**Facts:** Julian Sy and Jose Sy Bang formed a business partnership known as New Life Enterprises in Lucena City, engaged in selling construction materials. The partnership insured their stocks in trade with Western Guaranty Corporation, Reliance Surety and Insurance Co., Inc., and Equitable Insurance Corporation through three separate fire insurance policies with a total coverage of P1,550,000. A fire in October 1982 destroyed the insured stocks. Upon filing claims for compensation, all three insurance companies denied the claims citing violations of policy conditions including the non-disclosure of co-insurances among the insurers. As a result, separate civil actions were initiated by the plaintiffs against the insurers in the Regional Trial Court (RTC) of Lucena City, which jointly decided in favor of the plaintiffs. The Court of Appeals (CA) later reversed the RTC’s decision, leading to the current petition.
**Procedural Posture:** After the denial of their claims by the insurance companies, the petitioners filed separate civil actions against each insurer. These cases were consolidated for trial in the RTC of Lucena City, which ruled in favor of the petitioners. The insurance companies appealed to the CA, which reversed the RTC’s decision, leading to the petitioners seeking certiorari from the Supreme Court to challenge the CA’s decision.
**Issues:**
1. Whether the petitioners violated Policy Condition Nos. 3 and 27, leading to the forfeiture of their right to claim under the insurance contracts.
2. Whether the knowledge of co-insurances by the insurers’ agents can be deemed as notice under Policy Condition No. 3.
3. Whether the claim against Reliance was filed out of time in accordance with Policy Condition No. 27.
**Court’s Decision:**
1. The Supreme Court affirmed the CA’s decision, holding that the petitioners failed to disclose other insurance coverage as required by Policy Condition No. 3, leading to the forfeiture of their claims.
2. The Court ruled that mere knowledge of other insurances by the insurers’ agents cannot be equated with the formal notice required by the policies. Therefore, the petitioners’ failure to provide formal notice of co-insurances forfeited their claims.
3. The Court found that the claim against Reliance Surety was indeed filed out of time as stipulated by Policy Condition No. 27, which mandates filing a claim within twelve months from receiving the notice of claim rejection. The petitioners’ action, filed beyond this period, was deemed time-barred.
**Doctrine:** The Supreme Court reiterated the principle that the terms of insurance contracts are to be construed according to their plain and ordinary meaning unless ambiguous. Furthermore, the Court emphasized that failure to comply with policy conditions, specifically the disclosure of co-insurances, can result in the forfeiture of claims. Additionally, the Court held that compliance with policy conditions regarding the filing period after claim rejection is crucial for the recoverability of claims.
**Class Notes:**
– The need for clear and timely disclosure of co-insurances as stipulated in insurance policy conditions.
– The significance of complying with the procedural timelines for filing claims post-rejection by insurers.
– The distinction between the knowledge of agents and the formal notice requirements under insurance policy conditions.
**Historical Background:** This case highlights the common business practice of acquiring multiple insurances for the same property and the intricacies involved in claiming compensation following a loss. It underscores the judiciary’s role in interpreting insurance policy conditions and enforcing the principles of contractual obligations.
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