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Insurance Case Digest: Aboitiz Shipping Corp. v. Insurance Co. of North America (2008)

G.R. No. 168402             August 6, 2008
Lessons Applicable: Insurer's right of subrogration (Insurance)

  • June 20, 1993: MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS) procured an "all-risk"  marine insurance policy from ICNA UK Limited of London for wooden work tools and workbenches purchased by consignee Science Teaching Improvement Project (STIP), Ecotech Center, Sudlon Lahug, Cebu City.  
  • July 26, 1993: the cargo was received by Aboitiz Shipping Corporation (Aboitiz) through its duly authorized booking representative, Aboitiz Transport System
  • August 1, 1993: container van was loaded on board MV Super Concarrier I
    • The vessel left Manila en route to Cebu City
  • August 3, 1993: shipment arrived in Cebu City 
  • August 5, 1993: Stripping Report, checker noted that the crates were slightly broken or cracked at the bottom
  • August 11, 1993: cargo was withdrawn by the representative of the consignee, Science Teaching Improvement Project (STIP) and delivered to Don Bosco Technical High School, Punta Princesa, Cebu City
  • August 13, 1993: Mayo B. Perez, Head of Aboiti received a call from the receiver Mr. Bernhard Willig that the cargo sustained water damage so he checked the other cargo but they were dry
  • In a letter dated August 15, 1993, Willig informed Aboitiz that the damage was caused by water entering through the broken bottom parts of the crate 
  • Consignee filed a claim against ICNA 
  • CAC reported to ICNA that the shipment was placed outside the warehouse when it was delivered on July 26, 1993 and it was only  on July 31, 1993 when the shipment was stuffed inside another container van for shipment to Cebu.  Weather report shows that the heavy rains on July 28 and 29, 1993 caused the damages. 
  • Aboitiz refused to settle the claim
  • ICNA paid the amount of P280,176.92 to consignee and a subrogation receipt was duly signed by Willig.  
  • ICNA then advised Aboitiz of the receipt signed in its favor but received no reply so it filed for collection at the RTC. 
  • RTC: against ICNA - subrogation Form is self-serving and has no probative value since Wellig was not presented to the witness stand
  • CA: reversed RTC ruling - right of subrogation accrues simply upon payment by the insurance company of the insurance claim even assuming that it is an unlicensed foreign corporation
ISSUE: W/N ICNA can claim under the right of subrogation

HELD: YES. CA affirmed.
  • Only when that foreign corporation is "transacting" or "doing business" in the country will a license be necessary before it can institute suits.  It may, however, bring suits on isolated business transactions, which is not prohibited under Philippine law
  • The policy benefits any subsequent assignee, or holder, including the consignee, who may file claims on behalf of the assured.
Insurance Code
Sec. 57
Sec. 57. A policy may be so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured.

Civil Code
Art. 2207
Art. 2207. 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. 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.

  • This right of subrogation, however, has its limitations. 
    • First, both the insurer and the consignee are bound by the contractual stipulations under the bill of lading
    • Second, the insurer can be subrogated only to the rights as the insured may have against the wrongdoer. If by its own acts after receiving payment from the insurer, the insured releases the wrongdoer who caused the loss from liability, the insurer loses its claim against the latter.
Civil Code
Art. 366
Article 366. Within twenty four hours following the receipt of the merchandise, the claim against the carrier for damages or average which may be found therein upon opening the packages, may be made, provided that the indications of the damage or average which give rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.
  • The call was made 2 from delivery, a reasonable period considering that the goods could not have corroded instantly overnight such that it could only have sustained the damage during transit.
Civil Code
Art. 1735
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, 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 as required in Article 1733.
  • the shipment delivered to the consignee sustained water damage. We agree with the findings of the CA that petitioner failed to overturn this presumption