Zenith Insurance Corporation v. CA G.R. No. 85296 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 damages and 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 decision was 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. May 14, 1990

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 fortythree, as the case may be, until the claim is fully satisfied; Provided, That the 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 attorneys 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.