(5) ARTICLE 2207 OF CIVIL CODE || INSURANCE || JTS

RIZAL SURETY & INSURANCE COMPANY
v. MANILA RAILROAD COMPANY
GR L-24043 | April 25, 1968 | Fernando
SUBROGATION DOCTRINES
Keywords
FACTS
SS Flying Trader carried with it shipment of 6 cases
of OMH, Special Single Colour Offset Press Machine.
On or about November 29, 1960, the vessel, SS Flying
Trader, loaded on board at Genoa, Italy for shipment to
Manila, among others 6 cases of OMH, Special Single
Colour Offset Press Machine, for which Bill of Lading
No. 1 was issued, consigned to Suter, Inc.
Upon arrival, the goods were discharged in the
custody of Manila Port Service.
On or about January 16, 1961, the vessel arrived at the
Port of Manila wherein the goods were discharged
complete and in good order into the custody of
Manila Port Service as arrastre operator.
One of the OMH Machines was heavily damaged.
In the course of handling, 1 of the 6 OMG, Special Single
Colour Offset Press was being lifted and loaded by
crane into Suter, Inc’s truck was dropped by the crane.
As a consequence, the machine was heavily damaged.
Rizal Surety paid for the damages as the insurer of
Suter, Inc.
By way of costs of replacement parts and repairs, Rizal
Surety & Insurance Company, as the insurer of Suter,
Inc., paid P16,500 to put the machine back in working
condition plus P180 as adjuster’s fee for the survey
conducted on the damaged cargo.
sustained, it “shall be subrogated to the rights of the
insured against the wrong-doer or the person who has
violated the contract.”
Rizal Surety could only claim P500.
Rizal Surety, therefore, cannot recover from Manila
Port Service an amount greater than that to which
Suter, Inc. could lawfully lay claim. The management
contract is clear, the amount is limited to P500.
Atlantic Mutual Insurance Company v. Manila Port
Service also applies Clause 15 in relation to
subrogation.
“Plaintiff maintains that, not being a party to the
management contract, the consignee – into whose
shoes the plaintiff has stepped in consequence of said
payment – is not subject to the provisions of said
stipulation, and that the same is invalid. The lower
court correctly rejected this pretense because, having
taken delivery of the shipment by virtue of a delivery
permit, incorporating thereto, by reference, the
posivions of the management contact, the consignee
became bound by said provisions, and because it could
have avoided the application of said maximum limit of
P500 per package by stating the true value thereof in its
claim for delivery of the delivery of the goods in
question, which the consignee failed to do.”
Rizal Surety having subrogated the rights of Suter,
Inc., could only recover what is recoverable by the
latter.
Rizal Surety, having been subrogated merely to the
rights of Suter, Inc., its recovery necessarily should be
limited to what was recoverable by Suter, Inc.

Clause 15 of the management contract.

Clause 15 of the management contract contained an
“important notice” wherein paragraph 15 limited the
Company liability to P500 per package, unless the value
of the goods were otherwise, specified, declared or
manifested and the corresponding arrastre charges
have been paid.

RTC ruled in that Manila Port Service should pay

Rizal Surety P500.
On the above facts and relying on Bernabe & Co. v.
Delgado Brothers, Inc., the lower court ordered that
Manila Port Service, jointly and severally, pay Rizal
Surety P500 with legal interest.

ISSUE: Whether Rizal Surety is entitled to recover the

full amount it paid for the damages it paid. NO.

HELD
Article 2207 on subrogation.
The literal language of Article 2207 does not warrant an
interpretation that the insurance company could
recover in full. 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

CHAN GOMASAN OF SITO BERDE