G.R. No. 150094, 18 August 18 2004, 437 SCRA 50


Shipper SMITHKLINE USA delivered to carrier Burlington Air Express, an agent of herein petitioner, a cargo shipment, insured with respondent which consist of 109 cartons of veterinary biological for delivery to consignee SMITHKLINE and French Overseas Company in Makati City with the words, “REFRIGERATE WHEN NOT IN TRANSIT” and “PERISHABLE” stamp marked on its face. However, 12 days after the cargoes arrived in Manila, it was found out that the same were stored only in a room with 2 air conditioners running in the warehouse of Cargohaus Inc., to cool the place instead of a refrigerator.

As a consequence of the result of the veterinary biological test, SMITHKLINE abandoned the shipment and, declaring “total loss” for the unusable shipment, filed a claim with AHAC through its representative in the Philippines, The Philam Insurance Co., Inc., (PHILAM) which recompensed SMITHKLINE for the whole insured amount. Thereafter, PHILAM filed an action for damages against FEDEX imputing negligence on either or both of them in the handling of the cargo where it was decided that FEDEX is solidarily liable with Cargohaus Inc.


Whether or not FEDEX is liable for damage to or loss of the insured goods?


No. Upon receipt of the insurance proceeds, the consignee (SMITHKLINE) executed a subrogation receipt in favor of respondents authorizing them “to file claims and begin suit against any such carrier, person, vessel, corporation or government.” Undeniably, the consignee had a legal right to receive the goods in the same condition it was delivered for transport to petitioner and if that right was violated, the consignee would have a cause of action against the person responsible therefor.

In the exercise of its subrogatory right, an insurer may proceed against an erring carrier and to all intents and purposes, it stands in the place and in substitution of the consignee.

*Case digest by Allain Jay Gumela, LLB-IV, Andres Bonifacio College Law School, SY 2018-2019