Malayan Insurance vs. CA (165 SCRA 536)

Malayan Insurance vs. CA (165 SCRA 536)
GR No. L-36413, 9/26/2016
Padilla, J.:

Facts:
Malayan Insurance issued a Private Car Policy in favor of Sio Choy covering a Willys jeep for third-party liability for P20,000. The insured jeep, while being driven by Campollo, an employee of San Leon, collided with a PANTRANCO passenger bus causing damage to the jeep and injuries to its driver and to its passenger, Vallejos.

Vallejos filed an action for damages against Sio Choy, Malayan Insurance Co., Inc. and the PANTRANCO.

Sio Choy, however, later filed a separate answer with a cross-claim against Malayan wherein he alleged that he had actually paid Vallejos the amount of P5,000.00 for hospitalization and other expenses, and, in his cross-claim against Malayan, he alleged that the Malayan had issued in his favor a private car comprehensive policy wherein the insurance company obligated itself to indemnify Sio Choy, as insured, for the damage to his motor vehicle, as well as for any liability to third persons arising out of any accident during the effectivity of such insurance contract. He prayed that he be reimbursed by the insurance company for the amount that he may be ordered to pay.

Also later, Malayan sought, and was granted, leave to file a third-party complaint against the San Leon because the person driving the jeep of Sio Choy, at the time of the accident, was an employee of San Leon, performing his duties within the scope of his assigned task, and not an employee of Sio Choy; and that, as San Leon is the employer of the deceased driver, Campollo, it should be liable for the acts of its employee, pursuant to Art. 2180 of the Civil Code. Malayan prayed that judgment be rendered against San Leon, making it liable for the amounts claimed by Vallejos and/or ordering said San Leon to reimburse and indemnify the Malayan for any sum that it may be ordered to pay Vallejos.

Malayan prays that San Leon be ordered to reimburse Malayan any amount, in excess of one-half (1/2) of the entire amount of damages, because it is jointly and severally liable with Sio Choy.

Issue:Whether Malayan was solidarily liable with Sio Choy and San Leon for damages to Vallejos

Held:No, Malayan is liable to Vallejos, but is NOT solidarily liable with Sio Choy and San Leon.Sio Choy is made liable to said plaintiff as owner of the ill-fated Willys jeep, pursuant to Article 2184 of the Civil Code which provides:

Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of due diligence, prevented the misfortune it is disputably presumed that a driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the next preceding two months.

If the owner was not in the motor vehicle, the provisions of article 2180 are applicable.

On the other hand, the basis of liability of San Leon to Vallejos, the former being the employer of the driver of the Willys jeep at the time of the motor vehicle mishap, is Article 2180 of the Civil Code:

Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.
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Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged ill any business or industry.
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The responsibility treated in this article shall cease when the persons herein mentioned proved that they observed all the diligence of a good father of a family to prevent damage.

It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc. are the principal tortfeasors who are primarily liable to respondent Vallejos. The law states that the responsibility of two or more persons who are liable for a quasi-delict is solidarily.

On the other hand, the basis of Malayan's liability is its insurance contract with respondent Sio Choy. If petitioner is adjudged to pay respondent Vallejos in the amount of not more than P20,000.00, this is on account of its being the insurer of respondent Sio Choy under the third party liability clause included in the private car comprehensive policy existing between petitioner and respondent Sio Choy at the time of the complained vehicular accident.

While it is true that where the insurance contract provides for indemnity against liability to third persons, such third persons can directly sue the insurer, however, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault. The liability of the insurer is based on contract; that of the insured is based on tort.

In the case at bar, Malayan as insurer of Sio Choy, is liable to Vallejos, but it cannot be made "solidarily" liable with the two principal tortfeasors namely Sio Choy and San Leon. For if Malayan were solidarily liable with said two (2) respondents by reason of the indemnity contract against third party liability-under which an insurer can be directly sued by a third party — this will result in a violation of the principles underlying solidary obligation and insurance contracts.

In solidary obligation, the creditor may enforce the entire obligation against one of the solidary debtors.

In the case at bar, the trial court held Malayan, Sio Choy and San Leon solidarily liable to respondent Vallejos for a total amount of P29,103.00, but  Malayan's liability is only up to P20,000.00. In the context of a solidary obligation, Malayan may be compelled by Vallejos to pay the entire obligation of P29,013.00, notwithstanding the qualification made by the trial court. But Malayan cannot be obliged to pay the entire obligation when the amount stated in its insurance policy with respondent Sio Choy for indemnity against third party liability is only P20,000.00. Moreover, the qualification made in the decision of the trial court to the effect that petitioner is sentenced to pay up to P20,000.00 only when the obligation to pay P29,103.00 is made solidary, is an evident breach of the concept of a solidary obligation. Thus, We hold that the trial court, as upheld by the Court of Appeals, erred in holding Malayan as solidarily liable with respondents Sio Choy and San Leon to Vallejos.