GR 36657; (March, 1934) (2) (Digest)
G.R. No. 36657 , 36658, 36659, 36660; March 28, 1934
TEAL MOTOR COMPANY, INC., plaintiff-appellee, vs. THE CONTINENTAL INSURANCE CO., ET AL., defendants-appellants; MANILA BUILDING AND LOAN ASSOCIATION, defendant-appellee.
FACTS
Teal Motor Company, Inc., insured its building and merchandise with several insurance companies. A fire of unknown origin partially destroyed the building on January 6, 1929. The company filed claims. The trial court held the insurance companies liable for building damage amounting to P125,000 but denied the claim for merchandise damage as filed out of time. The Manila Building and Loan Association, a mortgagee with a partial assignment of the building insurance policies, was a party. The insurance companies appealed the liability for building damage, while Teal Motor Company appealed the denial of the merchandise claim.
ISSUE
(1) Whether the trial court correctly determined the amount of damage to the building. (2) Whether the insurance companies were justified in contesting payment, affecting the applicable interest rate under Act No. 3802 . (3) Whether the defense of arson and overinsurance should bar recovery.
RULING
(1) The Supreme Court affirmed the trial court’s finding that the building damage amounted to P125,000, giving weight to the trial court’s assessment of conflicting expert testimony. The claim was not so exaggerated as to be considered false under the insurance policies. (2) The insurance companies had justification to contest payment based on information suggesting the claim was excessive. Therefore, the legal interest rate on the proceeds is 6% per annum, not 8% as provided under Act No. 3802 for unjustified contests. (3) The defense of arson was properly rejected for lack of evidence. The intimation of overinsurance on the contents and the owners’ character did not affect the building claim, as the insurers had means to ascertain risks and values beforehand. The judgment of the trial court was affirmed with the modification on the interest rate.
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