G.R. No. 210302, August 27, 2020
Integrated Micro Electronics, Inc., Petitioner, vs. Standard Insurance Co., Inc., Respondent.

FACTS

Sometime in March 2009, a panel of insurers including Standard Insurance Co., Inc. issued an “all risks” insurance policy in favor of Integrated Micro Electronics, Inc. (Integrated Micro). On May 24, 2009, a fire broke out at Integrated Micro’s building, damaging its equipment. Integrated Micro filed a claim for indemnity, which Standard Insurance rejected on February 24, 2010, on the ground that the cause of the loss was an excluded peril. Integrated Micro sought reconsideration, which was denied in a letter dated April 12, 2010, received by Integrated Micro on April 15, 2010. On April 11, 2011, Integrated Micro filed a complaint for specific performance and damages against Standard Insurance before the Regional Trial Court (RTC). Standard Insurance moved to dismiss the complaint on grounds of invalid service of summons (as it was served upon the legal assistant/secretary of its in-house counsel), lack of cause of action, and prescription. Standard Insurance argued the complaint was filed beyond the 12-month prescriptive period from the rejection of the claim, counting from the February 24, 2010 denial. The RTC denied the motion to dismiss. The Court of Appeals (CA) reversed the RTC, ruling that the cause of action had prescribed and the service of summons was invalid. Integrated Micro filed this petition, arguing its cause of action accrued from the final rejection (April 15, 2010) and that the service of summons was valid.

ISSUE

1. Whether Integrated Micro’s cause of action against Standard Insurance had prescribed.
2. Whether the service of summons upon Standard Insurance was valid.

RULING

The Supreme Court denied the petition and affirmed the CA Decision.
1. On Prescription: The cause of action had prescribed. The insurance policy’s General Conditions explicitly stated that if a claim is made and rejected, an action must be commenced “within twelve (12) months from receipt of notice of such rejection.” The terms are clear and unambiguous, and must be understood in their plain, ordinary sense. The parties did not stipulate that the period would commence only after a denial of a request for reconsideration. The 12-month period is reckoned from the insurer’s initial rejection of the claim (February 24, 2010), not from the denial of a reconsideration. The Court clarified that the “final rejection” referred to in jurisprudence means the insurer’s denial of the claim itself, not the denial of a motion for reconsideration. Integrated Micro filed its complaint on April 11, 2011, which was beyond the 12-month period from February 24, 2010.
2. On Service of Summons: The service of summons was invalid. Service was made upon the legal assistant or secretary of Standard Insurance’s in-house counsel. Under Section 11, Rule 14 of the 1997 Rules of Court, service upon a private domestic corporation must be made on its president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. The rule is strictly construed. The in-house counsel’s legal assistant or secretary is not among the persons authorized to receive summons. Actual receipt by the corporation does not validate an otherwise defective service. Strict compliance with the rules on service of summons is required.