Malayan Insurance Co., Inc. v.

CA persons arising out of any accident during the effectivity of such

insurance contract, which policy was in full force and effect when
G.R. No. L-36413 | September 26, 1988 | Padilla, J. | Group 2 the vehicular accident complained of occurred. He prayed that he
be reimbursed by the insurance company for the amount that he
Petitioner: MALAYAN INSURANCE CO., INC. may be ordered to pay.
Respondents: THE HON. COURT OF APPEALS (THIRD DIVISION) MARTIN C.  Also later, the herein petitioner sought, and was granted, leave to file a third-
VALLEJOS, SIO CHOY, SAN LEON RICE MILL, INC. and PANGASINAN party complaint against the San Leon Rice Mill, Inc. for the reason that the
TRANSPORTATION CO., INC., person driving the jeep of Sio Choy, at the time of the accident, was an
employee of the San Leon Rice Mill, Inc. performing his duties within the
scope of his assigned task, and not an employee of Sio Choy; and that, as
Facts the San Leon Rice Mill, Inc. is the employer of the deceased driver, Juan P.
Campollo, it should be liable for the acts of its employee, pursuant to Art.
 29 March 1967  Malayan Insurance Co., Inc., issued in favor of private 2180 of the Civil Code.
respondent Sio Choy Private Car Comprehensive Policy No. MRO/PV-  The herein petitioner prayed that judgment be rendered against the San
15753, effective from 18 April 1967 to 18 April 1968, covering a Willys jeep Leon Rice Mill, Inc., making it liable for the amounts claimed by the plaintiff
with Motor No. ET-03023 Serial No. 351672, and Plate No. J-21536, Quezon and/or ordering said San Leon Rice Mill, Inc. to reimburse and indemnify the
City, 1967. petitioner for any sum that it may be ordered to pay the plaintiff.
o The insurance coverage was for "own damage" not to exceed
P600.00 and "third-party liability" in the amount of P20,000.00. TC: judgment in favor of the plaintiff and against Sio Choy and Malayan Insurance
 19 December 1967, at about 3:30PM  the insured jeep, while being driven Co., Inc., and third-party defendant San Leon Rice Mill, Inc., as follows: (a) P4,103 as
by one Juan P. Campollo an employee of the respondent San Leon Rice actual damages; (b) P18,000.00 representing the unearned income of plaintiff Martin
Mill, Inc., collided with a passenger bus belonging to the respondent C. Vallejos for the period of three (3) years; (c) P5,000.00 as moral damages; (d)
PANTRANCO at the national highway in Barrio San Pedro, Rosales, P2,000.00 as attomey's fees or the total of P29,103.00, plus costs.
Pangasinan, causing damage to the insured vehicle and injuries to the  The above-named parties against whom this judgment is rendered are
driver, Juan P. Campollo, and the respondent Martin C. Vallejos, who was hereby held jointly and severally liable. With respect, however, to Malayan
riding in the ill-fated jeep. Insurance Co., Inc., its liability will be up to only P20,000.00.
 Vallejos filed an action for damages against Sio Choy, Malayan Insurance  As no satisfactory proof of cost of damage to its bus was presented by
Co., Inc. and the PANTRANCO before CFI Pangasinan defendant Pantranco, no award should be made in its favor. Its counter-
o He prayed therein that the defendants be ordered to pay him, jointly claim for attorney's fees is also dismissed for not being proved.
and severally, the amount of P15,000.00, as reimbursement for
medical and hospital expenses; P6,000.00, for lost income; CA: affirmed TC that Sio Choy, the San Leon Rice Mill, Inc. and the Malayan
P51,000.00 as actual, moral and compensatory damages; and Insurance Co., Inc. are jointly and severally liable for the damages awarded to the
P5,000.00, for attorney's fees. plaintiff Martin C. Vallejos.
 Answering, PANTRANCO claimed that the jeep of Sio Choy was then  It ruled, however, that the San Leon Rice Mill, Inc. has no obligation to
operated at an excessive speed and bumped the PANTRANCO bus which indemnify or reimburse the petitioner insurance company for whatever
had moved to, and stopped at, the shoulder of the highway in order to avoid amount it has been ordered to pay on its policy, since the San Leon Rice
the jeep; and that it had observed the diligence of a good father of a family to Mill, Inc. is not a privy to the contract of insurance between Sio Choy and the
prevent damage, especially in the selection and supervision of its employees insurance company.
and in the maintenance of its motor vehicles. It prayed that it be absolved
from any and all liability. Hence, the present recourse by petitioner insurance company.
 Defendant Sio Choy and the petitioner insurance company, in their answer,
also denied liability to the plaintiff, claiming that the fault in the accident was Issues
solely imputable to the PANTRANCO. 1. W/N the trial court, as upheld by the CA, was correct in holding petitioner
o Sio Choy, however, later filed a separate answer with a cross-claim and respondents Sio Choy and San Leon Rice Mill, Inc. "solidarily liable" to
against the herein petitioner wherein he alleged that he had actually respondent Vallejos NO
paid the plaintiff, Martin C. Vallejos, the amount of P5,000.00 for 2. W/N petitioner is entitled to be reimbursed by respondent San Leon Rice
hospitalization and other expenses, and, in his cross-claim against Mill, Inc. for whatever amount petitioner has been adjudged to pay
the herein petitioner, he alleged that the petitioner had issued in his respondent Vallejos on its insurance policy. YES
favor a private car comprehensive policy wherein the insurance
company obligated itself to indemnify Sio Choy, as insured, for the Held
damage to his motor vehicle, as well as for any liability to third Issue 1
 TC & CA: petitioner and respondents Sio Choy and San Leon Rice Mill, Inc. — this will result in a violation of the principles underlying solidary
are jointly and severally liable to respondent Vallejos. obligation and insurance contracts.
o We do not agree with the aforesaid ruling.  In solidary obligation, the creditor may enforce the entire obligation against
o It is only respondents Sio Choy and San Leon Rice Mill, Inc, (to the one of the solidary debtors.
exclusion of the petitioner) that are solidarily liable to respondent o On the other hand, insurance is defined as "a contract whereby one
Vallejos for the damages awarded to Vallejos. undertakes for a consideration to indemnify another against loss,
 Sio Choy is made liable to said plaintiff as owner of the ill-fated Willys jeep, damage, or liability arising from an unknown or contingent event."
pursuant to Article 2184 of the Civil Codei  In the case at bar, TC held petitioner together with respondents Sio Choy
 The basis of liability of San Leon Rice Mill, Inc. to plaintiff Vallejos, the and San Leon Rice Mills Inc. solidarily liable to respondent Vallejos for a
former being the employer of the driver of the Willys jeep at the time of the total amount of P29,103.00, with the qualification that petitioner's liability is
motor vehicle mishap, is Article 2180 of the Civil Codeii only up to P20,000.00.
 Sio Choy and San Leon Rice Mill, Inc. are the principal tortfeasors who are o In the context of a solidary obligation, petitioner may be compelled
primarily liable to respondent Vallejos. The law states that the responsibility by respondent Vallejos to pay the entire obligation of P29,013.00,
of two or more persons who are liable for a quasi-delict is solidarily. notwithstanding the qualification made by the trial court.
 The basis of petitioner's liability is its insurance contract with respondent Sio o But, how can petitioner be obliged to pay the entire obligation when
Choy. If petitioner is adjudged to pay respondent Vallejos in the amount of the amount stated in its insurance policy with respondent Sio Choy
not more than P20,000.00, this is on account of its being the insurer of for indemnity against third party liability is only P20,000.00?
respondent Sio Choy under the third party liability clause included in the o Moreover, the qualification made in the decision of the trial court to
private car comprehensive policy existing between petitioner and respondent the effect that petitioner is sentenced to pay up to P20,000.00 only
Sio Choy at the time of the complained vehicular accident. when the obligation to pay P29,103.00 is made solidary, is an
 Guingon vs. Del Monte  a passenger of a jeepney had just alighted evident breach of the concept of a solidary obligation.
therefrom, when he was bumped by another passenger jeepney. He died as  Thus, the TC, as upheld by the CA, erred in holding petitioner, solidarily
a result thereof. liable with respondents Sio Choy and San Leon Rice Mill, Inc. to respondent
o In the damage suit filed by the heirs of said passenger against the Vallejos.
driver and owner of the jeepney at fault as well as against the
insurance company which insured the latter jeepney against third Issue 2
party liability, the trial court, affirmed by this Court, adjudged the  The CA, in affirming the decision of the TC, ruled that petitioner is not
owner and the driver of the jeepney at fault jointly and severally entitled to be reimbursed by respondent San Leon Rice Mill, Inc. on the
liable to the heirs of the victim in the total amount of P9,572.95 as ground that said respondent is not privy to the contract of insurance existing
damages and attorney's fees; while the insurance company was between petitioner and respondent Sio Choy. We disagree.
sentenced to pay the heirs the amount of P5,500.00 which was to  The appellate court overlooked the principle of subrogation in insurance
be applied as partial satisfaction of the judgment rendered against contracts. Thus —
said owner and driver of the jeepney. o Subrogation is a normal incident of indemnity insuranc. Upon
o Thus, it was only the owner and the driver of the jeepney at fault, payment of the loss, the insurer is entitled to be
not including the insurance company, who were held solidarily subrogated pro tanto to any right of action which the insured
liable to the heirs of the victim. may have against the third person whose negligence or
 While it is true that where the insurance contract provides for indemnity wrongful act caused the loss.
against liability to third persons, such third persons can directly sue the o The right of subrogation is of the highest equity. The loss in the first
insurer, the direct liability of the insurer under indemnity contracts against instance is that of the insured but after reimbursement or
third party liability does not mean that the insurer can be held solidarily liable compensation, it becomes the loss of the insurer
with the insured and/or the other parties found at fault. o Although many policies including policies in the standard form, now
o The liability of the insurer is based on contract; that of the insured is provide for subrogation, and thus determine the rights of the insurer
based on tort. in this respect, the equitable right of subrogation as the legal effect
 In the case at bar, petitioner as insurer of Sio Choy, is liable to respondent of payment inures to the insurer without any formal assignment or
Vallejos, but it cannot, as incorrectly held by the trial court, be made any express stipulation to that effect in the policy"
"solidarily" liable with the two principal tortfeasors namely respondents Sio o Stated otherwise, when the insurance company pays for the
Choy and San Leon Rice Mill, Inc. loss, such payment operates as an equitable assignment to
o For if petitioner-insurer were solidarily liable with said two (2) the insurer of the property and all remedies which the insured
respondents by reason of the indemnity contract against third party may have for the recovery thereof. That right is not dependent
liability-under which an insurer can be directly sued by a third party upon , nor does it grow out of any privity of contract or upon
 written assignment of claim, and payment to the insured He who made the payment may claim from his co-debtors only the
makes the insurer assignee in equity share which corresponds to each, with the interest for the payment
 It follows, therefore, that petitioner, upon paying respondent Vallejos the already made. If the payment is made before the debt is due, no
amount of riot exceeding P20,000.00, shall become the subrogee of the interest for the intervening period may be demanded.
insured, the respondent Sio Choy xxx xxx xxx
o As such, it is subrogated to whatever rights the latter has against  In accordance with Article 1217, petitioner, upon payment to respondent
respondent San Leon Rice Mill, Inc. Vallejos and thereby becoming the subrogee of solidary debtor Sio Choy, is
 Article 1217 of the Civil Code gives to a solidary debtor who has paid the entitled to reimbursement from respondent San Leon Rice Mill, Inc.
entire obligation the right to be reimbursed by his co-debtors for the share
which corresponds to each. WHEREFORE, the petition is GRANTED. The decision of the trial court, as affirmed
o Art. 1217. Payment made by one of the solidary debtors by the Court of Appeals, is hereby AFFIRMED, with the modification above-
extinguishes the obligation. If two or more solidary debtors offer to mentioned. Without pronouncement as to costs. SO ORDERED.
pay, the creditor may choose which offer to accept.

iArt. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the xxx xxx xxx
vehicle, could have, by the use of due diligence, prevented the misfortune it is disputably presumed that a Employers shall be liable for the damages caused by their employees and household helpers acting within the
driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice scope of their assigned tasks, even though the former are not engaged ill any business or industry.
within the next preceding two months. xxx xxx xxx
If the owner was not in the motor vehicle, the provisions of article 2180 are applicable. The responsibility treated in this article shall cease when the persons herein mentioned proved that they
observed all the diligence of a good father of a family to prevent damage.
ii
Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions,
but also for those of persons for whom one is responsible.