GR 152334; (September, 2014) (Digest)
G.R. No. 152334 ; September 24, 2014
H.H. HOLLERO CONSTRUCTION, INC., Petitioner, vs. GOVERNMENT SERVICE INSURANCE SYSTEM and POOL OF MACHINERY INSURERS, Respondents.
FACTS
Petitioner H.H. Hollero Construction, Inc. entered into a Project Agreement with respondent GSIS on April 26, 1988, to develop a housing project. Petitioner secured two Contractors’ All Risks (CAR) Insurance policies from GSIS: Policy No. 88/085 for land development and Policy No. 88/086 for housing unit construction. The policies contained a clause (Section 10) stating that all benefits would be forfeited if no action is instituted within twelve (12) months after the rejection of a claim. During construction, three typhoons (Biring, Huaning, and Saling) caused damage to the project. Petitioner filed indemnity claims with GSIS for these damages. GSIS rejected the claims for Typhoons Biring and Huaning via a letter dated April 26, 1990, citing the average clause provision. GSIS rejected the claim for Typhoon Saling via a letter dated June 21, 1990, on a “no loss” basis, stating the policies were not renewed. Petitioner filed a letter of reconsideration regarding the Typhoon Saling claim on April 18, 1991. Petitioner filed a Complaint for Sum of Money and Damages before the RTC on September 27, 1991. The RTC ruled in favor of the petitioner. On appeal, the CA reversed the RTC and dismissed the complaint on the ground of prescription, holding that the action was filed beyond the 12-month limitation period from the final rejection of the claims.
ISSUE
Whether or not the Court of Appeals committed reversible error in dismissing the complaint on the ground of prescription.
RULING
The Supreme Court denied the petition and affirmed the CA Decision and Resolution. The Court ruled that the complaint was barred by prescription. The 12-month prescriptive period for filing an action under the insurance policies commenced from the “final rejection” of the claim, which refers to the denial in the first instance. The GSIS letters dated April 26, 1990 (rejecting claims for Typhoons Biring and Huaning) and June 21, 1990 (rejecting the claim for Typhoon Saling) constituted final rejections. The Court held that the period is not tolled by the filing of a request for reconsideration. Since the complaint was filed on September 27, 1991, more than twelve months after the rejections in April and June 1990, the causes of action had prescribed.