241 Malayan Vs Ca

Right of Subrogation MALAYAN INSURANCE CO V. COURT OF APPEALS 165 SCRA 536 (1988) FACTS: Malayan Insurance Co. issued a car comprehensive policy in favor Sio Choy covering a jeep. The insurance coverage was for “own damage” not to exceed P600 and “third party liability” amounting to P20,000. While to policy was in force, the jeep, while driven by Campollo (San Leon Rice Mil employee), collided with a bus operated by PANTRANCO, causing damage to the insured jeep, injuries to the driver and respondent Vallejos, who was one of the jeepney passenger. Vallejos filed an action for damages against Sio Choy, Malayan, and PANTRANCO. PANTRANCO’s defenses is that the jeep was running at an excessive speed, and that the bus stopped at the shoulder of the highway to avoid the jeep. Sio Choy failed to observe ordinary diligence in the selection and supervision of its employees. Sio Choy and Malayan contends that the accident was solely imputable to PANTRANCO. Sio Choy later filed a cross-claim against Malayan, claiming that it had already paid Vallejos P5,000 for hospitalization and as insurer, Malayan should reimburse Sio Choy for the expenses he incurred. Malayan, in turn, filed a third-party claim against San Leon Rice Mill for the reason that its employee was driving the jeep at the time of the accident. Malayan alleged that San Leon was liable for the acts of its employee under Art 2180 NCC. The trial court ruled in favor of Vallejos and held Sio Chooy, Malayan and San Leon solidarily liable. However, the court limited Malayan’s liability to P20,000. On appeal, CA affirmed the solidary liability of the parties but ruled that San Leon was not obliged to indemnify the insurer since it was not privy to the insurance contract between Sio Choy and Malayan.

ISSUE: WON Malayan is entitled to be reimbursed by San Leon. HELD: No. Subrogation is a normal incident of indemnity insurance. 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 an assignee in equity.

Only respondents Sio Choy and San Leon Rice Mill, Inc. are solidarily liable to the respondent Martin C. Vallejos for the amount of P29,103.00. Vallejos may enforce the entire obligation on only one of said solidary debtors. If Sio Choy as solidary debtor is made to pay for the entire obligation (P29,103.00) and petitioner, as insurer of Sio Choy, is compelled to pay P20,000.00 of said entire obligation, petitioner would be entitled, as subrogee of Sio Choy as against San Leon Rice Mills, Inc., to be reimbursed by the latter in the amount of P14,551.50 (which is 1/2 of P29,103.00).