Page 1: Subrogation Page 2: Art.

1236 of the Civil Code: The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. (1158a) Page 3 Art. 2207 of the Civil Code: If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Page 4 Coastwise v CA Facts: 1. Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation

PAG-ASA, INC Contract to transport mollases

Coastwise Contract of PHILGEN

Insurance

2. Upon reaching Manila Bay, while approaching Pier 18, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole. The molasses at the cargo tanks were contaminated and rejected by Pag-asa Sales, Inc. as a total loss. 3. Pag-asa Sales, Inc. filed a formal claim with the insurer of its lost cargo and against the carrier Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee Issues: A. Was it transformed to a private carrier and exercise ordinary diligence? B. Was the insurer was subrogated into the rights of the consignee against the carrier, upon payment by the insurer of the value of the consignee's goods lost? Held: RTC and CA ruled in favour of Philgen. SC: Coastwise Lighterage entered into a Contract of Affreightment = Commom carrier = Extraordinary dilligence Coastwise Lighterage was negligent As held in other cases: Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer. PhilGen subrogated into all the rights which Pag-asa Sales againtst Coastwise after payment of amount of loss II. MAGLANA V CONSOLACION FACTS: 1. On December 20, 1978, early morning, Lope Maglana was on his way to his work station, driving a motorcycle owned by the Bureau of Customs. He met an accident that resulted in his death. The PUJ

jeep that bumped the deceased was driven by Pepito Into, operated and owned by defendant Destrajo. 2. Consequently, the heirs of Lope Maglana, Sr., here petitioners, filed an action for damages and attorney's fees against operator Patricio Destrajo and (AFISCO for brevity

3. Into was found guilty for the criminal offense during the pendency of the civil case.