G.R. No. L-27796 March 25, 1976
ST. PAUL FIRE & MARINE INSURANCE CO., plaintiff-appellant, vs. MACONDRAY & CO., INC., BARBER STEAMSHIP LINES, INC., WILHELM WILHELMSEN, MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, defendants-appellees.

FACTS

Winthrop Products, Inc. shipped 218 cartons and drums of drugs and medicine from New York to Manila aboard the SS “Tai Ping,” insured by St. Paul Fire & Marine Insurance Co. Upon arrival at the Port of Manila on August 7, 1960, the shipment was discharged into the custody of arrastre operator Manila Port Service. The consignee, Winthrop-Stearns Inc., discovered a shortage and damage to part of the cargo. The consignee filed claims with both the carrier and the arrastre operator for the C.I.F. value of the lost and damaged goods, totaling P1,109.67, which were refused. Consequently, the consignee claimed from its insurer, St. Paul, which paid the insured value of $1,134.46 in U.S. currency. As subrogee, St. Paul filed an action to recover this amount from the defendants.
The defendants contested liability. The arrastre operator invoked the liability limitation in its Management Contract with the Bureau of Customs, restricting liability to the invoice value but not exceeding P500 per package. The carrier defendants denied liability, arguing their responsibility ceased upon discharge and that any damage was due to insufficient packing or perils of the sea. The trial court rendered judgment, ordering the carrier defendants to pay P300 and the arrastre operator defendants to pay P809.67, with legal interest. St. Paul moved for reconsideration, arguing it should recover the full dollar amount it paid, converted at the exchange rate of P3.90 to $1.00 prevailing at the time of judgment, not the lower rate at the time of loss.

ISSUE

The issues are: (1) whether the liability of the carrier and arrastre operator to the consignee, and by subrogation to the insurer, is limited to the C.I.F. value of the goods as claimed by the consignee; and (2) whether the insurer, having paid in dollars, should be reimbursed based on the exchange rate at the date of the cargo’s discharge or at the date of the court’s decision.

RULING

The Supreme Court affirmed the trial court’s decision. On the first issue, the Court held that the liability of the carrier is limited by the contractual stipulation in the bill of lading, which is binding upon the shipper and consignee. The consignee’s own claim was explicitly for the C.I.F. value of the lost and damaged goods, amounting to P1,109.67. The right of subrogation merely places the insurer in the shoes of the assured; it cannot acquire greater rights than those possessed by the consignee. Since the consignee’s right of recovery was restricted to the C.I.F. value as per its claim and the governing contract, the insurer’s subrogated claim is subject to the same limitation. The insurer cannot recover the amount it paid under the insurance policy if that exceeds the carrier’s limited contractual liability to the consignee.
On the second issue, the Court ruled that the applicable exchange rate is that prevailing at the time of the breach or loss, not at the date of judgment. The carrier’s obligation to pay for the damage arose on the date it failed to deliver the shipment in good condition. The consignee itself computed its claim in pesos based on the exchange rate of P2.015 to $1.00 existing at the time of the loss in 1960. The