TEAL MOTOR COMPANY, INC., PLAINTIFF AND APPELLEE, VS. THE CONTINENTAL INSURANCE CO., DEFENDANT AND APPELLEE. MANILA BUILDING AND LOAN ASSOCIATION, DEFENDANT AND APPELLANT.

In these cases plaintiff brought suit in
the Court of First Instance of Manila against defendant insurance
companies on contracts of insurance covering the building owned by
plaintiff for damage caused by a fire on the afternoon of January 6,
1929. Defendant Manila Building and Loan Association holds a mortgage
on the building and has a partial assignment on the three insurance
policies here in question for its benefit as the holder of the
mortgage.

The Manila Building and Loan Association refused to join as party
plaintiff and was thereupon made party defendant and entered a
cross-complaint requesting the foreclosure of its mortgage.

After trial the Court of First Instance of Manila gave judgment
against the insurance companies for the sum of P125,000 for damage to
the building but dismissed the cross-complaint of the Manila Building
and Loan Association, holding that its action was premature.

The insurance companies perfected their appeal which was decided by
this court in a decision promulgated this day. Due to the lack of
notice of the action of the trial court, the Manila Building and Loan
Association was not able to perfect its appeal from the decision
dismissing its cross-complaint until a much later time, and the appeal
now being considered relates only to the denial of the cross-complaint.

The mortgage provides for monthly payments on or before the 5th of the month. There is also the following provision :

“Failure to pay any amount on time will render the whole sum overdue and demandable.”

During the year preceding the fire, plaintiff-appellee often failed
to pay the monthly installments on or before the 5th of the month, and
their payments at a later date were accepted without protest on the
part of the plaintiff. The payment due in January, 1929, was tendered
on the 12th, whereupon the building and loan association promptly
returned the tendered payment and demanded the payment of the mortgage.
This was refused by the appellee. With its claim that the forbearance
of the building and loan association in 1928 rendered the clause for
prompt payment of no force, we cannot concur. Mere forbearance does not
cause a novation of the contract. Especially is this true in a mutual
building and loan association, where all stockholders should be treated
alike.

There is a dispute between the building and loan association and
the appellee as to the amount due. On the present state of the record,
we shall not attempt to state the account.

The decision of the Court of First Instance of the City of Manila
dismissing the cross-complaint is vacated and reversed and the case
remanded to state the account and for further proceedings in accord
with this opinion. Costs against plaintiff-appellee. So ordered.

Street, Malcolm, Villa-Real, Abad Santos, Imperial, Butte, Goddard, and Diaz, JJ., concur.

Justice Vickers voted to reverse the decision of the lower
court in these cases, but was absent at the time of promulgation, and
his signature does not appear signed to the decision.—STREET, Acting C. J.