Perla Compania de Seguros, Inc. vs. Ancheta

Under Section 378 of the Insurance Code, a claim for "no fault indemnity" by an occupant of a vehicle must be made against the insurer of the vehicle in which the occupant is riding, mounting, or dismounting from, and not against the insurer of the directly offending vehicle. The use of the word "shall" makes the designation mandatory, and the claimant is not free to choose from which insurer to claim.

The case involves the "no fault indemnity" provision of the Insurance Code (P.D. No. 612, as amended, later consolidated into the Insurance Code of 1978 by P.D. No. 1460), specifically Section 378, which provides for immediate, limited compensation to victims of vehicular accidents without the necessity of proving fault or negligence. Petitioner Perla Compania de Seguros, Inc. was the insurer of a Superlines bus, while Malayan Insurance Co. insured the IH Scout vehicle in which private respondents were riding. The "no fault indemnity" provision forms part of the compulsory motor vehicle liability insurance framework (Sections 373–389) designed to ensure ready compensation for vehicular accident victims pending final determination of liability.

On December 27, 1977, a collision occurred along the national highway in Sta. Elena, Camarines Norte, between a Superlines bus and an IH Scout in which private respondents were riding. Private respondents sustained physical injuries in varying degrees of gravity as a result. The Superlines bus was insured with petitioner Perla Compania de Seguros, Inc. for the amount of P50,000.00 as passenger liability and P50,000.00 as third party liability. The IH Scout vehicle in which private respondents were riding was insured with Malayan Insurance Co.

On February 23, 1978, private respondents filed a complaint for damages with the Court of First Instance of Camarines Norte against Superlines, the bus driver, and petitioner as insurer of the bus. Even before summons could be served, respondent judge issued an order dated March 1, 1978 directing petitioner to pay private respondents P5,000.00 under the "no fault clause" as provided in Section 378 of the Insurance Code, finding that the requisite documents had been attached to the record. Petitioner denied liability in its Answer and moved for reconsideration of the order, contending that under Section 378, the insurer liable to pay the P5,000.00 is the insurer of the vehicle in which private respondents were riding — Malayan Insurance Co. — not petitioner, since the provision states that the claim of an occupant shall lie against the insurer of the vehicle in which the occupant is riding, mounting, or dismounting from.

Respondent judge denied the motion for reconsideration. A second motion for reconsideration was likewise denied by order dated January 3, 1979, which also directed the issuance of a writ of execution. Petitioner then elevated the matter to the Supreme Court via a petition for certiorari and prohibition with preliminary injunction, praying principally for the annulment and setting aside of the respondent judge's orders dated March 1, 1978 and January 3, 1979.

• Proper Insurer under Section 378: Petitioner argued that under Section 378 of the Insurance Code, the insurer liable to pay the P5,000.00 "no fault indemnity" is the insurer of the vehicle in which private respondents were riding, not petitioner, as the provision states that the claim of an occupant shall lie against the insurer of the vehicle in which the occupant is riding, mounting, or dismounting from.
• Grave Abuse of Discretion: Petitioner maintained that respondent judge gravely abused his discretion in ordering petitioner to pay the indemnity, warranting the issuance of a corrective writ of certiorari.

• Liability for No-Fault Indemnity: Whether petitioner, as insurer of the Superlines bus, is the insurer liable to indemnify private respondents under Section 378 of the Insurance Code, given that private respondents were occupants of a different vehicle.

• Liability for No-Fault Indemnity: No. Section 378 of the Insurance Code unambiguously provides that where the victim is an occupant of a vehicle, the claim for "no fault indemnity" shall lie against the insurer of the vehicle in which the occupant is riding, mounting, or dismounting from. Since private respondents were occupants of the IH Scout and not the Superlines bus, their claim must be directed against Malayan Insurance Co., the insurer of the Scout.

• Liability for No-Fault Indemnity: Section 378 of the Insurance Code, couched in straightforward and unambiguous language, establishes four rules for claims under the "no fault indemnity" provision: (1) a claim may be made against one motor vehicle only; (2) if the victim is an occupant of a vehicle, the claim shall lie against the insurer of the vehicle in which he is riding, mounting, or dismounting from; (3) in any other case, the claim shall lie against the insurer of the directly offending vehicle; and (4) the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident is maintained. The use of the word "shall" makes it mandatory that the claim be made against the insurer of the vehicle in which the occupant is riding; the claimant is not free to choose. That the vehicle in which the occupant is riding may not have caused the accident is of no moment, since the law itself provides a recourse for the paying insurer to recover against the owner of the vehicle responsible for the accident. This is the essence of "no fault indemnity" insurance — to provide victims or their heirs immediate, albeit limited, compensation pending final determination of liability. Because private respondents were not occupants of the Superlines bus, they cannot claim the indemnity from petitioner, regardless of whether fault lay with the bus driver. The respondent judge's order directing petitioner to pay constituted grave abuse of discretion amounting to lack of jurisdiction, warranting the corrective writ of certiorari.

• Mandatory Nature of Section 378 Designation — The word "shall" in Section 378 of the Insurance Code makes it mandatory that a "no fault indemnity" claim by an occupant of a vehicle be directed against the insurer of the vehicle in which the occupant is riding, mounting, or dismounting from. The claimant is not free to choose from which insurer to claim. The Court applied this by holding that private respondents, as occupants of the IH Scout, could only claim against Malayan Insurance Co., the Scout's insurer, and not against petitioner, the bus insurer.

• Purpose of No-Fault Indemnity — The "no fault indemnity" provision was introduced to provide victims of vehicular accidents or their heirs immediate compensation, although in a limited amount, pending final determination of who is responsible for the accident and liable for the victims' injuries or death. It forms part of the compulsory motor vehicle liability insurance framework (Sections 373–389) and should be read together with the requirement for compulsory passenger and/or third party liability insurance under Section 377.

• "The law is very clear — the claim shall lie against the insurer of the vehicle in which the 'occupant' is riding, and no other." — This passage encapsulates the ratio decidendi: the mandatory designation of the proper insurer under Section 378, foreclosing any discretion on the part of the claimant or the court to direct the claim elsewhere.

• "The claimant is not free to choose from which insurer he will claim the 'no fault indemnity,' as the law, by using the word 'shall,' makes it mandatory that the claim be made against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from." — This formulation emphasizes the obligatory character of the statutory designation and is the canonical statement of the rule in this case.

• "That said vehicle might not be the one that caused the accident is of no moment since the law itself provides that the party paying the claim under Sec. 378 may recover against the owner of the vehicle responsible for the accident." — This passage explains the legislative rationale for channeling the claim to the occupant's own vehicle insurer, regardless of fault, and the built-in recourse mechanism that preserves ultimate liability allocation.

• Section 378, Insurance Code (P.D. No. 612, as amended; later consolidated into P.D. No. 1460, the Insurance Code of 1978) — Governs "no fault indemnity" claims, providing that claims for death or injury to any passenger or third party shall be paid without proving fault or negligence. It limits indemnity to P5,000.00 per person, specifies the proofs of loss required, and mandates that claims by occupants of a vehicle lie against the insurer of the vehicle in which the occupant is riding, mounting, or dismounting from, while claims in other cases lie against the insurer of the directly offending vehicle. The Court applied this provision to hold that petitioner, as insurer of the bus, was not the proper party against whom private respondents' claim should be directed.

• Sections 373–389, Insurance Code — Comprise the provisions on compulsory motor vehicle liability insurance, of which the "no fault indemnity" provision is part and parcel, read together with Section 377 on compulsory passenger and/or third party liability insurance.

Fernan, C.J., Gutierrez, Jr., Feliciano, and Bidin, JJ., concurred.