Lorenzo Shipping vs. Chubb & Sons, Inc. et. al.

Lorenzo Shipping vs. Chubb & Sons, Inc. et. al.
431 SCRA 266 (2004)

FACTS: SUMITOMO contracted the services of Lorenzo Shipping for the delivery of steel pipes. The steel pipes were insured with CHUBB. Upon delivery the goods were found rusty due to the contact of seawater. CHUBB paid and subrogated itself.

HELD: Subrogation was proper.

A. Once made, the subrogee is entitled to all rights and remedies possessed by the insured.


B. Rule:

Subrogation of one person in the place of another is with reference to a lawful claim or right so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including rights and remedies or securities.

FEDEX vs. American Home Assurance

FEDEX vs. American Home Assurance
437 SCRA 50 (2004)

FACTS: SMITHKLINE delivered to the agent of FEDEX a shipment of veterinary biological goods for delivery to consignee SMITHLIKE. The goods had to be refrigerated. At the customs in Manila, smples were taken. It was shown that the shipment was damaged. Insurer AHA paid and subrogated itself.

HELD: Subrogation was proper.

A. A subrogation receipt was issued in favor of AHA. Hence, the latter was authorized to claim and begin suit against any such carrier.


B. Rule:

Upon payment to the consignee of an indemnity for the loss of or damage to the insured goods, the insurer’s 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.

Malayan Insurance vs. CA

Malayan Insurance vs. CA
165 SCRA 536 (1988)

FACTS: The insured jeepney driven recklessly by an employee of San Leon collided with a bus, while in the performance of work. Insurer Malayan paid insured Sio Choy and subsequently subrogated to the rights of the latter to recover from San Leon.

HELD: Insurer may recover from San Leon.

A. Sio Choy and San Leon were the principal tortfeasors. The law states that the responsibility of 2 or more persons who are liable for a quasi-delict is solidary. In Art. 1217 of the Civil Code, the solidary debtor who has paid the entire obligation has the right to be reimbursed by his co-debtors for the share which corresponds to each. In the case at bar, Malayan subrogated itself into the shoes of Sio Choy. Hence, it may claim reimbursement from San Leon.


B. Rules:

Subrogation is a normal incident of indemnity insurance.

Upon payment of the loss, the insurer is entitled to be subrogated pro tanto to any right of action which the insured may have against the 3rd person whose negligence or wrongful act caused the loss.

The equitable right of subrogation as the legal effect of payment inures to the insurer without any formal assignment or any express stipulation to that effect in the policy.

St. Paul vs. Macondray

St. Paul vs. Macondray
70 SCRA 122 (1976)

FACTS: The insurer paid the full value of the lost shipment of drugs and medicine. When it tried to claim from the shipping company, the latter was willing to pay only that which was stipulated in the bill of lading.

HELD: The shipping company was liable only for the amount indicated in the bill of lading.

A. Since the right of the assured, in case of loss or damage to the goods, is limited and restricted by the provisions of the bill of lading, a suit by the insured as subrogee necessarily was subject to like limitations and restrictions.


B. Rule:

An insurer is subrogated merely to the rights of the insured and can recover from common carrier only the amount recoverable by the insured.

PHILAMGEN vs. CA

PHILAMGEN vs. CA
273 SCRA 262 (1997)

FACTS: The carrier operated by Felman which carried the insured goods of coke litros capsized due to the vessels being top heavy. That being the case, it was not eaworthy. After paying Coca Cola, PHILAMGEN subrogated itself.

HELD: Felman was liable. Normally, a person cannot claim on an insurance policy if there has been a violation of the implied warranty of seaworthiness. In this case, however, PHILAMGEN had in its policy an “admission of seaworthiness," in effect, seaworthiness is presumed and the insured may claim despite the absence of seaworthiness. Hence, PHILAMGEN as subrogee has a claim against Felman.

Fireman’s Fund vs. Jamilla

Fireman’s Fund vs. Jamilla 70 SCRA 323 (1976)

FACTS: Jamila was contracted to supply security guards to Firestone. Jamila assumed responsibility of the acts of guards. Theft happened allegedly due to Firestone’s employees in connivance with the guards. The insurer of Fireman paid and subrogated itself.

HELD: Subrogation was proper.

A. Firestone was not relying on the novation premised on change of creditors (conventional subrogation), but on Art. 2207 (legal subrogation).


B. Rules:

Subrogation is a doctrine of substitution.

The right is not dependent upon, nor does it grow out of, any privity of contract, or upon written assignment of claims, and payment to the insured makes the insurer an assignee in equity.

Cebu Shipyard vs. William Lines

Cebu Shipyard vs. William Lines
306 SCRA 762 (1999)

FACTS: A luxury ship owned by William Lines sank after a fire gutted it while being docked and repaired by Cebu Shipyard. After paying the claim, Prudential subrogated itself to the rights of William to claim against Cebu Shipyard. As a defense, Cebu claims that Prudential has no right to subrogate because (1) the fire was an excluded risk and (2) per contract (Clause Order No. 20) with William, Cebu was a co-assured in the policy.

HELD: Cebu Shipyard was liable. It was established that the fire was not an excluded risk; rather, it was caused by the negligence of the employees of Cebu Shipyard. Regarding Cebu Shipyard’s claim of being co-assured, there was no intention of William Lines to make Cebu shipyard a co-assured under the insurance contract.