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INSURANCE: The Business of Insurance - 03

Basil Maguigad
SMITH BELL vs. COURT OF APPEALS obligation requires solidarity. The Insurance Code is
G.R. No. 110668, February 6, 1997|PANGANIBAN J., quite clear as to the purpose and role of a resident
agent. Such agent, as a representative of the
FACTS foreign insurance company, is tasked only to receive
legal processes on behalf of its principal and not to
July 1982: the plaintiffs, doing business under the style of answer personally for any insurance claims.
Tic Hin Chiong, Importer, bought and imported to the
Philippines from the firm Chin Gact Co ., Ltd . of Taipei , Sec. 190: On whom any notice provided by law or by
Taiwan , 50 metric tons of Dicalcium Phospate , These were any insurance policy, proof of loss, summons and other
contained in 1 , 250 bags and shipped from the Port of legal processes may be served in all actions or other
Kaohsiung, Taiwan for the Port of Manila . legal proceedings against such company, and
consenting that service upon such general agent shall
On July 27, 1982 , this shipment was insured by the be admitted and held as valid as if served upon the
defendant First Insurance Co and stamped by Smith, foreign company at its home office.
Bell and Co as claim agent.) `against all risks. Upon
arrival, the shipped goods were not complete (of the 1,250 In the case at bar, the trial court had to order the
bags of the imported material , 600 were damaged by service of summons upon First Insurance Co., Ltd. which
tearing at the sides of the container bags and the contents would not have been necessary if petitioner was its
partly empty. Also, the contents of the damaged bags were resident agent.
found to be 18, 546 . 0 kg short).
3. Not Real Party - In Interest: Lastly, being a mere
October 16, the plaintiff filed with Smith, Bell, and Co., Inc a agent and representative, petitioner is also not the
formal statement of claim with proof of loss and a demand real party - in - interest in this case.
for settlement of the corresponding value of the losses. But
Smith, Bell and Co. denied liability. They said that a claim 4. Resort to Equity Misplaced: Finally, respondent
agent is not personally liable under a policy in which it Court also contends that the interest of justice is
has not even taken part of. better served by holding the settling agent jointly
and severally liable with its principal. As no law
ISSUE(S) backs up such pronouncement, the appellate Court
is thus resorting to equity. However , equity which
Whether or not a local settling or claim agent of a has been aptly described as justice outside
disclosed principal, a foreign insurance company, can be legality , is availed of only in the absence of , and
held jointly and severally liable with said principal never against , statutory law or judicial
under the latters marine cargo insurance policy, given pronouncements
that the agent is not a party to the insurance contract.


NO. This is because of four reasons

1. Jurisprudence: 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