Vector Shipping Corporation v. American Home Assurance Company

Summary

This case involves insurance subrogation arising from a maritime collision between M/T Vector and M/V Doña Paz on December 20, 1987, which destroyed Caltex's petroleum cargo. After American Home Assurance paid Caltex P7,455,421.08 in insurance proceeds, it sued Vector Shipping and Francisco Soriano to recover the amount through subrogation rights. The key legal issue was whether the action prescribed in 4 years (quasi-delict) or 10 years (obligation created by law). The Supreme Court clarified that insurance subrogation under Article 2207 of the Civil Code creates a cause of action based on an obligation created by law, which prescribes in 10 years under Article 1144(2), not 4 years under Article 1146. The Court affirmed the joint and several liability of Vector and Soriano for the full amount, establishing important precedent on the prescriptive period for insurance subrogation claims.