41.SUN INSURANCE OFFICE, LTD. v.

COURT OF APPEALS
G.R. No. 89741 March 13, 1991
Facts: On August 15, 1983, Emilio Tan took from Sun Insurance a 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. Tan filed his claim for fire
loss, but on February 29, 1984, Sun Insurance denied the claim. On April 3, 1984,
Tan wrote petitioner, seeking reconsideration of the denial of his claim. On
September 3, 1985, Tans counsel wrote the Insurer inquiring about the status of
his April 3, 1984 request for reconsideration. Petitioner answered the letter on
October 11, 1985, advising Tans counsel that the Insurers denial of Tans claim
remained unchanged. On November 20, 1985, Tan filed Civil Case with the RTC
of Iloilo but Sun Insurance filed a motion to dismiss on the alleged ground that the
action had already prescribed. RTC denied the motion. CA affirmed.
Issue:
1. WHETHER OR NOT THE FILING OF A MOTION FOR
RECONSIDERATION INTERRUPTS THE TWELVE (12) MONTHS
PRESCRIPTIVE PERIOD TO CONTEST THE DENIAL OF THE INSURANCE
CLAIM?
2. WHETHER OR NOT THE REJECTION OF THE CLAIM SHALL BE
DEEMED FINAL ONLY IF IT CONTAINS WORDS TO THE EFFECT THAT
THE DENIAL IS FINAL.
Held:
1. No. 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."cra

2. No. 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 (Ang v. Fulton Fire Insurance Co., 2 SCRA 945 [1961]).
In enunciating the above-cited principle, this Court had definitely settled the
rationale for the necessity of bringing suits against the Insurer within one year from
the rejection of the claim. 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, 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. 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.c