Sun Insurance v CA

211 SCRA 554 (1991)

Justice Paras
Petitioner: Sun Insurance Office, Ltd.
Respondents: CA, Emilio Tan

FACTS
On Aug 15, 1983, Emilio Tan undertook a Php300,000 property insurance policy with Sun Insurance
Office for his brother’s electrical supply store in Iloilo City. 4 days after the issuance of the policy, the store
burned down. Thus, Tan filed a claim for fire loss.
Petitioner denied the latter’s claim. The letter was received by Tan on Apr 2, 1984 (important). On Apr 3,
1984, Tan sought for reconsideration. After asking for an update, Tan was again sent a letter by petitioner on
Oct 11, 1985 reiterating that the denial of Tan’s claim remained unchanged.
Thus, on Nov 20, 1985, Tan filed Civil Case with Iloilo RTC, but petitioner claimed that action had already
prescribed. Petitioner’s motion was denied by RTC, as well as the MR. CA also dismissed petitioner’s claim and
the subsequent MR, hence this petition.

ISSUES/HELD/RATIO
W/N filing of MR interrupts the 12 month prescriptive period to contest the denial of the insurance
claim – NO
- Cardinal principle of insurance law: policy/contract should be construed in favor of insured and
strictly against insurer. BUT, since stipulations in the contract are clear and unambiguous, they
should be construed in their plain and ordinary sense.
- Condition 27 of the Insurance Policy states that if a claim was to be rejected and an action to file
suit was not commenced within 12 months, the claim shall be deemed to have been abandoned.

W/N the insured was definitely advised of the rejection of his claim through the 1st denial letter – YES
- The court states that the first letter was clear and unqualified, and that the time should have ran
from that moment.
- This is in accordance with the principle laid down in Ang v Fulton Fire Insurance, which states that
conditions which require claims to be presented within a year are not merely procedural necessities,
but also practical ones so as to ensure that proper evidence has not yet been destroyed.
- 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.
- The court also states that the insured's cause of action commences from the time of the denial of
his claim by the Insurer, either expressly or impliedly.

JUDGMENT
CA decision reversed. Tan’s Civil Case dismissed.