Group 3:

CAHUAN, Izhar
DUGUAN, Bryan Kent
MAGAHUD, Edziel James
PAHANGUIN, Debson
RONCALES, Raffy

Chapter VI
Compulsory Motor Vehicle Liability Insurance
CASE DIGEST

Shafer v. Judge of Olongapo City

167 SCRA 386 (1986)
Facts:
This is a petition for review on certiorari. Herein petitioner Shafer obtained a private policy of CTPL
from Makati Insurance Company. During the period of insurance, he met an accident and was charged
with reckless imprudence resulting in damage to property and serious physical injuries and causes
damage in the amount of P 12,345.00. The passenger of the Volkswagen also filed a separate civil
action for damages. During the trial of the criminal case the passenger Jovencio Poblete testified on his
claim for damages. Shafer then filed a third party complaint against Makati Insurance Company which
was allowed by the former presiding judge of the court. Makati Insurance Co. moved to dismiss the case
which was granted on the ground that it was premature. Stating that unless herein petitioner is found
guilty and sentenced to pay the offended party for indemnity or damages, the complaint is without
cause of action. Hence, the petition.
Issue:
WON the accused, also the third party plaintiff, has a cause of action against the third party defendant
for the enforcement of its third party liability (TPL) under the insurance contract.
Ruling:
Yes, the occurrence of the injury to the third party immediately gave rise to the liability of the insurer
under its policy. The liability of the insurance company under the Compulsory Motor Vehicle Liability
Insurance is for loss or damage. Where 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.

First Integrated Bonding and Insurance Co, Inc. vs Hernando

199 SCRA 796 (1991)
Facts:
Silverio Blanco was the owner of a passenger jeepney which he insured against liabilities for death and
injuries to third persons with First Integrated Bonding and Insurance Company, Inc. for P30,000. The
said jeepney driven by Blanco himself bumped a five-year old child, Deogracias Advincula, causing the
latter's death. The boys parents filed a complaint for damages against Blanco and First Insurance,
which was granted by the lower court. First Insurance filed a petition for certiorari contending that the
victims parents have no cause of action against it because they are not parties to the insurance
contract and that they may only proceed against the driver based on the provisions of the New Civil
Code.
Issue:
W/N an injured party for whom the contract of insurance is intended can sue directly the insurer
Held: YES
Doctrine: Where the insurance contract provides for indemnity against liability to a third party,
such third party can directly sue the insurer. The liability of the insurer to such third person is based on
contract while the liability of the insured to the third party is based on tort. It cannot evade its liability
as insurer by hiding under the cloak of the insured. Its liability is primary and not dependent on the
recovery of judgment from the insured.
.

GSIS vs. Court of Appeals

308 SCRA 559 (1997)
Facts:
NFA National Food Authority was the owner of Chevrolet truck insured by GSIS-CMVLI. Victor Uy was
the owner of Toyota Tamaraw used as PU insured by Mabuhay Insurance and Guarantee-CMVLI. On
May 9, 1979 at Tabon-Tabon, Butuan City, the two vehicles collided resulting death and injuries to
passengers of the Tamaraw.
Petitioner denies solidary liability with the NFA or the negligent operator of the cargo truck because it
claims that they are liable under different obligations. It asserts that the NFAs liability is based on quasidelict, while petitioners liability is based on the contract of insurance. Citing articles 1207 and 1208of
the Civil Code of the Philippines, petitioner asserts that the presumption is that its obligation arising
from a contract of insurance is joint.
Issue: Whether or not GSIS and NFA are jointly liable.
Held: Petitioners position insofar as joint liability is concerned is not tenable. It is now established that
the injured or the heirs of a deceased victim of a vehicular accident may sue directly the insurer of the
vehicle. Note that common carriers are required to secure Compulsory Motor Vehicle Liability Insurance
[CMVLI] coverage as provided under Sec. 374 of the Insurance Code, precisely for the benefit of victims
of vehicular accidents and to extend them immediate relief. Compulsory Motor Vehicle Liability
Insurance is primarily intended to provide 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
victims and/or their defendants [dependents] are assured of immediate financial assistance, regardless
of the financial capacity of motor vehicle owners. However, although the victim may proceed directly
against the insurer for indemnity, the third party liability is only up to the extent of the insurance policy
and those required by law.

Perla Compania de Seguros vs. Ancheta

164 SCRA 144
Facts:
There was a collision between the IH Scout (in which private respondents were riding) and a Superlines
bus. Private respondents sustained injuries. A complaint for damages was filed against Superlines, the
bus driver and petitioner insurance company, the insurer of the bus. The vehicle in which the private
respondents were riding was insured with Malayan Insurance Co. Even before summons could be
served, the judge issued an order for the Insurance Company to pay immediately within 5 days the
P5,000 under the no-fault clause as provided for in Section 378 of the Insurance Code.
Petitioner moved for the reconsideration of the order; it was denied. Petitioner contends that under
Sec. 378 of the Insurance Code, the insurer liable to pay the P5,000 is the insurer of the vehicle in which
private respondents were riding, not petitioner.
Issue:
Whether or not petitioner is the insurer liable to indemnify the private respondents under Sec. 378 of
the Insurance Code
Ruling:
Supreme Court says that the provision is clear and unambiguous. Under Sec. 378, the claim shall lie
against the insurer of the vehicle in which the occupant is riding and no other. The claimant is not free
to choose from which insurer he will claim the no fault indemnity as the law uses the term shall.
That said vehicle might not be the one that caused the accident is of no moment since the law itself
provides that the party paying the claim may recover against the owner of the vehicle responsible for
the accident.
Essence of no fault indemnity clause: to provide victims of vehicular accidents or their heirs
immediate compensation pending final determination of who is responsible for the accident.
The no fault indemnity provision is part and parcel of the Insurance Code provisions on compulsory
motor vehicle liability insurance (Secs. 373-389) and should be read together with the requirement for
compulsory passenger and/or third party liability insurance (Sec. 377).
.

Perla Cia. De Seguros, Inc. v. CA

208 SCRA 487 (1992)
FACTS:
Spouses Lim purchased a brand new red Ford Laser car from Supercars, Inc. in a sale by installment
secured by a chattel mortgage. The same car is insured with Perla Compania de Seguros (Perla). On the
same day, Supercars, Inc. assigned its rights, title and interest to FCP Credit Corporation (FCP).
On a later date, the vehicle was carnapped. Spouses Lim filed a claim for loss with Perla but this was
denied on the ground that Evelyn Lim, who was using the vehicle before it was carnapped, was in
possession of an expired drivers license at the time of the loss, in violation of the authorized driver
clause of the insurance policy.
ISSUE:
Whether or not Perla is liable despite the alleged violation of the authorized driver clause in the
insurance contract
HELD:
The Supreme Court held that Perla is liable to pay the insurance claim. The comprehensive motor car
insurance policy issued by Perla covered loss or damage to the car: (a) xxx; (b) by fire, external
explosion, self-ignition or lightning or burglary, housebreaking or theft; (c) xxx. Where a car is
admittedly unlawfully and wrongfully taken without the owners consent or knowledge, such taking
constitutes theft, and therefore, it is the THEFT clause, and not the AUTHORIZED DRIVER clause
that should apply.
The Court of Appeals was correct in holding that: Theft is an entirely different legal concept from
that of accident. Theft is committed by a person with the intent to gain or, to put it in another way, with
the concurrence of the doers will. On the other hand, accident, although it may proceed or result from
negligence, is the happening of an event without the concurrence of the will of the person by whose
agency it was caused.

JEWEL VILLACORTA vs. THE INSURANCE COMMISSION

G.R. No. L-54171, 28 October 1980
100 SCRA 467
FACTS: Villacorta had her Colt Lancer car insured with Empire Insurance Company against own
damage, theft and 3rd party liability. While the car was in the repair shop, one of the employees of the
said repair shop took it out for a joyride after which it figured in a vehicular accident. This resulted to
the death of the driver and some of the passengers as well as to extensive damage to the car. Villacorta
filed a claim for total loss with the said insurance company. However, it denied the claim on the ground
that the accident did not fall within the provisions of the policy either for the Own Damage or Theft
coverage, invoking the policy provision on Authorized Driver Clause. This was upheld by the Insurance
Commission further stating that the car was not stolen and therefore not covered by the Theft Clause
because it is not evident that the person who took the car for a joyride intends to permanently deprive
the insured of his/ her car.
ISSUE: Whether or not the insurer company should pay the said claim
HELD: Yes. Where the insureds car is wrongfully taken without the insureds consent from the car
service and 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 accident), respondent
insurer is liable and must pay insured for the total loss of the insured vehicle under the Theft Clause of
the policy. Assuming, despite the totally inadequate evidence, that the taking was temporary and for
a joy ride, the Court sustains as the better view that which holds that when a person, either with the
object of going to a certain place, or learning how to drive, or enjoying a free ride, takes possession of a
vehicle belonging to another, without the consent of its owner, he is guilty of theft because by taking
possession of the personal property belonging to another and using it, his intent to gain is evident
since he derives therefrom utility, satisfaction, enjoyment and pleasure.
.

Palermo vs. Pyramid Insurance Co.,

161 SCRA 677 (1988)
FACTS:
On March 7, 1969, the insured, appellee Andrew Palermo, filed a complaint in the Court of First Instance
of Negros Occidental against Pyramid Insurance Co., Inc., for payment of his claim under a Private Car
Comprehensive Policy MV-1251 issued by the defendant (Exh. A). In its answer, the appellant Pyramid
Insurance Co., Inc., alleged that it disallowed the claim because at the time of the accident, the insured
was driving his car with an expired driver's license. After the trial, the court a quo rendered judgment on
October 29, 1969 ordering the defendant "to pay the plaintiff the sum of P20,000.00, value of the
insurance of the motor vehicle in question and to pay the costs." On November 26, 1969, the plaintiff
filed a "Motion for Immediate Execution Pending Appeal." It was opposed by the defendant, but was
granted by the trial court on December 15, 1969.
ISSUE: WON plaintiff was not authorized to drive the insured motor vehicle because his driver's license
had expired.
RULING:
There is no merit in the appellant's allegation that the plaintiff was not authorized to drive the insured
motor vehicle because his driver's license had expired. The driver of the insured motor vehicle at the
time of the accident was, the insured himself, hence an "authorized driver" under the policy. While the
Motor Vehicle Law prohibits a person from operating a motor vehicle on the highway without a license
or with an expired license, an infraction of the Motor Vehicle Law on the part of the insured, is not a bar
to recovery under the insurance contract. It however renders him subject to the penal sanctions of the
Motor Vehicle Law. The requirement that the driver be "permitted in accordance with the licensing or
other laws or regulations to drive the Motor Vehicle and is not disqualified from driving such motor
vehicle by order of a Court of Law or by reason of any enactment or regulation in that behalf," applies
only when the driver" is driving on the insured's order or with his permission." It does not apply when
the person driving is the insured himself.