Manila Mahogany Manufacturing Corporation v.
Rationale:
CA and Zenith Insurance Corporation (1987)
Padilla, J.
I. Facts:
Manila Mahogany (petitioner) insured its Mercedes
Benz 4-door sedan with Zenith Insurance Corporation
(respondent) from March 6 1970 to March 1971. On
May 4, 1970, the sedan was bumped and damaged
by a truck owned by San Miguel Corporation. For the
damage, Zenith Insurance paid Mahogany 5,000
pesos. Mahogany then executed a Release of Claim,
subrogating Zenith to all its right to action against San
Miguel.
December 11, 1972 - Zenith Insurance wrote to
Insurance Adjusters, Inc. to demand reimbursement
from San Miguel of the 5k it gave to Mahogany.
Insurance Adjusters refused, saying that San Miguel
already paid Mahogany 4,500 pesos for the damages
as evidenced by a Release of Claim executed by
Mahogany’s General Manager discharging San
Miguel from “all actions, claims, demands the rights of
action that now exist or hereafter develop arising out
of or as a consequence of the accident.”
Zenith then demanded from Mahogany the
reimbursement of the 4,500 pesos that San Miguel
paid. The latter refused; hence, Zenith filed a suit in
the City Court of Manila for the recovery of the
money.
City Court ruled in favor of Zenith. CFI affirmed the
decision. CA also affirmed with the modification that
Mahogany was supposed to pay the total of 5,000 —
the amount it received from Zenith.
II. Issue: W/N Manila Mahogany is bound to pay
4,500 - 5,000 pesos to Zenith Insurance. NO
III.
Manila Mahogany contends that it is not bound to pay
Zenith as the subrogation in the Release of Claim was
conditioned on recovery of the total amount of the
damages that the former sustained. Since the total
value of the damages amounted to 9, 486.43 and
Zenith only gave 5,000 to Mahogany, the latter argues
now that it is still entitled to go after San Miguel for the
4,500.
Zenith argues that in the Release of Claim executed
by the petitioner, there were no qualifications to its
right of subrogation. The contents of the deed
expressed all the intents and purposes of the parties.
Petitioner Mahogany then alleged that its right not to
return the 4,500 paid by San Miguel is supported by
Article 2207 and 1304 of the Civil Code.
SC found petitioner’s arguments to be untenable and
without merit. It says that in the absence of any other
evidence to support its allegation that a gentlemen's
agreement existed between it and respondent, not
embodied in the Release of Claim, such Release of
Claim must be taken as the best evidence of the
intent and purpose of the parties.
Since Mahogany, by its own acts, released San
Miguel Corporation, thereby defeating the right of
subrogation of Zenith Insurance, Mahogany’s right of
action against Zenith was also nullified. With this,
Zenith is now entitled to recover the 5,000 pesos that
it earlier paid to Mahogany.
IV. Dispositive: Petition DENIED. CA decision is
AFFIRMED.