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. (First Insurance) under Motor Vehicle Policy No. V-05-63751 with the face value of P30,000.00 (p. 15, Rollo).
On November 25, 1976, the said jeepney driven by Blanco himself bumped a five-year old child, Deogracias Advincula, causing the latter’s death.
A complaint (pp. 38-41, Rollo) for damages was brought by the child’s parents, the Advincula spouses, against Silverio Blanco. First Insurance was also impleaded in the complaint as the insurer. The complaint was docketed as Civil Case No. 1104 of the Court of First Instance of Abra (now Regional Trial Court).
Summons were served on Silverio Blanco and First Insurance. However, only Blanco filed an answer. Upon motion of the Advincula spouses, First Insurance was declared in default (p. 45, Rollo) on January 19,..
The insured argued that the injured have no cause of action against the petitioner for not being a party to the contract of insurance.
ISSUE: won the petitioner is liable.
HELD: YES. 1. CIVIL LAW; INSURANCE; CLAIM FOR INDEMNITY; BASIS OF LIABILITY THEREOF. — It is settled that where the insurance contract provides for indemnity against liability to a third party, such third party can directly sue the insurer (Caguia vs. Fieldman’s Insurance Co., Inc. G.R. No. 23276, November 29, 1968, 26 SCRA 178). 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 (Malayan Insurance Co., Inc. vs. CA, L-36413, September 26, 1988, 165 SCRA 536).
2. ID.; ID.; ID.; ID.; CASE OF SHAFER vs. JUDGE, RTC OF OLONGAPO CITY CITED. — This rule was explained in the case of Shafer vs. Judge, RTC of Olongapo City, Br. 75, G.R. No. 78848, November 14, 1988: “The injured for whom the contract of insurance is intended can sue directly the insurer. The general purpose of statutes enabling an injured person to proceed directly against the insurer 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, and statutes are to be liberally construed so that their intended purpose may be accomplished. It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured as if such injured person were specifically named in the policy. “In the event that the injured fails or refuses to include the insurer as party defendant in his claim for indemnity against the insured, the latter is not prevented by law to avail of the procedural rules intended to avoid multiplicity of suits. Not even a ‘no action’ clause under the policy which requires that a final judgment be first obtained against the insured and that only thereafter can the person insured recover on the policy can prevail over the Rules of Court provisions aimed at avoiding multiplicity of suits.”
3. ID.; ID.; ID.; ID.; PRIMARY LIABILITY. — First Insurance 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. “. . . 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 (Shafer vs. Judge, RTC of Olongapo, G.R. No. 78848, November 14, 1988).