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[ G . R . No . 110668 . February 6 , 1997 ] SMITH , BELL & CO, INC . , petitioner , vs.

COURT OF
APPEALS and JOSEPH BENGZON CHUA ,
[1]
respondents . ; PANGANIBAN , J

FACTS:
July 1982: the plaintiffs, doing business under the style of Tic Hin Chiong, Importer, bought and imported to the
Philippines from the firm Chin Gact Co ., Ltd . of Taipei , Taiwan , 50 metric tons of Dicalcium Phospate , These were
contained in 1 , 250 bags and shipped from the Port of Kaohsiung, Taiwan for the Port of Manila . On July 27, 1982
, this shipment was insured by the defendant First Insurance Co and stamped by Smith, Bell and Co as claim
agent.) `against all risks. Upon arrival, the shipped goods were not complete (of the 1,250 bags of the imported
material , 600 were damaged by tearing at the sides of the container bags and the contents partly empty. Also, the
contents of the damaged bags were found to be 18, 546 . 0 kg short).

October 16, the plaintiff filed with Smith, Bell, and Co., Inc a formal statement of claim with proof of loss and a demand
for settlement of the corresponding value of the losses. But Smith, Bell and Co. denied liability. They said that a claim
agent is not personally liable under a policy in which it has not even taken part of.

ISSUE: WON a local settling or claim agent of a disclosed principal, a foreign insurance company, can be held jointly
and severally liable with said principal under the latters marine cargo insurance policy, given that the agent is not a
party to the insurance contract-

HELD: NO. This is because of four reasons
RATIO:

1. J urisprudence: Salonga v. Warner, Barnes & Co. An adjustment and settlement agent is no different from
any other agent from the point of view of his responsibility, for he also acts in a representative
capacity. Whenever he adjusts or settles a claim, he does it in behalf of his principal, and his action is
binding not upon himself but upon his principal. And here again, the ordinary rule of agency applies. ->
Thus, an adjustment and settlement agent do not include personal liability. His functions are merely to settle
and adjusts claims in behalf of his principal if those claims are proven and undisputed, and if the claim is
disputed or is disapproved by the principal, like in the instant case, the agent does not assume any personal
liability. The recourse of the insured is to press his claim against the principal.
2. Absence of Solidary Liability: There is a solidary liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires solidarity. The Insurance Code is quite clear as to the
purpose and role of a resident agent. Such agent, as a representative of the foreign insurance company, is
tasked only to receive legal processes on behalf of its principal and not to answer personally for any insurance
claims.
Sec. 190: On whom any notice provided by law or by any insurance policy, proof of loss, summons and other legal
processes may be served in all actions or other legal proceedings against such company, and consenting that
service upon such general agent shall be admitted and held as valid as if served upon the foreign company at its
home office.
In the case at bar, the trial court had to order the service of summons upon First Insurance Co., Ltd. which would
not have been necessary if petitioner was its resident agent.
3. Not Real Party - In Interest: Lastly, being a mere agent and representative, petitioner is also not the real
party - in - interest in this case.
4. Resort to Equity Misplaced: Finally, respondent Court also contends that the interest of justice is better
served by holding the settling agent jointly and severally liable with its principal. As no law backs up such
pronouncement, the appellate Court is thus resorting to equity. However , equity which has been aptly
described as justice outside legality , is availed of only in the absence of , and never against , statutory
law or judicial pronouncements