GSIS vs. CA, Vda. De Kho, et.

al,
GR NO. 101439, JUNE 21, 1999

Subject: Obligations & Contracts

I Statement of the Legal Problem
GSIS filed a petition for review on October 4,1991 on the courts decision holding them
solidarily liable with NFA and in holding them liable beyond the terms and conditions of
the Contract of Insurance and the limitations under Insurance Memorandum Circular
(IMC) no. 5-78.
Private respondents wants GSIS to be jointly and solidarily liable to damages incurred
by Guillermo Corbeta , who is the driver of the Chevy truck, and NFA since GSIS is the
insurer of the said motor vehicle.

II Legal Concepts relevant to the Case

Article 1207 – The concurrence of two or more creditors or of two or more debtors in
one and the same obligation does not imply that each of the former has aright to
demand, or that each one of the latter is bound to render, entire compliance with the
prestation. There is a solidary liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires solidarity.
Article 1208 – If from the law, or the nature or the wording of the obligations to which
the preceding article refers, the contrary does not appear, the credit or debt shall be
presumed to be divided into as many equal shares as there are creditors and debtors,
the credits or debts being considered distinct from one another, subject to the Rules of
Court governing the multiplicity of suits.
Joint obligation – the whole obligation is to be paid or fulfilled proportionately by the
different debtors and/or is to be demanded proportionately by the different creditors.
Solidary obligation – each one of the debtors is bound to render, and/or each one of the
creditors has a right to demand from any of the debtors, entire compliance with the
prestation.
Insurance Code 374 – states that it shall be unlawful for any land transportation
operator or owner of a motor vehicle to operate the same in the public highways unless
there is a force in relation thereto a policy of insurance or guaranty in cash or surety
bond issued I accordance with the provisions of this chapter to indemnify the death or
bodily injury of a third party or passenger, as the case maybe , arising from the use
thereof.
Article 2176 – whoever by act or omission causes damages to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties is called a quasi-delict
and is governed by the provision of this chapter.
Article 2180 – The obligation imposed by Article 2176 of the civil code is demandable
not only for one’s own acts or omissions, but also for those of persons for whom one is
responsible.

III Highlights of the Case

On May 9, 1979, at about 7:00 in the evening at Tabon – Tabon, Butuan City, a Chevy
truck owned by the NFA (National Food Authority) and was driven by Guillermo
Corbeta, collided with a public utility vehicle, a Toyota Tamaraw owned and operated by
Victor Uy registered under “Victory Line”. The Tamaraw was declared total wrecked.
All the collisions victims were passengers of the Toyota Tamaraw. Five passengers died
and ten suffered bodily injuries. Among the injured were private respondents Victoria
Jaime Vda. De Kho and Gloria kho Vda. De Calabia. Among the dead were Maxima
Ugmad Vda. De Kho, Roland Kho and Willie Calabia , Sr.

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 Three cases were filed with the Court of First Instance of Agusan del Norte and Butuan
City . First, Civil Case No. 2196 for quasi-delict, damages and attorney’s fees was filed
by Victor Uy against NFA and Corbeta. Second , Civil Case NO. 2225 for damages filed
by an injured passenger, Librado Taer, against Victor Uy, the operator of the said
Tamaraw. Uy filed a cross-claim against NFA and Corbeta. Third, Civil CaseNo. 2256
was also filed by the private respondents for damages incurred due to quasi-delict,
GSIS as insurer of the truck, Uy for breach of contract for carriage and MIGC who is
the insurer of the Toyota Tamaraw.
The court decided that Corbeta’s negligence was the proximate cause of the collision.
In Civil Case No. 2196, the trial court awarded Uy the total amount of P 109,100 for
damages. In Civil Case 2225, the court dismissed the case against Uy and ordered
MIGc, Corbeta and NFA to pay plaintiff Taer, jointly and severally, the amount of
P40,559.94 for actual, compensatory and moral damages plus attorney’s fees.
Damages were likewise awarded to private respondents in Civil Case No. 2256.
Corbeta and NFA appealed the decision of the trial court to the Court of Appeals (Civil
Case no. 2196, 2225, 2256). GSIS also elevated the decision in Civil Case No. 2256.
The Court of Appeals docketed the appeals and agreed with the conclusions of the trial
court that the costs be with the appellants.

On February 5 and 6, 1991, GSIS and NFA filed a motion for reconsideration and was
denied by the respondent court.
On October 4, 1991 GSIS filed a petition for review based on the respondent court’s
decision holding GSIS solidarily liable with NFA and that GSIS’ liability is beyond the
terms and conditions of the contract of insurance and the limitations under Insurance
Memorandum Circular No. 5-78. GSIS is also questioning the filing of the claims private
respondents that was submitted only after 6 months and under the Insurance
Memorandum Circular No. 5-78, claims must be filed within the six months period from
the date of the accident.
The court decided that GSIS is not solidarily liable with NFA and Corbeta. GSIS is only
liable based on the contract of insurance.

IV Case Analysis and the Court Resolution

The decisions of the Regional Trial Court of Butuan City Branch II are as follows:
1. Civil Case No. 2196 – based on Article 2176 of the Civil Code, NFA and Guillermo
Corbeta is jointly and severally liable to Victor Uy for damages incurred since the
driver was really reckless and negligent in doing his job correctly as proven by the
fact that the truck traveled 50 meters more after the collision and that the car
crossed-over to the other lane proving to the court that he is driving fast than
normal speed and is reckless. NFA failed to show also the diligence and care of a
good father in taking care of its employees and with this , the latter is said to be
jointly and severally liable to the plaintiff.
2. Civil Case No.2225 – the court dismissed the case against Yu and ordered MIGC,
Corbeta and NFA to pay. jointly and severally, plaintiff Taer for actual,
compensatory and moral damages brought by the accident.
3. Civil Case No: 2256 – the court decided that NFA, Corbeta and GSIS should be
held jointly and Solidarily liable to damages done due to Quasi-delict
When GSIS filed a petition for review to the court on October 4, 1991, the court ruled
that GSIS should not be jointly and solidarily liable with NFA and Corbeta since the
liability is based on the contract of the insurance and could only be held liable up to the
extent of what was provided for by the contract of insurance, in accordance with CMVLI
law.

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V My Critique of the Court’s Decision
I agree with the decision of the court that NFA, Corbeta be jointly and solidarily liable
on the basis of quasi-delict. The court proved that Corbeta was driving too fast since
the truck crossed-over the other lane and slide 50 meters from the collision. On the
other hand, NFA is also liable, because it failed to show the court that it exercise the
care and diligence of a good father to its employees because there was no record that
indeed Corbeta was rated in terms of his driving proficiency before he was handed
down the company truck. GSIS should not be solidarily liable because the third party
liability is only up to the extent of the insurance policy and those required by law and
therefore the said liability is not covered by quasi-delict but by the contract of
insurance.

VI Conclusion and Recommendation

I therefore conclude that GSIS should not be held solidarily liable with the NFA and
Guillermo Corbeta because it is stated in Article 2176 of the Civil Code that whoever by
act or omission causes damages to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties is called a quasi-delict and in this case there is
a pre-existing contract which is the Contract of Insurance which states that it is only
liable up to the extent of the insurance policy and those required by law. I recommend
that the private respondents should have filed the claim earlier so as not to give the
insurance company a chance to make delaying tactics and so as to remove loopholes
in statements provided by the respondents and also so that the insurance can also
investigate the veracity of the claim so that insurance company can also give the
rightful amount to the claimant.