Paulo Ang and Sally Ang v. Fulton Fire Insurance Co.

et al
No. L-15862. July 31, 1961; J. Labrador
FACTS:
(chronological arrangement of facts)
1. Sept 1953: P&S Department Store (Sally Ang) was insured with Fulton Fire Insurance Co
over stocks of general merchandise, consisting principally of dried goods. It contained a
stipulation stating if the claim is made and rejected but no action is commenced within
12 months after such rejection, all benefits under the policy would be forfeited.
2. Dec 1954: fire consumed the store and Ang filed claims. However, on April 1956, Fulton
denied claims.
3. January 1955: Paulo Ang and 10 others were charged for arson in the Justice of the Peace
Court of Ilocos Norte. Remanded to CFI and the latter acquitted Paulo Ang of the crime
of arson.
4. May 1956: Ang filed case against Fultons agent. On Sept 1957, this case was dismissed
without prejudice.
5. May 1958: Ang filed the present case against Fulton. CFI ruled in favor of Ang, holding
that the 12-month prescription period (from insurers denial of claim) was suspended by
the case against the agent.
ISSUE: whether or not the filing of the previous suit against the agent suspended the running
of the prescriptive period.
HELD:
1. SC ruled that no, period was not suspended, and action had already prescribed. CFI
ruling set aside, case dismissed.
2. The condition contained that claims must be presented within 12 months or one year
after rejection is not merely a procedural requirement, but is essential to a prompt
settlement of claims against insurance companies.
3. It demands that insurance suits be brought by the insured while the evidence as to the
origins and causes of destruction have not yet disappeared.
4. Its purpose is to terminate all liabilities in case the action is not filed by the insured
within the period stipulated.
5. The action against the agent cannot have any other legal effect except that of notifying
the agent of the claim if there is no condition in the policy that an action should be filed
by the insured against the agent for his claim. There is no law giving any effect to such
action upon the principal, and courts cannot by interpretation extend the clear scope of
the agreement beyond what is agreed upon by the parties.
6. Contractual limitations in insurance policies prevail over the statutory limitations, as well
as over the exceptions to the latter, because the rights of the parties flow from the
contract of insurance. Their contract is the law between the parties, and their agreement
that an action on a claim denied by the insurer must be brought within one year from the
denial, governs, not the rules on the prescription of actions.