Sun Insurance Office Ltd.

vs. Court of Appeals

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

Facts:
On August 15, 1983, Emilio Tan took from Sun
Insurance a Php 300,000 policy to cover his interest
in the electrical supply store of his brother in Iloilo
City. Four days after the issuance of the policy, the
building was burned including the insured store. Tan
filed his claim for fire loss with petitioner on August
20,1983. Tan’s request for an indemnity in 1983 was
repeatedly denied, firstly in April 2, 1984. He wrote
for a reconsideration in the same year.
 This was rejected in 1985, prompting him to file a
civil case on November 20, 1985.  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:
●

Whether or not the filing of a reconsideration

interrupts the twelve (12) months prescriptive period to
contest the denial of the insurance claim.
Ruling:
●

NO. While it is a cardinal principle of insurance

law that a policy or contract of insurance is to be
construed liberally in favor of the insured and strictly
against the insurer company, yet contracts of
insurance, like other contracts, are to be construed
according to the sense and meaning of the terms
which the parties themselves have used. If such terms
are clear and unambiguous, they must be taken and
understood in their plain, ordinary and popular sense
(Pacific Banking Corp. vs CA, 168 SCRA 1)
 In this case, 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. As the
terms are very clear and free from any doubt or
ambiguity whatsoever, it must be taken and
understood in its plain, ordinary and popular sense.

Thus, the 12-month prescriptive period started to

run from the said date of April 2, 1984, for such is
the plain meaning and intention under section 27 of
the insurance policy.
APPLICABILITY TO THE INSURANCE CODE

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 (1) year from the time when the cause of
action accrues, is void.