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INSURANCE CASE DIGESTS Double Insurance PIONEER INSURANCE AND SURETY CORPORATION VS. YAP 61 SCRA 426 (G.R.

. NO. L-36232) DECEMBER 19, 1974 Petitioner: Pioneer Insurance and Surety Corporation Respondent: Oliva Yap, represented by her attorney-in-fact, Chua Soon Poon J. Fernandez: FACTS: Respondent Oliva Yap was the owner of a store in a two-storey building located in Manila. On April 19, 1962, respondent Yap took out a fire policy from Pioneer Insurane for 25,000.00 covering her stocks, officer furniture, fixtures and fittings of every kind and description Among the conditions in the policy was The insured shall give notice to the company of any insurance or insurance already effected, or which may subsequently be effected, covering any of the property hereby insured and unless such notice be given and the particulars of such insurance be stated in or indorsed on this policy by or on behalf of the company before the occurrence of any loss or damage, all benefits under this policy shall be forfeited. At the time of the insurance, an insurance for 20,000.00 issued by the Great American Insurance Company covering the same properties was noted on said policy as co-insurance. On September 26, 1962, Yap took out another Fire Policy for 20,000.00 covering the same properties, from the Federal Insurance Company, Inc. which new policy was however procured without notice to and without the written consent of Pioneer Ins. and therefore, was not noted as a co-insurance in Policy No. 4219. On December 19, 1962, a fire broke out in the building housing Yaps above-mentioned store, and the said store was burned. Yap filed an insurance claim, but the same was denied on the ground of breach and/or violative of any/or all terms and conditions of Policy No. 4219. ISSUE: Whether or not petitioner should be absolved from liability on the policy. HELD: By the plain terms of the policy, other insurance without the consent of petitioner would ipso facto avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance. The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured. Subrogation

MALAYAN INSURANCE CO., INC., petitioner, vs. THE HON. COURT OF APPEALS (THIRD DIVISION) MARTIN C. VALLEJOS, SIO CHOY, SAN LEON RICE MILL, INC. and PANGASINAN TRANSPORTATION CO., INC., respondents. September 26, 1988 FACTS: THE PLAYERS: Sio Choy - registered owner of the Willys Jeep Malayan Insurance - insurer of the jeep, up to P600 for damage to the jeep and up to P20,000 for thirdparty liability PANTRANCO (Pangasinan Transit Co.) San Leon Rice Mill employer of Juan Campollo Juan Campollo - driver of jeep at the time of accident Martin Vallejos injured passenger of the jeep

At the time of the accident, Campollo was driving the jeep with Vallejo as the passenger. Travelling at high speed, the jeep bumped a Pantranco bus which already tried to avoid the jeep by stopping at the shoulder of the national highway. The accident resulted in the death of the driver, Campollo, and injuries to Vallejo, the passenger. Vallejo filed an action for damages against Sio Choy, Malayan Insurance, and Pantranco. Pantranco disclaimed any liability saying it was Campollo who was negligent, and that it exercised the diligence of a good father of a family in its selection and supervision of its drivers and in the maintenance of its buses. Sio Choy filed a cross-claim against Malayan. Malayan filed a cross claim.

TRIAL COURT: Pantranco is free from liability. Sio Choy, Malayan and San Leon Rice Mill are jointly and severally liable. With respect to Malayan, however, its liability is up to P20,000 only. COURT OF APPEALS: Affirmed the judgment of the trial court. CA also ruled that, San Leon Rice Mill, Inc. 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. Hence, Malayan appealed to the SC. ISSUES: (1) Whether the trial court, as upheld by the Court of Appeals, was correct in Malayan, Sio Choy and San Leon Rice Mill, Inc. "solidarily liable" to respondent Vallejos. NO. (2) Whether Malayan is entitled to be reimbursed by San Leon Rice Mill, Inc. for whatever amount Malayan has been adjudged to pay Vallejos on its insurance policy. YES. HELD: (1) Sio Choy and San Leon Rice Mill are jointly and solidarity liable to Vallejos. Malayan is NOT SOLIDARILY LIABLE WITH THE OTHER TWO. Sio Choy is liable under 2184 because he is the registered owner of the jeep. Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty or reckless driving or violating traffic regulations at least twice within the next preceding two months. If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. San Leon Rice Mill was held liable under 2180 . 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. xxx xxx xxx Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged ill any business or industry.

Sio Choy and San Leon are solidarily liable because of 2194. Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary. SC: It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc. are the principal tortfeasors who are primarily liable to respondent Vallejos. The law states that the responsibility of two or more persons who are liable for a quasi-delict is solidarily. On the other hand, the basis of MALAYANs liability is its insurance contract with Sio Choy. If MALAYAN is adjudged to pay Vallejos in the amount of not more than P20,000.00, this is on account of its being the insurer of respondent Sio Choy under the third party liability clause included in the private car comprehensive policy existing between petitioner and respondent Sio Choy at the time of the complained vehicular accident. While it is true that where the insurance contract provides for indemnity against liability to third persons, such third persons can directly sue the insurer, however, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault. The liability of the insurer is based on contract; that of the insured is based on tort. Thus, it would seem that Malayans liability is DIRECT by reason of its contract with Sio Choy, but it is NOT SOLIDARY. (2) Malayan is entitled to re-imbursement from San Leon by virtue of SUBROGATION. Article 1217 says, Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. In accordance with Article 1217, MALAYAN, upon payment to Vallejos and thereby becoming the subrogee of solidary debtor Sio Choy, is entitled to reimbursement from respondent San Leon Rice Mill, Inc. The SC summarized it as follows: To recapitulate then: We hold that 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 ).

PAN MALAYAN INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, ERLINDA FABIE AND HER UNKNOWN DRIVER, G.R. No. 81026.
FACTS. 1. Petitioner Panmalay was an insurer of the car of CANLUBANG AUTOMOTIVE RESOURCE CORP. which was bumpt and damaged by the private respondent through its negligent driver. 2. Petitioner PANMALAy paid the amount of insurance to the insured. 3. Subrogated on the rights of the insured, petitioner demand payment from the private respondent who refused to pay the claim of the petitioner.

4. Petitioner filed a complaint against private respondent before the RTC. 5. Private respondent filed a motion to dismiss arguing that payment under the "own damage" clause of the insurance policy precluded subrogation under Article 2207 of the Civil Code, since indemnification thereunder was made on the assumption that there was no wrongdoer or no third party at fault. 6. The RTC dismissed the complaint aswell as the motion for reconsideration and this was affirmed by the CA. ISSUE: WHETHER OR NOT, THE PETITIONER IS ALLOWED TO RECOVERED THE AMOUNT OF INSURANCE IT HAD PAID TO THE INSURED FROM PRIVATE RESPONDENT. According to the Supreme Court, Art. 2207 of the civil code states that If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. This was founded on the wellsettled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, the insurer, upon payment to the assured, will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operates as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. WHEREFORE, in view of the foregoing, the present petition is GRANTED. Petitioner's complaint for damages against private respondents is reinstated. So the case was remanded to the Trial Court for the trial of the merit. MANILA MAHOGANY MANUFACTURING CORPORATION VS. COURT OF APPEALS 154 SCRA 650 (G.R. NO. 52756) OCTOBER 12 1987 Petitioner: Manila Mahogany Manufacturing Corporation Respondent: Court of Appeals and Zenith Insurance Corporation J. Padilla: FACTS: Petitioner insured its Mercedes Benz 4-door sedan with respondent insurance company . The insured vehicle was bumped and damaged by a truck owned by San Miguel Corporation. For the damage caused, respondent company paid petitioner 5,000.00 in amicable settlement. Petitioners general manager executed a Release of Claim, subrogating respondent company to all its right to action against San Miguel Corp.. Read more in USA & Canada Looking for Condos for Your FamilyWhitney Houston Tribute Had Jordin Sparks Feeling The Pressure Respondent company wrote the Insurer Adjusters, Inc. to demand reimbursements from San Miguel Corporation of the amount it had paid petitioner. Insurer Adjusters, Inc. refuse reimbursement alleging that San Miguel Corporation had already paid petitioner 4,500.00 for the damages to petitioners motor vehicle, as evidenced by a cash voucher and Release of Claim executed by the General Manager of petitioner discharging San Miguel Corporation from all actions, claims, demands the right of action that now exist or hereafter develop arising out of or as a consequence of the accident. Respondent insurance company thus demanded from petitioner reimbursement of the sum of 4,500.00 paid by San Miguel Corporation. Petitioner refused. ISSUE: Whether or not the insurer is entitled to recover from the insured the amount of insurance money paid. HELD: Although petitioner s right to file a deficiency claim against San Miguel Corporation is with legal basis, without prejudice to the insurers right of subrogation, nevertheless when Manila Mahogany executed another release claim (Exhibit K) discharging San Miguel Corporation from all actions, claims, demands and rights of action that now exist or hereafter arising out of or as a consequence of the accident after the insurer bad paid the proceeds of the policythe compromise agreement of P5,000.00 being based on the insurance policythe insurer is entitled to recover from the insured the amount of insurance money paid, Since petitioner by its own acts released San Miguel Corporation, thereby defeating private respondents right of subrogation, the right of action of petitioner against the insurer was also nullified. Otherwise stated: private respondent may recover the sum of P5,000.00 it had earlier paid to petitioner.

As held in Phil Air Lines v. Heald Lumber Co,; If a property is insured and the owner receives the indemnity from the insurer, it is provided in [Article 2207 of the New Civil Code] that the insurer is deemed subrogated to the rights of the insured against the wrongdoer and if the amount paid by the insurer does not fully cover the loss, then the aggrieved party is the one entitled to recover the deficiency. x x x Under this legal provision, the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured. The right of subrogation can only exist after the insurer has paid the insured, otherwise the insured will be deprived of his right to full indemnity. If the insurance proceeds are not sufficient to cover the damages suffered by the insured, then he may sue the party responsible for the damage for the the [sic] remainder, To the extent of the amount he has already received from the insurer, the insurer enjoys [sic] the right of subrogation. Since the insurer can be subrogated to only such rights as the insured may have, should the insured, after receiving payment from the insurer. release the wrongdoer who caused the loss, the insurer loses his rights against the latter. But in such a case, the insurer will be entitled to recover from the insured whatever it has paid to the latter, unless the release was made with the consent of the insurer.

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