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VOL. 23, APRIL 25, 1968 205 1 Art. 2207.

205 1 Art. 2207. If the plaintiffs property has been insured, and he has
Rizal Surety & Insurance Co. vs. Manila Railroad Company
received indemnity from the insurance company for the injury or loss
No. L-24043. April 25, 1968.
arising out of the wrong or breach of contract complained of, the
RIZAL SURETY & INSURANCE COMPANY, plaintiff-
insurance company shall be subrogated to the rights of the insured
appellant, vs. MANILA RAILROAD COMPANY and
against the wrong-doer or the person who has violated the contract. If
MANILA PORT SERVICE, defendants-appellees.
the amount paid by the insurance company does not fully cover the
Insurance; Property; Subrogation; Insurer is subrogated
injury or loss, the aggrieved party shall be entitled to recover the
only to the rights of the insured.Insurer after paying the
deficiency from the person causing the loss or injury.
claim of the insured for damages under the insurance is
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subrogated merely to the rights of the insured and therefore 206 SUPREME COURT REPORTS ANNOTATED
can necessarily recover only that to what was recoverable by Rizal Surety & Insurance Co. vs. Manila Railroad Company
the insured. which speak to the effect that the Insurance Company
Damages; Where property is insured; Article 2207 of the shall be subrogated to the rights of the insured, it is its
Civil Code construed.Under Article 2207 of the Civil Code, contention that it is entitled ot the amount paid by it in
the insurance company cannot recover in full the amount it full, by virtue of the insurance contract. The lower court,
paid to the insured. The literal language of Article 2207 makes however, relying on the limited liability clause on a
it clear that the insurance company that has paid the management contract with the defendants, could not go
indemnity for the injury or loss sustained by the property along with such a theory. Hence, this appeal.
insured, shall be subrogated to the rights of the insured The facts were stipulated. The more pertinent follows:
against the wrong-doer or the person who has violated the That on or about November 29, 1960, the vessel, SS
contract. Flying Trader, loaded on board at Genoa, Italy for
APPEAL from a decision of the Court of First Instance of shipment to Manila, Philippines, among other cargoes, 6
Manila. Reyes, J. cases OMH, Special Single Colour Offset Press Machine,
The facts are stated in the opinion of the Court. for which Bill of Lading No. 1 was issued, consigned to
Gil R. Carlos & Associates for plaintiff-appellant. Suter, Inc.; that such vessel arrived at the Port of
D.F. Macaranas & M.C. Gonzales for Manila, Philippines on or about January 16, 1961 and
defendantsappellees. subsequently discharged complete and in good order the
FERNANDO, J.: aforamentioned shipment into the custody of defendant
In this suit for the recovery of the amount paid by the Manila Port Service as arrastre operator; that in the
plaintiff, Rizal Surety and Insurance Company, to the course of the handling, one of the six cases identified as
consignee based on the applicable Civil Code provision,1 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 P500.00 per package, unless the value of the goods is
consignees truck, it was dropped by the crane and as a otherwise, specified, declared or manifested and the
consequence, the machine was heavily damaged for corresponding arrastre charges have been paid. x x x.
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which plaintiff as insurer paid to the consignee, Suter, On the above facts and relying on Bernabe & Co. v.
Inc. the amount of P16,500.00, representing damages by Delgado Brothers, Inc., the lower court rendered the
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way of costs of replacement parts and repairs to put the judgment ordering defendants, jointly and severally, to
machine in working condition, plus the sum of P180.70 pay plaintiff the amount of Five Hundred Pesos
which plaintiff paid to the International Adjustment (P500.00), with legal interest thereon from January 13,
Bureau as adjusters fee for the survey conducted on the 1962, the date of the filing of the complaint, with costs
damaged cargo or a total of P16,680.70 representing against said defendants. 5

plaintiffs liability under the insurance contract; and that As noted at the outset, in this appeal, the point is
the arrastre charges in this particular shipment was pressed that under the applicable Civil Code provision,
paid on the weight or measurement basis whichever is plaintiffappellant Insurance Company could recover in
higher, and not on the value thereof. 2 full. The literal language of Article 2207, however, does
Clause 15 of the management contract which as not warrant such an interpretation. It is there made
admitted by the plaintiff, appeared at the dorsal part of clear that in the event that the property has been
the Delivery Permit and was used in taking delivery of insured and the Insurance Company has paid the
the subject shipment from the defendants (Manila Port indemnity for the injury or loss sustained, it shall be
Service and Manila Railroad Co.) custody and control, subrogated to the rights of the insured against the
issued wrong-doer or the person who has violated the contract.
______________ Plaintiff-appellant Insurance Company, therefore,
2 Record on Appeal, pp. 3839. cannot recover from defendants an amount greater than
207 that to which the consignee could lawfully lay claim. The
VOL. 23, APRIL 25, 1968 207 management contract is clear. The amount is limited to
Rizal Surety & Insurance Co. vs. Manila Railroad Company
Five Hundred Pesos (P500.00). Such a stipulation has
in the name of consignees broker, contained what was
invariably received the approval of this Court from the
referred to as an important notice. Such permit is
leading case of Bernabe & Co. v. Delgado Bros.,
presented subject to all the terms and conditions of the
Inc. Such a decision was quoted with approval in the
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Management Contract between the Bureau of Customs


following subsequent cases: Atlantic Mutual Insurance
and Manila Port Service and amendments thereto or
Co. v. Manila Port
alterations thereof, particularly but not limited to
______________
paragraph 15 thereof limiting the Company liability to 3 Record on Appeal, p. 37.
4 58 O.G. 1104 (1960). to what was recoverable by the insured. The lower court
5 Record on Appeal, p. 44. therefore did not err when in the decision appealed from,
6 58 O.G. 1104 (1960). it limited the amount which defendants were jointly and
208 severally to
208 SUPREME COURT REPORT ANNOTATED
_______________
Rizal Surety & Insurance Co. vs. Manila Railroad Company
7 L-16271, October 31, 1961.
Service, Insurance Service Co. of North America v.
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8 L-17331, November 29, 1961
Manila Port Service, Insurance Company of North
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9 L-17032, March 31, 1964.
America v. U.S. Lines, Co., and Insurance Company of
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10 The decision cited the following cases: Tomas Grocery v. Delgado
North America v. Manila Port Service. 10

Brothers, Inc, L-1154, April 29, 1959; Jose Bernabe & Co. v. Delgado
In one of them, Atlantic Mutual Insurance Company v.
Brothers Inc., L-14360. February 29. 1960; Northern Motors, Inc. v.
Manila Port Service, this Court, through the then
Prince Line, L-13884, February 29, 1960; and Jose Bernabe & Co. v.
Justice, now Chief Justice, Concepcion, restated the
Delgado Brothers Inc L-12058, April 27, 1960.
doctrine thus: Plaintiff maintains that, not being a 11 The decision cited the following cases: Tomas Grocery vs. Delgado
party to the management contract, the consigneeinto
Brothers, Inc., L-11154, April 29, 1959; Jose Bernabe & Co. vs.
whose shoes plaintiff had stepped in consequence of said
Delgado Brothers, Inc., L-14360, February 29, 1960; Northern Motors,
paymentis not subject to the provisions of said
Inc. vs. Prince Lines, L-13884 February 29, 1960: and Jose Bernabe &
stipulation, and that the same is furthermore invalid.
Co vs. Delgado Brothers Inc., L-12058, April 27, 1960
The lower court correctly rejected this pretense because,
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having taken delivery of the shipment aforementioned by VOL. 23, APRIL 25, 1968 209
virtue of a delivery permit, incorporating thereto, by Chua Bok vs. Republic
reference, the provisions of said management contract, pay plaintiff-appellant to Five Hundred Pesos (P500.00)
particularly paragraph 15 thereof, the gist of which was with legal interest thereon from January 31, 1962, the
set forth in the permit, the consignee became bound by dateof the filing of the complaint, x x x.
said provisions, and because it could have avoided the WHEREFORE, the decision appealed from is affirmed.
application of said maximum limit of P500.00 per With costs against Rizal Surety and Insurance Company.
package by stating the true value thereof in its claim for Reyes, J.B.L., Actg.
delivery of the goods in question, which, admittedly, the C.J., Dizon, Makalintal,Bengzon,
consignee failed to do x x x. 11 J.P., Zaldivar, Sanchez, Castro and Angeles, JJ.,concur.
Plaintiff-appellant Rizal Surety and Insurance Decision affirmed.
Company, having been subrogated merely to the rights of ________________
the consignee, its recovery necessarily should be limited Copyright 2016 Central Book Supply, Inc. All rights reserved.
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