GR 223134 CAguioa (Digest)
G.R. No. 223134 , August 14, 2019
VICENTE G. HENSON, JR., PETITIONER, VS. UCPB GENERAL INSURANCE CO., INC., RESPONDENT.
FACTS
Copylandia Office Systems Corp.’s insured equipment was damaged due to a water leak from National Arts Studio and Color Lab (NASCL) on May 9, 2006. Copylandia filed a claim with its insurer, respondent UCPB General Insurance Co., Inc. (UCPB Gen), and they settled for P1,326,342.76 on November 2, 2006. Over four years later, on May 20, 2010, UCPB Gen, as subrogee, made a formal demand for payment against NASCL. Upon NASCL’s failure to pay, UCPB Gen filed a complaint for damages. Both the Regional Trial Court and the Court of Appeals dismissed the defense of prescription, holding that the action, based on legal subrogation under Article 2207 of the Civil Code, prescribes in ten years as an obligation created by law, not in four years as a quasi-delict.
ISSUE
Whether the prescriptive period for an insurer’s subrogatory action against a tortfeasor is four years based on quasi-delict or ten years based on an obligation created by law.
RULING
The applicable prescriptive period is four years. Justice Caguioa, in his Concurring Opinion, agrees with the ponencia that the cause of action is fundamentally based on quasi-delict under Article 2176 of the Civil Code. Legal subrogation under Article 2207 does not create a new, independent obligation “created by law” on the part of the tortfeasor toward the subrogee-insurer. Instead, it merely transfers the existing rights of the insured against the wrongdoer. The insurer “steps into the shoes” of the insured; it acquires no greater rights. Consequently, the nature of the underlying obligation—here, a quasi-delict between Copylandia and NASCL—dictates the prescriptive period. Since there was no contractual relation between Copylandia and NASCL, the action arises from quasi-delict, which prescribes in four years under Article 1146. The opinion calls for a revisit of the contrary interpretation in Vector Shipping Corp. v. American Home Assurance Co., clarifying that the subrogee’s cause of action is derivative and subject to the same defenses, including the shorter prescriptive period for quasi-delicts.