40.Sun Insurance vs.

CA
Facts: Private respondent emilio tan took from petitioner a property insurance policy. After 4
days, the bulding was burned down including the insured store. On August 20, 1983, private
respondent filed a claim on the insurance but was denied by the petitioner. On April 3 1984,
private respondent sent a letter to petitioner seeking for reconsideration, but the same was
denied. On November 20,1985, petitioner filed a civil case but the petitioner filed a motion to
dismiss on the ground that the action has already prescibed.
Condition 27 of the Insurance Policy, which is the subject of the conflicting contentions of the
parties, reads:
"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."

It is apparent that Section 27 of the insurance policy was stipulated pursuant to Section 63 of the
Insurance Code, which states that an action or suit be filed in the Insurance Commission or in a
court of competent jurisdiction one year from the denial of the claim. However, said motion was
denied..
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 Hence this case.
Issue: 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

Ruling: No, the motion for reconsideration does not interrupt the prescription period.
The insured’s right to file a claim either in the /insurance Commission or in a court of competent
jurisdiction commences from the time of the denial or rejection of his claim by the insurer, either
expressly or implied.
Court had laid down the principle 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.
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. v. Court of Appeals, 168 SCRA 1[1988]).
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 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. The "final rejection" being
referred to in said case is the rejection by the insurance company.

[G.R. No. 155102. June 21, 2005.]

PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner, vs. LIZA T.
ONG/CHENG LING YA,

for approval is a Compromise Agreement executed by and between the herein petitioner and
respondent, assisted by counsel, and dated October 14, 2002.
Respondent Liza T. Ong, is the sole beneficiary of a P1,000,000 life insurance with a
P1,000,000 Comprehensive Accident Indemnity Rider (CAIR) procured by her brother, Henry
Ong,(PHILAMLIFE
One daay Henry Ong was found dead with a gunshot wound on the chest, inside a Mitsubishi
L300 van. Respondent filed a claim under the insurance policy and the petitioner paid her the
P1,000,000 basic life coverage. but denied liability under the P1,000,000 CAIR. because Henry
Ong was murdered, and murder is not covered by the CAIR.

Respondent filed a complaint before the RRTC of Manila, praying for payment of P1,000,000
with 24% interest, moral and exemplary damages, and attorney's fees. She alleged that Henry
Ong's death was an accident, contrary to petitioner's finding that the cause of his death was
murder.

Issue WON the mdeath is compensable under the rider.

After trial on the merits, the lower court ruled that the cause of Henry Ong's death was robbery
with homicide is a crime against property. and not against persons , therefore compensable
under the CAIR.
During the pendency of the instant petition, on October 14, 2002, the petitioner and respondent
entered into a compromise agreement, thus:
"COMPROMISE AGREEMENT
"PARTIES, assisted by their respective counsels, and unto the Honorable Court, most
respectfully aver that they settle the above case under the following terms and conditions, viz:
"1. They agree to put an end to the present litigation to their mutual satisfaction;
"2. In this connection, Petitioner shall indemnify the Respondent the sum of P1,000,000.00
representing the insurance proceeds under the Comprehensive Accident Indemnity Rider (CAIR)
upon the signing of this Compromise Agreement;
"3. They waive any and all other claims against each other.

The court approved th compromise agreement and dismissed the petition

Advantage of ADR, even during the pendency of a case, a compromise agreement may be
reached and made binding through court approval.

General Insurance vs Union insurance

In 1959 , the parties all insurance, reinsurance corporations entered into a reciprocal reinsurance
agreement and a retrocession agreement. Each Contract contains an arbitration clause.
the petitioners and respondent expressly agreed to settle by arbitration all their differences of
whatever nature or controversy arising out of the contract, which agreement is embodied in
Article XII of the reinsurance agreement
Upon termination of the agreements in 1961 then petitioners claimed respondent owed them a
sum of 4784 sterling pounds or phil peso at the prevailing exchange rate. The respondents refuse
to pay in pounds sterling and insisted that it should pay the amount in pesos and the old
exchange rate of Php2 to 1 US dollar. Then petitioners made a formal demand to proceed with
arbitration but respondent refuses , contending that there was no controversy or dispute existing
between parties so there was no need for arbitration. SO in1967 , lawsuits were filed in the CFI
praying for a declaration that a dispute exists between parties that is subject of arbitration. The
Cfi ruled for the petitioners and ordered gen insurance to pay .
Upon appeal ,in its memorandum the respondent now petitioner belatedly invoked R.A. 529 as a
defense which declares as against public policy, and null and void, provisions in agreements
which "purport(s) to give the obligee the right to require payment in gold or in a particular kind
of coin or currency other than Philippine Currency or in an amount of money in the Philippines
measured thereby
The issue: Is there a controversy or dispute to warrant an order compelling the parties to submit
to arbitration?

The ruling:
petitioner's invocation of R.A. 529 as a defense was raised for the first time only in its
memorandum, on appeal. It is a basic rule in procedure that defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived

But, even if We were to consider petitioner's defense of R.A. 529 , R.A. 529 does not invalidate
the whole contract which gives the obligee the right to demand payment in gold or other foreign
currencies. What it declares as null and void is the provision to such effect. Consequently, the
transaction or contract subsists. The most that could be demanded is to pay said obligation in
Philippine currency.= prevailing exchange rate

So therefore,the nonpayment- is A valid controversy that exists between parties, which is proper
subject or arbitration. Where there is an agreement (as in this case, a clause) to arbitrate and one
party puts up a claim which the other disputes, the need to arbitrate becomes mandatory. Since it
was not disputed that in both agreements the parties had agreed that any dispute arising from
these agreements shall be referred to a set of arbitrators, the trial court correctly ordered the
parties to submit to arbitration. The provision on arbitration is the remedy by which the parties
may resort to for disputes arising from their agreements. (General Insurance v. Union Insurance,
179 SCRA 530)

Insurance Code ( RA 10607 )

“SEC. 397. Any person having any claim upon the policy issued pursuant to this chapter shall,
without any unnecessary delay, present to the insurance company concerned a written notice of
claim setting forth the nature, extent and duration of the injuries sustained as certified by a duly
licensed physician. Notice of claim must be filed within six (6) months from the date of accident,
otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss
or injury must be brought, in proper cases, with the Commissioner or the courts within one (1)
year from denial of the claim, otherwise, the claimant’s right of action shall prescribe.

“SEC. 398. The insurance company concerned shall forthwith ascertain the truth and
extent of the claim and make payment within five (5) working days after reaching an
agreement. If no agreement is reached, the insurance company shall pay only the no-
fault indemnity provided in Section 391 without prejudice to the claimant from pursuing
his claim further, in which case, he shall not be required or compelled by the insurance
company to execute any quit claim or document releasing it from liability under the
policy of insurance or surety bond issued.

“In case of any dispute in the enforcement of the provisions of any policy issued
pursuant to this chapter, the adjudication of such dispute shall be within the original and
exclusive jurisdiction of the Commissioner, subject to the limitations provided in Section
439.

SEC. 439. The Commissioner shall have the power to adjudicate claims and complaints
involving any loss, damage or liability for which an insurer may be answerable under
any kind of policy or contract of insurance, or for which such insurer may be liable under
a contract of suretyship, or for which a reinsurer may be sued under any contract of
reinsurance it may have entered into; or for which a mutual benefit association may be
held liable under the membership certificates it has issued to its members, where the
amount of any such loss, damage or liability, excluding interest, cost and attorney’s
fees, being claimed or sued upon any kind of insurance, bond, reinsurance contract, or
membership certificate does not exceed in any single claim Five million pesos
(P5,000,000.00).

“The power of the Commissioner does not cover the relationship between the insurance
company and its agents/brokers but is limited to adjudicating claims and complaints filed
by the insured against the insurance company.

“The Commissioner may authorize any officer or group of officers under him to conduct
investigation, inquiry and/or hearing and decide claims and he may issue rules
governing the conduct of adjudication and resolution of cases. The Rules of Court shall
have suppletory application.

“The party filing an action pursuant to the provisions of this section thereby submits his
person to the jurisdiction of the Commissioner. The Commissioner shall acquire
jurisdiction over the person of the impleaded party or parties in accordance with and
pursuant to the provisions of the Rules of Court.

“The authority to adjudicate granted to the Commissioner under this section shall be
concurrent with that of the civil courts, but the filing of a complaint with the
Commissioner shall preclude the civil courts from taking cognizance of a suit involving
the same subject matter.

“Any decision, order or ruling rendered by the Commissioner after a hearing shall have
the force and effect of a judgment. Any party may appeal from a final order, ruling or
decision of the Commissioner by filing with the Commissioner within thirty (30) days
from receipt of copy of such order, ruling or decision a notice of appeal to the Court of
Appeals in the manner provided for in the Rules of Court for appeals from the Regional
Trial Court to the Court of Appeals.
“For the purpose of any proceeding under this section, the Commissioner, or any officer
thereof designated by him is empowered to administer oaths and affirmation, subpoena
witnesses, compel their attendance, take evidence, and require the production of any
books, papers, documents, or contracts or other records which are relevant or material
to the inquiry.

“A full and complete record shall be kept of all proceedings had before the
Commissioner, or the officers thereof designated by him, and all testimony shall be
taken down and transcribed by a stenographer appointed by the Commissioner.

“In order to promote party autonomy in the resolution of cases, the Commissioner shall
establish a system for resolving cases through the use of alternative dispute resolution.