Zenith Ins. v.

CA: Under the Insurance Code, in case of unreasonable delay in the payment of
the proceeds of an insurance policy, the damages that may be awarded are:
1.) Attys fees;
2.) Other expenses incurred by the insured person by reason of such unreasonable denial or
withholding of payment;
3.) Interest at twice the ceiling prescribed by the Monetary Board of the amount of the claim
due the injured; and
4.) The amount of the claim.
Zenith Insurance Corporation vs. CA [G.R. No. 85296 May 14, 1990]
Facts: On January 25, 1983, private respondent Lawrence Fernandez insured his car for "own
damage" with petitioner Zenith Insurance Corporation. On July 6, 1983, the car figured in an
accident and suffered actual damages in the amount of P3,640.00. After allegedly being given a
run around by Zenith for two (2) months, Fernandez filed a complaint with the Regional Trial
Court of Cebu for sum of money and damages resulting from the refusal of Zenith to pay the
amount claimed. Aside from actual damages and interests, Fernandez also prayed for moral
damages in the amount of P10,000.00, exemplary damages of P5,000.00, attorney's fees of
P3,000.00 and litigation expenses of P3,000.00.
On September 28, 1983, Zenith filed an answer alleging that it offered to pay the claim of
Fernandez pursuant to the terms and conditions of the contract which, the private respondent
rejected. On June 4, 1986, a decision was rendered by the trial court in favor of private
respondent Fernandez. On August 17, 1988, the Court of Appeals rendered its decision affirming
in toto the decision of the trial court.
Issue: The propriety of the award of moral damages, exemplary damages and attorney's fees is
the main issue raised herein by petitioner.
Held: The award of damages in case of unreasonable delay in the payment of insurance
claims is governed by the Philippine Insurance Code, which provides:
Sec. 244. In case of any litigation for the enforcement of any policy or contract of insurance, it
shall be the duty of the Commissioner or the Court, as the case may be, to make a finding as to
whether the payment of the claim of the insured has been unreasonably denied or withheld; and
in the affirmative case, the insurance company shall be adjudged to pay damages which shall
consist of attorney's feesand other expenses incurred by the insured person by reason of such
unreasonable denial or withholding of payment plus interest of twice the ceiling prescribed by
the Monetary Board of the amount of the claim due the insured, from the date following the time
prescribed in section two hundred forty-two or in section twohundred forty-three, as the case
may be, until the claim is fully satisfied; Provided, That the failure to pay any such claim within
the time prescribed in said sections shall be considered prima facie evidence of unreasonable
delay in payment.
It is clear that under the Insurance Code, in case of unreasonable delay in the payment of the
proceeds of an insurance policy, the damages that may be awarded are: 1) attorney's fees; 2)
other expenses incurred by the insured person by reason of such unreasonable denial or
withholding of payment; 3) interest at twice the ceiling prescribed by the Monetary Board of the
amount of the claim due the injured; and 4) the amount of the claim.

Tiu vs. Arriesgado 437 SCRA 426

of its rear tires exploded. The driver, Sergio Pedrano, then parked along the right side of the
bridge and removed the damaged tire to have it vulcanized at a nearby shop. Pedrano left his
helper, Jose Militante Jr. to keep watch over the stalled vehicle, and instructed the latter to place
a spare tire 6 fathoms behind the stalled truck to serve as a warning for oncoming vehicles. The
truck's tail lights were also left on. At abount 4:45 am., D rough Riders Passenger bus driven by
Virgilio te Las Pinas was crushing along the national highway of Sitio Aggies also bound for Cebu
City. Among its passengers were the Sposes Pedro A. Arriesgado and Felisa Pepito Arriesgado,
who were seated at the right side of the bus.
As the bus was approaching the bridge, Las Pinas saw the stalled truck. He applied the brakes
and tried to swerve to the left to avoid hitting the truck. But it was too late; the bus rammed
into the truck's left rear. Pedro Arriesgado lost consciousness and suffered a fracture in his colles.
His wife Felisa died after being transferred to Island Medical Center. Arriesgado then filed
a complaint against Wiliam Tiu, operator of D Rough and his driver Las Pinas for breach of
contract of carriage.
ISSUE: Whether the doctrine of last clear chance is applicable as the petitioner asserts.
HELD:
Contrary to the petitioner's contention, the principle of last clear chance is inapplicable in the
instant case, as it only applies in a suit between the owners and drivers of two colliding vehicles.
It does not arise where the passenger demands responsibility from the carrier to enforce its
contractual obligations, for it would be inequitable to exempt the negligent driver and its owner
on the ground that the other driver was likewise guilty negligence. The common law notion of
last clear chance permitted courts to grant recovery to a plaintiff who has also been negligent
provided that the defendant had the last clear chance to avoid the casualty and failed to do so.

Tiu vs Arriesgado
At about 10:00 p.m. of March 15, 1987, a cargo truck marked "Condor Hollow Blocks and General
Merchandise" was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies,
Poblacion, Compostela, Cebu, just as the truck passed over a bridge, one of its rear tires exploded. The
driver, Sergio Pedrano, then parked along the right side of the national highway and removed the damaged
tire to have it vulcanized at a nearby shop, about 700 meters away. Pedrano left his helper, Jose Mitante, Jr.
to keep watch over the stalled vehicle, and instructed the latter to place a spare tire six fathoms away
behind the stalled truck to serve as a warning for oncoming vehicles. The trucks tail lights were also left on.
It was about 12:00 a.m.
At about 4:45 a.m., D Rough Riders passenger bus driven by Virgilio Te Laspias was cruising along the
national highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus was also bound for Cebu
City, and had come from Maya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A.
Arriesgado and Felisa Pepito Arriesgado, who were seated at the right side of the bus.
As the bus was approaching the bridge, Laspias saw the stalled truck, which was then about 25 meters
away. He applied the breaks and tried to swerve to the left to avoid hitting the truck. But it was too late; the
bus rammed into the trucks left rear. The impact damaged the right side of the bus and left several
passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in his right colles. His wife,
Felisa, was brought to the Danao City Hospital. She was later transferred to the Southern Island Medical
Center where she died shortly thereafter.

Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage before the RTC.,
against D Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspias. The

respondent alleged that the passenger bus in question was cruising at a fast and high speed along the
national road, and that petitioner Laspias did not take precautionary measures to avoid the accident.
The petitioners, for their part, filed a Third-Party Complaint against the following: respondent Philippine
Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tius insurer; respondent Benjamin Condor, the
registered owner of the cargo truck; and respondent Sergio Pedrano, the driver of the truck. They alleged
that petitioner Laspias was negotiating the uphill climb along the national highway of Sitio Aggies,
Poblacion, Compostela, in a moderate and normal speed. It was further alleged that the truck was parked in
a slanted manner, its rear portion almost in the middle of the highway, and that no early warning device was
displayed. Petitioner Laspias promptly applied the brakes and swerved to the left to avoid hitting the truck
head-on, but despite his efforts to avoid damage to property and physical injuries on the passengers, the
right side portion of the bus hit the cargo trucks left rear.
Issue:
Whether or not Laspinas is liable as being the driver of the bus.
Whether or not Tiu, as bus operator, overcame the presumption of negligence being the operator of a
common carrier.
Whether or not the doctrine of last clear chance is applicable.
Whether or not Pedrano and Condor are liable as well.
What then would be the liability of the insurer.
Held:
1) Yes. In his testimony before the trial court, petitioner Laspias claimed that he was traversing the twolane road at Compostela, Cebu at a speed of only forty (40) to fifty (50) kilometers per hour before the
incident occurred. He also admitted that he saw the truck which was parked in an oblique position at about
25 meters before impact, and tried to avoid hitting it by swerving to the left. However, even in the absence
of expert evidence, the damage sustained by the truck itself supports the finding of both the trial court and
the appellate court, that the D Rough Rider bus driven by petitioner Laspias was traveling at a fast pace.
Since he saw the stalled truck at a distance of 25 meters, petitioner Laspias had more than enough time to
swerve to his left to avoid hitting it; that is, if the speed of the bus was only 40 to 50 kilometers per hour as
he claimed. As found by the Court of Appeals, it is easier to believe that petitioner Laspias was driving at a
very fast speed, since at 4:45 a.m., the hour of the accident, there were no oncoming vehicles at the
opposite direction. Petitioner Laspias could have swerved to the left lane with proper clearance, and, thus,
could have avoided the truck
Indeed, petitioner Laspias negligence in driving the bus is apparent in the records. By his own
admission, he had just passed a bridge and was traversing the highway of Compostela, Cebu at a speed of
40 to 50 kilometers per hour before the collision occurred. The maximum speed allowed by law on a bridge
is only 30 kilometers per hour. And, as correctly pointed out by the trial court, petitioner Laspias also
violated Section 35 of the Land Transportation and Traffic Code, Republic Act No. 4136, as amended:
Sec. 35. Restriction as to speed. (a) Any person driving a motor vehicle on a highway shall drive the same
at a careful and prudent speed, not greater nor less than is reasonable and proper, having due regard for
the traffic, the width of the highway, and or any other condition then and there existing; and no person shall
drive any motor vehicle upon a highway at such speed as to endanger the life, limb and property of any
person, nor at a speed greater than will permit him to bring the vehicle to a stop within the assured clear
distance ahead.
Under Article 2185 of the Civil Code, a person driving a vehicle is presumed negligent if at the time of
the mishap, he was violating any traffic regulation
2) No. Upon the happening of the accident, the presumption of negligence at once arises, and it becomes
the duty of a common carrier to prove that he observed extraordinary diligence in the care of his
passengers.

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 existence of such contract, and the fact that the obligor, in this
case the common carrier, failed to transport his passenger safely to his destination are the matters that
need to be proved. The negligence of petitioner Laspias as driver of the passenger bus is, thus, binding
against petitioner Tiu, as the owner of the passenger bus engaged as a common carrier.
3) No. Contrary to the petitioners contention, the principle of last clear chance is inapplicable in the instant
case, as it only applies in a suit between the owners and drivers of two colliding vehicles. It does not arise
where a passenger demands responsibility from the carrier to enforce its contractual obligations, for it would
be inequitable to exempt the negligent driver and its owner on the ground that the other driver was likewise
guilty of negligence.
4) Yes. The manner in which the truck was parked clearly endangered oncoming traffic on both sides,
considering that the tire blowout which stalled the truck in the first place occurred in the wee hours of the
morning. The Court can only now surmise that the unfortunate incident could have been averted had
respondent Condor, the owner of the truck, equipped the said vehicle with lights, flares, or, at the very least,
an early warning device. Hence, we cannot subscribe to respondents Condor and Pedranos claim that they
should be absolved from liability.
5) As can be gleaned from the Certificate of Cover, such insurance contract was issued pursuant to the
Compulsory Motor Vehicle Liability Insurance Law. It was expressly provided therein that the limit of the
insurers liability for each person was P12,000, while the limit per accident was pegged at P50,000. An
insurer in an indemnity contract for third party liability is directly liable to the injured party up to the extent
specified in the agreement but it cannot be held solidarily liable beyond that amount. The respondent PPSII
could not then just deny petitioner Tius claim; it should have paid P12,000 for the death of Felisa
Arriesgado, and respondent Arriesgados hospitalization expenses of P1,113.80, which the trial court found
to have been duly supported by receipts. The total amount of the claims, even when added to that of the
other injured passengers which the respondent PPSII claimed to have settled, would not exceed the P50,000
limit under the insurance agreement.
Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is such that it is primarily intended to
provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a
result of the negligent operation and use of motor vehicles. The victims and/or their dependents are assured
of immediate financial assistance, regardless of the financial capacity of motor vehicle owners.

GSIS v. CA
FACTS
At around 7 PM, in Tabon-Tabon, Butuan City, a Chevrolet Truck, owned by NFA,driven by
Guillermo Corbeta collided with a Toyota Tamaraw, a public utility vehicle, owned by Victory Line.
As a result of the collision, the truck crossed over to the other lane, and fell into theravine
It was found out that the Truck was occupying the lane of the Tamaraw at the timeof the
collision and it was concluded by the RTC that if both vehicles had traveledin their respective
lanes. He incident would not have happened
5 died from the accident, 10 were injured.
3 sets of heirs filed a case with the RTC for damages against NFA as owner of the Truck ,and
GSIS as the insurer of NFAs motor vehicles
RTC held NFA and GSIS solidarily liable for P109K

 GSIS rejects the decision since, according to the insurance contract, their maximumliability in
case of death in a motor vehicle accident is only P12K per victim.
ISSUES & ARGUMENTS
W/N NFA and GSIS are solidarily liable.
o Petitioner:
GSIS denies solidary liability because their liability ariss fromdifferent causes of action. GSIS is
liable under an insurance contract, whileNFA is liable under the laws of quasi-delict.
HOLDING & RATIO DECIDENDINO GSIS IS NOT SOLIDARILY LIABLE.
The victims may proceed directly against the insurer for the indemnity, the thirdparty liability is
only up to the extent of the insurance policy and those required by law
The direct liability of the insurer under indemnity contracts against third party liability does not
mean that the insurer can be held liable in solidum with the insuredand/or the other parties
found at fault.

For the liability of the insurer is based on contract; that of the insured carrier or vehicle owner is
based on tort.
The liability of GSIS based on insurance contract is direct, NOT SOLIDARY withthat of NFA.
The insurer could only be held liable up to the extent if what was provided for in theinsurance
contracts, therefore GSIS is only liable for P12K per victim (3 sets of heirs at P12K each, plus
insurance for those who were injured)