Delsan Transport lines, Inc vs. CA, 369 SCRA 24
D E C I S I O N
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the
Decision[1] of the Court of Appeals in CA-G.R. CV No. 39836
promulgated on June 17, 1996, reversing the decision of the
Regional Trial Court of Makati City, Branch 137, ordering
petitioner to pay private respondent the sum of Five Million
Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven
Centavos (P5,096,635.57) and costs and the Resolution[2] dated
January 21, 1997 which denied the subsequent motion for
reconsideration.
The facts show that Caltex Philippines (Caltex for brevity)
entered into a contract of affreightment with the petitioner,
Delsan Transport Lines, Inc., for a period of one year whereby the
said common carrier agreed to transport Caltexs industrial fuel oil
from the Batangas-Bataan Refinery to different parts of the
country. Under the contract, petitioner took on board its vessel,
MT Maysun, 2,277.314 kiloliters of industrial fuel oil of Caltex to
be delivered to the Caltex Oil Terminal in Zamboanga City. The
shipment was insured with the private respondent, American Home
Assurance Corporation.
On August 14, 1986, MT Maysun set sail from Batangas for
Zamboanga City. Unfortunately, the vessel sank in the early morning
of August 16, 1986 near Panay Gulf in the Visayas taking with it
the entire cargo of fuel oil.
Subsequently, private respondent paid Caltex the sum of Five
Million Ninety-Six Thousand Six Hundred Thirty-Five Pesos and
Fifty-Seven Centavos (P5,096,635.57) representing the insured value
of the lost cargo. Exercising its right of subrogation under
Article 2207 of the New Civil Code, the private respondent demanded
of the petitioner the same amount it paid to Caltex.
Due to its failure to collect from the petitioner despite prior
demand, private respondent filed a complaint with the Regional
Trial Court of Makati City, Branch 137, for collection of a sum of
money. After the trial and upon analyzing the evidence adduced, the
trial court rendered a decision on November 29, 1990 dismissing the
complaint against herein petitioner without pronouncement as to
cost. The trial court found that the vessel, MT Maysun, was
seaworthy to undertake the voyage as determined by the Philippine
Coast Guard per Survey Certificate Report No. M5-016-MH upon
inspection during its annual dry-docking and that the incident was
caused by unexpected inclement weather condition or force majeure,
thus exempting the common carrier (herein petitioner) from
liability for the loss of its cargo.[3]
The decision of the trial court, however, was reversed, on
appeal, by the Court of Appeals. The appellate court gave credence
to the weather report issued by the Philippine Atmospheric,
Geophysical and Astronomical Services Administration (PAGASA for
brevity) which showed that from 2:00 oclock to 8:00 oclock in the
morning on August 16, 1986, the wind speed remained at 10 to 20
knots per hour while the waves measured from .7 to two (2) meters
in height only in the vicinity of the Panay Gulf where the subject
vessel sank, in contrast to herein petitioners allegation that the
waves were twenty (20) feet high. In the absence of any explanation
as to what may have caused the sinking of the vessel coupled with
the finding that the same was improperly manned, the appellate
court ruled that the petitioner is liable on its obligation as
common carrier[4] to herein private respondent insurance company as
subrogee of Caltex. The subsequent motion for reconsideration of
herein petitioner was denied by the appellate court.
Petitioner raised the following assignments of error in support
of the instant petition,[5] to wit:
I
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE
REGIONAL TRIAL COURT.
II
THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED IN REBUTTING
THE LEGAL PRESUMPTION THAT THE VESSEL MT "MAYSUN" WAS
SEAWORTHY.
III
THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF THE
SUPREME COURT IN THE CASE OF HOME INSURANCE CORPORATION V. COURT OF
APPEALS.
Petitioner Delsan Transport Lines, Inc. invokes the provision of
Section 113 of the Insurance Code of the Philippines, which states
that in every marine insurance upon a ship or freight, or
freightage, or upon any thing which is the subject of marine
insurance there is an implied warranty by the shipper that the ship
is seaworthy. Consequently, the insurer will not be liable to the
assured for any loss under the policy in case the vessel would
later on be found as not seaworthy at the inception of the
insurance. It theorized that when private respondent paid Caltex
the value of its lost cargo, the act of the private respondent is
equivalent to a tacit recognition that the ill-fated vessel was
seaworthy; otherwise, private respondent was not legally liable to
Caltex due to the latters breach of implied warranty under the
marine insurance policy that the vessel was seaworthy.
The petitioner also alleges that the Court of Appeals erred in
ruling that MT Maysun was not seaworthy on the ground that the
marine officer who served as the chief mate of the vessel,
Francisco Berina, was allegedly not qualified. Under Section 116 of
the Insurance Code of the Philippines, the implied warranty of
seaworthiness of the vessel, which the private respondent admitted
as having been fulfilled by its payment of the insurance proceeds
to Caltex of its lost cargo, extends to the vessels complement.
Besides, petitioner avers that although Berina had merely a 2nd
officers license, he was qualified to act as the vessels chief
officer under Chapter IV(403), Category III(a)(3)(ii)(aa) of the
Philippine Merchant Marine Rules and Regulations. In fact, all the
crew and officers of MT Maysun were exonerated in the
administrative investigation conducted by the Board of Marine
Inquiry after the subject accident.[6]
In any event, petitioner further avers that private respondent
failed, for unknown reason, to present in evidence during the trial
of the instant case the subject marine cargo insurance policy it
entered into with Caltex. By virtue of the doctrine laid down in
the case of Home Insurance Corporation vs. CA,[7] the failure of
the private respondent to present the insurance policy in evidence
is allegedly fatal to its claim inasmuch as there is no way to
determine the rights of the parties thereto.
Hence, the legal issues posed before the Court are:
I
Whether or not the payment made by the private respondent to
Caltex for the insured value of the lost cargo amounted to an
admission that the vessel was seaworthy, thus precluding any action
for recovery against the petitioner.
II
Whether or not the non-presentation of the marine insurance
policy bars the complaint for recovery of sum of money for lack of
cause of action.
We rule in the negative on both issues.
The payment made by the private respondent for the insured value
of the lost cargo operates as waiver of its (private respondent)
right to enforce the term of the implied warranty against Caltex
under the marine insurance policy. However, the same cannot be
validly interpreted as an automatic admission of the vessels
seaworthiness by the private respondent as to foreclose recourse
against the petitioner for any liability under its contractual
obligation as a common carrier. The fact of payment grants the
private respondent subrogatory right which enables it to exercise
legal remedies that would otherwise be available to Caltex as owner
of the lost cargo against the petitioner common carrier.[8] Article
2207 of the New Civil Code provides that:
Art. 2207. If the plaintiffs property has been insured, and he
has received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the
contract. If the amount paid by the insurance company does not
fully cover the injury or loss, the aggrieved party shall be
entitled to recover the deficiency from the person causing the loss
or injury.
The right of subrogation has its roots in equity. It is designed
to promote and to accomplish justice and is the mode which equity
adopts to compel the ultimate payment of a debt by one who in
justice and good conscience ought to pay.[9] It is not dependent
upon, nor does it grow out of, any privity of contract or upon
written assignment of claim. It accrues simply upon payment by the
insurance company of the insurance claim.[10] Consequently, the
payment made by the private respondent (insurer) to Caltex
(assured) operates as an equitable assignment to the former of all
the remedies which the latter may have against the petitioner.
From the nature of their business and for reasons of public
policy, common carriers are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of
passengers transported by them, according to all the circumstances
of each case.[11] In the event of loss, destruction or
deterioration of the insured goods, common carriers shall be
responsible unless the same is brought about, among others, by
flood, storm, earthquake, lightning or other natural disaster or
calamity.[12] In all other cases, if the goods are lost, destroyed
or deteriorated, common carriers are presumed to have been at fault
or to have acted negligently, unless they prove that they observed
extraordinary diligence.[13]
In order to escape liability for the loss of its cargo of
industrial fuel oil belonging to Caltex, petitioner attributes the
sinking of MT Maysun to fortuitous event or force majeure. From the
testimonies of Jaime Jarabe and Francisco Berina, captain and chief
mate, respectively of the ill-fated vessel, it appears that a
sudden and unexpected change of weather condition occurred in the
early morning of August 16, 1986; that at around 3:15 oclock in the
morning a squall ("unos") carrying strong winds with an approximate
velocity of 30 knots per hour and big waves averaging eighteen (18)
to twenty (20) feet high, repeatedly buffeted MT Maysun causing it
to tilt, take in water and eventually sink with its cargo.[14] This
tale of strong winds and big waves by the said officers of the
petitioner however, was effectively rebutted and belied by the
weather report[15] from the Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAGASA), the independent
government agency charged with monitoring weather and sea
conditions, showing that from 2:00 oclock to 8:00 oclock in the
morning on August 16, 1986, the wind speed remained at ten (10) to
twenty (20) knots per hour while the height of the waves ranged
from .7 to two (2) meters in the vicinity of Cuyo East Pass and
Panay Gulf where the subject vessel sank. Thus, as the appellate
court correctly ruled, petitioners vessel, MT Maysun, sank with its
entire cargo for the reason that it was not seaworthy. There was no
squall or bad weather or extremely poor sea condition in the
vicinity when the said vessel sank.
The appellate court also correctly opined that the petitioners
witnesses, Jaime Jarabe and Francisco Berina, ship captain and
chief mate, respectively, of the said vessel, could not be expected
to testify against the interest of their employer, the herein
petitioner common carrier.
Neither may petitioner escape liability by presenting in
evidence certificates[16] that tend to show that at the time of
dry-docking and inspection by the Philippine Coast Guard, the
vessel MT Maysun, was fit for voyage. These pieces of evidence do
not necessarily take into account the actual condition of the
vessel at the time of the commencement of the voyage. As correctly
observed by the Court of appeals:
At the time of dry-docking and inspection, the ship may have
appeared fit. The certificates issued, however, do not negate the
presumption of unseaworthiness triggered by an unexplained sinking.
Of certificates issued in this regard, authorities are likewise
clear as to their probative value, (thus):
Seaworthiness relates to a vessels actual condition. Neither the
granting of classification or the issuance of certificates
establishes seaworthiness. (2-A Benedict on Admiralty, 7-3, Sec.
62)
And also:
Authorities are clear that diligence in securing certificates of
seaworthiness does not satisfy the vessel owners obligation. Also
securing the approval of the shipper of the cargo, or his surveyor,
of the condition of the vessel or her stowage does not establish
due diligence if the vessel was in fact unseaworthy, for the cargo
owner has no obligation in relation to seaworthiness.
(Ibid.)[17]
Additionally, the exoneration of MT Maysuns officers and crew by
the Board of Marine Inquiry merely concerns their respective
administrative liabilities. It does not in any way operate to
absolve the petitioner common carrier from its civil liability
arising from its failure to observe extraordinary diligence in the
vigilance over the goods it was transporting and for the negligent
acts or omissions of its employees, the determination of which
properly belongs to the courts.[18] In the case at bar, petitioner
is liable for the insured value of the lost cargo of industrial
fuel oil belonging to Caltex for its failure to rebut the
presumption of fault or negligence as common carrier[19] occasioned
by the unexplained sinking of its vessel, MT Maysun, while in
transit.
Anent the second issue, it is our view and so hold that the
presentation in evidence of the marine insurance policy is not
indispensable in this case before the insurer may recover from the
common carrier the insured value of the lost cargo in the exercise
of its subrogatory right. The subrogation receipt, by itself, is
sufficient to establish not only the relationship of herein private
respondent as insurer and Caltex, as the assured shipper of the
lost cargo of industrial fuel oil, but also the amount paid to
settle the insurance claim. The right of subrogation accrues simply
upon payment by the insurance company of the insurance
claim.[20]
The presentation of the insurance policy was necessary in the
case of Home Insurance Corporation v. CA[21] (a case cited by
petitioner) because the shipment therein (hydraulic engines) passed
through several stages with different parties involved in each
stage. First, from the shipper to the port of departure; second,
from the port of departure to the M/S Oriental Statesman; third,
from the M/S Oriental Statesman to the M/S Pacific Conveyor;
fourth, from the M/S Pacific Conveyor to the port of arrival;
fifth, from the port of arrival to the arrastre operator; sixth,
from the arrastre operator to the hauler, Mabuhay Brokerage Co.,
Inc. (private respondent therein); and lastly, from the hauler to
the consignee. We emphasized in that case that in the absence of
proof of stipulations to the contrary, the hauler can be liable
only for any damage that occurred from the time it received the
cargo until it finally delivered it to the consignee. Ordinarily,
it cannot be held responsible for the handling of the cargo before
it actually received it. The insurance contract, which was not
presented in evidence in that case would have indicated the scope
of the insurers liability, if any, since no evidence was adduced
indicating at what stage in the handling process the damage to the
cargo was sustained.
Hence, our ruling on the presentation of the insurance policy in
the said case of Home Insurance Corporation is not applicable to
the case at bar. In contrast, there is no doubt that the cargo of
industrial fuel oil belonging to Caltex, in the case at bar, was
lost while on board petitioners vessel, MT Maysun, which sank while
in transit in the vicinity of Panay Gulf and Cuyo East Pass in the
early morning of August 16, 1986.
WHEREFORE, the instant petition is DENIED. The Decision dated
June 17, 1996 of the Court of Appeals in CA-G.R. CV No. 39836 is
AFFIRMED. Costs against the petitioner.
SO ORDERED.
(PAN MALAYAN INSURANCE CORPORATION, petitioner, vs. COURT OF
APPEALS, ERLINDA FABIE AND HER UNKNOWN DRIVER, respondents., G.R.
No. 81026, 1990 April 03, 3rd Division)
D E C I S I O N
CORTES, J.:
Petitioner Pan Malayan Insurance Company (PANMALAY) seeks the
reversal of a decision of the Court of Appeals which upheld an
order of the trial court dismissing for no cause of action
PANMALAY's complaint for damages against private respondents
Erlinda Fabie and her driver.
The principal issue presented for resolution before this Court
is whether or not the insurer PANMALAY may institute an action to
recover the amount it had paid its assured in settlement of an
insurance claim against private respondents as the parties
allegedly responsible for the damage caused to the insured
vehicle.
On December 10, 1985, PANMALAY filed a complaint for damages
with the RTC of Makati against private respondents Erlinda Fabie
and her driver.
PANMALAY averred the following: that it insured a Mitsubishi
Colt Lancer car with plate No. DDZ-431 and registered in the name
of Canlubang Automotive Resources Corporation [CANLUBANG]; that on
May 26, 1985, due to the "carelessness, recklessness, and
imprudence" of the unknown driver of a pick-up with plate no.
PCR-220, the insured car was hit and suffered damages in the amount
of P42,052.00; that PANMALAY defrayed the cost of repair of the
insured car and, therefore, was subrogated to the rights of
CANLUBANG against the driver of the pick-up and his employer,
Erlinda Fabie; and that, despite repeated demands, defendants,
failed and refused to pay the claim of PANMALAY.
Private respondents, thereafter, filed a Motion for Bill of
Particulars and a supplemental motion thereto. In compliance
therewith, PANMALAY clarified, among others, that the damage caused
to the insured car was settled under the "own damage" coverage of
the insurance policy, and that the driver of the insured car was,
at the time of the accident, an authorized driver duly licensed to
drive the vehicle. PANMALAY also submitted a copy of the insurance
policy and the Release of Claim and Subrogation Receipt executed by
CANLUBANG in favor of PANMALAY.
On February 12, 1986, private respondents filed a Motion to
Dismiss alleging that PANMALAY had no cause of action against them.
They argued that payment under the "own damage" clause of the
insurance policy precluded subrogation under Article 2207 of the
Civil Code, since indemnification thereunder was made on the
assumption that there was no wrongdoer or no third party at
fault.
After hearings conducted on the motion, opposition thereto,
reply and rejoinder, the RTC issued an order dated June 16, 1986
dismissing PANMALAY's complaint for no cause of action. On August
19, 1986, the RTC denied PANMALAY's motion for reconsideration.
On appeal taken by PANMALAY, these orders were upheld by the
Court of Appeals on November 27, 1987. Consequently, PANMALAY filed
the present petition for review.
After private respondents filed its comment to the petition, and
petitioner filed its reply, the Court considered the issues joined
and the case submitted for decision.
Deliberating on the various arguments adduced in the pleadings,
the Court finds merit in the petition.
PANMALAY alleged in its complaint that, pursuant to a motor
vehicle insurance policy, it had indemnified CANLUBANG for the
damage to the insured car resulting from a traffic accident
allegedly caused by the negligence of the driver of private
respondent, Erlinda Fabie. PANMALAY contended, therefore, that its
cause of action against private respondents was anchored upon
Article 2207 of the Civil Code, which reads:
If the plaintiff's property has been insured, and he has
received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the
contract . . .
PANMALAY is correct.
Article 2207 of the Civil Code is founded on the well-settled
principle of subrogation. If the insured property is destroyed or
damaged through the fault or negligence of a party other than the
assured, then the insurer, upon payment to the assured, will be
subrogated to the rights of the assured to recover from the
wrongdoer to the extent that the insurer has been obligated to pay.
Payment by the insurer to the assured operates as an equitable
assignment to the former of all remedies which the latter may have
against the third party whose negligence or wrongful act caused the
loss. The right of subrogation is not dependent upon, nor does it
grow out of, any privity of contract or upon written assignment of
claim. It accrues simply upon payment of the insurance claim by the
insurer [Compania Maritima v. Insurance Company of North America,
G.R. No. L-18965, October 30, 1964, 12 SCRA 213; Fireman's Fund
Insurance Company v. Jamilla & Company, Inc., G.R. No. L-27427,
April 7, 1976, 70 SCRA 323].
There are a few recognized exceptions to this rule. For
instance, if the assured by his own act releases the wrongdoer or
third party liable for the loss or damage, from liability, the
insurer's right of subrogation is defeated [Phoenix Ins. Co. of
Brooklyn v. Erie & Western Transport, Co., 117 US 312, 29 L.
Ed. 873 (1886); Insurance Company of North America v. Elgin, Joliet
& Eastern Railway Co., 229 F 2d 705 (1956)]. Similarly, where
the insurer pays the assured the value of the lost goods without
notifying the carrier who has in good faith settled the assured's
claim for loss, the settlement is binding on both the assured and
the insurer, and the latter cannot bring an action against the
carrier on his right of subrogation [McCarthy v. Barber Steamship
Lines, Inc., 45 Phil. 488 (1923)]. And where the insurer pays the
assured for a loss which is not a risk covered by the policy,
thereby effecting "voluntary payment", the former has no right of
subrogation against the third party liable for the loss [Sveriges
Angfartygs Assurans Forening v. Qua Chee Gan, G.R. No. L-22146,
September 5, 1967, 21 SCRA 12].
None of the exceptions are availing in the present case.
The lower court and Court of Appeals, however, were of the
opinion that PANMALAY was not legally subrogated under Article 2207
of the Civil Code to the rights of CANLUBANG, and therefore did not
have any cause of action against private respondents. On the one
hand, the trial court held that payment by PANMALAY of CANLUBANG's
claim under the "own damage" clause of the insurance policy was an
admission by the insurer that the damage was caused by the assured
and/or its representatives. On the other hand, the Court of Appeals
in applying the ejusdem generis rule held that Section III-1 of the
policy, which was the basis for settlement of CANLUBANG's claim,
did not cover damage arising from collision or overturning due to
the negligence of third parties as one of the insurable risks. Both
tribunals concluded that PANMALAY could not now invoke Article 2207
and claim reimbursement from private respondents as alleged
wrongdoers or parties responsible for the damage.
The above conclusion is without merit.
It must be emphasized that the lower court's ruling that the
"own damage" coverage under the policy implies damage to the
insured car caused by the assured itself, instead of third parties,
proceeds from an incorrect comprehension of the phrase "own damage"
as used by the insurer. When PANMALAY utilized the phrase "own
damage" a phrase which, incidentally, is not found in the insurance
policy to define the basis for its settlement of CANLUBANG's claim
under the policy, it simply meant that it had assumed to reimburse
the costs for repairing the damage to the insured vehicle [See
PANMALAY's Compliance with Supplementary Motion for Bill of
Particulars, p. 1; Record, p. 31]. It is in this sense that the
so-called "own damage" coverage under Section III of the insurance
policy is differentiated from Sections I and IV-1 which refer to
"Third Party Liability" coverage (liabilities arising from the
death of, or bodily injuries suffered by, third parties) and from
Section IV-2 which refer to "Property Damage" coverage (liabilities
arising from damage caused by the insured vehicle to the properties
of third parties).
Neither is there merit in the Court of Appeals' ruling that the
coverage of insured risks under Section III-1 of the policy does
not include damage to the insured vehicle arising from collision or
overturning due to the negligent acts of a third party. Not only
does it stem from an erroneous interpretation of the provisions of
the section, but it also violates a fundamental rule on the
interpretation of property insurance contracts.
It is a basic rule in the interpretation of contracts that the
terms of a contract are to be construed according to the sense and
meaning of the terms which the parties thereto have used. In the
case of property insurance policies, the evident intention of the
contracting parties, i.e., the insurer and the assured, determine
the import of the various terms and provisions embodied in the
policy. It is only when the terms of the policy are ambiguous,
equivocal or uncertain, such that the parties themselves disagree
about the meaning of particular provisions, that the courts will
intervene. In such an event, the policy will be construed by the
courts liberally in favor of the assured and strictly against the
insurer [Union Manufacturing Co., Inc. v. Philippine Guaranty Co.,
Inc., G.R. No. L-27932, October 30, 1972, 47 SCRA 271; National
Power Corporation v. Court of Appeals, G.R. No. L-43706, November
14, 1986, 145 SCRA 533; Pacific Banking Corporation v. Court of
Appeals, G.R. No. L-41014, November 28, 1988, 168 SCRA 1. Also
Articles 1370-1378 of the Civil Code].
Section III-1 of the insurance policy which refers to the
conditions under which the insurer PANMALAY is liable to indemnify
the assured CANLUBANG against damage to or loss of the insured
vehicle, reads as follows:
SECTION III LOSS OR DAMAGE.
1. The Company will, subject to the Limits of Liability,
indemnify the Insured against loss of or damage to the Scheduled
Vehicle and its accessories and spare parts whilst thereon:
(a) by accidental collision or overturning, or collision or
overturning consequent upon mechanical breakdown or consequent upon
wear and tear;
(b) by fire, external explosion, self ignition or lightning or
burglary, housebreaking or theft;
(c) by malicious act;
(d) whilst in transit (including the processes of loading and
unloading) incidental to such transit by road, rail, inland,
water-way, lift or elevator.
xxx xxx xxx
[Annex "A-1" of PANMALAY's Compliance with Supplementary Motion
for Bill of Particulars; Record, p. 34].
PANMALAY contends that the coverage of insured risks under the
above section, specifically Section III-1(a), is comprehensive
enough to include damage to the insured vehicle arising from
collision or overturning due to the fault or negligence of a third
party. CANLUBANG is apparently of the same understanding. Based on
a police report wherein the driver of the insured car reported that
after the vehicle was sideswiped by a pick-up, the driver thereof
fled the scene [Record, p. 20], CANLUBANG filed its claim with
PANMALAY for indemnification of the damage caused to its car. It
then accepted payment from PANMALAY, and executed a Release of
Claim and Subrogation Receipt in favor of latter.
Considering that the very parties to the policy were not shown
to be in disagreement regarding the meaning and coverage of Section
III-1, specifically sub-paragraph (a) thereof, it was improper for
the appellate court to indulge in contract construction, to apply
the ejusdem generis rule, and to ascribe meaning contrary to the
clear intention and understanding of these parties.
It cannot be said that the meaning given by PANMALAY and
CANLUBANG to the phrase "by accidental collision or overturning"
found in the first part of sub-paragraph (a) is untenable. Although
the terms "accident" or "accidental" as used in insurance contracts
have not acquired a technical meaning, the Court has on several
occasions defined these terms to mean that which takes place
"without one's foresight or expectation, an event that proceeds
from an unknown cause, or is an unusual effect of a known cause
and, therefore, not expected" [De la Cruz v. The Capital Insurance
& Surety Co., Inc., G.R. No. L-21574, June 30, 1966, 17 SCRA
559; Filipino Merchants Insurance Co., Inc. v. Court of Appeals,
G.R. No. 85141, November 28, 1989]. Certainly, it cannot be
inferred from jurisprudence that these terms, without
qualification, exclude events resulting in damage or loss due to
the fault, recklessness or negligence of third parties. The concept
"accident" is not necessarily synonymous with the concept of "no
fault". It may be utilized simply to distinguish intentional or
malicious acts from negligent or careless acts of man.
Moreover, a perusal of the provisions of the insurance policy
reveals that damage to, or loss of, the insured vehicle due to
negligent or careless acts of third parties is not listed under the
general and specific exceptions to the coverage of insured risks
which are enumerated in detail in the insurance policy itself [See
Annex "A-1" of PANMALAY's Compliance with Supplementary Motion for
Bill of Particulars, supra.]
The Court, furthermore, finds it noteworthy that the meaning
advanced by PANMALAY regarding the coverage of Section III-1(a) of
the policy is undeniably more beneficial to CANLUBANG than that
insisted upon by respondents herein. By arguing that this section
covers losses or damages due not only to malicious, but also to
negligent acts of third parties, PANMALAY in effect advocates for a
more comprehensive coverage of insured risks. And this, in the
final analysis, is more in keeping with the rationale behind the
various rules on the interpretation of insurance contracts favoring
the assured or beneficiary so as to effect the dominant purpose of
indemnity or payment [See Calanoc v. Court of Appeals, 98 Phil. 79
(1955); Del Rosario v. The Equitable Insurance and Casualty Co.,
Inc., G.R. No. L-16215, June 29, 1963, 8 SCRA 343; Serrano v. Court
of Appeals, G.R. No. L-35529, July 16, 1984, 130 SCRA 327].
Parenthetically, even assuming for the sake of argument that
Section III-1(a)of the insurance policy does not cover damage to
the insured vehicle caused by negligent acts of third parties, and
that PANMALAY's settlement of CANLUBANG's claim for damages
allegedly arising from a collision due to private respondents'
negligence would amount to unwarranted or "voluntary payment",
dismissal of PANMALAY's complaint against private respondents for
no cause of action would still be a grave error of law.
For even if under the above circumstances PANMALAY could not be
deemed subrogated to the rights of its assured under Article 2207
of the Civil Code, PANMALAY would still have a cause of action
against private respondents. In the pertinent case of Sveriges
Angfartygs Assurans Forening v. Qua Chee Gan, supra., the Court
ruled that the insurer who may have no rights of subrogation due to
"voluntary" payment may nevertheless recover from the third party
responsible for the damage to the insured property under Article
1236 of the Civil Code.
In conclusion, it must be reiterated that in this present case,
the insurer PANMALAY as subrogee merely prays that it be allowed to
institute an action to recover from third parties who allegedly
caused damage to the insured vehicle, the amount which it had paid
its assured under the insurance policy. Having thus shown from the
above discussion that PANMALAY has a cause of action against third
parties whose negligence may have caused damage to CANLUBANG's car,
the Court holds that there is no legal obstacle to the filing by
PANMALAY of a complaint for damages against private respondents as
the third parties allegedly responsible for the damage. Respondent
Court of Appeals therefore committed reversible error in sustaining
the lower court's order which dismissed PANMALAY's complaint
against private respondents for no cause of action. Hence, it is
now for the trial court to determine if in fact the damage caused
to the insured vehicle was due to the "carelessness, recklessness
and imprudence" of the driver of private respondent Erlinda
Fabie.
WHEREFORE, in view of the foregoing, the present petition is
GRANTED.
Petitioner's complaint for damages against private respondents
is hereby REINSTATED. Let the case be remanded to the lower court
for trial on the merits.
SO ORDERED.
([2004V926] FEDERAL EXPRESS CORPORATION, Petitioner, vs.
AMERICAN HOME ASSURANCE COMPANY and PHILAM INSURANCE COMPANY, INC.,
Respondents., G.R. No. 150094, 2004 Aug 18, 3rd Division)
DECISION
PANGANIBAN, J.:
Basic is the requirement that before suing to recover loss of or
damage to transported goods, the plaintiff must give the carrier
notice of the loss or damage, within the period prescribed by the
Warsaw Convention and/or the airway bill.
___________________________
* On leave.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules
of Court, challenging the June 4, 2001 Decision[2] and the
September 21, 2001 Resolution[3] of the Court of Appeals (CA) in
CA-GR CV No. 58208. The assailed Decision disposed as follows:
"WHEREFORE, premises considered, the present appeal is hereby
DISMISSED for lack of merit. The appealed Decision of Branch 149 of
the Regional Trial Court of Makati City in Civil Case No. 95-1219,
entitled American Home Assurance Co. and PHILAM Insurance Co., Inc.
v. FEDERAL EXPRESS CORPORATION and/or CARGOHAUS, INC. (formerly
U-WAREHOUSE, INC.), is hereby AFFIRMED and REITERATED.
"Costs against the [petitioner and Cargohaus, Inc.]."[4]
The assailed Resolution denied petitioners Motion for
Reconsideration.
The Facts
The antecedent facts are summarized by the appellate court as
follows:
"On January 26, 1994, SMITHKLINE Beecham (SMITHKLINE for
brevity) of Nebraska, USA delivered to Burlington Air Express
(BURLINGTON), an agent of [Petitioner] Federal Express Corporation,
a shipment of 109 cartons of veterinary biologicals for delivery to
consignee SMITHKLINE and French Overseas Company in Makati City,
Metro Manila. The shipment was covered by Burlington Airway Bill
No. 11263825 with the words, REFRIGERATE WHEN NOT IN TRANSIT and
PERISHABLE stamp marked on its face. That same day, Burlington
insured the cargoes in the amount of $39,339.00 with American Home
Assurance Company (AHAC). The following day, Burlington turned over
the custody of said cargoes to Federal Express which transported
the same to Manila. The first shipment, consisting of 92 cartons
arrived in Manila on January 29, 1994 in Flight No. 0071-28NRT and
was immediately stored at [Cargohaus Inc.s] warehouse. While the
second, consisting of 17 cartons, came in two (2) days later, or on
January 31, 1994, in Flight No. 0071-30NRT which was likewise
immediately stored at Cargohaus warehouse. Prior to the arrival of
the cargoes, Federal Express informed GETC Cargo International
Corporation, the customs broker hired by the consignee to
facilitate the release of its cargoes from the Bureau of Customs,
of the impending arrival of its clients cargoes.
"On February 10, 1994, DARIO C. DIONEDA (DIONEDA), twelve (12)
days after the cargoes arrived in Manila, a non-licensed customs
broker who was assigned by GETC to facilitate the release of the
subject cargoes, found out, while he was about to cause the release
of the said cargoes, that the same [were] stored only in a room
with two (2) air conditioners running, to cool the place instead of
a refrigerator. When he asked an employee of Cargohaus why the
cargoes were stored in the cool room only, the latter told him that
the cartons where the vaccines were contained specifically
indicated therein that it should not be subjected to hot or cold
temperature. Thereafter, DIONEDA, upon instructions from GETC, did
not proceed with the withdrawal of the vaccines and instead,
samples of the same were taken and brought to the Bureau of Animal
Industry of the Department of Agriculture in the Philippines by
SMITHKLINE for examination wherein it was discovered that the ELISA
reading of vaccinates sera are below the positive reference
serum.
"As a consequence of the foregoing result of the veterinary
biologics test, SMITHKLINE abandoned the shipment and, declaring
total loss for the unusable shipment, filed a claim with AHAC
through its representative in the Philippines, the Philam Insurance
Co., Inc. (PHILAM) which recompensed SMITHKLINE for the whole
insured amount of THIRTY NINE THOUSAND THREE HUNDRED THIRTY NINE
DOLLARS ($39,339.00). Thereafter, [respondents] filed an action for
damages against the [petitioner] imputing negligence on either or
both of them in the handling of the cargo.
"Trial ensued and ultimately concluded on March 18, 1997 with
the [petitioner] being held solidarily liable for the loss as
follows:
WHEREFORE, judgment is hereby rendered in favor of [respondents]
and [petitioner and its Co-Defendant Cargohaus] are directed to pay
[respondents], jointly and severally, the following:
1. Actual damages in the amount of the peso equivalent of
US$39,339.00 with interest from the time of the filing of the
complaint to the time the same is fully paid.
2. Attorneys fees in the amount of P50,000.00 and
3. Costs of suit.
SO ORDERED.
"Aggrieved, [petitioner] appealed to [the CA]."[5]
Ruling of the Court of Appeals
The Test Report issued by the United States Department of
Agriculture (Animal and Plant Health Inspection Service) was found
by the CA to be inadmissible in evidence. Despite this ruling, the
appellate court held that the shipping Receipts were a prima facie
proof that the goods had indeed been delivered to the carrier in
good condition. We quote from the ruling as follows:
Where the plaintiff introduces evidence which shows prima facie
that the goods were delivered to the carrier in good condition
[i.e., the shipping receipts], and that the carrier delivered the
goods in a damaged condition, a presumption is raised that the
damage occurred through the fault or negligence of the carrier, and
this casts upon the carrier the burden of showing that the goods
were not in good condition when delivered to the carrier, or that
the damage was occasioned by some cause excepting the carrier from
absolute liability. This the [petitioner] failed to discharge. x x
x."[6]
Found devoid of merit was petitioners claim that respondents had
no personality to sue. This argument was supposedly not raised in
the Answer or during trial.
Hence, this Petition.[7]
The Issues
In its Memorandum, petitioner raises the following issues for
our consideration:
"I.
Are the decision and resolution of the Honorable Court of
Appeals proper subject for review by the Honorable Court under Rule
45 of the 1997 Rules of Civil Procedure?
"II.
Is the conclusion of the Honorable Court of Appeals -
petitioners claim that respondents have no personality to sue
because the payment was made by the respondents to Smithkline when
the insured under the policy is Burlington Air Express is devoid of
merit - correct or not?
"III.
Is the conclusion of the Honorable Court of Appeals that the
goods were received in good condition, correct or not?
"IV.
Are Exhibits F and G hearsay evidence, and therefore, not
admissible?
"V.
Is the Honorable Court of Appeals correct in ignoring and
disregarding respondents own admission that petitioner is not
liable? and
"VI.
Is the Honorable Court of Appeals correct in ignoring the Warsaw
Convention?"[8]
Simply stated, the issues are as follows: (1) Is the Petition
proper for review by the Supreme Court? (2) Is Federal Express
liable for damage to or loss of the insured goods?
This Courts Ruling
The Petition has merit.
Preliminary Issue:Propriety of Review
The correctness of legal conclusions drawn by the Court of
Appeals from undisputed facts is a question of law cognizable by
the Supreme Court.[9]
In the present case, the facts are undisputed. As will be shown
shortly, petitioner is questioning the conclusions drawn from such
facts. Hence, this case is a proper subject for review by this
Court.
Main Issue:
Liability for Damages
Petitioner contends that respondents have no personality to sue
-- thus, no cause of action against it -- because the payment made
to Smithkline was erroneous.
Pertinent to this issue is the Certificate of Insurance[10]
("Certificate") that both opposing parties cite in support of their
respective positions. They differ only in their interpretation of
what their rights are under its terms. The determination of those
rights involves a question of law, not a question of fact. "As
distinguished from a question of law which exists when the doubt or
difference arises as to what the law is on a certain state of facts
-- there is a question of fact when the doubt or difference arises
as to the truth or the falsehood of alleged facts; or when the
query necessarily invites calibration of the whole evidence
considering mainly the credibility of witnesses, existence and
relevancy of specific surrounding circumstance, their relation to
each other and to the whole and the probabilities of the
situation."[11]
Proper Payee
The Certificate specifies that loss of or damage to the insured
cargo is "payable to order x x x upon surrender of this
Certificate. Such wording conveys the right of collecting on any
such damage or loss, as fully as if the property were covered by a
special policy in the name of the holder itself. At the back of the
Certificate appears the signature of the representative of
Burlington. This document has thus been duly indorsed in blank and
is deemed a bearer instrument.
Since the Certificate was in the possession of Smithkline, the
latter had the right of collecting or of being indemnified for loss
of or damage to the insured shipment, as fully as if the property
were covered by a special policy in the name of the holder. Hence,
being the holder of the Certificate and having an insurable
interest in the goods, Smithkline was the proper payee of the
insurance proceeds.
Subrogation
Upon receipt of the insurance proceeds, the consignee
(Smithkline) executed a subrogation Receipt[12] in favor of
respondents. The latter were thus authorized "to file claims and
begin suit against any such carrier, vessel, person, corporation or
government." Undeniably, the consignee had a legal right to receive
the goods in the same condition it was delivered for transport to
petitioner. If that right was violated, the consignee would have a
cause of action against the person responsible therefor.
Upon payment to the consignee of an indemnity for the loss of or
damage to the insured goods, the insurers entitlement to
subrogation pro tanto -- being of the highest equity -- equips it
with a cause of action in case of a contractual breach or
negligence.[13] "Further, the insurers subrogatory right to sue for
recovery under the bill of lading in case of loss of or damage to
the cargo is jurisprudentially upheld."[14]
In the exercise of its subrogatory right, an insurer may proceed
against an erring carrier. To all intents and purposes, it stands
in the place and in substitution of the consignee. A fortiori, both
the insurer and the consignee are bound by the contractual
stipulations under the bill of lading.[15]
Prescription of Claim
From the initial proceedings in the trial court up to the
present, petitioner has tirelessly pointed out that respondents
claim and right of action are already barred. The latter, and even
the consignee, never filed with the carrier any written notice or
complaint regarding its claim for damage of or loss to the subject
cargo within the period required by the Warsaw Convention and/or in
the airway bill. Indeed, this fact has never been denied by
respondents and is plainly evident from the records.
Airway Bill No. 11263825, issued by Burlington as agent of
petitioner, states:
6. No action shall be maintained in the case of damage to or
partial loss of the shipment unless a written notice, sufficiently
describing the goods concerned, the approximate date of the damage
or loss, and the details of the claim, is presented by shipper or
consignee to an office of Burlington within (14) days from the date
the goods are placed at the disposal of the person entitled to
delivery, or in the case of total loss (including non-delivery)
unless presented within (120) days from the date of issue of the
[Airway Bill]."[16]
Relevantly, petitioners airway bill states:
12./12.1 The person entitled to delivery must make a complaint
to the carrier in writing in the case:
12.1.1 of visible damage to the goods, immediately after
discovery of the damage and at the latest within fourteen (14) days
from receipt of the goods;
12.1.2 of other damage to the goods, within fourteen (14) days
from the date of receipt of the goods;
12.1.3 delay, within twenty-one (21) days of the date the goods
are placed at his disposal; and
12.1.4 of non-delivery of the goods, within one hundred and
twenty (120) days from the date of the issue of the air
waybill.
12.2 For the purpose of 12.1 complaint in writing may be made to
the carrier whose air waybill was used, or to the first carrier or
to the last carrier or to the carrier who performed the
transportation during which the loss, damage or delay took
place.[17]
Article 26 of the Warsaw Convention, on the other hand,
provides:
ART. 26. (1) Receipt by the person entitled to the delivery of
baggage or goods without complaint shall be prima facie evidence
that the same have been delivered in good condition and in
accordance with the document of transportation.
(2) In case of damage, the person entitled to delivery must
complain to the carrier forthwith after the discovery of the
damage, and, at the latest, within 3 days from the date of receipt
in the case of baggage and 7 days from the date of receipt in the
case of goods. In case of delay the complaint must be made at the
latest within 14 days from the date on which the baggage or goods
have been placed at his disposal.
(3) Every complaint must be made in writing upon the document of
transportation or by separate notice in writing dispatched within
the times aforesaid.
(4) Failing complaint within the times aforesaid, no action
shall lie against the carrier, save in the case of fraud on his
part.[18]
Condition Precedent
In this jurisdiction, the filing of a claim with the carrier
within the time limitation therefor actually constitutes a
condition precedent to the accrual of a right of action against a
carrier for loss of or damage to the goods.[19] The shipper or
consignee must allege and prove the fulfillment of the condition.
If it fails to do so, no right of action against the carrier can
accrue in favor of the former. The aforementioned requirement is a
reasonable condition precedent; it does not constitute a limitation
of action.[20]
The requirement of giving notice of loss of or injury to the
goods is not an empty formalism. The fundamental reasons for such a
stipulation are (1) to inform the carrier that the cargo has been
damaged, and that it is being charged with liability therefor; and
(2) to give it an opportunity to examine the nature and extent of
the injury. This protects the carrier by affording it an
opportunity to make an investigation of a claim while the matter is
fresh and easily investigated so as to safeguard itself from false
and fraudulent claims.[21]
When an airway bill -- or any contract of carriage for that
matter -- has a stipulation that requires a notice of claim for
loss of or damage to goods shipped and the stipulation is not
complied with, its enforcement can be prevented and the liability
cannot be imposed on the carrier. To stress, notice is a condition
precedent, and the carrier is not liable if notice is not given in
accordance with the stipulation.[22] Failure to comply with such a
stipulation bars recovery for the loss or damage suffered.[23]
Being a condition precedent, the notice must precede a suit for
enforcement.[24] In the present case, there is neither an
allegation nor a showing of respondents compliance with this
requirement within the prescribed period. While respondents may
have had a cause of action then, they cannot now enforce it for
their failure to comply with the aforesaid condition precedent.
In view of the foregoing, we find no more necessity to pass upon
the other issues raised by petitioner.
We note that respondents are not without recourse. Cargohaus,
Inc. -- petitioners co-defendant in respondents Complaint below --
has been adjudged by the trial court as liable for, inter alia,
"actual damages in the amount of the peso equivalent of US
$39,339."[25] This judgment was affirmed by the Court of Appeals
and is already final and executory.[26]
WHEREFORE, the Petition is GRANTED, and the assailed Decision
REVERSED insofar as it pertains to Petitioner Federal Express
Corporation. No pronouncement as to costs.
SO ORDERED.
([1967V374E] SVERIGES ANGFARTYGS ASSURANS FORENING,
plaintiff-appellant, vs. QUA CHEE GAN, defendant-appellee., G.R.
No. L-22146, 1967 Sep 5, En Banc)
D E C I S I O N
BENGZON, J.P., J.:
On August 23 and 24, 1947, defendant Qua Chee Gan, a sole
proprietorship, shipped on board the S.S. NAGARA, as per bills of
lading Exhs. A and B 2,032,000 kilos of bulk copra at Siain,
Quezon, consigned to DAL International Trading Co., in Gdynia,
Poland. The vessel first called at the port of Karlshamn, Sweden,
where it unloaded 696,419 kilos of bulk copra. Then, it proceeded
to Gdynia where it unloaded the remaining copra shipment. The
actual outturn weights in the latter port showed that only
1,569,429 kilos were discharged.Because of the alleged confirmed
cargo shortage, the Polish cargo insurers had to indemnify the
consignee for the value thereof. Thereafter, the former sued the
shipowner, the Swedish East Asia Company, in Gothenburg, Sweden.
The latter, in turn, sued defendant and had it summoned to
Gothenburg. Defendant However refused to submit to that court's
jurisdiction and its objection was sustained.In March, 1951, a
settlement was effected between the Polish cargo insurers and the
shipowner. Plaintiff, as the indemnity insurer for the latter, paid
approximately $60,733.53 to the Polish insurers. On August 16,
1954, claiming to have been subrogated to the rights of the
carrier, plaintiff sued defendant before the Court of First
Instance of Manila to recover U.S. $60,733.53 plus 17% exchange
tax, with legal interest, as the value of the alleged cargo
shortshipment, and P10,000 as attorney's fees. Defendant answered
in due time and countered with a P15,000 counterclaim for
attorney's fees.On August 1, 1955, defendant filed a motion to
dismiss on the ground of prescription under the Carriage of Goods
by Sea Act. The lower court sustained the motion and plaintiff
appealed here. We reversed the order of dismissal and remanded the
case for further proceedings. 1 After trial, the lower court on
September 28, 1963, rendered its decision dismissing the complaint
and awarding P10,000 as attorney's fees to defendant. It ruled (a)
that there was no short shipment on defendant's part; (b) that
plaintiff's insurance policy did not cover the short shipment, and
(c) defendant was merely acting as an agent of Louis Dreyfus &
Co., who was the real shipper.Taking issue with all the foregoing,
plaintiff has interposed the present appeal to Us on questions of
fact and law, the amount involved exceeding P200,000.00.Was the
non-presentation of the insurance policy fatal to plaintiff's case?
The lower court ruled so, reasoning that unless the same as the
best evidence were presented, it could not be conclusively
determined if "liability for shortshipment" was a covered risk. And
the rule is that an insurer who pays the insured for loss or
liability not covered by the policy is not subrogated to the
latter. 2 However, even assuming that there was unwarranted or
"volunteer" payment, plaintiff could still recover what it paid in
effect to the carrier from defendant shipper under Art. 1236 of the
Civil Code which allows a third person who pays on behalf of
another to recover from the latter, although there is no
subrogation. But since the payment here was without the knowledge
and consent of defendant, plaintiff's right of recovery is
defeasible by the former's defenses since the Code is clear that
the recovery is only up to the amount by which the defendant was
benefited.This brings Us to the crux of the case: Was there a
shortshipment? To support its case, plaintiff theorizes that
defendant had two shipments at Siain, Quezon province: (1) 812,800
kilos for Karlshamn and (2) 2,032,000 kilos for Gdynia. The
Karlshamn shipment was asserted to have been covered by a separate
bill of lading which however was allegedly lost subsequently. Thus,
the 696, 419 kilos of copra unloaded in Karlshamn was not part of
the Gdynia shipment and cannot explain the confirmed shortage at
the latter port.Plaintiff's cause of action suffers from several
fatal defects and inconsistencies. The alleged shipment of 812,800
kilos for Karlshamn is contradicted by plaintiff's admission in
paragraphs 2 and 3 of its complaint that defendant shipped only
2,032,00 kilos of copra at Siain, purportedly for both Gydnia and
Karlshamn. 3 Needless to state, plaintiff is bound by such judicial
admission. 4 Moreover, the alleged existence of the Karlshamn bills
of lading is negative by the fact that Exhibits A and B the bills
of lading presented by plaintiff show that the 2,032,000 kilos of
copra loaded in Siain were for Gydnia only. Further destroying its
case is the testimony of plaintiff's own witness, Mr. Claro
Pasicolan, who on direct examination affirmed 5 that these two
exhibits constituted the complete set of documents which the
shipping agent in charge of the vessel S.S. NAGARA issued covering
the copra cargo loaded at Siain. In view of this admission and for
want of evident support, plaintiffs belated claim that there is
another complete set of documents can not be seriously
taken.Lastly, if there really was a separate bill of lading for the
Karlshamn shipment, plaintiff could not have failed to present a
copy thereof. Mr. Pasicolan testified 6 that the shipping agent
makes 20 copies of the documents of which three signed ones are
given to the shipper and the rest, marked as non-negotiable bills
of lading like Exhibits A and B are kept on its file. For the three
signed copies to be lost, We may believe, but not for all the
remaining 17 others copies. Under the circumstances, it is more
reasonable to hold that there was no separate shipment intended for
Karlshamn, Sweden.As a corollary to the foregoing conclusion, it
stands to reason that the copra unloaded in Karlshamn formed part
of the same and only shipment of defendant intended for Gdynia. Now
the fact that the sum total of the cargo unloaded at Karlshamn and
Gdynia would exceed what appears to have been loaded at Siain by as
much as 233,848 kilos can only show that defendant really
overshipped, not shortshipped. And while this would not tally with
defendant's claim of having weighed the copra cargo 1000 at Siain,
thus exposing a flaw in defendant's case, yet it is elementary that
plaintiff must rely on the strength of its own case to recover, and
not bank on the weakness of the defense. Plaintiff here failed to
establish its case by preponderance on evidence.On the question
whether defendant is the real shipper or merely an agent of Louis
Dreyfus & Co., suffice it to say that altho on Exhibits A and B
his name appears as the shipper, yet the very loading certificate,
Exhibit 3 [5-Deposition of Horle], issued and signed by the Chief
Mate and Master of the S.S. NAGARA shows that defendant was acting
merely for account of Louis Dreyfus & Co. The other documentary
exhibits 7 confirm this. Anyway, in whatever capacity defendant is
considered, it cannot be liable since no shortshipment was
shown.Plaintiff's action against defendant cannot, however, be
considered as clearly unfounded as to warrant an award of
attorney's fees as damages to defendant under par. 4, Art. 2208 of
the Civil Code. The facts do not show that plaintiff's cause of
action was so frivolous or untenable as to amount to gross and
evident bad faith. 8 WHEREFORE, but for the award of attorney's
fees to defendant which is eliminated, the decision appealed from
is, in all other respects, hereby affirmed. Costs against
plaintiff-appellant. So ordered.Concepcion, C.J., Reyes, J.B.L,,
Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Angeles and
Fernando, JJ., concur.
(ST. PAUL FIRE & MARINE INSURANCE CO., plaintiff-appellant,
vs. MACONDRAY & CO., INC., BARBER STEAMSHIP LINES, INC.,
WILHELM WILHELMSEN, MANILA PORT SERVICE and/or MANILA RAILROAD
COMPANY, defendants-appellees., G.R. No. L-27796, 1976 March 25,
2nd Division)
D E C I S I O N
ANTONIO, J:
Certified to this Court by the Court of Appeals in its
Resolution of May 8, 1967, 1 on the ground that the appeal involves
purely questions of law, thus: (a) whether or not, in case of loss
or damage, the liability of the carrier to the consignee is limited
to the C.I.F. value of the goods which were lost or damaged, and
(b) whether the insurer who has paid the claim in dollars to the
consignee should be reimbursed in its peso equivalent on the date
of discharge of the cargo or on the date of the decision.
According to the records, on June 29, 1960, Winthrop Products,
Inc., of New York, New York, U.S.A., shipped aboard the SS "Tai
Ping", owned and operated by Wilhelm Wilhelmsen, 218 cartons and
drums of drugs and medicine, with the freight prepaid, which were
consigned to Winthrop-Steams, Inc., Manila, Philippines. Barber
Steamship Lines, Inc., agent of Wilhelm Wilhelmsen issued Bill of
Lading No. 34, in the name of Winthrop Products, Inc. as shipper,
with arrival notice in Manila to consignee Winthrop-Stearns, Inc.,
Manila, Philippines. The shipment was insured by the shipper
against loss and/or damage with the St. Paul Fire & Marine
Insurance Company under its insurance Special Policy No. OC-173766
dated June 23, 1960 (Exhibit "S").
On August 7, 1960, the SS "Tai Ping" arrived at the Port of
Manila and discharged its aforesaid shipment into the custody of
Manila Port Service, the arrastre contractor for the Port of
Manila. The said shipment was discharged complete and in good order
with the exception of one (1) drum and several cartons which were
in bad order condition. Because consignee failed to receive the
whole shipment and as several cartons of medicine were received in
bad order condition, the consignee filed the corresponding claim in
the amount of P1,109.67 representing the C.I.F. value of the
damaged drum and cartons of medicine with the carrier, herein
defendants-appellees (Exhibits "G" and "H") and the Manila Port
Service (Exhibits "I" & "J"). However, both refused to pay such
claim. Consequently, the consignee filed its claim with the
insurer, St. Paul Fire & Marine Insurance Co. (Exhibit "N"),
and the insurance company, on the basis of such claim, paid to the
consignee the insured value of the lost and damaged goods,
including other expenses in connection therewith, in the total
amount of $1,134.46 U.S. currency (Exhibit "U").
On August 5, 1961, as subrogee of the rights of the shipper
and/or consignee, the insurer, St. Paul Fire & Marine Insurance
Co., instituted with the Court of First Instance of Manila the
present action 2 against the defendants for the recovery of said
amount of $1,134.46, plus costs.
On August 23, 1961, the defendants Manila Port Service and
Manila Railroad Company resisted the action, contending, among
others, that the whole cargo was delivered to the consignee in the
same condition in which it was received from the carrying vessel;
that their rights, duties and obligations as arrastre contractor at
the Port of Manila are governed by and subject to the terms,
conditions and limitations contained in the Management Contract
between the Bureau of Customs and Manila Port Service, and their
liability is limited to the invoice value of the goods, but in no
case more than P500.00 per package, pursuant to paragraph 15 of the
said Management Contract; and that they are not the agents of the
carrying vessel in the receipt and delivery of cargoes in the Port
of Manila.
On September 7, 1961, the defendants Macondray & Co., Inc.,
Barber Steamship Lines, Inc. and Wilhelm Wilhelmsen also contested
the claim alleging, among others, that the carrier's liability for
the shipment ceased upon discharge thereof from the ship's tackle;
that they and their co-defendant Manila Port Service are not the
agents of the vessel; that the said 218 packages were discharged
from the vessel SS "Tai Ping" into the custody of defendant Manila
Port Service as operator of the arrastre service for the Port of
Manila; that if any damage was sustained by the shipment while it
was under the control of the vessel, such damage was caused by
insufficiency of packing, force majeure and/or perils of the sea;
and that they, in good faith and for the purpose only of avoiding
litigation without admitting liability to the consignee, offered to
settle the latter's claim in full by paying the C.I.F. value of 27
lbs. caramel, 4.13 kilos methyl salicylate and 12 pieces
pharmaceutical vials of the shipment, but their offer was declined
by the consignee and/or the plaintiff.
After due trial, the lower court, on March 10, 1965 rendered
judgment ordering defendants Macondray & Co., Inc., Barber
Steamship Lines, Inc. and Wilhelm Wilhelmsen to pay to the
plaintiff, jointly and severally, the sum of P300.00, with legal
interest thereon from the filing of the complaint until fully paid,
and defendants Manila Railroad Company and Manila Port Service to
pay to plaintiff, jointly and severally, the sum of P809.67, with
legal interest thereon from the filing of the complaint until fully
paid, the costs to be borne by all the said defendants. 3 On April
12, 1965, plaintiff, contending that it should recover the amount
of $1,134.46, or its equivalent in pesos at the rate of P3.90,
instead of P2.00, for every US$1.00, filed a motion for
reconsideration, but this was denied by the lower court on May 5,
1965. Hence, the present appeal.
Plaintiff-appellant argues that, as subrogee of the consignee,
it should be entitled to recover from the defendants-appellees the
amount of $1,134.46 which it actually paid to the consignee
(Exhibits "N" & "U") and which represents the value of the lost
and damaged shipment as well as other legitimate expenses such as
the duties and cost of survey of said shipment, and that the
exchange rate on the date of the judgment, which was P3.90 for
every US$1.00, should have been applied by the lower court.
Defendants-appellees countered that their liability is limited
to the C.I.F. value of the goods, pursuant to contract of sea
carriage embodied in the bill of lading; that the consignee's
(Winthrop-Steams, Inc.) claim against the carrier (Macondray &
Co., Inc., Barber Steamship Lines, Inc., Wilhelm Wilhelmsen) and
the arrastre operators (Manila Port Service and Manila Railroad
Company) was only for the sum of P1,109.67 (Exhibits "G", "H", "I"
& "J"), representing the C.I.F. value of the loss and damage
sustained by the shipment which was the amount awarded by the lower
court to the plaintiff-appellant; 4 defendants appellees are not
insurers of the goods and as such they should not be made to pay
the insured value therefor; the obligation of the
defendants-appellees was established as of the date of discharge,
hence the rate of exchange should be based on the rate existing on
that date, i.e., August 7, 1960, 5 and not the value of the
currency at the time the lower court rendered its decision on March
10, 1965.
The appeal is without merit.
The purpose of the bill of lading is to provide for the rights
and liabilities of the parties in reference to the contract to
carry. 6 The stipulation in the bill of lading limiting the common
carrier's liability to the value of the goods appearing in the
bill, unless the shipper or owner declares a greater value, is
valid and binding. 7 This limitation of the carrier's liability is
sanctioned by the freedom of the contracting parties to establish
such stipulations, clauses, terms, or conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs and public policy. 8 A stipulation fixing or limiting the
sum that may be recovered from the carrier on the loss or
deterioration of the goods is valid, provided it is (a) reasonable
and just under the circumstances, 9 and (b) has been fairly and
freely agreed upon. 10 In the case at bar, the liabilities of the
defendants-appellees with respect to the lost or damaged shipments
are expressly limited to the C.I.F. value of the goods as per
contract of sea carriage embodied in the bill of lading, which
reads:
"Whenever the value of the goods is less than $500 per package
or other freight unit, their value in the calculation and
adjustment of claims for which the Carrier may be liable shall for
the purpose of avoiding uncertainties and difficulties in fixing
value be deemed to be the invoice value, plus freight and insurance
if paid, irrespective of whether any other value is greater or
less.
"The limitation of liability and other provisions herein shall
inure not only to the benefit of the carrier, its agents, servants
and employees, but also to the benefit of any independent
contractor performing services including stevedoring in connection
with the goods covered hereunder." (Paragraph 17, mphasis
supplied.).
It is not pretended that those conditions are unreasonable or
were not freely and fairly agreed upon. The shipper and consignee
are, therefore, bound by such stipulations since it is expressly
stated in the bill of lading that in "accepting this Bill of
Lading, the shipper, owner and consignee of the goods, and the
holder of the Bill of Lading agree to be bound by all its
stipulations, exceptions and conditions, whether written, stamped
or printed, as fully as if they were all signed by such shipper,
owner, consignee or holder." It is obviously for this reason that
the consignee filed its claim against the defendants-appellees on
the basis of the C.I.F. value of the lost or damaged goods in the
aggregate amount of P1,109.67 (Exhibits "G", "H", "I" and "J").
11
The plaintiff-appellant, as insurer, after paying the claim of
the insured for damages under the insurance, is subrogated merely
to the rights of the assured. As subrogee, it can recover only the
amount that is recoverable by the latter. Since the right of the
assured, in case of loss or damage to the goods, is limited or
restricted by the provisions in the bill of lading, a suit by the
insurer as subrogee necessarily is subject to like limitations and
restrictions.
"The insurer after paying the claim of the insured for damages
under the insurance is subrogated merely to the rights of the
insured and therefore can necessarily recover only that to what was
recoverable by the insured." 12
"Upon payment for a total loss of goods insured, the insurance
is only subrogated to such rights of action as the assured has
against 3rd persons who caused or are responsible for the loss. The
right of action against another person, the equitable interest in
which passes to the insurer, being only that which the assured has,
it follows that if the assured has no such right of action, none
passes to the insurer, and if the assured's right of action is
limited or restricted by lawful contract between him and the person
sought to be made responsible for the loss, a suit by the insurer,
in the right of the assured, is subject to like limitations or
restrictions." 13
Equally untenable is the contention of the plaintiff-appellant
that because of extraordinary inflation, it should be reimbursed
for its dollar payments at the rate of exchange on the date of the
judgment and not on the date of the loss or damage. The obligation
of the carrier to pay for the damage commenced on the date it
failed to deliver the shipment in good condition to the
consignee.
The C.I.F. Manila value of the goods which were lost or damaged,
according to the claim of the consignee dated September 26, 1960 is
$226.37 (for the pilferage, Exhibit "G") and $324.33 (shortlanded,
Exhibit "H") or P456.14 and P653.53, respectively, in Philippine
Currency. The peso equivalent was based by the consignee on the
exchange rate of P2.015 to $1.00 which was the rate existing at
that time. We find, therefore, that the trial court committed no
error in adopting the aforesaid rate of exchange.
WHEREFORE, the appealed decision is hereby affirmed, with costs
against the plaintiff-appellant.
([1988V726] F.F. CRUZ and CO., INC., petitioner, vs. THE COURT
OF APPEALS, GREGORIO MABLE as substituted by his wife LUZ ALMONTE
MABLE and children DOMING, LEONIDAS, LIGAYA, ELENA, GREGORIO, JR.,
SALOME, ANTONIO, and BERNARDO all surnamed MABLE, respondents.,
G.R. No. L-52732, 1988 August 29, 3rd Division)
D E C I S I O N
CORTES, J.:
This petition to review the decision of the Court of Appeals
puts in issue the application of the common law doctrine of res
ipsa loquitur.
The essential facts of the case are not disputed.
The furniture manufacturing shop of petitioner in Caloocan City
was situated adjacent to the residence of private respondents.
Sometime in August 1971, private respondent Gregorio Mable first
approached Eric Cruz, petitioner's plant manager, to request that a
firewall be constructed between the shop and private respondents'
residence. The request was repeated several times but they fell on
deaf ears. In the early morning of September 6, 1974, fire broke
out in petitioner's shop. Petitioner's employees, who slept in the
shop premises, tried to put out the fire, but their efforts proved
futile. The fire spread to private respondents' house. Both the
shop and the house were razed to the ground. The cause of the
conflagration was never discovered. The National Bureau of
Investigation found specimens from the burned structures negative
for the presence of inflammable substances.
Subsequently, private respondents collected P35,000.00 on the
insurance on their house and the contents thereof.
On January 23, 1975, private respondents filed an action for
damages against petitioner, praying for a judgment in their favor
awarding P150,000.00 as actual damages, P50,000.00 as moral
damages, P25,000.00 as exemplary damages, P20,000.00 as attorney's
fees and costs. The Court of First Instance held for private
respondents:
WHEREFORE, the Court hereby renders judgment, in favor of
plaintiffs, and against the defendant:
1. Ordering the defendant to pay to the plaintiffs the amount of
P80,000.00 for damages suffered by said plaintiffs for the loss of
their house, with interest of 6% from the date of the filing of the
Complaint on January 23, 1975, until fully paid;
2. Ordering the defendant to pay to the plaintiffs the sum of
P50,000.00 for the loss of plaintiffs' furnitures, religious
images, silverwares, chinawares, jewelries, books, kitchen
utensils, clothing and other valuables, with interest of 6% from
date of the filing of the Complaint on January 23, 1975, until
fully paid;
3. Ordering the defendant to pay to the plaintiffs the sum of
P5,000.00 as moral damages, P2,000.00 as exemplary damages, and
P5,000.00 as and by way of attorney's fees;
4. With costs against the defendant;
5. Counterclaim is ordered dismissed, for lack of merit. [CA
Decision, pp. 1-2; Rollo, pp. 29-30.]
On appeal, the Court of Appeals, in a decision promulgated on
November 19, 1979, affirmed the decision of the trial court but
reduced the award of damages:
WHEREFORE, the decision declaring the defendants liable is
affirmed. The damages to be awarded to plaintiff should be reduced
to P70,000.00 for the house and P50,000.00 for the furniture and
other fixtures with legal interest from the date of the filing of
the complaint until full payment thereof [CA Decision, p. 7; Rollo,
p. 35.]
A motion for reconsideration was filed on December 3, 1979 but
was denied in a resolution dated February 18, 1980. Hence,
petitioner filed the instant petition for review on February 22,
1980.
After the comment and reply were filed, the Court resolved to
deny the petition for lack of merit on June 11, 1980. However,
petitioner filed a motion for reconsideration, which was granted,
and the petition was given due course on September 12, 1980. After
the parties filed their memoranda, the case was submitted for
decision on January 21, 1981.
Petitioner contends that the Court of Appeals erred:
1. In not deducting the sum of P35,000.00, which private
respondents recovered on the insurance on their house, from the
award of damages.
2. In awarding excessive and/or unproved damages.
3. In applying the doctrine of res ipsa loquitur to the facts of
the instant case.
The pivotal issue in this case is the applicability of the
common law doctrine of res ipsa loquitur, the issue of damages
being merely consequential. In view thereof, the errors assigned by
petitioner shall be discussed in the reverse order.
1. The doctrine of res ipsa loquitur, whose application to the
instant case petitioner objects to, may be stated as follows:
Where the thing which caused the injury complained of is shown
to be under the management of the defendant or his servants and the
accident is such as in the ordinary course of things does not
happen if those who have its management or control use proper care,
it affords reasonable evidence, in the absence of explanation by
the defendant, that the accident arose from want of care. [Africa
v. Caltex (Phil.), Inc., G.R. No. L-12986, March 31, 1966, 16 SCRA
448.]
Thus, in Africa, supra, where fire broke out in a Caltex service
station while gasoline from a tank truck was being unloaded into an
underground storage tank through a hose and the fire spread to and
burned neighboring houses, this Court, applying the doctrine of res
ipsa loquitur, adjudged Caltex liable for the loss.
The facts of the case likewise call for the application of the
doctrine, considering that in the normal course of operations of a
furniture manufacturing shop, combustible material such as wood
chips, sawdust, paint, varnish and fuel and lubricants for
machinery may be found thereon.
It must also be noted that negligence or want of care on the
part of petitioner or its employees was not merely presumed. The
Court of Appeals found that petitioner failed to construct a
firewall between its shop and the residence of private respondents
as required by a city ordinance; that the fire could have been
caused by a heated motor or a lit cigarette; that gasoline and
alcohol were used and stored in the shop; and that workers
sometimes smoked inside the shop [CA Decision, p. 5; Rollo, p.
33.]
Even without applying the doctrine of res ipsa loquitur,
petitioner's failure to construct a firewall in accordance with
city ordinances would suffice to support a finding of
negligence.
Even then the fire possibly would not have spread to the
neighboring houses were it not for another negligent omission on
the part of defendants, namely, their failure to provide a concrete
wall high enough to prevent the flames from leaping over it. As it
was the concrete wall was only 2-1/2 meters high, and beyond that
height it consisted merely of galvanized iron sheets, which would
predictably cramble and melt when subjected to intense heat.
Defendant's negligence, therefore, was not only with respect to the
cause of the fire but also with respect to the spread thereof to
the neighboring houses. [Africa Y. Caltex (Phil.) Inc., supra]
In the instant case, with more reason should petitioner be found
guilty of negligence since it had failed to construct a firewall
between its property and private respondents' residence which
sufficiently complies with the pertinent city ordinances. The
failure to comply with an ordinance providing for safety
regulations had been ruled by the Court as an act of negligence
[Teague v. Fernandez, G.R. No. L-29745, June 4, 1973, 51 SCRA
181.]
The Court of Appeals, therefore, had more than adequate basis to
find petitioner liable for the loss sustained by private
respondents.
2. Since the amount of the loss sustained by private respondents
constitutes a finding of fact, such finding by the Court of Appeals
should not be disturbed by this Court [M.D. Transit & Taxi Co.,
Inc. v. Court of Appeals, G.R. No. L-23882, February 17, 1968, 22
SCRA 559], more so when there is no showing of arbitrariness.
In the instant case, both the CFI and the Court of Appeals, were
in agreement as to the value of private respondents' furniture and
fixtures and personal effects lost in the fire (i.e. P50,000.00).
With regard to the house, the Court of Appeals reduced the award to
P70,000.00 from P80,000.00. Such cannot be categorized as arbitrary
considering that the evidence shows that the house was built in
1951 for P40,000.00 and, according to private respondents, its
reconstruction would cost P246,000.00. Considering the appreciation
in value of real estate and the diminution of the real value of the
peso, the valuation of the house at P70,000.00 at time it was razed
cannot be said to be excessive.
3. While this Court finds that petitioner is liable for damages
to private respondents as found by the Court of Appeals, the fact
that private respondents have been indemnified by their insurer in
the amount of P35,000.00 for the damage caused to their house and
its contents has not escaped the attention of the Court. Hence, the
Court holds that in accordance with Article 2207 of the Civil Code
the amount of P35,000.00 should be deducted from the amount awarded
as damages. Said article provides:
Art. 2207. If the plaintiffs property has been insured, and he
has received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of,
the insurance company is subrogated to the rights of the insured
against the wrongdoer or the person who violated the contract. If
the amount paid by the insurance company does not fully cover the
injury or loss, the aggrieved party shall be entitled to recover
the deficiency from the person causing the loss or injury.
The law is clear and needs no interpretation. Having been
indemnified by their insurer, private respondents are only entitled
to recover the deficiency from petitioner.
On the other hand, the insurer, if it is so minded, may seek
reimbursement of the amount it indemnified private respondents from
petitioner. This is the essence of its right to be subrogated to
the rights of the insured, as expressly provided in Article 2207.
Upon payment of the loss incurred by the insured, 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 [Fireman's Fund Insurance Co. v.
Jamila & Co., Inc., G.R. No. L-27427, April 7, 1976, 70 SCRA
323.]
Under Article 2207, the real party in interest with regard to
the indemnity received by the insured is the insurer [Phil. Air
Lines, Inc. v. Heald Lumber Co., 101 Phil. 1031, (1957).] Whether
or not the insurer should exercise the rights of the insured to
which it had been subrogated lies solely within the former's sound
discretion. Since the insurer is not a party to the case, its
identity is not of record and no claim is made on its behalf, the
private respondent's insurer has to claim his right to
reimbursement of the P35,000.00 paid to the insured.
WHEREFORE, in view of the foregoing, the decision of the Court
of Appeals is hereby AFFIRMED with the following modifications as
to the damages awarded for the loss of private respondents' house,
considering their receipt of P35,000.00 from their insurer: (1) the
damages awarded for the loss of the house is reduced to P35,000.00;
and (2) the right of the insurer to subrogation and thus seek
reimbursement from petitioner for the P35,000.00 it had paid
private respondents is recognized.
SO ORDERED.
([1968V250E] RIZAL SURETY & INSURANCE COMPANY,
plaintiff-appellant, vs. MANILA RAILROAD COMPANY and MANILA PORT
SERVICE, defendants-appellees., G.R. No. L-24043, 1968 Apr 25, En
Banc)
D E C I S I O N
FERNANDO, J.:
In this suit for the recovery of the amount paid by the
plaintiff, Rizal Surety and Insurance Company, to the consignee
based on the applicable Civil Code provision, 1 which speaks to the
effect that the Insurance Company "shall be subrogated to the
rights of the insured," it is its contention that it is entitled to
the amount paid by it in full, by virtue of the insurance contract.
The lower court, however, relying on the limited liability clause
on a management contract with the defendants, could not go along
with such a theory. Hence this appeal.The facts were stipulated.
The more pertinent follow: That on or about November 29, 1960, the
vessel, SS Flying Trader, loaded on Board at Genoa, Italy for
shipment to Manila, Philippines, among other cargoes, 6 cases OMH,
Special Single Colour Offset Press Machine, for which Bill of
Lading No. 1 was issued, consigned to Suter, Inc.; that such vessel
arrived at the Port of Manila, Philippines on or about January 16,
1961 and subsequently discharged complete and in good order the
aforementioned shipment into the custody of defendant Manila Port
Service as arrastre operator; that in the course of the handling,
one of the six cases identified as Case No. 2143 containing the
OMH, Special Single Colour Offset Press, while the same was being
lifted and loaded by the crane of the Manila Port Service into the
consignee's truck, it was dropped by the crane and as a
consequence, the machine was heavily damaged for which plaintiff as
insurer paid to the consignee, Suter, Inc. the amount of
P16,500.00, representing damages by way of costs of replacement
parts and repairs to put the machine in working condition, plus the
sum of P180.70 which plaintiff paid to the International Adjustment
Bureau as adjuster's fee for the survey conducted on the damaged
cargo or a total of P16,680.70 representing plaintiff's liability
under the insurance contract; and that the arrastre charges in this
particular shipment was paid on the weight or measurement basis
whichever is higher, and not on the value thereof. 2 Clause 15 of
the management contract which as admitted by the plaintiff,
appeared "at the dorsal part of the Delivery Permit" and was "used
in taking delivery of the subject shipment from the defendants'
(Manila Port Service and Manila Railroad Co.) custody and control,
issued in the name of consignee's broker," contained what was
referred to as "an important notice." Such permit "is presented
subject to all the terms and conditions of the Management Contract
between the Bureau of Customs and Manila Port Service and
amendments thereto or alterations thereof, particularly but not
limited to paragraph 15 thereof limiting the Company liability to
P500.00 per package, unless the value of the goods is otherwise,
specified, declared or manifested and the corresponding arrastre
charges have been paid, . . ." 3 On the above facts and relying on
Bernabe & Co. v. Delgado Brothers, Inc., 4 the lower court
rendered the judgment "ordering defendants, jointly and severally,
to pay plaintiff the amount of Five Hundred Pesos (P500.00), with
legal interest thereon from January 13, 962, the date of the filing
oft he complaint, with costs against said defendants." 5 As noted
at the outset, in this appeal, the point is pressed that under the
applicable Civil Code provision, plaintiff-appellant Insurance
Company could recover in full. The literal language of Article
2207, however, does not warrant such an interpretation. It is there
made clear that in the event that the property has been insured and
the Insurance Company has paid the indemnity for the injury or loss
sustained, it "shall be subrogated to the rights of the insured
against the wrong-doer or the person who has violated the contract.
"Plaintiff-appellant Insurance Company, therefore, cannot recover
from defendants an amount greater than that to which the consignee
could lawfully lay claim. The management contract is clear. The
amount is limited to Five Hundred Pesos (P500.00). Such a
stipulation has invariably received the approval of this Court from
the leading case of Bernabe & Co. v. Delgado Bros., Inc. 6 Such
a decision was quoted with approval in the following subsequent
cases: Atlantic Mutual Insurance Co. v. Manila Port Service, 7
Insurance Service Co. of North America v. Manila Port Service, 8
Insurance Company of North America v. U.S. Lines, Co., 9 and
Insurance Company of North America v. Manila Port Service. 10 In
one of them, Atlantic Mutual Insurance Company v. Manila Port
Service, this Court, through the then Justice, now Chief Justice,
Concepcion, restated the doctrine thus: "Plaintiff maintains that,
not being a party to the management contract, the consignee into
whose shoes plaintiff had stepped in consequence of said payment is
not subject to the provisions of said stipulation, and that the
same is furthermore invalid. The lower court correctly rejected
this pretense because, having taken delivery of the shipment
aforementioned by virtue of a delivery permit, incorporating
thereto, by reference, the provisions of said management contract,
particularly paragraph 15 thereof, the gist of which was set forth
in the permit, the consignee became bound by said provisions, and
because it could have avoided the application of said maximum limit
of P500.00 per package by stating the true value thereof in its
claim for delivery of the goods in question, which admittedly, the
consignee failed to do. 11 Plaintiff-appellant Rizal Surety and
Insurance Company having been subrogated merely to the rights of
the consignee its recovery necessarily should be limited to what
was recoverable by the insured. The lower court therefore did not
err when in the decision appealed from, it limited the amount which
defendants were jointly and severally to pay plaintiff-appellant to
"Five Hundred Pesos (P500.00) with legal interest thereon from
January 31, 1962, the date of the filing of the complaint, . . .
"WHEREFORE, the decision appealed from is affirmed. With costs
against Rizal Surety and Insurance Company.Reyes, J.B.L. (Acting
C.J.), Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro
and Angeles, JJ., concur.
([1987V576] MANILA MAHOGANY MANUFACTURING CORPORATION,
petitioner, vs. COURT OF APPEALS AND ZENITH INSURANCE CORPORATION,
respondents., G.R. No. L-52756, 1987 October 12, 2nd Division)
D E C I S I O N
PADILLA, J.:
Petition to review the decision ** of the Court of Appeals, in
CA-G.R. No. SP-08642, dated 21 March 1979, ordering petitioner
Manila Mahogany Manufacturing Corporation to pay private respondent
Zenith Insurance Corporation the sum of Five Thousand Pesos
(P5,000.00) with 6% annual interest from 18 January 1973,
attorney's fees in the sum of five hundred pesos (P500.00), and
costs of suit, and the resolution of the same Court, dated 8
February 1980, denying petitioner's motion for reconsideration of
its decision.
From 6 March 1970 to 6 March 1971, petitioner insured its
Mercedes Benz 4-door sedan with respondent insurance company. On 4
May 1970 the insured vehicle was bumped and damaged by a truck
owned by San Miguel Corporation. For the damage caus