Malayan Insurance v CA (L-36413, September 26, 1988) Petitioner: Malayan Insurance Co., Inc.

Respondents: CA, Martin Vallejos, Sio Choy, San Leon Rice Mill, and Pangasinan Transportation Co. Ponente: Padilla, J. Facts

Petitioner Malayan issued a Private Car Comprehensive Policy to respondent Sio Choy for the latters Willys jeep. During the effectivity of the policy, the said jeep, while being driven one Juan Compollo (employee of respondent San Leon Rice Mill), collided with a passenger bus of respondent PANTRANCO, leading to injuries to Compollo and the passenger of the jeep, Martin Vallejos, and damage to the insured vehicle. Vallejos sued for damages against petitioner Malayan, and respondents Sio Choy and PANTRANCO. The trial court ruled in favor of Vallejos and ordered the defendants to solidarily answer for the damages. The appellate court affirmed the decision, but denied the right to reimbursement of petitioner Malayan as San Leon Rice Mill was not a party privy to the insurance contract between Sio Choy and the petitioner. Hence this petition. Issue

Whether or not petitioner Malayan has the right to reimbursement Held

YES. An insurance contract, being a contract of indemnity, follows the principle of subrogation. As such, the insurer, in this case petitioner Malayan, is entitled to be subrogated to the rights of the insured Sio Choy against herein respondent San Leon Rice Mill to answer for the solidary obligation ordered by the Court against them. After paying the damages, Malayan can recover from San Leon Rice Mill its corresponding share.