Summary: Vda. de Maglana vs. Consolacion (GR 60506, 6 August 1992)

Vda. de Maglana vs. Consolacion
[GR 60506, 6 August 1992]
Third Division, Romero (J): 3 concur

Facts: Lope Maglana was an employee of the Bureau of Customs whose work station was at Lasa, in Davao City. On 20 December 1978, early morning, Lope Maglana was on his way to his work station, driving a motorcycle owned by the Bureau of Customs. At Km. 7, Lanang, he met an accident that resulted in his death. He died on the spot. The PUJ jeep that bumped the deceased was driven by Pepito Into, operated and owned by Destrajo. From the investigation conducted by the traffic investigator, the PUJ jeep was overtaking another passenger jeep that was going towards the city poblacion. While overtaking, the PUJ jeep of Destrajo running abreast with the overtaken jeep, bumped the motorcycle driven by the deceased who was going towards the direction of Lasa, Davao City. The point of impact was on the lane of the motorcycle and the deceased was thrown from the road and met his untimely death. Consequently, the heirs of Lope Maglana, Sr., filed an action for damages and attorney's fees against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO) before the then Court of First Instance of Davao, Branch II. An information for homicide thru reckless imprudence was also filed against Pepito Into. During the pendency of the civil case, Into was sentenced to suffer an indeterminate penalty of 1 year, 8 months and 1 day of prision correccional, as minimum, to 4 years, 9 months and 11 days of prision correcional, as maximum, with all the accessory penalties provided by law, and to indemnify the heirs of Lope Maglana, Sr. in the amount of P12,000.00 with subsidiary imprisonment in case of insolvency, plus P5,000.00 in the concept of moral and exemplary damages with costs. No appeal was interposed by the accused who later applied for probation. On 14 December 1981, the lower court rendered a decision finding that Destrajo had not exercised sufficient diligence as the operator of the jeepney. The court ordered Destrajo to pay the heirs of Maglana the sum of P28,000.00 for loss of income; the sum of P12,000.00 which amount shall be deducted in the event judgment in Criminal Case 3527-D against the driver, accused Into, shall have been enforced; the sum of P5,901.70 representing funeral and burial expenses of the deceased; the sum of P5,000.00 as moral damages which shall be deducted in the event judgment (sic) in Criminal Case 3527-D against the driver, accused Into; the sum of P3,000.00 as attorney's fees and to pay the costs of suit. The court ordered the insurance company is ordered to reimburse Destrajo whatever amounts the latter shall have paid only up to the extent of its insurance coverage. The heirs of Maglana filed a motion for the reconsideration of the second paragraph of the dispositive portion of the decision contending that AFISCO should not merely be held secondarily liable because the Insurance Code provides that the insurer's liability is "direct and primary and/or jointly and severally with the operator of the vehicle, although only up to the extent of the insurance coverage." In its Order of February 9, 1982, the lower court denied the motion for reconsideration ruling that since the insurance contract "is in the nature of suretyship, then the liability of the insurer is secondary only up to the extent of the insurance coverage." The heirs filed a second motion for reconsideration reiterating that the liability of the insurer is direct, primary and solidary with the jeepney operator because the petitioners became direct beneficiaries under the provision of the policy which, in effect, is a stipulation pour autrui. This motion was likewise denied for lack of merit. The heirs filed the petition for certiorari.

Issue [1]: Whether AFISCO is primarily liable, not secondarily liable, on the insurance policy.

Held [1]: The particular provision of the insurance policy on which the heirs base their claim provides "SECTION 1 — LIABILITY TO THE PUBLIC 1. The Company will, subject to the Limits of Liability, pay all sums necessary to discharge liability of the insured in respect of. (a) death of or bodily injury to any THIRD PARTY; xxx 3. In the event of the death of any person entitled to indemnity under this Policy, the Company will, in respect of the liability incurred to such person indemnify his personal representatives in terms of, and subject to the terms and conditions hereof." The above-quoted provision leads to no other conclusion but that AFISCO can be held directly liable by the heirs. As the Court ruled in Shafer vs. Judge, RTC of Olongapo City, Br. 75, "[w]here an insurance policy insures directly against liability, the insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends, and does not depend on the recovery of judgment by the injured party against the insured." The underlying reason behind the third party liability (TPL) of the Compulsory Motor Vehicle Liability Insurance is "to protect injured persons against the insolvency of the insured who causes such injury, and to give such injured person a certain beneficial interest in the proceeds of the policy." Since the heirs had received from AFISCO the sum of P5,000.00 under the no-fault clause, AFISCO's liability is now limited to P15,000.00.

Issue [2]: Whether AFISCO is solidarily liable with Destrajo.

Held [2]: NO. In Malayan Insurance Co., Inc. v. Court of Appeals, the Court had the opportunity to resolve the issue as to the nature of the liability of the insurer and the insured vis-a-vis the third party injured in an accident, where it ruled that "While it is true that where the insurance contract provides for indemnity against liability to third persons, such third persons can directly sue the insurer, however, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault. The liability of the insurer is based on contract; that of the insured is based on tort." The Court then proceeded to distinguish the extent of the liability and manner of enforcing the same in ordinary contracts from that of insurance contracts. While in solidary obligations, the creditor may enforce the entire obligation against one of the solidary debtors, in an insurance contract, the insurer undertakes for a consideration to indemnify the insured against loss, damage or liability arising from an unknown or contingent event." Herein, the heirs cannot validly claim that AFISCO, whose liability under the insurance policy is also P20,000.00, can be held solidarily liable with Destrajo for the total amount of P53,901.70 in accordance with the decision of the lower court. Since under both the law and the insurance policy, AFISCO's liability is only up to P20,000.00, the second paragraph of the dispositive portion of the decision in question may have unwittingly sown confusion among the heirs and their counsel. What should have been clearly stressed as to leave no room for doubt was the liability of AFISCO under the explicit terms of the insurance contract. The liability of AFISCO based on the insurance contract is direct, but not solidary with that of Destrajo which is based on Article 2180 of the Civil Code. As such, the heirs have the option either to claim the P15,000 from AFISCO and the balance from Destrajo or enforce the entire judgment from Destrajo subject to reimbursement from AFISCO to the extent of the insurance coverage.

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