THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC. v.

COURT OF
APPEALS
G.R. No. 116940
June 11, 1997
Bellosillo, J.

Facts:
Coca-Cola Bottlers Philippines, Inc., loaded on board "MV Asilda," a vessel owned and
operated by respondent Felman Shipping Lines, Coca-Cola softdrink bottles to be transported
from Zamboanga City to Cebu City. The shipment was insured with petitioner Philippine
American General Insurance Co., Inc. However, the vessel sank in the waters bringing down
her entire cargo with her including the subject cases of Coca-Cola softdrink bottles.

Thereafter, the consignee Coca-Cola Bottlers Philippines, Inc., Cebu plant, filed a claim
with respondent Felman for recovery of damages. Respondent denied the claim thus prompting
the consignee to file an insurance claim with Philamgen which paid its claim.

Claiming its right of subrogation Philamgen sought recourse against respondent Felman
which disclaimed any liability for the loss. Consequently, Philamgen sued the shipowner for sum
of money and damages.

In its complaint Philamgen alleged that the sinking and total loss of "MV Asilda" and its
cargo were due to the vessel's unseaworthiness as she was put to sea in an unstable condition.
Felman filed a motion to dismiss alleging that no right of subrogation in favor of Philamgen was
transmitted by the shipper and that Felman had abandoned all its rights, interests and
ownership over "MV Asilda".

Issue:
Whether Philamgen was properly subrogated to the rights and legal actions which the
shipper had against Felman?

Held:
Yes, generally in every marine insurance policy the assured impliedly warrants to the
assurer that the vessel is seaworthy and such warranty is as much a term of the contract as if
expressly written on the face of the policy. The result of the admission of seaworthiness by the
assurer Philamgen is in recognition of the realistic fact that cargo owners cannot control the
state of the vessel. Thus it can be said that with such categorical waiver, Philamgen has
accepted the risk of unseaworthiness so that if the ship should sink by unseaworthiness, as
what occurred in this case, Philamgen is liable.

On the legal basis for subrogation. Philamgen's action against Felman is squarely
sanctioned by Art. 2207 of the Civil Code which provides:

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.
 In Pan Malayan Insurance Corporation v. Court of Appeals, we said the right of
subrogation is not dependent upon, nor does it grow out of any privity of contract or upon
payment by the insurance company of the insurance claim. It accrues simply upon payment by
the insurance company of the insurance claim.

The doctrine of subrogation has its roots in equity. Therefore, the payment made by
Philamgen to Coca-Cola Bottlers Philippines, Inc., gave the former the right to bring an action as
subrogee against Felman. Having failed to rebut the presumption of fault, the liability of Felman
for the loss of the Coca-Cola softdrink bottles is inevitable.
 PLANTERS PRODUCTS, INC. v. COURT OF APPEALS
G.R. No. 101503
September 15, 1993
Bellosillo, J.

Facts:
Planters Products, Inc. purchased from Mitsubishi, Urea fertilizer which the latter
shipped in bulk aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei
Kisen Kabushiki Kaisha. Prior to its voyage, a time charter-party on the vessel was entered into
between Mitsubishi as shipper/charterer and KKKK as shipowner.

Upon arrival of the vessel at her port of call, it took eleven days for PPI to unload the
cargo. Thereafter, a private marine and cargo surveyor, was hired by PPI to determine the
"outturn" of the cargo shipped. The survey report revealed a shortage in the cargo and that a
portion of the Urea fertilizer was contaminated with dirt.

Consequently, PPI sent a claim letter to Soriamont Steamship Agencies, the resident
agent of the carrier, KKKK, of the alleged shortage in the goods shipped and the diminution in
value of that portion said to have been contaminated with dirt.

Respondent SSA explained that the request was denied by them because they had
nothing to do with the discharge of the shipment. Hence, PPI filed an action for damages. The
defendant carrier argued that the strict public policy governing common carriers does not apply
to them because they have become private carriers by reason of the provisions of the charter-
party.

Issues:
(1) Whether a common carrier becomes a private carrier by reason of a charter-party?
(2) Whether the shipowner in the instant case was able to prove that he had exercised
that degree of diligence required of him under the law?

Held:
(1) No, it is not disputed that respondent carrier, in the ordinary course of business,
operates as a common carrier, transporting goods indiscriminately for all persons. When
petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment
were under the employ of the shipowner and therefore continued to be under its direct
supervision and control. This is evident in the present case considering that the steering of the
ship, the manning of the decks, the determination of the course of the voyage and other
technical incidents of maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner.

(2) Yes, the presumption of negligence on the part of the respondent carrier has been
efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by the
carrier in the care of the cargo. The record of the instant case discloses ample evidence
showing that defendant carrier was not negligent in performing its obligations. That the hull of
the vessel at the time of the discharge of the cargo was sealed and nobody could open the
same except in the presence of the owner of the cargo and the representatives of the vessel
and that the cover of the hatches was made of steel and it was overlaid with tarpaulins, three
layers of tarpaulins and therefore their contents were protected from the weather and in order to
open these hatches, the seals would have to be broken, all the seals were found to be intact.