DIGEST: HH Hollero Construction Inc. vs. GSIS

ISSUES INVOLVED

Prescription for insurance claims reckons from the date of denial of first instance and not denial of motion for reconsideration 

FACTS:

HH Hollero undertook a housing project with the GSIS. Pursuant to this, they insured the projects with GSIS. During the construction of the project several typhoons passed which caused damage to the pending construction.  Hollero filed for a claim in their insurance policy before the GSIS, but the latter denied it.  Hollero asked for another reconsideration of its claim, but was again denied by the GSIS. On appeal, the CA dismissed the complaint on account of prescription. Hollero contends that the decision of the denial is merely a tentative resolution or rejection which would not start the counting of the claim period.

ISSUE: Whether prescription barred Hollero’s claims.

RULING:

The rejection referred to should be construed as the rejection in the first instance. The right of the insured to the payment of his loss accrues from the happening of the loss. However, the cause of action in an insurance contract does not accrue until the insured’s claim is finally rejected by the insurer. This is because before such final rejection there is no real necessity for bringing suit. Cause of action will only arise when the party obligated refuses to comply with its duty.