Shafer vs. Judge, RTC of Olongapo City, Br. 75

12/6/22, 3:58 PM SUPREME COURT REPORTS ANNOTATED VOLUME 167
386 SUPREME COURT REPORTS ANNOTATED

Shafer vs. Judge, RTC of Olongapo City, Br. 75
*
No. L-78848. November 14, 1988.
SHERMAN SHAFER, petitioner, vs. HON. JUDGE,

REGIONAL TRIAL COURT OF OLONGAPO CITY,
BRANCH 75, AND MAKATI INSURANCE COMPANY,
INC, respondents.
Remedial Law; Civil Procedure; Third-Party Liability;

Insurance; Compulsory Motor Vehicle Liability; If an insurance
policy insures directly against liability, the insurer's liability
accrues immediately upon occurence of the injury, and will not
depend on the recovery of judgment by the injured party against
the insured.—Compulsory Motor Vehicle Liability Insurance
(third party
________________
* SECOND DIVISION.
387
VOL. 167, NOVEMBER 14, 1988 387
liability, or TPL) is primarily intended to provide compensation

for the death or bodily injuries suffered by innocent third parties
or passengers as a result of a negligent operation and use of motor
vehicles. The victims and/or their defendants are assured of
immediate financial assistance, regardless of the financial
capacity of motor vehicle owners. The liability of the insurance
company under the Compulsory Motor Vehicle Liability Insurance
is for loss or damage. Where an insurance policy insures directly
against liability, the insurer's liability accrues immediately upon
the occurrence of the injury or event upon which the liability
https://central.com.ph/sfsreader/session/00000184e67327bb3843f0db000d00d40059004a/t/?o=False 1/8
depends, and does not depend on the recovery of judgment by the

injured party against the insured.
Same; Same; Same; Same; Same; The injured for whom the
contract of insurance is intended may sue directly the insurer.—
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 to policy.
Same; Same; Same; "No Action" Clause; A "no action" clause
in an insurance policy cannot prevail over the Rules of Court
provisions aimed at avoiding multiplicity of suits.—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.
Same; Same; Third-Party Complaints; Third-Party
complaints are predicated on the need for expediency and the
avoidance of unnecessary lawsuits.—A third party complaint is a
device allowed by the rules of procedure by which the defendant
can bring into the original suit a party against whom he will have
a claim for indemnity
388
or remuneration as a result of a liability established against him

in the original suit. Third party complaints are allowed to
minimize the number of lawsuits and avoid the necessity of
bringing two (2) or more actions involving the same subject
matter. They are predicated on the need for expediency and the
avoidance of unnecessary lawsuits. If it appears probable that a
second action will result if the plaintiff prevails, and that this
result can be avoided by allowing the third party complaint to

remain, then the motion to dismiss the third party complaint
should be denied.
PETITION for certiorari to review the order of the Regional

Trial Court of Olongapo City, Br. 75.
The facts are stated in the opinion of the Court.

R.M. Blanco for petitioner.
Camacho and Associates for respondents.
PADILLA, J.:
**
This is a petition for review on certiorari of the Order of

the Regional Trial Court, Olongapo City, Branch 75, dated
24 April 1986 dismissing petitioner's third party complaint
filed in Criminal Case No. 381-85, a prosecution for
reckless imprudence resulting
1 in damage to property and
serious physical injuries.
On 2 January 1985, petitioner Sherman 2 Shafer
obtained a private car policy, GA No. 0889, over his Ford
Laser car with Plate No. CFN-361 from Makati Insurance
Company, Inc., for third party liability (TPL).
3 During the
effectivity of the policy, an information for reckless
imprudence resulting in damage to property and serious
physical injuries was filed against petitioner. The
information reads as follows:
"That on or about the seventeenth (17th) day of May 1985, in the

City of Olongapo, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being then the driver
and in actual physical control of a Ford Laser car bearing Plate
No.
_______________
** Penned by Judge C. Limin.

1 Rollo, pp. 33-34.
2 Rollo, pp. 17-20.
3 Ibid, p. 21-22.
389
VOL. 167, NOVEMBER 14, 1988 389

CFN-361, did then and there wilfully, unlawfully and criminally

drive, operate and manage the said Ford Laser car in a careless,
reckless and imprudent manner without exercising reasonable
caution, diligence and due care to avoid accident to persons and

damage to property and in disregard of existing traffic rules and
regulations, causing by such carelessness, recklessness and
imprudence the said Ford Laser car to hit and bump a
Volkswagen car bearing Plate No. NJE-338 owned and driven by
Felino Ilano y Legaspi, thereby causing damage in the total
amount of P12,345.00 Pesos, Philippine Currency, and as a result
thereof one Jovencio Poblete, Sr. who was on board of the said
Volkswagen car sustained physical injuries, to wit:
'1. 2 cm. laceration of left side of tongue.

'2. 6 cm. laceration with partial transection of muscle
(almost full thickness) left side of face.
'3. Full thickness laceration of lower lip and adjacent
skin.
4
which injuries causing [sic] deformity on the face."'
The owner of the damaged Volkswagen car filed a separate

civil action against petitioner for damages, while Jovencio
Poblete, Sr., who was a passenger in the Volkswagen car
when allegedly hit and bumped by the car driven by
petitioner, did not reserve his right to file a separate civil
action for damages. Instead, in the course of the trial in the
criminal case, Poblete, Sr. testified on his claim for
damages for the serious physical injuries which he claimed
to have sustained as a result of the accident.
Upon motion, petitioner was granted leave by the former
presiding judge of the trail court to file a third party
complaint against the herein private respondent, Makati
Insurance Company, Inc. Said insurance company,
however, moved to vacate the order granting leave to
petitioner to file a third
5 party complaint against it and/or
to dismiss the same.
On 24 April 1987, the court a quo issued an order
dismissing the third party complaint on the ground that it
was premature, based on the premise that unless the
accused (herein petitioner) is found guilty and sentenced to
pay the offended party
_______________
4 Ibid.
5 Ibid, p. 25.
390
(Poblete, Sr.) indemnity or damages, the third party

complaint is without cause of action. The court further
stated that the better procedure is for the accused
(petitioner) to wait for the outcome of the criminal aspect of
the case to determine whether or not the accused, also the
third party plaintiff, has a cause of action against the third
party defendant for the enforcement of its 6third party
liability (TPL) under the insurance contract. Petitioner
moved for7 reconsideration of said order, but the motion was
denied; hence, this petition.
It is the contention of herein petitioner that the
dismissal of the third party complaint amounts to a denial
or curtailment of his right to defend himself in the civil
aspect of the case. Petitioner further raises the legal
question of whether the accused in a criminal action for
reckless imprudence, where the civil action is jointly
prosecuted, can legally implead the insurance company as
third party defendant under its private car insurance
policy, as one of his modes of defense in the civil aspect of
said proceedings.
On the other hand, the insurance company submits that
a third party complaint is, under the rules, available only if
the defendant has a right to demand contribution,
indemnity, subrogation or any other relief in respect of
plaintiffs claim, to minimize the number of lawsuits and
avoid the necessity of bringing two (2) or more suits
involving the same subject matter. The insurance company
further contends that the contract of motor vehicle
insurance, the damages and attorney's fees claimed by
accused/third party plaintiff are matters entirely different
from his criminal liability in the reckless imprudence case,
and that petitioner has no cause of action against the
insurer until petitioner's liability shall have been
determined by 8 final judgment, as stipulated in the contract
of insurance.
Compulsory Motor Vehicle Liability Insurance (third
party liability, or TPL) is primarily intended to provide
compensation for the death or bodily injuries suffered by
innocent third parties or passengers as a result of a
negligent operation and
_______________
6 Ibid, pp. 33-34.

7 Ibid, p. 38.
8 Memorandum for Respondents, Rollo, pp. 86-93.
391
VOL. 167, NOVEMBER 14, 1988 391

9
use of motor vehicles. The victims and/or their defendants

are assured of immediate financial assistance, regardless of
the financial capacity of motor vehicle owners.
The liability of the insurance company under the
Compulsory Motor Vehicle Liability Insurance is for loss or
damage. Where an insurance policy insures directly
against liability, 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 recovery10 of
judgment by the injured party against the insured.
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 11 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 12 of
Court provisions aimed at avoiding multiplicity of suits.

In the instant case, the court a quo erred in dismissing
petitioner's third party complaint on the ground that peti-
_______________
9 Sec. 374, Chapter VI, Compulsory Motor Vehicle Liability Insurance,

Insurance Code of the Philippines.
10 S 930, 45 CJS, 1050-1051.
11 S 449 7 Am. Jur., 2d, pp. 118-119.
12 Guigon v. Del Monte, 20 SCRA 1043, G.R. No. L-22042, 17 August
1967.
392

tioner had no cause of action yet against the insurance

company (third party defendant). There is no need on the
part of the insured to wait for the decision of the trial court
finding him guilty of reckless imprudence. The occurrence
of the injury to the third party immediately gave rise to the
liability of the insurer under its policy.
A third party complaint is a device allowed by the rules
of procedure by which the defendant can bring into the
original suit a party against whom he will have a claim for
indemnity or remuneration as a result of 13 a liability
established against him in the original suit. Third party
complaints are allowed to minimize the number of lawsuits
and avoid the necessity of bringing two (2) or more actions
involving the same subject matter. They are predicated on
the need for expediency and the avoidance of unnecessary
lawsuits. If it appears probable that a second action will
result if the plaintiff prevails, and that this result can be
avoided by allowing the third party complaint to remain,
then the motion14 to dismiss the third party complaint
should be denied.
Respondent insurance company's contention that the
third party complaint involves extraneous matter which
will only clutter, complicate and delay the criminal case is
without merit. An offense causes two (2) classes of injuries
—the first is the social injury produced by the criminal act
which is sought to be repaired thru the imposition of the
corresponding penalty, and the second is the personal
injury caused to the victim of the crime, which injury is
sought 15to be compensated thru indemnity, which is civil in
nature.
In the instant case, the civil aspect of the offense
charged, i.e., serious physical injuries allegedly suffered by
Jovencio Poblete, Sr., was impliedly instituted with the
criminal case. Petitioner may thus raise all defenses
available to him insofar as the criminal and civil aspects of
the case are concerned. The
_______________
13 Revised Rules of Court by Vicente J. Francisco, Vol. 1, p. 506, 2nd ed.

14 Republic vs. Ramos, G.R. No. L-18911, April 27, 1967, 19 SCRA 825.
15 Ramos v. Gonong, G.R. No. L-42010, August 31, 1976, 72 SCRA 559.
393
VOL. 167, NOVEMBER 14, 1988 393

Soliven vs. Makasiar
claim of petitioner for payment of indemnity to the injured

third party, under the insurance policy, for the alleged
bodily injuries caused to said third party, arose from the
offense charged in the criminal case, from which the
injured (Jovencio Poblete, Sr.) has sought to recover civil
damages. Hence, such claim of petitioner against the
insurance company cannot be regarded as not related to
the criminal action.
WHEREFORE, the instant petition is GRANTED. The
questioned order dated 24 April 1987 is SET ASIDE and a
new one entered admitting petitioner's third party
complaint against the private respondent Makati
Insurance Company, Inc.
SO ORDERED.
Melencio-Herrera, (Chairperson), Paras, Sarmiento

and Regalado, JJ., concur.
Petition granted. Order set aside.
Note.—Contracts of insurance construed liberally in

favor of the insured and strictly against the insurer.
(National Power Corporation vs. Court of Appeals, 145
SCRA 533.)
——o0o——
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12/6/22, 3:58 PM SUPREME COURT REPORTS ANNOTATED VOLUME 167

386 SUPREME COURT REPORTS ANNOTATED

No. L-78848. November 14, 1988.

SHERMAN SHAFER, petitioner, vs. HON. JUDGE,

Remedial Law; Civil Procedure; Third-Party Liability;

VOL. 167, NOVEMBER 14, 1988 387