GR 36701; (March, 1934) (2) (Digest)
G.R. No. 36701-36707; March 28, 1934
TEAL MOTOR COMPANY, INC., plaintiff-appellant, vs. ORIENT INSURANCE COMPANY, INC., et al., defendants-appellants/appellees.
FACTS
Teal Motor Company, Inc. (plaintiff) had fire insurance policies with various defendant insurance companies covering goods in a Manila building that were damaged by fire on January 6, 1929. The insurance companies formally rejected the plaintiff’s claims in writing on April 15, 1929. The policies (except for the Atlas Assurance Company policy) contained a clause stating that if a claim is made and rejected, and an action is not commenced within three months after such rejection, all benefit under the policy is forfeited. The Atlas policy contained a similar clause but required the commencement of arbitration proceedings within three months. The plaintiff filed the seven suits between August 3 and 15, 1929, which was more than three months after the April 15 rejection. The plaintiff argued that informal settlement negotiations with the insurance companies’ agents after the rejection lulled it into not filing suit on time.
ISSUE
Whether the plaintiff’s actions were filed within the period required by the forfeiture clauses in the insurance policies.
RULING
No. The Supreme Court affirmed the trial court’s dismissal of the suits. The three-month period to file suit (or commence arbitration for the Atlas policy) after the formal rejection of the claim is a valid contractual limitation. The informal settlement negotiations were insufficient to estop the insurance companies from invoking the forfeiture clauses, as they were inconsequential and did not lull the plaintiff, a shrewd businessman advised by counsel, into a confident belief that a settlement was forthcoming. The plaintiff had ample time from the termination of negotiations (May 31, 1929) until the expiry of the limitation period (July 15, 1929) to file its complaints. Since the actions were filed late, the benefits under the policies were forfeited. The Court deemed it unnecessary to rule on other defenses like overinsurance and false claims.
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