Third-Party Liability Insurance: Filing Claims and Solidary Liability in the Philippines

The Supreme Court's ruling in Travellers Insurance & Surety Corporation v. Court of Appeals (G.R. No. 82036, May 22, 1997) clarifies two important points for anyone dealing with vehicle accidents in the Philippines: an insurer's liability is based on contract, not on the fault of the driver, and a claimant must file a written notice of claim before suing the insurer. This case also explains why an insurance company cannot automatically be held solidarily liable with the negligent driver and vehicle owner.

The Facts of the Case

In July 1980, a 78-year-old woman was struck and killed by a taxicab in Manila. Her son filed a complaint for damages against the driver, the registered owner of the taxi, and the alleged insurer of the vehicle, Travellers Insurance & Surety Corporation. The trial court found all three defendants jointly and severally liable for damages, including death indemnity, moral damages, and attorney's fees.

The insurer appealed, arguing that no insurance contract was ever presented in evidence and that the claimant failed to file a written notice of claim as required by law.

The Issue

The central question was whether the insurer could be held liable when (1) no copy of the insurance policy was presented to the court, and (2) the claimant did not file a written notice of claim with the insurer within the period required by the Insurance Code.

The Ruling

The Supreme Court reversed the lower courts and dismissed the complaint against the insurer. The Court made two key rulings.

First, the insurer's liability is contractual, not based on tort. The driver and owner are liable under the law on quasi-delicts, while an insurer's liability arises from the insurance contract. These are different sources of obligation. While a third party who is injured may directly sue the insurer when the policy provides indemnity against liability to third persons, this does not mean the insurer is solidarily liable with the insured. As the Court explained, the liability of the insurer is based on contract; that of the insured is based on tort.

The Court also noted that the trial court never saw the insurance policy. The claimant did not attach a copy to the complaint, and the trial court did not require its production. Without the contract, the court could not determine the nature and limits of the insurer's liability. The insurer's standard coverage was allegedly only P50,000, yet the lower courts held it liable for amounts exceeding that limit.

Second, the claimant failed to file a written notice of claim. Under the Insurance Code, as it stood at the time of the accident, any person with a claim under a policy must present a written notice of claim to the insurance company within six months from the date of the accident. Otherwise, the claim is deemed waived. The same provision required that any action for recovery be brought within one year from the date of the accident.

The Court clarified that the prescriptive period to sue the insurer runs from the date the insurer rejects the written claim. This is when the cause of action accrues. But if no written claim is filed at all, there is nothing for the insurer to reject, and no cause of action arises. In this case, the claimant did not file any written claim with the insurer, so he was deemed to have waived his rights against it.

Practical Takeaways

• File a written notice of claim promptly. If you are claiming under a third-party liability insurance policy, submit a written notice to the insurer within six months from the date of the accident. Failure to do so may be deemed a waiver of your claim.
• The prescriptive period starts from denial, not the accident. Once you file a written claim, the insurer has the opportunity to accept or reject it. The one-year period to file a court action begins only upon the insurer's rejection of the claim.
• An insurer is not automatically solidarily liable with the driver and owner. The insurer's liability is based on the insurance contract, while the driver and owner's liability is based on tort. These are separate sources of obligation.
• Present the insurance policy in evidence. If you sue an insurer, attach a copy of the policy to your complaint. Without it, the court cannot determine the nature, extent, and limits of the insurer's liability.
• Know the policy limits. An insurer's liability is limited to the amount stated in the policy. It cannot be held liable beyond the coverage limits, even if the total damages awarded exceed that amount.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.