G.R. No. 239989 - Pioneer Insurance and Surety Corp. vs. Tan

Petitioner: Pioneer Insurance & Surety Corporation, an insurer engaged in fire insurance.
Respondent: Carmen G. Tan, also known as Carmen S.F. GATMAYTAN, proprietor of Save More Drug.

Pioneer Insurance issued Fire Insurance Policy No. FI-PP-03-0000356-00-D in favor of United Laboratories, Inc. (Unilab).
The policy was effective from December 29, 2003, to December 29, 2004, covering stocks of various drugs, medicines, and pharmaceutical products.
Among the goods covered were those delivered to respondent’s warehouse at 1910 Don Jose Street, Don Antonio Heights Subdivision, Commonwealth Avenue, Quezon City.
The delivery receipts stipulated that although the goods were delivered to the respondent, ownership remained with Unilab until full payment, while the risk of loss was transferred upon delivery.

On August 28, 2004, the Save More Drug warehouse was completely razed by fire, resulting in the destruction of Unilab’s goods.
Unilab filed a claim with Pioneer Insurance and successfully obtained insurance proceeds amounting to ₱13,430,528.22.
In connection with the claim, Unilab executed a Release Claim and a Loss and Subrogation Receipt in favor of the petitioner.

Petitioner sought to recover the amount paid to Unilab from the respondent, on the basis of its right of subrogation.
Respondent denied liability, contending that the fire was an accidental or fortuitous event.
At the Regional Trial Court (RTC) of Makati City, Branch 62, the complaint was ruled in favor of petitioner, holding that by making payment to Unilab, petitioner effectively acquired an assignment of all remedies under subrogation.
The RTC ruled that respondent’s liability to pay stands irrespective of the accidental nature of the fire, since her obligation under the contract was to pay a sum of money.

The Court of Appeals (CA) initially affirmed the RTC ruling with modifications, maintaining that the relationship between Unilab and respondent was that of a sale and that Unilab retained insurable interest until full payment.
On appeal, respondent introduced a new theory, asserting that the contract with Unilab was one of consignment, which rendered her merely an agent or extension of Unilab.
In a subsequent decision dated June 16, 2017, the CA reversed its earlier ruling, holding that the contract was indeed one of consignment and dismissing petitioner’s amended complaint.
This new theory was fortified by a Resolution dated June 5, 2018, leading petitioner to elevate the case on certiorari before the Supreme Court.

Asserted that the payment to Unilab created a subrogation right to recover from the party liable for the loss.
Maintained that the evidence and pleadings clearly identified the contract as one of sale, where the risk of loss transferred upon delivery.

Contended that the relationship with Unilab was based on a consignment agreement, which would effectively shield her from liability.
Claimed that petitioner, as subrogee, bore the burden of proving that respondent’s negligence caused the loss.
Attempted to change her theory on appeal—an issue not previously advanced before the RTC.

Whether the Court of Appeals erred in allowing the respondent to change her theory of defense on appeal by introducing the consignment argument, which was not raised at trial.

Whether the contract between the respondent and Unilab should be classified as a contract of sale or a contract of consignment.

Whether, based on the principle of subrogation and the facts established at trial, petitioner is entitled to recover from the respondent the amount advanced to Unilab for the loss of goods.