GR 36701; (March, 1934) (4) (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) held fire insurance policies from several defendant companies covering goods in a Manila building that were damaged by fire on January 6, 1929. The insurance companies 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. Informal settlement negotiations occurred between the parties but ended by May 31, 1929.
ISSUE
Whether the plaintiff’s actions on the insurance policies were barred for having been filed beyond the three-month period stipulated in the policies after the rejection of the claims.
RULING
Yes. The Supreme Court affirmed the trial court’s judgment, holding that the suits were not filed within the contractual period. The three-month period to file suit after rejection of the claim is valid and reasonable. The informal settlement negotiations were insufficient to toll the running of the period or to lull the plaintiff, a business entity advised by counsel, into inaction. Since the actions were time-barred, the Court deemed it unnecessary to address other issues like overinsurance or false claims. The Court treated the clauses in the Atlas policy (requiring arbitration) as having the same practical effect as the others (requiring suit) for purposes of the forfeiture, based on how the case was submitted by both parties. Justice Imperial dissented as to the Atlas case, arguing its policy contained no suit limitation clause. Justice Butte dissented, arguing the forfeiture was a harsh penalty under the circumstances.
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