Case Summary (G.R. No. 96306)
Subrogation and Claim Process
Great Harvest first claimed from Fortune Brokerage (its customs broker) and C.V. Gaspar for damage. Upon their refusal, it presented an insurance claim to LG Insurance, which paid and received a subrogation receipt. LG Insurance and WM H. McGee then sued Fortune Brokerage and C.V. Gaspar for reimbursement of US$100,688.82 plus attorney’s fees. Venancio Mesina was impleaded as Fortune Brokerage’s representative.
Trial Court’s Findings and Decision
The RTC held that:
- AYNA-1, as a common carrier, was presumed negligent and bore the burden of proving extraordinary diligence and seaworthiness.
- Subrogation accrued upon insurer’s payment, evidenced by the subrogation receipt.
- Mesina bore no personal liability given lack of proof of authority.
The court ordered Fortune Brokerage and C.V. Gaspar to pay US$100,688.82 (or peso equivalent) and P1,200,000.00 attorney’s fees, jointly and severally.
Court of Appeals’ Findings and Decision
The CA affirmed with modification:
- Valid subrogation from Great Harvest to LG Insurance and WM H. McGee.
- Fajardo Law Office, through Atty. Beda Fajardo, was authorized as resident agent to file pleadings and sign certification against forum shopping.
- Fortune Brokerage assumed full contractual liability for cargo damage and could not deny Mesina’s authority to bind it.
- Attorney’s fees award was unwarranted and thus deleted.
Issues on Review
- Authority of Fajardo Law Office/Atty. Fajardo to file pleadings and sign verification/certification
- Validity of subrogation of rights from Great Harvest to LG Insurance and WM H. McGee
- Status of AYNA-1 as a common carrier
- Joint and several liability of Fortune Brokerage and C.V. Gaspar
Supreme Court’s Analysis on Capacity and Verification
The Court held that:
- A foreign insurer not licensed in the Philippines may sue on isolated transactions (marine insurance of inward cargo) without doing business license.
- WM H. McGee, as LG Insurance’s American manager, validly designated Fajardo Law Office and Atty. Fajardo as resident agents by Special Power of Attorney, including authority to file and certify non-forum shopping.
- Late attachment of verification and certification to the amended complaint constituted substantial compliance that furthers the anti-forum shopping objective.
Supreme Court’s Analysis on Subrogation of Rights
Under Civil Code Article 2207 and jurisprudence:
- Payment by insurer effects equitable assignment of insured’s remedies against the wrongdoer.
- Subrogation arises upon discharge of insured’s claim without need of written assignment.
- LG Insurance, having paid Great Harvest’s claim, stepped into its shoes to pursue Fortune Brokerage and C.V. Gaspar.
Supreme Court’s Analysis on Common Carrier Status and Negligence Presumption
Citing Civil Code Article 1732 et seq.:
- AYNA-1, engaged in transporting goods for compensation and offering service to the public, qualified as a common carrier.
- Common carriers owe extraordinary diligence and are presumed negligent upon loss or damage of cargo.
- Survey disclosed a 50 mm hole in AYNA-1’s bottom plating permitting water ingress; C.V. Gaspar fa
Case Syllabus (G.R. No. 96306)
Procedural Background
- Two petitions for review on certiorari under Rule 45 (G.R. Nos. 206892 and 207035) assail the Court of Appeals’ Decision (Aug. 13, 2012) and Resolution (Apr. 23, 2013) in CA-G.R. CV No. 91166.
- CA had affirmed with modification the RTC-Makati Branch 132 Decision (Jan. 21, 2008) in Civil Case No. 99-1864, ordering defendants Fortune Brokerage and C.V. Gaspar to pay subrogated insurance proceeds.
- The two petitions were consolidated by the Supreme Court on July 29, 2013.
Antecedent Facts
- On August 5, 1997, Sunkyong America, Inc. shipped 23,842 bags of Peruvian fishmeal to Great Harvest in Manila, insured for US$753,117.75 with LG Insurance (U.S. Branch) via its American manager, WM H. McGee.
- Fortune Brokerage acted as Great Harvest’s customs broker; C.V. Gaspar provided four barges (including AYNA-1) for inland delivery.
- Upon discharge on September 16, 1997, water ingress through a hole in AYNA-1 damaged 3,662 bags: 2,085 dumped, 877 accepted at 65% loss allowance, 700 salvaged.
- Great Harvest’s direct claims against Fortune Brokerage and C.V. Gaspar were ignored; it then claimed under its policy. LG Insurance paid and received a subrogation receipt.
- LG Insurance and WM H. McGee sued Fortune Brokerage, C.V. Gaspar, and impleaded Venancio Mesina (alleged unauthorized signatory).
RTC Decision
- Presumed negligence of common carriers failing to show exercise of “extraordinary diligence” over transported goods.
- Held that C.V. Gaspar failed to prove seaworthiness of AYNA-1 and diligence in carriage.
- Recognized subrogation upon insurer’s payment, as evidenced by Great Harvest’s receipt.
- Dismissed personal liability of Mesina.
- Ordered Fortune Brokerage and C.V. Gaspar, jointly and severally, to pay US$100,688.82 (subrogation amount) plus P1,200,000 attorney’s fees.
CA Decision
- Confirmed va