Gaisano Cagayan v. Insurance Company of North America

Summary

This case involves the subrogation rights of an insurance company following payment of fire insurance claims. IMC and LSPI obtained fire insurance policies with book debt endorsements covering unpaid accounts from customers. When Gaisano's store was destroyed by fire, the insurance company paid the claims and sought recovery from Gaisano for unpaid accounts totaling over P2.6 million. The Supreme Court held that the insurance covered book debts (unpaid accounts), not the goods themselves, and that Gaisano bore the risk of loss under Civil Code Article 1504(1) since sellers retained ownership merely to secure payment. The Court ruled monetary obligations are not excused by fortuitous events and recognized valid subrogation for the IMC claim (P2,119,205.00) but rejected the LSPI claim due to insufficient evidence of proper subrogation. This decision clarifies insurance coverage interpretation, risk allocation in commercial sales, and subrogation requirements in fire insurance with book debt endorsements.