zenith insurance v. ca

7/27/2019 Zenith Insurance v. CA

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Zenith Insurance Corporation v. CA

G.R. No. 85296 May 14, 1990

J. Medialdea

Doctrine: It is clear that under the Insurance Code, in case of unreasonable

delay in the payment of the proceeds of an insurance policy, the damages

that may be awarded are: 1) attorney's fees; 2) other expenses incurred by

the insured person by reason of such unreasonable denial or withholding of

payment; 3) interest at twice the ceiling prescribed by the Monetary Board

of the amount of the claim due the injured; and 4) the amount of the claim.

Facts: On January 25, 1983, private respondent Lawrence Fernandez

insured his car for "own damage" with petitioner Zenith Insurance

Corporation. On July 6, 1983, the car figured in an accident and suffered

actual damages in the amount of P3,640. After allegedly being given a run

around by Zenith for two months, Fernandez filed a complaint with the

Regional Trial Court of Cebu for sum of money and damages resulting from

the refusal of Zenith to pay the amount claimed. Aside from actual damagesand interests, Fernandez also prayed for moral damages in the amount of

P10,000.00, exemplary damages of P5,000.00, attorney's fees of P3,000.00

and litigation expenses of P3,000.00.

On September 28, 1983, Zenith filed an answer alleging that it offered to

pay the claim of Fernandez pursuant to the terms and conditions of the

contract which, the private respondent rejected. On June 4, 1986, a decisionwas rendered by the trial court in favor of private respondent Fernandez. On

August 17, 1988, the Court of Appeals rendered its decision affirming in toto

the decision of the trial court.



Issue: Whether or not the Court of Appeals had legal basis in awarding

more than the amount prayed for in the complaint?

Held: The award of damages in case of unreasonable delay in the payment

of insurance claims is governed by the Philippine Insurance Code, which

provides:

Sec. 244. In case of any litigation for the enforcement of any policy or

contract of insurance, it shall be the duty of the Commissioner or the Court,

as the case may be, to make a finding as to whether the payment of the

claim of the insured has been unreasonably denied or withheld; and in the

affirmative case, the insurance company shall be adjudged to pay damages

which shall consist of attorney's fees and other expenses incurred by the

insured person by reason of such unreasonable denial or withholding of

payment plus interest of twice the ceiling prescribed by the Monetary Board

of the amount of the claim due the insured, from the date following the time

prescribed in section two hundred forty-two or in section two hundred forty-

three, as the case may be, until the claim is fully satisfied; Provided, Thatthe failure to pay any such claim within the time prescribed in said sections

shall be considered prima facie evidence of unreasonable delay in payment.

It is clear that under the Insurance Code, in case of unreasonable delay in

the payment of the proceeds of an insurance policy, the damages that may

be awarded are: 1) attorney's fees; 2) other expenses incurred by the

insured person by reason of such unreasonable denial or withholding of payment; 3) interest at twice the ceiling prescribed by the Monetary Board

of the amount of the claim due the injured; and 4) the amount of the claim.

In the instant case, there was a finding that private respondent was given a

“run-around” for 2 months which is the basis for the award of the damages



granted under the Insurance Code for unreasonable delay in the payment of

the claim. However, such delay is not so wanton as to justify an award of

P20,000 as moral damages. The amount awarded as attorney’s fees and

actual damages were justified under the circumstances, but respondent

court correctly ruled that the deductions claimed by petitioners as agreed

upon in the contract had no basis. The appealed decision is modified.

zenith insurance v. ca

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