Tuesday, February 21, 2012

Malayan Insurance Co., Inc. vs. CA [G.R. No. L-36413, 26 September 1988]

Facts: Malayan Insurance Co. Inc. (MALAYAN) issued a Private Car Comprehensive Policy covering a Willys jeep. The insurance coverage was for "own damage" not to exceed P600.00 and "third-party liability" in the amount of P20,000.00. 

During the effectivity of the insurance policy, , the insured jeep, while being driven by one Juan P. Campollo an employee of the respondent San Leon Rice Mill, Inc., (SAN LEON) collided with a passenger bus belonging to the respondent Pangasinan Transportation Co., Inc. (PANTRANCO) at the national highway in Barrio San Pedro, Rosales, Pangasinan, causing damage to the insured vehicle and injuries to the driver, Juan P. Campollo, and the respondent Martin C. Vallejos, who was riding in the ill-fated jeep. 

Martin C. Vallejos filed an action for damages against Sio Choy, Malayan Insurance Co., Inc. and the PANTRANCO before the Court of First Instance of Pangasinan. The trial court rendered judgment holding Sio Choy, SAN LEON, and MALAYAN jointly and severally liable. However, MALAYAN’s liability will only be up to P20,000.

On appeal, CA affirmed the decision of the trial court. However, it ruled that SAN LEON has no obligation to indemnify or reimburse the petitioner insurance company for whatever amount it has been ordered to pay on its policy, since the San Leon Rice Mill, Inc. is not a privy to the contract of insurance between Sio Choy and the insurance company. 

MALAYAN appealed to the SC by way of review on certiorari. 

(1) Whether or not MALAYAN is solidarily liable to Vallejos, along with Sio Choy and SAN LEON 

(2) Whether or not MALAYAN is entitled to be reimbursed by SAN LEON for whatever amount petitioner has been adjudged to pay respondent Vallejos on its insurance policy. 

(1) Only Sio Choy and SAN LEON are solidarily liable to Vallejos for the award of damages. Sio Choy is liable as owner of the jeep pursuant to Article 2184, while SAN LEON is liable as the employer of the driver of the jeep at the time of the accident pursuant to Art 2180. 

MALAYAN’s liability, however, arose only out of the insurance policy with Sio Choy. Petitioner as insurer of Sio Choy, is liable to respondent Vallejos, but it cannot, as incorrectly held by the trial court, be made "solidarily" liable with the two principal tortfeasors namely respondents Sio Choy and SAN LEON. 

(2) MALAYAN is entitled to be reimbursed. Upon payment of the loss, the insurer is entitled to be subrogated pro tanto to any right of action which the insured may have against the third person whose negligence or wrongful act caused the loss. When the insurance company pays for the loss, such payment operates as an equitable assignment to the insurer of the property and all remedies which the insured may have for the recovery thereof. That right is not dependent upon , nor does it grow out of any privity of contract or upon written assignment of claim, and payment to the insured makes the insurer assignee in equity. 

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