Manila Bankers Life Insurance Corp. vs Cresencia Aban
GR No. 175666 | July 29, 2013
Del Castillo J.:
F: Delia Sotero took out a life insurance policy from Bankers
Life designating her niece, Aban as beneficiary. The Policy
had a face value of 100k, the requisite medical examination
and payment of premiums was done.
After the insurance had been in effect for 2 yrs and 7
months, Sotero died. Thus Aban filed for a claim to get the
proceeds of the policy. The Insurer investigated and found
out that insured did not personally apply, she was already
sickly, did not sign the application of insurance and did not
have the capacity to pay for the premiums herself.
In short, Insurer denied the claim of the beneficiary Aban.
Petitioner filed for recession of the insurance contract on
the premise of fraud CONCEALMENT and/or
MISREPRESENTATION. Respondent then answered that
the petitioner is barred to claim such under article 48.
The RTC ruled in favor of Aban (respondent)
The CA then sustained the RTC.
R: Sec. 48 serves a noble purpose as it regulates both the
insurer and the insured. It gives the insurer a 2 year period
from the effectivity of the life insurance and while the
insured is still alive to discover or prove that the policy is
void ab initio or rescindable by virtue of concealment or
misrepresentation. It also protects the insured from
unwarranted denial of their claims or delay in the
collection of their insurance proceeds.
The insurer is deemed to have the necessary facilities to
discover the concealment or misrepresentation within the
2 year period from effectivity or last reinstatement.
After 2 years the defense of concealment or
misrepresentation no matter how patent or well founded
will no longer lie.
Here the policy was in effect for 3 years, 7 months and 24
days. The insured died after 2 years thus the plaintiff was
barred from proving the policy was a fraud, concealment
or misrepresentation or even want of insurable interest
SC: DENIED, Respondent wins.
Sun Life (Canada) vs. Daisy Sibya et. Al.
GR No. 211212 | June 8, 2016
Reyes , J.:
F: Atty. Jesus Jr. applied for life insurance with sun life. In
his application he stated he has previously sought for advice
for kidney problems “1987, had undergone lithoprisy due to
kidney stone under Dr. Mendoza at the National Kidney
Institute, discharged after 3 days. No recurrence claimed”
Sun life approved the application and issued the
corresponding policy on 2/5/01 with a value of P1M should
the insured die on or before 2/5/21 or a sum of money if the
insured is still alive. (basically an endowment policy)
May 11, 2001, Atty. Jesus died from a gunshot wound he
sustained in Iloilo. The beneficiaries then applied to claim
the proceeds of the policy stating that the insured failed to
provide the details of his medical history and instead, issued
a check corresponding to the refund of premiums paid by
the insured. Beneficiaries reiterated their claim through a
letter but Sun Life refused and instead filed a case for
recession of contract before the RTC, Sun life claim that
insured failed to disclose his treatment at the national
kidney institute in 1994 and was at a stage of “renal failure”.
The beneficiaries answered that no misrepresentation was
made by the deceased and the application form was done in
good faith.
RTC – dismissed and ordered the payment of 1M to the
beneficiaries. No material concealment and
misrepresentation when he applied for life insurance.
CA – Affirm.
R: Affirm, the SC reiterated the doctrine laid down in Aban.
In this case, the policy was in effect for 3 months upon
issuance thereof. Upon the death of the insured, the insurer
loses its right to rescind the policy. As stated in Aban, the
death of the insured within the 2 year period will render the
right of the insurer to rescind the policy nugatory. As such,
the incontestable period will now set in.
Nonetheless, the insured had admitted his medical treatment
for his kidney and he even authorized the insurer to
investigate the matter. Thus Sun Life failed to clearly and
satisfactorily prove its allegations and is therefore liable to
pay the proceeds of the insurance.
H.H. Solero Construction Inc. vs. GSIS and Pool of from the time of the denial of his claim by the Insurer,
Machinery Insurers either expressly or impliedly.
G.R. No. 152334 | 9-24-14 | Perlas-Bernabe, J.:
But as pointed out by the petitioner insurance
F: 4-26-88, GSIS and HH entered into an agreement company, the rejection referred to should be construed
whereby the later undertook to develop the Modesta as the rejection, in the first instance, for if what is being
referred to is a reiterated rejection conveyed in a
Village project of the former. HH obliged itself to
resolution of a yetition for reconsideration, such should
insure the project including all the improvements
have been expressly stipulated.
therein under a “Contractors All Risk” (CAR)
insurance with the GSIS. Thus, when the claims were rejected on the first
instance, this was the point where the indemnity
Initial coverage of P1M (for land) which was latter on respectively accrued at the first instance. It allowed
increased to P10M effective May 2, 1988 to 89. Then more than 12 months to lapse before filing the
another policy also initially for P1M (for housing) necessary complaint before the RTC, its cause of
which was then increased to P17.75M also for the same action had already expired.
period.
Petition was denied.
The policies provides that there must be a notice of loss
within 14 days of the occurrence and all the benefits
are forfeited if no action is instituted within 12 months
after rejection of the claim of loss or damage. And an
average clause wherein if the sum insured is found to
be less than the amount required to be insured, the
amount recoverable shall be reduced to such
proportion.

During the policy’s life, 3 storms hit the project which

caused considerable damage. Thus HH filed for several
claims based on the storms. The GSIS rejected the
petitioners claims on the ground that there was “no
loss” as there was no renewal before the onset of the
typhoon.

A Complaint for sum of money and damages before

the RTC was filed by the insured. GSIS filed a MTD
based on the premised that insured was barred based
on the 12-month limitation in the policy.

RTC – Ruled in favor of HH

CA – Reversed RTC, barred as it was beyond the 12
month period.

R: After the denial of the letter, petitioner was given

the opportunity to dispute its findings but neither party
pursued any action on the matter. This logically shows
that they deemed the letter as a denial of the claims.
Which was also admitted by the petitioner during trial,
that such letter was indeed a denial.

Before the end of the 12 month period, the petitioner

filed a reconsideration of the decision of the GSIS
denying its claim, that the rejection of this letter was
done after the lapse of the policy.

The insured' s cause of action or his right to file a claim

either in the Insurance Commission or in a court of
competent jurisdiction [as in this case] commences
Makati Tuscany Condominium Corp. vs. CA
GR No. 95546 | November 6, 1992
Bellosillo J.:
I: WON payment by installment of the premiums due on an
insurance policy invalidates the contract of insurance?
F: The insurer, American Home Assurance, issued
Petitioner an insurance policy on the its property and
building for 1 year from march 1, 1982 to 83 and for a total
premium of 466k which was paid on installments (4) which
were all accepted by the insurer.
In 1983, the policy was renewed and the payments were
made. In 1984 the policy was again renewed and was able
to make 2 installment payments then petitioner refused to
pay the remainder of the premiums. Insurer filed to collect
the balance of the premiums. According to the insured the
contract they entered into was not binding as it did not
contain any credit clause.
The case was dismissed by the court, the CA then modified
the decision of the RTC and ordered the petitioner to pay
the balance of the premiums plus interests.
R: Sec. 77 of the insurance code merely precludes the party
from stipulating that the policy is valid even if premiums
are not paid, however there is no prohibition on granting
credit extension, since such an agreement is not contrary to
morals, good customs, public order or public policy.
Both parties are likewise estopped from questioning the
arrangement they each voluntarily accepted.
R: Remember the policy’s risk entered here the risk is entire
and the contract is indivisible, thus the insured is not entitled
to a refund of the premiums paid if the insurer was exposed
to the risk insured for any for any period, however brief or
momentary.
UCPB vs. Masagana Telamart
GR No. 137172 | April 4, 2001
Davide Jr, C.J.:
F: Masagana took 5 polices from UCPB all of which are
effective from “4pm of may 22, 1991 to 92”.
June 13, 1992 the properties were razed by fire. On the same
day the respondent tendered payment which petitioner
accepted which correspond to renewal premiums. That
same day respondent demanded for indemnification for the
burned properties which was denied by petitioners based on
the following grounds:
1. Policy was expired
2. Payment was made after the buildings were burned
Hence Masagana filed a case
I: Do we apply Section 77 strictly to petitioners advantage
despite its practice of granting a 60-90 day credit term for
payment of premiums?
R: While the import of Section 77, states that the payment
of premiums is strictly required as a condition to the validity
of the contract. At the very least, both parties should be
deemed in estoppel to question the arrangement they have
voluntarily accepted.
Sun Insurance Office Ltd. vs. CA & Nerrisa Lim
G.R. No. 92383 | 7-17-82
Cruz, J.:
F: Sun issued a personal accident insurance to Felix
Lim valued at 200k. He died later after being shot in
the head. Respondent, wife, sought to collect from the
insurer but was denied stating no suicide nor accident.
relieve the insurer from liability, and none of these
exceptions is applicable in the case at bar.
It bears noting that insurance contracts are as a rule
supposed to be interpreted liberally in favor of the
assured. There is no reason to deviate from this rule,
especially in view of the circumstances of this case as
above analyzed.

According to the lone eyewitness, the deceased was CA is affirmed, pay the beneficiary.
happy during the birthday of her mother. The deceased
was playing with his gun which he removed the
magazine. Deceased was fooling around and
eventually placed the gun to his temple and apparently
shot himself.

Respondent then sued before the RTC, and won. The

CA affirmed the RTC.

“Accident” defined, “accident" and "accidental" mean

that which happens by chance or fortuitously,
without intention or design, and which is
unexpected, unusual, and unforeseen. The definition
that has usually been adopted by the courts is that an
accident is an event that takes place without one's
foresight or expectation — an event that proceeds from
an unknown cause, or is an unusual effect of a known
case, and therefore not expected.

Thus the death of the deceased was found to be an

accident.

The insurance contract entered into by the parties states

that:
-Exceptions: The company shall not be liable
i.) the insured person attempting to commit
suicide or willfully exposing himself to needless peril
except in an attempt to save human life.

It should be noted at the outset that suicide and willful

exposure to needless peril are in pari materia because
they both signify a disregard for one's life. The only
difference is in degree, as suicide imports a positive act
of ending such life whereas the second act indicates a
reckless risking of it that is almost suicidal in intent.
To illustrate, a person who walks a tightrope one
thousand meters above the ground and without any
safety device may not actually be intending to commit
suicide, but his act is nonetheless suicidal. He would
thus be considered as "willfully exposing himself to
needless peril" within the meaning of the exception in
question.

Lim was unquestionably negligent and that negligence

cost him his own life. But it should not prevent his
widow from recovering from the insurance policy he
obtained precisely against accident. There is nothing in
the policy that relieves the insurer of the responsibility
to pay the indemnity agreed upon if the insured is
shown to have contributed to his own accident. Indeed,
most accidents are caused by negligence. There are
only four exceptions expressly made in the contract to
FGU Insurance vs. CA & SMC
GR No. 137775 | 3-31-05
Chico-Nazario, J:
F: Evidence shows that Anco Enterprises Company (ANCO), a
partnership between Ang Gui and Co To, was engaged in the
shipping business. It owned the M/T ANCO tugboat and the D/B
Lucio barge which were operated as common carriers. Since the
D/B Lucio had no engine of its own, it could not maneuver by
itself and had to be towed by a tugboat for it to move from one
place to another.
On 23 September 1979, San Miguel Corporation (SMC) shipped
from Mandaue City, Cebu, on board the D/B Lucio, for towage
by M/T ANCO, the following cargoes:
Bill of Lading No. Shipment Destination
1 25,000 cases Pale Pilsen Estancia, Iloilo
350 cases Cerveza Negra Estancia, Iloilo
2 15,000 cases Pale Pilsen San Jose, Antique
200 cases Cerveza Negra San Jose, Antique
The D/B Lucio was towed by the M/T ANCO all the way from
Mandaue City to San Jose, Antique. The vessels arrived at San
Jose, Antique, at about one o’clock in the afternoon of 30
September 1979. The tugboat M/T ANCO left the barge
immediately after reaching San Jose, Antique.
When the barge and tugboat arrived at San Jose, Antique, in the
afternoon of 30 September 1979, the clouds over the area were
dark and the waves were already big. The arrastre workers
unloading the cargoes of SMC on board the D/B Lucio began to
complain about their difficulty in unloading the cargoes. SMCs
District Sales Supervisor, Fernando Macabuag, requested ANCOs
representative to transfer the barge to a safer place because the
vessel might not be able to withstand the big waves.
At about ten to eleven o’clock in the evening of 01 October 1979,
the crew of D/B Lucio abandoned the vessel because the barges
rope attached to the wharf was cut off by the big waves. At around
midnight, the barge run aground and was broken and the cargoes
of beer in the barge were swept away.
As a result, ANCO failed to deliver to SMCs consignee Twenty-
Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen
and Five Hundred Fifty (550) cases of Cerveza Negra.
As a consequence of the incident, SMC filed a complaint for
Breach of Contract of Carriage and Damages against ANCO.
ANCO claimed however that it had an agreement with SMC that
ANCO would not be liable for any losses or damages resulting to
the cargoes by reason of fortuitous event. Since the cases of beer
Pale Pilsen and Cerveza Negra were lost by reason of a storm, a
fortuitous event which battered and sunk the vessel in which they
were loaded, they should not be held liable. ANCO further
asserted that there was an agreement between them and SMC to
insure the cargoes in order to recover indemnity in case of loss.
Pursuant to that agreement, the cargoes to the extent of Twenty
Thousand (20,000) cases was insured with FGU Insurance
Corporation (FGU) for the total amount of Eight Hundred Fifty-
Eight Thousand Five Hundred Pesos (P858,500.00) per Marine
Insurance Policy No. 29591.
Subsequently, ANCO, with leave of court, filed a Third-Party
Complaint against FGU, alleging that before the vessel of ANCO
left for San Jose, Antique with the cargoes owned by SMC, the
cargoes, to the extent of Twenty Thousand (20,000) cases, were
insured with FGU for a total amount of Eight Hundred Fifty-Eight
Thousand Five Hundred Pesos (P858,500.00) under Marine
Insurance Policy No. 29591.
In its answer to the Third-Party complaint, third-party defendant
FGU admitted the existence of the Insurance Policy under Marine
Cover Note No. 29591 but maintained that the alleged loss of the
cargoes covered by the said insurance policy cannot be attributed
directly or indirectly to any of the risks insured against in the said
insurance policy.
Third-Party defendant FGU prayed for the dismissal of the Third-
Party Complaint and asked for actual, moral, and exemplary
damages and attorneys fees.
RTC: The trial court found that while the cargoes were indeed lost
due to fortuitous event, there was failure on ANCOs part, through
their representatives, to observe the degree of diligence required
that would exonerate them from liability. The trial court thus held
the Estate of Ang Gui and Co To liable to SMC for the amount of
the lost shipment. With respect to the Third-Party complaint, the
court a quo found FGU liable to bear Fifty-Three Percent (53%)
of the amount of the lost cargoes.
CA: The appellate court affirmed in toto the decision of the lower
court and denied the motion for reconsideration and the
supplemental motion for reconsideration.
ISSUE:
Whether or not FGU can be held liable under the insurance policy
to reimburse ANCO for the loss of the cargoes despite the findings
of the respondent court that such loss was occasioned by the
blatant negligence of the latters employees.
HELD:
No.
The United States Supreme Court has made a distinction between
ordinary negligence and gross negligence or negligence
amounting to misconduct and its effect on the insureds right to
recover under the insurance contract. According to the Court,
while mistake and negligence of the master or crew are incident
to navigation and constitute a part of the perils that the insurer is
obliged to incur, such negligence or recklessness must not be of
such gross character as to amount to misconduct or wrongful acts;
otherwise, such negligence shall release the insurer from liability
under the insurance contract.
In the case at bar, both the trial court and the appellate court had
concluded from the evidence that the crewmembers of both the
D/B Lucio and the M/T ANCO were blatantly negligent.
This Court does not find any reason to deviate from the conclusion
drawn by the lower court, as sustained by the Court of Appeals,
that ANCOs representatives had failed to exercise extraordinary
diligence required of common carriers in the shipment of SMCs
cargoes. Such blatant negligence being the proximate cause of the
loss of the cargoes amounting to One Million Three Hundred
Forty-Six Thousand One Hundred Ninety-Seven Pesos
(P1,346,197.00).
This Court, taking into account the circumstances present in the
instant case, concludes that the blatant negligence of ANCOs
employees is of such gross character that it amounts to a wrongful
act which must exonerate FGU from liability under the insurance
contract.
WHEREFORE, premises considered, the Decision of the Court
of Appeals dated 24 February 1999 is hereby AFFIRMED with
MODIFICATION dismissing the third-party complaint.
G.R. No. 185565, November 26, 2014
LOADSTAR SHIPPING COMPANY, INCORPORATED
AND LOADSTAR INTERNATIONAL SHIPPING
COMPANY, INCORPORATED, Petitioners, v. MALAYAN
INSURANCE COMPANY, INCORPORATED,Respondent.
Facts:
Loadstar International Shipping, Inc. (Loadstar Shipping)
and Philippine Associated Smelting and Refining
Corporation (PASAR) entered into a Contract of
Affreightment for domestic bulk transport of the latter’s
copper concentrates which were loaded in Cargo Hold Nos.
1 and 2 of MV “Bobcat”, a marine vessel owned by
Loadstar International Shipping Co., Inc. (Loadstar
International) and operated by Loadstar Shipping under a
charter party agreement. The cargo was insured with
Malayan Insurance Company, Inc. (Malayan).
not possess the right to be indemnified and therefore, no
right to collect is passed on to the subrogee.
As regards the determination of actual damages, “[i]t is
axiomatic that actual damages must be proved with
reasonable degree of certainty and a party is entitled only
to such compensation for the pecuniary loss that was duly
proven. As Malayan is claiming for actual damages, it
bears the burden of proof to substantiate its claim. Actual
damages are not presumed. The claimant must prove the
actual amount of loss with a reasonable degree of
certainty premised upon competent proof and on the best
evidence obtainable. Specific facts that could afford a
basis for measuring whatever compensatory or actual
damages are borne must be pointed out. Actual damages
cannot be anchored on mere surmises, speculations or
conjectures.

The vessel’s chief officer on routine inspection found a It is not disputed that the copper concentrates carried by
crack on starboard side of the main deck which caused M/V Bobcat from Poro Point, La Union to Isabel, Leyte
seawater to enter and wet the cargo. Upon inspection, the were indeed contaminated with seawater. The issue lies
Elite Adjusters and Surveyor, Inc. (Elite Surveyor) on whether such contamination resulted to damage, and
confirmed that samples of copper concentrates from the costs thereof, if any, incurred by the insured PASAR.
Cargo Hold No. 2 were contaminated by seawater. In this case, Malayan, as the insurer of PASAR, neither
stated nor proved that the goods are rendered useless or
PASAR sent a formal notice of claim in the amount of unfit for the purpose intended by PASAR due to
[P]37,477,361.31 to Loadstar Shipping. On the basis of contamination with seawater. Hence, there is no basis for
the Elite Surveyor’s recommendation, Malayan paid the goods’ rejection under Article 365 of the Code of
PASAR the amount of [P]32,351,102.32. PASAR signed a Commerce. Clearly, it is erroneous for Malayan to
subrogation receipt in favor of Malayan. To recover the reimburse PASAR as though the latter suffered from total
amount paid and in the exercise of its right of subrogation, loss of goods in the absence of proof that PASAR sustained
Malayan demanded reimbursement from Loadstar such kind of loss.
Shipping, which refused to comply. Consequently, on
September 19, 2001, Malayan instituted with the RTC a
complaint for damages. In its complaint, Malayan mainly
alleged that as a direct and natural consequence of the
unseaworthiness of the vessel, PASAR suffered loss of the
cargo. Loadstar Shipping and Loadstar International
denied respondent’s allegations and averred that
respondent’s payment to PASAR, on the basis of the
latter’s fraudulent claim, does not entitle respondent
automatic right of recovery by virtue of subrogation.

Issue:

WON respondent is entitled to the right of recovery by

virtue of subrogation against petitioners, on the basis of
PASAR’s claim.

Ruling:

Malayan’s claim against the petitioners is based on

subrogation to the rights possessed by PASAR as
consignee of the allegedly damaged goods. The right of
subrogation stems from Article 2207 of the New Civil
Code. The rights of a subrogee cannot be superior to the
rights possessed by a subrogor. In other words, a
subrogee cannot succeed to a right not possessed by the
subrogor. A subrogee in effect steps into the shoes of the
insured and can recover only if the insured likewise could
have recovered. Consequently, an insurer indemnifies the
insured based on the loss or injury the latter actually
suffered from. If there is no loss or injury, then there is
no obligation on the part of the insurer to indemnify the
insured. Should the insurer pay the insured and it turns
out that indemnification is not due, or if due, the amount
paid is excessive, the insurer takes the risk of not being
able to seek recompense from the alleged
wrongdoer. This is because the supposed subrogor did
G.R. No. 185964 June 16, 2014 subrogation is not dependent upon, nor does it grow out
ASIAN TERMINALS, INC. vs. FIRST LEPANTO-TAISHO of any privity of contract or upon payment by the insurance
INSURANCE CORPORATION company of the insurance claim. It accrues simply upon
payment by the insurance company of the insurance claim.
FACTS: On July 6, 1996, 3,000 bags of sodium
tripolyphosphate were loaded and received on board M/V
"Da Feng" owned by China Ocean Shipping Co. (COSCO) in
favor of consignee, Grand Asian Sales, Inc. (GASI). Based on
a Certificate of Insurance, it appears that the shipment was
insured against all risks. Upon receipt of the shipment,
GASI found that the delivered goods incurred shortages
and spillage of loss/damage. GASI sought recompense
from COSCO, thru its Philippine agent Smith Bell Shipping
Lines, Inc. (SMITH BELL), ATI and PROVEN but was denied.
Hence, it pursued indemnification from the shipment’s
insurer. FIRST LEPANTO paid GASI the amount of insurance
indemnity.

FIRST LEPANTO demanded from COSCO, its shipping

agency in the Philippines, SMITH BELL, PROVEN and ATI,
reimbursement of the amount it paid to GASI. When FIRST
LEPANTO’s demands were not heeded, it filed a complaint
for sum of money before MeTC of Manila. The MeTC
absolved ATI and PROVEN from any liability and instead
found COSCO to be the party at fault and hence liable for
the loss/damage sustained by the subject shipment.

On appeal, the RTC reversed the MeTC’s findings. The CA

dismissed the appeal and held that FIRST LEPANTO was
subrogated to its rights against those liable for the
lost/damaged shipment and also affirmed the ruling of the
RTC that the subject shipment was damaged while in the
custody of ATI.

ISSUE: Whether or not the presentation of the insurance

policy is indispensable in proving the right of FIRST
LEPANTO to be subrogated to the right of the consignee.

HELD: The Court denies the petition. Non-presentation of

the insurance contract is not fatal to FIRST LEPANTO’s
cause of action for reimbursement as subrogee.

In certain instances, the Court has admitted exceptions by

declaring that a marine insurance policy is dispensable
evidence in reimbursement claims instituted by the
insurer. Based on the attendant facts of the instant case,
the application of the exception is warranted. As discussed
above, it is already settled that the loss/damage to the
GASI’s shipment occurred while they were in ATI’s custody,
possession and control as arrastre operator. Verily, the
Certificate of Insurance and the Release of Claim presented
as evidence sufficiently established FIRST LEPANTO’s right
to collect reimbursement as the subrogee of the
consignee, GASI.

The payment by the insurer to the insured operates as an

equitable assignment to the insurer of all the remedies
which the insured may have against the third party whose
negligence or wrongful act caused the loss. The right of
Lorenzo Shipping vs. Chubb and Sons
G.R. No. 147724 | June 8, 2004 | Puno, J:
F: Mayer Steel Corp. (Mayer), loaded 581 bundles of steel
pipes on board the vessel MV Lorcon owned by Lorenzo
Shipping to be delivered to Davao City. A bill of lading was
issued and the goods were duly insured with respondents.
doing business in the Philippines, but is suing only under an
isolated transaction, i.e., under the one (1) marine insurance
policy issued in favor of the consignee Sumitomo covering
the damaged steel pipes.
Affirms CA.

The vessel arrived at Davao City, and the pipes were

received and discharged from the vessel. It was found out
that the pipes were submerged in sea water inside the vessel
and were rusting (no longer in good condition). This
condition of the pipes was duly noted on the receipt.

These steel pipes were then to be shipped Oakland, CA and

Vancouver, Washington from the Davao Port. The pipes
were described as “All units heavily rusted”. While the
pipes were in transit the original consignee, Sumitomo
wrote Lorenzo Shipping that it will file a claim for the
damage sustained by the cargo, but the amount of the
damage is yet to be ascertained.

Due to the pipes being unfit for their purpose due to rusting,
the pipes were rejected by Sumitomo. A claim was filed
with Chubbs which settled the claim ($104k).

Chubbs then filed a collection case against Loreno

Shipping, Chubbs won the case before the RTC.

CA, Chubbs still won.

I: Was there valid subrogation?

R: Subrogation is the substitution of one person in the place

of another with reference to a lawful claim or right, so that
he who is substituted succeeds to the rights of the other in
relation to a debt or claim, including its remedies or sureties.

A subrogee in effect steps into the shoes of the creditor. The

rights of the subrogee are the same and not greater than
those of the person for whom he is substituted.

In the instant case, the rights inherited by the insurer,

respondent Chubb and Sons, pertain only to the payment it
made to the insured Sumitomo as stipulated in the insurance
contract between them, and which amount it now seeks to
recover from petitioner Lorenzo Shipping which caused the
loss sustained by the insured Sumitomo.

Capacity to sue is a right personal to its holder. It is

conferred by law and not by the parties. Lack of legal
capacity to sue means that the plaintiff is not in the exercise
of his civil rights, or does not have the necessary
qualification to appear in the case, or does not have the
character or representation he claims. It refers to a plaintiff’s
general disability to sue, such as on account of minority,
insanity, incompetence, lack of juridical personality, or any
other disqualifications of a party.

Respondent Chubb and Sons who was plaintiff in the trial

court does not possess any of these disabilities. On the
contrary, respondent Chubb and Sons has satisfactorily
proven its capacity to sue, after having shown that it is not
 defeating respondent’s right of subrogation, the right of
Manila Mahogany v. Court of action against the insurer was also nullified.

Appeals 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
G.R. No. L-52756, 12 October 1987, 154 SCRA 650 wrongdoer who caused the loss, the insurer losses his
rights against the latter. But in such a case, the insurer
FACTS: will be entitled to recover from the insured whatever it has
paid to the latter, unless the release was made with the
Petitioner insured its Mercedes Benz 4-door sedan with consent of the insurer.
respondent insurance company . The insured vehicle
was bumped and damaged by a truck owned by San
Miguel Corporation (SMC). For the damage caused,
respondent company paid petitioner ₱ 5,000.00 in
amicable settlement. Petitioner’s general manager
executed a Release of Claim, subrogating respondent
company to all its right to action against San Miguel Corp.
Respondent company wrote the Insurer Adjusters, Inc. to
demand reimbursements from San Miguel Corporation of
the amount it had paid petitioner. Insurer Adjusters, Inc.
refused reimbursement alleging that SMC had already
paid petitioner ₱ 4,500.00 for the damages to petitioner’s
motor vehicle, as evidenced by a cash voucher and
Release of Claim executed by the General Manager of
petitioner discharging SMC from “ all actions, claims,
demands the right of action that now exist or hereafter
develop arising out of or as a consequence of the
accident.

Respondent demanded the ₱ 4,500.00 amount from

petitioner. Petitioner refused. Suit was 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 ₱ 5,000.00 it
had received from respondent.

Petitioner’s argument: Since the total damages were

valued at P9,486.43 and only ₱ 5,000.00 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.

Respondent’s argument: No qualification to its right of

subrogation.

ISSUE:

Whether or not the insured should pay the insurer despite

that the subrogation in the Release of Claim was
conditioned on recovery of the total amount of damages
that the insured has sustained.

RULING:

NO. Supreme Court said there being no other evidence

to support its allegation that a gentleman’s 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 was correct in holding petitioner should
reimburse respondent ₱ 5,000.00.

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 ₱ 5,000.00– the insurer is entitled to
recover from the insured the amount of insurance money
paid. Petitioner by its own acts released SMC, thereby