated, plus interest at 8% decisions Courts United States. We note, however, that
and P500.00 as attorney's fees. Appeal was taken by those relied upon by appellee are not in point by
defendant directly to this Court, there being no dispute reason of material differences in the facts or issues
as to the facts. presented. In Messersmith vs. American Fidelity Co.,
187 App. Div. 35, 175 N.Y. Supp. 169; and Fireman's
Fund Insurance Co. vs. Haley, 129 Miss. 525, 90 So.
The policy sued upon covers, up to a certain limit, loss 635, the question was whether the insured could
or damage to the insured vehicle as well as damage to recover on an automobile policy for damage sustained
property of third persons as a consequence of or in a collision which occurred while the vehicle was
incident to the operation of said vehicle. There is an being driven in violation of law in the first case by an
exception clause, however, which provides that "the infant at the instance of the insured, and in the second
company shall not be liable in respect of any accident, by the insured himself beyond the statutory speed
loss, damage or liability caused, sustained or limit. In neither case was there a provision in the policy
incurred ... whilst (the insured vehicle) is ... being expressly excluding liability by reason of the particular
driven by or is for the purpose of being driven by him violation involved. We have no reason to disagree with
in the charge of any person other than an Authorized the pronouncement of the court in the second case,
Driver." The policy defined the term "Authorized Driver" after citing the first, that "if such a defense (that the
to be the insured himself and "(b) any person driving vehicle was being driven in violation of law) were
on the Insured's order or with his permission, provided permissible automobile insurance would be practically
that the person driving is permitted in accordance with valueless."
the licensing or other laws or regulations to drive the
Motor Vehicle or has been permitted and is not
disqualified by order of a court of law or by reason of In MacMahon vs. Pearlman, 13 N.E. 154-156, a
any enactment or regulation in that behalf from driving Massachusetts case, the defense of the insurer was
such Motor Vehicle." also the violation of law by the insured, namely, that
she was driving without a license; but as stated in the
decision, "the casualty company does not urge that the
At the time of the collision plaintiff's brother who was unlawful conduct is forbidden in express terms, (but)
at the wheel, did not have a valid license, the one he that because of public policy it ought not to be
had obtained for the year 1958 not having been compelled to pay damages." The court,
renewed on or before the last working day of February citing Messersmith v. American Fidelity Co., supra,
1959, as required by section 31 of the Motor Vehicle similarly allowed recovery, saying that to restrict such
Law, Act No. 3992. That section states that any license insurance to cases where there has been no violation
not so renewed "shall become delinquent and invalid," of criminal law or ordinance would reduce indemnity to
and section 21 states that "except as otherwise a shadow.
specifically provided in this Act no person shall operate
In the case before Us now appellant's defense does not
rest on the general proposition that if a law is violated
at the time of the accident which causes the damage
or injury there can be no recovery, but rather on a
specific provision in the policy that appellant shall not
be liable if the accident occurs while the vehicle is
being driven by any person other than an authorized
driver and that an authorized driver, if not the insured
himself, is one who is acting on his order or with his
permission, provided he is permitted to drive under the
licensing laws.
... . The fact that the Cavite Agency of It is thus clear that the issuance of a driving license
the Motor Vehicles Office states that without previous examination does not necessarily
Driver's License No. 271703 DP was not imply that the license issued is invalid. As the law
issued by that office, does not remove stood in 1961, when the claim arose, the examinations
the possibility that said office may have could be dispensed with in the discretion of the Motor
been mistaken or that said license was Vehicles Office official officials. Whether discretion was
issued by another agency. Indeed abused in issuing the license without examination is
Exhibit 13 shows that a certain Gloria not a proper subject of inquiry in these proceedings,
Presa made the notation thereon "no though, as a matter of legislative policy, the discretion
license issued" and which notation was should be eliminated. There is no proof that the owner
the basis of the 1st Indorsement, of the automobile knew that the circumstance
Exhibit 12, signed by the MVO Cavite surrounding such issuance showed that it was irregular.
City Agency's officer-in-charge. Neither
Gloria Presa nor the officer-in-charge
Marciano A. Monzon was placed on the The issuance of the license is proof that the Motor
witness stand to be examined in order Vehicles Office official considered Reyes, the driver of
to determine whether said license is the insured- appellee, qualified to operate motor
indeed void. As it is, as heretofore vehicles, and the insured was entitled to rely upon such
pointed out, the fact remains that license. In this connection, it should be observed that
Domingo Reyes is in possession of a the chauffeur, Reyes, had been driving since
driver's license issued by the Motor 1957,2 and without mishap, for all the record shows.
Vehicles Office which on its face Considering that, as pointed out by the Court of
appears to have been regularly issued. 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
In effect, the Court of Appeals found that the driver's find no reason to diverge from the conclusion reached
license No. 271703 DP was genuine, that is, one really by the Court of Appeals that no breach was committed
issued by the Motor Vehicles Office or its authorized of the above-quoted provision of the policy.
deputy; and this finding of fact is now conclusive and
may not be questioned in this appeal.
The next issue assigned is anchored on the fact that
the decision of the trial court was based on evidence
Nevertheless, the appellant insurer insists that, under presented to and received by the clerk of court who
the established facts of this case, Reyes, being acted as commissioner, although allegedly, there was
admittedly one who cannot read and write, who has no written court order constituting him as such
never passed any examination for drivers, and has not commissioner, no written request for his commission
applied for a license from the duly constituted was made by the parties; he did not take an oath prior
government agency entrusted with the duty of to entering into the discharge of his commission; no
licensing drivers, cannot be considered an authorized written report of his findings was ever submitted to the
driver. court; and no notice thereof was sent to the parties,
contrary to the specific provisions of Rule 33 of the
The fatal flaw in appellant's argument is that it Rules of Court.
studiously ignores the provisions of law existing at the
time of the mishap. Under Section 24 of the Revised
Actually there is nothing basically wrong with the Republic of the Philippines
practice of delegating to a commissioner, usually the SUPREME COURT
clerk of court, who is a duly sworn court officer, the Manila
reception of both parties and for him to submit a report
thereon to the court. In fact, this procedure is expressly FIRST DIVISION
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 G.R. No. L-54171 October 28, 1980
against the alleged non-observance of the prescribed
steps in connection with such delegation. JEWEL VILLACORTA, assisted by her husband,
GUERRERO VILLACORTA, petitioner,
We find no cause sufficient to invalidate the vs.
proceedings had in the trial court. We note that this THE INSURANCE COMMISSION and EMPIRE
issue was brought up by the appellant insurance INSURANCE COMPANY, respondents.
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 TEEHANKEE, Acting C.J.:
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., The Court sets aside respondent Insurance
either before the parties proceeded with the hearing or Commission's dismissal of petitioner's complaint and
before the court handed down its ruling. 4 It is a holds that where the insured's car is wrongfully taken
procedural point that can be waived by consent of the without the insured's consent from the car service and
parties, express or implied.5 repair shop to whom it had been entrusted for check-
up and repairs (assuming that such taking was for a joy
ride, in the course of which it was totally smashed in an
For the same reason, appellant cannot insist now on accident), respondent insurer is liable and must pay
the annulment of the proceeding on the basis of insured for the total loss of the insured vehicle under
alleged lack of written consent of the parties to the the theft clause of the policy.
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 The undisputed facts of the case as found in the
presented no proof that the clerk of court committed appealed decision of April 14, 1980 of respondent
any mistake or abuse in the performance of the task insurance commission are as follows:
entrusted to him, or that the trial court was not able to
properly appreciate the evidence in the case because it Complainant [petitioner] was the owner
was received by another person. If indeed there were of a Colt Lancer, Model 1976, insured
errors at all, they would be non-prejudicial and could with respondent company under
not justify the holding of a new trial, as urged by herein Private Car Policy No. MBI/PC-0704 for
petitioner. 6 P35,000.00 Own Damage;
P30,000.00 Theft; and P30,000.00
WHEREFORE, the decision of the Court of Appeals is Third Party Liability, effective May 16,
affirmed, with costs against appellant CCC Insurance 1977 to May 16, 1978. On May 9, 1978,
Corporation. the vehicle was brought to the Sunday
Machine Works, Inc., for general check-
up and repairs. On May 11, 1978, while
it was in the custody of the Sunday
Machine Works, the car was allegedly
taken by six (6) persons and driven out
to Montalban, Rizal. While travelling
along Mabini St., Sitio Palyasan, Barrio
Burgos, going North at Montalban,
Rizal, the car figured in an accident,
hitting and bumping a gravel and sand
truck parked at the right side of the
road going south. As a consequence,
the gravel and sand truck veered to the
right side of the pavement going south
and the car veered to the right side of
the pavement going north. The driver,
Benito Mabasa, and one of the
passengers died and the other four
sustained physical injuries. The car, as
well, suffered extensive damage.
Complainant, thereafter, filed a claim
for total loss with the respondent
company but claim was denied. Hence,
complainant, was compelled to insured of his car," and that "Such was not the case in
institute the present action. this instance. The fact that the car was taken by one of
the residents of the Sunday Machine Works, and the
The comprehensive motor car insurance policy for withholding of the same, for a joy ride should not be
P35,000.00 issued by respondent Empire Insurance construed to mean 'taking' under Art. 308 of the
Company admittedly undertook to indemnify the Revised Penal Code. If at all there was a 'taking', the
petitioner-insured against loss or damage to the car (a) same was merely temporary in nature. A temporary
by accidental collision or overturning, or collision or taking is held not a taking insured against (48 A LR 2d.,
overturning consequent upon mechanical breakdown page 15)."
or consequent upon wear and tear; (b) by fire, external
explosion, self-ignition or lightning or burglary, The Court finds respondent commission's dismissal of
housebreaking or theft; and (c) by malicious act. the complaint to be contrary to the evidence and the
law.
Respondent insurance commission, however, dismissed
petitioner's complaint for recovery of the total loss of First, respondent commission's ruling that the person
the vehicle against private respondent, sustaining who drove the vehicle in the person of Benito Mabasa,
respondent insurer's contention that the accident did who, according to its finding, was one of the residents
not fall within the provisions of the policy either for the of the Sunday Machine Works, Inc. to whom the car had
Own Damage or Theft coverage, invoking the policy been entrusted for general check-up and repairs was
provision on "Authorized Driver" clause. 1 not an "authorized driver" of petitioner-complainant is
too restrictive and contrary to the established principle
Respondent commission upheld private respondent's that insurance contracts, being contracts of adhesion
contention on the "Authorized Driver" clause in this where the only participation of the other party is the
wise: "It must be observed that under the above- signing of his signature or his "adhesion" thereto,
quoted provisions, the policy limits the use of the "obviously call for greater strictness and vigilance on
insured vehicle to two (2) persons only, namely: the the part of courts of justice with a view of protecting
insured himself or any person on his (insured's) the weaker party from abuse and imposition, and
permission. Under the second category, it is to be prevent their becoming traps for the unwary. 2
noted that the words "any person' is qualified by the
phrase The main purpose of the "authorized driver" clause, as
may be seen from its text, supra, is that a person other
... on the insured's order or with his than the insured owner, who drives the car on the
permission.' It is therefore clear that if insured's order, such as his regular driver, or with his
the person driving is other than the permission, such as a friend or member of the family or
insured, he must have been duly the employees of a car service or repair shop must be
authorized by the insured, to drive the duly licensed drivers and have no disqualification to
vehicle to make the insurance drive a motor vehicle.
company liable for the driver's
negligence. Complainant admitted that A car owner who entrusts his car to an established car
she did not know the person who drove service and repair shop necessarily entrusts his car key
her vehicle at the time of the accident, to the shop owner and employees who are presumed
much less consented to the use of the to have the insured's permission to drive the car for
same (par. 5 of the complaint). Her legitimate purposes of checking or road-testing the car.
husband likewise admitted that he The mere happenstance that the employee(s) of the
neither knew this driver Benito Mabasa shop owner diverts the use of the car to his own illicit
(Exhibit '4'). With these declarations of or unauthorized purpose in violation of the trust
complainant and her husband, we hold reposed in the shop by the insured car owner does not
that the person who drove the vehicle, mean that the "authorized driver" clause has been
in the person of Benito Mabasa, is not violated such as to bar recovery, provided that such
an authorized driver of the employee is duly qualified to drive under a valid
complainant. Apparently, this is a driver's license.
violation of the 'Authorized Driver'
clause of the policy. The situation is no different from the regular or family
driver, who instead of carrying out the owner's order to
Respondent commission likewise upheld private fetch the children from school takes out his girl friend
respondent's assertion that the car was not stolen and instead for a joy ride and instead wrecks the car. There
therefore not covered by the Theft clause, ruling that is no question of his being an "authorized driver" which
"The element of 'taking' in Article 308 of the Revised allows recovery of the loss although his trip was for a
Penal Code means that the act of depriving another of personal or illicit purpose without the owner's
the possession and dominion of a movable thing is authorization.
coupled ... with the intention. at the time of the
'taking', of withholding it with the character of Secondly, and independently of the foregoing (since
permanency (People vs. Galang, 7 Appt. Ct. Rep. 13). In when a car is unlawfully taken, it is the theft clause,
other words, there must have been shown a felonious not the "authorized driver" clause, that applies), where
intent upon the part of the taker of the car, and the a car is admittedly as in this case unlawfully and
intent must be an intent permanently to deprive the 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
owner's consent or knowledge, such taking constitutes
or partakes of the nature of theft as defined in Article
308 of the Revised Penal Code, viz. "Who 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 latter's
consent," for purposes of recovering the loss under the
policy in question.
3. That in the latter part of 1961, through plaintiffs ". . . the Court sustains as the better view that which
representative, Dr. Antonio Lim, the aforementioned holds that when a person, either with the object of
Chevrolet Carry-all was placed at the Jones Monument going to a certain place, or learning how to drive, or
Mobilgas Service Station at Davao City, under the care enjoying a free ride, takes possession of a vehicle
of said stations operator, Rene Te so that said carry-all belonging to another, without the consent of its owner,
could be displayed as being for sale, with the he is guilty of theft because by taking possession of the
understanding that the latter or any of his station boys personal property belonging to another and using it, his
would receive a 2% commission should they sell said intent to gain is evident since he derives therefrom
vehicle. utility, satisfaction, enjoyment and pleasure. Justice
Ramon C. Aquino cites in his work Groizard who holds
4. That on the night of January 18, 1962, Romeo that the use of a thing constitutes gain and Cuello
Catiben one of the boys at the aforementioned Jones Calon who calls it hurto de uso. 1
Monument Service Station and a nephew of the wife of
Rene Te who is residing with them, took the There need be no prior conviction for the crime of theft
aforementioned chevrolet carry-all for a joy ride to Toril, to make an insurer liable under the theft clause of the
Davao City, without the prior permission, authority or policy. Upon the facts stipulated by the parties it is
consent of either the plaintiff or its representative Dr. admitted that Catiben had taken the vehicle for a joy
Antonio Lim, or of Rene Te, and on its way back to ride and while the same was in his possession he
Davao City, said vehicle, due to some mechanical bumped it against an electric post resulting in
defect accidentally bumped an electric post causing damages. That act is theft within a policy of insurance.
actual damages valued at P5,518.61. In a civil action for recovery on an automobile
insurance, the question whether a person using a
5. That the issue before the Honorable Court is certain automobile at the time of the accident stole it
whether or not for the damage to the abovementioned or not is to be determined by a fair preponderance of
Chevrolet Carry-all to be compensable under the evidence and not by the rule of criminal law requiring
aforementioned Fieldmens Private Car Comprehensive proof of guilt beyond reasonable doubt. 2 Besides,
Policy No. 22 JL 11107, there must be a prior criminal there is no provision in the policy requiring prior
conviction of Romeo Catiben for theft. criminal conviction for theft.chanroblesvirtualawlibrary
WHEREFORE, it is respectfully prayed that this ACCORDINGLY, finding no error in the judgment
Honorable Court render judgment on the facts and appealed from, the same is hereby affirmed.
issues above stipulated after the parties shall have
submitted their respective memoranda."cralaw Costs against defendant Fieldmens Insurance Co., Inc.
virtua1aw library
SO ORDERED.
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 FIRST DIVISION
Appellate Court, docketed as CA-G.R. No. 33543-R,
which as above stated, elevated it to this [G.R. No. L-34768. February 24, 1984.]
instance.chanrobles.com:cralaw:red JAMES STOKES, as Attorney-in-Fact of Daniel
Stephen Adolfson and DANIEL STEPHEN
We affirm. The Comprehensive Policy issued by the ADOLFSON, Plaintifs-Appellees, v. MALAYAN
insurance company includes loss of or damage to the INSURANCE CO., INC., Defendant-Appellant.
motor vehicle by "burglary . . . or theft." It is settled Rodrigo M. Nera for Plaintifs-Appellees.
that the act of Catiben in taking the vehicle for a joy Pio B. Salomon, Jr., for Defendant-Appellant.
ride to Toril, Davao City, constitutes theft within the DECISION
PLANA, J.:
"Defendant cannot evade liability under the policy by
virtue of the above provision of the Land Transportation
This is an appeal by Malayan Insurance Company, Inc. and Traffic Code. This is an insurance case. The basis of
(MALAYAN) from a decision of Court of First Instance of insurance contracts is good faith and trust between the
Manila ordering it to pay the insured under a car insurer and the insured. The matter of the failure on
insurance policy issued by MALAYAN to Daniel Stephen the part of Stokes to have a Philippine drivers license
Adolfson against own damage as well as third party is not such a defect that can be considered as fatal to
liability.chanrobles virtualawlibrary the contract of insurance, because the fact is that
The facts are not in dispute, Adolfson had a subsisting Stokes still had a valid and unexpired Irish license. As a
MALAYAN car insurance policy with the above coverage matter of fact, the traffic officer who investigated the
on November 23, 1969 when his car collided with a car incident gave Stokes a traffic violation receipt and not
owned by Cesar Poblete, resulting in damage to both a ticket for driving without license.
vehicles. At the time of the accident, Adolfsons car
was being driven by James Stokes, who was authorized "Then the Court believes that defendant is in estoppel
to do so by Adolfson. Stokes, an Irish citizen who had in this case because it allowed the plaintiff to pay the
been in the Philippines as a tourist for more than ninety insurance premium even after the accident occurred.
days, had a valid and subsisting Irish drivers license Admitting for the sake of argument that there was a
but without a Philippine drivers license. violation of the terms of the policy before the incident,
the admission or acceptance by the insurance
After the collision, Adolfson filed a claim with MALAYAN company of the premium should be considered as a
but the latter refused to pay, contending that Stokes waiver on its part to contest the claim of the
was not an authorized driver under the "Authorized plaintiffs."cralaw virtua1aw librar
Driver" clause of the insurance policy in relation to In this appeal, the two issues resolved by the court a
Section 21 of the Land Transportation and Traffic Code. quo are raised anew. We find the appeal meritorious.
Under the insurance policy, "authorized driver" refers 1. A contract of insurance is a contract of indemnity
to upon the terms and conditions specified therein. When
the insurer is called upon to pay in case of loss or
"(a) The insured damage, he has the right to insist upon compliance
with the terms of the contract. If the insured cannot
"(b) Any person driving on the insureds order or with bring himself within the terms and conditions of the
his permission. contract, he is not entitled as a rule to recover for the
loss or damage suffered. For the terms of the contract
"PROVIDED that the person driving is permitted in constitute the measure of the insurers liability, and
accordance with the licensing or other laws or compliance therewith is a condition precedent to the
regulations to drive the motor vehicle and is not right of recovery. (Young v. Midland Textile Insurance
disqualified from driving such motor vehicle by order of Co., 30 Phil. 617.)
a court of law or by reason of any enactment or
regulation in that behalf."cralaw virtua1aw library Under the "authorized driver" clause, an authorized
driver must not only be permitted to drive by the
The cited Section 21 of the Land Transportation and insured. It is also essential that he is permitted under
Traffic Code provides:jgc:chanrobles.com.ph the law and regulations to drive the motor vehicle and
is not disqualified from so doing under any enactment
"Operation of motor vehicles by tourists. Bona fide or regulation.chanrobles virtual lawlibrary
tourists and similar transients who are duly licensed to
operate motor vehicles in their respective countries At the time of the accident, Stokes had been in the
may be allowed to operate motor vehicles during but Philippines for more than 90 days. Hence, under the
not after ninety days of their sojourn in the Philippines. law, he could not drive a motor vehicle without a
Philippine drivers license. He was therefore not an
"After ninety days, any tourist or transient desiring to "authorized driver" under the terms of the insurance
operate motor vehicles shall pay fees and obtain and policy in question, and MALAYAN was right in denying
carry a license as hereinafter provided." (Emphasis the claim of the insured.cralawnad
supplied.)
Unable to convince MALAYAN to pay, Stokes and 2. Acceptance of premium within the stipulated period
Adolfson brought suit before the Court of First Instance for payment thereof, including the agreed period of
of Manila and succeeded in getting a favorable grace, merely assures continued effectivity of the
judgment, although Stokes had ceased to be insurance policy in accordance with its terms. Such
authorized to drive a motor vehicle in the Philippines at acceptance does not estop the insurer from interposing
the time of the accident, he having stayed therein as a any valid defense under the terms of the insurance
tourist for over 90 days without having obtained a policy.
Philippine drivers license. The Court held that Stokes
lack of a Philippine drivers license was not fatal to the The principle of estoppel is an equitable principle
enforcement of the insurance policy; and the MALAYAN rooted upon natural justice which prevents a person
was estopped from denying liability under the from going back on his own acts and representations to
insurance policy because it accepted premium the prejudice of another whom he has led to rely upon
payment made by the insured one day after the them. The principle does not apply to the instant case.
accident. It said:jgc:chanrobles.com.ph In accepting the premium payment of the insured,
MALAYAN was not guilty of any inequitable act or violation: "Inattentive to driving (Inv. in accident) at
representation. There is nothing inconsistent between 9:30 a.m., 2-22-62" (Exh. E-1).
acceptance of premium due under an insurance policy
and the enforcement of its The same TVR, which served as a receipt for his
terms.chanroblesvirtualawlibrary license, required him to report to Branch 8 of the traffic
WHEREFORE, the appealed judgment is reversed. The court at the corner of Arroceros and Concepcion
complaint is dismissed. Costs against the appellees. Streets, Manila at nine o'clock in the morning of March
SO ORDERED. 2, 1962. The TVR would "serve as a temporary
operator's permit for 15 days from receipt hereof" (p.
Republic of the Philippines 100, Record on Appeal). It is indisputable that at the
SUPREME COURT time of the accident (May 29, 1962), Ventura was
Manila holding an "expired Temporary Operator's Permit."
The issue in this case is whether an insurance covers a The Court of First Instance in a decision dated April 18,
jeepney whose driver's traffic violation report or 1966 held that Gutierrez's Exhibits B and B-1 prove
temporary operator's permit had already expired. that he paid the widow of Ballega P4,099.95 and that
his driver, Ventura, was an authorized driver because
Capital Insurance & Surety Co., Inc. insured on his TVR was "coextensive with the" two-year term of
December 7, 1961 for one year the jeepney of Agapito his confiscated license. It ordered the insurance
Gutierrez against passenger and third-party liability. company to pay the Id amount. The insurance
The passenger liability would not exceed P5,000 for company appealed to this Court.
any one person (Exh. 1 or C-2).
We hold that paragraph 13 of the policy, already cited,
The policy provides in item 13 that the authorized is decisive and controlling in this case. It plainly
driver must be the holder of a valid and subsisting provides, and we repeat, that "a driver with an expired
professional driver's license. "A driver with an expired Traffic Violation Receipt or expired Temporary
Traffic Violation Receipt or expired Temporary Operator's permit is not considered an authorized
Operator's Permit is not considered an authorized driver within the meaning" of the policy. Obviously,
driver" (pp. 26-27, 107, Record on Appeal, Par. 13, Ventura was not an authorized driver. His temporary
Policy, Exh. C). operator's permit had expired. The expiration bars
recovery under the policy.
Item 13 is part of the "declarations" which formed part
of the policy and had a promissory nature and effect In liability insurance, "the parties are bound by the
and constituted "the basis of the policy" (Exh. C, p. 7, terms of the policy and the right of insured to recover
Record on Appeal). is governed thereby" (44 C.J.S. 934).
On May 29, 1962, the insured jeepney figured in an It may be that for purposes of the Motor Vehicle Law
accident at Buendia Avenue, Makati, Rizal. As a result, the TVR is coterminous with the confiscated license.
a passenger named Agatonico Ballega fell off the That is why the Acting Administrator of the Motor
vehicle and died (Pars. 3 and 4, Exh. A). Vehicles Office and the Manila deputy chief of police
ventured the opinion that a TVR does not suspend the
erring driver's license, that it serves as a temporary
Teofilo Ventura, the jeepney driver, was duly licensed
license and that it may be renewed but should in no
for the years 1962 and 1963 (Exh. D). However, at the
case extend beyond the expiration date of the original
time of the accident he did not have the license.
license (Exh. F and J, 67, 90-9 1, Record on Appeal).
Instead, he had a carbon copy of a traffic violation
report (summons) issued by a policeman on February
22, 1962, with the notation that he had committed the But the instant case deals with an insurance policy
which definitively fixed the meaning of "authorized
driver". That stipulation cannot be disregarded or
rendered meaningless. It is binding on the insured.
SO ORDERED.
complaint, the amount of P5,000.00 as attorney's fees
and expenses in litigation, and to pay the costs.
There is no question that the vehicle of private Petitioner's fourth assignment of error is untenable.
respondent was damaged because the unlawful taker, Respondent has sufficiently established his demand for
accused Rogelio Mahinay, drove it and met with a the award of damages plus interest as sanctioned
vehicular accident. The damages therefore were under Arts. 1169, 1170 and 2209 of the Civil Code.
sustained in the course of the unlawful taking. The Thus, a debtor who is in delay (default) is liable for
testimonies of plaintiff and his witness in this respect damages (Art. 1170) generally from extrajudicial or
remain unrebutted. The fact remains that plaintiff's judicial demand (Art. 1169) in the form of interest. (See
claim is substantiated by competent evidence. The Art. 2209, Civil Code).
appellate court ruled:
WHEREFORE, premises considered, the present petition
Appellant contends that the trial court is hereby DENIED for lack of merit and the judgment
erred in awarding the amount of appealed from AFFIRMED in toto.
P20,000.00 actual damage without
sufficient evidentiary basis and SO ORDERED.
imposing interest from date of filing of
the complaint. We do not see anything
erroneous with this finding of the trial
court. As estimated by a reputed motor
company, Fidelity Motor Company, the
damage which the insured vehicle
sustained amounts to P21,849,62.
Actual repair is not necessary for the
purpose, as the insured has the option,
either to advance expenses for the
repair of or to wait for the proceeds of
the insurance.
GRIO-AQUINO, J:
The insurance policy, Exhibit "A," The main purpose of the "authorized
grants an option unto the defendant, in driver" clause, as may be seen from its
case of accident either to indemnify the text, is that a person other than the
plaintiff for loss or damage to the car in insured owner, who drives the car on
cash or to replace the damaged car. the insured's order, such as his regular
The defendant, however, refused to driver, or with his permission, such as a
take either of the above-mentioned friend or member of the family or the
alternatives for the reason as alleged, employees of a car service or repair
that the insured himself had violated shop, must be duly licensed drivers and
the terms of the policy when he drove have no disqualification to drive a
the car in question with an expired motor vehicle.
driver's license. (Decision, Oct. 29,
1969, p. 68, Record on Appeal.) In an American case, where the insured herself was
personally operating her automobile but without a
Appellant alleges that the trial court erred in license to operate it, her license having expired prior to
interpreting the following provision of the Private Car the issuance of the policy, the Supreme Court of
Comprehensive Policy MV-1251: Massachusetts was more explicit:
SECOND DIVISION
vs.
NOCON, J.:
For its part, petitioner FCP raised the issue of whether It is worthy to note that there is no causal connection
or not the loss of the collateral exempted the debtor between the possession of a valid driver's license and
from his admitted obligations under the promissory the loss of a vehicle. To rule otherwise would render car
note particularly the payment of interest, litigation insurance practically a sham since an insurance
expenses and attorney's fees. company can easily escape liability by citing
restrictions which are not applicable or germane to the
We find no merit in Perla's petition. claim, thereby reducing indemnity to a shadow.
The comprehensive motor car insurance policy issued We however find the petition of FCP meritorious.
by petitioner Perla undertook to indemnify the private
respondents against loss or damage to the car (a) by This Court agrees with petitioner FCP that private
accidental collision or overturning, or collision or respondents are not relieved of their obligation to pay
overturning consequent upon mechanical breakdown the former the installments due on the promissory note
or consequent upon wear and tear; (b) by fire, external on account of the loss of the automobile. The chattel
explosion, self-ignition or lightning or burglary, mortgage constituted over the automobile is merely an
housebreaking or theft; and (c) by malicious act. 14 accessory contract to the promissory note. Being the
principal contract, the promissory note is unaffected by
Where a car is admittedly, as in this case, unlawfully whatever befalls the subject matter of the accessory
and wrongfully taken without the owner's consent or contract. Therefore, the unpaid balance on the
knowledge, such taking constitutes theft, and, promissory note should be paid, and not just the
therefore, it is the "THEFT"' clause, and not the installments due and payable before the automobile
"AUTHORIZED DRIVER" clause that should apply. As was carnapped, as erronously held by the Court of
correctly stated by the respondent court in its decision: Appeals.
. . . Theft is an entirely different legal However, this does not mean that private respondents
concept from that of accident. Theft is are bound to pay the interest, litigation expenses and
committed by a person with the intent attorney's fees stipulated in the promissory note.
to gain or, to put it in another way, with Because of the peculiar relationship between the three
the concurrence of the doer's will. On contracts in this case, i.e., the promissory note, the
the other hand, accident, although it chattel mortgage contract and the insurance policy,
may proceed or result from negligence, this Court is compelled to construe all three contracts
is the happening of an event without as intimately interrelated to each other, despite the
the concurrence of the will of the fact that at first glance there is no relationship
person by whose agency it was caused. whatsoever between the parties thereto.
(Bouvier's Law Dictionary, Vol. I, 1914
ed., p. 101). Under the promissory note, private respondents are
obliged to pay Supercars, Inc. the amount stated
Clearly, the risk against accident is therein in accordance with the schedule provided for.
distinct from the risk against theft. The To secure said promissory note, private respondents
"authorized driver clause" in a typical constituted a chattel mortgage in favor of Supercars,
insurance policy is in contemplation or Inc. over the automobile the former purchased from
anticipation of accident in the legal the latter. The chattel mortgage, in turn, required
sense in which it should be understood, private respondents to insure the automobile and to
and not in contemplation or make the proceeds thereof payable to Supercars, Inc.
anticipation of an event such as theft. The promissory note and chattel mortgage were
The distinction often seized upon by assigned by Supercars, Inc. to petitioner FCP, with the
insurance companies in resisting claims knowledge of private respondents. Private respondents
from their assureds between death were able to secure an insurance policy from petitioner
occurring as a result of accident and Perla, and the same was made specifically payable to
death occurring as a result of intent petitioner FCP. 16
The insurance policy was therefore meant to be an As to the award of moral damages, exemplary
additional security to the principal contract, that is, to damages and attorney's fees, private respondents are
insure that the promissory note will still be paid in case legally entitled to the same since petitioner Perla had
the automobile is lost through accident or theft. The acted in bad faith by unreasonably refusing to honor
Chattel Mortgage Contract provided that: the insurance claim of the private respondents.
Besides, awards for moral and exemplary damages, as
THE SAID MORTGAGOR COVENANTS well as attorney's fees are left to the sound discretion
AND AGREES THAT HE/IT WILL CAUSE of the Court. Such discretion, if well exercised, will not
THE PROPERTY/IES HEREIN-ABOVE be disturbed on appeal. 19
MORTGAGED TO BE INSURED AGAINST
LOSS OR DAMAGE BY ACCIDENT, THEFT WHEREFORE, the assailed decision of the Court of
AND FIRE FOR A PERIOD OF ONE YEAR Appeals is hereby MODIFIED to require private
FROM DATE HEREOF AND EVERY YEAR respondents to pay petitioner FCP the amount of
THEREAFTER UNTIL THE MORTGAGE P55,055.93, with legal interest from July 2, 1983 until
OBLIGATION IS FULLY PAID WITH AN fully paid. The decision appealed from is hereby
INSURANCE COMPANY OR COMPANIES affirmed as to all other respects. No pronouncement as
ACCEPTABLE TO THE MORTGAGEE IN to costs.
AN AMOUNT NOT LESS THAN THE
OUTSTANDING BALANCE OF THE SO ORDERED.
MORTGAGE OBLIGATION; THAT HE/IT
WILL MAKE ALL LOSS, IF ANY, UNDER
SUCH POLICY OR POLICIES, PAYABLE
TO THE MORTGAGE OR ITS ASSIGNS AS
ITS INTERESTS MAY APPEAR AND
FORTHWITH DELIVER SUCH POLICY OR
POLICIES TO THE MORTGAGEE, . . . . 17
Petitioner Pan Malayan Insurance Company After private respondents filed its comment to the
(PANMALAY) seeks the reversal of a decision of the petition, and petitioner filed its reply, the Court
Court of Appeals which upheld an order of the trial considered the issues joined and the case submitted
court dismissing for no cause of action PANMALAY's for decision.
complaint for damages against private respondents
Erlinda Fabie and her driver. Deliberating on the various arguments adduced in the
pleadings, the Court finds merit in the petition.
The principal issue presented for resolution before this
Court is whether or not the insurer PANMALAY may PANMALAY alleged in its complaint that, pursuant to a
institute an action to recover the amount it had paid its motor vehicle insurance policy, it had indemnified
assured in settlement of an insurance claim against CANLUBANG for the damage to the insured car
private respondents as the parties allegedly resulting from a traffic accident allegedly caused by the
responsible for the damage caused to the insured negligence of the driver of private respondent, Erlinda
vehicle. Fabie. PANMALAY contended, therefore, that its cause
of action against private respondents was anchored
On December 10, 1985, PANMALAY filed a complaint for upon Article 2207 of the Civil Code, which reads:
damages with the RTC of Makati against private
respondents Erlinda Fabie and her driver. PANMALAY If the plaintiffs property has been insured, and
averred the following: that it insured a Mitsubishi Colt he has received indemnity from the insurance
Lancer car with plate No. DDZ-431 and registered in company for the injury or loss arising out of the
the name of Canlubang Automotive Resources wrong or breach of contract complained of, the
Corporation [CANLUBANG]; that on May 26, 1985, due insurance company shall be subrogated to the
to the "carelessness, recklessness, and imprudence" of rights of the insured against the wrongdoer or
the unknown driver of a pick-up with plate no. PCR-220, the person who has violated the contract. . . .
the insured car was hit and suffered damages in the
amount of P42,052.00; that PANMALAY defrayed the PANMALAY is correct.
cost of repair of the insured car and, therefore, was
subrogated to the rights of CANLUBANG against the
driver of the pick-up and his employer, Erlinda Fabie; Article 2207 of the Civil Code is founded on the well-
and that, despite repeated demands, defendants, failed settled principle of subrogation. If the insured property
and refused to pay the claim of PANMALAY. is destroyed or damaged through the fault or
negligence of a party other than the assured, then the
insurer, upon payment to the assured, will be
Private respondents, thereafter, filed a Motion for Bill of subrogated to the rights of the assured to recover from
Particulars and a supplemental motion thereto. In the wrongdoer to the extent that the insurer has been
compliance therewith, PANMALAY clarified, among obligated to pay. Payment by the insurer to the assured
others, that the damage caused to the insured car was operates as an equitable assignment to the former of
settled under the "own damage", coverage of the all remedies which the latter may have against the
insurance policy, and that the driver of the insured car third party whose negligence or wrongful act caused
was, at the time of the accident, an authorized driver the loss. The right of subrogation is not dependent
duly licensed to drive the vehicle. PANMALAY also upon, nor does it grow out of, any privity of contract or
submitted a copy of the insurance policy and the upon written assignment of claim. It accrues simply
upon payment of the insurance claim by the insurer
[Compania Maritima v. Insurance Company of North Particulars, p. 1; Record, p. 31]. It is in this sense that
America, G.R. No. L-18965, October 30, 1964, 12 SCRA the so-called "own damage" coverage under Section III
213; Fireman's Fund Insurance Company v. Jamilla & of the insurance policy is differentiated from Sections I
Company, Inc., G.R. No. L-27427, April 7, 1976, 70 and IV-1 which refer to "Third Party Liability" coverage
SCRA 323]. (liabilities arising from the death of, or bodily injuries
suffered by, third parties) and from Section IV-2 which
There are a few recognized exceptions to this rule. For refer to "Property Damage" coverage (liabilities arising
instance, if the assured by his own act releases the from damage caused by the insured vehicle to the
wrongdoer or third party liable for the loss or damage, properties of third parties).
from liability, the insurer's right of subrogation is
defeated [Phoenix Ins. Co. of Brooklyn v. Erie & Neither is there merit in the Court of Appeals' ruling
Western Transport, Co., 117 US 312, 29 L. Ed. 873 that the coverage of insured risks under Section III-1 of
(1886); Insurance Company of North America v. Elgin, the policy does not include to the insured vehicle
Joliet & Eastern Railway Co., 229 F 2d 705 (1956)]. arising from collision or overturning due to the
Similarly, where the insurer pays the assured the value negligent acts of the third party. Not only does it stem
of the lost goods without notifying the carrier who has from an erroneous interpretation of the provisions of
in good faith settled the assured's claim for loss, the the section, but it also violates a fundamental rule on
settlement is binding on both the assured and the the interpretation of property insurance contracts.
insurer, and the latter cannot bring an action against
the carrier on his right of subrogation [McCarthy v. It is a basic rule in the interpretation of contracts that
Barber Steamship Lines, Inc., 45 Phil. 488 (1923)]. And the terms of a contract are to be construed according
where the insurer pays the assured for a loss which is to the sense and meaning of the terms which
not a risk covered by the policy, thereby effecting the parties thereto have used. In the case of property
"voluntary payment", the former has no right of insurance policies, the evident intention of the
subrogation against the third party liable for the loss contracting parties, i.e., the insurer and the assured,
[Sveriges Angfartygs Assurans Forening v. Qua Chee determine the import of the various terms and
Gan, G. R. No. L-22146, September 5, 1967, 21 SCRA provisions embodied in the policy. It is only when the
12]. terms of the policy are ambiguous, equivocal or
uncertain, such that the parties themselves disagree
None of the exceptions are availing in the present case. about the meaning of particular provisions, that the
courts will intervene. In such an event, the policy will
The lower court and Court of Appeals, however, were of be construed by the courts liberally in favor of the
the opinion that PANMALAY was not legally subrogated assured and strictly against the insurer [Union
under Article 2207 of the Civil Code to the rights of Manufacturing Co., Inc. v. Philippine Guaranty Co., Inc.,
CANLUBANG, and therefore did not have any cause of G.R., No. L-27932, October 30, 1972, 47 SCRA 271;
action against private respondents. On the one hand, National Power Corporation v. Court of Appeals, G.R.
the trial court held that payment by PANMALAY of No. L-43706, November 14, 1986, 145 SCRA 533;
CANLUBANG's claim under the "own damage" clause of Pacific Banking Corporation v. Court of Appeals, G.R.
the insurance policy was an admission by the insurer No. L-41014, November 28, 1988, 168 SCRA
that the damage was caused by the assured and/or its 1. Also Articles 1370-1378 of the Civil Code].
representatives. On the other hand, the Court of
Appeals in applying the ejusdem generis rule held that Section III-1 of the insurance policy which refers to the
Section III-1 of the policy, which was the basis for conditions under which the insurer PANMALAY is liable
settlement of CANLUBANG's claim, did not cover to indemnify the assured CANLUBANG against damage
damage arising from collision or overturning due to the to or loss of the insured vehicle, reads as follows:
negligence of third parties as one of the insurable risks.
Both tribunals concluded that PANMALAY could not now SECTION III LOSS OR DAMAGE
invoke Article 2207 and claim reimbursement from
private respondents as alleged wrongdoers or parties
responsible for the damage. 1. The Company will, subject to the Limits of
Liability, indemnify the Insured against loss of
or damage to the Scheduled Vehicle and its
The above conclusion is without merit. accessories and spare parts whilst thereon:
It must be emphasized that the lower court's ruling (a) by accidental collision or
that the "own damage" coverage under the policy overturning, or collision or overturning
implies damage to the insured car caused by the consequent upon mechanical
assured itself, instead of third parties, proceeds from breakdown or consequent upon wear
an incorrect comprehension of the phrase "own and tear;
damage" as used by the insurer. When PANMALAY
utilized the phrase "own damage" a phrase which,
incidentally, is not found in the insurance policy to (b) by fire, external explosion, self
define the basis for its settlement of CANLUBANG's ignition or lightning or burglary,
claim under the policy, it simply meant that it had housebreaking or theft;
assumed to reimburse the costs for repairing
the damage to the insured vehicle [See PANMALAY's (c) by malicious act;
Compliance with Supplementary Motion for Bill of
(d) whilst in transit (including the The Court, furthermore. finds it noteworthy that the
processes of loading and unloading) meaning advanced by PANMALAY regarding the
incidental to such transit by road, rail, coverage of Section III-1(a) of the policy is undeniably
inland, waterway, lift or elevator. more beneficial to CANLUBANG than that insisted upon
by respondents herein. By arguing that this section
xxx xxx xxx covers losses or damages due not only to malicious,
but also to negligent acts of third parties, PANMALAY in
effect advocates for a more comprehensive coverage
[Annex "A-1" of PANMALAY's Compliance with of insured risks. And this, in the final analysis, is more
Supplementary Motion for Bill of Particulars; in keeping with the rationale behind the various rules
Record, p. 34; Emphasis supplied]. on the interpretation of insurance contracts favoring
the assured or beneficiary so as to effect the dominant
PANMALAY contends that the coverage of insured risks purpose of indemnity or payment [See Calanoc v. Court
under the above section, specifically Section III-1(a), is of Appeals, 98 Phil. 79 (1955); Del Rosario v. The
comprehensive enough to include damage to the Equitable Insurance and Casualty Co., Inc., G.R. No. L-
insured vehicle arising from collision or overturning due 16215, June 29, 1963, 8 SCRA 343; Serrano v. Court of
to the fault or negligence of a third party. CANLUBANG Appeals, G.R. No. L-35529, July 16, 1984, 130 SCRA
is apparently of the same understanding. Based on a 327].
police report wherein the driver of the insured car
reported that after the vehicle was sideswiped by a Parenthetically, even assuming for the sake of
pick-up, the driver thereof fled the scene [Record, p. argument that Section III-1(a) of the insurance policy
20], CANLUBANG filed its claim with PANMALAY for does not cover damage to the insured vehicle caused
indemnification of the damage caused to its car. It then by negligent acts of third parties, and that PANMALAY's
accepted payment from PANMALAY, and executed a settlement of CANLUBANG's claim for damages
Release of Claim and Subrogation Receipt in favor of allegedly arising from a collision due to private
latter. respondents' negligence would amount to unwarranted
or "voluntary payment", dismissal of PANMALAY's
Considering that the very parties to the policy were not complaint against private respondents for no cause of
shown to be in disagreement regarding the meaning action would still be a grave error of law.
and coverage of Section III-1, specifically sub-
paragraph (a) thereof, it was improper for the appellate For even if under the above circumstances PANMALAY
court to indulge in contract construction, to apply could not be deemed subrogated to the rights of its
the ejusdem generis rule, and to ascribe meaning assured under Article 2207 of the Civil Code,
contrary to the clear intention and understanding of PANMALAY would still have a cause of action against
these parties. private respondents. In the pertinent case of Sveriges
Angfartygs Assurans Forening v. Qua Chee Gan, supra.,
It cannot be said that the meaning given by PANMALAY the Court ruled that the insurer who may have no
and CANLUBANG to the phrase "by accidental collision rights of subrogation due to "voluntary" payment may
or overturning" found in the first paint of sub- nevertheless recover from the third party responsible
paragraph (a) is untenable. Although the terms for the damage to the insured property under Article
"accident" or "accidental" as used in insurance 1236 of the Civil Code.
contracts have not acquired a technical meaning, the
Court has on several occasions defined these terms to In conclusion, it must be reiterated that in this present
mean that which takes place "without one's foresight or case, the insurer PANMALAY as subrogee merely prays
expectation, an event that proceeds from an unknown that it be allowed to institute an action to recover from
cause, or is an unusual effect of a known cause and, third parties who allegedly caused damage to the
therefore, not expected" [De la Cruz v. The Capital insured vehicle, the amount which it had paid its
Insurance & Surety Co., Inc., G.R. No. L-21574, June 30, assured under the insurance policy. Having thus shown
1966, 17 SCRA 559; Filipino Merchants Insurance Co., from the above discussion that PANMALAY has a cause
Inc. v. Court of Appeals, G.R. No. 85141, November 28, of action against third parties whose negligence may
1989]. Certainly, it cannot be inferred from have caused damage to CANLUBANG's car, the Court
jurisprudence that these terms, without qualification, holds that there is no legal obstacle to the filing by
exclude events resulting in damage or loss due to the PANMALAY of a complaint for damages against private
fault, recklessness or negligence of third parties. The respondents as the third parties allegedly responsible
concept "accident" is not necessarily synonymous with for the damage. Respondent Court of Appeals therefore
the concept of "no fault". It may be utilized simply to committed reversible error in sustaining the lower
distinguish intentional or malicious acts from negligent court's order which dismissed PANMALAY's complaint
or careless acts of man. against private respondents for no cause of action.
Hence, it is now for the trial court to determine if in fact
Moreover, a perusal of the provisions of the insurance the damage caused to the insured vehicle was due to
policy reveals that damage to, or loss of, the insured the "carelessness, recklessness and imprudence" of the
vehicle due to negligent or careless acts of third parties driver of private respondent Erlinda Fabie.
is not listed under the general and specific exceptions
to the coverage of insured risks which are enumerated WHEREFORE, in view of the foregoing, the present
in detail in the insurance policy itself [See Annex "A-1" petition is GRANTED. Petitioner's complaint for
of PANMALAY's Compliance with Supplementary Motion damages against private respondents is hereby
for Bill of Particulars, supra.]
REINSTATED. Let the case be remanded to the lower SUN INSURANCE OFFICE, LTD., petitioner,
court for trial on the merits. vs.
THE HON. COURT OF APPEALS and NERISSA
SO ORDERED. LIM, respondents.
CRUZ, J.:
To repeat, the parties agree that Lim did not commit The private respondent maintains that Lim did not.
suicide. Nevertheless, the petitioner contends that the That is where she says the analogy fails. The
insured willfully exposed himself to needless peril and petitioner's hypothetical swimmer knew when he dived
thus removed himself from the coverage of the off the Quezon Bridge that the currents below were
insurance policy. dangerous. By contrast, Lim did not know that the gun
he put to his head was loaded.
It should be noted at the outset that suicide and willful
exposure to needless peril are in pari materia because Lim was unquestionably negligent and that negligence
they both signify a disregard for one's life. The only cost him his own life. But it should not prevent his
difference is in degree, as suicide imports a positive act widow from recovering from the insurance policy he
of ending such life whereas the second act indicates a obtained precisely against accident. There is nothing in
reckless risking of it that is almost suicidal in intent. To the policy that relieves the insurer of the responsibility
illustrate, a person who walks a tightrope one thousand to pay the indemnity agreed upon if the insured is
meters above the ground and without any safety shown to have contributed to his own accident. Indeed,
device may not actually be intending to commit most accidents are caused by negligence. There are
suicide, but his act is nonetheless suicidal. He would only four exceptions expressly made in the contract to
thus be considered as "willfully exposing himself to relieve the insurer from liability, and none of these
needless peril" within the meaning of the exception in exceptions is applicable in the case at bar. **
question.
It bears noting that insurance contracts are as a rule
The petitioner maintains that by the mere act of supposed to be interpreted liberally in favor of the
pointing the gun to hip temple, Lim had willfully assured. There is no reason to deviate from this rule,
exposed himself to needless peril and so came under especially in view of the circumstances of this case as
the exception. The theory is that a gun is per above analyzed.
se dangerous and should therefore be handled
cautiously in every case.
On the second assigned error, however, the Court must
rule in favor of the petitioner. The basic issue raised in
this case is, as the petitioner correctly observed, one of
first impression. It is evident that the petitioner was
acting in good faith then it resisted the private
respondent's claim on the ground that the death of the
insured was covered by the exception. The issue was
indeed debatable and was clearly not raised only for
the purpose of evading a legitimate obligation. We hold
therefore that the award of moral and exemplary
damages and of attorney's fees is unjust and so must
be disapproved.
Moreover,
SO ORDERED.
THIRD DIVISION
During the pendency of the civil case, Into was
sentenced to suffer an indeterminate penalty of one (1)
G.R. No. 60506 August 6, 1992 year, eight (8) months and one (1) day of prision
correccional, as minimum, to four (4) years, nine (9)
months and eleven (11) days of prision correccional, as
FIGURACION VDA. DE MAGLANA, EDITHA M. maximum, with all the accessory penalties provided by
CRUZ, ERLINDA M. MASESAR, LEONILA M. law, and to indemnify the heirs of Lope Maglana, Sr. in
MALLARI, GILDA ANTONIO and the minors LEAH, the amount of twelve thousand pesos (P12,000.00)
LOPE, JR., and ELVIRA, all surnamed MAGLANA, with subsidiary imprisonment in case of insolvency,
herein represented by their mother, FIGURACION plus five thousand pesos (P5,000.00) in the concept of
VDA. DE MAGLANA, petitioners, moral and exemplary damages with costs. No appeal
vs. was interposed by accused who later applied for
HONORABLE FRANCISCO Z. CONSOLACION, probation. 2
Presiding Judge of Davao City, Branch II, and
AFISCO INSURANCE CORPORATION, respondents.
On December 14, 1981, the lower court rendered a
decision finding that Destrajo had not exercised
Jose B. Guyo for petitioners. sufficient diligence as the operator of the jeepney. The
dispositive portion of the decision reads:
Angel E. Fernandez for private respondent.
WHEREFORE, the Court finds judgment
in favor of the plaintiffs against
defendant Destrajo, ordering him to
ROMERO, J.: pay plaintiffs the sum of P28,000.00 for
loss of income; to pay plaintiffs the
sum of P12,000.00 which amount shall
The nature of the liability of an insurer sued together be deducted in the event judgment in
with the insured/operator-owner of a common carrier Criminal Case No. 3527-D against the
which figured in an accident causing the death of a driver, accused Into, shall have been
third person is sought to be defined in this petition enforced; to pay plaintiffs the sum of
for certiorari. P5,901.70 representing funeral and
burial expenses of the deceased; to
The facts as found by the trial court are as follows: pay plaintiffs the sum of P5,000.00 as
moral damages which shall be
. . . Lope Maglana was an employee of deducted in the event judgment (sic) in
the Bureau of Customs whose work Criminal Case No. 3527-D against the
station was at Lasa, here in Davao City. driver, accused Into; to pay plaintiffs
On December 20, 1978, early morning, the sum of P3,000.00 as attorney's fees
Lope Maglana was on his way to his and to pay the costs of suit.
work station, driving a motorcycle
owned by the Bureau of Customs. At The defendant insurance company is
Km. 7, Lanang, he met an accident that ordered to reimburse defendant
resulted in his death. He died on the Destrajo whatever amounts the latter
spot. The PUJ jeep that bumped the shall have paid only up to the extent of
deceased was driven by Pepito Into, its insurance coverage.
operated and owned by defendant
Destrajo. From the investigation SO ORDERED. 3
Petitioners filed a second motion for reconsideration While it is true that where the
reiterating that the liability of the insurer is direct, insurance contract provides for
primary and solidary with the jeepney operator indemnity against liability to third
because the petitioners became direct beneficiaries persons, such third persons can directly
under the provision of the policy which, in effect, is a sue the insurer, however, the direct
stipulation pour autrui. 6 This motion was likewise liability of the insurer under indemnity
denied for lack of merit. contracts against third party liability
does not mean that the insurer can be
Hence, petitioners filed the instant petition held solidarily liable with the insured
for certiorari which, although it does not seek the and/or the other parties found at
reversal of the lower court's decision in its entirety, fault. The liability of the insurer is
prays for the setting aside or modification of the based on contract; that of the insured
second paragraph of the dispositive portion of said is based on tort.
decision. Petitioners reassert their position that the
insurance company is directly and solidarily liable with In the case at bar, petitioner as insurer
the negligent operator up to the extent of its insurance of Sio Choy, is liable to respondent
coverage. Vallejos (the injured third party), but it
cannot, as incorrectly held by the trial
We grant the petition. court, be made "solidarily" liable with
the two principal tortfeasors, namely
respondents Sio Choy and San Leon
The particular provision of the insurance policy on Rice Mill, Inc. For if petitioner-insurer
which petitioners base their claim is as follows: were solidarily liable with said, two (2)
respondents by reason of the
indemnity contract against third party
Sec. 1 LIABILITY TO THE PUBLIC liability under which an insurer can
1. The Company will, subject to the Limits of be directly sued by a third party this
Liability, pay all sums necessary to discharge will result in a violation of the
liability of the insured in respect of principles underlying solidary
(a) death of or bodily injury to any THIRD PARTY obligation and insurance contracts.
(b) . . . . (emphasis supplied)
2. . . . .
3. In the event of the death of any person The Court then proceeded to distinguish the extent of
entitled to indemnity under this Policy, the the liability and manner of enforcing the same in
Company will, in respect of the liability incurred ordinary contracts from that of insurance contracts.
to such person indemnify his personal While in solidary obligations, the creditor may enforce
representatives in terms of, and subject to the the entire obligation against one of the solidary
terms and conditions hereof. 7 debtors, in an insurance contract, the insurer
undertakes for a consideration to indemnify the insured
The above-quoted provision leads to no other against loss, damage or liability arising from an
conclusion but that AFISCO can be held directly liable unknown or contingent event. 11 Thus, petitioner
by petitioners. As this Court ruled in Shafer vs. Judge, therein, which, under the insurance contract is liable
RTC of Olongapo City, Br. 75, "[w]here an insurance only up to P20,000.00, can not be made solidarily liable
policy insures directly against liability, the insurer's with the insured for the entire obligation of P29,013.00
liability accrues immediately upon the occurrence of otherwise there would result "an evident breach of the
the injury or even upon which the liability depends, and concept of solidary obligation."
does not depend on the recovery of judgment by the
injured party against the insured." 8 The underlying Similarly, petitioners herein cannot validly claim that
reason behind the third party liability (TPL) of the AFISCO, whose liability under the insurance policy is
Compulsory Motor Vehicle Liability Insurance is "to also P20,000.00, can be held solidarily liable with
protect injured persons against the insolvency of the Destrajo for the total amount of P53,901.70 in
insured who causes such injury, and to give such accordance with the decision of the lower court. Since
injured person a certain beneficial interest in the under both the law and the insurance policy, AFISCO's
proceeds of the policy . . ." 9 Since petitioners had liability is only up to P20,000.00, the second paragraph
received from AFISCO the sum of P5,000.00 under the of the dispositive portion of the decision in question
no-fault clause, AFISCO's liability is now limited to may have unwittingly sown confusion among the
P15,000.00. petitioners and their counsel. What should have been
clearly stressed as to leave no room for doubt was the
However, we cannot agree that AFISCO is likewise liability of AFISCO under the explicit terms of the
solidarily liable with Destrajo. In Malayan Insurance insurance contract.
Co., Inc. v. Court of Appeals, 10 this Court had the
opportunity to resolve the issue as to the nature of the In fine, we conclude that the liability of AFISCO based
liability of the insurer and the insured vis-a-vis the third on the insurance contract is direct, but not solidary
with that of Destrajo which is based on Article 2180 of G.R. CV No. 49624 entitled, San Miguel Corporation,
the Civil Code. 12 As such, petitioners have the option Plaintiff-Appellee versus Estate of Ang Gui, represented
either to claim the P15,000 from AFISCO and the by Lucio, Julian and Jaime, all surnamed Ang, and Co
balance from Destrajo or enforce the entire judgment To, Defendants-Appellants, ThirdParty Plaintiffs versus
from Destrajo subject to reimbursement from AFISCO FGU Insurance Corporation, Third-Party Defendant-
to the extent of the insurance coverage. Appellant, which affirmed in toto the decision[2] of the
Regional Trial Court of Cebu City, Branch 22. The
While the petition seeks a definitive ruling only on the dispositive portion of the Court of Appeals decision
nature of AFISCO's liability, we noticed that the lower reads:
court erred in the computation of the probable loss of
income. Using the formula: 2/3 of (80-56) x P12,000.00, WHEREFORE, for all the foregoing, judgment is hereby
it awarded P28,800.00. 13 Upon recomputation, the rendered as follows:
correct amount is P192,000.00. Being a "plain error,"
we opt to correct the same. 14 Furthermore, in 1) Ordering
accordance with prevailing jurisprudence, the death defendants to pay plaintiff the sum of
indemnity is hereby increased to P50,000.00. 15 P1,346,197.00 and an interest of 6% per
annum to be reckoned from the filing of this
WHEREFORE, premises considered, the present petition case on October 2, 1990;
is hereby GRANTED. The award of P28,800.00
representing loss of income is INCREASED to 2) Ordering
P192,000.00 and the death indemnity of P12,000.00 to defendants to pay plaintiff the sum of
P50,000.00. P25,000.00 for attorneys fees and an
additional sum of P10,000.00 as litigation
SO ORDERED. expenses;
The Facts
[G.R. No. 137775. March 31, 2005] Evidence shows that Anco Enterprises Company
(ANCO), a partnership between Ang Gui and Co To, was
engaged in the shipping business. It owned the M/T
ANCO tugboat and the D/B Lucio barge which were
operated as common carriers. Since the D/B Lucio had
FGU INSURANCE CORPORATION, petitioner, vs. no engine of its own, it could not maneuver by itself
THE COURT OF APPEALS, SAN MIGUEL and had to be towed by a tugboat for it to move from
CORPORATION, and ESTATE OF ANG GUI, one place to another.
represented by LUCIO, JULIAN, and JAIME,
all surnamed ANG, and CO On 23 September 1979, San Miguel Corporation
TO, respondents. (SMC) shipped from Mandaue City, Cebu, on board the
D/B Lucio, for towage by M/T ANCO, the following
cargoes:
[G.R. No. 140704. March 31, 2005] Bill of Lading No. Shipment Destination
ESTATE OF ANG GUI, Represented by LUCIO, 1 25,000 cases Pale Pilsen Estancia,
JULIAN and JAIME, all surnamed ANG, and Iloilo
CO TO, petitioners, vs. THE HONORABLE
COURT OF APPEALS, SAN MIGUEL CORP., 350 cases Cerveza
and FGU INSURANCE CORP., respondents. Negra Estancia, Iloilo
ANCOs representative did not heed the request Subsequently, ANCO, with leave of court, filed a
because he was confident that the barge could Third-Party Complaint against FGU, alleging that before
withstand the waves. This, notwithstanding the fact the vessel of ANCO left for San Jose, Antique with the
that at that time, only the M/T ANCO was left at the cargoes owned by SMC, the cargoes, to the extent of
wharf of San Jose, Antique, as all other vessels already Twenty Thousand (20,000) cases, were insured with
left the wharf to seek shelter. With the waves growing FGU for a total amount of Eight Hundred Fifty-Eight
bigger and bigger, only Ten Thousand Seven Hundred Thousand Five Hundred Pesos (P858,500.00) under
Ninety (10,790) cases of beer were discharged into the Marine Insurance Policy No. 29591. ANCO further
custody of the arrastre operator. alleged that on or about 02 October 1979, by reason of
very strong winds and heavy waves brought about by a
passing typhoon, the vessel run aground near the
At about ten to eleven oclock in the evening of 01 vicinity of San Jose, Antique, as a result of which, the
October 1979, the crew of D/B Lucio abandoned the vessel was totally wrecked and its cargoes owned by
vessel because the barges rope attached to the wharf SMC were lost and/or destroyed. According to ANCO,
was cut off by the big waves. At around midnight, the the loss of said cargoes occurred as a result of risks
barge run aground and was broken and the cargoes of insured against in the insurance policy and during the
beer in the barge were swept away. existence and lifetime of said insurance policy. ANCO
went on to assert that in the remote possibility that the
As a result, ANCO failed to deliver to SMCs court will order ANCO to pay SMCs claim, the third-
consignee Twenty-Nine Thousand Two Hundred Ten party defendant corporation should be held liable to
(29,210) cases of Pale Pilsen and Five Hundred Fifty indemnify or reimburse ANCO whatever amounts, or
(550) cases of Cerveza Negra. The value per case of damages, it may be required to pay to SMC.
Pale Pilsen was Forty-Five Pesos and Twenty Centavos
(P45.20). The value of a case of Cerveza Negra was In its answer to the Third-Party complaint, third-
Forty-Seven Pesos and Ten Centavos (P47.10), hence, party defendant FGU admitted the existence of the
SMCs claim against ANCO amounted to One Million Insurance Policy under Marine Cover Note No. 29591
Three Hundred Forty-Six Thousand One Hundred but maintained that the alleged loss of the cargoes
Ninety-Seven Pesos (P1,346,197.00). covered by the said insurance policy cannot be
attributed directly or indirectly to any of the risks
As a consequence of the incident, SMC filed a insured against in the said insurance policy. According
complaint for Breach of Contract of Carriage and to FGU, it is only liable under the policy to Third-party
Damages against ANCO for the amount of One Million Plaintiff ANCO and/or Plaintiff SMC in case of any of the
Three Hundred Forty-Six Thousand One Hundred following:
Ninety-Seven Pesos (P1,346,197.00) plus interest,
litigation expenses and Twenty-Five Percent (25%) of a) total loss of the entire shipment;
the total claim as attorneys fees.
b) loss of any case as a result of the
Upon Ang Guis death, ANCO, as a partnership, was sinking of the vessel; or
dissolved hence, on 26 January 1993, SMC filed a
second amended complaint which was admitted by the
Court impleading the surviving partner, Co To and the c) loss as a result of the vessel being on
Estate of Ang Gui represented by Lucio, Julian and fire.
Furthermore, FGU alleged that the Third-Party the proximate cause of the loss of the cargoes; and 2)
Plaintiff ANCO and Plaintiff SMC failed to exercise The respondent court acted with grave abuse of
ordinary diligence or the diligence of a good father of discretion when it ruled that the appeal was without
the family in the care and supervision of the cargoes merit despite the fact that said court had accepted the
insured to prevent its loss and/or destruction. decision in Civil Case No. R-19341, as affirmed by the
Court of Appeals and the Supreme Court, as res
Third-Party defendant FGU prayed for the judicata.
dismissal of the Third-Party Complaint and asked for
actual, moral, and exemplary damages and attorneys Ruling of the Court
fees.[1]
First, we shall endeavor to dispose of the common
The trial court found that while the cargoes were issue raised by both petitioners in their respective
indeed lost due to fortuitous event, there was failure on petitions for review, that is, whether or not the doctrine
ANCOs part, through their representatives, to observe of res judicata applies in the instant case.
the degree of diligence required that would exonerate
them from liability. The trial court thus held the Estate It is ANCOs contention that the decision in Civil
of Ang Gui and Co To liable to SMC for the amount of Case No. R-19341,[5] which was decided in its favor,
the lost shipment. With respect to the Third-Party constitutes res judicata with respect to the issues
complaint, the court a quo found FGU liable to bear raised in the case at bar.
Fifty-Three Percent (53%) of the amount of the lost
cargoes. According to the trial court:
The contention is without merit. There can be
no res judicata as between Civil Case No. R-19341 and
. . . Evidence is to the effect that the D/B Lucio, on the case at bar. In order for res judicata to be made
which the cargo insured, run-aground and was broken applicable in a case, the following essential requisites
and the beer cargoes on the said barge were swept must be present: 1) the former judgment must be final;
away. It is the sense of this Court that the risk insured 2) the former judgment must have been rendered by a
against was the cause of the loss. court having jurisdiction over the subject matter and
the parties; 3) the former judgment must be a
... judgment or order on the merits; and 4) there must be
between the first and second action identity of parties,
Since the total cargo was 40,550 cases which had a identity of subject matter, and identity of causes of
total amount of P1,833,905.00 and the amount of the action.[6]
policy was only for P858,500.00, defendants as
assured, therefore, were considered co-insurers of There is no question that the first three elements
third-party defendant FGU Insurance Corporation to the of res judicata as enumerated above are indeed
extent of 975,405.00 value of the cargo. Consequently, satisfied by the decision in Civil Case No. R-19341.
inasmuch as there was partial loss of only However, the doctrine is still inapplicable due to the
P1,346,197.00, the assured shall bear 53% of the absence of the last essential requisite of identity of
loss[4] [Emphasis ours] parties, subject matter and causes of action.
The appellate court affirmed in toto the decision of The parties in Civil Case No. R-19341 were ANCO
the lower court and denied the motion for as plaintiff and FGU as defendant while in the instant
reconsideration and the supplemental motion for case, SMC is the plaintiff and the Estate of Ang Gui
reconsideration. represented by Lucio, Julian and Jaime, all surnamed
Ang and Co To as defendants, with the latter merely
Hence, the petitions. impleading FGU as third-party defendant.
The Issues The subject matter of Civil Case No. R-19341 was
the insurance contract entered into by ANCO, the
owner of the vessel, with FGU covering the vessel D/B
In G.R. No. 137775, the grounds for review raised Lucio, while in the instant case, the subject matter of
by petitioner FGU can be summarized into two: 1) litigation is the loss of the cargoes of SMC, as shipper,
Whether or not respondent Court of Appeals committed loaded in the D/B Lucio and the resulting failure of
grave abuse of discretion in holding FGU liable under ANCO to deliver to SMCs consignees the lost cargo.
the insurance contract considering the circumstances Otherwise stated, the controversy in the first case
surrounding the loss of the cargoes; and 2) Whether or involved the rights and liabilities of the shipowner vis--
not the Court of Appeals committed an error of law in vis that of the insurer, while the present case involves
holding that the doctrine of res judicata applies in the the rights and liabilities of the shipper vis--vis that of
instant case. the shipowner. Specifically, Civil Case No. R-19341 was
an action for Specific Performance and Damages based
In G.R. No. 140704, petitioner Estate of Ang Gui on FGU Marine Hull Insurance Policy No. VMF-MH-13519
and Co To assail the decision of the appellate court covering the vessel D/B Lucio, while the instant case is
based on the following assignments of error: 1) The an action for Breach of Contract of Carriage and
Court of Appeals committed grave abuse of discretion Damages filed by SMC against ANCO based on Bill of
in affirming the findings of the lower court that the Lading No. 1 and No. 2, with defendant ANCO seeking
negligence of the crewmembers of the D/B Lucio was
reimbursement from FGU under Insurance Policy No. a fundamental and settled rule that findings of fact by
MA-58486, should the former be held liable to pay SMC. the trial court are entitled to great weight on appeal
and should not be disturbed unless for strong and
Moreover, the subject matter of the third-party cogent reasons because the trial court is in a better
complaint against FGU in this case is different from that position to examine real evidence, as well as to
in Civil Case No. R-19341. In the latter, ANCO was suing observe the demeanor of the witnesses while testifying
FGU for the insurance contract over the vessel while in in the case.[11]
the former, the third-party complaint arose from the
insurance contract covering the cargoes on board the It is not the function of this Court to analyze or
D/B Lucio. weigh evidence all over again, unless there is a
showing that the findings of the lower court are totally
The doctrine of res judicata precludes the re- devoid of support or are glaringly erroneous as to
litigation of a particular fact or issue already passed constitute palpable error or grave abuse of discretion.
[12]
upon by a court of competent jurisdiction in a former
judgment, in another action between the same parties
based on a different claim or cause of action. The A careful study of the records shows no cogent
judgment in the prior action operates as estoppel only reason to fault the findings of the lower court, as
as to those matters in issue or points controverted, sustained by the appellate court, that ANCOs
upon the determination of which the finding or representatives failed to exercise the extraordinary
judgment was rendered.[7] If a particular point or degree of diligence required by the law to exculpate
question is in issue in the second action, and the them from liability for the loss of the cargoes.
judgment will depend on the determination of that
particular point or question, a former judgment First, ANCO admitted that they failed to deliver to
between the same parties or their privies will be final the designated consignee the Twenty Nine Thousand
and conclusive in the second if that same point or Two Hundred Ten (29,210) cases of Pale Pilsen and Five
question was in issue and adjudicated in the first suit. [8] Hundred Fifty (550) cases of Cerveza Negra.
Since the case at bar arose from the same incident Second, it is borne out in the testimony of the
as that involved in Civil Case No. R-19341, only findings witnesses on record that the barge D/B Lucio had no
with respect to matters passed upon by the court in the engine of its own and could not maneuver by itself. Yet,
former judgment are conclusive in the disposition of the patron of ANCOs tugboat M/T ANCO left it to fend
the instant case. A careful perusal of the decision in for itself notwithstanding the fact that as the two
Civil Case No. R-19341 will reveal that the pivotal vessels arrived at the port of San Jose, Antique, signs of
issues resolved by the lower court, as affirmed by both the impending storm were already manifest. As stated
the Court of Appeals and the Supreme Court, can be by the lower court, witness Mr. Anastacio Manilag
summarized into three legal conclusions: 1) that the testified that the captain or patron of the tugboat M/T
D/B Lucio before and during the voyage was ANCO left the barge D/B Lucio immediately after it
seaworthy; 2) that there was proper notice of loss reached San Jose, Antique, despite the fact that there
made by ANCO within the reglementary period; and 3) were already big waves and the area was already dark.
that the vessel D/B Lucio was a constructive total loss. This is corroborated by defendants own witness, Mr.
Fernando Macabueg.[13]
Said decision, however, did not pass upon the
issues raised in the instant case. Absent therein was The trial court continued:
any discussion regarding the liability of ANCO for the
loss of the cargoes. Neither did the lower court pass
upon the issue of the alleged negligence of the At that precise moment, since it is the duty of the
crewmembers of the D/B Lucio being the cause of the defendant to exercise and observe extraordinary
loss of the cargoes owned by SMC. diligence in the vigilance over the cargo of the plaintiff,
the patron or captain of M/T ANCO, representing the
defendant could have placed D/B Lucio in a very safe
Therefore, based on the foregoing discussion, we location before they left knowing or sensing at that
are reversing the findings of the Court of Appeals that time the coming of a typhoon. The presence of big
there is res judicata. waves and dark clouds could have warned the patron
or captain of M/T ANCO to insure the safety of D/B
Anent ANCOs first assignment of error, i.e., the Lucio including its cargo. D/B Lucio being a barge,
appellate court committed error in concluding that the without its engine, as the patron or captain of M/T
negligence of ANCOs representatives was the ANCO knew, could not possibly maneuver by itself. Had
proximate cause of the loss, said issue is a question of the patron or captain of M/T ANCO, the representative
fact assailing the lower courts appreciation of evidence of the defendants observed extraordinary diligence in
on the negligence or lack thereof of the crewmembers placing the D/B Lucio in a safe place, the loss to the
of the D/B Lucio. As a rule, findings of fact of lower cargo of the plaintiff could not have occurred. In short,
courts, particularly when affirmed by the appellate therefore, defendants through their representatives,
court, are deemed final and conclusive. The Supreme failed to observe the degree of diligence required of
Court cannot review such findings on appeal, especially them under the provision of Art. 1733 of the Civil Code
when they are borne out by the records or are based of the Philippines.[14]
on substantial evidence.[9] As held in the case
of Donato v. Court of Appeals,[10] in this jurisdiction, it is
Petitioners Estate of Ang Gui and Co To, in liability)[18] by definition, are extraordinary events not
their Memorandum, asserted that the contention of foreseeable or avoidable, events that could not be
respondents SMC and FGU that the crewmembers of foreseen, or which though foreseen, were inevitable. It
D/B Lucio should have left port at the onset of the is therefore not enough that the event should not have
typhoon is like advising the fish to jump from the frying been foreseen or anticipated, as is commonly believed
pan into the fire and an advice that borders on but it must be one impossible to foresee or to avoid. [19]
madness.[15]
In this case, the calamity which caused the loss of
The argument does not persuade. The records the cargoes was not unforeseen nor was it
show that the D/B Lucio was the only vessel left at San unavoidable. In fact, the other vessels in the port of
Jose, Antique, during the time in question. The other San Jose, Antique, managed to transfer to another
vessels were transferred and temporarily moved to place, a circumstance which prompted SMCs District
Malandong, 5 kilometers from wharf where the barge Sales Supervisor to request that the D/B Lucio be
remained.[16] Clearly, the transferred vessels were likewise transferred, but to no avail. The D/B Lucio had
definitely safer in Malandong than at the port of San no engine and could not maneuver by itself. Even if
Jose, Antique, at that particular time, a fact which ANCOs representatives wanted to transfer it, they no
petitioners failed to dispute longer had any means to do so as the tugboat M/T
ANCO had already departed, leaving the barge to its
ANCOs arguments boil down to the claim that the own devices. The captain of the tugboat should have
loss of the cargoes was caused by the typhoon Sisang, had the foresight not to leave the barge alone
a fortuitous event (caso fortuito), and there was no considering the pending storm.
fault or negligence on their part. In fact, ANCO claims
that their crewmembers exercised due diligence to While the loss of the cargoes was admittedly
prevent or minimize the loss of the cargoes but their caused by the typhoon Sisang, a natural disaster,
efforts proved no match to the forces unleashed by the ANCO could not escape liability to respondent SMC.
typhoon which, in petitioners own words was, by any The records clearly show the failure of petitioners
yardstick, a natural calamity, a fortuitous event, an act representatives to exercise the extraordinary degree of
of God, the consequences of which petitioners could diligence mandated by law. To be exempted from
not be held liable for.[17] responsibility, the natural disaster should have been
the proximate and only cause of the loss. [20] There must
The Civil Code provides: have been no contributory negligence on the part of
the common carrier. As held in the case of Limpangco
Sons v. Yangco Steamship Co.:[21]
Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy are bound to
observe extraordinary diligence in the vigilance over . . . To be exempt from liability because of an act of
the goods and for the safety of the passengers God, the tug must be free from any previous
transported by them, according to all the negligence or misconduct by which that loss or
circumstances of each case. damage may have been occasioned. For, although the
immediate or proximate cause of the loss in any given
instance may have been what is termed an act of God,
Such extraordinary diligence in vigilance over the yet, if the tug unnecessarily exposed the two to such
goods is further expressed in Articles 1734, 1735, and accident by any culpable act or omission of its own, it
1745 Nos. 5, 6, and 7 . . . is not excused.[22]
Art. 1734. Common carriers are responsible for the Therefore, as correctly pointed out by the
loss, destruction, or deterioration of the goods, unless appellate court, there was blatant negligence on the
the same is due to any of the following causes only: part of M/T ANCOs crewmembers, first in leaving the
engine-less barge D/B Lucio at the mercy of the storm
(1) Flood, storm, earthquake, lightning, or without the assistance of the tugboat, and again in
other natural disaster or calamity; failing to heed the request of SMCs representatives to
have the barge transferred to a safer place, as was
... done by the other vessels in the port; thus, making
said blatant negligence the proximate cause of the loss
of the cargoes.
Art. 1739. In order that the common carrier may
be exempted from responsibility, the natural
disaster must have been the proximate and only We now come to the issue of whether or not FGU
cause of the loss. However, the common carrier must can be held liable under the insurance policy to
exercise due diligence to prevent or minimize loss reimburse ANCO for the loss of the cargoes despite the
before, during and after the occurrence of flood, storm, findings of the respondent court that such loss was
or other natural disaster in order that the common occasioned by the blatant negligence of the latters
carrier may be exempted from liability for the loss, employees.
destruction, or deterioration of the goods . . .
(Emphasis supplied) One of the purposes for taking out insurance is to
protect the insured against the consequences of his
Caso fortuito or force majeure (which in law are own negligence and that of his agents. Thus, it is a
identical insofar as they exempt an obligor from basic rule in insurance that the carelessness and
negligence of the insured or his agents constitute no recklessness must not be of such gross character as to
defense on the part of the insurer. [23] This rule however amount to misconduct or wrongful acts; otherwise,
presupposes that the loss has occurred due to causes such negligence shall release the insurer from liability
which could not have been prevented by the insured, under the insurance contract.
despite the exercise of due diligence.
In the case at bar, both the trial court and the
The question now is whether there is a certain appellate court had concluded from the evidence that
degree of negligence on the part of the insured or his the crewmembers of both the D/B Lucio and the M/T
agents that will deprive him the right to recover under ANCO were blatantly negligent. To wit:
the insurance contract. We say there is. However, to
what extent such negligence must go in order to There was blatant negligence on the part of the
exonerate the insurer from liability must be evaluated employees of defendants-appellants when the patron
in light of the circumstances surrounding each case. (operator) of the tug boat immediately left the barge at
When evidence show that the insureds negligence or the San Jose, Antique wharf despite the looming bad
recklessness is so gross as to be sufficient to constitute weather. Negligence was likewise exhibited by the
a willful act, the insurer must be exonerated. defendants-appellants representative who did not heed
Macabuags request that the barge be moved to a more
In the case of Standard Marine Ins. Co. v. Nome secure place. The prudent thing to do, as was done by
Beach L. & T. Co.,[24] the United States Supreme Court the other sea vessels at San Jose, Antique during the
held that: time in question, was to transfer the vessel to a safer
wharf. The negligence of the defendants-appellants is
The ordinary negligence of the insured and his agents proved by the fact that on 01 October 1979, the only
has long been held as a part of the risk which the simple vessel left at the wharf in San Jose was the D/B
insurer takes upon himself, and the existence of which, Lucio.[27] [Emphasis ours]
where it is the proximate cause of the loss, does not
absolve the insurer from liability. But willful exposure, As stated earlier, this Court does not find any
gross negligence, negligence amounting to reason to deviate from the conclusion drawn by the
misconduct, etc., have often been held to release the lower court, as sustained by the Court of Appeals, that
insurer from such liability.[25] [Emphasis ours] ANCOs representatives had failed to exercise
extraordinary diligence required of common carriers in
... the shipment of SMCs cargoes. Such blatant negligence
being the proximate cause of the loss of the cargoes
amounting to One Million Three Hundred Forty-Six
In the case of Williams v. New England Insurance Co., 3 Thousand One Hundred Ninety-Seven Pesos
Cliff. 244, Fed. Cas. No. 17,731, the owners of an (P1,346,197.00)
insured vessel attempted to put her across the bar at
Hatteras Inlet. She struck on the bar and was wrecked.
The master knew that the depth of water on the bar This Court, taking into account the circumstances
was such as to make the attempted passage present in the instant case, concludes that the blatant
dangerous. Judge Clifford held that, under the negligence of ANCOs employees is of such gross
circumstances, the loss was not within the protection of character that it amounts to a wrongful act which must
the policy, saying: exonerate FGU from liability under the insurance
contract.
Authorities to prove that persons insured cannot
recover for a loss occasioned by their own wrongful WHEREFORE, premises considered, the Decision
acts are hardly necessary, as the proposition involves of the Court of Appeals dated 24 February 1999 is
an elementary principle of universal application. Losses hereby AFFIRMED with MODIFICATION dismissing the
may be recovered by the insured, though remotely third-party complaint.
occasioned by the negligence or misconduct of the
master or crew, if proximately caused by the perils SO ORDERED.
insured against, because such mistakes and negligence
are incident to navigation and constitute a part of the
perils which those who engage in such adventures are
obliged to incur; but it was never supposed that the
insured could recover indemnity for a loss occasioned
by his own wrongful act or by that of any agent for
whose conduct he was responsible.[26] [Emphasis ours]
R.M. Blanco for petitioner. The owner of the damaged Volkswagen car filed a
separate civil action against petitioner for damages,
Camacho and Associates for respondents. while Jovencio Poblete, Sr., who was a passenger in the
Volkswagen car when allegedly hit and bumped by the
car driven by petitioner, did not reserve his right to file
a separate civil action for damages. Instead, in the
course of the trial in the criminal case, Poblete, Sr. The liability of the insurance company under the
testified on his claim for damages for the serious Compulsory Motor Vehicle Liability Insurance is for loss
physical injuries which he claimed to have sustained as or damage. Where an insurance policy insures directly
a result of the accident. against liability, the insurer's liability accrues
immediately upon the occurrence of the injury or event
Upon motion, petitioner was granted leave by the upon which the liability depends, and does not depend
former presiding judge of the trail court to file a third on the recovery of judgment by the injured party
party complaint against the herein private respondent, against the insured. 10
Makati Insurance Company, Inc. Said insurance
company, however, moved to vacate the order The injured for whom the contract of insurance is
granting leave to petitioner to file a third party intended can sue directly the insurer. The general
complaint against it and/or to dismiss the same. 5 purpose of statutes enabling an injured person to
proceed directly against the insurer is to protect injured
On 24 April 1987, the court a quo issued an order persons against the insolvency of the insured who
dismissing the third party complaint on the ground that causes such injury, and to give such injured person a
it was premature, based on the premise that unless the certain beneficial interest in the proceeds of the policy,
accused (herein petitioner) is found guilty and and statutes are to be liberally construed so that their
sentenced to pay the offended party (Poblete Sr.) intended purpose may be accomplished. It has even
indemnity or damages, the third party complaint is been held that such a provision creates a contractual
without cause of action. The court further stated that relation which inures to the benefit of any and every
the better procedure is for the accused (petitioner) to person who may be negligently injured by the named
wait for the outcome of the criminal aspect of the case insured as if such injured person were specifically
to determine whether or not the accused, also the third named in the policy. 11
party plaintiff, has a cause of action against the third
party defendant for the enforcement of its third party In the event that the injured fails or refuses to include
liability (TPL) under the insurance contract. 6Petitioner the insurer as party defendant in his claim for
moved for reconsideration of said order, but the motion indemnity against the insured, the latter is not
was denied; 7 hence, this petition. prevented by law to avail of the procedural rules
intended to avoid multiplicity of suits. Not even a "no
It is the contention of herein petitioner that the action" clause under the policy-which requires that a
dismissal of the third party complaint amounts to a final judgment be first obtained against the insured and
denial or curtailment of his right to defend himself in that only thereafter can the person insured recover on
the civil aspect of the case. Petitioner further raises the the policy can prevail over the Rules of Court provisions
legal question of whether the accused in a criminal aimed at avoiding multiplicity of suits. 12
action for reckless imprudence, where the civil action is
jointly prosecuted, can legally implead the insurance In the instant case, the court a quo erred in dismissing
company as third party defendant under its private car petitioner's third party complaint on the ground that
insurance policy, as one of his modes of defense in the petitioner had no cause of action yet against the
civil aspect of said proceedings. insurance company (third party defendant). There is no
need on the part of the insured to wait for the decision
On the other hand, the insurance company submits of the trial court finding him guilty of reckless
that a third party complaint is, under the rules, imprudence. The occurrence of the injury to the third
available only if the defendant has a right to demand party immediately gave rise to the liability of the
contribution, indemnity, subrogation or any other relief insurer under its policy.
in respect of plaintiff's claim, to minimize the number
of lawsuits and avoid the necessity of bringing two (2) A third party complaint is a device allowed by the rules
or more suits involving the same subject matter. The of procedure by which the defendant can bring into the
insurance company further contends that the contract original suit a party against whom he will have a claim
of motor vehicle insurance, the damages and for indemnity or remuneration as a result of a liability
attorney's fees claimed by accused/third party plaintiff established against him in the original suit. 13 Third
are matters entirely different from his criminal liability party complaints are allowed to minimize the number
in the reckless imprudence case, and that petitioner of lawsuits and avoid the necessity of bringing two (2)
has no cause of action against the insurer until or more actions involving the same subject matter.
petitioner's liability shall have been determined by final They are predicated on the need for expediency and
judgment, as stipulated in the contract of insurance. 8 the avoidance of unnecessary lawsuits. If it appears
probable that a second action will result if the plaintiff
Compulsory Motor Vehicle Liability Insurance (third prevails, and that this result can be avoided by
party liability, or TPL) is primarily intended to provide allowing the third party complaint to remain, then the
compensation for the death or bodily injuries suffered motion to dismiss the third party complaint should be
by innocent third parties or passengers as a result of a denied. 14
negligent operation and use of motor vehicles. 9 The
victims and/or their dependents are assured of Respondent insurance company's contention that the
immediate financial assistance, regardless of the third party complaint involves extraneous matter which
financial capacity of motor vehicle owners. will only clutter, complicate and delay the criminal case
is without merit. An offense causes two (2) classes of
injuries the first is the social injury produced by the
criminal act which is sought to be repaired thru the
imposition of the corresponding penalty, and the
second is the personal injury caused to the victim of
the crime, which injury is sought to be compensated
thru indemnity, which is civil in nature. 15
DECISION
QUISUMBING, J.:
xxx
That this decision is without prejudice as to the right of Three (3) cases were filed with the Court of First
Mabuhay Insurance & Guaranty Co., Inc., and NFA to Instance of Agusan del Norte and Butuan City. The first,
recover from Guillermo Corbeta and GSIS the amounts Civil Case No. 2196 for quasi-delict, damages and
they may have paid by virtue hereof.[2] attorneys fees, was commenced by Uy on June 5, 1979
against NFA and Corbeta. On August 27, 1979,
For purposes of this review, we deem as also the second, Civil Case No. 2225 for damages, was filed
assailed the disposition by the trial court in its Order by an injured passenger, Librado Taer, against Uy, the
issued on July 12, 1985, modifying its original decision, operator of the public utility vehicle, and insurer,
by awarding moral damages to the heirs of the Mabuhay Insurance and Guaranty Co. (MIGC). In turn,
deceased victims, as follows: Uy filed a cross-claim against MIGC and a third-party
complaint against Corbeta and NFA. The third, Civil
Considering that the dispositive portion of the decision Case No. 2256, was instituted by herein private
in this case, an award of P10,000.00 each made to respondents on November 26, 1979 against the
plaintiffs Gloria Kho Vda. de Calabia x x x, for injuries following: NFA and Corbeta for damages due to quasi-
they sustained, this award, through [sic] not clearly delict; GSIS as insurer of the truck; Uy for breach of
stated in the decision, is the moral damages the contract of carriage; and MIGC as insurer of the Toyota
instant motion seeks to obtain. However, the prayer for Tamaraw. These cases were consolidated and partially
moral damages for the death of the three (3) persons tried by Judge Fortunato A. Vailoces, of the then Court
above-mentioned is proper. (citation omitted) of First Instance of Agusan del Norte and Butuan City.
In view of the foregoing, the prayer of plaintiffs Gloria These cases were later on transferred to Branch II
Kho Vda. de Calabia and Victoria Kho for an award of of the Regional Trial Court of Butuan City. Trial ensued
moral damages in their favor is hereby and on April 30, 1985, the court rendered its
denied. However, as for the death of Wellie [Willie] decision[5] holding that Corbetas negligence was the
Calabia, Sr., Rolando Kho and Maxima Ugmad Vda. de proximate cause of the collision. The findings of the
Kho, an award of moral damages is hereby made, and trial court stated that the truck which crossed over to
ordering and directing defendants Mabuhay Insurance the other lane was speeding because after the
and Guaranty Company Inc., Guillermo Corbeta, collision, its left front wheel was detached and the
National Food Authority and Government Service truck traveled for about fifty (50) meters and fell into a
Insurance System to pay jointly and severally the ravine.[6] Likewise, the court concluded that if both
following sums to wit: vehicles had traveled in their respective lanes, the
incident would not have occurred.[7] However, the
Chevy cargo truck had crossed over to the other lane
P10,000.00 to the heirs of Wellie [Willie] Calabia, Sr. which, under traffic rules, was the lane of the Toyota
Tamaraw.[8]
P10,000.00 to the heirs of Rolando Kho and
In Civil Case No. 2196, the trial court awarded Uy
P10,000.00 to the heirs of Maxima Ugmad Vda. de Kho the total amount of one hundred nine thousand one
hundred (P109,100.00) pesos for damages. In Civil
xxx Case No. 2225, said court dismissed the case against
Uy and ordered MIGC, Corbeta and NFA to pay plaintiff
Taer, jointly and severally, the total amount of forty Petitioner denies solidary liability with the NFA or
thousand five hundred fifty-nine pesos and ninety four the negligent operator of the cargo truck because it
centavos (P40,559.94) for actual, compensatory, and claims that they are liable under different obligations. It
moral damages plus attorneys fees. Damages were asserts that the NFAs liability is based on quasi-delict,
likewise awarded to the herein private respondents in while petitioners liability is based on the contract of
Civil Case No. 2256, as earlier mentioned. insurance. Citing articles 1207[11] and 1208[12] of the
Civil Code of the Philippines, petitioner states that
Corbeta and NFA appealed the decision of the trial when there are two or more debtors or two or more
court in Civil Case Nos. 2196, 2225, and 2256 to the creditors, the obligation as a general rule is joint. It
Court of Appeals. GSIS also elevated the decision in claims that the only exceptions are: (1) when there is a
Civil Case No. 2256 to the same appellate court. The stipulation for solidary obligation; (2) when the nature
appeals were docketed as C.A.-G.R. Nos. 19847, 19848, of the obligation requires solidary liability; and (3)
and 19849. when the law declares the obligation to be
solidary. However, since neither the provision of the
contract nor the insurance law provides for solidary
The Court of Appeals agreed with the conclusions liability, petitioner asserts that the presumption is that
of the trial court and ruled as follows: its obligation arising from a contract of insurance is
joint.
WHEREFORE, in view of the foregoing considerations,
and finding no reversible error, the decisions of the Petitioners position insofar as joint liability is
Court a quo in Civil Cases Nos. 2196, 2225 and 2256 concerned is not tenable. It is now established that the
are hereby AFFIRMED in toto, with costs against the injured or the heirs of a deceased victim of a vehicular
appellants. accident may sue directly the insurer of the
vehicle. Note that common carriers are required to
SO ORDERED.[9] secure Compulsory Motor Vehicle Liability Insurance
[CMVLI] coverage as provided under Sec. 374[13] of the
On February 5 and 6, 1991, GSIS and NFA filed Insurance Code, precisely for the benefit of victims of
their motions for reconsideration respectively, which vehicular accidents and to extend them immediate
were denied by the respondent court in its relief.[14] As this Court held in Shafer vs. Judge, RTC of
Resolution[10] dated August 13, 1991. Olongapo City, Br. 75:[15]
On October 4, 1991, only GSIS filed this petition Compulsory Motor Vehicle Liability Insurance (third
for review on certiorari based on the following assigned party liability, or TPL) is primarily intended to provide
errors: compensation for the death or bodily injuries suffered
by innocent third parties or passengers as a result of a
negligent operation and use of motor vehicles. The
1. The respondent court erred in holding GSIS victims and/or their defendants [dependents] are
solidarily liable with NFA. assured of immediate financial assistance, regardless
of the financial capacity of motor vehicle owners.
2. The respondent court erred in holding GSIS
liable beyond the terms and conditions of xxx
the contract of insurance and the
limitations under Insurance Memorandum
Circular (IMC) No. 5-78. The injured for whom the contract of insurance is
intended can sue directly the insurer. The general
purpose of statutes enabling an injured person to
3. The respondent court erred in holding GSIS proceed directly against the insurer is to protect injured
liable without proof that a notice of claim persons against the insolvency of the insured who
had been filed within six (6) months from causes such injury, and to give such injured person a
the date of the accident. certain beneficial interest in the proceeds of the policy,
and statutes are to be liberally construed so that their
We find pertinent the following issues: intended purpose may be accomplished. It has even
been held that such a provision creates a contractual
1) Whether the respondent court erred in relation which inures to the benefit of any and every
holding GSIS solidarily liable with the person who may be negligently injured by the named
negligent insured/owner-operator of the insured as if such injured person were specifically
Chevrolet truck for damages awarded to named in the policy. (S 449 7 Am. Jur., 2d, pp. 118-119)
[16]
private respondents which are beyond the
limitations of the insurance policy and the
Insurance Memorandum Circular No. 5-78. However, although the victim may proceed
directly against the insurer for indemnity, the third
2) Whether the respondent court failed to party liability is only up to the extent of the insurance
consider that the private respondents policy and those required by law. While it is true that
have no cause of action against the where the insurance contract provides for indemnity
petitioner, allegedly for failure of the against liability to third persons, and such third persons
victims to file an insurance claim within six can directly[17] sue the insurer, the direct liability of the
(6) months from the date of the accident. insurer under indemnity contracts against third party
liability does not mean that the insurer can be held avers that the presumption is that the victim opted to
liable in solidum with the insured and/or the other pursue his claim against the motor vehicle owner or
parties found at fault.[18] For the liability of the insurer is against the tortfeasor.
based on contract; that of the insured carrier or vehicle
owner is based on tort.[19] The liability of GSIS based on However, in this case the records reveal that on
the insurance contract is direct, but not solidary with September 7, 1979, the private respondents sent a
that of the NFA. The latters liability is based separately notice of loss to the petitioner informing the latter of
on Article 2180[20] of the Civil Code.[21] the accident. Included as Exhibit J[24] in the records, this
notice constitutes evidence of the loss they suffered by
Obviously, the insurer could be held liable only up reason of the vehicular collision. They stressed further
to the extent of what was provided for by the contract that the petitioner did not deny receipt of notice of
of insurance, in accordance with CMVLI law. At the time claim during the trial, and it would be too late now to
of the incident, the schedule of indemnities for death state otherwise.
and/or bodily injuries, professional fees, hospital and
other charges payable under a CMVLI coverage was Although merely factual, we need to emphasize
provided under the Insurance Memorandum Circular that the alleged delay in reporting the loss by the
(IMC) No. 5-78 which was approved on November 10, insured and/or by the beneficiaries must be promptly
1978. As therein provided, the maximum indemnity for raised by the insurer[25] in objecting to the
death was twelve thousand (P12,000.00) pesos per claims. When the insured presented proof of loss
victim.[22] The schedules for medical expenses were before the trial court, the insurer failed to object to said
also provided by said IMC, specifically in paragraphs presentation. The petitioner should have promptly
(C) to (G). interposed the defense of delay, or belated
compliance, concerning the notice of claim. Moreover,
Consequently, heirs of the victims who died in the the petitioner merely waited for the victims or
May 9, 1979 vehicular incident, could proceed (1) beneficiaries to file their complaint. As matters stand
against GSIS for the indemnity of P12,000 for each now, the defense of laches or prescription is deemed
dead victim, and against NFA and Guillermo Corbeta for waived because of petitioners failure to raise it not only
any other damages or expenses claimed; or (2) against before but also during the hearing.[26]
NFA and Corbeta to pay them all their claims in full.
To recapitulate, petitioner seeks a definitive ruling
It follows also that injured victims, Gloria Kho Vda. only on the extent of its liability, as insurer of NFA, to
de Calabia and Victoria Kho, could claim their medical those injured or killed in the May 9, 1979 vehicular
expenses for eight thousand nine hundred thirty-five collision.
pesos and six centavos (P8,935.06) and eight hundred
thirty-two (P832.00) pesos, from any of the As found by the trial court, the driver (Guillermo
following: GSIS, NFA, or Corbeta. As to the other Corbeta), the operator (NFA), and MIGC, are solidarily
damages, only NFA or Corbeta may be held liable liable for damages as computed below:
therefor.
SCHEDULE A
Computation of hospital charges and fees for the
services rendered to the injured victims was
conclusively established by the trial court. The I. For the Injured Victims
petitioner failed to object to the evidence thereon,
when presented by the private respondents during the 1) Gloria Kho Vda. de Calabia
trial. Thus, these factual bases for the award of
damages may no longer be attacked. For generally, a) Medical expenses P 8,935.06
findings of the judge who tried the case and heard the
witnesses could not be disturbed on appeal, unless
there are substantial facts and particular circumstances b) Transportation and Telegraph Expenses 2,372.30
which have been overlooked but which, if properly
considered, might affect the result of the case. [23] Thus, c) Other Compensatory/Moral Damages 10,000.00
considering the evidence on record including the
schedule of indemnities provided under IMC No. 5-78, d) Loss of Income 12,000.00
we find no cogent reason to disturb the computation of
medical charges and expenses that justify the award of
damages by the trial court. Total P 33,307.36
SCHEDULE B
DECISION
CALLEJO, SR., J.:
6. That the accident resulted to the death of the PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS
plaintiffs wife, Felisa Pepito Arriesgado, as evidenced AND REMEDIES IN LAW AND EQUITY. [10]
by a Certificate of Death, a xerox copy of which is
hereto attached as integral part hereof and marked as The petitioners, for their part, filed a Third-Party
ANNEX A, and physical injuries to several of its Complaint[11] on August 21, 1987 against the following:
passengers, including plaintiff himself who suffered a respondent Philippine Phoenix Surety and Insurance,
COLLES FRACTURE RIGHT, per Medical Certificate, a Inc. (PPSII), petitioner Tius insurer; respondent
xerox copy of which is hereto attached as integral part Benjamin Condor, the registered owner of the cargo
hereof and marked as ANNEX B hereof. truck; and respondent Sergio Pedrano, the driver of the
truck. They alleged that petitioner Laspias was
7. That due to the reckless and imprudent driving by negotiating the uphill climb along the national highway
defendant Virgilio Te Laspias of the said Rough Riders of Sitio Aggies, Poblacion, Compostela, in a moderate
passenger bus, plaintiff and his wife, Felisa Pepito and normal speed. It was further alleged that the truck
Arriesgado, failed to safely reach their destination was parked in a slanted manner, its rear portion almost
which was Cebu City, the proximate cause of which in the middle of the highway, and that no early warning
was defendant-drivers failure to observe utmost device was displayed. Petitioner Laspias promptly
diligence required of a very cautious person under all applied the brakes and swerved to the left to avoid
circumstances. hitting the truck head-on, but despite his efforts to
avoid damage to property and physical injuries on the
8. That defendant William Tiu, being the owner and passengers, the right side portion of the bus hit the
operator of the said Rough Riders passenger bus which cargo trucks left rear. The petitioners further alleged,
figured in the said accident, wherein plaintiff and his thus:
wife were riding at the time of the accident, is
therefore directly liable for the breach of contract of 5. That the cargo truck mentioned in the aforequoted
carriage for his failure to transport plaintiff and his wife paragraph is owned and registered in the name of the
safely to their place of destination which was Cebu third-party defendant Benjamin Condor and was left
City, and which failure in his obligation to transport unattended by its driver Sergio Pedrano, one of the
safely his passengers was due to and in consequence third-party defendants, at the time of the incident;
of his failure to exercise the diligence of a good father
of the family in the selection and supervision of his 6. That third-party defendant Sergio Pedrano, as driver
employees, particularly defendant-driver Virgilio Te of the cargo truck with marked (sic) Condor Hollow
Laspias.[9] Blocks & General Merchandise, with Plate No. GBP-675
which was recklessly and imprudently parked along the
The respondent prayed that judgment be rendered national highway of Compostela, Cebu during the
in his favor and that the petitioners be condemned to vehicular accident in question, and third-party
pay the following damages: defendant Benjamin Condor, as the registered owner of
the cargo truck who failed to exercise due diligence in
1). To pay to plaintiff, jointly and severally, the amount the selection and supervision of third-party defendant
of P30,000.00 for the death and untimely demise of Sergio Pedrano, are jointly and severally liable to the
plaintiffs wife, Felisa Pepito Arriesgado; third-party plaintiffs for whatever liability that may be
adjudged against said third-party plaintiffs or are
directly liable of (sic) the alleged death of plaintiffs
2). To pay to plaintiff, jointly and severally, the amount wife;
of P38,441.50, representing actual expenses incurred
by the plaintiff in connection with the death/burial of
plaintiffs wife; 7. That in addition to all that are stated above and in
the answer which are intended to show reckless
imprudence on the part of the third-party defendants,
3). To pay to plaintiff, jointly and severally, the amount the third-party plaintiffs hereby declare that during the
of P1,113.80, representing medical/hospitalization vehicular accident in question, third-party defendant
expenses incurred by plaintiff for the injuries sustained was clearly violating Section 34, par. (g) of the Land
by him; Transportation and Traffic Code
4). To pay to plaintiff, jointly and severally, the amount 10. That the aforesaid passenger bus, owned and
of P50,000.00 for moral damages; operated by third-party plaintiff William Tiu, is covered
by a common carrier liability insurance with Certificate
5). To pay to plaintiff, jointly and severally, the amount of Cover No. 054940 issued by Philippine Phoenix
of P50,000.00 by way of exemplary damages; Surety and Insurance, Inc., Cebu City Branch, in favor
of third-party plaintiff William Tiu which covers the
6). To pay to plaintiff, jointly and severally, the amount period from July 22, 1986 to July 22, 1987 and that the
of P20,000.00 for attorneys fees; said insurance coverage was valid, binding and
subsisting during the time of the aforementioned
incident (Annex A as part hereof);
11. That after the aforesaid alleged incident, third- unfortunate incident. It then concluded that petitioner
party plaintiff notified third-party defendant Philippine Laspias was negligent.
Phoenix Surety and Insurance, Inc., of the alleged
incident hereto mentioned, but to no avail; The trial court also ruled that the absence of an
early warning device near the place where the truck
was parked was not sufficient to impute negligence on
12. That granting, et arguendo et arguendi, if herein the part of respondent Pedrano, since the tail lights of
third-party plaintiffs will be adversely adjudged, they the truck were fully on, and the vicinity was well
stand to pay damages sought by the plaintiff and lighted by street lamps.[16] It also found that the
therefore could also look up to the Philippine Phoenix testimony of petitioner Tiu, that he based the selection
Surety and Insurance, Inc., for contribution, of his driver Laspias on efficiency and in-service
indemnification and/or reimbursement of any liability training, and that the latter had been so far an efficient
or obligation that they might [be] adjudged per and good driver for the past six years of his
insurance coverage duly entered into by and between employment, was insufficient to prove that he
third-party plaintiff William Tiu and third-party observed the diligence of a good father of a family in
defendant Philippine Phoenix Surety and Insurance, the selection and supervision of his employees.
Inc.;[12]
After the petitioners motion for reconsideration of
The respondent PPSII, for its part, admitted that it the said decision was denied, the petitioners elevated
had an existing contract with petitioner Tiu, but the case to the Court of Appeals on the following
averred that it had already attended to and settled the issues:
claims of those who were injured during the incident. I WHETHER THIRD PARTY DEFENDANT SERGIO
[13]
It could not accede to the claim of respondent PEDRANO WAS RECKLESS AND
Arriesgado, as such claim was way beyond the IMPRUDENT WHEN HE PARKED THE
scheduled indemnity as contained in the contract of CARGO TRUCK IN AN OBLIQUE MANNER;
insurance. [14]
II WHETHER THE THIRD PARTY DEFENDANTS
After the parties presented their respective ARE JOINTLY AND SEVERALLY LIABLE
evidence, the trial court ruled in favor of respondent DIRECTLY TO PLAINTIFF-APPELLEE OR TO
Arriesgado. The dispositive portion of the decision DEFENDANTS-APPELLANTS FOR
reads: WHATEVER LIABILITY THAT MAY BE
ADJUDGED TO THE SAID DEFENDANTS-
WHEREFORE, in view of the foregoing, judgment is APPELLANTS;
hereby rendered in favor of plaintiff as against
defendant William Tiu ordering the latter to pay the III WHETHER DEFENDANT-APPELLANT
plaintiff the following amounts: VIRGILIO TE LASPIAS WAS GUILTY OF
GROSS NEGLIGENCE;
1 - The sum of FIFTY THOUSAND PESOS (P50,000.00) IV WHETHER DEFENDANT-APPELLANT
as moral damages; WILLIAM TIU HAD EXERCISED THE DUE
DILIGENCE OF A GOOD FATHER OF A
2 - The sum of FIFTY THOUSAND PESOS (P50,000.00) FAMILY IN THE SELECTION AND
as exemplary damages; SUPERVISION OF HIS DRIVERS;
V GRANTING FOR THE SAKE OF ARGUMENT
3 - The sum of THIRTY-EIGHT THOUSAND FOUR THAT DEFENDANT-APPELLANT WILLIAM TIU
HUNDRED FORTY-ONE PESOS (P38,441.00) as actual IS LIABLE TO PLAINTIFF-APPELLEE,
damages; WHETHER THERE IS LEGAL AND FACTUAL
BASIS IN AWARDING EXCESSIVE MORAL
4 - The sum of TWENTY THOUSAND PESOS DAMAGES, EX[E]MPLARY DAMAGES,
(P20,000.00) as attorneys fees; ATTORNEYS FEES AND LITIGATION
EXPENSES TO PLAINTIFF-APPELLEE;
5 - The sum of FIVE THOUSAND PESOS (P5,000.00) as VI WHETHER THIRD PARTY DEFENDANT
costs of suit; PHILIPPINE PHOENIX SURETY AND
INSURANCE, INC. IS LIABLE TO
SO ORDERED.[15] DEFENDANT- APPELLANT WILLIAM TIU.[17]
The appellate court rendered judgment affirming
According to the trial court, there was no dispute the trial courts decision with the modification that the
that petitioner William Tiu was engaged in business as awards for moral and exemplary damages were
a common carrier, in view of his admission that D reduced to P25,000. The dispositive portion reads:
Rough Rider passenger bus which figured in the
accident was owned by him; that he had been engaged
WHEREFORE, the appealed Decision dated November
in the transportation business for 25 years with a sole
6, 1995 is hereby MODIFIED such that the awards for
proprietorship; and that he owned 34 buses. The trial
moral and exemplary damages are each reduced
court ruled that if petitioner Laspias had not been
to P25,000.00 or a total of P50,000.00 for both. The
driving at a fast pace, he could have easily swerved to
judgment is AFFIRMED in all other respects.
the left to avoid hitting the truck, thus, averting the
SO ORDERED.[18] petitioner Laspias was driving at a very fast speed, and
that the CA could not reach such conclusion by merely
According to the appellate court, the action of considering the damages on the cargo truck. It was
respondent Arriesgado was based not on quasi-delict also pointed out that petitioner Tiu presented evidence
but on breach of contract of carriage. As a common that he had exercised the diligence of a good father of
carrier, it was incumbent upon petitioner Tiu to prove a family in the selection and supervision of his drivers.
that extraordinary diligence was observed in ensuring The petitioners further allege that there is no legal
the safety of passengers during transportation. Since and factual basis to require petitioner Tiu to pay
the latter failed to do so, he should be held liable for exemplary damages as no evidence was presented to
respondent Arriesgados claim. The CA also ruled that show that the latter acted in a fraudulent, reckless and
no evidence was presented against the respondent oppressive manner, or that he had an active
PPSII, and as such, it could not be held liable for participation in the negligent act of petitioner Laspias.
respondent Arriesgados claim, nor for contribution,
indemnification and/or reimbursement in case the Finally, the petitioners contend that respondent
petitioners were adjudged liable. PPSII admitted in its answer that while it had attended
to and settled the claims of the other injured
The petitioners now come to this Court and passengers, respondent Arriesgados claim remained
ascribe the following errors committed by the appellate unsettled as it was beyond the scheduled indemnity
court: under the insurance contract. The petitioners argue
I. THE HONORABLE COURT OF APPEALS that said respondent PPSII should have settled the said
ERRED IN NOT DECLARING RESPONDENTS claim in accordance with the scheduled indemnity
BENJAMIN CONDOR AND SERGIO PEDRANO instead of just denying the same.
GUILTY OF NEGLIGENCE AND HENCE, On the other hand, respondent Arriesgado argues
LIABLE TO RESPONDENT PEDRO A. that two of the issues raised by the petitioners involved
ARRIESGADO OR TO PETITIONERS FOR questions of fact, not reviewable by the Supreme
WHATEVER LIABILITY THAT MAY BE Court: the finding of negligence on the part of the
ADJUDGED AGAINST THEM. petitioners and their liability to him; and the award of
II. THE HONORABLE COURT OF APPEALS exemplary damages, attorneys fees and litigation
ERRED IN FINDING PETITIONERS GUILTY OF expenses in his favor. Invoking the principle of equity
NEGLIGENCE AND HENCE, LIABLE TO and justice, respondent Arriesgado pointed out that if
RESPONDENT PEDRO A. ARRIESGADO. there was an error to be reviewed in the CA decision, it
should be geared towards the restoration of the moral
III. THE HONORABLE COURT OF APPEALS and exemplary damages to P50,000 each, or a total
ERRED IN FINDING PETITIONER WILLIAM of P100,000 which was reduced by the Court of
TIU LIABLE FOR EXEMPLARY DAMAGES, Appeals to P25,000 each, or a total of only P50,000.
ATTORNEYS FEES AND LITIGATION
EXPENSES. Respondent Arriesgado also alleged that
respondents Condor and Pedrano, and respondent
IV.THE HONORABLE COURT OF APPEALS Phoenix Surety, are parties with whom he had no
ERRED IN NOT FINDING RESPONDENT contract of carriage, and had no cause of action
PHILIPPINE PHOENIX SURETY AND against. It was pointed out that only the petitioners
INSURANCE, INC. LIABLE TO RESPONDENT needed to be sued, as driver and operator of the ill-
PEDRO A. ARRIESGADO OR TO PETITIONER fated bus, on account of their failure to bring the
WILLIAM TIU.[19] Arriesgado Spouses to their place of destination as
agreed upon in the contract of carriage, using the
According to the petitioners, the appellate court utmost diligence of very cautious persons with due
erred in failing to appreciate the absence of an early regard for all circumstances.
warning device and/or built-in reflectors at the front
and back of the cargo truck, in clear violation of Respondents Condor and Pedrano point out that,
Section 34, par. (g) of the Land Transportation and as correctly ruled by the Court of Appeals, the
Traffic Code. They aver that such violation is only a proximate cause of the unfortunate incident was the
proof of respondent Pedranos negligence, as provided fast speed at which petitioner Laspias was driving the
under Article 2185 of the New Civil Code. They also bus owned by petitioner Tiu. According to the
question the appellate courts failure to take into respondents, the allegation that the truck was not
account that the truck was parked in an oblique equipped with an early warning device could not in any
manner, its rear portion almost at the center of the way have prevented the incident from happening. It
road. As such, the proximate cause of the incident was was also pointed out that respondent Condor had
the gross recklessness and imprudence of respondent always exercised the due diligence required in the
Pedrano, creating the presumption of negligence on the selection and supervision of his employees, and that he
part of respondent Condor in supervising his was not a party to the contract of carriage between the
employees, which presumption was not rebutted. The petitioners and respondent Arriesgado.
petitioners then contend that respondents Condor and
Pedrano should be held jointly and severally liable to Respondent PPSII, for its part, alleges that
respondent Arriesgado for the payment of the latters contrary to the allegation of petitioner Tiu, it settled all
claim. the claims of those injured in accordance with the
insurance contract. It further avers that it did not deny
The petitioners, likewise, aver that expert respondent Arriesgados claim, and emphasizes that its
evidence should have been presented to prove that liability should be within the scheduled limits of
indemnity under the said contract. The respondent property, and those of his fellow beings, would ever be
concludes that while it is true that insurance contracts exposed to all manner of danger and injury.[27]
are contracts of indemnity, the measure of the insurers
liability is determined by the insureds compliance with We agree with the following findings of the trial
the terms thereof. court, which were affirmed by the CA on appeal:
The rules which common carriers should observe Thus, petitioner Tiu cannot escape liability for the
as to the safety of their passengers are set forth in the death of respondent Arriesgados wife due to the
Civil Code, Articles 1733,[32] 1755[33] and 1756.[34] In this negligence of petitioner Laspias, his employee, on this
case, respondent Arriesgado and his deceased wife score.
contracted with petitioner Tiu, as owner and operator
Respondents Pedrano and
of D Rough Riders bus service, for transportation from
Condor were likewise
Maya, Daanbantayan, Cebu, to Cebu City for the price
Negligent
of P18.00.[35] It is undisputed that the respondent and
his wife were not safely transported to the destination
agreed upon. In actions for breach of contract, only the In Phoenix Construction, Inc. v. Intermediate
existence of such contract, and the fact that the Appellate Court,[45] where therein respondent Dionisio
obligor, in this case the common carrier, failed to sustained injuries when his vehicle rammed against a
transport his passenger safely to his destination are dump truck parked askew, the Court ruled that the
the matters that need to be proved. [36] This is because improper parking of a dump truck without any warning
under the said contract of carriage, the petitioners lights or reflector devices created an unreasonable risk
assumed the express obligation to transport the for anyone driving within the vicinity, and for having
respondent and his wife to their destination safely and created such risk, the truck driver must be held
to observe extraordinary diligence with due regard for responsible. In ruling against the petitioner therein, the
all circumstances.[37] Any injury suffered by the Court elucidated, thus:
passengers in the course thereof is immediately
attributable to the negligence of the carrier. [38] Upon In our view, Dionisios negligence, although later in
the happening of the accident, the presumption of point of time than the truck drivers negligence, and
negligence at once arises, and it becomes the duty of a therefore closer to the accident, was not an efficient
common carrier to prove that he observed intervening or independent cause. What the petitioners
extraordinary diligence in the care of his passengers. describe as an intervening cause was no more than a
[39]
It must be stressed that in requiring the highest foreseeable consequence of the risk created by the
possible degree of diligence from common carriers and negligent manner in which the truck driver had parked
in creating a presumption of negligence against them, the dump truck. In other words, the petitioner truck
the law compels them to curb the recklessness of their driver owed a duty to private respondent Dionisio and
drivers.[40] others similarly situated not to impose upon them the
very risk the truck driver had created. Dionisios
While evidence may be submitted to overcome negligence was not that of an independent and
such presumption of negligence, it must be shown that overpowering nature as to cut, as it were, the chain of
the carrier observed the required extraordinary causation in fact between the improper parking of the
diligence, which means that the carrier must show the dump truck and the accident, nor to sever the juris
utmost diligence of very cautious persons as far as vinculum of liability.
human care and foresight can provide, or that the
accident was caused by fortuitous event.[41] As correctly
found by the trial court, petitioner Tiu failed to We hold that private respondent Dionisios negligence
conclusively rebut such presumption. The negligence of was only contributory, that the immediate and
petitioner Laspias as driver of the passenger bus is, proximate cause of the injury remained the truck
thus, binding against petitioner Tiu, as the owner of the drivers lack of due care.[46]
passenger bus engaged as a common carrier.[42]
In this case, both the trial and the appellate courts
The Doctrine of failed to consider that respondent Pedrano was also
Last Clear Chance negligent in leaving the truck parked askew without
Is Inapplicable in the any warning lights or reflector devices to alert
Case at Bar oncoming vehicles, and that such failure created the
presumption of negligence on the part of his employer,
Contrary to the petitioners contention, the respondent Condor, in supervising his employees
principle of last clear chance is inapplicable in the properly and adequately. As we ruled in Poblete v.
instant case, as it only applies in a suit between the Fabros:[47]
owners and drivers of two colliding vehicles. It does not
arise where a passenger demands responsibility from
It is such a firmly established principle, as to have
the carrier to enforce its contractual obligations, for it
virtually formed part of the law itself, that the
would be inequitable to exempt the negligent driver
negligence of the employee gives rise to the
and its owner on the ground that the other driver was
presumption of negligence on the part of the employer.
likewise guilty of negligence. [43] The common law notion
This is the presumed negligence in the selection and
of last clear chance permitted courts to grant recovery
supervision of employee. The theory of presumed
negligence, in contrast with the American doctrine MODEL MAKE TYPE O
of respondeat superior, where the negligence of the
employee is conclusively presumed to be the Isuzu Forward Bus
negligence of the employer, is clearly deducible from
the last paragraph of Article 2180 of the Civil Code
which provides that the responsibility therein PLATE NO. PBP- SERIAL/CHASSIS NO. SER450- MOTOR
mentioned shall cease if the employers prove that they 724 1584124
observed all the diligence of a good father of a family
to prevent damages. [48] SECTION 1/11 *LIMITS
Nor should it make difference that the liability of Jose B. Sanez for petitioner.
petitioner [bus owner] springs from contract while that
of respondents [owner and driver of other vehicle] James B. Pajares for private respondents.
arises from quasi-delict. As early as 1913, we already
ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in
case of injury to a passenger due to the negligence of CORTES, J.:
the driver of the bus on which he was riding and of the
driver of another vehicle, the drivers as well as the The instant petition for certiorari and prohibition with
owners of the two vehicles are jointly and severally preliminary injunction concerns the ability of insurers
liable for damages. Some members of the Court, under the "no fault indemnity" provision of the
though, are of the view that under the circumstances Insurance Code. *
they are liable on quasi-delict. 69
On December 27, 1977, in a collision between the IH
IN LIGHT OF ALL THE FOREGOING, the petition Scout in which private respondents were riding and a
is PARTIALLY GRANTED. The Decision of the Court of Superlines bus along the national highway in Sta.
Appeals is AFFIRMED with MODIFICATIONS: Elena, Camarines Norte, private respondents sustained
physics injuries in varying degrees of gravity. Thus,
(1) Respondent Philippine Phoenix Surety and they filed with the Court of First Instance of Camarines
Insurance, Inc. and petitioner William Tiu Norte on February 23,1978 a complaint for damages
are ORDERED to pay, jointly and severally, respondent against Superlines, the bus driver and petitioner, the
Pedro A. Arriesgado the total amount of P13,113.80; insurer of the bus [Rollo, pp. 27-39.] The bus was
(2) The petitioners and the respondents Benjamin insured with petitioner for the amount of P50,000.00 as
Condor and Sergio Pedrano are ORDERED to pay, and for passenger liability and P50,000.00 as and for
jointly and severally, respondent Pedro A. third party liability. The vehicle in which private
Arriesgado P50,000.00 as indemnity; P26,441.50 as respondents were riding was insured with Malayan
actual damages; P50,000.00 as moral Insurance Co.
damages; P50,000.00 as exemplary damages;
and P20,000.00 as attorneys fees. Even before summons could be served, respondent
judge issued an order dated March 1, 1978 [Rollo, pp.
SO ORDERED. 40-41], the pertinent portion of which stated:
Republic of the Philippines Petitioner denied in its Answer its alleged liability under
SUPREME COURT the "no fault indemnity" provision [Rollo, p. 44] and
Manila likewise moved for the reconsideration of the order.
Petitioner held the position that under Sec. 378 of the
THIRD DIVISION Insurance Code, the insurer liable to pay the P5,000.00
is the insurer of the vehicle in which private
G.R. No. L-49699 August 8, 1988 respondents were riding, not petitioner, as the
provision states that "[i]n the case of an occupant of a
vehicle, claim shall lie against the insurer of the vehicle
PERLA COMPANIA de SEGUROS, INC., petitioner, in which the occupant is riding, mounting or
vs. dismounting from." Respondent judge, however, denied
HON. CONSTANTE A. ANCHETA, Presiding Judge reconsideration. A second motion for reconsideration
of the Court of First instance of Camarines Norte, was filed by petitioner. However, in an order dated
Branch III, ERNESTO A. RAMOS and GOYENA January 3, 1979, respondent judge denied the second
ZENAROSA-RAMOS, for themselves and as motion for reconsideration and ordered the issuance of
Guardian Ad Litem for Minors JOBET, BANJO, a writ of execution [Rollo, p. 69.] Hence, the instant
DAVID and GRACE all surnamed RAMOS, petition praying principally for the annulment and
FERNANDO M. ABCEDE, SR., for himself and
Guardian Ad Litem for minor FERNANDO G.
setting aside of respondent judge's orders dated March 1. A claim may be made against one motor vehicle
1, 1978 and January 3, 1979. only.
The Court issued a temporary restraining order on 2. If the victim is an occupant of a vehicle, the claim
January 24,1979 [Rollo pp. 73-74.] shall lie against the insurer of the vehicle. in which he
is riding, mounting or dismounting from.
The sole issue raised in this petition is whether or not
petitioner is the insurer liable to indemnify private 3. In any other case (i.e. if the victim is not an
respondents under Sec. 378 of the Insurance Code. occupant of a vehicle), the claim shall lie against the
insurer of the directly offending vehicle.
The key to the resolution of the issue is of courts e Sec.
378, which provides: 4. In all cases, the right of the party paying the claim to
recover against the owner of the vehicle responsible for
Sec. 378. Any claim for death or injury the accident shall be maintained.
to any passenger or third party
pursuant to the provision of this The law is very clear the claim shall lie against the
chapter shall be paid without the insurer of the vehicle in which the "occupant" ** is
necessity of proving fault or negligence riding, and no other. The claimant is not free to choose
of any kind. Provided, That for purposes from which insurer he will claim the "no fault
of this section indemnity," as the law, by using the word "shall, makes
it mandatory that the claim be made against the
(i) The indemnity in respect of any one insurer of the vehicle in which the occupant is riding,
person shall not exceed five thousand mounting or dismounting from.
pesos;
That said vehicle might not be the one that caused the
(ii) The following proofs of loss, when accident is of no moment since the law itself provides
submitted under oath, shall be that the party paying the claim under Sec. 378 may
sufficient evidence to substantiate the recover against the owner of the vehicle responsible for
claim: the accident. This is precisely the essence of "no fault
indemnity" insurance which was introduced to and
made part of our laws in order to provide victims of
(a) Police report of vehicular accidents or their heirs immediate
accident, and compensation, although in a limited amount, pending
final determination of who is responsible for the
(b) Death certificate accident and liable for the victims'injuries or death. In
and evidence sufficient turn, the "no fault indemnity" provision is part and
to establish the proper parcel of the Insurance Code provisions on compulsory
payee, or motor vehicle ability insurance [Sec. 373-389] and
should be read together with the requirement for
(c) Medical report and compulsory passenger and/or third party liability
evidence of medical or insurance [Sec. 377] which was mandated in order to
hospital disbursement ensure ready compensation for victims of vehicular
in respect of which accidents.
refund is claimed;
Irrespective of whether or not fault or negligence lies
(iii) Claim may be made against one with the driver of the Superlines bus, as private
motor vehicle only. In the case of an respondents were not occupants of the bus, they
occupant of a vehicle, claim shall lie cannot claim the "no fault indemnity" provided in Sec.
against the insurer of the vehicle in 378 from petitioner. The claim should be made against
which the occupant is riding, mounting the insurer of the vehicle they were riding. This is very
or dismounting from. In any other case, clear from the law. Undoubtedly, in ordering petitioner
claim shall lie against the insurer of the to pay private respondents the 'no fault indemnity,'
directly offending vehicle. In all cases, respondent judge gravely abused his discretion in a
the right of the party paying the claim manner that amounts to lack of jurisdiction. The
to recover against the owner of the issuance of the corrective writ of certiorari is therefore
vehicle responsible for the accident warranted.
shall be maintained. [Emphasis
supplied.] WHEREFORE, the petition is GRANTED and respondent
judge's order dated March 1, 1978, requiring petitioner
From a reading of the provision, which is couched in to pay private respondents the amount of P5,000.00 as
straight-forward and unambiguous language, the "no fault indemnity' under Sec. 378 of the Insurance
following rules on claims under the "no fault indemnity" Code, and that of January 3, 1979, denying the second
provision, where proof of fault or negligence is not motion for reconsideration and issuing a writ of
necessary for payment of any claim for death Or injury execution, are ANNULLED and SET ASIDE. The
to a passenger or a third party, are established: temporary restraining order issued by the Court on
January 24, 1979 is made permanent.
SO ORDERED.
EN BANC
GANCAYCO, J.:
The purpose of this provision requiring that the order of Respondent Commissioner in turn argues that the
the court dismissing an action should be founded on cause of action of FGU was shown and arose only from
indubitable grounds is to avoid multiplicity of appeals. the date it paid Olaso for the damages suffered and not
In case of doubt, the court, instead of denying or from the date of the accident; and that the period set
granting the motion, must defer its final hearing and forth in Section 384 of PD 612 begins to run only from
determination until the trial . 2 the time the party against whom the right is to be
asserted is Identified. In this case FGU was able to
The remedy against the denial of a motion to dismiss is Identify petitioner only in 1978 after all efforts were
by appeal in due course after the case is decided on undertaken to verify its Identity. FGU paid Marcos Olaso
the merits, save where the trial court clearly acted on Dec. 9,1976.
outside its jurisdiction or with grave abuse of discretion
as to amount to excess of jurisdiction . 3 Thus it is only Respondent Commissioner invites attention to the
when it clearly appears that the trial judge or court is phrase "in proper cases" in Section 384 of PD 612 and
proceeding in excess or outside of its jurisdiction, when argues that the prescriptive period was interrupted
the remedy of prohibition would lie since it would be upon the extrajudicial demand for payment made by
useless to waste time to go ahead with the FGU on petitioner. 7It is further argued that respondent
proceedings. 4 The same remedy applies when the FGU had a right to wait for the petitioner to respond to
court denies the motion based on lack of the demand before it should file a suit as litigation is
jurisdiction. 5 However, such a situation does not exist not encouraged when it could be justifiably settled.
in the present case as to warrant this extraordinary
remedy.
In the cases of Summit Guaranty & Insurance Co., Inc.
vs. The Hon. Jose C. de Guzman, etc., et al., G.R. No.
Nevertheless, petitioner squarely brings into focus the 50997, Summit Guaranty & Insurance Co., Inc. vs. The
provisions of Section 384 of PD 612, the Insurance Hon. Gregoria C. Arnaldo, etc., G.R. No. L-48679,
Code, which provides as follows: and Summit Guaranty & Insurance Co., Inc. vs. The
Hon. Ramon B. Jabson etc., G.R. No. L-48758, which
Sec. 384. Any person having any claim were jointly decided by this Court on June 30,1987,
upon the policy issued pursuant to this wherein the petitioner in the present case was also the
chapter shall, without any unnecessary petitioner in said cases, the Court had occasion to
delay, present to the insurance interpret the aforesaid provision of Section 384 of the
company concerned a written notice of Insurance Code in this manner:
claim setting forth the amount of his
loss, and/or the nature, extent and Petitioner company contends that the
duration of the injuries sustained as two periods prescribed in the
certified by a duly licensed physician. aforementioned law that is, the six-
Notice of claim must be filed within six month period for filing the notice of
months from date of the accident, claim and the one-year period for
otherwise, the claim shall be deemed bringing an action or suit are
waived. Action or suit for recovery of mandatory and must always concur.
Petitioner company argues that under its duties to adopt and implement
this law, even if the notice of claim was reasonable standards for the prompt
timely filed with the insurance investigation of claims and to
company within the six-month period, effectuate prompt, fair and equitable
as what happened in the three cases settlement of claims, and with manifest
before Us, the action or suit that bad faith, petitioner company devised
follows, if filed beyond the one-year means and ways of stalling the
period should necessarily be dismissed settlement proceedings. In G.R.No. L-
on the ground of prescription. 50997, no steps were taken to process
the claim and no rejection of said claim
We find no merit in the contention of was ever made even if private
petitioner company. There is absolutely respondent had already complied with
nothing in the law which mandates that all the requirements. In G.R. No. L-
the two periods must always concur. 48758 petitioner company even
On the contrary, it is very clear that the provided legal assistance to one of the
one-year period is only required 'in private respondents in the criminal
proper cases.' It appears that petitioner case filed against him leading private
company disregarded this very respondents to believe that it was
significant phrase when it made its own ready to pay. In the same case,
interpretation of the law. Had the petitioner company admits that it took
lawmakers intended it to be the way no final action or adjudication of the
petitioner company assumes it to be, claim. Worse still, in G.R. No. L-48679,
then the phrase in proper cases' would assurances of payment were constantly
not have been inserted. At this point, it given and petitioner company even
is but appropriate for Us to reiterate said that a check was ready for release.
our ruling in Aisporna vs. Court of
Appeals, 8 to wit: This Court has made the observation
that some insurance companies have
Legislative intent must been inventing excuses to avoid their
be ascertained from a just obligations and it is only the State
consideration of the that can give the protection which the
statute as a whole. The insuring public needs from possible
particular words, abuses of the insurers.
clauses and phrases
should not be studied In view of the foregoing, We hold that
as detached and these three cases do not fall within the
isolated expressions, meaning of 'proper cases as
but the whole and contemplated in Section 384 of the
every part of the Insurance Code. To hold otherwise
statute must be would enable petitioner company to
considered in fixing the evade its responsibility through a
meaning of any of its clever scheme it had contrived.
parts and in order to
produce a harmonious xxx xxx xxx
whole. A statute must
be so construed as to
harmonize and give The one-year period should instead be
effect to all its counted from the date of rejection by
provisions whenever the insurer as this is the time when the
possible. cause of action accrues. Since in these
cases there has yet been no accrual of
cause of action, We hold that
It is very obvious that petitioner precription has not yet set in.
company is trying to use Section 384 of
the Insurance Code as a cloak to hide
itself from its liabilities. The facts of We also observed in the aforesaid cases that because
these cases evidently reflect the of the problems created by the aforecited provision of
deliberate efforts of petitioner company the Insurance Code the said section was amended by
to prevent the filing of a formal action the then Batas Pambansa to read as follows:
against it. Bearing in mind that if it
succeeds in doing so until one year ... Action or suit for recovery of damage
lapses from the date of the accident it due to loss or injury must be brought in
could set up the defense of proper cases, with the Commissioner or
prescription, petitioner company made the Courts within one year from the
private respondents believe that their denial of the claim, otherwise, the
claims would be settled in order that claimant's right of action shall
the latter will not find it necessary to prescribe. 9
immediately bring suit. In violation of
In the present case, it is not denied that an
extrajudicial demand for payment was made by
respondent FGU on petitioner but petitioner failed to
respond to the same. Nevertheless the complaint was
filed even before a denial of the claim was made by
petitioner. For all legal purposes, the one-year
prescriptive period provided for in Section 384 of the
Insurance Code has not begun to run. The cause of
action arises only and starts to run upon the denial of
the claim by the insurance company.
SO ORDERED.
FIRST DIVISION
A complaint (pp. 38-41, Rollo) for damages was WHEREFORE, for moral damages, this
brought by the child's parents, the Advincula spouses, Court hereby adjudicates to the
against Silverio Blanco. First Insurance was also plaintiffs P5,000.00; for the life of
impleaded in the complaint as the insurer. The Deogracias Advincula P12,000.00; for
complaint was docketed as Civil Case No. 1104 of the funeral expenses P3,663.50 and for
Court of First Instance of Abra (now Regional Trial attorney's fees P3,000.00 or in the total
Court). amount of P23,663.50 which must be
satisfied independently by the
Summons were served on Silverio Blanco and First defendant First Integrated Bonding and
Insurance. However, only Blanco filed an answer. Upon Insurance Company, Inc. in favor of the
motion of the Advincula spouses, First Insurance was plaintiffs and the balance of P6,336.50
declared in default (p. 45, Rollo) on January 19, 1978. shall also be paid by said defendant
Thereafter, a pre-trial conference was conducted where Insurance Company to the defendant
the Advincula spouses presented the following Silverio Blanco. The grand total under
documentary evidence: the insurance policy, Exhibit H, is
P30,000.00.
Exhibit "A" Marriage Certificate,
Exhibit B Birth Certificate, Exhibit B- The defendant Insurance Company to
1 The Certificate of the Local Civil pay the costs of the proceedings.
Registrar, Exhibit C Certificate of
Death, Exhibit C-1 the official receipt SO ORDERED. (p. 17, Rollo)
of the burial permit, Exhibit C-2 the
autopsy report, Exhibit D filing fee The amended decision was received by First Instance
under official receipt in the amount of on April 11, 1978. On May 11, 1978, entry of judgment
P80.00, Exhibit D-1 list of actual was made, a copy of which was furnished First
expenses in connection with the death Insurance on June 27, 1978. Upon motion of the
and burial of the deceased Advincula, Advincula spouses, an order granting execution was
Exhibit E Criminal Case No. 666 of
issued by the court on June 14, 1978, which was duly summoned and served a copy of
received by First Insurance on August 1, 1978 (pp. 31- the complaint on August 16, 1977 and
32, Rollo). it was received by the President of the
Insurance Company as shown by the
On September 5, 1978, First Insurance filed a petition certificate of Service of the Sheriff of
for relief from judgment in the same case. The petition Manila and found in page 12 and page
was set for hearing on September 28, 1978. No 13 of the records of this case; after the
appearance was entered by First Insurance on the said reglementary period to file an answer
date. On October 4, 1978, the trial court issued an expired, the plaintiffs move to declare
order, denying the petition for relief from judgment (pp. the defendant insurance company in
33-34, Rollo), a copy of which was received by First default and likewise asked the Court
Insurance on October 10, 1978 (p. 35, Rollo). The order that they be allowed to present their
reads: evidence on January 23, 1978 and
which was granted by this Court
pursuant to an order dated January 19,
The records of this case show that on 1978 and found on page 16 of the
April 11, 1978, the defendant First records of this case; after the reception
Integrated Bonding and Insurance of the evidence for the plaintiffs this
Company, Inc. received a copy of the Court rendered a decision on March 1,
amended decision dated March 27, 1978 and which is found on pages 23
1978 and found on page 30 of the to 26 of the records of this case;
records of this case; on May 11, 1978, subsequently, on March 27, 1978, an
the Deputy Clerk of Court entered the amended decision was issued by this
corresponding entry of judgment and Court and it is found on page 30 of the
the First Integrated Bonding and records of this case. Clearly, therefore,
Insurance Company, Inc. received a the First Integrated Bonding and
copy thereof on June 27, 1978, On June Insurance Co., Inc. was grossly and
13, 1978, the plaintiffs moved for notoriously negligent in giving the
execution of judgment and the same proper attention to this case. This kind
was granted pursuant to an Order of of gross and notorious negligence can
this Court dated June 14, 1978 and not be considered excusable. The last
found on page 35 of the records of this ground is that this Court has
case. jurisdiction over the plaintiffs' cause of
action against the insurance company.
And now comes the petition for relief This ground is well-taken because
from the Order of execution and according to Section 416 of the
judgment with preliminary injunction Philippine Insurance Code, Presidential
filed by First integrated Bonding and Decree No. 612, it provides that the
Insurance Co., Inc. and which was authority to adjudicate granted to the
received by this Court on September 5, Commissioner of insurance shall be
1978; on September 28, 1978, the concurrent with that of the civil courts,
plaintiffs filed their written opposition but the filing of a complaint with the
to the petition for relief from judgment commissioner shall preclude the civil
and preliminary injunction. The courts from taking cognizance of a suit
opposition is based on three grounds, involving the same subject matter.
namely: 1. that the petition is filed out Furthermore, the plaintiffs did not
of time; 2. that there was gross and intervene in the criminal aspect of this
notorious negligence of the Insurance case, instead, they filed a separate and
Company; 3. that this case is within the independent civil action on July 26,
jurisdiction of this Court and therefore 1977 and which is now the present Civil
the cause of action of the plaintiffs Case No. 1104. It may be added, that
deserves judicial consideration. the matter of exhaustion of
administrative remedy may be waived
It was on April 11, 1978 that the First which has been so in the present case
Integrated Bonding and Insurance Co., because the First Integrated Bonding
Inc. received the amended decision and Insurance Co., Inc. was declared in
and the petition for relief from Order of default.
Execution and judgment with
preliminary injunction was filed on In view of all the foregoing
September 5, 1978 or a period of 191 considerations, the petition for relief
days already expired, that is, more from the order of execution and
than 6 months already as required by judgment with preliminary injunction,
Section 3, Rule 38 of the Rules of Court. for lack of merit, is hereby denied.
Consequently, the first ground invoked
by the opposition must be sustained. SO ORDERED. (pp. 33-34, Rollo)
On the second ground, the records of
this case show that the First Integrated
Bonding and Insurance Co., Inc. was
First Insurance filed a motion for reconsideration of the accomplished. It has even been held
order denying the petition for relief on May 14, 1979. that such a provision creates a
The motion was set for hearing and again no contractual relation which inures to the
appearance was entered by the movant First Insurance benefit of any and every person who
(p. 35, Rollo), prompting the trial court to deny the may be negligently injured by the
same. named insured as if such injured
person were specifically named in the
On August 13, 1979, the herein petitioner First policy.
Insurance filed this petition for certiorari on the
following grounds: In the event that the injured fails or
refuses to include the insurer as party
1. The trial court erred in deciding for defendant in his claim for indemnity
the respondent spouse(s) where there against the insured, the latter is not
exists no cause of action against the prevented by law to avail of the
herein petitioner. procedural rules intended to avoid
multiplicity of suits. Not even a "no
action" clause under the policy which
2. The trial court erred when it requires that a final judgment be first
abbreviated the proceeding and obtained against the insured and that
rendered judgment based only on the only thereafter can the person insured
documentary evidence presented recover on the policy can prevail over
during the pre-trial conference. the Rules of Court provisions aimed at
avoiding multiplicity of suits. (p. 391,
3. The trial court erred in holding the 167 SCRA) (emphasis supplied)
petitioner liable in excess of the limits
of liability as provided for in the policy First Insurance cannot evade its liability as insurer by
contract. hiding under the cloak of the insured. Its liability is
primary and not dependent on the recovery of
On August 20, 1979, this Court issued a temporary judgment from the insured.
restraining order enjoining the respondents from
enforcing the Writ of Execution dated August 1, 1978 Compulsory Motor Vehicle Liability
(p. 19, Rollo) Insurance (third party liability, or TPL)
is primarily intended to provide
It is the contention of the petitioner that the Advincula compensation for the death or bodily
spouses have no cause of action against it. As parents injuries suffered by innocent third
of the victim, they may proceed against the driver, parties or passengers as a result of a
Silverio Blanco on the basis of the provisions of the negligent operation and use of motor
New Civil Code. However, they have no cause of action vehicles. The victims and/or their
against First Insurance, because they are not parties to dependents are assured of immediate
the insurance contract. financial assistance, regardless of the
financial capacity of the motor vehicle
It is settled that where the insurance contract provides owners.
for indemnity against liability to a third party, such
third party can directly sue the insurer (Caguia v. . . . the insurer's liability accrues
Fieldman's Insurance Co., Inc., G. R. No. 23276, immediately upon the occurrence of
November 29, 1968, 26 SCRA 178). The liability of the the injury or event upon which the
insurer to such third person is based on contract while liability depends, and does not depend
the liability of the insured to the third party is based on on the recovery of judgment by the
tort (Malayan Insurance Co., Inc. v. CA, L-36413, injured party against the
September 26, 1988, 165 SCRA 536). This rule was insured (Shafer v. Judge, RTC of
explained in the case of Shafer v. Judge, RTC of Olongapo, supra, p. 390).
Olongapo City, Br. 75, G.R. No. 78848, November 14,
1988: It is true that Blanco denied that he was negligent
when the incident occurred. However, during the pre-
The injured for whom the contract of trial conference, when respondent judge admitted all
insurance is intended can sue directly the exhibits of the plaintiffs to abbreviate the
the insurer. The general purpose of proceedings, no objection was interposed by Blanco.
statutes enabling an injured person to When a decision was rendered based only on the
proceed directly against the insurer is exhibits of the plaintiffs, Blanco likewise did not object.
to protect injured persons against the No motion for reconsideration was filed by either
insolvency of the insured who causes Blanco or First Insurance. Hence, the decision became
such injury, and to give such injured final and may no longer be attacked.
person a certain beneficial interest in
the proceeds of the policy, and statutes It should be noted also that First Insurance was
are to be liberally construed so that declared in default because of its failure to file an
their intended purpose may be answer. As far as it was concerned, it failed to raise any
triable issue. It lost its standing in court and judgment [G.R. No. 82036. May 22, 1997]
may be rendered against it on the basis only of the
evidence of the Advincula spouses. TRAVELLERS INSURANCE & SURETY
CORPORATION, petitioner, vs. HON.
Petitioner had been given its day in court. Despite its COURT OF APPEALS and VICENTE
having been declared in default and its failure to file a MENDOZA, respondents.
motion to lift the order of default, it was still notified of
the subsequent proceedings in the trial court. But no DECISION
positive step was taken by it on time to vacate the
order of default, the decision nor the amended
decision. Instead, it chose to file a petition for relief HERMOSISIMA, JR., J.:
from judgment on September 1, 1978 almost five (5)
months from its receipt of a copy of the amended The petition herein seeks the review and reversal
decision on April 11, 1978. Clearly, the said petition for of the decision[1] of respondent Court of
relief from judgment was filed out of time. The rules Appeals[2] affirming in toto the judgment[3] of the
require that such petitions must be filed within sixty Regional Trial Court[4] in an action for damages[5] filed
(60) days after the petitioner learns of the judgment by private respondent Vicente Mendoza, Jr. as heir of
and not more than six (6) months after such judgment his mother who was killed in a vehicular accident.
was entered (Rule 38, Section 3). The period fixed by
Rule 38 of the Rules of Court is non-extendible and Before the trial court, the complainant lumped the
never interrupted. It is not subject to any condition or erring taxicab driver, the owner of the taxicab, and the
contingency, because it is itself devised to meet a alleged insurer of the vehicle which featured in the
condition or contingency. The remedy allowed by Rule vehicular accident into one complaint. The erring
38 is an act of grace, as it were, designed to give the taxicab was allegedly covered by a third-party liability
aggrieved party another and last chance. Being in the insurance policy issued by petitioner Travellers
position of one who begs, such party's privilege is not Insurance & Surety Corporation.
to impose conditions, haggle or dilly-dally, but to grab
what is offered him. (Palomares, et al. v. Jimenez, et al.,
90 Phil. 773, XVII, L.J., No. 3, p. 136, Rafanan v. The evidence presented before the trial court
Rafanan, 35 O.G. 228; Santos v. Manila Electric Co., established the following facts:
G.R. L-7735, December 29, 1955; Gana v. Abaya, G.R.
No. L-3106, December 29, 1955, cited in Vicente J. At about 5:30 oclock in the morning of July 20, 1980, a
Francisco, The Revised Rules of Court of the Philippines, 78-year old woman by the name of Feliza Vineza de
Annotated and Commented, Vol, 11, p. 580. Mendoza was on her way to hear mass at the Tayuman
Cathedral. While walking along Tayuman corner
It appears that the award of damages in favor of Gregorio Perfecto Streets, she was bumped by a taxi
Blanco has no basis. The complaint in Civil case 1104 that was running fast. Several persons witnessed the
was for damages brought by the spouses against accident, among whom were Rolando Marvilla, Ernesto
Blanco and First Insurance. Blanco did not put up any Lopez and Eulogio Tabalno. After the bumping, the old
claim against the latter. However, since the said woman was seen sprawled on the pavement. Right
decision had already become final and executory, it away, the good Samaritan that he was, Marvilla ran
can no longer be corrected or amended. In the same towards the old woman and held her on his lap to
vein, the claim of petitioner that its liability to third inquire from her what had happened, but obviously she
parties under the insurance policy is limited to was already in shock and could not talk. At this moment,
P20,000.00 only can no longer be given consideration a private jeep stopped. With the driver of that vehicle,
at this late stage, when the decision of the trial court the two helped board the old woman on the jeep and
awarding damages had already become final and brought her to the Mary Johnston Hospital in Tondo.
executory.
x x x Ernesto Lopez, a driver of a passenger jeepney
ACCORDINGLY, finding respondent judge to have acted plying along Tayuman Street from Pritil, Tondo, to Rizal
within his jurisdiction in denying the petition for relief Avenue and vice-versa, also witnessed the incident. It
from judgment, the petition is DISMISSED. The was on his return trip from Rizal Avenue when Lopez
questioned decision of the trial court in Civil Case No. saw the plaintiff and his brother who were crying near
1104 having become final and executory, is AFFIRMED. the scene of the accident. Upon learning that the two
The temporary restraining order issued on August 20, were the sons of the old woman, Lopez told them what
1979 is hereby lifted. Costs against petitioner. had happened. The Mendoza brothers were then able to
trace their mother at the Mary Johnston Hospital where
they were advised by the attending physician that they
SO ORDERED. should bring the patient to the National Orthopedic
Hospital because of her fractured bones. Instead, the
victim was brought to the U.S.T. Hospital where she
expired at 9:00 oclock that same morning. Death was
caused by traumatic shock as a result of the severe
injuries she sustained x x x x.
FIRST DIVISION
x x x The evidence shows that at the moment the victim
was bumped by the vehicle, the latter was running fast,
so much so that because of the strong impact the old Insurance and Surety Corporation, by ordering the
woman was thrown away and she fell on the latter to pay, jointly and severally, the former the
pavement. x x x In truth, in that related criminal case following amounts:
against defendant Dumlao x x x the trial court found as
a fact that therein accused was driving the subject (a) The sum of P2,924.70, as actual and compensatory
taxicab in a careless, reckless and imprudent manner damages, with interest thereon at the rate of 12% per
and at a speed greater than what was reasonable and annum from October 17, 1980, when the complaint was
proper without taking the necessary precaution to avoid filed, until the said amount is fully paid;
accident to persons x x x considering the condition of
the traffic at the place at the time aforementioned x x
x. Moreover, the driver fled from the scene of the (b) P30,000.00 as death indemnity;
accident and without rendering assistance to the
victim. x x x (c) P25,000.00 as moral damages;
x x x Three (3) witnesses who were at the scene at the (d) P10,000.00 as by way of corrective or exemplary
time identified the taxi involved, though not necessarily damages; and
the driver thereof. Marvilla saw a lone taxi speeding
away just after the bumping which, when it passed by (e) Another P10,000.00 by way of attorneys fees and
him, said witness noticed to be a Lady Love Taxi with other litigation expenses.
Plate No. 438, painted maroon, with baggage bar
attached on the baggage compartment and with an
antenae[sic] attached at the right rear side. The same Defendants are further ordered to pay, jointly and
descriptions were revealed by Ernesto Lopez, who severally, the costs of this suit.
further described the taxi to have x x x reflectorized
decorations on the edges of the glass at the back. x x x SO ORDERED.[7]
A third witness in the person of Eulogio Tabalno x x x
made similar descriptions although, because of the fast Petitioner appealed from the aforecited decision to
speed of the taxi, he was only able to detect the last the respondent Court of Appeals. The decision of the
digit of the plate number which is 8. x x x [T]he police trial court was affirmed by respondent appellate
proceeded to the garage of Lady Love Taxi and then and court. Petitioners Motion for Reconsideration[8] of
there they took possession of such a taxi and later September 22, 1987 was denied in a Resolution [9] dated
impounded it in the impounding area of the agency February 9, 1988.
concerned. x x x [T]he eyewitnesses x x x were
unanimous in pointing to that Lady Love Taxi with Plate
No. 438, obviously the vehicle involved herein. Hence this petition.
x x x During the investigation, defendant Armando Petitioner mainly contends that it did not issue an
Abellon, the registered owner of Lady Love Taxi bearing insurance policy as compulsory insurer of the Lady
No. 438-HA Pilipinas Taxi 1980, certified to the fact that Love Taxi and that, assuming arguendo that it had
the vehicle was driven last July 20, 1980 by one Rodrigo indeed covered said taxicab for third-party liability
Dumlao x x x x x x It was on the basis of this affidavit of insurance, private respondent failed to file a written
the registered owner that caused the police to notice of claim with petitioner as required by Section
apprehend Rodrigo Dumlao, and consequently to have 384 of P.D. No. 612, otherwise known as the Insurance
him prosecuted and eventually convicted of the offense Code.
x x x. x x x [S]aid Dumlao absconded in that criminal
case, specially at the time of the promulgation of the We find the petition to be meritorious.
judgment therein so much so that he is now a fugitive
from justice.[6] I
Private respondent filed a complaint for damages When private respondent filed his amended
against Armando Abellon as the owner of the Lady complaint to implead petitioner as party defendant and
Love Taxi and Rodrigo Dumlao as the driver of the Lady therein alleged that petitioner was the third-party
Love taxicab that bumped private respondents liability insurer of the Lady Love taxicab that fatally hit
mother. Subsequently, private respondent amended his private respondents mother, private respondent did not
complaint to include petitioner as the compulsory attach a copy of the insurance contract to the
insurer of the said taxicab under Certificate of Cover amended complaint. Private respondent does not deny
No. 1447785-3. this omission.
After trial, the trial court rendered judgment in It is significant to point out at this juncture that
favor of private respondent, the dispositive portion of the right of a third person to sue the insurer depends
which reads: on whether the contract of insurance is intended to
benefit third persons also or only the insured.
WHEREFORE, judgment is hereby rendered in favor of
the plaintiff, or more particularly the Heirs of the late [A] policy x x x whereby the insurer agreed to
Feliza Vineza de Mendoza, and against defendants indemnify the insured against all sums x x x which the
Rodrigo Dumlao, Armando Abellon and Travellers Insured shall become legally liable to pay in respect of:
a. death of or bodily injury to any person x x x is one While it is true that where the insurance contract
for indemnity against liability; from the fact then that provides for indemnity against liability to third persons,
the insured is liable to the third person, such third such third persons can directly sue the insurer,
person is entitled to sue the insurer. however, the direct liability of the insurer under
indemnity contracts against third-party liability does
The right of the person injured to sue the insurer of the not mean that the insurer can be held solidarily liable
party at fault (insured), depends on whether the with the insured and/or the other parties found at
contract of insurance is intended to benefit third fault. The liability of the insurer is based on contract;
persons also or on the insured. And the test applied that of the insured is based on tort.[11]
has been this:Where the contract provides for
indemnity against liability to third persons, then third Applying this principle underlying solidary obligation
persons to whom the insured is liable can sue the and insurance contracts, we ruled in one case that:
insurer. Where the contract is for indemnity against
actual loss or payment, then third persons cannot In solidary obligation, the creditor may enforce the
proceed against the insurer, the contract being solely entire obligation against one of the solidary
to reimburse the insured for liability actually debtors. On the other hand, insurance is defined as a
discharged by him thru payment to third persons, said contract whereby one undertakes for a consideration to
third persons recourse being thus limited to the insured indemnify another against loss, damage or liability
alone.[10] arising from an unknown or contingent event.
Since private respondent failed to attach a copy of In the case at bar, the trial court held petitioner
the insurance contract to his complaint, the trial court together with respondents Sio Choy and San Leon Rice
could not have been able to apprise itself of the real Mills Inc. solidarily liable to respondent Vallejos for a
nature and pecuniary limits of petitioners liability. More total amount of P29,103.00, with the qualification that
importantly, the trial court could not have possibly petitioners liability is only up to P20,000.00. In the
ascertained the right of private respondent as third context of a solidary obligation, petitioner may be
person to sue petitioner as insurer of the Lady Love compelled by respondent Vallejos to pay the entire
taxicab because the trial court never saw nor read the obligation of P29,103.00, notwithstanding the
insurance contract and learned of its terms and qualification made by the trial court. But, how can
conditions. petitioner be obliged to pay the entire obligation when
the amount stated in its insurance policy with
Petitioner, understandably, did not volunteer to respondent Sio Choy for indemnity against third-party
present any insurance contract covering the Lady Love liability is only P20,000.00?Moreover, the qualification
taxicab that fatally hit private respondents mother, made in the decision of the trial court to the effect that
considering that petitioner precisely presented the petitioner is sentenced to pay up to P20,000.00 only
defense of lack of insurance coverage before the trial when the obligation to pay P29,103.00 is made solidary
court. Neither did the trial court issue is an evident breach of the concept of a solidary
a subpoena duces tecum to have the insurance obligation.[12]
contract produced before it under pain of contempt.
The above principles take on more significance in
We thus find hardly a basis in the records for the the light of the counter-allegation of petitioner that,
trial court to have validly found petitioner liable jointly assuming arguendo that it is the insurer of the Lady
and severally with the owner and the driver of the Lady Love taxicab in question, its liability is limited to
Love taxicab, for damages accruing to private only P50,000.00, this being its standard amount of
respondent. coverage in vehicle insurance policies. It bears
repeating that no copy of the insurance contract was
Apparently, the trial court did not distinguish ever proffered before the trial court by the private
between the private respondents cause of action respondent, notwithstanding knowledge of the fact that
against the owner and the driver of the Lady Love the latters complaint against petitioner is one under a
taxicab and his cause of action against petitioner.The written contract. Thus, the trial court proceeded to hold
former is based on torts and quasi-delicts while the petitioner liable for an award of damages exceeding its
latter is based on contract. Confusing these two limited liability of P50,000.00. This only shows beyond
sources of obligations as they arise from the same act doubt that the trial court was under the erroneous
of the taxicab fatally hitting private respondents presumption that petitioner could be found liable
mother, and in the face of overwhelming evidence of absent proof of the contract and based merely on the
the reckless imprudence of the driver of the Lady Love proof of reckless imprudence on the part of the driver
taxicab, the trial court brushed aside its ignorance of of the Lady Love taxicab that fatally hit private
the terms and conditions of the insurance contract and respondents mother.
forthwith found all three - the driver of the taxicab, the
owner of the taxicab, and the alleged insurer of the II
taxicab - jointly and severally liable for actual, moral
and exemplary damages as well as attorneys fees and Petitioner did not tire in arguing before the trial
litigation expenses. This is clearly a misapplication of court and the respondent appellate court that,
the law by the trial court, and respondent appellate assuming arguendo that it had issued the insurance
court grievously erred in not having reversed the trial contract over the Lady Love taxicab, private
court on this ground. respondents cause of action against petitioner did not
successfully accrue because he failed to file with year from denial of the claim, otherwise the
petitioner a written notice of claim within six (6) claimants right of action shall prescribe [emphasis
months from the date of the accident as required by ours].[15]
Section 384 of the Insurance Code.
We have certainly ruled with consistency that the
At the time of the vehicular incident prescriptive period to bring suit in court under an
which resulted in the death of private respondents insurance policy, begins to run from the date of the
mother, during which time the Insurance Code had not insurers rejection of the claim filed by the insured, the
yet been amended by Batas Pambansa (B.P.) Blg. 874, beneficiary or any person claiming under an insurance
Section 384 provided as follows: contract. This ruling is premised upon the compliance
by the persons suing under an insurance contract, with
Any person having any claim upon the policy issued the indispensable requirement of having filed the
pursuant to this chapter shall, without any unnecessary written claim mandated by Section 384 of the
delay, present to the insurance company concerned a Insurance Code before and after its
written notice of claim setting forth the amount of his amendment. Absent such written claim filed by the
loss, and/or the nature, extent and duration of the person suing under an insurance contract, no cause of
injuries sustained as certified by a duly licensed action accrues under such insurance contract,
physician. Notice of claim must be filed within six considering that it is the rejection of that claim that
months from date of the accident, otherwise, the claim triggers the running of the one-year prescriptive period
shall be deemed waived. Action or suit for recovery of to bring suit in court, and there can be no opportunity
damage due to loss or injury must be brought in proper for the insurer to even reject a claim if none has been
cases, with the Commission or the Courts within one filed in the first place, as in the instant case.
year from date of accident, otherwise the claimants
right of action shall prescribe [emphasis and The one-year period should instead be counted from
underscoring supplied]. the date of rejection by the insurer as this is the time
when the cause of action accrues. x x x
In the landmark case of Summit Guaranty and
Insurance Co., Inc. v. De Guzman, [13] we ruled that the In Eagle Star Insurance Co., Ltd., et al. vs. Chia Yu, this
one year prescription period to bring suit in court Court ruled:
against the insurer should be counted from the time
that the insurer rejects the written claim filed therewith The plaintiffs cause of action did not accrue until his
by the insured, the beneficiary or the third person claim was finally rejected by the insurance
interested under the insurance policy. We explained: company. This is because, before such final rejection,
there was no real necessity for bringing suit.
It is very obvious that petitioner company is trying to
use Section 384 of the Insurance Code as a cloak to The philosophy of the above pronouncement was
hide itself from its liabilities. The facts of these cases pointed out in the case of ACCFA vs. Alpha Insurance
evidently reflect the deliberate efforts of petitioner and Surety Co., viz.:
company to prevent the filing of a formal action against
it. Bearing in mind that if it succeeds in doing so until
one year lapses from the date of the accident it could Since a cause of action requires, as essential elements,
set up the defense of prescription, petitioner company not only a legal right of the plaintiff and a correlative
made private respondents believe that their claims obligation of the defendant but also an act or omission
would be settled in order that the latter will not find it of the defendant in violation of said legal right, the
necessary to immediately bring suit. In violation of its cause of action does not accrue until the party
duties to adopt and implement reasonable standards obligated refuses, expressly or impliedly, to comply
for the prompt investigation of claims and to effectuate with its duty.[16]
prompt, fair and equitable settlement of claims, and
with manifest bad faith, petitioner company devised When petitioner asseverates, thus, that no written
means and ways of stalling the settlement claim was filed by private respondent and rejected by
proceedings. x x x [N]o steps were taken to process the petitioner, and private respondent does not dispute
claim and no rejection of said claim was ever made such asseveration through a denial in his pleadings, we
even if private respondent had already complied with are constrained to rule that respondent appellate court
all the requirements. x x x committed reversible error in finding petitioner liable
under an insurance contract the existence of which had
This Court has made the observation that some not at all been proven in court. Even if there were such
insurance companies have been inventing excuses to a contract, private respondents cause of action can not
avoid their just obligations and it is only the State that prevail because he failed to file the written claim
can give the protection which the insuring public needs mandated by Section 384 of the Insurance Code. He is
from possible abuses of the insurers.[14] deemed, under this legal provision, to have waived his
rights as against petitioner-insurer.
It is significant to note that the aforecited Section
384 was amended by B.P. Blg. 874 to categorically WHEREFORE, the instant petition is HEREBY
provide that action or suit for recovery of damage due GRANTED. The decision of the Court of Appeals in CA-
to loss or injury must be brought in proper cases, with G.R. CV No. 09416 and the decision of the Regional
the Commissioner or the Courts within one Trial Court in Civil Case No. 135486 are REVERSED and
SET ASIDE insofar as Travellers Insurance & Surety REASON OF DEATH: UNDER
Corporation was found jointly and severally liable to EXAMINATION NOW NOT YET
pay actual, moral and exemplary damages, death KNOWN 6
indemnity, attorneys fees and litigation expenses in
Civil Case No. 135486. The complaint against Travellers and an autopsy report 7 of the National Bureau
Insurance & Surety Corporation in said case is hereby of Investigation ("NBI") to the effect that "(d)ue
ordered dismissed. to advanced state of postmortem
decomposition, cause of death (could) not be
No pronouncement as to costs. determined." 8 Private respondent referred the
insurance claim to Mission Adjustment Service,
SO ORDERED. Inc.
Petitioner's recourse to this Court must also fail. The appellate court acted neither erroneously nor with
grave abuse of discretion when it seconded the court a
quo and ruled:
On the issue of "prescription," private respondent
correctly invoked Section 384 of the Insurance
Code; viz: As to the allegation of the plaintiff-
appellant that the matters requested
by her to be admitted by the
Sec. 384. Any person having any claim defendant-appellant under the Request
upon the policy issued pursuant to this for Admission were already deemed
chapter shall, without any unnecessary admitted by the latter for its failure to
delay, present to the insurance answer it under oath, has already been
company concerned a written notice of properly laid to rest when the lower
claim setting forth the nature, extent court in its Order of May 28, 1987
and duration of the injuries sustained correctly ruled:
as certified by a duly licensed
physician. Notice of claim must be filed
within six months from date of the At the outset, it must
accident, otherwise, the claim shall be be stressed that the
deemed waived. Action or suit for defendant indeed filed
recovery of damage due to loss or a written answer to the
injury must be brought, in proper request for
cases, with the Commissioner or the admission, sans verifica
Courts within one year from denial of tion. The case of Motor
the claim, otherwise, the claimant's Service
right of action shall prescribe. Co., Inc. vs. Yellow
Taxicab Co., Inc., et al.
may not therefore be
The notice of death was given to private controlling, or actually
respondent, concededly, more than a year after opposite. In said case,
the death of petitioner's husband. Private there was an absolute
respondent, in invoking prescription, was not failure on the part of
referring to the one-year period from the denial the defendant to
of the claim within which to file an action answer the request for
against an insurer but obviously to the written admission, and thus
notice of claim that had to be submitted within the court was justified
six months from the time of the accident. in rendering a
summary judgment.
Petitioner argues that private respondent must be Here, however, as
deemed to have waived its right to controvert the clearly intimated
claim, that is, to show that the cause of death is an elsewhere above, the
excepted peril, by failing to have its answers (to the defendant answered in
Request for Admission sent by petitioner) duly verified. writing practically
It is true that a matter of which a written request for every question posed in
admission is made shall be deemed impliedly admitted the request for
"unless, within a period designated in the request, admission. The Court
which shall not be less than ten (10) days after service believes, under the
thereof, or within such further time as the court may peculiar circumstance,
allow on motion and notice, the party to whom the that the more
request is directed serves upon the party requesting controlling
the admission a sworn statement either denying jurisprudence on the
specifically the matters of which an admission is mater would be those
requested or setting forth in detail the reasons why he cited by the defendant
cannot truthfully either admit or deny those in its memorandum,
particularly the case Not one of the other documents submitted, to
of Quimpo vs. de la wit, the POEA decision, dated 06 June
Victoria, 46 SCRA 139. 1984, 21 the death certificate issued by the
Ministry of Health of Iraq and the NBI autopsy
Prescinding from the foregoing, there is report, 22 could give any probative value to
absolutely no basis in fact and in law petitioner's claim. The POEA decision did not
for the lower court to hold that the make any categorical holding on the specific
appellant insurance company was cause of Gabriel's death. Neither did the death
deemed to have waived the defense, certificate issued by the health authorities in
that the death of plaintiff-appellant's Iraq nor the NBI autopsy report provide any
husband was not caused by violent clue on the cause of death. All that appeared to
accidental external and visible means' be clear was the fact of Gabriel's demise on 22
as contemplated in the insurance May 1982 in Iraq.
policy. The Death Certificate (Exh. 9)
and the Autopsy Report (Exh. 10), more Evidence, in fine, is utterly wanting to establish that
than controverted the allegation of the the insured suffered from an accidental death, the risk
plaintiff-appellant as to the cause of covered by the policy. In an accident insurance, the
death of her husband. 17 insured's beneficiary has the burden of proof in
demonstrating that the cause of death is due to the
The insurance policy expressly provided that to be covered peril. Once that fact is established, the burden
compensable, the injury or death should be caused by then shifts to the insurer to show any excepted peril
"violent accidental external and visible means." In that may have been stipulated by the parties. An
attempting to prove the cause of her husband's death, "accident insurance" is not thus to be likened to an
all that petitioner could submit were a letter sent to her ordinary life insurance where the insured's death,
by her husband's co-worker, stating that Gabriel died regardless of the cause thereof, would normally be
when he tried to haul water out of a tank while its compensable. The latter is akin in property insurance
submerged motor was still functioning, 18 and to an "all risk" coverage where the insured, on the
petitioner's sinumpaang aspect of burden of proof, has merely to show the
salaysay 19 which merely confirmed the receipt and condition of the property insured when the policy
stated contents of the letter. Said the appellate court in attaches and the fact of loss or damage during the
this regard: period of the policy and where, thereafter, the burden
would be on the insurer to show any "excluded peril."
When, however, the insured risk is specified, like in the
. . . . It must be noted that the only case before us, it lies with the claimant of the
evidence presented by her to prove the insurance proceeds to initially prove that the loss is
circumstances surrounding her caused by the covered peril.
husband's death were her purported
affidavit and the letter allegedly written
by the deceased co-worker in Iraq. The While petitioner did fail in substantiating her allegation
said affidavit however suffers from that the death of her husband was due to an accident,
procedural infirmity as it was not even considering, however, the uncertainty on the real
testified to or identified by the affiant cause of death, private respondent might find its way
(plaintiff-appellant) herself. This self- clear into still taking a second look on the matter and
serving affidavit therefore is a mere perhaps help ease the load of petitioner's loss.
hearsay under the rules, . . . .
WHEREFORE, the decision appealed from is AFFIRMED.
xxx xxx xxx No costs.