MALAYAN INSURANCE CO., INC. VS.

COURT OF APPEALS, ET AL
FACTS:
• Petitioner issued a private car comprehensive policy in favour of respondent Sio
Choy covering a Willys jeep. The insurance coverage was for own damage not to
exceed P600.00 and third-party liability in the amount of P20,000.00 On Dec. 19,
1967, the insured jeep collided with a passenger bus. The jeep was driven by an
employee of respondent San Leon Rice Mill Inc. The passenger bus belongs to
respondent Pangasinan Transportation Co. Inc. Respondent Martin Vallejos, who
was riding the ill-fated jeep was injured, prompting him to file a suit for damages.
PANTRANCO claimed that the jeepney was operated at an excessive speed and
bumped the bus which had to move to, and stopped at, the shoulder of the highway
in order to avoid the jeep. It also claimed that it had observed the diligence of a
good father of a family to prevent maintenance of its motor vehicles. It prayed that
it be absolved for any liability.
• On their part, defendants Sio Choy and the petitioner insurance company claimed
that the fault in the accident was solely imputable to PANTRANCO. Sio Choy then
filed an answer with a cross-claim against Malayan Insurance Co. Inc, alleging that
he had actually paid Vallejps P5,000 for hospitalization and other expenses. He
prayd for reimbursement by the insurance company for the amount he may be
ordered to pay pursuant to the policy.
• Malayan insurance filed a third-party complaint against San Leon Rice Mill Inc.
for the reason that the person driving the jeep 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, thus it should be held liable for the acts of its
employee.
• The CFI ruled in favour of Vallejos, ordering Sio Choy, Malayan Insurance Co. Inc.
and third-party defendant San Leon to pay jointly and severally.
• The CA affirmed the CFI’s decision, but it ruled however, that San Leon has no
obligation to indemnify or reimburse the petitioner insurance company for
whatever amount it has been ordered to pay on its policy since San Leon is not
privy to the contract of insurance between Sio Choy and Malayan Insurance.
ISSUE: 1. Whether or not the owner of a motor vehicle is solidarily liable with the driver
who is not an employee of the owner.
2. What is the liability of the insurance company.
HELD:
1.
• Yes. It must be observed that respondent 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, it is noted that the basis of liability of respondent San Leon Rice
Mill, Inc. to plaintiff 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
which reads:
• 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.
• 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.
• 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.

2.
• The basis of petitioner'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, petitioner as insurer of Sio Choy, is liable to respondent Vallejos,
but it cannot, as incorrectly held by the trial court, be made "solidarily" liable with
the two principal tortfeasors namely respondents Sio Choy and San Leon Rice Mill,
Inc. For if petitioner-insurer 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.