Sun Insurance vs. CA, 195 SCRA 193 (1991)

G.R. No. 89741. March 13, 1991.


Emilio Tan took from Sun Insurance a P300,000.00 property insurance policy to cover his interest in the electrical supply store of his brother housed in a building in Iloilo City. Four (4) days after the issuance of the policy, the building was burned including the insured store. On August 20, 1983, Tan filed his claim for fire loss with the petitioner, but on February 29, 1984, petitioner wrote Tan denying the latter’s claim. On April 3, 1984, Tan wrote to the petitioner, seeking reconsideration of the denial of his claim, but still denied the claim. 

Sun Insurance alleged Condition 27 of the Insurance Policy which provides that: If a claim be made and rejected and an action or suit shall be commenced within twelve (12) months from receipt of notice of such rejection, or in case of arbitration taking place as provided herein, within twelve (12) months after due notice of the award made by the arbitrator or arbitrators, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.”

On November 20, 1985, Tan filed Civil Case No. 16817 with the Regional Trial Court but petitioner filed a motion to dismiss on the alleged ground that the action had already been prescribed. The motion was denied. The CA denied the motion for reconsideration and held that the court a quo may continue until its final termination.


WON the one-year prescriptive period does not start to run until the petition for reconsideration has been resolved by the insurer.


NO, it runs counter to the declared purpose for requiring that an action or suit be filed in the Insurance Commission or in a court of competent jurisdiction from the denial of the claim. The terms  are very clear and free from any doubt or ambiguity, thus must be taken and understood in its plain, ordinary and popular sense. Tan received a copy of the letter of rejection on April 2, 1984. Thus, the 12-month prescriptive period started to run from the said date, or such is the plain meaning and intention of Section 27 of the insurance policy.

In the case of Ang v. Fulton Fire Insurance Co., “the condition contained in an insurance policy that claims must be presented within one year after rejection is not merely a procedural requirement but an important matter essential to a prompt settlement of claims against insurance companies as it demands that insurance suits be brought by the insured while the evidence as to the origin and cause of destruction have not yet disappeared.”  To uphold respondents’ contention would contradict and defeat the very principle which this Court had laid down. Moreover, it can easily be used by insured persons as a scheme or device to waste time until any evidence which may be considered against them is destroyed.

It is apparent that Section 27 of the insurance policy was stipulated pursuant to Section 63 of the Insurance Code, which states that:

“Sec. 63. A condition, stipulation or agreement in any policy of insurance, limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues, is void.”

The insured’s cause of action or his right to file a claim either in the Insurance Commission or in a court of competent jurisdiction commences from the time of the denial of his claim by the Insurer, either expressly or impliedly.

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