GR 36701; (March, 1934) (5) (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 insurance companies covering goods in a Manila building that was damaged by fire on January 6, 1929. The insurance companies rejected the plaintiff’s claims in writing on April 15, 1929. The plaintiff filed suits between August 3 and 15, 1929. The policies (except for the Atlas Assurance Company policy in G.R. No. 36705) contained a clause stating that if a claim is made and rejected, and an action or suit 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 after rejection, which did not occur. 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 stipulated in the insurance policies, thereby preventing the forfeiture of benefits.
RULING
No. The Supreme Court affirmed the trial court’s judgment, holding that the suits were not filed within the contractual period. The three-month period (from April 15, 1929) for filing suit under the policies expired on July 15, 1929. The suits filed in August 1929 were therefore untimely. The informal settlement negotiations were insufficient to estop the insurance companies from invoking the contractual time limit, as they were not of such a nature as to lull the plaintiff, a shrewd business entity assisted by counsel, into a confident belief that a settlement was forthcoming. The provision requiring an action to be filed within three months after rejection of the claim is valid. The Court deemed it unnecessary to address other defenses like overinsurance and false claims. (Note: A separate opinion dissented regarding G.R. No. 36705, as the Atlas policy lacked the specific suit limitation clause present in the others, but the majority treated the cases uniformly based on how they were submitted by counsel).
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