In my view, the most logical view is that, as a legal consequence of subrogation under section 2207, a relationship arises primarily between the insurer and the debtor-offender. The payment of compensation by the insurer to the insured results in a vinculum juris between the insurer and the debtor-offender, since the insurer now becomes the true interested party[18] in recovery proceedings against the debtor-offender with respect to the compensation paid. On the other hand, the effect of the legal subrogation between the insured and the insurer, who are governed by the insurance contract concluded by them, is only indirect. But more than its name suggests, it is the purpose of subrogation that defines the scope of its legal effects. It has been said that legal subrogation is „a just principle to prevent unjust enrichment“. [3] Accordingly: In the case of claims for payment for damage suffered by the insured, the insurer is entitled to payment of such damage or damage to the perpetrator or third parties (3.). This process is called legal substitution, which is defined in Article 2207 of the new Civil Code as the replacement of one person in place of another by reference to a legitimate claim or right, so that one replaced assumes the rights of the other with respect to a debt or claim, including its remedies and titles. „Although many policies, including standard form policies, now provide for subrogation and thus determine the insurer`s rights in this regard, the equitable right to subrogation passes to the insurer as the legal effect of payment, without formal assignment or express provision in the policy“ (44 Am. Jur. 2.
746). If the insurance company pays for the damages, this payment will be considered a fair assignment to the insurer of the property and all remedies available to the insured to repair the damage. This right is not dependent on a contractual relationship or written assignment of claims, and payment to the insured makes the insurer an equitable assignee (Shambley vs. Jobe-Blackley Plumbing and Heating Co., 264 N. C. 456, 142 SE 2d 18). [21] Subrogation is the replacement of one person or group by another in respect of a debt or insurance claim, accompanied by the transfer of all related rights and obligations. This is a well-established rule in Philippine law. In PAN MALAYAN INSURANCE CORPORATION, applicant, v. COURT OF APPEAL, et. para.
1, the court listed the exceptions to the subrogation rule: If a subsequent mortgagee replaces a previous hypothec with a subsequent hypothec, the courts apply equitable subrogation only after the following factors have been established: The right to subrogation is of the highest equity. The damage is mainly that of the insured, but after reimbursement or compensation, it becomes the loss of the insurer (44 hours. Jur. 2d 746, note 16, citing Newcomb vs. Cincinnati Ins. Co., 22 Ohio St. 382). Based on the considerations discussed above, the court has so far had to overturn the decision in the Vector case that an insurer may bring an action against the injured party within ten (10) years from the date on which the insurer compensated the insured. According to the principles of subrogation, the insurer merely follows in the footsteps of the insured and therefore inherits only the remaining period within which the insured may bring an action against the offender for the purpose of limitation. Of course, the limitation period for the action that the insured may bring against the offender begins at the time when the offence was committed and the damage occurred against the insured. The insurer`s compensation of the insured simply transfers the insured`s rights and does not create a new calculation point for the cause of action that the insured initially has against the offender.
Subrogation results ipso jure when the insurer pays part or all of the amount of property damage claimed by an insured person under a policy and may exist even in the absence of a law or agreement providing for it. [29] Subrogation goes hand in hand with payment and results only in the limited right to repayment that arises from the payment to settle the debts of a third party. [30] If the insurer has a right of subrogation, Philippine law – in particular Section 2207 of the Civil Code – confers on it the status of a true party in terms of compensation paid. The fact that the insurer becomes the true party to the interest after subrogation was demonstrated in Philippine Airlines, Inc. v. Heald Lumber Company,[31] where the Court clarified that: (a) the insured suffered damage for which the defendant is liable, either as an infringer whose act or omission caused the damage, either because the defendant is legally liable to the insured for the damage caused by the infringer; The Court has always respected the above distinction between an assignment of credit and a contractual subrogation. Such a distinction is crucial because it would determine the need for the debtor`s consent. In the case of a loan assignment, the consent of the debtor is not required for the assignment to produce full legal effects. What the law requires in the case of an assignment of credit is not the consent of the debtor, but only notification to the debtor, since the assignment does not take effect until the debtor becomes aware of it. A creditor may therefore validly assign his credit and accessories without the debtor`s consent. On the other hand, contractual subrogation requires an agreement between the parties involved – the original creditor, the debtor and the new creditor. This is a new contractual relationship based on the mutual agreement of all necessary parties.
[48] (emphasis added) Since subrogation does not amount to traditional subrogation, the insurer`s payment under article 2207 of the Civil Code does not create a new obligation; Since legal subrogation is not the same as an assignment of credit (since the former is actually called an „assignment of equity“), no contractual relationship is required to produce its legal effects. Thus, „by subrogation, the insurer cannot assume anything other than the rights of the insured and has transferred only the rights held by the insured. This principle has often been expressed in the form that the rights of the insurer vis-à-vis the offender cannot be superior to the rights of the insured vis-à-vis the latter, since the insurer, as debtor, legally substitutes itself for the insured and assumes all the rights he may have in substance. Therefore, any defence that a wrongdoer has against the insured is good against the insurer that passes into the rights of the insured“[51] and this would clearly include the defence of the limitation period. The right to a guarantee of subrogation exists independently of the law. However, some laws define the law. As a rule, they declare existing rules only in equity. King vs. Hartford Acci. Co., 133 Cal.
App. 711 (Cal. App. 1933). The guarantor is entitled to any guarantee for the performance of the principal obligation held by the creditor at the time of the conclusion of the contract of guarantee. In the case of a guarantee, the right to subrogation arises when a guarantor fulfils his contractual obligation. The right does not depend on an assignment, lien or contract. A right of subrogation is not a security interest and therefore does not require compliance with the filing requirements of the Uniform Commercial Code.
State Bank & Trust Co. v. Insurance Co., 132 F.3d 203, 206 (5th Cir. Tex. 1997). In any event, however, it should be clarified that the Court`s abandonment of the vector doctrine should be of prospective application, since judicial decisions applying or interpreting laws or the Constitution until they are repealed are part of the legal system of the Philippines. [52] This Court has exclusive authority to interpret the meaning of the law and every person is bound to follow its interpretation. As in De Castro v. Judiciary and Bar Council:[53] Under Vector, the insurer in Filipino Merchants would have 10 years to be compensated on the basis of subrogation and would not be bound by the one-year limitation period under the LCGSA. If permitted, the insurer`s rights against the offender will increase more than the insured`s rights against that offender, and the insurer will have greater rights than the one in whose place he will be replaced. „There are a few recognized exceptions to this rule.