SUMMIT GUARANTY AND INSURANCE COMPANY, INC., PETITIONER, VS. HON. JOSE C. DE GUZMAN, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH III, CFI OF TARLAC, GERONIMA PULMANO AND ARIEL …

These three consolidated
cases arose from three separate complaints filed against Summit Guaranty and
Insurance Company, Inc., herein petitioner, for the payment of insurance on
insurance policies issued by the latter.

The facts are as follows:

G.R. No. L-48679

Private respondent Jose
Ledesma was the owner of a tractor which was bumped by a minibus insured with
petitioner company for purposes of Third Party Liability.  The incident took place on March 10, 1977.

Immediately thereafter,
private respondent made a notice of claim with petitioner company for the
damage and loss suffered by the tractor. 
Petitioner company then advised private respondent to have the tractor
repaired at G.A. Machineries which estimated the job at Twenty-One Thousand
Pesos (P21,000.00).^[1] Later, petitioner company through its
officials, made an assurance of payment of the said amount.^[2]

When G.A. Machineries was
finally through with the repair, private respondent made several demands on
petitioner company because of the repair shop’s warning that failure to pay
would result in the auctioning of the tractor to cover the mechanic’s
lien.  However, private respondent only received additional
assurances of payment.

On June 8, 1977, due to
the failure of petitioner company to settle his claim, private respondent
submitted a letter-complaint to the Insurance Commission.^[3] The latter, in turn, wrote petitioner
company to inquire about the status of the claim.^[4]

Again, in March, 1978,
petitioner company promised to pay^[5]

On April 26, 1978, for
not having received any payment of its credit, private respondent filed a
formal complaint with the Insurance Commission^[6] which petitioner company moved to dismiss on
the ground of prescription.  The Com­mission,
through an order of respondent Commissioner Gregoria Arnaldo, deferred the
resolution of the motion to dismiss causing petitioner company to file a motion
for reconsideration which was later denied. 
Hence, this peti­tion for certiorari and prohibition.

G.R. No. 50997

Private respondent
Geronima Pulmano was the owner of a jeep insured with petitioner company in the
amount of Twenty Thousand Pesos (P20,000.00). 
On Sept. 5, 1977, while being driven by private respondent Ariel Pulmano
this jeep got involved in a vehicular accident which resulted in the death of one
of the victims.

Private respondent
immediately filed a notice of accident and claim with the petitioner company
and diligently submitted all the required documents with it.^[7] However, petitioner company did not take any
steps to process the claim.

Because of this, private
respondents brought their claim to the Insurance Commission and the latter
wrote petitioner company three letters dated October 11, 13 and 21, 1977.^[8] On December 22, 1977, the heirs of the
victim themselves filed a letter-complaint with the Insurance Commission^[9] a copy of which was sent to petitioner
company by registered mail.^[10] Still,
petitioner company failed to
settle the claim.

Since all the waiting for
petitioner company to act proved to be futile, private respondents were
constrained to file a complaint with the Court of First Instance of Tarlac
dated October 5, 1978.  Petitioner
company moved to dismiss on the ground of prescription but respondent Judge
Jose C. de Guzman denied the motion. 
Hence, this petition for certiorari and prohibition.

G.R. No. L-48758

Private respondent Amelia
Generao owned a passenger jeepney that was insured with petitioner company
under a Vehicle Comprehensive Policy.  On
June 23, 1976, while being driven by private respondent Carlos Pagkalinawan,
this jeepney struck the van of a certain Mr. Hahn.

Two days after the accident or on June 25, 1976,
Generao notified petitioner company of the vehicular accident and demanded from
it payment of damages on both vehicles^[11] Thereafter, Generao submitted to petitioner company
all the necessary papers in support of the claim and required of her by the
latter.^[12] Following this, Generao and petitioner
company had a dialogue at the office of the insurance company to settle the
claim.^[13] Then, in the initial hearing of the criminal
case that arose out of the incident, accused Pagkalinawan was represented by a
lawyer of petitioner company^[14]

Nonetheless, time passed
without petitioner company taking any final action on Generao’s claim.

On August 3, 1977, Mr.
Hahn filed a complaint for damages against herein respondents Generao and
Pagkali­nawan with the Court of First Instance of Rizal, Branch XXVI.  Private respondents, on the other hand, filed
a third party complaint against petitioner company which in turn filed a motion
to dismiss on the ground of prescription. 
Respondent Judge Ramon V. Jabson, however, denied the said motion.  Subsequently, petitioner company filed a
motion for reconsideration which again was denied.  Hence, this petition for certiorari
and prohibition.

The only issue at bar is
whether or not the causes of action of private respondents have already
prescribed.

According to the
petitioner company, the complaints of private respondents, having been filed
beyond the one-year period provided in Section 384 of the Insurance Code, can
no longer prosper.  Said law reads as
follows:

SECTION 384.  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 amount
of his loss, and/or the nature, extent and duration of the injuries sustained
as certified by a duly licensed physician. 
Notice of claim must be filed within six months from date of the
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 Commission or the
Courts within one year from date of accident, otherwise the claimant’s right of
action shall prescribe.  (Emphasis
supplied.)^[15]

Petitioner company
contends that the two periods prescribed in the aforementioned law – that is,
the six-month period for filing the notice of claim and the one-year period for
bringing an action or suit – are
mandatory and must always concur. 
Petitioner company argues that under this law, even if the notice of
claim was timely filed with the insurance company within the six-month period,
as what happened in the three cases before Us, the action or suit that follows,
if filed beyond the one-year period should necessarily be dismissed on the
ground of prescription.

We find no merit in the
contention of petitioner company.  There
is absolutely nothing in the law which mandates that the two periods must
always concur.  On the contrary, it is very clear that the one-year period is only required “in
proper cases”.  It appears that petitioner company disregarded this very
significant phrase when it made its own interpretation of the law.  Had the lawmakers intended it to be the way petitioner
company assumes it to be, then the phrase “in proper cases” would not
have been inserted.  At this point, it is
but appro­priate for Us to reiterate our ruling in Aisporna vs. Court of
Appeals,^[16] to wit:

“Legislative intent must be ascertained from a consideration
of the statute as a whole.  The
particular words, clauses and phrases should not be studied as detached and
isolated expressions, but the whole and
every part of the statute must be considered in fixing the meaning of
any of its parts and in order to produce a harmonious whole.  A statute must be so construed as to
harmonize and give effect to all its provisions whenever possible.”

It is very obvious that
petitioner company is trying to use Section 384 of the Insurance Code as a
cloak to hide itself from its liabilities. 
The facts of these cases evidently reflect the deliberate efforts of
petitioner company to prevent the filing of a formal action against it.  Bearing in mind that if it succeeds in doing
so until one year lapses from the date of the accident it could set up the
defense of prescription, petitioner company made private respondents believe
that their claims would be settled in order that the latter will not find it
necessary to immediately bring suit.  In
violation of its duties to adopt and implement reasonable standards for the
prompt investigation of claims and to effectuate prompt, fair and equitable
settlement of claims,^[17] and with manifest bad faith, petitioner
company devised means and ways of stalling the settlement proceedings.  In G.R. No. L-50997, no steps were taken to
process the claim and no rejection of said claim was ever made even if private
respondent had already complied with all the requirements.  In G.R. No. L-48758 – petitioner company even
provided legal assistance to one of the private respondents in the criminal
case filed against him leading private respond­ents to believe that it was
ready to pay.  In the same case,
petitioner company admits that it took no final action or adjudication of the
claim.^[18] Worse still, in G.R. No.L-48679, assurances
of payment were constantly given and petitioner company even said that a check
was ready for release.

This Court has made the observation that some insurance companies have been inventing excuses to
avoid their just obligations^[19] and it is only the State that can give the
protection which the insuring public needs from possible abuses of the
insurers.^[20]

In view of the foregoing,
We hold that these three cases do not fall within the meaning of “proper
cases” as contemplated in Section 384 of the Insurance Code.  To hold otherwise would enable petitioner
company to evade its responsibility through a clever scheme it had contrived.

To strengthen its
position, petitioner company cites the following principle laid down in the
case of Ang vs. Fulton Fire Insurance,^[21] to wit:

“‘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.  It is in the
nature of a condition precedent to the liabi­lity of the insurer, or in other
terms, a resolutory clause, the purpose of which is to terminate all
liabilities in case the action is not filed by the insured within the period
stipulated.'”

Suffice it to say that
the aforementioned case has no application to the present cases as in that case
the claim of the plaintiffs was denied as early as April 18, 1956 and the
action was brought only on May 5, 1958 or almost 2 years after.  As we have already noted earlier, in the cases
at bar, no denial of the claims was ever made and on the contrary, private
respondents were made to believe that they will be paid by petitioner company. 
The alleged delay, which is
quite insignificant compared to the length of time that the plaintiffs took in
the Ang case in bringing
suit, was not caused by herein private respondents but by the petitioner
company itself.

The one-year period
should instead be counted from the date of rejection by the insurer as this is
the time when the cause of action accrues. 
Since in these cases there has yet been no accrual of cause of action,
We hold that prescription has not yet set in.

In Eagle Star
Insurance Co., Ltd., et al. vs. Chia Yu,^[22] this Court ruled:

“The plaintiff’s cause of action did not accrue until his
claim was finally rejected by the insurance
company.  This is because, before
such final rejection, there was no real necessity for bringing suit.”

The philosophy of the
above pronouncement was pointed out in the case of ACCFA vs. Alpha Insurance
and Surety Co.,^[23] viz:

“Since a ’cause of action’ requires, as essential elements,
not only a legal right of the plaintiff and a correlative obligation of the
defendant but also ‘an act or omission of the defendant in vio­lation of said
legal right’, the cause of action does not accrue until the party obligated
refuses, expressly or implied­ly, to comply with its duty.”

Finally, We are pleased
to note that the now defunct Batasang Pambansa, after having recognized that
Section 384 of the Insurance Code, has created so many problems for the insured^[24] amended the law to read as follows:

SEC. 384.  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 months from date of the 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 Commisioner or the Courts within one year from denial of the
claim, otherwise the claimant’s right of action shall pres­cribe. (Emphasis
supplied.)^[25]

WHEREFORE, the instant petitions are hereby dismissed for
lack of merit.  The temporary restraining
order dated July 18, 1979 issued in G.R. No. 50997 is hereby lifted.  With costs against petitioner company.  Let the records of these cases be immediately
remanded for prompt determination of the claims.  This decision is immediately executory.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera,
Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Sarmiento, and Cortes, JJ., concur.

^[1]
Page 7, Rollo.

^[2]
Page 6, Rollo.

^[3]
Pages 34 and 38, Rollo.

^[4]
Page 34, Rollo.

^[5]
Page 7, Rollo.

^[6]
Annex “A”, pages 6-8, Rollo.

^[7]
Page 9, Rollo.

^[8]
Pages 30-31, Rollo.

^[9]
Page 31, Rollo.

^[10]
Page 31, Rollo.

^[11]
Pages 14, 18 and 33, Rollo.

^[12]
Page 33, Rollo.

^[13]
Page 33, Rollo.

^[14]
Pages 18 and 33, Rollo.

^[15]
Section 384 of the Insurance Code
(Presidential Decree No. 612) has been amended
by P.D. No. 1814 and B.P. Blg.
874.  The above-quoted provision is
in the original text.

^[16] 113 SCRA 459.

^[17]
Section 241 of the Insurance Code
provides:  (1) No insurance company doing
business in the Philippines shall refuse, without just cause, to pay or settle
claims arising under coverages provided by its policies, nor shall any such
company engage in unfair claim settlement prac­tices.  Any of the following acts by an insurance
company, if committed without just cause and performed with such frequency as
to indicate a general business practice, shall constitute unfair claim
settlement practices;

(a) knowingly misrepresenting to
claimants pertinent facts or policy provisions relating to coverages at issue;

(b) failing to acknowledge with
reasonable promptness pertinent communications with respect to claims arising
under its policies;

(c) failing to adopt and implement reasonable standards for the
prompt investigation of claims arising under its policies;

(d) not attempting in good faith to effectuate prompt, fair and
equitable settlement of claims submitted in which liability has become
reasonably clear; or

(e) compelling policyholders to institute
suits to recover amounts due under its policies by offering without justifiable
reason substantially less than the amounts ultimately recovered in suits
brought by them.

(2) Evidence as to numbers and types of valid and justifiable
complaints to the Commissioner against an insurance company, and the
Commissioner’s complaint experience with other insurance companies writing
similar lines of insurance shall be admissible in evidence in an adminis­trative
or judicial proceeding brought under this section.

(3) If it is found, after notice
and an opportunity to be heard, that an insurance company has violated this
section, each instance of non-compliance with paragraph (1) may be treated as a
separate violation of this section and shall be considered sufficient cause for
the suspension or revocation of the company’s certificate authority.  (Emphasis
supplied)

^[18]
Page 39, Rollo of G.R. No. L-48758.

^[19]
American Home Insurance Co. vs.
Court of Appeals,109 SCRA 180.

^[20]
Campos, Insurance, 1983 Ed., p. 7.

^[21]
2 SCRA 945; page 73, Rollo of
G.R. No. 50997.

^[22]
G.R. No. 5915, March 31, 1955.

^[23]
G.R. No. 24566, July 29, 1968.

^[24]
Pages 770-771, Record of the Batasan,
Proceedings and Debates, First Division (1984-1985), Volume 4.

^[25]
Assemblyman H. Perez, who was the
sponsor of the Bill (Parliamentary Bill No. 1340) that embodied the proposed
amendment of changing the period of prescription to run not from the date of
the accident but from the date of the denial of the claim, explained that the
latter is the date of accrual of the
cause of action.