Filcon Ready Mixed Inc. et.al v. UCPB General Insurance Company, Inc. G.R. No. 229877 15 July 2020 Lazaro-Javier, J.:

 Filcon Ready Mixed Inc. et.al v. UCPB General Insurance Company, Inc.

G.R. No. 229877

15 July 2020

Lazaro-Javier, J.:

First Division

 

Nature of the Action: This is a petition for review on certiorari assailing the Court of Appeals’ Decision and Resolution.

Facts:

Marco Gutang is the registered owner of a Honda Civic and was insured with the Respondent UCPB General Banking Insurance Company covering the period April 17, 2007 to April 17, 2008. But on 16 November 2007, the car figured in a vehicular accident involving three other vehicles, a Toyota Revo and a Mitsubishi Adventure and a cement mixer owned by the petitioner. Based on the Traffic Accident Investigation Report, Vergara left the cement mixer with its engine running at the uphill portion of Boni Serrano Extension. It moved backward and hit the front portion of the Mitsubishi Adventure parked behind it. This car, in turn, hit the front portion of the insured vehicle. The rear portion of the insured vehicle rammed into the Toyota Revo parked behind it.

In 01 February 2012, Respondent filed a complaint averring that the proximate cause of the accident was Vergara’s gross negligence and lack of precaution. As Gutang's insurer, respondent paid the total cost of repairs in the amount of P195,409.50 to Honda. Thereafter, Gutang executed a document captioned "Release and Discharge" which effectively assigned to respondent all his claims against petitioners.

By virtue of this legal subrogation, respondent sent a demand letter dated September 1, 2011 to petitioners, but the latter simply ignored it. Hence, respondent was constrained to file the present action for sum of money before the Metropolitan Trial Court. On the other hand, the petitioners interposed extinctive prescription as an affirmative defense and claimed that under Article 1146 of the Civil Code, actions based on quasi-delict prescribes in four (4) years. 

The trial court dismissed the complaint on ground of prescription. Since the accident happened on November

16, 2007, the claim should have been filed only until November 16, 2011. Here, the claim was filed on February 1, 2012 or more than two (2) months late. On appeal, the Regional Trial Court affirmed the trial court’s decision in toto. Thus, the respondent moved for reconsideration which was denied. On appeal before the Court of Appeals, the Respondent alleged that the RTC ignored the fact that its subrogation to the rights of Gutang was by virtue of an express provision of law under Articles 220712 and 1144 (2)13 of the Civil Code stating that an obligation created by law must be brought within ten (10) years from the time the cause of action accrued.

Consequently, the Court of Appeals reversed RTC’s decision. It found that respondent successfully proved it was subrogated to the rights of its assured, Marco Gutang. Evidence showed that the repairs on the insured vehicle were undertaken by Honda Cars Pasig pursuant to Letters of Authority. As for prescription, it held that since respondent's cause of action was anchored on legal subrogation, an obligation created by law, the same must be brought within ten (10) years from the time the right of action accrued. Considering that respondent indemnified Gutang on February 6, 2008, the action will prescribe on February 6, 2018. Hence, the filing of respondent's complaint on February 1, 2012 was well within the ten-year prescriptive period.

The petitioner moved for reconsideration but was denied by the CA. Hence, this present petition.

Issue:

Whether Respondent's action for money claims against petitioners barred by prescription.

Ruling:

We DENY the petition.

At the outset, it is noted that in the recent case of Henson, Jr. v. UCPB General Insurance Co., Inc.23 the Court overturned Vector and held that subrogation under Article 2207 of the Civil Code only allows the insurer, as the new creditor who assumes ipso jure the old creditor's rights without the need of any contract, to go after the debtor. But this does not mean that a new obligation is created between the debtor and the insurer. The insurer, as the new creditor, remains bound by the limitations of the old creditor's claims against the debtor, which includes, among others, the aspect of prescription. Hence, the debtor's right to invoke the defense of prescription cannot be circumvented by the mere expedient of successive payments of certain insurers that purport to create new obligations when, in fact, what remains subsisting is only the original obligation, viz.:

xxx The Court must heretofore abandon the ruling in Vector that an insurer may file an action against the tortfeasor within ten (10) years from the time the insurer indemnifies the insured. Following the principles of subrogation, the insurer only steps into the shoes of the insured and therefore, for purposes of prescription, inherits only the remaining period within which the insured may file an action against the wrongdoer. To be sure, the prescriptive period of the action that the insured may file against the wrongdoer begins at the time that the tort was committed and the loss/injury occurred against the insured. The indemnification of the insured by the insurer only allows it to be subrogated to the former's rights, and does not create a new reckoning point for the cause of action that the insured originally has against the wrongdoer.

Be that as it may, it should, however, be clarified that this Court's abandonment of the Vector doctrine should be prospective in application for the reason that judicial decisions applying or interpreting the laws or the Constitution, until reversed, shall form part of the legal system of the Philippines, x x x

In Henson, the Court came up with guidelines relative to the application of Vector and its Decision vis-a-vis the prescriptive period in cases where the insurer is subrogated to the rights of the insured against the wrongdoer based on a quasi-delict. 

1. For actions of such nature that have already been filed and are currently pending before the courts at the time of the finality of this Decision, the rules on prescription prevailing at the time the action is filed would apply. Particularly:

xxx

 (b)     For cases that were filed by the subrogee-insurer prior to the applicability of the Vector ruling (i.e., before August 15, 2013), the prescriptive period is four (4) years from the time the tort is committed against the insured by the wrongdoer.

Rationale: The Vector doctrine, which espoused unique rules on legal subrogation and prescription as aforedescribed, was not yet a binding precedent at this time; hence, issues of prescription must be resolved under the rules prevailing before Vector, which, incidentally, are the basic principles of legal subrogation visa-vis prescription of actions based on quasi-delicts.

We apply here paragraph 1(b). Since the action was filed on February 1, 2012, prior to Vector, the applicable prescriptive period is four (4) years pursuant to Article 1146 of the Civil Code.24 Respondent, therefore, had four (4) years from November 16, 2007 when the vehicular mishap took place or until November 16, 2011 within which to file its action for sum of money against Vergara and his employer Filcon.

Within the four (4) year prescriptive period, or on September 1, 2011, respondent sent petitioners a demand letter of even date. The latter never denied receipt thereof. Pursuant to Article 1155 of the Civil Code, respondent's demand letter and petitioners' receipt thereof had the effect of interrupting the four (4) year prescriptive period and gave respondent a whole fresh period of four (4) years from petitioners' receipt of the demand letter within which to file the action for sum of money. Records show that respondent filed the action just within five (5) months from September 1, 2011, the date when it sent the demand letter to petitioners, who, as stated, never denied receipt thereof.

The Court of Appeals, thus, correctly reversed the dispositions of both MeTC and RTC and in lieu thereof, properly ruled that complaint was filed within the prescriptive period of four (4) years.