Republic of the Philippines motorcycle driven by the deceased who was going towards the

SUPREME COURT direction of Lasa, Davao City. The point of impact was on the
Manila lane of the motorcycle and the deceased was thrown from the
road and met his untimely death. 1
THIRD DIVISION
Consequently, the heirs of Lope Maglana, Sr., here petitioners, filed
G.R. No. 60506 August 6, 1992 an action for damages and attorney's fees against operator Patricio
Destrajo and the Afisco Insurance Corporation (AFISCO for brevity)
FIGURACION VDA. DE MAGLANA, EDITHA M. CRUZ, ERLINDA before the then Court of First Instance of Davao, Branch II. An
M. MASESAR, LEONILA M. MALLARI, GILDA ANTONIO and the information for homicide thru reckless imprudence was also filed
minors LEAH, LOPE, JR., and ELVIRA, all surnamed MAGLANA, against Pepito Into.
herein represented by their mother, FIGURACION VDA. DE
MAGLANA, petitioners, During the pendency of the civil case, Into was sentenced to suffer an
vs. indeterminate penalty of one (1) year, eight (8) months and one (1)
HONORABLE FRANCISCO Z. CONSOLACION, Presiding Judge day of prision correccional, as minimum, to four (4) years, nine (9)
of Davao City, Branch II, and AFISCO INSURANCE months and eleven (11) days of prision correccional, as maximum,
CORPORATION, respondents. with all the accessory penalties provided by law, and to indemnify the
heirs of Lope Maglana, Sr. in the amount of twelve thousand pesos
(P12,000.00) with subsidiary imprisonment in case of insolvency, plus
five thousand pesos (P5,000.00) in the concept of moral and
ROMERO, J.: exemplary damages with costs. No appeal was interposed by
accused who later applied for probation. 2
The nature of the liability of an insurer sued together with the
insured/operator-owner of a common carrier which figured in an On December 14, 1981, the lower court rendered a decision finding
accident causing the death of a third person is sought to be defined in that Destrajo had not exercised sufficient diligence as the operator of
this petition for certiorari. the jeepney. The dispositive portion of the decision reads:

The facts as found by the trial court are as follows: WHEREFORE, the Court finds judgment in favor of the
plaintiffs against defendant Destrajo, ordering him to pay
. . . Lope Maglana was an employee of the Bureau of Customs plaintiffs the sum of P28,000.00 for loss of income; to pay
whose work station was at Lasa, here in Davao City. On plaintiffs the sum of P12,000.00 which amount shall be
December 20, 1978, early morning, Lope Maglana was on his deducted in the event judgment in Criminal Case No. 3527-D
way to his work station, driving a motorcycle owned by the against the driver, accused Into, shall have been enforced; to
Bureau of Customs. At Km. 7, Lanang, he met an accident that pay plaintiffs the sum of P5,901.70 representing funeral and
resulted in his death. He died on the spot. The PUJ jeep that burial expenses of the deceased; to pay plaintiffs the sum of
P5,000.00 as moral damages which shall be deducted in the
bumped the deceased was driven by Pepito Into, operated and
owned by defendant Destrajo. From the investigation event judgment (sic) in Criminal Case No. 3527-D against the
conducted by the traffic investigator, the PUJ jeep was driver, accused Into; to pay plaintiffs the sum of P3,000.00 as
overtaking another passenger jeep that was going towards the attorney's fees and to pay the costs of suit.
city poblacion. While overtaking, the PUJ jeep of defendant
Destrajo running abreast with the overtaken jeep, bumped the
 The defendant insurance company is ordered to reimburse The particular provision of the insurance policy on which petitioners
defendant Destrajo whatever amounts the latter shall have base their claim is as follows:
paid only up to the extent of its insurance coverage.
Sec. 1 — LIABILITY TO THE PUBLIC
SO ORDERED. 3
1. The Company will, subject to the Limits of Liability, pay all
Petitioners filed a motion for the reconsideration of the second sums necessary to discharge liability of the insured in respect
paragraph of the dispositive portion of the decision contending that of
AFISCO should not merely be held secondarily liable because the
Insurance Code provides that the insurer's liability is "direct and (a) death of or bodily injury to any THIRD PARTY
primary and/or jointly and severally with the operator of the vehicle,
although only up to the extent of the insurance coverage." 4 Hence, (b) . . . .
they argued that the P20,000.00 coverage of the insurance policy
issued by AFISCO, should have been awarded in their favor. 2. . . . .

In its comment on the motion for reconsideration, AFISCO argued that 3. In the event of the death of any person entitled to indemnity
since the Insurance Code does not expressly provide for a solidary under this Policy, the Company will, in respect of the liability
obligation, the presumption is that the obligation is joint. incurred to such person indemnify his personal representatives
in terms of, and subject to the terms and conditions hereof. 7
In its Order of February 9, 1982, the lower court denied the motion for
reconsideration ruling that since the insurance contract "is in the The above-quoted provision leads to no other conclusion but that
nature of suretyship, then the liability of the insurer is secondary only AFISCO can be held directly liable by petitioners. As this Court ruled
up to the extent of the insurance coverage." 5 in Shafer vs. Judge, RTC of Olongapo City, Br. 75, "[w]here an
insurance policy insures directly against liability, the insurer's liability
Petitioners filed a second motion for reconsideration reiterating that accrues immediately upon the occurrence of the injury or even upon
the liability of the insurer is direct, primary and solidary with the which the liability depends, and does not depend on the recovery of
jeepney operator because the petitioners became direct beneficiaries judgment by the injured party against the insured." 8 The underlying
under the provision of the policy which, in effect, is a stipulation pour reason behind the third party liability (TPL) of the Compulsory Motor
autrui. 6 This motion was likewise denied for lack of merit. Vehicle Liability Insurance is "to protect injured persons against the
insolvency of the insured who causes such injury, and to give such
Hence, petitioners filed the instant petition for certiorari which, injured person a certain beneficial interest in the proceeds of the
although it does not seek the reversal of the lower court's decision in policy . . ." 9 Since petitioners had received from AFISCO the sum of
its entirety, prays for the setting aside or modification of the second P5,000.00 under the no-fault clause, AFISCO's liability is now limited
paragraph of the dispositive portion of said decision. Petitioners to P15,000.00.
reassert their position that the insurance company is directly and
solidarily liable with the negligent operator up to the extent of its However, we cannot agree that AFISCO is likewise solidarily liable
insurance coverage. with Destrajo. In Malayan Insurance Co., Inc. v. Court of
Appeals, 10 this Court had the opportunity to resolve the issue as to
We grant the petition. the nature of the liability of the insurer and the insured vis-a-vis the
third party injured in an accident. We categorically ruled thus:
 While it is true that where the insurance contract provides for In fine, we conclude that the liability of AFISCO based on the
indemnity against liability to third persons, such third persons insurance contract is direct, but not solidary with that of Destrajo
can directly sue the insurer, however, the direct liability of the which is based on Article 2180 of the Civil Code. 12 As such,
insurer under indemnity contracts against third party liability petitioners have the option either to claim the P15,000 from AFISCO
does not mean that the insurer can be held solidarily liable and the balance from Destrajo or enforce the entire judgment from
with the insured and/or the other parties found at fault. The Destrajo subject to reimbursement from AFISCO to the extent of the
liability of the insurer is based on contract; that of the insured insurance coverage.
is based on tort.
While the petition seeks a definitive ruling only on the nature of
In the case at bar, petitioner as insurer of Sio Choy, is liable to AFISCO's liability, we noticed that the lower court erred in the
respondent Vallejos (the injured third party), but it cannot, as computation of the probable loss of income. Using the formula: 2/3 of
incorrectly held by the trial court, be made "solidarily" liable (80-56) x P12,000.00, it awarded P28,800.00. 13 Upon recomputation,
with the two principal tortfeasors, namely respondents Sio the correct amount is P192,000.00. Being a "plain error," we opt to
Choy and San Leon Rice Mill, Inc. For if petitioner-insurer correct the same. 14 Furthermore, in accordance with prevailing
were solidarily liable with said, two (2) respondents by reason jurisprudence, the death indemnity is hereby increased to
of the indemnity contract against third party liability — under P50,000.00. 15
which an insurer can be directly sued by a third party — this
will result in a violation of the principles underlying solidary WHEREFORE, premises considered, the present petition is hereby
obligation and insurance contracts. (emphasis supplied) GRANTED. The award of P28,800.00 representing loss of income is
INCREASED to P192,000.00 and the death indemnity of P12,000.00
The Court then proceeded to distinguish the extent of the liability and to P50,000.00.
manner of enforcing the same in ordinary contracts from that of
insurance contracts. While in solidary obligations, the creditor may SO ORDERED.
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. 11 Thus, petitioner therein, which, under
the insurance contract is liable only up to P20,000.00, can not be
made solidarily liable with the insured for the entire obligation of
P29,013.00 otherwise there would result "an evident breach of the
concept of solidary obligation."

Similarly, petitioners herein cannot validly claim that AFISCO, whose