Case Summary (G.R. No. 203756)
Key Dates
• June 9, 2007–June 9, 2008: Period of two fire insurance policies
• February 24, 2008: Warehouse fire occurs
• January 22, 2009: PCIC denies claim (received January 24, 2009)
• January 20, 2010: Original complaint filed in RTC, Malolos (Civil Case No. 41-M-2010)
• February 9, 2010: Amended complaint filed (P300 million claim)
• April 5, 2011 and June 21, 2011: RTC orders denying PCIC’s motions to dismiss
• July 20, 2012: Court of Appeals decision nullifying RTC orders and dismissing the complaint
• October 3, 2012: CA resolution denying motion for reconsideration
Applicable Law
• 1987 Philippine Constitution (governs all cases decided after 1990)
• Insurance Code, Section 63 (prohibits stipulations limiting suit to less than one year)
• Condition No. 27 of fire insurance policies (requires suit within twelve months from notice of rejection)
• Civil Code, Article 13 (defines “year” as 365 days)
• Rules of Court, Rule 65 (certiorari) and Rule 16, Section 6 (affirmative defenses)
Factual Background
Alpha Plus obtained two fire‐insurance policies from PCIC covering its warehouse and equipment. Following a destructive fire on February 24, 2008, Alpha Plus submitted a claim, which PCIC formally denied by letter dated January 22, 2009 (received January 24, 2009). Attempts at out‐of‐court settlement failed.
Procedural History
- Original Complaint (Jan. 20, 2010) – prayed for insurance proceeds, legal interest, exemplary damages (≥P1 million), attorney’s fees (≥P1 million), and costs; initial docket fees of ₱42,545.
- Amended Complaint (Feb. 9, 2010) – expressly claimed P300 million actual damages and “two times the legal interest per annum”; paid additional docket fees of ₱6,056,465.
- Motions to Dismiss filed for lack of cause of action, insufficient fees, and prescription; RTC denied these motions in Orders dated April 5 and June 21, 2011.
- Respondents petitioned the Court of Appeals for certiorari.
- CA granted the petition, nullified the RTC orders, and ordered dismissal on the ground that the action had prescribed.
- Petitioner’s motion for reconsideration before the CA was denied on October 3, 2012.
Issue
Whether the Court of Appeals erred in dismissing Alpha Plus’s complaint on the ground of prescription and in computing the prescriptive period from the filing of the amended complaint.
Supreme Court Ruling
- Prescription is a fixed period and must be raised by the court when evident from the record; dismissal for prescribed actions is mandatory.
- Insurance Code Section 63 voids any policy clause limiting suit to less than one year; Condition No. 27 sets a one‐year (365 days) period from “receipt of notice of such rejection.”
- Civil Code Article 13 confirms that a “year” means 365 days.
- “Final rejection” occurs upon the insurer’s initial denial, not upon any later motion for reconsideration. Here, prescription began on January 24, 2009, and ran until January 24, 2010.
- Origin
Case Syllabus (G.R. No. 203756)
Facts of the Case
- Alpha Plus International Enterprises Corp. (“Alpha Plus”) is engaged in the optical media business.
- It obtained two fire insurance policies from Philippine Charter Insurance Corp. (“PCIC”) covering June 9, 2007 to June 9, 2008.
- On February 24, 2008, a fire gutted Alpha Plus’s warehouse, destroying equipment and machinery.
- PCIC denied the insurance claim by letter dated January 22, 2009, received by Alpha Plus on January 24, 2009.
- Subsequent correspondence failed to settle the dispute.
Trial Court Proceedings (RTC, Malolos, Branch 84)
- January 20, 2010: Alpha Plus filed its original Complaint for Specific Performance, Collection of Money, and Damages (Civil Case No. 41-M-2010), claiming insurance proceeds plus exemplary damages (not less than ₱1 million), attorney’s fees (not less than ₱1 million), and costs; paid initial docket fees of ₱42,545.00.
- February 9, 2010: Alpha Plus filed an Amended Complaint specifying actual damages of ₱300 million and requesting “two (2) times the legal interest per annum on the proceeds”; paid additional docket fees of ₱6,056,465.00.
- Respondents (PCIC and its officers) filed Motions to Dismiss for lack of cause of action and insufficient docket fees; RTC denied these motions.
- Respondents filed an Answer Ad Cautelam with Compulsory Counterclaim, asserting prescription under Condition No. 27 of the policies.
- They also moved for a preliminary hearing on affirmative defenses or dismissal for lack of jurisdiction (insufficient fees), lack of cause of action, and prescription. Alpha Plus opposed.
RTC Orders
- April 5, 2011 Order: Denied PCIC’s Motion for Preliminary Hearing of Affirmative Defenses and/or Motion to Dismiss. Held that the RTC had acquired jurisdiction upon payment of correct docket fees and that the issues raised had been previously resolved; set the pre-trial.
- June 21, 2011 Order: Denied respondents’ Motion fo