MANILA MAHOGANY MFG CORP V CA & ZENITH INSURANCE

OCT 12, 1997; PADILLA, J

recovery of the total amount of damages petitioner has

sustained?

FACTS:
From March 6, 1970 1971, petitioner insured its
Mercedes Benz 4-door sedan w/ respondent insurance
company. On May 4, 1970, vehicle was bumped and
damaged by a truck owned by San Miguel Corp (SMC).
Zenith paid P5K to petitioner in amicable settlement.
Petitioners general manager executed a Release
Claim, subrogating respondent company to all its right
to action against SMC
Dec. 11, 1972 respondent co. wrote Insurance
Adjusters Inc. To demand reimbursement from SMC.
Insurance Adjusters refused saying that SMC had
already paid petitioner P4,500 for the damages to
petitioners vehicle, as evidenced by a cash voucher
and Release of Claim executed by the GM of petitioner
discharging SMC from all actions, claims, demands
the rights of action that now exist or hereafter develop
arising out of or as a consequence of the accident
Respondent demanded the P4.5K amount from
petitioner. Petitioner refused. Suit filed for recovery.
City Court ordered petitioner to pay respondent. CFI
affirmed. CA affirmed with modification that petitioner
was to pay respondent the total amount of 5K it had
received from respondent co.
Petitioners argument: Since the total damages were valued
at P9,486.43 and only 5K was received by petitioner from
respondent, petitioner argues that it was entitled to go after
SMC to claim the additional which was eventually paid to it
Respondents argument: No qualification to its right of
subrogation

HELD/RATIO: NO.
SC: no other evidence to support its allegation that a
gentlemans agreement existed between the parties,
not embodied in the Release of Claim, such Release of
Claim must be taken as the best evidence of the intent
and purpose of the parties
CA correct in holding petitioner should reimburse
respondent 5K
o When Manila Mahogany executed another
release claim discharging SMC from all rights of
action after the insurer had paid the proceeds of
the policy the compromise agreement of 5Kthe insurer is entitled to recover from the
insured the amount of insurance money paid
o Petitioner by its own acts released SMC, thereby
defeating respondents right of subrogation, the
right of action against the insurer was also
nullified
Since the insurer can be subrogated to only such rights
as the insured may have, should the insured, after
receiving payment from the insurer, release the
wrongdoer who caused the loss, the insurer losses his
rights against the latter. But in such a case, the insurer
will be entitled to recover from the insured whatever it
has paid to the latter, unless the release was made w/
the consent of the insurer

ISUE: WON petitioner should pay respondent despite the

subrogation in the Release of Claim was conditioned on

DISPOSITIVE: PETITION DENIED