FILCON READY MIXED, INC. VS. UCPB GENERAL INSURANCE COMPANY, INC.

G.R. No. 229877, July 15, 2020

DOCTRINE: 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.

(see guidelines in held)

FACTS: Marco P. Gutang is the registered owner of a Honda Civic The vehicle was insured
with respondent UCPB General Insurance Company, Inc. (UCPB). On 2007, The car figured
in a vehicular accident involving three (3) other vehicles: a Toyota Revo, a Mitsubishi
Adventure and a cement mixer owned by petitioner Filcon Ready Mixed Inc. and driven by
petitioner Gilbert S. Vergara.

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.

By complaint on 2012, respondent essentially averred that the proximate cause of the
accident was Vergara's gross negligence and lack of precaution. As a consequence, the
insured vehicle got damaged. 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.

Respondent sent a demand letter dated 2011 to petitioners, but the latter simply ignored it.
Hence, respondent was constrained to file the present action for sum of money before the
(MeTC)

Petitioners, on the other hand, interposed extinctive prescription as an affirmative defense.

They claimed that under Article 1146 of the Civil Code, actions based on quasi-delict
prescribes in four (4) years.

RTC: The trial court dismissed the complaint on ground of prescription.

Respondent appealed to CA and 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.
CA: CA reversed 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.

Petitioners argue in the main that respondent's cause of action is based on quasi-delict
since the cause of action stemmed from the alleged gross negligence of Vergara. Thus, the
prescriptive period within which to file the action is four (4) years from the accrual of
cause of action.

ISSUE: Is respondent's action for money claims against petitioners barred by prescription?

HELD: NO. 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.

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, thus:

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:

(a) For cases that were filed by the subrogee-insurer during the applicability
of the Vector ruling (i.e., from Vector's, finality on August 15, 2013 up until
the finality of this Decision), the prescriptive period is ten (10) years from
the time of payment by the insurer to the insured, which gave rise to an
obligation created by law.

(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.
 2. For actions of such nature that have not yet been filed at the time of the
finality of this Decision:

(a) For cases where the tort was committed and the consequent loss/injury
against the insured occurred prior to the finality of this Decision, the
subrogee-insurer is given a period not exceeding four (4) years from the time
of the finality of this Decision to file the action against the wrongdoer:
provided, that in all instances, the total period to file such case shall not
exceed ten (10) years from the time the insurer is subrogated to the rights of
the insured.
However, the benefit of the additional period (i.e., not exceeding four 4 years)
under this Decision must not result in the insured being given a total of more
than ten (10) years from the time the insurer is subrogated to the rights of
the insured (i.e., the old prescriptive period in Vector); otherwise, the insurer
would be able to unduly propagate its right to file the case beyond the ten
(10)-year period accorded by Vector to the prejudice of the wrongdoer.

(b) For cases where the tort was committed and the consequent loss/injury
against the insured occurred only upon or after the finality of this Decision,
the Vector doctrine would hold no application. The prescriptive period is four
(4) years from the time the tort is committed against the insured by the
wrongdoer.

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.