G.R. No. L-48546. February 29, 1988.
SUMMIT GUARANTY & INSURANCE COMPANY, INC., petitioner, vs. THE HONORABLE GREGORIA C. ARNALDO, in her capacity as Insurance Commissioner, and FGU INSURANCE CORPORATION, respondents.

FACTS

A vehicular accident occurred on November 26, 1976, involving a vehicle insured by FGU Insurance Corporation and a cargo truck owned by Alberto Floralde, who was insured by Summit Guaranty & Insurance Company, Inc. FGU paid its assured, Marcos Olaso, for the damages and was subrogated to his rights. FGU later identified Summit as Floralde’s insurer and made a formal demand for reimbursement on February 28, 1978. Summit did not respond. Consequently, FGU filed a complaint for recovery with the Insurance Commissioner on May 22, 1978.
Summit moved to dismiss the complaint on the ground of prescription, citing Section 384 of the Insurance Code (Presidential Decree No. 612), which requires that an action for recovery of damage must be brought “within one year from date of accident.” The Insurance Commissioner deferred resolution of the motion to dismiss until after a hearing on the merits, prompting Summit to file this petition for certiorari and prohibition. Summit argued that the Commissioner acted with grave abuse of discretion by not dismissing the case outright, as the complaint was filed more than one year after the November 1976 accident.

ISSUE

Whether the Insurance Commissioner committed grave abuse of discretion in deferring the resolution of the motion to dismiss based on prescription, and whether FGU’s action had indeed prescribed under Section 384 of the Insurance Code.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion by the Insurance Commissioner and ruling that the action had not prescribed. On the procedural issue, the Court held that the Commissioner’s deferment of the motion to dismiss was proper under Section 3, Rule 16 of the Rules of Court, which allows such deferral if the grounds for dismissal are not indubitable. The remedy against a denial (or deferral) of a motion to dismiss is an appeal after a final judgment, unless the court acts without jurisdiction or with grave abuse of discretion, which was not present here.
On the substantive issue of prescription, the Court rejected Summit’s strict application of the one-year period from the “date of accident” under Section 384. Interpreting the phrase “in proper cases,” the Court, citing precedent (Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc.), held that the one-year prescriptive period should be counted from the date of the insurer’s denial of the claim, not from the accident date. This is because the cause of action for a subrogated insurer like FGU accrues only upon such denial. In this case, FGU’s extrajudicial demand was met with inaction from Summit, and the complaint was filed before any formal denial. Therefore, the prescriptive period had not even begun to run. The Court condemned dilatory tactics by insurers to evade liabilities and affirmed the Commissioner’s authority to proceed with the case.