Facts:
In 1985, PANMALAY filed a complaint for damages with the RTC
of Makati against private respondents Erlinda Fabie and her driver. PANMALAY
averred that: it is an insurer of a Mitsubishi Colt Lancer car registered in
the name of Canlubang Automotive Resources Corporation; on May 26, 1985, due to
the "carelessness, recklessness, and imprudence" of the unknown
driver of a pick-up with plate no. PCR-220, the insured car was hit and
suffered damages in the amount of P42,052.00; PANMALAY 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;
and, despite repeated demands, defendants, failed and refused to pay the claim
of PANMALAY.
Private
respondents filed a Motion for Bill of Particulars. In compliance therewith,
PANMALAY clarified, among others, that the damage caused to the insured car was
settled under the "own damage", coverage of the insurance policy, and
that the driver of the insured car was, at the time of the accident, an
authorized driver duly licensed to drive the vehicle. PANMALAY also submitted a
copy of the insurance policy and the Release of Claim and Subrogation Receipt
executed by CANLUBANG in favor of PANMALAY.
Private
respondents filed a Motion to Dismiss alleging that PANMALAY had no cause of
action against them. They argued that 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.
After
hearing, the RTC issued an order dismissing PANMALAY's complaint for no cause
of action. The RTC ruled that that payment
by PANMALAY of Canlubang's claim under the "own damage" clause of the
insurance policy was an admission by the insurer that the damage was caused by
the assured and/or its representatives.
The Court of Appeals in upholding the RTC decision, held that Section
III-1 of the policy, which was the basis for settlement of Canlubang's claim, did not cover damage arising from collision or overturning due to
the negligence of third parties as one of the insurable risks.
Issue:
Whether
or not PANMALAY was legally subrogated to the rights of Canlubang.
Held:
Yes.
Article 2207 of the Civil Code provides: "If
the plaintiffs property has been insured, and he has received indemnity from
the insurance company for the injury or loss arising out of the wrong or breach
of contract complained of, the insurance company shall be subrogated to the
rights of the insured against the wrongdoer or the person who has violated the
contract."
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 a few recognized exceptions
to this rule. For instance, if the assured by his own act releases the
wrongdoer or third party liable for the loss or damage, from liability, the
insurer's right of subrogation is defeated. Similarly, 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, the settlement is binding
on both the assured and the insurer, and the latter cannot bring an action
against the carrier on his right of subrogation. And where the insurer pays the
assured for a loss which is not a risk covered by the policy, thereby effecting
"voluntary payment", the former has no right of subrogation against
the third party liable for the loss.
None of
the exceptions are availing in the present case.
It must
be emphasized that the lower court's ruling that the "own damage"
coverage under the policy implies damage to the insured car caused by
the assured itself, instead of third parties, proceeds from an
incorrect comprehension of the phrase "own damage" as used by the
insurer. When PANMALAY utilized the phrase "own damage" — a phrase
which, incidentally, 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).
Neither
is there merit in the Court of Appeals' ruling that the coverage of insured
risks under Section III-1 of the policy does not include to the insured vehicle
arising from collision or overturning due to the negligent acts of the third
party. Not only does it stem from an erroneous interpretation of the provisions
of the section, but it also violates a fundamental rule on the interpretation
of property insurance contracts.
PANMALAY
contends that the coverage of insured risks under the above section,
specifically Section III-1(a), is comprehensive enough to include damage to the
insured vehicle arising from collision or overturning due to the fault or
negligence of a third party. CANLUBANG is apparently of the same understanding.
Based on a police report wherein the driver of the insured car reported that
after the vehicle was sideswiped by a pick-up, the driver thereof fled the
scene [Record, p. 20], CANLUBANG filed its claim with PANMALAY for
indemnification of the damage caused to its car. It then accepted payment from
PANMALAY, and executed a Release of Claim and Subrogation Receipt in favor of
latter.
Considering
that the very parties to the policy were not shown to be in disagreement
regarding the meaning and coverage of Section III-1, specifically sub-paragraph
(a) thereof, it was improper for the appellate court to indulge in contract construction,
to apply the ejusdem generis rule, and to ascribe meaning
contrary to the clear intention and understanding of these parties.
For
even if under the above circumstances PANMALAY could not be deemed subrogated
to the rights of its assured under Article 2207 of the Civil Code, PANMALAY
would still have a cause of action against private respondents. In the
pertinent case of Sveriges Angfartygs Assurans Forening v. Qua
Chee Gan, the Court
ruled that the insurer who may
have no rights of subrogation due to "voluntary" payment may
nevertheless recover from the third party responsible for the damage to the
insured property under Article 1236 of the Civil Code.
