GR 36701; (March, 1934) (7) (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 were damaged by fire on January 6, 1929. The insurance companies rejected the plaintiff’s claims in writing on April 15, 1929. The plaintiff filed seven separate suits between August 3 and 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 suits were filed more than three months after the April 15 rejection. The plaintiff argued that informal settlement negotiations with the insurers’ agents after the rejection lulled it into not filing suit on time.
ISSUE
Were the actions filed by Teal Motor Company against the insurance companies barred for having been filed beyond the three-month period stipulated in the insurance policies?
RULING
Yes. The Supreme Court affirmed the trial court’s judgment, holding the actions were barred. The three-month period for filing suit (or commencing arbitration for the Atlas policy) after rejection of the claim is a valid contractual limitation. The informal settlement negotiations cited by the plaintiff were insufficient to have induced a confident belief that an extrajudicial settlement was forthcoming so as to excuse the delay. The plaintiff, a shrewd business entity advised by counsel, had ample time from the termination of negotiations (May 31) until the expiry of the period (July 15) to file its complaints. The Court treated the clauses in the various policies as having the same practical effect for the purposes of the case. Since the suits were time-barred, the Court deemed it unnecessary to address other defenses like overinsurance or false claims.
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