G.R. No. 81026, 3 April 1990, 184 SCRA 54

FACTS:

Pan Malayan filed a complaint for damages with the RTC of Makati against private respondents Erlinda Fabie and her driver. It insured a Mitsubishi Colt Lancer car registered in the name of Canlubang. Due to the carelessness, recklessness, and imprudence of the unknown driver of a pick-up, the insured car was hit and suffered damages in the amount of P42,052.00.

Pan Malayan defrayed the cost of repair of the insured car, and therefore was subrogated to the rights of Canlubang against the driver of the pick-up and his employer, Erlinda Fabie. Despite repeated demands, defendants failed and refused to pay the claim of Pan Malay. Defendants/Private Respondents alleged that Pan Malayan had no cause of action against them because 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. RTC dismissed the case for no cause of action and denied its motion for reconsideration. The CA affirmed the trial courts decision.

ISSUE:

Whether or not the insurer may institute ac action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents.

RULING:

Pan Malayan is correct. 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 ma 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.

*Case digest by Princess Dianne Kris S. Decierdo, LLB-IV, Andres Bonifacio College Law School, SY 2018-2019