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DANZAS

Danzas Corporation challenged Seaboard Eastern Insurance Co.'s subrogation claim against Philippine Skylander. Seaboard had paid an insurance claim to International Freeport Traders Inc. (IFTI) for damaged watches that Korean Airlines transported. Without Seaboard's consent, IFTI later settled with Korean Airlines for the same loss. The court held that IFTI settling with Korean Airlines, the wrongdoer, did not defeat Seaboard's right to subrogation. Subrogation allows an insurer to recover damages paid to the insured from the liable third party.

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98 views1 page

DANZAS

Danzas Corporation challenged Seaboard Eastern Insurance Co.'s subrogation claim against Philippine Skylander. Seaboard had paid an insurance claim to International Freeport Traders Inc. (IFTI) for damaged watches that Korean Airlines transported. Without Seaboard's consent, IFTI later settled with Korean Airlines for the same loss. The court held that IFTI settling with Korean Airlines, the wrongdoer, did not defeat Seaboard's right to subrogation. Subrogation allows an insurer to recover damages paid to the insured from the liable third party.

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DANZAS CORPORATION vs.

ABROGAR AND SEABOARD EASTERN


INSURANCE CO., and Phil. Skylander
G.R. No. 141462, December 15, 2005

FACTS:
Danzas took a shipment for ICS watches, the consignee International Freeport Traders
Inc. (IFTI) secured Marine Risk Note from Seaboard. The Korean Airlines (KAL) plane
carrying the goods arrived in Manila and discharged the goods to the custody of Phil.
Skylander for safe keeping.
On withdrawal of the shipment from Skylander, IFTI noted that the watches sustained
tears on sides and retape of flaps, the other watches were also missing. Seaboard as
insurer paid the losses to IFTI. Seaboard invoking its right of subrogation filed a
complaint against Skylander for the amount of damages. While the case was still
pending, IFTI’s
treasurer accepted the proposal of KAL to settle consignees claim by paying the
amount of damage. IFTI correspondingly signed a release form.
Danzas filed a motion to dismiss the case on the ground that Seaboards demand had
been extinguished by KAL. The trial court denied the motion to dismiss. CA also denied
the motion for reconsideration by KAL and Skylander. Danzas contended that
Seaboards right of subrogation was extinguished when IFTI received payment from
KAL in settlement of its obligation.

ISSUE:
Whether or not Korean Airlines (KAL) (wrongdoer), by settling with IFTI (insured),
defeats the right to subrogation of Seaboard (insurer).

HELD:
No.
Manila Mahogany case: “Since the insurer can be subrogated to only such rights as the
insured may have, should the insured, after receiving payment from the insurer, release
the wrongdoer who caused the loss, the insurer loses his right against the latter. But in
such a case, the insurer will be entitled to recover from the insured whatever it has paid
to the latter, unless the release was made with the consent of the insurer.”
One of the exceptions to the rule laid down in Article 2207 CC, “if the insured by his
own act release the wrongdoer or 3rd party liable for the loss or damage from liability,
the insurer’s right of subrogation is defeated.”

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