LACSON, LOUCILLE A.
Zenith Insurance Corporation vs. Court of
Appeals and Lawrence Fernandez
Facts:
Lawrence Fernandez insured his car for “own
damage” under private care policy with Zenith
Insurance Corporation. The car figured an
accident and suffered actual damages in the
amount of P3,640.00. After allegedly being given
a run a round by Zenith for 2 months, Fernandez
filed a complaint with the RTC 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 of P10,000.00,
exemplary damages of P5,000.00, attorney’s fees
of P3,000.00 and litigation expenses of
P3,000.00.
The RTC ruled in favor of Fernandez and
awarded the amount prayed for as actual
damages but it incurred interest at the rate of
twice the prevailing interest rates. Attorney’s fees
and litigation expenses were also awarded in the
same amount as that prayed for by Fernandez.
However, the RTC increased the awards for moral
and exemplary damages, from P10,000.00 to
P20,000.00 and from P5,000.00 to P20,000.00
respectively.
The CA affirmed the RTC’s decision in toto.
In its Petition, Zenith argues that the CA has
no legal basis in awarding the moral damages,
exemplary damages and attorney’s fees in an
amount more than that prayed for in the
complaint.
Issue: WON the award of moral damages,
exemplary damages and attorney’s fees was
proper.
Held: As to moral and exemplary the award was
improper while as to the attorney’s fees it was
proper.
Ratio:
Under Section 244 of 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.
As regards the award of moral and exemplary
damages, the rules under the Civil Code of the
Philippines shall govern. In awarding moral
damages in case of breach of contract, there
must be a showing that the breach was wanton
and deliberately injurious or the one responsible
acted fraudulently or in bad faith. In the instant
case, Fernandez 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 claim.
However, the act of Zenith of delaying payment
for two months cannot be considered as so
wanton or malevolent to justify an award of
P20,000.00 as moral damages, given that the
actual damage on the car was only P3,460.00.
The real reason was that the parties could not
come to an agreement as regards the amount of
the actual damage on the car, hence, the
P10,000.00 prayed for by Fernandez is equitable.
As to the exemplary damages, the insurance
company had not acted in wanton, oppressive or
malevolent manner, hence, award cannot be
given. On one hand, the amount of P5,000.00
awarded as attorney’s fees is justified considering
that there were other petitions filed and defended
by Fernandez in connection with this case. Lastly,
the actual damages incurred by Fernandez in the
amount of P3,640.00 plus interest of twice the
ceiling prescribed by the Monetary Board
computed from the time of submission of proof of
loss had been established before the trial court
and affirmed by the appellate court.