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Lorenzo Shipping v. Chubb and Sons Inc. (2004) Puno, J. Lorenzo Shipping Corporation is a corporation engaged in shipping. It was the carrier of 581 bundles of black steel pipes from Manila to Davao City. From Davao City, Gearbulk, Ltd. a corporation licensed as a common carrier under the laws of Norway, through its agent, Philippine Transmarine Carriers, Inc., carried the goods on board M/V San Mateo to the US, for the account of Sumitomo Corporation. Sumitomo insured the shipment with Chubb and Sons, Inc., a foreign corporation licensed to engage in insurance business under the laws of the US. M/V Lorcon received the shipping of steel pipes in good order and condition as evidenced by the clean bill of lading. When the cargo was unloaded from Lorenzo Shippings vessel at Davao City, the steel pipes were rusted all over. M/V San Mateo of Gearbulk Ltd which received the cargo issued bills of lading covering the entire shipment marked all units heavily rusted. Surveyors found that the cargo hold of M/V Lorcon was flooded with seawater, the tank was rusty, thinning and perforated thereby exposing the cargo to sea water. The cargo was damaged while in the ship. o Negligence was sufficiently established. The contact with the steel pipes caus ed the development of rust. While the ship was on transit from Davao to US, the consignee sent a letter of intent to Lorenzo shipping informing them that it would file a claim based on the damaged cargo once the damage had been ascertained. Once Sumitomo inspected the pipes, it declared them unfit and filed a marine insurance claim against Chubb and Sons for $104k. Chubb and Sons filed a complaint for collection of a sum of money against Lorenzo Shipping, Gearbulk, and Transmarine. RTC found Chubb and Sons had the right to institute the action and Lorenzo shipping was negligent. CA affirmed Lorenzo claimed the packaging was defective and that the action was prescribed (SC ruled against both defenses. There was evidence that the shipment was packed in superior condition.)

Issue: 1. 2. Held: 1. 2.

Did Chubb and Sons have capacity to sue? Had the action prescribed?

Yes No

Ratio: Re: Capacity to sue Capacity to sue is a right personal to its holder , its is conferred by law. The foreign corporation doing an isolated business transaction in the Philippines does not need a license. The insurer Chubb and Sons is the real party in interest and damages. Where an insurance company as subrogee pays the insured of the entire loss it suffered, the insurer subrogee is the only real party in interest and must sue in its own name to enforce its right of subrogation against a third party which caused the loss. The subrogated unsurer becomes owner of the claims and the entire fruits of the action. Re: Art 366 Code of Commerce: 24 hour period that does not begin until the consignee has received possession of the merchandise or by delivery of the cargo by the carrier to the consignee at the place of destination. In this case, consignee Sumitomo only took possession of the entire shipment when it reached the US. Only then was the delivery made and completed and only then did the 24 hour prescriptive period run.

Decision affirmed.