Published 15 May 2020, The Daily Tribune
One would have never thought that our lives would come to a halt because of a pandemic. From government to businesses, COVID-19 has literally slowed down, if not completely stopped, almost everything. Indeed, several government regulations were issued either extending or suspending periods to file and/or submit any document required by law. In fact, Section 4(z) of Republic Act 11469 (Bayanihan to Heal as One Act) authorizes the President to move statutory deadlines and timelines for the filing and submission of any document, the payment of taxes, fees, and other charges required by law, in order to ease the burden on individuals under community quarantine.
Thus, on 21 April 2020, President Rodrigo Duterte issued Administrative Order 30 (AO 30) directing all government offices to formulate guidelines on the “interruption of reglementary periods for the commencement of actions and claims” and “suspension of deadlines for the payment of monetary obligation” (Section 1 [a] and [d]), among others.
Relevantly, the case of Vicente G. Henson Jr. v UCPB General Insurance Co. Inc. (G.R. 223134, 14 August 2019) is worth revisiting, where the Supreme Court (SC) laid down guidelines on the prescriptive periods for actions in property insurance by a subrogee-insurer.
In Henson, the insured sustained damages in 2006 forcing it to file a claim with its insurer. The insurer immediately settled the claim, thereby subrogating the insured. More than four years later, the insurer filed an action against the person responsible for the damage (wrongdoer). The wrongdoer contended that since the insurer’s action was based on quasi-delict, which prescribes in four years (Article 1146 [2], Civil Code), the same had already prescribed. The lower courts disagreed with the wrongdoer. Instead, the lower courts applied the ruling in Vector Shipping Corporation v American Home Assurance Company (G.R. 159213, 3 July 2013) where the SC held that an insurer may file an action against a wrongdoer within 10 years from the time the former indemnifies an insured. According to Vector, an insurer’s action against a wrongdoer is based on an obligation created by law (subrogation) which prescribes in 10 years (Article 1144, Civil Code).
The SC, however, differed from the lower courts’ reasoning and expressly abandoned the Vector ruling. The High Court emphasized that Vector is legally erroneous. It held, “(f)ollowing 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.”
Nevertheless, the SC clarified that Vector’s inapplicability shall be prospective. Hence, it issued the following guidelines:
1. For cases that were filed by the subrogree-insurer from 15 August 2013 up until the finality of Henson, the prescriptive period is 10 years from the time the insurer pays the insured;
2. For cases that were filed before 15 August 2013, the prescriptive period is four years from the time the wrongdoer caused damages on the insured;
3. In cases where the damage occurred prior to Henson’s finality, the subrogee-insurer is given a period of not exceeding four years therefrom to file an action, provided the total period shall not exceed 10 years from subrogation; and
4. In cases where the damage occurred after Henson’s finality, Vector no longer applies and the subrogree-insurer only has four years to file an action.
For now, these periods must inarguably give way to President Duterte’s AO 30 which clearly mandates the interruption of reglementary periods for the commencement of actions and claims.
For comments and questions, please send an email to cabdo@divinalaw.com.
