G.R. No. 84197 – PIONEER INSURANCE & SURETY CORPORATION, petitioner, vs. THE HON. COURT OF APPEALS, BORDER MACHINERY & HEAVY EQUIPMENT, INC., (BORMAHECO), CONSTANCIO M. MAGLANA and JACOB S. LIM, respondents.
G.R. No. 84157 – JACOB S. LIM, petitioner, vs. COURT OF APPEALS, PIONEER INSURANCE AND SURETY CORPORATION, BORDER MACHINERY and HEAVY EQUIPMENT CO., INC,, FRANCISCO and MODESTO CERVANTES and CONSTANCIO MAGLANA, respondents.
GUTIERREZ, JR., J.
Rule Synopsis
An insurer who has already collected proceeds from its reinsurer can no longer be subrogated to the insured’s rights. Instead, the reinsurer may be subrogated as such.
Facts
Lim, as owner-operator of Southern Airlines (SAL) bought aircraft from Japan Domestic Airlines (JDA). A surety bond was executed by Pioneer Insurance and Surety Corp. (Pioneer) in favor of JDA, on behalf of Lim. Indemnity agreements were also executed in favor of Pioneer, whereby the indemnitors bound themselves to jointly and severally indemnify Pioneer against all damages, losses, etc. that it may incur as a surety. These indemnitors also contributed funds for the purchase of said aircraft based on the misrepresentation of Lim that they would form a new corporation to expand his business. In addition to the indemnification agreements, Lim also executed a chattel mortgage on the aircraft purchased in favor of Pioneer as security.
Lim eventually failed to pay. Pioneer paid on his behalf. Thus, the mortgage was foreclosed. Pioneer also applied for a writ of preliminary attachment against Lim and the indemnitors. However, it appears that Pioneer had already collected the reinsurance proceeds on its bond in favor of JDA. The indemnitors, on the other hand, filed cross-claims against Lim, alleging that they were not privies to the contracts signed by Lim. They also sought to recover the amounts they advanced for the purchase of the aircraft.
Issue
Were Lim and the indemnitors liable to Pioneer Insurance & Surety Co.?
Ruling and Discussion
No. Lim and the indemnitors were not liable to Pioneer Insurance & Surety Co.
As regards the issue of subrogation, the SC dismissed the case filed by Pioneer against Lim and the indemnitors given that it was established that it had already collected the proceeds of the reinsurance on its bond in favor of JDA. In this case, the Court held that the real party in interest is Pioneer’s reinsurer, having been subrogated to the latter’s rights upon its payment to Pioneer; Pioneer, thus, had no cause of action against the respondents. It is clear from the records that Pioneer sued in its name and not as an attorney-in-fact of the reinsurer.
Dispositive
Petitions dismissed. Decision affirmed.