The Philippine American General Insurance Company v. Court of Appeals

Summary

PHILAMGEN insured Coca-Cola's cargo of 7,500 cases of softdrink bottles transported by FELMAN's MV Asilda, which sank due to the vessel being top-heavy from improper deck loading. After paying the P755,250.00 insurance claim, PHILAMGEN sought subrogation against FELMAN. Lower courts found the vessel unseaworthy but denied recovery due to alleged breach of seaworthiness warranty. The Supreme Court reversed, ruling that the insurance policy contained clear waiver clauses admitting seaworthiness, thereby waiving the warranty. The Court found FELMAN liable under Article 1733 of the Civil Code for failing to observe extraordinary diligence, and held that Article 587's limited liability rule did not apply since the shipowner was equally negligent. PHILAMGEN's subrogation rights under Article 2207 were upheld, establishing important precedents on marine insurance warranties and common carrier liability in maritime cargo transportation.