1.

Loadmasters VS Glodel Brokerage

MENDOZA, J .:


This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the August 24, 2007 Decision
[1]
of
the Court of Appeals (CA) in CA-G.R. CV No. 82822, entitled R&B Insurance Corporation v. Glodel Brokerage Corporation and
Loadmasters Customs Services, Inc., which held petitioner Loadmasters Customs Services, Inc. (Loadmasters) liable to respondent
Glodel Brokerage Corporation (Glodel) in the amount of P1,896,789.62 representing the insurance indemnity which R&B Insurance
Corporation (R&B Insurance) paid to the insured-consignee, Columbia Wire and Cable Corporation (Columbia).


THE FACTS:


On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor of Columbia to insure the shipment of
132 bundles of electric copper cathodes against All Risks. On August 28, 2001, the cargoes were shipped on board the vessel
Richard Rey from Isabela, Leyte, to Pier 10, North Harbor, Manila. They arrived on the same date.

Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the subsequent
delivery to its warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the
cargoes to Columbias warehouses/plants in Bulacan and Valenzuela City.

The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by its employed drivers and accompanied
by its employed truck helpers. Six (6) truckloads of copper cathodes were to be delivered to Balagtas, Bulacan, while the other six (6)
truckloads were destined for Lawang Bato, Valenzuela City. The cargoes in six truckloads for Lawang Bato were duly delivered
in Columbias warehouses there. Of the six (6) trucks en route to Balagtas, Bulacan, however, only five (5) reached the
destination. One (1) truck, loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its cargo.

Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the copper cathodes. Because of this
incident, Columbia filed with R&B Insurance a claim for insurance indemnity in the amount of P1,903,335.39. After the requisite
investigation and adjustment, R&B Insurance paid Columbia the amount of P1,896,789.62 as insurance indemnity.

R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the Regional Trial
Court, Branch 14, Manila (RTC), docketed as Civil Case No. 02-103040. It sought reimbursement of the amount it had paid
to Columbia for the loss of the subject cargo. It claimed that it had been subrogated to the right of the consignee to recover from the
party/parties who may be held legally liable for the loss.
[2]


On November 19, 2003, the RTC rendered a decision
[3]
holding Glodel liable for damages for the loss of the subject cargo and
dismissing Loadmasters counterclaim for damages and attorneys fees against R&B Insurance. The dispositive portion of the decision
reads:

WHEREFORE, all premises considered, the plaintiff having established by preponderance of evidence its
claims against defendant Glodel Brokerage Corporation, judgment is hereby rendered ordering the latter:


1. To pay plaintiff R&B Insurance Corporation the sum of P1,896,789.62 as actual and
compensatory damages, with interest from the date of complaint until fully paid;

2. To pay plaintiff R&B Insurance Corporation the amount equivalent to 10% of the principal
amount recovered as and for attorneys fees plus P1,500.00 per appearance in Court;

3. To pay plaintiff R&B Insurance Corporation the sum of P22,427.18 as litigation expenses.


WHEREAS, the defendant Loadmasters Customs Services, Inc.s counterclaim for damages and attorneys
fees against plaintiff are hereby dismissed.

With costs against defendant Glodel Brokerage Corporation.
SO ORDERED.
[4]



Both R&B Insurance and Glodel appealed the RTC decision to the CA.

On August 24, 2007, the CA rendered the assailed decision which reads in part:

Considering that appellee is an agent of appellant Glodel, whatever liability the latter owes to appellant R&B
Insurance Corporation as insurance indemnity must likewise be the amount it shall be paid by appellee Loadmasters.

WHEREFORE, the foregoing considered, the appeal is PARTLY GRANTED in that the appellee
Loadmasters is likewise held liable to appellant Glodel in the amount ofP1,896,789.62 representing the insurance
indemnity appellant Glodel has been held liable to appellant R&B Insurance Corporation.

Appellant Glodels appeal to absolve it from any liability is herein DISMISSED.

SO ORDERED.
[5]


Hence, Loadmasters filed the present petition for review on certiorari before this Court presenting the following

ISSUES


1. Can Petitioner Loadmasters be held liable to Respondent Glodel in spite of the fact that the latter
respondent Glodel did not file a cross-claim against it (Loadmasters)?

2. Under the set of facts established and undisputed in the case, can petitioner Loadmasters be legally
considered as an Agent of respondent Glodel?
[6]




To totally exculpate itself from responsibility for the lost goods, Loadmasters argues that it cannot be considered an agent of
Glodel because it never represented the latter in its dealings with the consignee. At any rate, it further contends that Glodel has no
recourse against it for its (Glodels) failure to file a cross-claim pursuant to Section 2, Rule 9 of the 1997 Rules of Civil Procedure.

Glodel, in its Comment,
[7]
counters that Loadmasters is liable to it under its cross-claim because the latter was grossly negligent
in the transportation of the subject cargo. With respect to Loadmasters claim that it is already estopped from filing a cross-claim, Glodel
insists that it can still do so even for the first time on appeal because there is no rule that provides otherwise. Finally, Glodel argues
that its relationship with Loadmasters is that of Charter wherein the transporter (Loadmasters) is only hired for the specifi c job of
delivering the merchandise. Thus, the diligence required in this case is merely ordinary diligence or that of a good father of the family,
not the extraordinary diligence required of common carriers.

R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-claim against Loadmasters because it was
not prevented from presenting evidence to prove its position even without amending its Answer. As to the relationship between
Loadmasters and Glodel, it contends that a contract of agency existed between the two corporations.
[8]


Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right, so that he who is
substituted succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities.
[9]
Doubtless, R&B
Insurance is subrogated to the rights of the insured to the extent of the amount it paid the consignee under the marine insurance, as
provided under Article 2207 of the Civil Code, which reads:


ART. 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company
shall be subrogated to the rights of the insured against the wrong-doer or the person who has violated the contract. If
the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled
to recover the deficiency from the person causing the loss or injury.

As subrogee of the rights and interest of the consignee, R&B Insurance has the right to seek reimbursement from either
Loadmasters or Glodel or both for breach of contract and/or tort.

The issue now is who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of the indemnity it paid
Columbia.

At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are common carriers to determine their liability for
the loss of the subject cargo. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations
engaged in the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their
services to the public.


Based on the aforecited definition, Loadmasters is a common carrier because it is engaged in the business of transporting
goods by land, through its trucking service. It is acommon carrier as distinguished from a private carrier wherein the carriage is
generally undertaken by special agreement and it does not hold itself out to carry goods for the general public.
[10]
The distinction is
significant in the sense that the rights and obligations of the parties to a contract of private carriage are governed principally by their
stipulations, not by the law on common carriers.
[11]


In the present case, there is no indication that the undertaking in the contract between Loadmasters and Glodel was private in
character. There is no showing that Loadmasters solely and exclusively rendered services to Glodel.

In fact, Loadmasters admitted that it is a common carrier.
[12]


In the same vein, Glodel is also considered a common carrier within the context of Article 1732. In its Memorandum,
[13]
it
states that it is a corporation duly organized and existing under the laws of the Republic of the Philippines and is engaged in the
business of customs brokering. It cannot be considered otherwise because as held by this Court in Schmitz Transport & Brokerage
Corporation v. Transport Venture, Inc.,
[14]
a customs broker is also regarded as a common carrier, the transportation of goods being an
integral part of its business.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of
public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the
circumstances of such case, as required by Article 1733 of the Civil Code. When the Court speaks of extraordinary diligence, it is that
extreme measure of care and caution which persons of unusual prudence and circumspection observe for securing and preserving their
own property or rights.
[15]
This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the
scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment.
[16]
Thus, in
case of loss of the goods, the common carrier is presumed to have been at fault or to have acted negligently.
[17]
This presumption of
fault or negligence, however, may be rebutted by proof that the common carrier has observed extraordinary diligence over the goods.

With respect to the time frame of this extraordinary responsibility, the Civil Code provides that the exercise of extraordinary
diligence lasts from the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right t o receive
them.
[18]


Premises considered, the Court is of the view that both Loadmasters and Glodel are jointly and severally liable to R & B
Insurance for the loss of the subject cargo. Under Article 2194 of the New Civil Code, the responsibility of two or more persons who
are liable for a quasi-delict is solidary.

Loadmasters claim that it was never privy to the contract entered into by Glodel with the consignee Columbia or R&B
Insurance as subrogee, is not a valid defense. It may not have a direct contractual relation with Columbia, but it is liable for tort under
the provisions of Article 2176 of the Civil Code on quasi-delicts which expressly provide:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of this Chapter.



Pertinent is the ruling enunciated in the case of Mindanao Terminal and Brokerage Service, Inc. v. Phoenix Assurance
Company of New York,/McGee & Co., Inc.
[19]
where this Court held that a tort may arise despite the absence of a contractual
relationship, to wit:

We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against Mindanao
Terminal, from which the present case has arisen, states a cause of action. The present action is based on quasi-
delict, arising from the negligent and careless loading and stowing of the cargoes belonging to Del Monte Produce.
Even assuming that both Phoenix and McGee have only been subrogated in the rights of Del Monte Produce, who is
not a party to the contract of service between Mindanao Terminal and Del Monte, still the insurance carriers may
have a cause of action in light of the Courts consistent ruling that the act that breaks the contract may be also a
tort. In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract. In the
present case, Phoenix and McGee are not suing for damages for injuries arising from the breach of the
contract of service but from the alleged negligent manner by which Mindanao Terminal handled the cargoes
belonging to Del Monte Produce. Despite the absence of contractual relationship between Del Monte Produce and
Mindanao Terminal, the allegation of negligence on the part of the defendant should be sufficient to establish a cause
of action arising from quasi-delict. [Emphases supplied]


In connection therewith, Article 2180 provides:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions,
but also for those of persons for whom one is responsible.

x x x x

Employers shall be liable for the damages caused by their employees and household helpers acting within
the scope of their assigned tasks, even though the former are not engaged in any business or industry.


It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver and
helper) were instrumental in the hijacking or robbery of the shipment. As employer, Loadmasters should be made answerable for the
damages caused by its employees who acted within the scope of their assigned task of delivering the goods safely to the warehouse.

Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption juris
tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in
vigilando) of its employees.
[20]
To avoid liability for a quasi-delict committed by its employee, an employer must overcome the
presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and
supervision of his employee.
[21]
In this regard, Loadmasters failed.

Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters would fully
comply with the undertaking to safely transport the subject cargo to the designated destination. It should have been more prudent in
entrusting the goods to Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in
delivering the cargoes. Glodel should, therefore, be held liable with Loadmasters. Its defense of force majeure is unavailing.

At this juncture, the Court clarifies that there exists no principal-agent relationship between Glodel and Loadmasters, as
erroneously found by the CA. Article 1868 of the Civil Code provides: By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with the consent or authority of the latter. The elements of a
contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a
juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within t he scope of
his authority.
[22]


Accordingly, there can be no contract of agency between the parties. Loadmasters never represented Glodel. Neither was it
ever authorized to make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for
and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal. On the part of the principal, there must be an actual intention to appoint or an intention naturally
inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on
it.
[23]
Such mutual intent is not obtaining in this case.

What then is the extent of the respective liabilities of Loadmasters and Glodel? Each wrongdoer is liable for the total damage
suffered by R&B Insurance. Where there are several causes for the resulting damages, a party is not relieved from liability, even
partially. It is sufficient that the negligence of a party is an efficient cause without which the damage would not have resulted. It is no
defense to one of the concurrent tortfeasors that the damage would not have resulted from his negligence alone, without the negligence
or wrongful acts of the other concurrent tortfeasor. As stated in the case of Far Eastern Shipping v. Court of Appeals,
[24]


X x x. Where several causes producing an injury are concurrent and each is an efficient cause without which
the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had
against any or all of the responsible persons although under the circumstances of the case, it may appear that one of
them was more culpable, and that the duty owed by them to the injured person was not the same. No actor's
negligence ceases to be a proximate cause merely because it does not exceed the negligence of other actors. Each
wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of the injury.
There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for
the total damage. Where the concurrent or successive negligent acts or omissions of two or more persons, although
acting independently, are in combination the direct and proximate cause of a single injury to a third person, it is
impossible to determine in what proportion each contributed to the injury and either of them is responsible for the
whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint
tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the Civil Code. [Emphasis supplied]

The Court now resolves the issue of whether Glodel can collect from Loadmasters, it having failed to file a cross-claim against
the latter.

Undoubtedly, Glodel has a definite cause of action against Loadmasters for breach of contract of service as the latter is
primarily liable for the loss of the subject cargo. In this case, however, it cannot succeed in seeking judicial sanction against
Loadmasters because the records disclose that it did not properly interpose a cross-claim against the latter. Glodel did not even pray
that Loadmasters be liable for any and all claims that it may be adjudged liable in favor of R&B Insurance. Under the Rules, a
compulsory counterclaim, or a cross-claim, not set up shall be barred.
[25]
Thus, a cross-claim cannot be set up for the first time on
appeal.

For the consequence, Glodel has no one to blame but itself. The Court cannot come to its aid on equitable
grounds. Equity, which has been aptly described as a justice outside legality, is applied only in the absence of, and never against,
statutory law or judicial rules of procedure.
[26]
The Court cannot be a lawyer and take the cudgels for a party who has been at fault or
negligent.


WHEREFORE, the petition is PARTIALLY GRANTED. The August 24, 2007 Decision of the Court of Appeals
is MODIFIED to read as follows:

WHEREFORE, judgment is rendered declaring petitioner Loadmasters Customs Services, Inc. and
respondent Glodel Brokerage Corporation jointly and severally liable to respondent R&B Insurance Corporation for
the insurance indemnity it paid to consignee Columbia Wire & Cable Corporation and ordering both parties to pay,
jointly and severally, R&B Insurance Corporation a] the amount of P1,896,789.62 representing the insurance
indemnity; b] the amount equivalent to ten (10%) percent thereof for attorneys fees; and c] the amount of P22,427.18
for litigation expenses.

The cross-claim belatedly prayed for by respondent Glodel Brokerage Corporation against petitioner
Loadmasters Customs Services, Inc. is DENIED.

SO ORDERED






























































2. Danzas Corporation VS Abrogar

CORONA, J .:

Petitioner Danzas Corporation, through its agent, petitioner All Transport Network brings to us this petition for review on
certiorari
[1]
questioning the decision
[2]
and resolution
[3]
of the Court of Appeals which affirmed two orders issued by the Regional Trial
Court, Makati City, Branch 150.
[4]


The facts of the case follow.
[5]


On February 22, 1994, petitioner Danzas took a shipment of nine packages of ICS watches for transport to Manila. The
consignee, International Freeport Traders, Inc. (IFTI) secured Marine Risk Note No. 0000342 from private respondent Seaboard.

On March 2, 1994, the Korean Airlines plane carrying the goods arrived in Manila and discharged the goods to the custody of
private respondent Philippine Skylanders, Inc. for safekeeping. On withdrawal of the shipment from private respondent Skylanders
warehouse, IFTI noted that one package containing 475 watches was shortlanded while the remaining eight were found to have
sustained tears on sides and the retape of flaps. On further examination and inventory of the cartons, it was discovered that 176 Guess
watches were missing. Private respondent Seaboard, as insurer, paid the losses to IFTI.

On February 23, 1995, Seaboard, invoking its right of subrogation, filed a complaint against Skylanders, petitioner and its
authorized representative, petitioner All Transport Network, Inc. (ATN), praying for actual damages in the amount of P612,904.97 plus
legal interest, attorneys fees and cost of suit. Petitioners impleaded Korean Airlines (KAL) as third-party defendant.

While the case was pending, IFTIs treasurer, Mary Eileen Gozon accepted the proposal of KAL to settle consignees claim by
paying the amount of US $522.20. On May 8, 1996, Felipe Acebedo, IFTIs representative received a check from KAL and
correspondingly signed a release form.

On July 2, 1996, petitioners filed a motion to dismiss the case on the ground that private respondent Seaboards demand had
been paid or otherwise extinguished by KAL.

On December 9, 1996, the trial court issued an order denying the motion to dismiss. Petitioners, private respondent
Skylanders and KAL filed separate motions for reconsideration. Prior to the resolution of these motions, the trial court allowed private
respondent Skylanders to present evidence in a preliminary hearing on November 14, 1997, after which the court set a date to hear the
presentation of rebuttal evidence.

On December 5, 1997, petitioners filed a manifestation and motion for reconsideration of the order of the trial court dated
November 14, 1997, questioning the propriety of the preliminary hearing.

On February 18, 1998, the trial court issued an order denying: (1) the motion for reconsideration of the December 9, 1996
order filed by petitioners, private respondent Skylanders and KAL; (2) the motion to dismiss filed by Skylanders and (3) petitioners
motion for reconsideration of the November 14, 1997 order.

On April 6, 1998, petitioners filed in the Court of Appeals a special civil action for certiorari under Rule 65 of the Rules of
Court. On March 5, 1999, the CA dismissed the petition.
[6]
Petitioners filed
[7]
a motion for reconsideration but this was denied.
[8]


Hence, this petition.

Petitioners principal contention is that private respondents right of subrogation was extinguished when IFTI received payment
from KAL in settlement of its obligation. They also claim that public respondent committed grave abuse of discretion by refusing to
dismiss the case on that ground. Finally, they claim that, by granting private respondent Skylanders a preliminary hearing on an
affirmative defense other than one of the grounds stated in Section 1, Rule 16 of the 1997 Rules of Civil Procedure, public
respondent committed another grave abuse of discretion.

For its part, private respondent Seaboard argues that the payment made by the tortfeasor did not relieve it of liability because
at the time of payment, its (Seaboards) suit against petitioners was already ongoing. It also insists that because the assailed order was
interlocutory, it was not a proper subject for certiorari.
[9]


Private respondent Skylanders likewise contends that the order denying dismissal cannot be the subject of certiorari in the
absence of grave abuse of discretion. It also defends the trial courts order granting a preliminary hearing, saying that, assuming the
trial court had erroneously granted such a hearing, such error was merely one of judgment and not of jurisdiction as to merit
certiorari.
[10]


The petition has no merit.

It is true that the doctrine in Manila Mahogany Manufacturing Corporation v. Court of Appeals
[11]
remains the controlling
doctrine on the issue of whether the tortfeasor, by settling with the insured, defeats the right to subrogation of the insurer. According
to Manila Mahogany:

Since the insurer can be subrogated to only such rights as the insured may have, should the insured, after
receiving payment from the insurer, release the wrongdoer who caused the loss, the insurer loses his rights against
the latter. But in such a case, the insurer will be entitled to recover from the insured whatever it has paid to the latter,
unless the release was made with the consent of the insurer.

This is buttressed by a later decision, Pan Malayan Insurance Corporation v. Court of Appeals,
[12]
in which we cited a number
of exceptions to the rule laid down in Article 2207 of the Civil Code.
[13]
Under the first of these exceptions, if the assured by his own act
releases the wrongdoer or third party liable for the loss or damage from liability, the insurers right of subrogation is defeated.

However, certain factual differences pointed out by private respondent Seaboard render this doctrine inapplicable. In Manila
Mahogany, the tortfeasor San Miguel Corporation paid the insured without knowing that the insurer had already made such payment.
KAL was not similarly situated, being fully aware of the prior payment made by the insurer to the consignee. Private respondent
Seaboard asserts that, being in bad faith, KAL should bear the consequences of its actions.
[14]


While Manila Mahogany is silent on whether the existence of good faith or bad faith on the tortfeasors part affects the insurers
right of subrogation, there exists a wealth of U.S. jurisprudence holding that whenever the wrongdoer settles with the insured without
the consent of the insurer and with knowledge of the insurers payment and right of subrogation, such right is not defeated by the
settlement.
[15]
Because this doctrine is actually consistent with the facts of Mahogany and helps fill a slight gap left by our ruling in that
case, we adopt it now. The trial court correctly refused to dismiss the case. In that respect, therefore, the trial court did not commit
grave abuse of discretion which would justify certiorari.

We likewise find that no grave abuse of discretion was committed by public respondent when it granted private respondent
Skylanders motion for a preliminary hearing.

In California and Hawaiian Sugar Company v. Pioneer Insurance and Surety Corporation,
[16]
we held that a preliminary hearing
was not mandatory but was rather subject to the discretion of the trial court. We found in that instance that the trial court had committed
grave abuse of discretion in refusing the partys motion for a preliminary hearing on the ground that the case was premature, not having
been submitted for arbitration. A preliminary hearing could have settled the entire case, thereby helping decongest the dockets. It was
therefore the refusal to allow the most efficient and expeditious process which we condemned.

In the instant case, we are not convinced that public respondents act of allowing a preliminary hearing constituted grave abuse of
discretion.

In Land Bank of the Philippines v. the Court of Appeals
[17]
we discussed the meaning of grave abuse of discretion:

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or
personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law.

The special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction
and not errors of judgment. The raison detre for the rule is when a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of the jurisdiction being exercised when the error is committed. If it
did, every error committed by a court would deprive it of its jurisdiction and every erroneous judgment would be a void
judgment. In such a scenario, the administration of justice would not survive. Hence, where the issue or question
involved affects the wisdom or legal soundness of the decisionnot the jurisdiction of the court to render
said decisionthe same is beyond the province of a special civil action for certiorari. (emphasis supplied)


Public respondents order granting the preliminary hearing does not at all fit the description above. At worst, it was an error in
judgment which is beyond the domain of certiorari.

WHEREFORE, in view of the foregoing, the petition is hereby DENIED. The decision and resolution of the Court of Appeals
areAFFIRMED.

Costs against petitioners.


SO ORDERED.









3. Vector Shipping VS American Home Assurance
BERSAMIN, J .:

Subrogation under Article 2207 of the Civil Code gives rise to a cause of action created by law. For purposes of the law on the
prescription of actions, the period of limitation is ten years.
The Case

Vector Shipping Corporation (Vector) and Francisco Soriano appeal the decision promulgated on July 22, 2003,
1
whereby the Court of
Appeals (CA) held them jointly and severally liable to pay P7,455,421.08 to American Home Assurance Company (respondent) as and
by way of actual damages on the basis of respondent being the subrogee of its insured Caltex Philippines, Inc. (Caltex).
Antecedents

Vector was the operator of the motor tanker M/T Vector, while Soriano was the registered owner of the M/T Vector. Respondent is a
domestic insurance corporation.
2


On September 30, 1987, Caltex entered into a contract of affreightment
3
with Vector for the transport of Caltexs petroleum cargo
through the M/T Vector. Caltex insured the petroleum cargo with respondent for P7,455,421.08 under Marine Open Policy No. 34-5093-
6.
4
In the evening of December 20, 1987, the M/T Vector and the M/V Doa Paz, the latter a vessel owned and operated by Sulpicio
Lines, Inc., collided in the open sea near Dumali Point in Tablas Strait, located between the Provinces of Marinduque and Ori ental
Mindoro. The collision led to the sinking of both vessels. The entire petroleum cargo of Caltex on board the M/T Vector perished.
5
On
July 12, 1988, respondent indemnified Caltex for the loss of the petroleum cargo in the full amount of P7,455,421.08.
6


On March 5, 1992, respondent filed a complaint against Vector, Soriano, and Sulpicio Lines, Inc. to recover the full amount of
P7,455,421.08 it paid to Caltex (Civil Case No. 92-620).
7
The case was raffled to Branch 145 of the Regional Trial Court (RTC) in
Makati City.

On December 10, 1997, the RTC issued a resolution dismissing Civil Case No. 92-620 on the following grounds:cralavvonlinelawlibrary
This action is upon a quasi-delict and as such must be commenced within four
4
years from the day they may be brought. [Art. 1145 in
relation to Art. 1150, Civil Code] From the day [the action] may be brought means from the day the quasi-delict occurred. [Capuno v.
Pepsi Cola, 13 SCRA 663]

The tort complained of in this case occurred on 20 December 1987. The action arising therefrom would under the law prescribe, unless
interrupted, on 20 December 1991.

When the case was filed against defendants Vector Shipping and Francisco Soriano on 5 March 1992, the action not having been
interrupted, had already prescribed.

Under the same situation, the cross-claim of Sulpicio Lines against Vector Shipping and Francisco Soriano filed on 25 June 1992 had
likewise prescribed.

The letter of demand upon defendant Sulpicio Lines allegedly on 6 November 1991 did not interrupt the [tolling] of the prescriptive
period since there is no evidence that it was actually received by the addressee. Under such circumstances, the action against Sulpicio
Lines had likewise prescribed.

Even assuming that such written extra-judicial demand was received and the prescriptive period interrupted in accordance with Art.
1155, Civil Code, it was only for the 10-day period within which Sulpicio Lines was required to settle its obligation. After that period
lapsed, the prescriptive period started again. A new 4-year period to file action was not created by the extra-judicial demand; it merely
suspended and extended the period for 10 days, which in this case meant that the action should be commenced by 30 December 1991,
rather than 20 December 1991.

Thus, when the complaint against Sulpicio Lines was filed on 5 March 1992, the action had prescribed.

PREMISES CONSIDERED, the complaint of American Home Assurance Company and the cross-claim of Sulpicio Lines against Vector
Shipping Corporation and Francisco Soriano are DISMISSED.

Without costs.

SO ORDERED.
8


Respondent appealed to the CA, which promulgated its assailed decision on July 22, 2003 reversing the RTC.
9
Although thereby
absolving Sulpicio Lines, Inc. of any liability to respondent, the CA held Vector and Soriano jointly and severally liable to respondent for
the reimbursement of the amount of P7,455,421.08 paid to Caltex, explaining:cralavvonlinelawlibrary
x x x x

The resolution of this case is primarily anchored on the determination of what kind of relationship existed between Caltex and M/V Dona
Paz and between Caltex and M/T Vector for purposes of applying the laws on prescription. The Civil Code expressly provides for the
number of years before the extinctive prescription s[e]ts in depending on the relationship that governs the parties.

x x x x

After a careful perusal of the factual milieu and the evidence adduced by the parties, We are constrained to rule that the relationship
that

existed between Caltex and M/V Dona Paz is that of a quasi-delict while that between Caltex and M/T Vector is culpa
contractual based on a Contract of Affreightment or a charter party.

x x x x

On the other hand, the claim of appellant against M/T Vector is anchored on a breach of contract of affreightment. The appellant
averred that M/T Vector committed such act for having misrepresented to the appellant that said vessel is seaworthy when in fact it is
not. The contract was executed between Caltex and M/T Vector on September 30, 1987 for the latter to transport thousands of barrels
of different petroleum products. UnderArticle 1144 of the New Civil Code, actions based on written contract must be brought within 10
years from the time the right of action accrued. A passenger of a ship, or his heirs, can bring an action based on culpa contractual
within a period of 10 years because the ticket issued for the transportation is by itself a complete written contract (Peralta de Guerrero
vs. Madrigal Shipping Co., L 12951, November 17, 1959). Viewed with reference to the statute of limitations, an action against a
carrier, whether of goods or of passengers, for injury resulting from a breach of contract for safe carriage is one on contract, and not in
tort, and is therefore, in the absence of a specific statute relating to such actions governed by the statute fixing the peri od within which
actions for breach of contract must be brought (53 C.J .S. 1002 citing Southern Pac. R. Co. of Mexico vs. Gonzales 61 P. 2d 377, 48
Ariz. 260, 106 A.L.R. 1012).

Considering that We have already concluded that the prescriptive periods for filing action against M/V Doa Paz based on quasi delict
and M/T Vector based on breach of contract have not yet expired, are We in a position to decide the appeal on its merit.

We say yes.

x x x x

Article 2207 of the Civil Code on subrogation is explicit that if the plaintiffs property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company
should be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. Undoubtedly, the
herein appellant has the rights of a subrogee to recover from M/T Vector what it has paid by way of indemnity to Caltex.

WHEREFORE, foregoing premises considered, the decision dated December 10, 1997 of the RTC of Makati City, Branch 145 is hereby
REVERSED. Accordingly, the defendant-appellees Vector Shipping Corporation and Francisco Soriano are held jointly and severally
liable to the plaintiff-appellant American Home Assurance Company for the payment of P7,455,421.08 as and by way of actual
damages.

SO ORDERED.
10


Respondent sought the partial reconsideration of the decision of the CA, contending that Sulpicio Lines, Inc. should also be held jointly
liable with Vector and Soriano for the actual damages awarded.
11
On their part, however, Vector and Soriano immediately appealed to
the Court on September 12, 2003.
12
Thus, on October 1, 2003, the CA held in abeyance its action on respondents partial motion for
reconsideration pursuant to its internal rules until the Court has resolved this appeal.
13

Issues

The main issue is whether this action of respondent was already barred by prescription for bringing it only on March 5, 1992. A related
issue concerns the proper determination of the nature of the cause of action as arising either from a quasi-delict or a breach of contract.

The Court will not pass upon whether or not Sulpicio Lines, Inc. should also be held jointly liable with Vector and Soriano for the actual
damages claimed.
Ruling

The petition lacks merit.

Vector and Soriano posit that the RTC correctly dismissed respondents complaint on the ground of prescription. They insist that this
action was premised on a quasi-delict or upon an injury to the rights of the plaintiff, which, pursuant to Article 1146 of the Civil Code,
must be instituted within four years from the time the cause of action accrued; that because respondents cause of action accrued on
December 20, 1987, the date of the collision, respondent had only four years, or until December 20, 1991, within which to bring its
action, but its complaint was filed only on March 5, 1992, thereby rendering its action already barred for being commenced beyond the
four-year prescriptive period;
14
and that there was no showing that respondent had made extrajudicial written demands upon them for
the reimbursement of the insurance proceeds as to interrupt the running of the prescriptive period.
15


We concur with the CAs ruling that respondents action did not yet prescribe. The legal provision governing this case was not Article
1146 of the Civil Code,
16
but Article 1144 of the Civil Code, which states:cralavvonlinelawlibrary
Article 1144. The following actions must be brought within ten years from the time the cause of action accrues:cralavvonlinelawlibrary
(1) Upon a written contract;chanroblesvirtualawlibrary
(2) Upon an obligation created by law;chanroblesvirtualawlibrary
(3) Upon a judgment.

We need to clarify, however, that we cannot adopt the CAs characterization of the cause of action as based on the contract of
affreightment between Caltex and Vector, with the breach of contract being the failure of Vector to make the M/T Vector seaworthy, as
to make this action come under Article 1144 (1), supra. Instead, we find and hold that that the present action was not upon a written
contract, but upon an obligation created by law. Hence, it came under Article 1144 (2) of the Civil Code. This is because the
subrogation of respondent to the rights of Caltex as the insured was by virtue of the express provision of law embodied in Article 2207
of the Civil Code, to wit:cralavvonlinelawlibrary
Article 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does
not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or
injury. (Emphasis supplied)

The juridical situation arising under Article 2207 of the Civil Code is well explained in Pan Malayan Insurance Corporation v. Court of
Appeals,
17
as follows:cralavvonlinelawlibrary
Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged
through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured, will be subrogated to
the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the
insurer to the assured operates as an equitable assignment to the former of all remedies which the latter may have against
the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it
grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance
claim by the insurer[Compania Maritima v. Insurance Company of North America, G.R. No. L-18965, October 30, 1964, 12 SCRA
213; Firemans Fund Insurance Company v. Jamilla & Company, Inc., G.R. No. L-27427, April 7, 1976, 70 SCRA 323].
18


Verily, the contract of affreightment that Caltex and Vector entered into did not give rise to the legal obligation of Vector and Soriano to
pay the demand for reimbursement by respondent because it concerned only the agreement for the transport of Caltexs petroleum
cargo. As the Court has aptly put it in Pan Malayan Insurance Corporation v. Court of Appeals, supra, respondents right of subrogation
pursuant to Article 2207, supra, was not dependent upon, nor d[id] it grow out of, any privity of contract or upon written assignment of
claim [but] accrue[d] simply upon payment of the insurance claim by the insurer.

Considering that the cause of action accrued as of the time respondent actually indemnified Caltex in the amount of P7,455,421.08 on
July 12, 1988,
19
the action was not yet barred by the time of the filing of its complaint on March 5, 1992,
20
which was well within the 10-
year period prescribed by Article 1144 of the Civil Code.

The insistence by Vector and Soriano that the running of the prescriptive period was not interrupted because of the failure of
respondent to serve any extrajudicial demand was rendered inconsequential by our foregoing finding that respondents cause of action
was not based on a quasi-delict that prescribed in four years from the date of the collision on December 20, 1987, as the RTC
misappreciated, but on an obligation created by law, for which the law fixed a longer prescriptive period of ten years from the accrual of
the action.

Still, Vector and Soriano assert that respondent had no right of subrogation to begin with, because the complaint did not all ege that
respondent had actually paid Caltex for the loss of the cargo. They further assert that the subrogation receipt submitted by respondent
was inadmissible for not being properly identified by Ricardo C. Ongpauco, respondents witness, who, although supposed to identify
the subrogation receipt based on his affidavit, was not called to testify in court; and that respondent presented only one witness in the
person of Teresita Espiritu, who identified Marine Open Policy No. 34-5093-6 issued by respondent to Caltex.
21


We disagree with petitioners assertions. It is undeniable that respondent preponderantly established its right of subrogation. Its Exhibit
C was Marine Open Policy No. 34-5093-6 that it had issued to Caltex to insure the petroleum cargo against marine peril.
22
Its Exhibit D
was the formal written claim of Caltex for the payment of the insurance coverage of P7,455,421.08 coursed through respondents
adjuster.
23
Its Exhibits E to H were marine documents relating to the perished cargo on board the M/V Vector that were processed for
the purpose of verifying the insurance claim of Caltex.
24
Its Exhibit I was the subrogation receipt dated July 12, 1988 showing that
respondent paid Caltex P7,455,421.00 as the full settlement of Caltexs claim under Marine Open Policy No. 34-5093-6.
25
All these
exhibits were unquestionably duly presented, marked, and admitted during the trial.
26
Specifically, Exhibit C was admitted as an
authentic copy of Marine Open Policy No. 34-5093-6, while Exhibits D, E, F, G, H and I, inclusive, were admitted as parts of the
testimony of respondents witness Efren Villanueva, the manager for the adjustment service of the Manila Adjusters and Surveyors
Company.
27


Consistent with the pertinent law and jurisprudence, therefore, Exhibit I was already enough by itself to prove the payment of
P7,455,421.00 as the full settlement of Caltexs claim.
28
The payment made to Caltex as the insured being thereby duly documented,
respondent became subrogated as a matter of course pursuant to Article 2207 of the Civil Code. In legal contemplation, subrogation is
the substitution of another person in the place of the creditor, to whose rights he succeeds in relation to the debt; and is independent
of any mere contractual relations between the parties to be affected by it, and is broad enough to cover every instance in which one
party is required to pay a debt for which another is primarily answerable, and which in equity and conscience ought to be discharged by
the latter.
29


Lastly, Vector and Soriano argue that Caltex waived and abandoned its claim by not setting up a cross-claim against them in Civil Case
No. 18735, the suit that Sulpicio Lines, Inc. had brought to claim damages for the loss of the M/V Doa Paz from them, Oriental
Assurance Company (as insurer of the M/T Vector), and Caltex; that such failure to set up its cross-claim on the part of Caltex, the real
party in interest who had suffered the loss, left respondent without any better right than Caltex, its insured, to recover anything from
them, and forever barred Caltex from asserting any claim against them for the loss of the cargo; and that respondent was similarly
barred from asserting its present claim due to its being merely the successor-in-interest of Caltex.

The argument of Vector and Soriano would have substance and merit had Civil Case No. 18735 and this case involved the same
parties and litigated the same rights and obligations. But the two actions were separate from and independent of each other. Civil Case
No. 18735 was instituted by Sulpicio Lines, Inc. to recover damages for the loss of its M/V Doa Paz. In contrast, this action was
brought by respondent to recover from Vector and Soriano whatever it had paid to Caltex under its marine insurance policy on the basis
of its right of subrogation. With the clear variance between the two actions, the failure to set up the cross-claim against them in Civil
Case No. 18735 is no reason to bar this action.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on July 22, 2003;
and ORDERS petitioners to pay the costs of suit.

SO ORDERED.