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During the investigation, defendant Armando Abellon, Petitioner, understandably, did not volunteer to present
the registered owner of Lady Love Taxi bearing No. 438- any insurance contract covering the Lady Love taxicab
HA Pilipinas Taxi 1980, certified to the fact that the that fatally hit private respondents mother, considering
vehicle was driven last July 20, 1980 by one Rodrigo that petitioner precisely presented the defense of lack of
Dumlao x x x x x x It was on the basis of this affidavit of insurance coverage before the trial court. Neither did the
the registered owner that caused the police to apprehend trial court issue a subpoena duces tecum to have the
Rodrigo Dumlao, and consequently to have him insurance contract produced before it under pain of
prosecuted and eventually convicted of the offense x x contempt.
x. x x x [S]aid Dumlao absconded in that criminal case. We thus find hardly a basis in the records for the trial
Private respondent filed a complaint for damages against court to have validly found petitioner liable jointly and
Armando Abellon as the owner of the Lady Love Taxi and severally with the owner and the driver of the Lady Love
taxicab, for damages accruing to private respondent.
While it is true that where the insurance contract provides Commission or the Courts within one year from date of
for indemnity against liability to third persons, such third accident, otherwise the claimants right of action shall
persons can directly sue the insurer, however, the direct prescribe [emphasis and underscoring supplied].
liability of the insurer under indemnity contracts against
In the landmark case of Summit Guaranty and Insurance
third-party liability does not mean that the insurer can be
Co., Inc. v. De Guzman,[13] we ruled that the one year
held solidarily liable with the insured and/or the other
prescription period to bring suit in court against the
parties found at fault. The liability of the insurer is based
insurer should be counted from the time that the insurer
on contract; that of the insured is based on tort.
rejects the written claim filed therewith by the insured, the
The above principles take on more significance in the beneficiary or the third person interested under the
light of the counter-allegation of petitioner that, insurance policy.
assuming arguendo that it is the insurer of the Lady Love
It is significant to note that the aforecited Section 384 was
taxicab in question, its liability is limited to
amended by B.P. Blg. 874 to categorically provide that
only P50,000.00, this being its standard amount of
action or suit for recovery of damage due to loss or injury
coverage in vehicle insurance policies. It bears repeating
must be brought in proper cases, with the Commissioner
that no copy of the insurance contract was ever proffered
or the Courts within one year from denial of the claim,
before the trial court by the private respondent,
otherwise the claimants right of action shall prescribe
notwithstanding knowledge of the fact that the latters
[emphasis ours].
complaint against petitioner is one under a written
contract. Thus, the trial court proceeded to hold petitioner We have certainly ruled with consistency that the
liable for an award of damages exceeding its limited prescriptive period to bring suit in court under an
liability of P50,000.00. This only shows beyond doubt insurance policy, begins to run from the date of the
that the trial court was under the erroneous presumption insurers rejection of the claim filed by the insured, the
that petitioner could be found liable absent proof of the beneficiary or any person claiming under an insurance
contract and based merely on the proof of reckless contract. This ruling is premised upon the compliance by
imprudence on the part of the driver of the Lady Love the persons suing under an insurance contract, with the
taxicab that fatally hit private respondents mother. indispensable requirement of having filed the written
claim mandated by Section 384 of the Insurance Code
CONNECTED RULING: Petitioner did not tire in
before and after its amendment. Absent such written
arguing before the trial court and the respondent appellate
claim filed by the person suing under an insurance
court that, assuming arguendo that it had issued the
contract, no cause of action accrues under such insurance
insurance contract over the Lady Love taxicab, private
contract, considering that it is the rejection of that claim
respondents cause of action against petitioner did not
that triggers the running of the one-year prescriptive
successfully accrue because he failed to file with
period to bring suit in court, and there can be no
petitioner a written notice of claim within six (6) months
opportunity for the insurer to even reject a claim if none
from the date of the accident as required by Section 384
has been filed in the first place, as in the instant case.
of the Insurance Code.
At the time of the vehicular incident which resulted in the
death of private respondents mother, during which time
the Insurance Code had not yet been amended by Batas
Pambansa (B.P.) Blg. 874, Section 384 provided as
follows:
Any person having any claim upon the policy issued
pursuant to this chapter shall, without any unnecessary
delay, present to the insurance company concerned a
written notice of claim setting forth the amount of his loss,
and/or the nature, extent and duration of the injuries
sustained as certified by a duly licensed physician. Notice
of claim must be filed within six months from date of the
accident, otherwise, the claim shall be deemed
waived. Action or suit for recovery of damage due to loss
or injury must be brought in proper cases, with the
COASTWISE LITHERAGE CORP VS. CA negligence of its captain and crew, would remain in the
absence of stipulation.
FACTS:
Although a charter party may transform a common carrier
Pag-asa Sales, Inc. entered into a contract to transport
into a private one, the same however is not true in a
molasses from the province of Negros to Manila with
contract of affreightment on account of the
Coastwise Lighterage Corporation (Coastwise for
aforementioned distinctions between the two.
brevity), using the latter's dumb barges. The barges were
towed in tandem by the tugboat MT Marica, which is Petitioner admits that the contract it entered into with the
likewise owned by Coastwise. consignee was one of affreightment. We agree. Pag-asa
Sales, Inc. only leased three of petitioner's vessels, in
Upon reaching Manila Bay, while approaching Pier 18,
order to carry cargo from one point to another, but the
one of the barges, "Coastwise 9", struck an unknown
possession, command and navigation of the vessels
sunken object.
remained with petitioner Coastwise Lighterage.
As a consequence, the molasses at the cargo tanks were
The records show that the damage to the barge which
contaminated and rendered unfit for the use it was
carried the cargo of molasses was caused by its hitting an
intended. This prompted the consignee, Pag-asa Sales,
unknown sunken object as it was heading for Pier 18. The
Inc. to reject the shipment of molasses as a total loss.
object turned out to be a submerged derelict vessel.
Thereafter, Pag-asa Sales, Inc. filed a formal claim with
Petitioner contends that this navigational hazard was the
the insurer of its lost cargo, herein private respondent,
efficient cause of the accident. Further it asserts that the
Philippine General Insurance Company (PhilGen, for
fact that the Philippine Coastguard "has not exerted any
short) and against the carrier, herein petitioner, Coastwise
effort to prepare a chart to indicate the location of sunken
Lighterage. Coastwise Lighterage denied the claim and it
derelicts within Manila North Harbor to avoid
was PhilGen which paid the consignee, Pag-asa Sales,
navigational accidents" effectively contributed to the
Inc., the amount of P700,000.00, representing the value of
happening of this mishap. Thus, being unaware of the
the damaged cargo of molasses.
hidden danger that lies in its path, it became impossible
In turn, PhilGen then filed an action against Coastwise for the petitioner to avoid the same. Nothing could have
Lighterage before the Regional Trial Court of Manila, prevented the event, making it beyond the pale of even the
seeking to recover the amount of P700,000.00 which it exercise of extraordinary diligence.
paid to Pag-asa Sales, Inc. for the latter's lost cargo.
2. On the issue of subrogation, which petitioner contends
The RTC awarded the amount prayed for by PhilGen. On as inapplicable in this case, we once more rule against the
Coastwise Lighterage's appeal to the Court of Appeals, petitioner. We have already found petitioner liable for
the award was affirmed. breach of the contract of carriage it entered into with Pag-
asa Sales, Inc. However, for the damage sustained by the
ISSUE: loss of the cargo which petitioner-carrier was
1. W/N petitioner Coastwise Lighterage was transformed transporting, it was not the carrier which paid the value
into a private carrier, by virtue of the contract of thereof to Pag-asa Sales, Inc. but the latter's insurer,
affreightment which it entered into with the consignee, herein private respondent PhilGen.
Pag-asa Sales, Inc. Corollarily, if it were in fact Undoubtedly, upon payment by respondent insurer
transformed into a private carrier, did it exercise the PhilGen of the amount of P700,000.00 to Pag-asa Sales,
ordinary diligence to which a private carrier Inc., the consignee of the cargo of molasses totally
2. W/N the insurer was subrogated into the rights of the damaged while being transported by petitioner Coastwise
consignee against the carrier, upon payment by the insurer Lighterage, the former was subrogated into all the rights
of the value of the consignee's goods lost while on board which Pag-asa Sales, Inc. may have had against the
one of the carrier's vessels. carrier, herein petitioner Coastwise Lighterage.
RULING:
1. Accordingly, the charter party contract is one of
affreightment over the whole vessel, rather than a demise.
As such, the liability of the shipowner for acts or
SERVICEWIDE SPECIALISTS, INC VS. CA that he made the initial payment on the vehicle and that
he himself would pay its monthly amortization; that
FACTS: Garcia prepared and executed a "Deed of Sale with
petitioner Servicewide Specialists, Inc. (Servicewide) Assumption of Mortgage" where it appears that Tolosa
filed a complaint for replevin and/or sum of money with sold and transferred to Garcia the said jeepney.
damages before the then Court of First Instance of Manila,
Three days later, Bartina filed a "Third Party Claim" and
Branch V against private respondents Eduardo and Felisa
"Urgent Motion for Release" alleging ownership of the
Tolosa (Tolosa spouses) and one John Doe. Servicewide
jeepney. She claimed that she purchased the vehicle from
alleged that on January 15, 1981, the Tolosa spouses
Bian Motors and regularly paid its subsequent
purchased from Amante Motor Works one (1) Isuzu
installments to the Commercial Credit Corporation of Las
passenger-type jeepney with Motor No. C240-317331
Pias. On February 21, 1983, the trial court released the
and Serial No. CMCI-81063-C for the sum of P48,432.00
vehicle to Bartina on an indemnity bond of
to be paid in 24 monthly installments; that the spouses
P34,000.00. The court found that the documents
executed a promissory note and drew a deed of chattel
supporting Bartina's ownership of the jeepney were in due
mortgage over the vehicle in favor of Amante Motor
form and executed prior to the documents of the Tolosa
Works; that on the same day, Amante Motor Works, with
spouses.
notice to the Tolosas, assigned the promissory note and
chattel mortgage to Filinvest Finance and Leasing A decision was rendered by the trial court. It ruled in
Corporation, that Filinvest Finance and Leasing favor of Servicewide granting it the right to either
Corporation also assigned its rights and interest in said foreclose the mortgage on the subject vehicle or to
promissory note and chattel mortgage to Filinvest Credit demand from defendants, jointly and severally, payment
Corporation; that Servicewide later acquired the rights of P34,224.78 plus interest and damages.
and interests of Filinvest Credit Corporation over said
Eduardo Garcia appealed to the Court of Appeals.] In a
note and mortgage; that the Tolosa spouses failed to pay
decision dated October 27, 1994, the appellate court
the installments due on the purchase price despite several
found that no summons on the amended complaint had
demands. In its prayer, Servicewide demanded from the
been served on Garcia however, since Garcia filed several
spouses and John Doe, the person in possession of the
pleadings as a third-party defendant in the trial court, he
vehicle, the return of the vehicle or the payment of the
was deemed to have submitted himself to its
balance of P34,224.78 and damages
jurisdiction. Nonetheless, it found no sufficient evidence
the trial court issued an order for the seizure of the vehicle to hold Garcia solidarily liable with the Tolosa spouses on
subject of the complaint. the principal complaint. The Court of Appeals therefore
modified the trial court's decision and relieved Garcia
The Tolosa spouses filed their Answer on March 22,
from liability.
1982. They claimed that they purchased one jeepney unit
from Bian Motor Sales Corporation (Bian Motors), not ISSUE:
Amante Motors Works; that in January 1981, they
ordered another unit from the same corporation through RULING:
the proddings of its President and General Manager, Garcia and Bian Motors did not file an "Answer" to the
Eduardo Garcia; that Garcia informed the spouses that the complaint. The records of the case do not show that both
additional unit shall be "house financed" by Bian Motors; or either of them were served any summons on the
that Eduardo Tolosa noticed that the vendor indicated in amended complaint.This is precisely why Garcia raised
the deed of sale was not Bian Motors but Amante Motor the issue of lack of jurisdiction. Garcia and Bian Motors
Works; that Garcia explained to Tolosa that he (Garcia) however filed an "Answer to Third Party Complaint" and
was to make full payment on the jeepney to Amante "Answer to Complaint in Intervention."
Motor Works and that he (Tolosa) was to pay Garcia the
monthly installments thereon; that Tolosa never received It must be stressed that the third-party complaint filed by
any notice from Bian Motors about the jeepney unit he the Tolosas was dismissed twice by the trial court - first
ordered; that on December 17, 1981, Tolosa received a at the pretrial of October 7,1985 for the principal
receipt from Filinvest Finance and Leasing Corporation complaint and second at the pretrial of March 1, 1988 for
about the payment he allegedly made on a jeepney unit he the complaint-in-intervention. The second dismissal was
purchased from Amante Motor Works; that Garcia with prejudice. The complaint-in-intervention was, upon
informed him he was in possession of the jeepney and said
motion of the parties-in-intervention, also dismissed by therein had different motor and chassis number. The deed
the trial court on May 24, 1988. reveals that what the Tolosas sold to Garcia was a red
jeepney with Motor No. C240-32833 and Chassis No.
A dismissal or discontinuance of an action operates to
CMCI-82062-C.[38]
annul orders, rulings or judgments previously made in the
case.[32] It also annuls all proceedings had in connection The documentary evidence of Bartina merely shows that
therewith and renders all pleadings ineffective.[33] A the jeepney subject of the complaint was indeed sold to
dismissal or nonsuit leaves the situation as though no suit her by Bian Motors represented by Juliet Garcia, Eduardo
had ever been brought. Further proceedings in the action Garcia's daughter. There is nothing to show that Eduardo
are arrested and what has been done therein is also Garcia sold to Bartina the same vehicle that he previously
annulled, so that the action is as if it had never been.[34] It sold to the Tolosas.
carries down with it previous proceeding and orders in the
We also hold that the compromise between Bartina and
action, and all pleadings of both parties, and all issues
Garcia and Bian Motors cannot be taken as an admission
with respect to the plaintiff's claim.[35]
of Garcia's liability. In civil cases, an offer of
The records do not show that petitioner adopted the compromise is not an admission of any liability.[39] With
"Answer to Third Party Complaint" and the "Answer to more reason, a compromise agreement should not be
Complaint in Intervention" filed by Bian Motors and treated as an admission of liability on the part of the
Garcia, and the testimony of Bartina as part of its evidence parties vis-a-vis a third person. The compromise
in the trial court. It cannot rely on them on appeal for settlement of a claim or cause of action is not an
evidence not formally offered before the trial court cannot admission that the claim is valid, but merely admits that
be considered.[36] To consider them at this stage will deny there is a dispute, and that an amount is paid to be rid of
the other parties their right to rebut them. the controversy,[40] nor is a compromise with one person
an admission of any liability to someone else.[41] The
Assuming arguendo that the said pleadings of Garcia and
policy of the law should be, and is, to encourage
Bian Motors and the evidence of Bartina can be
compromises.[42] When they are made, the rights of third
considered in favor of petitioner, still, they do not
parties are not in any way affected thereby.[43]
sufficiently prove Garcia's liability on the matter.
On the whole, petitioner's evidence consists of the
For one, the motor vehicle described in the "Answer to
promissory note, the deed of chattel mortgage and the
Third-Party Complaint" has different motor and serial
deed of assignment and the notice and demand letter. The
numbers from the vehicle subject of the complaint. The
promissory note in favor of Amante Motor Works was
subject vehicle is a galvanized silver jeepney with Motor
signed by the Tolosa spouses.[44] This same promissory
No. C240-317331 and Serial No. CMCI-81063-C while
note provides that any payment thereon shall be made "to
the vehicle in said pleading is a red stainless jeepney with
the order of Filinvest Finance and Leasing
Motor No. C-221-443144 and Serial No. CMCI-81795-
Corporation.[45] Both spouses also signed as mortgagors
C.[37] What Garcia and Bian Motors admittedly sold to the
the deed of chattel mortgage of the said jeepney in favor
Tolosas was not the subject vehicle.
of Amante Motor Works. Amante Motor Works assigned
In the "Answer to the Complaint in Intervention," Garcia in the same deed all its rights over the chattel mortgage to
and Bian Motors admitted that they acquired from the Filinvest Finance and Leasing Corporation.[46] Filinvest
Tolosas the "vehicle subject of the complaint in Finance and Leasing Corporation likewise assigned its
consideration of one Celeste jeepney valued at rights and interest over the promissory note and deed of
P56,000.00." The vehicle subject of the complaint was the chattel mortgage to Filinvest Credit Corporation which in
one found in the possession of Bartina. Under the two turn assigned it to petitioner.[47] The Tolosa spouses
pleadings, however, what Garcia and Bian Motors sold to defaulted on the obligation and refused to pay the
the Tolosa spouses was a different vehicle from the one installments due despite notice to them. By no stretch of
they acquired from said spouses and which they allegedly logic can they prove Garcia's solidary liability.
sold to Bartina. A double sale of the same jeepney could
not rise because there appears to be two different jeepneys
in the pleadings.
Even in the "Deed of Sale with Assumption of Mortgage"
where the Tolosa spouses allegedly sold to Garcia the
jeepney subject of the complaint the vehicle described