SUN INSURANCE OFFICE LTD.

V CA (TAN)
195 SCRA 193PARAS; March 13, 1991
NATURE
Petition for certiorari to review the decision of the CA
FACTS
- Private respondent Emilio Tan took from the petitioner a Peso 300,000 property
insurance policy to cover his interest in the electrical insurance store of his brother
housed in a building in Iloilo City on August 15, 1983. Four days after the issuance
of the policy, the building including the insured store burned.- On August 20, 1983,
Tan filed his claim for fire loss. Sun Insurance, on February 29, 1984, wrote the
private respondent denying the claim. On April 3,1984, private respondent wrote
another letter to the insurance company requesting reconsideration of the denial.
Tans lawyer wrote another letter to the insurance company inquiring about the April
3 letter which sought for a reconsideration of the denial. In its reply to the lawyers
letter, Sun Insurance reiterated its denial of the claim and enclosed therein copies
of the two previous denials dated February29, 1984 and May 17, 1985.- On
November 20, 1985, Tan filed a civil case with the RTC. Petition filed a motion to
dismiss on the alleged ground that the action has already prescribed based on
Condition 27 of the Insurance Policy which stated that the window to file the
appropriate action with either the Insurance Commission or in any court of
competent jurisdiction is twelve months from the rejection of the claim. RTC denied
the motion and the subsequent motion for reconsideration. The CA likewise denied
the petition of Sun Insurance.
ISSUE
1. WON the court the filing of a motion for reconsideration interrupts the 12 months
prescription period to contest the denial of the insurance claim2. WON 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- The SC held that Condition 27 of the Insurance policy is very clear and free
from any doubt or ambiguity. It has to be taken in its plain, ordinary ,and popular
sense. The rejection letter of February29, 1984 was clear and plain. The Court noted
that the one year period is likewise in accord with Section23 of the Insurance Code
which states that any condition which limits the time for commencing an action to a
period of less than one year when the cause of action accrues is void. The right of
action ,according to the SC, accrues at the time that the claim is rejected at the first
instance. A request for reconsideration of the denial cannot suspend the running of
the prescriptive period. The Court noted that the rationale for the one year period is

to ensure that the evidence as to the origin and cause of the destruction have not
yet disappeared.2. NO- The Court clarified its ruling in Eagle Star Insurance Co. vs
Chia Yu where it ruled that the cause of action in an insurance contract does not
accrue until the Insureds claim is finally rejected by the Insurer by stating the use
of the word finally cannot be construed to mean the rejection of a petition for
reconsideration. What the court referred to in effect is the rejection in the first
instance as claimed by Sun Insurance
Disposition
The decision of the CA is reversed and set aside. The case is dismissed