KIMEN M.

INDO
1st Year JD

Case Digest

MALAYAN INSURANCE CO., INC., petitioner, vs. THE HON. COURT OF

APPEALS (THIRD DIVISION) MARTIN C. VALLEJOS, SIO CHOY, SAN LEON
RICE MILL, INC., and PANGASINAN TRANSPORTATION CO.,
INC., respondents.
G.R. No. L-36413. September 26, 1988. PADILLA, J.

R U L E S Y N O P S I S : The victim of an accident may hold liable both the offending

party and the latter’s insurer. In this case, they will be held solidarily liable, subject to
the right of the insured offending party to demand reimbursement from the insurer.

F A C T S : Sio Choy (insured) insured his jeep with Malayan Insurance Co., Inc.
(insurer). The insurance coverage was for “own damage” and “third-party liability.”
The jeep then collided with a bus while being driven by an employee of San Leon
Rice Mill, Inc. (SLRMI); this resulted in damages to the jeep, and death of the driver,
and injuries to one Vallejos, a passenger of the jeep. Vallejos filed a complaint for
damages against the insured, the insurer, and the bus company. The insured then
filed a cross-claim against the insurer on grounds that he had actually paid the
injured passenger. Meanwhile, the insurer filed a third-party complaint against San
Leon Rice Mill, Inc. (SLRMI), as the employer of the negligent driver. The lower
courts held the insurer, insured, and driver’s employer jointly and severally liable.

ISSUE: Who between the insurer and the insured of third-party liability insurance
may be held liable to the victim.

HELD: Both, are subject to the right of the insured to demand reimbursement from
the insurer. The Supreme Court held that only Sio Choy and SLRMI were solidarily
liable to the victim, but upon payment by the insurer of the insured’s liability, it has a
right to demand reimbursement from San Leon Rice Mill, Inc. (SLRMI). Relevantly,
the Supreme Court held that the insurer is entitled to be reimbursed by SLRMI by
virtue of subrogation. The Court said: “[s]ubrogation is a normal incident of indemnity
insurance. Upon payment of the loss, the insurer is entitled to be subrogated pro
tanto to any right of action which the insured may have against the third person
whose negligence or wrongful act caused the loss.” It held that, in the present case,
the insurer, upon paying the injured passenger shall become the subrogee of the
insured; it is subrogated to whatever rights the latter has against SLRMI. Petition
granted. Decision affirmed.
Spouses Puerto vs. Court of Appeals
[G.R. NO. 138210 June 6, 2002]
FACTS: On May 8, 1972, petitioner-spouses Puerto and respondent-spouses
Cortes, a pawn shop operator, entered into a Deed of Real Estate Mortgage on a
house and lot located at 89 Kapiligan, Araneta Subdivision, Quezon City.
Accompanying said the agreement was a loan from respondents to petitioners in the
amount of P200,000. Said agreement lacked any stipulated interest; in its stead,
respondents could foreclose the mortgage should the petitioners fail to repay the
loan after a year.
Said agreement was contended by the petitioner as having been entered with
usurious intent on both sides. Petitioners alleged that the property subject of the loan
was only worth P150,000 and that the remaining P50,000 was an advance payment
to cover the loan’s lack of interest. The usurious agreement involved a monthly
payment of P4,000 after one year, uncredited (no receipts) in order to conceal its
illegal nature.
Due to the petitioner’s failure to pay the sum after a year, the respondent foreclosed
on the property, and repurchased it in the subsequent auction, becoming its owner
on October 4, 1973. Respondents permitted the petitioner to stay on the property
until such time that the petitioner could find a new home. After failing to transfer,
respondents entered a lease contract with petitioners effective January 1, 1975. The
contract would see petitioners pay respondents P3,000 monthly in rental fees. On
September 16, 1976, respondents filed an ejectment case after petitioners failed to
pay said rental fees.
Petitioners contend that the rental fees paid were P4,000 covering the period from
October 1973 to December 1975, from which it was changed to a formal lease
agreement and again were without receipts to conceal their usurious nature.
Petitioners filed a case against respondents to declare the initial Deed of Real Estate
Mortgage null and void, and for the cancellation of the foreclosure by respondents
conducted in 1973.
ISSUE: Whether or not the Deed of Real Estate Mortgage is null and void for having
violated P.D. 116, the Usury Law.
Whether or not the petition is invalid for raising questions of fact not reviewable
under Rule 45 of the Rules of Court.
HELD: Yes. The Deed of Real Estate Mortgage is null and void; foreclosure on the
property has no effect. Petitioners are to pay respondents P150,000 with the legal
rate of interest from the time of demand.