G.R. No. 132607,5 May 1999, 306 SCRA 762

FACTS:

William Lines, Inc. brought its vessel M/V Manila City to the Cebu Shipyard and Engineering Works, Inc (CSEW) in Lapulapu City for annual dry-docking and repair. Subject vessel was insured with Prudential Guarantee for P45,000,000.00 for hull and machinery. The Hull Policy included an “Additional Perils” clause covering loss of or damage to the vessel through the negligence of, among others, ship repairmen. CSEW was also insured by Prudential Guarantee for third party liability under s Shiprepairs Legal Liability Insurance Policy for P10,000,000.00 only.

After subject vessel was transferred to the docking quay, it caught fire and sank, resulting to its eventual total loss. William Lines, Inc. filed a complaint for damages against CSEW, alleging that the fire which broke out in M/V Manila City was caused by CSEW’s negligence and lack of care. An amended complaint, impleading Prudential Guarantee as co-plaintiff, was filed after the latter had paid William Lines, Inc. the value of the hull and machinery insurance of M/V Manila City. RTC ruled that the cause of the fire was through the negligence of CSEW. CA affirmed the appealed decision.

ISSUE:

Whether or not Prudential has the right of subrogation against its own insured.
Whether or not the parties intended for them to be a co-assured in the insurance policy.

RULING:

The petition is unmeritorious. Upon proof of payment by Prudential Guarantee to William Lines, the former was subrogated to the right of the latter to indemnification from CSEW. Thus, when Prudential, after due verification of the merit and validity of the insurance claim of William Lines, paid the latter the total amount covered by its insurance policy, it was subrogated to the right of the latter to recover the insured loss from CSEW, the liable party.

A stipulation in the work order that requires William Lines to maintain insurance on the vessel during the period of dry-docking or repair, works to the benefit of CSEW. However, the fact that CSEW benefits from the said stipulation does not automatically make it as a co-assured of William Lines. The hull and machinery insurance procured by William Lines, Inc. from Prudential named only “William Lines, Inc.” as the assured. Thus, when the insurance policy involved named only William Lines, Inc. as the assured thereunder, the claim of CSEW that it is a co-assured is unfounded.

*Case digest by Princess Dianne Kris S. Decierdo, LLB-IV, Andres Bonifacio College Law School, SY 2018-2019