G.R. No. L-36413 – 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.
PADILLA, J.
Rule Synopsis
The victim of an accident may hold liable both the offending party and the latter’s insurer. In this case, they will be held solidarily liable, subject to the right of the insured offending party to demand reimbursement from the insurer.
Facts
Sio Choy (insured) insured his jeep with Malayan Insurance Co., Inc. (insurer). The insurance coverage was for “own damage” and “third-party liability.” The jeep then collided with a bus while being driven by an employee of San Leon Rice Mill, Inc. (SLRMI); this resulted in damages to the jeep, and death of the driver, and injuries to one Vallejos, a passenger of the jeep. Vallejos filed a complaint for damages against the insured, the insurer, and the bus company. The insured then filed a cross-claim against the insurer on the ground that he had paid the injured passenger. Meanwhile, the insurer filed a third-party complaint against SLRMI, as the employer of the negligent driver. The lower courts held the insurer, insured, and driver’s employer jointly and severally liable.
Issue
Who between the insurer and the insured, of a third-party liability insurance may be held liable to the victim?
Ruling and Discussion
Both the insurer and the insured may be held liable, subject to the right of the insured to demand reimbursement from the insurer.
The SC held that only Sio Choy and SLRMI were solidarily liable to the victim, but upon payment by the insurer of the insured’s liability, it has a right to demand reimbursement from SLRMI. Relevantly, the Supreme Court held that the insurer is entitled to be reimbursed by SLRMI by virtue of subrogation. The Court said: “[s]ubrogation 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.” It held that, in the present case, the insurer, upon paying the injured passenger shall become the subrogee of the insured; it is subrogated to whatever rights the latter has against SLRMI.
Dispositive
Petition granted. Decision affirmed.