Case Summary (G.R. No. 113054)
Petitioner
Vicente G. Henson, Jr., former owner of the building where the leak occurred and stockholder-President of Citrinne Holdings, Inc., which briefly held title before petitioner’s inclusion in the suit.
Respondent
UCPB General Insurance Co., Inc., insurer of Copylandia’s equipment, which paid P1,326,342.76 to Copylandia under its policy and was subrogated by law to Copylandia’s right to sue the wrongdoer for that amount.
Key Dates
• 1989–1999: NASCL leases front portion of building from petitioner.
• 1999: NASCL modifies lease and building piping.
• May 9, 2006: Water leak damages Copylandia’s equipment (P2,062,640.00).
• Nov 2, 2006: Respondent indemnifies Copylandia (P1,326,342.76) and is subrogated under Civil Code Art. 2207.
• May 20, 2010: Respondent makes extrajudicial demand on NASCL.
• Oct 6, 2011 & Apr 21, 2014: Respondent amends complaint to implead first Citrinne Holdings, Inc., then petitioner.
• Jun 10 & Sep 22, 2014: RTC orders dropping of CHI and joinder of petitioner.
• Nov 13, 2015 & Feb 26, 2016: CA affirms RTC orders; denies reconsideration.
• Aug 14, 2019: Supreme Court promulgates decision.
Applicable Law
• Civil Code of 1987, Arts. 1144(2) (ten-year prescription for “obligations created by law”), 1146(2) (four-year prescription for quasi-delict), and 2207 (equitable subrogation).
• Rules of Court, Rule 65 (certiorari).
• 1987 Philippine Constitution.
Facts
National Arts Studio and Color Lab (NASCL) leased petitioner’s building and altered its piping. Copylandia occupied the ground floor when a May 9, 2006 leak caused P2,062,640.00 in damage. Copylandia’s insurer, respondent, paid P1,326,342.76 on Nov 2, 2006 and became subrogated to its rights against the wrongdoer.
Procedural History
After a failed demand to NASCL, respondent sued in Makati RTC (Civil Case No. 10-885). It initially impleaded Citrinne Holdings, Inc. as owner, then substituted petitioner. CHI moved to dismiss on prescription grounds. The RTC and CA held the insurer’s cause of action was “created by law” under Art. 2207 and thus subject to a ten-year prescriptive period.
Issue for Resolution
Has respondent’s subrogated claim prescribed—i.e., is it barred by the four-year limit for quasi-delicts or preserved by a ten-year period for obligations created by law?
Court’s Ruling
The petition is DENIED. The CA decision and resolution are AFFIRMED, but Vector’s ten-year reckoning rule is prospectively modified.
Court’s Reasoning
- Under Vector Shipping Corp. v. American Home Assurance Co., subrogation under Civil Code Art. 2207 gives rise to an obligation created by law, triggering a ten-year prescription per Art. 1144(2).
- Although subrogation steps the insurer into the insured’s rights, the right itself arises by operation of law upon payment o
Case Syllabus (G.R. No. 113054)
Facts
- From 1989 to 1999, National Arts Studio and Color Lab (NASCL) leased the front portion of the ground floor of a two-storey building in Sto. Rosario Street, Angeles City, owned by petitioner Vicente G. Henson, Jr.
- In 1999, NASCL changed its lease to cover the right front portion of the ground floor and the entire second floor, undertaking renovations to the building’s piping assembly.
- Copylandia Office Systems Corp. (Copylandia) thereafter occupied the ground floor.
- On May 9, 2006, a water leak in the building damaged Copylandia’s equipment, resulting in an estimated loss of ₱2,062,640.00.
- The damaged equipment was insured with respondent UCPB General Insurance Co., Inc. (UCPB Gen).
Insurer’s Claim and Subrogation
- Copylandia filed an insurance claim with UCPB Gen; on November 2, 2006, they settled for ₱1,326,342.76.
- The settlement triggered UCPB Gen’s legal subrogation under Article 2207, Civil Code, to all of Copylandia’s rights and demands arising from the water leak incident.
- On May 20, 2010, UCPB Gen, as subrogee, made written demand upon, among others, NASCL for indemnity, but payment was not forthcoming.
Transfer of Ownership and Amended Complaints
- In 2010, petitioner Henson transferred building ownership to Citrinne Holdings, Inc. (CHI), of which he was president and stockholder.
- October 6, 2011: UCPB Gen filed an amended complaint adding CHI as defendant.
- April 21, 2014: UCPB Gen moved to admit a third amended complaint, requesting that petitioner be impleaded in lieu of CHI, on the ground that he was the building owner when the damage occurred.
Allegations of Negligence
- UCPB Gen charged NASCL with negligence in maintaining the renovated piping and comfort‐room facilities.
- It accused CHI (and petitioner Henson as owner) of neglecting the building’s drainage system, resulting in the water leak.
- Respondent claimed that such joint negligence directly caused at least ₱2,062,640.00 in damage to Copylandia’s equipment.
Prescription Defense by CHI/Petitioner
- CHI opposed the impleader motion, asserting that the cause of action was quasi-delict and had prescribed four years after May 9, 2006.
- No earlier written demand had been received by CHI or petitioner.
RTC Ruling
- June 10,