G.R. No. 101439 June 21, 1999 GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. COURT OF A EA!

S ("o#$e# Ten%& '()(*(on), VICTORIA JAIME V'A. 'E +,O, "o# &e#*e-" .n/ $(no# ROY RO!AN', G!ORIA +,O V'A. 'E CA!A0IA "o# &e#*e-" .n/ $(no#* MARY GRACE, 1I!!IE, JR., VO!TAIRE, G!ENN, .n/ MAY, .-- *u#n.$e/ CA!A0IA, 'ANIE! +,O, JOSEFINA +,O, EMERITA +,O A EGO, ANTONIO +,O .n/ TERESITA +,O, respondents.

2UISUM0ING, J.:p In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Government Service Insurance System (GSIS) assails the anuary !5, !""! #ecision 1 of the Court of $ppeals in C$%G.R. &o. !"'4", which affirmed in toto the (ud)ment of the Re)ional *rial Court of +utuan City, +ranch II, dated $pril ,-, !"'5, statin) in part. /01R123R1, (ud)ment is here4y rendered, as follows. 555 555 555 In Civil Case &o. 6657. a) #ismissin) the complaint a)ainst defendant 8ictor 9y: 4) 3rderin) defendants ;a4uhay Insurance and Guaranty Company, Inc., Guillermo Cor4eta, &2$ and GSIS to pay jointly and severally the followin) sums of money.

i. to pay plaintiff Gloria <ho 8da. de Cala4ia, the sum of =',",5.-7 for doctor>s fees, medicines, hospitali?at ions and medical e5penses: =6,,!".-for transportati on e5penses: and =5,.,for tele)rams: =!-,---.-for the in(uries she sustained: =!6,---.-loss of income for si5 months. ii. to plaintiff 8ictoria <ho, the sum =',6.-for hospitali?at ion and medicines: =!-,---.--

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for the in(uries she sustained: iii. to the heirs of /ellie @/illieA Cala4ia, Roland <ho and ;a5ima 9hmad @9)madA 8da. de <ho, the sum of =B,5--.-as funeral e5penses less =5,---.-advanced 4y defendant 8ictor 9y. iv. to the heirs of /ellie @/illieA Cala4ia, Sr., heirs of Roland <ho and heirs of ;a5ima 9)mad 8da. de <ho: =,-,---.-each as compensat ory dama)es. c) *o pay plaintiff the sum of =!-,---.-- as attorney>s fees and e5penses of liti)ation: d) #ismissin) defendants counterclaim, and cross% claim: and e) *o pay the costs.
*hat this decision is without pre(udice as to the ri)ht ;a4uhay Insurance C Guaranty Co., Inc., and &2$ to recover from Guillermo Cor4eta and GSIS the amounts they may have paid 4y virtue hereof. 2

2or purposes of this review, we deem as also assailed the disposition 4y the trial court in its 3rder issued on uly !6, !"'5, modifyin) its ori)inal decision, 4y awardin) moral dama)es to the heirs of the deceased victims, as follows. Considerin) that the dispositive portion of the decision in this case, an award of =!-,---.-- each made to plaintiffs Gloria <ho 8da. de Cala4ia . . ., for in(uries they sustained, this award, throu)h @sicA not clearly stated in the decision, is the moral dama)es the instant motion seeDs to o4tain. 0owever, the prayer for moral dama)es for the death of the three (,) persons a4ove%mentioned is proper. (citation omitted) In view of the fore)oin), the prayer of plaintiffs Gloria <ho 8da. de Cala4ia and 8ictoria <ho for an award of moral dama)es in their favor is here4y denied. 0owever, as for the death of /ellie @/illieA Cala4ia, Sr., Rolando <ho and ;a5ima 9)mad 8da. de <ho, an award of moral dama)es is here4y made, and orderin) and directin) defendants ;a4uhay Insurance and Guaranty Company

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Inc., Guillermo Cor4eta, &ational 2ood $uthority and Government Service Insurance System to pay jointly and severally the followin) sums to wit . =!-,---.-- to the heirs of /ellie @/illieACala4ia, Sr. =!-,---.-- to the heirs of Rolando <ho and =!-,---.-- to the heirs of ;a5ima 9)mad 8da. de <ho. 555 555 555
I* IS S3 3R#1R1#. 3

*he third, Civil Case &o. 6657, was instituted 4y herein private respondents on &ovem4er 67, !"B" a)ainst the followin). &2$ and Cor4eta for dama)es due to quasi-delict: GSIS as insurer of the trucD: 9y for 4reach of contract of carria)e: and ;IGC as insurer of the *oyota *amaraw. *hese cases were consolidated and partially tried 4y ud)e 2ortunate $. 8ailoces, of the then Court of 2irst Instance of $)usan del &orte and +utuan City. *hese cases were later on transferred to +ranch II of the Re)ional *rial Court of +utuan City. *rial ensued and on $pril ,-, !"'5, the court rendered its decision 3 holdin) that Cor4eta>s ne)li)ence was the pro5imate cause of the collision. *he findin)s of the trial court stated that the trucD which crossed over to the other lane was speedin) 4ecause after the collision, its left front wheel was detached and the trucD traveled for a4out fifty (5-) meters and fell into a ravine. 4 FiDewise, the court concluded that if 4oth vehicles had traveled in their respective lanes, the incident would not have occurred. 5 0owever, the Chevy car)o trucD had crossed over to the other lane which, under traffic rules, was the lane of the *oyota *amaraw. 6 In Civil Case &o. 6!"7, the trial court awarded 9y the total amount of one hundred nine thousand one hundred (=!-",!--.--) pesos for dama)es. In Civil Case &o. 6665, said court dismissed the case a)ainst 9y and ordered ;IGC, Cor4eta and &2$ to pay plaintiff *aer, (ointly and severally, the total amount of forty thousand five hundred fifty%nine pesos and ninety four centavos (=4-,55"."4) for actual, compensatory, and moral dama)es plus attorney>s fees. #ama)es were liDewise awarded to the herein private respondents in Civil Case &o. 6657, as earlier mentioned. Cor4eta and &2$ appealed the decision of the trial court in Civil Case &os. 6!"7, 6665, and 6657 to the Court of $ppeals. GSIS also elevated the decision in Civil Case &o. 6657 to the same appellate court. *he appeals were docDeted as C.$.%G.R. &os. !"'4B, !"'4', and !"'4". *he Court of $ppeals a)reed with the conclusions of the trial court and ruled as follows. /01R123R1, in view of the fore)oin) considerations, and findin) no reversi4le error, the decisions of the Court a quo in Civil Cases &os. 6!"7, 6665 and 6657 are

*he relevant facts as found 4y the trial court are as follows. &ational 2ood $uthority (&2$, formerly &ational Grains $uthority) was the owner of a Chevrolet trucD which was insured a)ainst lia4ilities for death of and in(uries to third persons with the GSIS. 3n ;ay ", !"B", at a4out B.-- in the evenin) at *a4on%*a4on, +utuan City, the said trucD driven 4y Guillermo Cor4eta collided with a pu4lic utility vehicle, a *oyota *amaraw. *he *oyota *amaraw was owned and operated 4y 8ictor 9y, under the name and style of E8ictory Fine.E *he *amaraw was a total wrecD. $ll the collision victims were passen)ers of the *oyota *amaraw. 2ive (5) passen)ers died 4 while ten (!-) others sustained 4odily in(uries. $mon) those in(ured were private respondents, 8ictoria aime 8da. de <ho and Gloria <ho 8da. de Cala4ia. $mon) the dead were ;a5ima 9)mad 8da. de <ho, Roland <ho and /illie Cala4ia, Sr. *hree (,) cases were filed with the Court of 2irst Instance of $)usan del &orte and +utuan City. *he first, Civil Case &o. 6!"7 for quasi-delict, dama)es and attorney>s fees, was commenced 4y 9y on une 5, !"B" a)ainst &2$ and Cor4eta. 3n $u)ust 6B, !"B", the second, Civil Case &o. 6665 for dama)es, was filed 4y an in(ured passen)er, Fi4rado *aer, a)ainst 9y, the operator of the pu4lic utility vehicle, and insurer, ;a4uhay Insurance and Guaranty Co. (;IGC). In turn, 9y filed a cross%claim a)ainst ;IGC and a third%party complaint a)ainst Cor4eta and &2$.

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here4y $22IR;1# in toto, with costs a)ainst the appellants.
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petitioner, alle)edly for failure of the victims to file an insurance claim within si5 (7) months from the date of the accident. =etitioner denies solidary lia4ility with the &2$ or the ne)li)ent operator of the car)o trucD 4ecause it claims that they are lia4le under different o4li)ations. It asserts that the &2$>s lia4ility is 4ased on quasi-delict, while petitioner>s lia4ility is 4ased on the contract of insurance. Citin) articles !6-B 11 and !6-' 12 of the Civil Code of the =hilippines, petitioner states that when there are two or more de4tors or two or more creditors, the o4li)ation as a )eneral rule is (oint. It claims that the only e5ceptions are. (!) when there is a stipulation for solidary o4li)ation: (6) when the nature of the o4li)ation reHuires solidary lia4ility: and (,) when the law declares the o4li)ation to 4e solidary. 0owever, since neither the provision of the contract nor the insurance law provides for solidary lia4ility, petitioner asserts that the presumption is that its o4li)ation arisin) from a contract of insurance is (oint. =etitioner>s position insofar as (oint lia4ility is concerned is not tena4le. It is now esta4lished that the in(ured or the heirs of a deceased victim of a vehicular accident may sue directly the insurer of the vehicle. &ote that common carriers are reHuired to secure Compulsory ;otor 8ehicle Fia4ility Insurance @C;8FIA covera)e as provided under Sec. ,B4 13 of the Insurance Code, precisely for the 4enefit of victims of vehicular accidents and to e5tend them immediate relief. 14 $s this Court held in Shafter vs. Judge, RTC of Olongapo City, Br. B5. 13 Compulsory ;otor 8ehicle Fia4ility Insurance (third party lia4ility, or *=F) is primarily intended to provide compensation for the death or 4odily in(uries suffered 4y innocent third parties or passen)ers as a result of a ne)li)ent operation and use of motor vehicles. *he victims andGor their defendants @dependentsA are assured of immediate financial assistance, re)ardless of the financial capacity of motor vehicle owners. 555 555 555
*he in(ured for whom the contract of insurance is intended can sue directly the insurer. *he )eneral purpose of statutes ena4lin) an in(ured person to proceed directly a)ainst the

3n 2e4ruary 5 and 7, !""!, GSIS and &2$ filed their motions for reconsideration respectively, which were denied 4y the respondent court in its Resolution 10 dated $u)ust !,, !""!. 3n 3cto4er 4, !""!, only GSIS filed this petition for review on certiorari 4ased on the followin) assi)ned errors. !. *he respondent court erred in holdin) GSIS solidarily lia4le with &2$. 6. *he respondent court erred in holdin) GSIS lia4le 4eyond the terms and conditions of the contract of insurance and the limitations under Insurance ;emorandum Circular (I;C) &o. 5%B'. ,. *he respondent court erred in holdin) GSIS lia4le without proof that a notice of claim had 4een filed within si5 (7) months from the date of the accident. /e find pertinent the followin) issues. !) /hether the respondent court erred in holdin) GSIS solidarily lia4le with the ne)li)ent insuredGowner%operator of the Chevrolet trucD for dama)es awarded to private respondents which are 4eyond the limitations of the insurance policy and the Insurance ;emorandum Circular &o. 5% B'. 6) /hether the respondent court failed to consider that the private respondents have no cause of action a)ainst the

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insurer is to protect in(ured persons a)ainst the insolvency of the insured who causes such in(ury, and to )ive such in(ured person a certain 4eneficial interest in the proceeds of the policy, and statutes are to 4e li4erally construed so that their intended purpose may 4e accomplished. It has even 4een held that such a provision creates a contractual relation which in(ures to the 4enefit of any and every person who may 4e ne)li)ently in(ured 4y the named insured as if such in(ured person were specifically named in the policy. (S 44" B $m. ur., 6d, pp. !!'%!!") 14

It follows also that in(ured victims, Gloria <ho 8da. de Cala4ia and 8ictoria <ho, could claim their medical e5penses for ei)ht thousand nine hundred thirty%five pesos and si5 centavos (=',",5.-7) and ei)ht hundred thirty%two (=',6.--) pesos, from any of the followin). GSIS, &2$, or Cor4eta. $s to the other dama)es, only &2$ or Cor4eta may 4e held lia4le therefor. Computation of hospital char)es and fees for the services rendered to the in(ured victims was conclusively esta4lished 4y the trial court. *he petitioner failed to o4(ect to the evidence thereon, when presented 4y the private respondents durin) the trial. *hus, these factual 4ases for the award of dama)es may no lon)er 4e attacDed. 2or )enerally, findin)s of the (ud)e who tried the case and heard the witnesses could not 4e distur4ed on appeal, unless there are su4stantial facts and particular circumstances which have 4een overlooDed 4ut which, if properly considered, mi)ht affect the result of the case. 23 *hus, considerin) the evidence on record includin) the schedule of indemnities provided under I;C &o. 5%B', we find no co)ent reason to distur4 the computation of medical char)es and e5penses that (ustify the award of dama)es 4y the trial court. $s to the second issue, the petitioner contends that it cannot 4e held lia4le without proof nor alle)ation that the private respondents filed 4efore its office a notice of claim within si5 (7) months from the date of the accident. *his reHuirement, accordin) to the petitioner, )ives the insurer the opportunity to investi)ate the veracity of the claim, and non% compliance therewith constitutes waiver. Since the claim was not reported to the insurer, the petitioner avers that the presumption is that the victim opted to pursue his claim a)ainst the motor vehicle owner or a)ainst the tortfeasor. 0owever, in this case the records reveal that on Septem4er B, !"B", the private respondents sent a notice of loss to the petitioner informin) the latter of the accident. Included as E15ihi4it >> 24 in the records, this notice constitutes evidence of the loss they suffered 4y reason of the vehicular collision. *hey stressed further that the petitioner did not deny receipt of notice of claim durin) the trial, and it would 4e too late now to state otherwise. $lthou)h merely factual, we need to emphasi?e that the alle)ed delay in reportin) the loss 4y the insured andGor 4y the 4eneficiaries must 4e

0owever, althou)h the victim may proceed directly a)ainst the insurer for indemnity, the third party lia4ility is only up to the e5tent of the insurance policy and those reHuired 4y law. /hile it is true that where the insurance contract provides for indemnity a)ainst lia4ility to third persons, and such third persons can directly 15 sue the insurer, the direct lia4ility of the insurer under indemnity contracts a)ainst third party lia4ility does not mean that the insurer can 4e held lia4le in solidu with the insured andGor the other parties found at fault. 16 2or the lia4ility of the insurer is 4ased on contract: that of the insured carrier or vehicle owner is 4ased on tort. 19 *he lia4ility of GSIS 4ased on the insurance contract is direct, 4ut not solidary with that of the &2$. *he latter>s lia4ility is 4ased separately on $rticle 6!'- 20 of the Civil Code. 21 34viously, the insurer could 4e held lia4le only up to the e5tent of what was provided for 4y the contract of insurance, in accordance with C;8FI law. $t the time of the incident, the schedule of indemnities for death andGor 4odily in(uries, professional fees, hospital and other char)es paya4le under a C;8FI covera)e was provided under the Insurance ;emorandum Circular (I;C) &o. 5%B' which was approved on &ovem4er !-, !"B'. $s therein provided, the ma5imum indemnity for death was twelve thousand (=!6,---.--) pesos per victim. 22 *he schedules for medical e5penses were also provided 4y said I;C, specifically in para)raphs (C) to (G). ConseHuently, heirs of the victims who died in the ;ay ", !"B" vehicular incident, could proceed (!) a)ainst GSIS for the indemnity of =!6,--- for each dead victim, and a)ainst &2$ and Guillermo Cor4eta for any other dama)es or e5penses claimed: or (6) a)ainst &2$ and Cor4eta to pay them all their claims in full.

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promptly raised 4y the insurer 23 in o4(ectin) to the claims. /hen the insured presented proof of loss 4efore the trial court, the insurer failed to o4(ect to said presentation. *he petitioner should have promptly interposed the defense of delay, or 4elated compliance, concernin) the notice of claim. ;oreover, the petitioner merely waited for the victims or 4eneficiaries to file their complaint. $s matters stand now, the defense of laches or prescription is deemed waived 4ecause of petitioner>s failure to raise it not only 4efore 4ut also durin) the hearin). 24 *o recapitulate, petitioner seeDs a definitive rulin) only on the e5tent of its lia4ility, as insurer of &2$, to those in(ured or Dilled in the ;ay ", !"B" vehicular collision. $s found 4y the trial court, the driver (Guillermo Cor4eta), the operator (&2$), and ;IGC, are solidarily lia4le for dama)es as computed 4elow. SC!"#$%" &
I. 'or the (njured )icti s .

a) ;edical e5penses =',6.-4) 3ther CompensatoryG;oral #ama)es !-,---.-IIIII *otal =!-,',6.-JJJJJJJJJ II. 'or the !eirs of the #eceased )icti s. CompensatoryG 2uneral #eath ;oral 15penses Indemnity #ama)es *otal IIII IIII III I III !) 0eirs of /illie Cala4ia, Sr. =6,5--.-- =,-,---.-- =!-,---.-46,5--.-6) 0eirs of Roland <ho 6,5--.-- ,-,---.-- !-,---.-- 46,5--.-,) 0eirs of ;a5ima 9)mad 8da.

!) Gloria <ho 8da. de Cala4ia. a) ;edical e5penses =',",5.-7 4) *ransportation and *ele)raph 15penses 6,,B6.,c) 3ther CompensatoryG;oral #ama)es !-,---.-d) Foss of Income !6,---.-IIIII *otal =,,,,-B.,7 JJJJJJJJJ 6) 8ictoria <ho.

de <ho 6,5--.-- ,-,---.-- !-,---.-- 46,5--.-IIII I III II II III I

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Su4%*otal =B,5--.-- ="-,---.-- =,-,---.-- =!6B,5--.-Fess. $dvances 4y 8ictor 9y (5,---.--) &IF (5,---.--) KKKKKKKK KKKKKKKKK KKKKKKKKK KKKKKKKKK +alance =6,5--.-- ="-,---.-- =,-,---.-- !66,5--.-JJJJJJJJ JJJJJJJJ JJJJJJJJ JJJJJJJJ III. *otal $mount of $ttorney>s 2ees =!-,---.-IIIII &ote that, the petitioner (GSIS) was impleaded as insurer of &2$. +ut under the C;8FI law, the petitioner could only 4e held lia4le under its contract of insurance. $nd pursuant to the C;8FI law, its lia4ility is primary, and not dependent on the recovery of (ud)ment from the insured. 0ence, GSIS is directly lia4le to the private respondents, in the followin) amounts. SC!"#$%" B
I. (njured )icti s *edical "+penses

,) 0eirs of ;a5ima 9)mad 8da. de <ho =!6,---.-*he 4alance of the private respondents> claims as shown on Schedule & a4ove, must 4e paid 4y Cor4eta or &2$, or ;IGC, the parties found solidarily lia4le. 25 /01R123R1, the instant petition is here4y GR$&*1#, 4ut the decision of the trial court as affirmed 4y the Court of $ppeals is here4y. ;3#I2I1#, as follows. !. =etitioner Government Service Insurance System is ordered to pay (a) twelve thousand pesos (=!6,---.--) as death indemnity to each )roup of heirs of the deceased, /illie Cala4ia Sr., Roland <ho and ;a5ima 9)mad 8da. de <ho: (4) ei)ht hundred thirty%two (=',6.--) pesos for medical e5penses of 8ictoria aime 8da. de <ho: and (c) ei)ht thousand, nine hundred thirty%five pesos and si5 centavos (=',",5.-7) for medical e5penses of Gloria <ho 8da. de Cala4ia. 6. Guillermo Cor4eta, &ational 2oods $uthority, and ;a4uhay Insurance C Guaranty Co., Inc., (ointly and severally, are ordered to pay private respondents> claims 26 as ad(ud)ed 4y the Re)ional *rial Court of +utuan City, minus the amounts that GSIS must pay to the in(ured victims and the heirs of the deceased victims as a4ove stated. *his decision is immediately e5ecutory. &o pronouncement as to cost. S3 3R#1R1#.

,,,,,,, ,,,,,,,,, !) 8ictoria aime 8da. de <ho =',6.-6) Gloria <ho 8da. de Cala4ia =',",5.-II. !eirs of #eceased )icti s #eath (nde nity ,,,,,,,,,,,, ,,,,,,,, !) 0eirs of /illie Cala4ia, Sr. =!6,---.-6) 0eirs of Roland <ho =!6,---.--