REPUBLIC OF THE PHILIPPINES

COURT OF APPEALS
MANILA

THIRD DIVISION

FLT PRIME INSURANCE CA-G.R. CV No. 110458

CORP.,
Plaintiff-Appellee, Members:

LAMPAS PERALTA, F.,

Chairperson
-versus-
ZALAMEDA, R. V. and
INTING, H. J. P. B., JJ.

THE SOLID GUARANTY,

INC., Promulgated:
Defendant-Appellant.
April 16, 2019

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DECISION

LAMPAS PERALTA, J.:

Assailed in this appeal under Rule 41, 1997 Rules of Civil

Procedure, as amended, are the (i) Resolution dated July 26, 2017 1 in
Civil Case No. 14-381 of Branch 59, Regional Trial Court, Makati
City, denying defendant-appellant's motion to dismiss plaintiff-
appellee's complaint for “Recovery of Sum of Money and Damages”
and granting plaintiff-appellee's motion for summary judgment by
1
pp. 574-594, Original Records Volume 2
CA-G.R. CV No. 110458 2
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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ordering defendant-appellant to pay plaintiff-appellee the amount of

P10,721,938.50, among others, representing defendant-appellant's
share under its reinsurance policy with plaintiff-appellee, and (ii)
Order dated December 8, 2017 2 of the trial court denying defendant-
appellant's motion for partial reconsideration of the Resolution dated
July 26, 2017.

THE ANTECEDENTS

Plaintiff-appellee FLT Prime Insurance Corp. is a domestic

corporation engaged in the insurance business. Defendant-appellant
The Solid Guaranty, Inc. is also a domestic corporation engaged in
the business of insurance and reinsurance.3

On November 11, 2008, plaintiff-appellee issued to its client

Top Forest Developers, Inc. (Top Forest, for brevity) a fire insurance
policy (Policy No. FI-NIL-HO-08-002977) in the sum of
P70,000,000.00.4 The fire insurance policy covered Top Forest's
“stocks of raw materials for wood manufacturing, goods in process,
finished/unfinished products and other items of every kind and
description usual to the Assured's business.” 5

Thereafter, plaintiff-appellee, through reinsurance broker KRM

Reinsurance Brokers Phil. Inc. (“KRM”), applied with defendant-
appellant for a reinsurance policy covering 45% of the policy sum
insured or a share of P31,500,000.00, per Facultative Reinsurance
Advice dated January 19, 2009. 6 Defendant-appellant confirmed the
same by affixing its representative's signature thereto.

2
pp. 637-639, Ibid.
3
p. 1, Original Records Volume 1
4
pp. 13-16, Ibid.
5
p. 13, Ibid.
6
p. 17, Ibid.
CA-G.R. CV No. 110458 3
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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Plaintiff-appellee also obtained facultative reinsurance policies

from reinsurers Philfirst and Corporate Guaranty covering another
45% of the policy sum insured in Top Forest's fire insurance policy. 7

On September 18, 2009, the insured loss occurred. Thus, Top

Forest gave plaintiff-appellee the corresponding notice of loss.
Plaintiff-appellee referred the loss to an independent adjuster, BA
Insight International, Inc. (BA Insight, for brevity), to determine
plaintiff-appellee's liability and the amount of indemnity Top Forest
was entitled to receive under the fire insurance policy. 8

Subsequently, representatives from plaintiff-appellee, BA

Insight, KRM and defendant-appellant met with each other for the
purpose of evaluating Top Forest's insurance claim. Defendant-
appellant also hired an independent adjuster, Cunningham and
Lindsay Philippines, Inc. (Cunningham, for brevity), to collaborate
with BA Insight in the determination of the claim. 9

After several consultations and adjustment reports, BA Insight

recommended the amount of P23,826,529.99 as full and final
settlement of the amount of indemnity. Plaintiff-appellee offered said
amount to Top Forest and the latter accepted the same. 10

Thereafter, plaintiff-appellee sent defendant-appellant an

Advance Facultative Cash Call asking the latter for payment of its
45% share, or an amount of P10,721,938.49, based on the
reinsurance policy they executed. 11 Plaintiff-appellee likewise sent
Advance Facultative Cash Calls to Philfirst and Corporate Guaranty
for their respective shares in the final settlement amount paid to Top
Forest.12
7
p. 2, Ibid.
8
p. 2, Ibid.
9
p. 3, Ibid.
10
p. 4, Ibid.
11
p. 531, Ibid.
12
p. 20, Ibid.
CA-G.R. CV No. 110458 4
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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Plaintiff-appellee then delivered to Top Forest a check covering

the final settlement amount of P23,826,529.99, which was received
by Top Forest. Accordingly, a Release of Claim was executed by
Top Forest in favor of plaintiff-appellee. 13

Meanwhile, Philfirst and Corporate Guaranty paid plaintiff-

appellee their respective shares in the final settlement amount. 14
However, defendant-appellant refused to pay its share for the reason
that it did not agree with the final settlement amount plaintiff-appellee
paid to Top Forest. According to defendant-appellant, the total loss
payable amounted to only P11,835,516.17. Thus, its share of 45%
only amounted to P5,123,482.00. 15

On April 2, 2014, plaintiff-appellee filed with the trial court a

complaint16 against defendant-appellant for “Recovery of Sum of
Money and Damages” alleging, among others, that (i) the final
settlement amount paid by plaintiff-appellee to Top Forest was
determined after careful and diligent evaluation by BA Insight, for
which defendant-appellant was even consulted; (ii) the reinsurance
policy between plaintiff-appellee and defendant-appellant provided for
a “follow the fortunes” clause whereby defendant-appellant confirmed
that settlement by plaintiff-appellee shall be binding on defendant-
appellant to its proportionate share; and, (iii) reinsurance is presumed
to be a contract of indemnity against liability, not merely against
damages, and is independent of and separate from the contract of
insurance; thus, defendant-appellant was liable to pay plaintiff-
appellee the amount of P10,721,938.50 representing defendant-
appellant's 45% share in the final settlement amount paid to Top
Forest under the terms of the reinsurance policy. Plaintiff-appellee
prayed that defendant-appellant be ordered to pay the amount of
P10,721,938.50 corresponding to its 45% share in the final settlement
amount paid to Top Forest, P500,000.00 as attorney's fees with
13
p. 282, Ibid.
14
p. 7, Ibid.
15
p. 4, Ibid.
16
pp. 1-12, Ibid.
CA-G.R. CV No. 110458 5
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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P5,000.00 per appearance, success fee equivalent to 10% of the

amount actually recovered from defendant-appellant, P300,000.00 as
exemplary damages and cost of suit.

Defendant-appellant filed its answer 17 alleging, among others,

that (i) in order for it to be bound by the settlement made by plaintiff-
appellee, the same must be done in good faith and covered by the
policy, but plaintiff-appellee decided to pay Top Forest the amount of
P23,829,529.99 despite the existence of factors which prevented or
could have affected indemnity; (ii) the prices submitted by Top Forest
and admitted by plaintiff-appellee were inflated and included illegal
expenses; (iii) there was an existing insurance by Top Forest with
BPI/MS Insurance Corporation which plaintiff-appellee merely set
aside; (iv) plaintiff-appellee itself was confused on how much to pay
Top Forest because the initial computation amounted to
P18,586,760.22, but plaintiff-appellee paid Top Forest the amount of
P23,829,529.99 and hence, it cannot insist that the amount it
arbitrarily paid to Top Forest should be binding on defendant-
appellant; (v) defendant-appellant's 45% share amounted to only
P613,856.40 because the total amount of raw materials constituting
749,529.82 board feet of logs was P1,364,125.34; (vi) the complaint
failed to demonstrate that the claim of Top Forest was proven and
established with certainty; (vii) plaintiff-appellee's claim had been
abandoned and/or prescribed because the complaint was not filed
within twelve (12) months from notice of rejection; and, (viii) plaintiff-
appellee failed to pay the correct filing fees. Defendant-appellant
prayed that the complaint be dismissed and plaintiff-appellee be
ordered to pay nominal damages, attorney's fees plus appearance
fees and litigation expenses.

Thereafter, the parties submitted their respective pre-trial

briefs.18 During the pre-trial,19 the parties made the following
stipulations:

17
pp. 34-42, Ibid.
18
pp. 134-152, 153-159, Ibid.
19
pp. 264-265, Original Records Volume 2
CA-G.R. CV No. 110458 6
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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“1. As to the Exhibit 'C-4' to 'C-4-a', Exhibit 'P', Exhibit 'T' and
Exhibit 'U',20 both parties stipulated as follows: that the
defendant admits the fact of receipts of the said exhibits, but
not on the contents thereof. The same exhibits, the parties
stipulate as to the genuineness and due execution thereof,
but not as to the contents. Hence, there is no more need to
resolve the manifestation of the plaintiff's counsel;

2. The parties through counsels adopt the Branch Clerk's

Report dated July 26, 2016 and August 5, 2016, as part of
this pre-trial order;”21

Thereafter, the parties attempted to enter into a compromise,

whereby defendant-appellant agreed to pay plaintiff-appellee the
amount of P6,000,000.00 in twelve (12) monthly installments of
P500,000.00 each as settlement of plaintiff-appellee's reinsurance
claim. Although the terms of the compromise were reduced in
writing, the compromise remained unsigned. 22 Defendant-appellant
had delivered to plaintiff-appellee 12 checks for P500,000.00 each. 23
However, defendant-appellant eventually informed plaintiff-appellee
that it would not push through with the compromise upon the advice
of the lawyers of its stockholders. Defendant-appellant also denied
liability to plaintiff-appellee.24

Defendant-appellant then filed a motion to dismiss 25 the

complaint on the ground of forum-shopping, alleging that plaintiff-
appellee had filed a letter-complaint against it with the Insurance
Commission and the letter-complaint was founded on the same
subject matter as in the present case.

20
Exhibit “C-4-a” is the Evaluation Report dated May 11, 2010 sent by BA Insight to plaintiff-
appellee (pp. 283-291, Original Records Volume 2). Exhibit “P” is the demand letter dated
November 6, 2013 given by plaintiff-appellee to defendant-appellant (pp. 18-23, Original Records
Volume 1). Exhibit “T” and Exhibit “U” are letters dated January 4, 2011 (p. 726, Original Records
Volume 1) and September 2, 2011 (pp. 727-728, Original Records Volume 1), respectively, of
KRM to defendant-appellant.
21
p. 264, Original Records Volume 2
22
pp. 445-449, Ibid.
23
pp. 450-451, 452-455, Ibid.
24
pp. 505-506, Ibid.
25
pp. 456-458, Ibid.
CA-G.R. CV No. 110458 7
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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For its part, plaintiff-appellee filed a motion for summary

judgment26 alleging, among others, that (i) plaintiff-appellee and
defendant-appellant agreed to settle plaintiff-appellee's claim under
the reinsurance policy by payment of a fixed amount of
P6,000,000.00 payable in twelve (12) monthly installments of
P500,000.00 each; (ii) defendant-appellant had issued the
appropriate checks in favor of plaintiff-appellee and sent the latter
scanned copies of the same in order to complete the exact dates of
the installments and the details to be specified in the
acknowledgment receipt; (iii) the compromise agreement was
scheduled to be signed by the parties, and the checks to be delivered
by defendant-appellant to plaintiff-appellee on April 10, 2017, but
plaintiff-appellee was informed that the lawyer for the stockholders of
defendant-appellant directed defendant-appellant's management not
to push through with the compromise agreement as defendant-
appellant was allegedly undergoing voluntary cessation of business;
(iv) defendant-appellant not only expressed willingness to pay
plaintiff-appellee, but had issued the checks as payment; (v)
defendant-appellant's liability to plaintiff-appellee under the
reinsurance policy amounted to P10,721,938.49; and, (vi) defendant-
appellant's answer failed to tender any genuine issue as to any
material fact even as to the amount of damages; thus, plaintiff-
appellee was entitled to a judgment in its favor without resorting to
trial. Plaintiff-appellee prayed that summary judgment be rendered in
its favor and defendant-appellant be ordered to pay P10,721,938.50
with interest, plus attorney's fees with success fee and appearance
fees, and cost of suit.

In a Resolution dated July 26, 2017,27 the trial court denied

defendant-appellant's motion to dismiss and granted plaintiff-
appellee's motion for summary judgment. Thus:

26
pp. 504-541, Ibid.
27
pp. 574-594, Ibid.
CA-G.R. CV No. 110458 8
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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“WHEREFORE, premises considered, the 'Motion to

Dismiss' is hereby DENIED and judgment is hereby rendered in
favor of the plaintiff, ordering defendant to pay plaintiff:

1. The amount of P10,721,938.50 representing the

defendant's 45% share in the Final Settlement Amount paid to Top
Forest under the terms of the defendant's Reinsurance Policy with
interest for the duration of the delay at the rate of twice the ceiling
of 6.855% per annum or a total of 13.71 % per annum prescribed
by the Monetary Board per the said Section 243 of the Insurance
Code commencing from January 7, 2011, or thirty (30) days after
the Advance Facultative Cash Call was made on the defendant on
December 8, 2013, until fully paid;

2. Attorney's Fees in the amount of Five Hundred

Thousand (P500,000.00) Pesos, taking into account the nature of
this case, and the time spent to litigate this case and the stature of
counsel;

3. To pay the cost of suit.

SO ORDERED.”28

Defendant-appellant filed a motion for partial reconsideration 29

of the Resolution dated July 26, 2017. It also filed a motion for
recusal,30 seeking the inhibition of the Presiding Judge from acting on
the motion for partial reconsideration.

In an Order dated December 8, 2017, 31 the trial court denied

both the motion for recusal and motion for partial reconsideration filed
by defendant-appellant.

Thus, defendant-appellant filed the present appeal which is

premised on the following assignment of errors:

28
p. 594, Ibid.
29
pp. 595-599, Ibid.
30
pp. 621-623, Ibid.
31
pp. 637-639, Ibid.
CA-G.R. CV No. 110458 9
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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“I

The lower court erred in granting appellee's Motion

for Summary Judgment when the case is in the middle of
the presentation of its evidence-in-chief.

II

The lower court erred in granting appellee's Motion

for Summary Judgment despite the fact that it did not
submit supporting affidavits, depositions, and admissions
on file showing that, except as to the amount of damages,
there is no genuine issue as to any material fact.

III

The lower court erred in ruling that appellee is

entitled to attorney's fees.”32

THE ISSUE

Whether the trial court erred in granting plaintiff-

appellee's motion for summary judgment and in ordering
defendant-appellant to pay plaintiff-appellee's money
claims.

THE COURT'S RULING

It must be stressed at the outset that in the present appeal,

defendant-appellant does not anymore raise issue on the trial court's
denial of its motion to dismiss based on the finding that “defendant
failed to show that all the elements or requisites of forum shopping
are present.” The subject of the present appeal is the grant by the
trial court of plaintiff-appellee's motion for summary judgment,
resulting in its order for defendant-appellant to pay plaintiff-appellee
the amount of P10,721,938.49 pursuant to their reinsurance contract.

32
p. 47, Rollo
CA-G.R. CV No. 110458 10
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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In granting plaintiff-appellee's motion for summary judgment,

the trial court explained in its Resolution dated July 26, 2017 that “the
defenses being raised by the defendant can be resolved without
resorting to trial on the basis of the admissions in the Answer and
those made during the Pre-Trial conference, the abortive agreed
settlement, which have never been denied by the defendant, and the
supporting affidavits of plaintiff as well as the undisputed Follow-the-
Fortunes Doctrine since there appears therefrom that no important
issues of fact are involved, even as to the amount of damages of
P10,921,938.49 (P10,721,938.49) and for the other amounts claimed
in the Complaint.”33

Defendant-appellant faults the trial court in so ruling. Allegedly,

the “lower court erred in granting FLT's Motion for Summary
Judgment when the case is in the middle of its presentation of
evidence-in-chief,”34 whereas “in all cases decided by the Supreme
Court regarding the propriety of a summary judgment, the summary
judgment was issued prior to start of trial.” 35 Furthermore, “FLT did
not submit any affidavits, depositions, admissions or other documents
wherein the deponent demonstrates the issues raised by SOLID are
not genuine.” This is because what plaintiff-appellee “incorporated by
reference are the judicial affidavits of its witnesses x x x, which do not
show in anyway why the issues raised by appellant are not genuine x
x x”36 and defendant-appellant “never admitted its liability and in fact,
it denied any liability to FLT.” 37

The asseverations are unfounded.

There is no merit in defendant-appellant's claim that the motion

for summary judgment was improperly filed “when the case is in the

33
p. 583, Original Records Volume 2
34
p. 53, Rollo
35
p. 55, Ibid.
36
p. 58, Ibid.
37
p. 60, Ibid.
CA-G.R. CV No. 110458 11
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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middle of its presentation of evidence in chief.” Section 1, Rule 35 of

the 1997 Rules of Civil Procedure provides:

"Section 1. Summary Judgment for claimant. — A party

seeking to recover upon a claim, counterclaim, or cross-claim or to
obtain a declaratory relief may, at any time after the pleading in
answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor
upon all or any part thereof."

Clearly, a motion for summary judgment may be filed “at any

time” after the pleading in answer to a claim has been served. There
is no prohibition on the filing of said motion during the pre-trial stage,
after the pre-trial stage or during the trial.

It has been explained that a summary judgment may be used to

expedite the proceedings and to avoid useless delays, when the
pleadings, depositions, affidavits or admissions on file show that
there exists no genuine question or issue of fact in the case, and the
moving party is entitled to a judgment as a matter of law. 38 In
Olivarez Realty Corp., et al., vs. Benjamin Castillo,39 the Supreme
Court elucidated on what constitues a genuine issue of fact. Thus:

“There are instances, however, when trial may be dispensed

with. Under Rule 35 of the 1997 Rules of Civil Procedure, a trial
court may dispense with trial and proceed to decide a case if from
the pleadings, affidavits, depositions, and other papers on file, there
is no genuine issue as to any material fact. In such a case, the
judgment issued is called a summary judgment.

A motion for summary judgment is filed either by the

claimant or the defending party. The trial court then hears the
motion for summary judgment. If indeed there are no genuine
issues of material fact, the trial court shall issue summary
judgment. X x x

38
Dennis Mortel vs. Michael Brundige, 757 SCRA 432, June 15, 2015
39
729 SCRA 544, July 9, 2014
CA-G.R. CV No. 110458 12
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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xxx xxx xxx

An issue of material fact exists if the answer or responsive

pleading filed specifically denies the material allegations of fact set
forth in the complaint or pleading. If the issue of fact 'requires the
presentation of evidence, it is a genuine issue of fact'. However, if
the issue 'could be resolved judiciously by plain resort' to the
pleadings, affidavits, depositions, and other papers on file, the
issue of fact raised is sham, and the trial court may resolve the
action through summary judgment.” (Underlining supplied.)

In the present case, plaintiff-appellee filed a complaint against

defendant-appellant for “Recovery of Sum of Money and Damages”
involving their reinsurance contract, wherein defendant-appellant
bound itself to pay 45% of the amount plaintiff-appellee would pay its
client, Top Forest, in case the insured loss of the latter occurred.

A contract of reinsurance is one by which an insurer (the "direct

insurer" or "cedant") procures a third person (the "reinsurer") to insure
him against loss or liability by reason of such original insurance. It is
a separate and distinct arrangement from the original contract of
insurance, whose contracted risk is insured in the reinsurance
agreement. The reinsurer's contractual relationship is with the direct
insurer, not the original insured, and the latter has no interest in and
is generally not privy to the contract of reinsurance. 40

Plaintiff-appellee alleged in its complaint for “Recovery of Sum

of Money and Damages” that despite its reinsurance contract with
defendant-appellant, the latter failed to pay its liability under the same
when the insured loss of Top Forest occurred and plaintiff-appellee
paid Top Forest's insurance claim. As alleged in the complaint:

“4. On January 19, 2009, Plaintiff, through KRM

Reinsurance Brokers Phil. Inc. (KRM), a reinsurance broker,
applied with the Defendant for a reinsurance policy covering 45% of

40
Communication and Information Systems Corp. vs. Mark Sensing Australia Pty. Ltd., et al., 815
SCRA 499, January 25, 2017
CA-G.R. CV No. 110458 13
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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the Policy Sum Insured or a share of P31,500,000.00 as evidenced

by the Facultative Reinsurance Binder x x x.

4.1. Accordingly, Defendant Solid confiemd said

application by signing the confirmation appearing in the lower
portion of the Facultative Reinsurance Advice and confirming that it
serves as its reinsurance policy x x x

xxx xxx xxx

5. The Solid Reinsurance Policy provides for a 'follow

the fortunes' clause whereby Defendant confirms that settlement by
the Plaintiff, as the Reassured and the Ceding Company, shall be
binding on the Defendant to its proportionate share, to wit:

xxx xxx xxx

6. Plaintiff likewise obtained facultative reinsurance

policies from other reinsurers (Other Reinsurers) on the other 45%
of the Policy Sum Insured of the Fire Policy.

6.1. Among the Other Reinsurers are Philfirst and

Corporate Guaranty.

7. On September 18, 2009, the insured loss occurred.

7.1. Consequently, Top Forest, as the assured in the Fire

Policy, filed with the Plaintiff the corresponding notice of loss.

8. Thus, on September 23, 2009, Plaintiff referred the

loss to an independent adjuster BA Insight International Inc. (BA
Insight) for the purpose of ascertaining Plaintiff's liability arising
under the Fire Policy and the amount of indemnity which Top
Forest, as the assured, is entitled to receive under the Fire Policy.

xxx xxx xxx

9.3. Guided by the foregoing, Plaintiff's representatives,

representatives of BA Insight and KRM for and on behalf of the
Defendant, met for the purpose of evaluating the claim.

9.4. Upon request of KRM for and on behalf of the

Defendant, Plaintiff furnished Defendant various documents which
would guide Defendant in the evaluation of the claim.
CA-G.R. CV No. 110458 14
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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9.5. KRM also informed Plaintiff that the Defendant had

appointed Cunningham and Lindsay Philippines, Inc. (Cunningham)
as Defendant's independent adjuster to collaborate with BA Insight
in the evaluation of the claim.

9.6. A series of meetings and consultations between the

representatives of the Plaintiff, BA Insight and KRM, for and on
behalf of the Defendant, and representatives of Cunningham were
had.

10. Various adjustment reports were made and issued by

BA Insight copies of which were furnished the Defendant, through
KRM. However, the Defendant had not furnished Plaintiff any of
the adjustment reports that may have been rendered by
Cunningham.

10.1. Based on the recommendation of BA Insight, offers

were made by Plaintiff to Top Forest to which counteroffers were
made by Top Forest which were referred to BA Insight for
evaluation.

10.2. Thereafter, on or about September 22, 2010, BA

Insight recommended the amount of P23,826.529.99 (Final
Settlement Amount) as full and final settlement of the amount of
indemnity.

10.3. After evaluating the said recommendation of BA

Insight and finding it to be reasonable, Plaintiff, by way of claim
handling decision, accepted the said recommendation and adopted
the Final Settlement Amount as full and final settlement of the
amount of indemnity under the Fire Policy which was accepted by
Top Forest.

11. Consequently, on or about December 8, 2010,

Plaintiff sent the Defendant, through KRM, an Advance Facultative
Cash Call on the Solid Reinsurance Policy regarding the
Defendant's share in the Final Settlement Amount equivalent to
45% thereof or the amount of P10,921,938.49.

xxx xxx xxx

CA-G.R. CV No. 110458 15
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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12. BA Insight prepared a Final Report dated December

6, 2010 (BA Insight Final Adjustment Report) embodying previous
recommendation setting the Final Settlement Amount a copy of
which was likewise furnished the Defendant.

12.1. Thus, Plaintiff delivered to and Top Forest received

the check covering the Final Settlement Amount for which the
corresponding Release of Claim was executed.

13. As a consequence, on April 13, 2010, a Final Cash

Call on the Solid Reinsurance Policy was sent the Defendant,
through KRM, requesting for the remittance to Plaintiff of the
Defendant's share of the loss in the amount of P10,921,938.49.

13.1. However, the Defendant unjustifiably refused and

continues to unjustifiably refuse to pay Plaintiff's cash calls on the
ground that the Defendant was not amenable to the Final
Settlement Amount, claiming that the total loss payable should only
be P11,835,516.17 and offering to pay the amount equivalent to
45% thereof or only the amount of P5,123,482.00 instead of the
amount of P10,921,938.49 equivalent to 45% of the Final
Settlement Amount which Plaintiff was entitled to under the terms of
the Solid Reinsurance Policy and the pertinent provisions of law.

xxx xxx xxx”41

Notably, the foregoing allegation in the complaint that

defendant-appellant offered to pay plaintiff-appellee “the amount of
P5,123,482.00 instead of the amount of P10,921,938.49,” 42 is
supported by a letter dated July 7, 2011 of defendant-appellant to
KRM, wherein defendant-appellant acknowledged its “share on the
loss” and proposed to pay the amount of P5,123,482.00 to plaintiff-
appellee. The letter dated July 7, 2011 was marked as Exhibit “M-1”
for plaintiff-appellee and Exhibit “10” for defendant-appellant. 43 Thus:

“Dr. Mr. Villamil:

41
pp. 1-4, Original Records Volume 1
42
p. 4, Ibid.
43
p. 533, Ibid.
CA-G.R. CV No. 110458 16
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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This refers to your cash call on the subject account.

Based on our evaluation of the loss as approved by, our reinsurers,

our share on the loss is computed at P5,123,482.00, computed as
follows:

xxx xxx xxx

Kindly note that the costing considered in the above computation

was based on the audited financial statement for the year 2009 of
the assured. The same computation was presented to us by Mr.
Willy Banting of FLT Prime in July 2009 which we also took into
account in our evaluation.

Considering the foregoing, we wish to advise that we are ready to

issue our settlement check based on the above computation.” 44

On the other hand, defendant-appellant's answer with

counterclaim contained the following admissions and denials:

“2.1 In par. 5, while defendant admits that the line quoted

by the plaintiff indeed appears in the Confirmation of KRM's
Facultative Reinsurance Advice x x x, however the full Confirmation
reads as follows”

'We hereby confirm that this Binder serves as our

Reinsurance Policy/Endorsement and that this Reinsuring
Company by this Acceptance, is bound under the terms and
conditions of the original Policy/Endorsement.

We further confirm that settlement by the Ceding

Company, shall be binding on the undersigned, to our
proportionate share of all losses and expenses incurred in
connection with any claim under the Original Policy'.

Since defendant is bound under the terms of the original

policy, the plaintiff should have settled the claim within the terms
and conditions of the policy to bind the defendant.

44
pp. 75-76, Original Records Volume 2
CA-G.R. CV No. 110458 17
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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2.2 In par. 9.5, while defendant admits having appointed

Cunningham Lindsay Phils., Inc. (Cunningham) as its adjuster, the
appointment is to independently adjust the claim of plaintiff's
insured Top Forest Developers, Inc. (Top Forest) and not to
collaborate with BA Insight (BAI).

2.3 In par. 10, defendant states that it is not necessary for

it to furnish KRM or plaintiff the adjustment reports of Cunningham.

2.4 In par. 10.3, defendant can only admit that plaintiff

adopted the final settlement amount presented by BAI but denies
the rest for lack of knowledge.

2.5 In par. 12, defendant admits learning of BAI's Final

Report but adds it has no file copy of the same.

2.6 In par. 13.1, defendant admits offering, on the ground

of business consideration, the amount of P5,123,482.00 as full
settlement of its share on the ground that the amount alleged to be
paid by plaintiff to Top Forest included inflated, unverified, illegal
and unlawful amounts which made the payment excessive for
which reason plaintiff must alone bear the excess amount.

2.7 In par. 14, defendant admits that it was informed of

the approved settlement amount although after plaintiff had already
paid the same. However, plaintiff ignored the queries and
suggestions of the defendant prior to making any payment despite
the fact that defendant had a 45% share on the risk. The rest of the
paragraph is denied for lack of knowledge.

2.8 In pars. 14.2, 14.3, 14.4 and 15.3, the defendant

admits the principle of 'follow the fortunes' subject to the condition
that the payment of claim must be in good faith and covered by the
policy but adds that repetitious citations are not allegations of
ultimate facts and hence, has no place in the complaint.

xxx xxx xxx

4.1 In par. 14.1, the settlement by the plaintiff to be

binding on defendant must be in good faith and covered by the
policy. However, for reasons known only to it, plaintiff decided to
pay Top Forest the amount of P23,826.529.99 despite the following
factors which prevent or may affect indemnity:
CA-G.R. CV No. 110458 18
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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4.1.1 Top Forest did not submit, and plaintiff did not
require, the prices set by Vicmar Development Corp. for logs
it delivered to Top Forest pursuant to the Log Supply
Agreement x x x between the two (2) entities which
agreement is well known to the plaintiff. X x x

4.1.2 The prices submitted by Top Forest and then

admitted by the plaintiff are inflated and included illegal
expenses. X x x

xxx xxx xxx

4.1.3 There is an existing other insurance x x x with

BPI/MS Insurance Corporation that the plaintiff merely set
aside. X x x

xxx xxx xxx

4.1.4 Plaintiff itself is confused on what and how

much to pay and for this reason, it cannot insist that the
amount it arbitrarily paid to Top Forest should be binding on
the defendant. X x x

4.2 Due to the above reasons, defendant is not liable to

the plaintiff for the amount claimed, even if it previously offered to
the plaintiff for business considerations the amount of
P5,123,482.00. Based on its computation and assuming the non-
existence of other insurance, the total amount for the raw materials
constituting of P749,529.82 board feet of logs is P1,364,125.34 or a
45% share of P613,856.40.”45

Notably, there was actually no genuine issue raised in

defendant-appellant's answer with counterclaim, because defendant-
appellant itself alleged that it was bound to its proportionate share in
the loss settled by plaintiff-appellee and even offered the amount of
P5,123,482.00 as full settlement of its share based on the
reinsurance contract it executed with plaintiff-appellee. Thus, the
factual issues raised in defendant-appellant's answer with
counterclaim are sham, as the case could be resolved judiciously by

45
pp. 34-38, Original Records Volume 1
CA-G.R. CV No. 110458 19
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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plain resort to the pleadings, affidavits, depositions, and other papers

on file.

Moreover, after the pre-trial and before trial, plaintiff-appellee

and defendant-appellant entered into a compromise whereby
defendant-appellant agreed to pay P6,000,000.00 to plaintiff-
appellee's in settlement of the latter's claim. In fact, the terms of the
compromise had been reduced into writing 46 and defendant-appellant
had delivered twelve (12) checks in the amount of P500,000.00 each
to plaintiff-appellee.47 However, defendant-appellant later informed
plaintiff-appellee that its stockholder's advised it not to go through
with the compromise and subsequently denied liability to plaintiff-
appellee.48

Defendant-appellant's claim that plaintiff-appellee failed to

submit affidavits, depositions, admissions or other documents, is
readily belied by the records showing that plaintiff-appellee submitted
the following documents in support of its motion for summary
judgment: (i) Insurance Policy Schedule; 49 (ii) Facultative
Reinsurance Advice;50 (iii) Immediate Advice dated September 30,
2009;51 (iv) Preliminary Report dated November 20, 2009; 52 (v) Letter
dated March 15, 2010 of BA Insight to plaintiff-appellee; 53 (vi) Letter
dated May 19, 2010 of plaintiff-appellee to defendant-appellant; 54 (vii)
Evaluation Report dated May 11, 2010; 55 (viii) Letter dated June 25,
2010 of BA Insight to plaintiff-appellee; 56 (ix) Letter dated July 7, 2010
of BA Insight to plaintiff-appellee; 57 (x) Letter dated July 21, 2010 of
BA Insight to plaintiff-appellee; 58 (xi) Addendum Report dated
46
pp. 445-449, Ibid.
47
pp. 450-451, 452-455, Ibid.
48
pp. 505-506, Ibid.
49
pp. 13-16, Original Records Volume 1
50
p. 17, Ibid.
51
pp. 22-23, Original Records Volume 2
52
pp. 24-30, Ibid.
53
pp. 36-39, Ibid.
54
p. 152, Ibid.
55
pp. 153-161, Ibid.
56
pp. 40-42, Ibid.
57
p. 43, Ibid.
58
pp. 44-45, Ibid.
CA-G.R. CV No. 110458 20
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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September 17, 2010;59 (xii) Final Report dated December 16, 2010; 60
(xiii) Letter dated July 7, 2010 of plaintiff-appellee to BA Insight; 61 (xiv)
Letter dated July 2, 2010 of Cunningham to BA Insight; 62 (xv) Letter
dated July 12, 2010 of defendant-appellant to plaintiff-appellee; 63 (xvi)
Letter dated July 26, 2010 of plaintiff-appellee to defendant-appellant;
(xvii) Letter dated July 28, 2010 of defendant-appellant to plaintiff-
appellee;64 (xviii) Letter dated July 30, 2010 of plaintiff-appellee to
defendant-appellant;65 (xix) Letter dated August 7, 2010 of defendant-
appellant to plaintiff-appellee;66 (xx) Letter dated August 31, 2010 of
plaintiff-appellee to KRM;67 (xxi) Letter dated April 12, 2011 of
plaintiff-appellee to KRM;68 (xxii) Release of Claim dated January 13,
2011;69 (xxiii) Check Voucher and Letter dated January 21, 2011 of
Banco De Oro to plaintiff-appellee; (xxiv) Letter dated July 15, 2011
of KRM to plaintiff-appellee; 70 (xxv) Letter dated July 7, 2011 of
defendant-appellant to KRM; 71 (xxvi) Letter dated December 1, 2011
of plaintiff-appellee to KRM; 72 (xxvii) Letter dated January 12, 2010 of
defendant-appellant to KRM; (xxviii) Demand Letter dated November
6, 2013 of plaintiff-appellee to defendant-appellant; 73 (xxix) Letter
dated July 30, 2010 of plaintiff-appellee to defendant-appellant; 74
(xxx) Letter dated July 7, 2010 of plaintiff-appellee to BA Insight; 75
(xxxi) Letter dated January 4, 2011 of KRM to defendant-appellant; 76
(xxxii) Letter dated September 2, 2011 of KRM to defendant-
appellant;77 (xxxiv) OR Nos. 2645721 and 2645722; (xxxv)

59
pp. 46-49, Ibid.
60
pp. 52-59, Ibid.
61
pp. 60-61, Ibid.
62
p. 62, Ibid.
63
p. 63, Ibid.
64
p. 64, Ibid.
65
pp. 65-66, Ibid.
66
p. 67, Ibid.
67
pp. 68-69, Ibid.
68
p. 70, Ibid.
69
p. 71, Ibid.
70
p. 74, Ibid.
71
pp. 75-76, Ibid.
72
p. 77, Ibid.
73
pp. 162-167, Ibid.
74
pp. 65-66, Ibid.
75
pp. 60-61, Ibid.
76
p. 168, Ibid.
77
pp. 169-170, Ibid.
CA-G.R. CV No. 110458 21
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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Preliminary Report dated November 20, 2009 of BA Insight; 78 (xxxvi)

First Interim Report dated December 7, 2009 of BA Insight; 79 (xxxvii)
Report dated March 15, 2010 of BA Insight; 80 (xxxviii) Evaluation
Report dated May 11, 2010;81 and, (xxxix) Report dated September
22, 2010 of BA Insight.82

The foregoing considerations show that the trial court did not
err in rendering summary judgment. To stress, defendant-appellant
failed to raise any genuine defense in support of its denial of any
liability to plaintiff-appellee. As borne by the pleadings and
supporting documents, defendant-appellant is liable to plaintiff-
appellee for the sum of P10,721,938.50 representing its 45% share
under its reinsurance contract with plaintiff-appellee. As the trial court
noted, “the defenses being raised by the defendant can be resolved
without resorting to trial.” Said the trial court in its Resolution dated
July 26, 2017:

“The Court agrees with the plaintiff that the defenses being
raised by the defendant can be resolved without resorting to trial on
the basis of the admissions in the Answer and those made during
the Pre-Trial conference, the abortive agreed settlement, which
have never been denied by the defendant, and the supporting
affidavits of plaintiff as well as the undisputed Follow-the-Fortunes
Doctrine since there appears therefrom that no important issues of
fact are involved, even as to the amount of damages of
P10,921,938.49 and for the other amounts claimed in the
Complaint thereby entitling the plaintiff to a judgment in its favor as
a matter of law pursuant to Sections 1 to 3 of Rule 35 of the Rules
of Court.

It is undisputed that the Reinsurance Policy x x x covered

45% of the Policy Sum Insured or the amount of P10,921,938.49
representing 45% of the Final Settlement Amount of
P23,826,529.99 x x x. In fact, defendant knew fully well that BA
Insight and Cunningham independent adjuster of defendant had

78
pp. 24-30, Ibid.
79
pp. 31-35, Ibid.
80
pp. 36-39, Ibid.
81
pp. 153-161, Ibid.
82
pp. 50-51, Ibid.
CA-G.R. CV No. 110458 22
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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agreed with the computation on how the Final Settlement Amount

was arrived at x x x.

Among the admissions in the Answer and the Pre-Trial is the

defendant's letter proposal dated July 7, 2011 x x x proposing to
settle its share under the defendant's Reinsurance Policy in the
reduced amount of P5,123,482.00 instead of the amount of
P10,921,938.49 that plaintiff is claiming x x x

xxx xxx xxx

In the said letter proposal of defendant, there is no mention

of the defense of Bad Faith/Excessive Valuation as the reduced
amount of P5,123,482.00 being proposed was merely based on
defendant's 'evaluation of the loss as approved by' its 'reinsurers'
as if the latter had the right to conduct the evaluation of the loss
that would be binding on the plaintiff as the reinsured under the
Defendant's Reinsurance Policy.

Neither is there any mention in the said letter proposal of the

defense of Double Insurance/Not Covered by Fire Policy Defense
and the defense of prescription.

xxx xxx xxx

Also, sometime in March 2017, plaintiff and defendant

arrived at the abortive agreed settlement when they agreed to settle
plaintiff's claim and to execute the corresponding compromise
agreement with defendant paying the fixed amount of Six Million
(P6,000,000.00) Pesos payable in twelve (12) monthly installments
of P500,000.00 each.

xxx xxx xxx

The terms of the corresponding compromise agreement to

be executed by the plaintiff and the defendant have already been
agreed upon and defendant had already issued the checks
covering the monthly installments mentioned in the said
Compromise Agreement.

xxx xxx xxx

CA-G.R. CV No. 110458 23
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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X x x the negotiations for the settlement of the claim under

the Fire Policy (Claim), including the ascertainment of the liability of
plaintiff under the Fire Policy and the amount of indemnity, as well
as the valuation of the goods insured, which Top Forest, as the
assured, is entitled to receive under the Fire Policy, which became
the basis for the plaintiff's Claim Handling Decision, were very
transparent clearly showing that plaintiff arrived at the said decision
in good faith.

xxx xxx xxx

Thus, the defenses being raised by the defendant do not

constitute any defense at all and, therefore, defendant is liable to
pay plaintiff the amount of P10,721,938.50 representing the
defendant's 45% share in the Final Settlement Amount paid to Top
Forest under the terms of the defendant's Reinsurance Policy as
well as the other damages claimed in the Complaint.” 83

Defendant-appellant further claims that plaintiff-appellee “is

deemed to have abandoned and waived the presentation of its
evidence-in-chief” when it filed the motion for summary judgment
“because x x x there is no need to present anything more.” 84 There
should be no issue on this, because in granting plaintiff-appellee's
motion for summary judgment, the trial court decided the case on the
basis of the pleadings, affidavits and other submitted documents on
record.

Defendant-appellant further argues that the “lower court erred

in ruling that the plaintiff is entitled to attorney's fees and exemplary
damages” considering that defendant-appellant “acted in good faith
when it denied FLT's claim because it was convinced that the claim is
indeed not covered” and “no premium should be placed on the right
to litigate.”85 Again, there should be no issue on exemplary damages
because the trial court did not order defendant-appellant to pay
exemplary damages to plaintiff-appellee.

83
pp. 583-590, Original Records Volume 2
84
p. 61, Rollo
85
pp. 60, 61, Ibid.
CA-G.R. CV No. 110458 24
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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Anent the award of attorney's fees, the same is proper pursuant

to Article 220886 of the Civil Code. In awarding attorney's fees to
plaintiff-appellee, the trial court noted that plaintiff-appellee “was
constrained to litigate for the enforcement of the defendant's
Reinsurance Policy and to engage the services of the undersigned
counsel and file the instant case to protect its interest.” Indeed,
defendant-appellant's insistence that it had no liability to plaintiff-
appellee despite its admissions and documents showing the contrary,
as well as defendant-appellant's repeated refusal to pay its obligation
to plaintiff-appellee, forced the latter to litigate in order to collect what
is due it under the reinsurance contract.

WHEREFORE, the trial court's Resolution dated July 26, 2017

and Order dated December 8, 2017 are affirmed.

SO ORDERED.

FERNANDA LAMPAS PERALTA

Associate Justice

WE CONCUR:

RODIL V. ZALAMEDA HENRI JEAN PAUL B. INTING

Associate Justice Associate Justice

86
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
xxx xxx xxx
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;
xxx xxx xxx
(11) In any other case where the court deems it just and equitable that attorney's fees
and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
CA-G.R. CV No. 110458 25
FLT Prime Insurance Corp. vs. The Solid Guaranty Inc.
DECISION
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CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of
the opinion of the Court.

FERNANDA LAMPAS PERALTA

Associate Justice
Chairperson, Third Division