Sun v CA G.R. No. 89741 March 13, 1991

J. Paras

Facts:

Tan took from Sun Insurance a Php 300,000 policy to cover his electrical store in Iloilo city. Tan’s request for an indemnity in 1983 was repeatedly denied, firstly in 1984. He wrote for a reconsideration in the same year. This was rejected in 1985, prompting him to file a civil case in the same year.  The insurance company filed a motion to dismiss due to prescription in 1987, but this was denied.  The company went to the court of appeals to petition the same thing, but this was denied.

Issue:

1. WON the filing of a motion for reconsideration interrupts the twelve months prescriptive period to contest the denial of the insurance claim.

2. WON the rejection of the claim shall be deemed final only if it contains words to the effect that denial is final. (ie. the first letter in 1984)

3. When does the cause of action accrue? 

Held:

1.No

2.No

3. At the time of the first rejection of the insurance company

Ratio:

1. The policy states in section 27.

Action or suit clause — If a claim be made and rejected and an action or suit be not commenced either in the Insurance Commission or in any court of competent jurisdiction 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 or umpire, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.

Respondent Tan  admitted that he 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 of April 2, 1984, under section 27.

2. It was clear in the letter.

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.

Therefore, there was a necessity of bringing suits against the Insurer within one year from the rejection of the claim. (1984) The contention of the respondents that the one-year prescriptive period does not start to run until the petition for reconsideration had been resolved by the insurer (1985), runs counter to the doctrine.

The provision in the contract was pursuant to 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.

3. Eagle star- The right of the insured to the payment of his loss accrues from the happening of the loss. However, the cause of action in an insurance contract does not accrue until the insured's claim is finally rejected by the insurer. This is because before such final rejection there is no real necessity for bringing suit.

The cause of action, then, started when the insurer denied his claim in the first instance(1984).  This rejection of a petition for reconsideration as insisted by respondents wasn’t the beginning of the cause of action.