- CASE DIGEST -
Tiu vs. Arriesgado
G.R. No. 138060
September 1, 2004
Subject: Insurance Law
Principle:
Where the insurance contract provides for indemnity against liability to
third person, such persons can directly sue the insurer, as an exception to the
rule on mutuality of contract.
FACTS: On
March 15, 1987, a truck owned by Condor was travelling along Poblacion,
Compostela, Cebu blew one of its rear tires. The truck driver parked the truck on the right
side of the highway, left the rear lights on, and instructed the helper to place
spare tire on the road few meters away from the truck to serve as warning
device. The driver went to get assistance.
Thereafter, D’Rough Riders passenger bus was cruising along
the highway in the same direction. Its driver saw the stalled truck 25 meters away
but it was too late. The bus rammed on the rear part of the truck resulting in
the injury of its passengers, including Arriesgado and his wife, who eventually
died from her injuries.
Arriesgado filed a complaint for breach of contract of
carriage against D’Rough Riders and its driver. For its part, Tiu (owner of
D’Rough Riders) filed a third party complaint against its insurer, PPSII, the
owner of the truck and its driver. He claimed that PPSII, as insurer, should be
held solidarily liable with Tiu. PPSII’s argument: There is a contract of
insurance (TPL) but it had already settled the claims of those injured in the
incident.
The trial court and the CA held in favor of
Arriesgado. As to the liability of PPSII, CA held that no evidence was
presented against PPSII so it cannot be held liable for Arriesgado’s claim
ISSUE: In third-party liability insurance,
would it be possible for a third party to sue the insurer directly?
HELD: Yes. This is an exception to the rule on
mutuality of contract. Whenever a contract contains stipulation for the benefit
of a third person and the moment the third person communicates his assent
thereto, the contract becomes binding upon him. The fact that a third person
demands fulfillment of the insurance policy may be reasonably construed as an
assent on his part to the benefit provided in the policy. This provision arms
him with the requisite legal personality to bring an action on the insurance
policy.
While it is true that where the insurance contract
provides for indemnity against liability to third persons, and such persons can
directly sue the insurer, 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 insured and/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.
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