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Pan Malayan Insurance Corporation v. Court of Appeals (Ana ) G.R. No. 81026 | April 3, 1990 | J.

Cortes

Facts: 1. Canlubang Automotive Resources Corp. obtained from PanMalay a motor vehicle insurance policy for its Mitsubishi Colt Lancer. 2. While the policy was still in effect, the insured car was allegedly hit by a pick-up owned by Erlinda Fabie but driven by another person. The car suffered damages in the amount of P42K. 3. PanMalay defrayed the cost of repair of the insured car. It then demanded reimbursement from Fabie and her driver of said amount, but to no avail. 4. PanMalay filed a complaint for damages with the RTC of Makati against Fabie and the driver. It averred that the damages caused to the insured car was settled under the own damage coverage of the insurance policy. 5. Private respondents filed a motion to dismiss alleging that PanMalay had no cause of action since the won damage clause of the policy precluded subrogation under Art. 2207 of the Civil Code. They contended that indemnification under said article is on the assumption that there was no wrongdoer or no 3rd party at fault. 6. The RTC dismissed PanMalays complaint and ruled that payment under the own damage clause was an admission by the insurer that the damage was caused by the assured and/or its representatives. 7. CA affirmed but on different ground. Applying the ejusdem generis rule, CA held that Section III-I of the policy, which was the basis for the settlement of the claim against insurance, did not cover damage arising from collision or overturning due to the negligence of 3rd parties as one of the insurable risks. Issue: Was PanMalay subrogated to the rights of Canlubang against the driver and his employer? Held: Yes. Decision: The Supreme Court remanded the case back to the trial court. Ruling: Right of Subrogation of the Insurer Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then 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. The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer.

There are three exceptions to this rule: 1. where the assured by his own act releases the wrongdoer or third party liable for the loss or damage 2. where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's claim for loss 3. where the insurer pays the assured for a loss which is not a risk covered by the policy, thereby effecting "voluntary payment" None of these exceptions are present in this case. As to the trial courts ruling: When PanMalay utilized the phrase "own damage" a phrase which is not found in the insurance policy to define the basis for its settlement of Canlubang's claim under the policy, it simply meant that it had assumed to reimburse the costs for repairing the damage to the insured vehicle. It is in this sense that the so-called "own damage" coverage under Section III of the insurance policy is differentiated from Sections I and IV-1 which refer to "Third Party Liability" coverage (liabilities arising from the death of, or bodily injuries suffered by, third parties) and from Section IV-2 which refer to "Property Damage" coverage (liabilities arising from damage caused by the insured vehicle to the properties of third parties). As to the Court of Appeals ruling: The Court of Appeals' ruling on the coverage of insured risks stems from an erroneous interpretation of the provisions of the policy. It violates a fundamental rule on the interpretation of property insurance contracts where interpretation should be liberally in favor of the assured and strictly against the insurer in cases of disagreement between the parties. The meaning advanced by PanMalay regarding the coverage of the policy is undeniable more beneficial to Canlubang than that insisted upon by the CA. In any case, the very parties to the policy were not shown to be in disagreement regarding the meaning and coverage of Section III-I. Hence, it was improper for CA to assert its own interpretation of the contract that is contrary to the clear understanding and intention of the parties to it.

* Even assuming for the sake of argument that the insurance

policy does not cover damage to the insured vehicle caused by negligent acts of third parties, and that PanMalay's settlement of Canlubang's claim for damages allegedly arising from a collision due to private respondents' negligence would amount to unwarranted or "voluntary payment", insurer may still recover from the third party responsible for the damage to the insured property under Article 1236 of the Civil Code.