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 Secs. 248 & 249 Sec. 439, ICP, RA 10607: The Code retained the same adjudicatory power
 Zenith v. CA but increased the jurisdictional amount of P5,000,000.
 Go v. Ombudsman - Jurisdiction
 Mitsubishi v. Mitsubishi– Collateral Source Rule T r a v el l er ’ s I n s u r a n c e v s CA
 Lopez v. Filipinaz 2 7 2 S C RA 5 3 6 ( 1 9 9 7 )
 Traveler’s Insurance v. CA
 Ang v. Fulton Fire Insurance Plaintiff Mendoza filed a case against the taxi company involved in an
 Vda de Gabriel v. CA accident which killed his mother. He also impleaded the Traveller’s
Insurance & Surety which was alleged to have covered the taxicab in a
 Prescription – Sec. 63
policy of third-party liability insurance.
 Subrogation with respect to reinsurance
 Tax liabilities of Insurance Companies IR argued against recovery partly on the ground that Mendoza did not file
a written notice of claim with the IR.
Zenith vs CA, 185 SCRA 398
May 14, 1990 The Court held that the lack of any written notice of claim means that no
cause of action accrued. It is the rejection of the claim which forms the
Go v. Office of the Ombudsman cause of action and triggers the prescriptive period to bring action before
the proper tribunal. Without the written notice of claim, the IR does not
Does it violate the DEAR Doctrine? No. Concurrent Jurisdiction of the IC even have an opportunity to reject the claim as none had been filed in the
where every single claim does not exceed 5M arising from insurance first place.
contract, suretyship, and similar cases. Otherwise, go to regular courts.
Ang vs. Fulton Fire Insurance
Often times a claimant both a claims case and an administrative case. In 2 S CR A 9 4 5 ( 1 9 6 1 )
such instances, both proceedings may continue at the same time,
independently and conflicting decisions is of no moment. Plaintiff’s filed a claim to recover on a fire insurance policy. Their claim
was denied in April 1956 but they did not file a case before the court until
It may be filed either on the IC and the Regular Courts depending on the May 1958, though the policy contained a condition that action must be
amount. commenced within 12 months.

Ang explained this late filing by saying they had previously filed an action
M i t s u b i s hi M o t o r s P hi l i p p i n e s S a l a r i e d E m p l o y e e s
in May 1956 against their insurance agent to assert their claim but this had
U n i o n v s M i t s u b i s hi M o t o r s P hi l i p p i n e s
been dismissed, without prejudice, in Sep. 1957. The trial court held that
Corporation in suing first the insurance agent, Ang had merely committed a procedural
(June 17, 2013) mistake which led to the tolling of prescriptive period.
Co l l a t e r a l s o u r ce r u l e
RULING: SC disagreed saying that the condition to bring action within a
It does not apply to no fault insurance, under which the … a no fault IR specific time is not a mere procedural requirement but is an important
cannot be obliged… manner as it is essential to bring action on the claim while the relevant
evidence has not yet disappeared. Because of the plaintiff’s non-
When is an IR liable for interest and damages? compliance with the condition, their case was ordered dismissed.
With unreasonable delay.
The filing of a case against the insurance agent did not toll the running of
Lopez vs Filipinas Compania de Seguros the prescriptive period.
16 SCRA 855 (1966)
V d a . D e Ga b r i e l v s C A
The plaintiff wanted to recover on insurance taken out on two of his 2 6 4 S C RA 1 3 7
vehicles which later figured in an accident. Upon rejection of the claim,
Lopez initially filed a complaint with the Office of the IC and did not file a
complaint before the court until Sept. 29, 1651.

The IR raised the defense of prescription as the policy provided that action
must be commenced within 12 months from the rejection of the claim.
The lower court dismissed the case on the ground of prescription and the
SC affirmed this dismissal.

RULING: SC sustained the lower court in its ruling that the filing of the
complaint with the IC could not be considered an action or suit which may
toll the running of the period as it was not a court of justice. There was
nothing in the then applicable law, Act. No. 2427, which empowered the
IC to adjudicate on disputes relating to an insurance company’s liability to
an ID under a policy.

Sec. 416, IC of 1978: The IC was given adjudicatory powers with respect
to claims on contracts of insurance, where the amount of loss, damage, or
liability did not exceed a single claim of P100,000.

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G.R. No. 85296 May 14, 1990 2. The amount of P20,000.00 by way of moral
vs. 3. The amount of P20,000.00 by way of exemplary
COURT OF APPEALS and LAWRENCE FERNANDEZ, respondents. damages;

Vicente R. Layawen for petitioner. 4. The amount of P5,000.00 as attorney's fees;

Lawrence L. Fernandez & Associates for private respondent. 5. The amount of P3,000.00 as litigation expenses;

6. Costs. (p. 9, Rollo)

Upon motion of Fernandez and before the expiration of the period to
Assailed in this petition is the decision of the Court of Appeals in CA-G.R. appeal, the trial court, on June 20, 1986, ordered the execution of the
C.V. No. 13498 entitled, "Lawrence L. Fernandez, plaintiff-appellee v. decision pending appeal. The order was assailed by petitioner in a
Zenith Insurance Corp., defendant-appellant" which affirmed in toto the petition for certiorariwith the Court of Appeals on October 23, 1986 in
decision of the Regional Trial Court of Cebu, Branch XX in Civil Case No. C.A. G.R. No. 10420 but which petition was also dismissed on December
CEB-1215 and the denial of petitioner's Motion for Reconsideration. 24, 1986 (p. 69, Rollo).

The antecedent facts are as follows: On June 10, 1986, petitioner filed a notice of appeal before the trial court.
The notice of appeal was granted in the same order granting private
respondent's motion for execution pending appeal. The appeal to
On January 25, 1983, private respondent Lawrence Fernandez insured respondent court assigned the following errors:
his car for "own damage" under private car Policy No. 50459 with
petitioner Zenith Insurance Corporation. On July 6, 1983, the car figured
in an accident and suffered actual damages in the amount of P3,640.00. I. The lower court erred in denying defendant
After allegedly being given a run around by Zenith for two (2) months, appellant to adduce evidence in its behalf.
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 II. The lower court erred in ordering Zenith
the amount claimed. The complaint was docketed as Civil Case No. CEB- Insurance Corporation to pay the amount of
1215. Aside from actual damages and interests, Fernandez also prayed P3,640.00 in its decision.
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 III. The lower court erred in awarding moral
P3,000.00. damages, attorneys fees and exemplary damages,
the worst is that, the court awarded damages more
On September 28, 1983, Zenith filed an answer alleging that it offered to than what are prayed for in the complaint. (p.
pay the claim of Fernandez pursuant to the terms and conditions of the 12, Rollo)
contract which, the private respondent rejected. After the issues had
been joined, the pre-trial was scheduled on October 17, 1983 but the On August 17, 1988, the Court of Appeals rendered its decision
same was moved to November 4, 1983 upon petitioner's motion, affirming in toto the decision of the trial court. It also ruled that the
allegedly to explore ways to settle the case although at an amount lower matter of the trial court's denial of Fernandez's right to adduce evidence
than private respondent's claim. On November 14, 1983, the trial court is a closed matter in view of its (CA) ruling in AC-G.R. 04644 wherein
terminated the pre-trial. Subsequently, Fernandez presented his Zenith's petition questioning the trial court's order submitting the case
evidence. Petitioner Zenith, however, failed to present its evidence in for decision without Zenith's evidence, was dismissed.
view of its failure to appear in court, without justifiable reason, on the
day scheduled for the purpose. The trial court issued an order on August
23, 1984 submitting the case for decision without Zenith's evidence (pp. The Motion for Reconsideration of the decision of the Court of Appeals
10-11, Rollo). Petitioner filed a petition for certiorari with the Court of dated August 17, 1988 was denied on September 29, 1988, for lack of
Appeals assailing the order of the trial court submitting the case for merit. Hence, the instant petition was filed by Zenith on October 18, 1988
decision without petitioner's evidence. The petition was docketed as on the allegation that respondent Court of Appeals' decision and
C.A.-G.R. No. 04644. However, the petition was denied due course on resolution ran counter to applicable decisions of this Court and that they
April 29, 1986 (p. 56, Rollo). were rendered without or in excess of jurisdiction. The issues raised by
petitioners in this petition are:
On June 4, 1986, a decision was rendered by the trial court in favor of
private respondent Fernandez. The dispositive portion of the trial court's a) The legal basis of respondent Court of Appeals in
decision provides: awarding moral damages, exemplary damages and
attomey's fees in an amount more than that prayed
for in the complaint.
WHEREFORE, defendant is hereby ordered to pay
to the plaintiff:
b) The award of actual damages of P3,460.00
instead of only P1,927.50 which was arrived at after
1. The amount of P3,640.00 representing the deducting P250.00 and P274.00 as deductible
damage incurred plus interest at the rate of twice franchise and 20% depreciation on parts as agreed
the prevailing interest rates; upon in the contract of insurance.

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Petitioner contends that while the complaint of private respondent payment of the claim. However, the act of petitioner of delaying payment
prayed for P10,000.00 moral damages, the lower court awarded twice for two months cannot be considered as so wanton or malevolent to
the amount, or P20,000.00 without factual or legal basis; while private justify an award of P20,000.00 as moral damages, taking into
respondent prayed for P5,000.00 exemplary damages, the trial court consideration also the fact that the actual damage on the car was only
awarded P20,000.00; and while private respondent prayed for P3,460. In the pre-trial of the case, it was shown that there was no total
P3,000.00 attorney's fees, the trial court awarded P5,000.00. disclaimer by respondent. The reason for petitioner's failure to
indemnify private respondent within the two-month period was that the
The propriety of the award of moral damages, exemplary damages and parties could not come to an agreement as regards the amount of the
attorney's fees is the main issue raised herein by petitioner. actual damage on the car. The amount of P10,000.00 prayed for by
private respondent as moral damages is equitable.
The award of damages in case of unreasonable delay in the payment of
insurance claims is governed by the Philippine Insurance Code, which On the other hand, exemplary or corrective damages are imposed by
provides: way of example or correction for the public good (Art. 2229, New Civil
Code of the Philippines). In the case of Noda v. Cruz-Arnaldo, G.R. No.
57322, June 22,1987; 151 SCRA 227, exemplary damages were not
Sec. 244. In case of any litigation for the awarded as the insurance company had not acted in wanton, oppressive
enforcement of any policy or contract of insurance, or malevolent manner. The same is true in the case at bar.
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 The amount of P5,000.00 awarded as attomey's fees is justified under
been unreasonably denied or withheld; and in the the circumstances of this case considering that there were other
affirmative case, the insurance company shall be petitions filed and defended by private respondent in connection with
adjudged to pay damages which shall consist of this case.
attomey's fees and other expenses incurred by the
insured person by reason of such unreasonable As regards the actual damages incurred by private respondent, the
denial or withholding of payment plus interest of amount of P3,640.00 had been established before the trial court and
twice the ceiling prescribed by the Monetary Board affirmed by the appellate court. Respondent appellate court correctly
of the amount of the claim due the insured, from the ruled that the deductions of P250.00 and P274.00 as deductible
date following the time prescribed in section two franchise and 20% depreciation on parts, respectively claimed by
hundred forty-two or in section two hundred forty- petitioners as agreed upon in the contract, had no basis. Respondent
three, as the case may be, until the claim is fully court ruled:
satisfied; Provided, That the failure to pay any such
claim within the time prescribed in said sections Under its second assigned error, defendant-
shall be considered prima facie evidence of appellant puts forward two arguments, both of
unreasonable delay in payment. which are entirely without merit. It is contented that
the amount recoverable under the insurance policy
It is clear that under the Insurance Code, in case of unreasonable delay in defendant-appellant issued over the car of plaintiff-
the payment of the proceeds of an insurance policy, the damages that appellee is subject to deductible franchise, and . . . .
may be awarded are: 1) attorney's fees; 2) other expenses incurred by
the insured person by reason of such unreasonable denial or The policy (Exhibit G, pp. 4-9, Record), does not
withholding of payment; 3) interest at twice the ceiling prescribed by the mntion any deductible franchise, . . . (p. 13, Rollo)
Monetary Board of the amount of the claim due the injured; and 4) the
amount of the claim.
Therefore, the award of moral damages is reduced to P10,000.00 and the
award of exemplary damages is hereby deleted. The awards due to
As regards the award of moral and exemplary damages, the rules under private respondent Fernandez are as follows:
the Civil Code of the Philippines shall govern.
1) P3,640.00 as actual claim plus interest of twice
"The purpose of moral damages is essentially indemnity or reparation, the ceiling prescribed by the Monetary Board
not punishment or correction. Moral damages are emphatically not computed from the time of submission of proof of
intended to enrich a complainant at the expense of a defendant, they are loss;
awarded only to enable the injured party to obtain means, diversions or
amusements that will serve to alleviate the moral suffering he has
undergone by reason of the defendant's culpable action." (J. Cezar S. 2) P10,000.00 as moral damages;
Sangco, Philippine Law on Torts and Damages, Revised Edition, p. 539)
(See also R and B Surety & Insurance Co., Inc. v. IAC, G.R. No. 64515, June 3) P5,000.00 as attorney's fees;
22, 1984; 129 SCRA 745). While it is true that no proof of pecuniary loss
is necessary in order that moral damages may be adjudicated, the 4) P3,000.00 as litigation expenses; and
assessment of which is left to the discretion of the court according to the
circumstances of each case (Art. 2216, New Civil Code), it is equally true
that in awarding moral damages in case of breach of contract, there must 5) Costs.
be a showing that the breach was wanton and deliberately injurious or
the one responsible acted fraudently or in bad faith (Perez v. Court of ACCORDINGLY, the appealed decision is MODIFIED as above stated.
Appeals, G.R. No. L-20238, January 30,1965; 13 SCRA 137; Solis v.
Salvador, G.R. No. L-17022, August 14, 1965; 14 SCRA 887). In the instant SO ORDERED.
case, there was a finding that private respondent was given a "run-
around" for two months, which is the basis for the award of the damages
granted under the Insurance Code for unreasonable delay in the
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G.R. No. 131399 October 17, 2003 (11) Philippine First Insurance Co., Inc. ₱ 1,500,000.00

ANGELITA AMPARO GO, petitioner, (12) Blue Cross Insurance Co., Inc. ₱ 2,500,000.00
OFFICE OF THE OMBUDSMAN, INSURANCE COMMISSIONER (13) Commonwealth Insurance Co. ₱ 2,000,000.00
(14) Imperial Insurance Co. Inc. ₱ 1,278,000.00
which total ₱29,778,000.00.
Feeling that the resolutions of her claims have been unduly delayed,
In this petition for review on certiorari under Rule 45 of the Rules of petitioner sought the assistance of the Insurance Commission
Court, petitioner Angelita Amparo Go seeks the reversal of the Resolution (Commission for brevity) through her letter dated January 18,
of the Office of the Ombudsman in OMB-0-96-2225 dismissing her 1994.1 Acting on said letter, the Public Assistance & Information Division
charges against Insurance Commissioner Eduardo T. Malinis and of the Commission held a conference on February 15, 1994 wherein
Hearing Officer Norberto F. Castro for Violation of Section 3 [e] of petitioner and the insurance companies’ respective representatives met.
Republic Act No. 3019, otherwise known as Anti-Graft and Corrupt The insurers manifested their official stance to deny the claims of
Practices Act, which provides: petitioner.2 As a result, the conference was terminated without prejudice
to petitioner’s option to pursue other legal remedies.3
Sec. 3. Corrupt practices of public officers. -- In addition to acts omissions
of public officers already penalized by existing law, the following shall Petitioner then sought the intercession of several members and
constitute corrupt practices of any public officer and are hereby declared committees of the Legislature, such as, then Senate President Edgardo
to be unlawful: Angara,4 Senator Heherson Alvarez and the Senate Blue Ribbon
Committee5 and the House Committee on Banks and Financial
... Intermediaries,6 accusing the Commission of acting in conspiracy with
the insurance companies in denying and delaying her claims.7 The
(e) Causing any undue injury to any party, including the Government, or legislators and the committees sent communications to the Commission
giving any private party any unwarranted benefits, advantage or regarding petitioner’s claims.8 Acting on the matter, the Commission
preference in the discharge of his official, administrative or judicial conducted several meetings with petitioner and the insurance
functions through manifest partiality, evident bad faith or gross companies in order to settle the claims. The Commission apprised the
inexcusable negligence. This provision shall apply to officers and legislators and their committees of the actions taken by the Commission
employees of offices or government corporations charged with the grant and vehemently denied petitioner’s accusations.9
of licenses or permits or other concessions.
On June 20, 1994, petitioner filed with the Commission a complaint for
The facts of the case are as follows: Revocation and/or Suspension of Licenses against the fourteen
insurance companies, docketed as Adm. Case No. RD-156, based on
alleged violation by the insurance companies and their respective
Petitioner is the Treasurer and Vice-President of Wear Me Garment adjusters of Section 241 (b), (c), (d) and (e) of the Insurance Code, as
Manufacturing Inc. whose business and factory are located in Nadurata amended, to wit:
St., Grace Park, Caloocan City. Due to a fire on July 12, 1993 that gutted
down Wear Me Garment’s factory as well as its machineries and stocks,
petitioner filed separate insurance claims against each of the following SEC. 241. (1) No insurance company doing business in the Philippines
14 insurance companies: shall refuse, without just cause, to pay or settle claims arising under
coverages provided by its policies, nor shall any such company engage in
unfair claim settlement practices. Any of the following acts by an
(1) Prudential Guarentee & Assurance Inc. ₱ 5,000,000.00 insurance company, if committed without just cause and performed with
such frequency as to indicate a general business practice, shall constitute
(2) Oriental Assutance Corporation ₱ 3,500,000.00 unfair claim settlement practices:

(3) Cibeles Insurance Corporation ₱ 1,000,000.00 ...

(4) Pioneer Asia Insurance Corporation ₱ 1,500,000.00 (b) Failing to acknowledge with reasonable promptness pertinent
communications with respect to claims arising under its policies;
(5) Western Guaranty Corp. ₱ 2,500,000.00
(c) Failing to adopt and implement reasonable standards for the the
(6) Liberty Insurance Corporation ₱ 4,000,000.00 prompt investigation of claims arising under its policies;

(7) Filipino Merchants Insurance Co. ₱ 1,000,000.00 (d) Not attempting in good faith to effectuate prompt, fair and equitable
settlement of claims submitted in which liability has become reasonably
clear; or
(8) Reliance Surety & Insurance Co., Inc. ₱ 500,000.00
(e) Compelling policyholders to institute suits to recover amounts due
(9) Central Surety & Insurance Co. ₱ 2,000,000.00 under its policies by offering without justifiable reason substantially less
than the amount ultimately recovered in suits brought by them.
(10) Phil. British Assurance Corporation ₱ 1,500,000.00
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mandating prompt investigation and settlement of claims.10 refused to grant the claims, he nevertheless exerted efforts to mediate
the dispute.25
Consequently, the Commission informed the concerned legislative
bodies that they could not mediate any longer petitioner’s claims against Respondent Castro also denies petitioner’s accusations. He maintains
the insurers because to do so will conflict with its position to maintain that he did not tell petitioner that the holding of separate hearings was
strict impartiality in the adjudication of Adm. Case No. RD-156.11 upon the instructions of Commissioner Malinis, as in fact, records show
that joint hearings were held in Adm. Case No. RD-156; and, that the
Preliminary hearings were conducted in Adm. Case No. RD-156.12 On suspension of Adm. Case No. RD-156 was based on a motion to dismiss
November 24, 1994, the complaint was amended including therein filed by the insurance companies, after due hearing on the motion.26
several adjusters as party-defendants.13 Petitioner also filed a Joint
Affidavit, together with her husband,14 and a Motion to Admit Amended Graft Investigation Officer Ginez-Jabalde recommended the dismissal of
Complaint and Affidavit in Lieu of Direct Testimony.15 the charges against respondents per Resolution dated January 13, 1997.
However, Ombudsman Desierto ordered further clarificatory
On February 27, 1995, while Adm. Case No. RD-156 is pending before hearings.27 On March 18, 1997, a clarificatory hearing was held wherein
the Commission, petitioner filed with the Regional Trial Court of Quezon respondent Castro explained that although he scheduled separate
City (Branch 222) a civil case for Specific Performance with Damages, hearings, it was because the situation called for it as there were various
docketed as Civil Case No. Q-95-23135, against the same defendants in insurance companies, adjusters and issues involved in the claims.28
Adm. Case No. RD-156.16 The complaint prayed that defendants be
ordered to perform their respective obligations as insurers under the Thereafter, the Ombudsman approved the recommendation of the Graft
insurance policies and to pay damages and attorney’s fees.17 Investigation Officer to dismiss the charges against respondents.29 Upon
denial by the Ombudsman of her motion for reconsideration,30 petitioner
On March 28, 1995, the pre-trial in Adm. Case No. RD-156 was filed the present petition for review on certiorari.
terminated and consolidated hearings on the case ensued.18 In its Order
dated May 17, 1995, the Commission admitted petitioner’s Amended Petitioner raises the following issues:
Complaint and Joint Affidavit.19 Consolidated/joint hearings on the case
On motion to dismiss by two of the insurers, the Commission ordered INDEPENDENTLY DESPITE SUBSEQUENT FILING OF A CIVIL CASE IN A
the suspension of Adm. Case No. RD-156 until final determination of Civil REGULAR COURT OF JUSTICE WHEREIN IN BOTH CASES, IT (sic)
Case No. Q-95-23135.21 The Commission was of the opinion that the INVOLVE THE SAME PARTIES AND RELATIVELY INVOLVE THE SAME
administrative case for revocation/suspension of license of respondents INCIDENT?
and the civil case for specific performance with the Regional Trial Court
involve the same set of parties, facts and circumstances; and that the WHETHER THE CONDUCT OF A (sic) SEPARATE HEARINGS FOR EACH
determination by the Commission of the validity of the claims might RESPONDENTS (sic) CONSISTING OF FOURTEEN (14) INSURANCE
conflict with that of the court, or vice-versa.22 COMPANIES AND SIX (6) ADJUSTMENT COMPANIES ON THE ONE
Aggrieved, petitioner filed with the Office of the Ombudsman a BY THE HEARING OFFICER IN AN ADMINISTRATIVE CASE
Complaint-Affidavit against Commissioner Malinis and Hearing Officer PREDICATED ON THE SAME ISSUE AND THE SAME SET OF FACTS AND
Castro of the Regulation Division, charging them of Violation of Section 3 CIRCUMSTANCES, AND THE SUBSEQUENT SUSPENSION OF THE
[e] of Rep. Act No. 3019, as herein quoted earlier. PROCEEDINGS THEREON VIOLATES SECTION 16, ARTICLE IV OF THE
In a gist, petitioner alleges in her Complaint-Affidavit, as follows: INSURANCE MEMORANDUM CIRCULAR 1-93 MANDATING THE
Some time in March 1994, petitioner went to the office of respondent
Commissioner Malinis to discuss her claims and he informed her that he The Court finds the petition devoid of merit. The Ombudsman did not
can settle the claims. However, because respondent Malinis did not fulfill commit any grave abuse of discretion when it found no probable cause
his promise, she decided to file Adm. Case No. RD-156, which was raffled and dismissed the Complaint-Affidavit against respondents.
to respondent Castro. Petitioner again visited respondent Malinis on May
20, 1994, and the latter told her that he will settle the claims if she gives The Ombudsman resolved to dismiss the charges against respondents as
him 50% of it. In order for petitioner to accede to respondent Malinis’ the latter were able to satisfactorily explain the reason for the holding of
demand, he ordered Castro to conduct separate hearings on the claims. separate hearings, i.e., expediency, and the Commission is allowed under
Castro admitted to petitioner that it was respondent Malinis who its rules of procedure to order the suspension of Adm. Case No. RD-156.
instructed him to conduct separate hearings. Petitioner asked The Ombudsman concluded:
respondent Malinis to consolidate the hearings but instead, Malinis again
propositioned that he will settle her claims if petitioner gives him 50%. The conduct of separate hearings and issuance of the Order were all
Respondent Malinis then ordered the suspension of Adm. Case No. RD- done in the regular performance of duties by the respondents Insurance
156 in his Order dated August 29, 1995, which is patently void since he Commissioner and Hearing Officer respetively (sic). Moreover, they were
was not the hearing officer, and the order violates E.O. No. 26 and done within the purview of the rules of procedure governing the
Insurance Circular Memorandum 1-93 on the early disposition of functions of the Insurance Commission.
insurance claims.23
Finally, complainant failed to substantiate her charge with any concrete
In his Counter-Affidavit, respondent Malinis denies petitioner’s evidence, thus we can simply regard the charge against respondent
allegations.24 He contends that the Commission attended to petitioner’s Eduardo T. Malinis and Norberto F. Castro as if it does not exist at all.32
claims as early as January 1994 and that despite the fact that it was
beyond the jurisdiction of the Commission and the insurance companies

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Petitioner insists that the filing of Civil Case No. Q-95-23135 before the The causing of undue injury or the giving of any unwarranted benefits,
regular court does not abate or suspend the proceedings in Adm. Case advantage or preference through manifest partiality, evident bad faith or
No. RD-156. Petitioner argues further that the holding of separate gross inexcusable negligence constitutes the very act punished under the
hearings violates her constitutional right to the speedy disposition of her foregoing section.44
Petitioner complains that she found it "difficult and burdensome to
It has been the Court’s policy to refrain from interfering with the prosecute her case against the insurers … not to mention that she had
Ombudsman’s exercise of its investigatory and prosecutory powers, been rendered despondent by the loss of her business due to
unless there are good and compelling reasons to rule otherwise.33 We conflagration."45 Such difficulty and burden, however, do not, per se,
find no cogent reason that justifies the reversal of the dismissal of the constitute the undue injury contemplated by law.
charges against respondents.
Jurisprudence has consistently interpreted the term "undue injury" as
In her Affidavits, petitioner alleges that respondent Malinis’ act of synonymous to "actual damage."46 In Llorente, Jr. vs.
demanding 50% of the insurance claims, instructing respondent Castro Sandiganbayan,47 we explained the concept of "undue injury" as an
to conduct separate hearings, and suspending Adm. Case No. RD-156, element of the offense punishable under Section 3 [e] of Rep. Act No.
caused her undue injury and gave the insurance companies 3019, to wit:
unwarranted benefits, advantage and preference.34 Aside from such bare
allegations, there is nothing on record proving that respondent Malinis in … Undue has been defined as "more than necessary, not proper, [or]
fact demanded such 50%, or that the holding of the separate hearings illegal;" and injury as "any wrong or damage done to another, either in
and the suspension of the proceedings were done in order to coerce his person, rights, reputation or property[;] [that is, the] invasion of any
petitioner into acceding to Malinis’ demand. legally protected interest of another." Actual damage, in the context of
these definitions, is akin to that in civil law.
Petitioner argues that respondent Malinis did not deny her accusations
and failed to answer the charges against him, indicating therefore the …
truth of her allegations.35 Indeed, the general rule is that failure to deny
allegations in the complaint results in admission thereof. 36 Such rule,
however, is not absolute and admits of exceptions.37 In Florentino Atillo Petitioner may have been fraught with attending and litigating her claims
III vs. Court of Appeals, Amancor, Inc. and Michell Lhuillier,38 we held that against each of the fourteen insurers as well as the insurance adjusters,
in spite of the presence of judicial admissions in a party’s pleading, the individually, but inconvenience is certainly not constitutive of undue
trial court is still given leeway to consider other evidence presented;39or, injury.48
as in the present case, the absence of evidence for the petitioner to prove
her claim. Moreover, petitioner failed to show that the conduct of separate hearings
was done by respondents through manifest partiality, evident bad faith
It is fundamental that upon him who alleges rests the burden of or gross inexcusable negligence.
proof;40 hence, it is incumbent upon petitioner to prove her allegations
with competent evidence.41 She cannot simply rely on respondent Records show that as early as January 1994, when petitioner first
Malinis’ failure to specifically deny her allegations to prove that there was brought the matter of the delay in her insurance claims to the
such an illegal proposition. Respondents may not be indicted on mere Commission, respondent Malinis, upon the request of petitioner, exerted
presumptions. efforts to mediate between her and the insurance companies in order to
amicably settle the claims notwithstanding the fact that it was beyond
A review of the records shows that petitioner failed to prove her claim the jurisdictional amount cognizable by the Commission under the
such that respondents may not be indicted for the acts complained of. As Insurance Code, as amended.1awphi1.nét
aptly found by the Ombudsman, there was no concrete evidence
presented by petitioner to substantiate her charge.42 Paragraph 1, Section 416 of the Code provides that the Insurance
Commissioner shall have the power to adjudicate claims and complaints
To establish probable cause for Violation of Section 3[e] of R.A. 3019, the involving any loss, damage or liability for which an insurer may be
following elements must be present: answerable under any kind of policy or contract of insurance where the
amount of any such loss, damage or liability does not exceed in any single
claim one hundred thousand pesos. When the insurance companies
(1) The accused is a public officer or a private person charged in made known their official position to deny the claims, respondent
conspiracy with the former; Malinis persisted in holding meetings between the parties. It was only
after petitioner formally filed a complaint for Revocation and/or
(2) The said public officer commits the prohibited acts during the Suspension of Licenses with the Commission that settlement discussions
performance of his or her official duties or in relation to his or her public were discontinued as it may compromise the Commission’s
positions; impartiality.49 These clearly are not indicative of evident bad faith,
manifest partiality or gross inexcusable negligence on respondents’ part.
(3) That he or she causes undue injury to any party, whether the Thus, respondent Malinis cannot be faulted for attempting to mediate
government or a private party; among the parties.

(4) Such undue injury is caused by giving unwarranted benefits, Records also show that the separate hearings on the case were held only
advantage or preference to such parties; and during the early part of the proceedings in Adm. Case No. RD-156,
particularly on August 15, 16, 17, 1994, and September 6, 7, 8, 9, 12, 13,
14, 16, 19, 20, 21, 22, 23, 1994.50 During the clarificatory hearing held
(5) That the public officer has acted with manifest partiality, evident bad before the Office of the Ombudsman, respondent Castro explained that
faith or gross inexcusable negligence.43 the conduct of separate hearings was necessary because petitioner’s
claims involved several insurance companies, adjusters and peculiar

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issues for each of the companies.51 What petitioner conveniently omitted Metropolitan Trial Courts, the Municipal Trial Courts and the Municipal
to add is that consolidated/joint hearings were in fact held on August 25, Circuit Trial Courts.56
29, 1994, April 6, 1995, May 12, 1995, June 5, 1995, and July 3,
1995.52 This negates petitioner’s allegation that respondents were In addition to such adjudicatory power, the Commissioner has the
deliberately holding separate hearings to her prejudice. Notably, it was regulatory authority to revoke or suspend the certificate or authority of
during the hearing of July 3, 1995 that the motion to dismiss the an insurance company upon finding the legal grounds for such
Amended Complaint was heard and argued before respondent Castro revocation or suspension under Sections 241 and 247 of the Insurance
who eventually decided to order the suspension of the proceedings.53 Code. Section 241 is quoted in the early part of herein Decision. Section
247 provides:
The fact that the Commission suspended the proceedings due to the
pendency of Civil Case No. Q-95-23135 does not constitute an indictable SEC. 247. If the Commissioner is of the opinion upon examination or
offense under Section 3 [e] of R.A. No. 3019. other evidence that any domestic or foreign insurance company is in an
unsound condition, or that it has failed to comply with the provisions of
In Almendras Mining Corporation vs. Office of the Insurance law or regulations obligatory upon it, or that its condition or methods of
Commission,54 the Court expounded on the two-fold powers of the business is such as to render its proceedings hazardous to the public or
Insurance Commission under the Insurance Code, as amended, 55 to wit: to its policyholders, or that its paid-up capital stock, in the case of a
domestic stock company, or its available cash assets, in the case of
. . . the Office of the Insurance Commission is an administrative agency domestic mutual company, or its security deposits, in the case of a
vested with regulatory power as well as with adjudicatory authority. foreign company, is impaired or deficient, or that the margin of solvency
Among the several regulatory or non-quasi-judicial duties of the required of such company is deficient, the Commissioner is authorized to
Insurance Commissioner under the Insurance Code is the authority to suspend or revoke all certificates of authority granted to such insurance
issue, or refuse issuance of, a Certificate of Authority to a person or entity company, its officers and agents, and no new business shall thereafter be
desirous of engaging in insurance business in the Philippines, and to done by such company or for such company by its agent in the
revoke or suspend such Certificate of Authority upon a finding of the Philippines while such suspension, revocation or disability continues or
existence of statutory grounds for such revocation or suspension. The until its authority to do business is restored by the Commission. Before
grounds for revocation or suspension of an insurer's Certificate of restoring such authority, the Commissioner shall required the company
Authority are set out in Section 241 and in Section 247 of the Insurance concerned to subject to him a business plan showing the company’s
Code as amended. The general regulatory authority of the Insurance estimated receipts and disbursements, as well as the basis therefore, for
Commissioner is described in Section 414 of the Insurance Code, as the next succeeding three years. (As amended by P.D. No. 1455)
amended, in the following terms:
Petitioner pursued her fire insurance claims through the regular courts
Sec. 414. The Insurance Commissioner shall have the duty to see that all when she filed Civil Case No. Q-95-23135 for Specific Performance with
laws relating to insurance, insurance companies and other insurance Damages with the RTC-Quezon City (Branch 222), her claims being
matters, mutual benefit associations, and trusts for charitable uses are beyond the jurisdiction of the Commission. In resolving petitioner’s
faithfully executed and to perform the duties imposed upon him by this claims, the trial court must therefore determine whether there was
Code, and shall, notwithstanding any existing laws to the contrary, have unreasonable denial or withholding of the claims by the insurance
sole and exclusive authority to regulate the issuance and sale of variable companies.
contracts as defined in section two hundred thirty-two and to provide for
the licensing of persons selling such contracts, and to issue such On the other hand, in Adm. Case No. RD-156 pending before the
reasonable rules and regulations governing the same. Insurance Commission, the Commissioner is called upon to determine
whether there was unreasonable delay or withholding of the claims, as
... petitioner’s action is one for the Revocation and/or Suspension of
Licenses on grounds of alleged violations of Section 241 (b), (c), (d) and
(e) of the Insurance Code, as amended, on prompt investigation and
The adjudicatory authority of the Insurance Commissioner is generally settlement of claims. The jurisdiction of the Commission in this case is
described in Section 416 of the Insurance Code, as amended, which reads one that calls for the exercise of its regulatory or non-quasi-judicial duty,
as follows: i.e., the authority to revoke or suspend an insurer’s certificate of
authority.57 Aside from the revocation/suspension of license, the
Sec. 416. The Commissioner shall have the power to adjudicate claims Insurance Commissioner also has the discretion to impose upon the
and complaints involving any loss, damage or liability for which an erring insurance companies and its directors, officers and agents, fines
insurer may be answerable under any kind of policy or contract of and penalties, as set out in Section 415, viz.:
insurance, or for which such insurer may be liable under a contract of
suretyship, or for which a reinsurer may be sued under any contract or SEC. 415. In addition to the administrative sanction provided elsewhere
reinsurance it may have entered into, or for which a mutual benefit in this Code, the Insurance Commissioner is hereby authorized, at his
association may be held liable under the membership certificates it has discretion, to impose upon insurance companies, their directors and/or
issued to its members, where the amount of any such loss, damage or officers and/or agents, for any willful failure or refusal to comply with, or
liability, excluding interests, cost and attorney's fees, being claimed or violation of any provision of this Code, or any order, instruction,
sued upon any kind of insurance, bond, reinsurance contract, or regulation or ruling of the Insurance Commissioner, or any commission
membership certificate does not exceed in any single claim one hundred of irregularities, and/or conducting business in an unsafe or unsound
thousand pesos. (Emphasis supplied) manner as may be determined by the Insurance Commissioner, the
Under its adjudicatory authority, the Insurance Commission has the
original jurisdiction to adjudicate and settle insurance claims and (a) Fines not in excess of five hundred pesos a day; and
complaints where the amount being claimed does not exceed in any
single claim one hundred thousand pesos, as provided in Section 416 of
the Code. Such original jurisdiction is concurrent with that of the

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(b) Suspension, or after due hearing, removal of directors Hence, Adm. Case No. RD-156 may proceed alongside Civil Case No. Q-
and/or officers and/or agents. 95-23135.

The findings of the trial court will not necessarily foreclose the The suspension of Adm. Case No. RD-156 by respondents, albeit
administrative case before the Commission, or vice versa. True, the erroneous, is not sufficient indicia of evident bad faith, manifest partiality
parties are the same, and both actions are predicated on the same set of or gross inexcusable negligence. Respondents’ mistaken sense of
facts, and will require identical evidence. But the issues to be resolved, prudence and judgment, dictated the suspension of the proceedings. To
the quantum of evidence, the procedure to be followed and the reliefs to hold respondents responsible for such error would be nothing short of
be adjudged by these two bodies are different. harassment. For no one called upon to try the facts or interpret the law in
the process of administering justice can be infallible in his judgment.66
Petitioner’s causes of action in Civil Case No. Q-95-23135 are predicated
on the insurers’ refusal to pay her fire insurance claims despite notice, WHEREFORE, the instant petition for review on certiorari is hereby
proofs of losses and other supporting documents. Thus, petitioner prays DENIED for lack of merit. However, in the interest of orderly
in her complaint that the insurers be ordered to pay the full-insured administration of justice, the Insurance Commission is directed to
value of the losses, as embodied in their respective policies.58 Petitioner proceed with immediate dispatch in conducting the hearings of Adm.
also sought payment of interests and damages in her favor caused by the Case No. RD-156 to determine whether or not the licenses of the
alleged delay and refusal of the insurers to pay her claims.59 The principal insurance companies and adjusters may be revoked or suspended as
issue then that must be resolved by the trial court is whether or not prayed for by petitioner.
petitioner is entitled to the payment of her insurance claims and
damages. The matter of whether or not there is unreasonable delay or No costs.
denial of the claims is merely an incident to be resolved by the trial court,
necessary to ascertain petitioner’s right to claim damages, as prescribed
by Section 244 of the Insurance Code. SO ORDERED.

On the other hand, the core, if not the sole bone of contention in Adm.
Case No. RD-156, is the issue of whether or not there was unreasonable
delay or denial of the claims of petitioner, and if in the affirmative,
whether or not that would justify the suspension or revocation of the
insurers’ licenses.

Moreover, in Civil Case No. Q-95-23135, petitioner must establish her

case by a preponderance of evidence, or simply put, such evidence that is
of greater weight, or more convincing than that which is offered in
opposition to it.60In Adm. Case No. RD-156, the degree of proof required
of petitioner to establish her claim is substantial evidence, which has
been defined as that amount of relevant evidence that a reasonable mind
might accept as adequate to justify the conclusion.61

In addition, the procedure to be followed by the trial court is governed by

the Rules of Court,62 while the Commission has its own set of rules63 and
it is not bound by the rigidities of technical rules of procedure.64 These
two bodies conduct independent means of ascertaining the ultimate facts
of their respective cases that will serve as basis for their respective

If, for example, the trial court finds that there was no unreasonable delay
or denial of her claims, it does not automatically mean that there was in
fact no such unreasonable delay or denial that would justify the
revocation or suspension of the licenses of the concerned insurance
companies. It only means that petitioner failed to prove by
preponderance of evidence that she is entitled to damages. Such finding
would not restrain the Insurance Commission, in the exercise of its
regulatory power, from making its own finding of unreasonable delay or
denial as long as it is supported by substantial evidence.

While the possibility that these two bodies will come up with conflicting
resolutions on the same issue is not far-fetched, the finding or conclusion
of one would not necessarily be binding on the other given the difference
in the issues involved, the quantum of evidence required and the
procedure to be followed.

Moreover, public interest and public policy demand the speedy and
inexpensive disposition of administrative cases.65

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G.R. No. 175773 June 17, 2013 c. The limitations and restrictions listed in Annex "B" must be
(MMPSEU), Petitioner, d. Payment shall be direct to the hospital and doctor and must
vs. be covered by actual billings.
Each employee shall pay one hundred pesos (₱100.00) per month
DECISION through salary deduction as his share in the payment of the insurance
premium for the above coverage with the balance of the premium to be
DEL CASTILLO, J.: paid by the COMPANY. If the COMPANY is self-insured the one hundred
pesos (₱100.00) per employee monthly contribution shall be given to the
COMPANY which shall shoulder the expenses subject to the above level
The Collective Bargaining Agreement (CBA) of the parties in this case of benefits and subject to the same limitations and restrictions provided
provides that the company shoulder the hospitalization expenses of the for in Annex "B" hereof.
dependents of covered employees subject to certain limitations and
restrictions. Accordingly, covered employees pay part of the
hospitalization insurance premium through monthly salary deduction The hospitalization expenses must be covered by actual hospital and
while the company, upon hospitalization of the covered employees' doctor’s bills and any amount in excess of the above mentioned level of
dependents, shall pay the hospitalization expenses incurred for the same. benefits will be for the account of the employee.
The conflict arose when a portion of the hospitalization expenses of the
covered employees' dependents were paid/shouldered by the For purposes of this provision, eligible dependents are the covered
dependent's own health insurance. While the company refused to pay employees’ natural parents, legal spouse and legitimate or legally
the portion of the hospital expenses already shouldered by the adopted or step children who are unmarried, unemployed who have not
dependents' own health insurance, the union insists that the covered attained twenty-one (21) years of age and wholly dependent upon the
employees are entitled to the whole and undiminished amount of said employee for support.
hospital expenses.
This provision applies only in cases of actual confinement in the hospital
By this Petition for Review on Certiorari,1 petitioner Mitsubishi Motors for at least six (6) hours.
Philippines Salaried Employees Union (MMPSEU) assails the March 31,
2006 Decision2 and December 5, 2006 Resolution3 of the Court of Maternity cases are not covered by this section but will be under the next
Appeals (CA) in CA-G.R. SP No. 75630, which reversed and set aside the succeeding section on maternity benefits.6
Voluntary Arbitrator’s December 3, 2002 Decision4 and declared
respondent Mitsubishi Motors Philippines Corporation (MMPC) to be
under no legal obligation to pay its covered employees’ dependents’ When the CBA expired on July 31, 1999, the parties executed another
hospitalization expenses which were already shouldered by other health CBA7 effective August 1, 1999 to July 31, 2002 incorporating the same
insurance companies. provisions on dependents’ hospitalization insurance benefits but in the
increased amount of ₱50,000.00. The room and board expenses, as well
as the doctor’s call fees, were also increased to ₱375.00.
Factual Antecedents
On separate occasions, three members of MMPSEU, namely, Ernesto
The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 Calida (Calida), Hermie Juan Oabel (Oabel) and Jocelyn Martin (Martin),
provides for the hospitalization insurance benefits for the covered filed claims for reimbursement of hospitalization expenses of their
dependents, thus: dependents.

SECTION 4. DEPENDENTS’ GROUP HOSPITALIZATION INSURANCE – MMPC paid only a portion of their hospitalization insurance claims, not
The COMPANY shall obtain group hospitalization insurance coverage or the full amount. In the case of Calida, his wife, Lanie, was confined at Sto.
assume under a self-insurance basis hospitalization for the dependents Tomas University Hospital from September 4 to 9, 1998 due to
of regular employees up to a maximum amount of forty thousand pesos Thyroidectomy. The medical expenses incurred totalled ₱29,967.10. Of
(₱40,000.00) per confinement subject to the following: this amount, ₱9,000.00 representing professional fees was paid by
MEDICard Philippines, Inc. (MEDICard) which provides health
a. The room and board must not exceed three hundred pesos maintenance to Lanie.8 MMPC only paid ₱12,148.63.9 It did not pay the
(₱300.00) per day up to a maximum of thirty-one (31) days. ₱9,000.00 already paid by MEDICard and the ₱6,278.47 not covered by
Similarly, Doctor’s Call fees must not exceed three hundred official receipts. It refused to give to Calida the difference between the
pesos (₱300.00) per day for a maximum of thirty-one (31) amount of medical expenses of ₱27,427.1010 which he claimed to be
days. Any excess of this amount shall be borne by the entitled to under the CBA and the ₱12,148.63 which MMPC directly paid
employee. to the hospital.

b. Confinement must be in a hospital designated by the In the case of Martin, his father, Jose, was admitted at The Medical City
COMPANY. For this purpose, the COMPANY shall designate from March 26 to 27, 2000 due to Acid Peptic Disease and incurred
hospitals in different convenient places to be availed of by the medical expenses amounting to ₱9,101.30.14 MEDICard paid
dependents of employees. In cases of emergency where the ₱8,496.00.15Consequently, MMPC only paid ₱288.40,16 after deducting
dependent is confined without the recommendation of the from the total medical expenses the amount paid by MEDICard and the
company doctor or in a hospital not designated by the ₱316.90 discount given by the hospital.
COMPANY, the COMPANY shall look into the circumstances of
such confinement and arrange for the payment of the amount Claiming that under the CBA, they are entitled to hospital benefits
to the extent of the hospitalization benefit. amounting to ₱27,427.10, ₱6,769.35 and ₱8,123.80, respectively, which

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should not be reduced by the amounts paid by MEDICard and by [Salaried] Employees Union
Prosper, Calida, Oabel and Martin asked for reimbursement from MMPC. Ortigas Avenue Extension,
However, MMPC denied the claims contending that double insurance Cainta, Rizal
would result if the said employees would receive from the company the
full amount of hospitalization expenses despite having already received Madam:
payment of portions thereof from other health insurance providers.
We acknowledge receipt of your letter which, to our impression,
This prompted the MMPSEU President to write the MMPC basically poses the question of whether or not recovery of medical
President17 demanding full payment of the hospitalization benefits. expenses from a Health Maintenance Organization bars recovery of the
Alleging discrimination against MMPSEU union members, she pointed same reimbursable amount of medical expenses under a contract of
out that full reimbursement was given in a similar claim filed by Luisito health or medical insurance.
Cruz (Cruz), a member of the Hourly Union. In a letter-reply,18 MMPC,
through its Vice-President for Industrial Relations Division, clarified that
the claims of the said MMPSEU members have already been paid on the We wish to opine that in cases of claims for reimbursement of medical
basis of official receipts submitted. It also denied the charge of expenses where there are two contracts providing benefits to that effect,
discrimination and explained that the case of Cruz involved an entirely recovery may be had on both simultaneously. In the absence of an Other
different matter since it concerned the admissibility of certified true Insurance provision in these coverages, the courts have uniformly held
copies of documents for reimbursement purposes, which case had been that an insured is entitled to receive the insurance benefits without
settled through voluntary arbitration. regard to the amount of total benefits provided by other insurance.
(INSURANCE LAW, A Guide to Fundamental Principles, Legal Doctrines,
and Commercial Practices; Robert E. Keeton, Alau I. Widiss, p. 261). The
On August 28, 2000, MMPSEU referred the dispute to the National result is consistent with the public policy underlying the collateral source
Conciliation and Mediation Board and requested for preventive rule – that is, x x x the courts have usually concluded that the liability of a
mediation.19 health or accident insurer is not reduced by other possible sources of
indemnification or compensation. (ibid).
Proceedings before the Voluntary Arbitrator
Very truly yours,
On October 3, 2000, the case was referred to Voluntary Arbitrator
Rolando Capocyan for resolution of the issue involving the interpretation RICHARD DAVID C. FUNK II
of the subject CBA provision.20 Officer-in-Charge
Claims Adjudication Division
MMPSEU alleged that there is nothing in the CBA which prohibits an
employee from obtaining other insurance or declares that medical (SGD.)
expenses can be reimbursed only upon presentation of original official Attorney IV
receipts. It stressed that the hospitalization benefits should be computed
based on the formula indicated in the CBA without deducting the
benefits derived from other insurance providers. Besides, if reduction is On December 3, 2002, the Voluntary Arbitrator rendered a
permitted, MMPC would be unjustly benefited from the monthly Decision27 finding MMPC liable to pay or reimburse the amount of
premium contributed by the employees through salary deduction. hospitalization expenses already paid by other health insurance
MMPSEU added that its members had legitimate claims under the CBA companies. The Voluntary Arbitrator held that the employees may
and that any doubt as to any of its provisions should be resolved in favor demand simultaneous payment from both the CBA and their
of its members. Moreover, any ambiguity should be resolved in favor of dependents’ separate health insurance without resulting to double
labor.21 insurance, since separate premiums were paid for each contract. He also
noted that the CBA does not prohibit reimbursement in case there are
other health insurers.
On the other hand, MMPC argued that the reimbursement of the entire
amounts being claimed by the covered employees, including those
already paid by other insurance companies, would constitute double Proceedings before the Court of Appeals
indemnity or double insurance, which is circumscribed under the
Insurance Code. Moreover, a contract of insurance is a contract of MMPC filed a Petition for Review with Prayer for the Issuance of a
indemnity and the employees cannot be allowed to profit from their Temporary Restraining Order and/or Writ of Preliminary
dependents’ loss.22 Injunction28 before the CA. It claimed that the Voluntary Arbitrator
committed grave abuse of discretion in not finding that recovery under
Meanwhile, the parties separately sought for a legal opinion from the both insurance policies constitutes double insurance as both had the
Insurance Commission relative to the issue at hand. In its letter23 to the same subject matter, interest insured and risk or peril insured against; in
Insurance Commission, MMPC requested for confirmation of its position relying solely on the unauthorized legal opinion of Atty. Funk; and in not
that the covered employees cannot claim insurance benefits for a loss finding that the employees will be benefited twice for the same loss. In its
that had already been covered or paid by another insurance company. Comment,29 MMPSEU countered that MMPC will unjustly enrich itself
However, the Office of the Insurance Commission opted not to render an and profit from the monthly premiums paid if full reimbursement is not
opinion on the matter as the same may become the subject of a formal made.
complaint before it.24 On the other hand, when queried by MMPSEU,25the
Insurance Commission, through Atty. Richard David C. Funk II (Atty. On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that
Funk) of the Claims Adjudication Division, rendered an opinion despite the lack of a provision which bars recovery in case of payment by
contained in a letter,26 viz: other insurers, the wordings of the subject provision of the CBA showed
that the parties intended to make MMPC liable only for expenses actually
Ms. Cecilia L. ParasPresident incurred by an employee’s qualified dependent. In particular, the
Mitsubishi Motors Phils. provision stipulates that payment should be made directly to the hospital

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and that the claim should be supported by actual hospital and doctor’s D.
bills. These mean that the employees shall only be paid amounts not
covered by other health insurance and is more in keeping with the THE COURT OF APPEALS GRAVELY ERRED IN GIVING MORE
principle of indemnity in insurance contracts. Besides, a contrary IMPORTANCE TO A POSSIBLE, HENCE MERELY SPECULATIVE, ABUSE
interpretation would "allow unscrupulous employees to unduly profit BY EMPLOYEES OF THE BENEFITS IF DOUBLE RECOVERY WERE
from the x x x benefits" and shall "open the floodgates to questionable ALLOWED INSTEAD OF THE REAL INJURY TO THE EMPLOYEES WHO
The dispositive portion of the CA Decision31 reads: AVAIL OF THE SAME IF THEY OR THEIR DEPENDENTS HAVE OTHER
WHEREFORE, the instant petition is GRANTED. The decision of the
voluntary arbitrator dated December 3, 2002 is REVERSED and SET MMPSEU avers that the Decision of the Voluntary Arbitrator deserves
ASIDE and judgment is rendered declaring that under Art. XI, Sec. 4 of the utmost respect and finality because it is supported by substantial
Collective Bargaining Agreement between petitioner and respondent evidence and is in accordance with the opinion rendered by the
effective August 1, 1999 to July 31, 2002, the former’s obligation to Insurance Commission, an agency equipped with vast knowledge
reimburse the Union members for the hospitalization expenses incurred concerning insurance contracts. It maintains that under the CBA,
by their dependents is exclusive of those paid by the Union members to member-employees are entitled to full reimbursement of medical
the hospital. expenses incurred by their dependents regardless of any amounts paid
by the latter’s health insurance provider. Otherwise, non-recovery will
SO ORDERED.32 constitute unjust enrichment on the part of MMPC. It avers that recovery
from both the CBA and other insurance companies is allowed under their
CBA and not prohibited by law nor by jurisprudence.
In its Motion for Reconsideration,33 MMPSEU pointed out that the alleged
oppression that may be committed by abusive employees is a mere
possibility whereas the resulting losses to the employees are real. Our Ruling
MMPSEU cited Samsel v. Allstate Insurance Co.,34 wherein the Arizona
Supreme Court explicitly ruled that an insured may recover from The Petition has no merit.
separate health insurance providers, regardless of whether one of them
has already paid the medical expenses incurred. On the other hand, Atty. Funk erred in applying the
MMPC argued in its Comment35 that the cited foreign case involves a collateral source rule.
different set of facts.
The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk
The CA, in its Resolution36 dated December 5, 2006, denied MMPSEU’s that the employees may recover benefits from different insurance
motion. providers without regard to the amount of benefits paid by each.
According to him, this view is consistent with the theory of the collateral
Hence, this Petition. source rule.

Issues As part of American personal injury law, the collateral source rule was
originally applied to tort cases wherein the defendant is prevented from
MMPSEU presented the following grounds in support of its Petition: benefiting from the plaintiff’s receipt of money from other
sources.38 Under this rule, if an injured person receives compensation for
his injuries from a source wholly independent of the tortfeasor, the
A. payment should not be deducted from the damages which he would
otherwise collect from the tortfeasor.39 In a recent Decision40 by the
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED THE Illinois Supreme Court, the rule has been described as "an established
DECISION DATED 03 [DECEMBER] 2002 OF THE VOLUNTARY exception to the general rule that damages in negligence actions must be
ARBITRATOR BELOW WHEN THE SAME WAS SUPPORTED BY compensatory." The Court went on to explain that although the rule
SUBSTANTIAL EVIDENCE, INCLUDING THE OPINION OF THE appears to allow a double recovery, the collateral source will have a lien
INSURANCE COMMISSION THAT RECOVERY FROM BOTH THE CBA or subrogation right to prevent such a double recovery.41 In Mitchell v.
AND SEPARATE HEALTH CARDS IS NOT PROHIBITED IN THE Haldar,42 the collateral source rule was rationalized by the Supreme

B. The collateral source rule is ‘predicated on the theory that a tortfeasor

has no interest in, and therefore no right to benefit from monies received
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN by the injured person from sources unconnected with the defendant’.
OVERTURNING THE DECISION OF THE VOLUNTARY ARBITRATOR According to the collateral source rule, ‘a tortfeasor has no right to any
WITHOUT EVEN GIVING ANY LEGAL OR JUSTIFIABLE BASIS FOR SUCH mitigation of damages because of payments or compensation received
REVERSAL. by the injured person from an independent source.’ The rationale for the
collateral source rule is based upon the quasi-punitive nature of tort law
liability. It has been explained as follows:
The collateral source rule is designed to strike a balance between two
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING competing principles of tort law: (1) a plaintiff is entitled to
TO CONSIDER OR EVEN MENTION ANYTHING ABOUT THE AMERICAN compensation sufficient to make him whole, but no more; and (2) a
AUTHORITIES CITED IN THE RECORDS THAT DO NOT PROHIBIT, BUT defendant is liable for all damages that proximately result from his
IN FACT ALLOW, RECOVERY FROM TWO SEPARATE HEALTH PLANS. wrong. A plaintiff who receives a double recovery for a single tort enjoys

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a windfall; a defendant who escapes, in whole or in part, liability for his from a separate health insurer. In that case, the Allstate automobile
wrong enjoys a windfall. Because the law must sanction one windfall and policy does not contain any clause restricting medical payment coverage
deny the other, it favors the victim of the wrong rather than the to expenses actually paid by the insured nor does it specifically provide
wrongdoer. for reduction of medical payments benefits by a coordination of
benefits.48 However, in the case before us, the dependents’ group
Thus, the tortfeasor is required to bear the cost for the full value of his or hospitalization insurance provision in the CBA specifically contains a
her negligent conduct even if it results in a windfall for the innocent condition which limits MMPC’s liability only up to the extent of the
plaintiff. (Citations omitted) expenses that should be paid by the covered employee’s dependent to
the hospital and doctor. This is evident from the portion which states
that "payment by MMPC shall be direct to the hospital and doctor."49 In
As seen, the collateral source rule applies in order to place the contrast, the Allstate automobile policy expressly gives Allstate the
responsibility for losses on the party causing them.43Its application is authority to pay directly to the insured person or on the latter’s behalf all
justified so that "'the wrongdoer should not benefit from the reasonable expenses actually incurred. Therefore, reliance on Samsel is
expenditures made by the injured party or take advantage of contracts or unavailing because the facts therein are different and not decisive of the
other relations that may exist between the injured party and third issues in the present case.
persons."44Thus, it finds no application to cases involving no-fault
insurances under which the insured is indemnified for losses by
insurance companies, regardless of who was at fault in the incident To allow reimbursement of amounts paid
generating the losses.45 Here, it is clear that MMPC is a no-fault insurer. under other insurance policies shall
Hence, it cannot be obliged to pay the hospitalization expenses of the constitute double recovery which is not
dependents of its employees which had already been paid by separate sanctioned by law.
health insurance providers of said dependents.
MMPSEU insists that MMPC is also liable for the amounts covered under
The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view other insurance policies; otherwise, MMPC will unjustly profit from the
that the covered employees are entitled to full payment of the hospital premiums the employees contribute through monthly salary deductions.
expenses incurred by their dependents, including the amounts already
paid by other health insurance companies based on the theory of This contention is unmeritorious.
collateral source rule.
To constitute unjust enrichment, it must be shown that a party was
The conditions set forth in the CBA provision indicate an intention to unjustly enriched in the sense that the term unjustly could mean illegally
limit MMPC’s liability only to actual expenses incurred by the employees’ or unlawfully.50 A claim for unjust enrichment fails when the person who
dependents, that is, excluding the amounts paid by dependents’ other will benefit has a valid claim to such benefit.51
health insurance providers.
The CBA has provided for MMPC’s limited liability which extends only up
The Voluntary Arbitrator ruled that the CBA has no express provision to the amount to be paid to the hospital and doctor by the employees’
barring claims for hospitalization expenses already paid by other dependents, excluding those paid by other insurers. Consequently, the
insurers. Hence, the covered employees can recover from both. The CA covered employees will not receive more than what is due them; neither
did not agree, saying that the conditions set forth in the CBA implied an is MMPC under any obligation to give more than what is due under the
intention of the parties to limit MMPC’s liability only to the extent of the CBA.
expenses actually incurred by their dependents which excludes the
amounts shouldered by other health insurance companies. Moreover, since the subject CBA provision is an insurance contract, the
rights and obligations of the parties must be determined in accordance
We agree with the CA. The condition that payment should be direct to with the general principles of insurance law.52 Being in the nature of a
the hospital and doctor implies that MMPC is only liable to pay medical non-life insurance contract and essentially a contract of indemnity, the
expenses actually shouldered by the employees’ dependents. It follows CBA provision obligates MMPC to indemnify the covered employees’
that MMPC’s liability is limited, that is, it does not include the amounts medical expenses incurred by their dependents but only up to the extent
paid by other health insurance providers. This condition is obviously of the expenses actually incurred.53 This is consistent with the principle
intended to thwart not only fraudulent claims but also double claims for of indemnity which proscribes the insured from recovering greater than
the same loss of the dependents of covered employees. the loss.54 Indeed, to profit from a loss will lead to unjust enrichment and
therefore should not be countenanced. As aptly ruled by the CA, to grant
It is well to note at this point that the CBA constitutes a contract between the claims of MMPSEU will permit possible abuse by employees.
the parties and as such, it should be strictly construed for the purpose of
limiting the amount of the employer’s liability.46 The terms of the subject WHEREFORE, the Petition is DENIED. The Decision dated March 31,
provision are clear and provide no room for any other interpretation. As 2006 and Resolution dated December 5, 2006 of the Court of Appeals in
there is no ambiguity, the terms must be taken in their plain, ordinary CA-G.R. SP No. 75630, are AFFIRMED.
and popular sense.47 Consequently, MMPSEU cannot rely on the rule that
a contract of insurance is to be liberally construed in favor of the insured. SO ORDERED.
Neither can it rely on the theory that any doubt must be resolved in favor
of labor.

Samsel v. Allstate Insurance Co. is not

on all fours with the case at bar.

MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the

Supreme Court of Arizona allowed the insured to enjoy medical benefits
under an automobile policy insurance despite being able to also recover

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G.R. No. L-19613 April 30, 1966 On August 16, 1961, the plaintiff-appellant informed by letter the Office
of the Insurance Commissioner that he was willing to submit his claim to
ALFONSO G. LOPEZ, plaintiff-appellant, arbitration and, in the premises, suggested that the Assistant Insurance
vs. Commissioner be designated as the sole arbitrator of the same. On
FILIPINAS COMPAÑIA DE SEGUROS, defendant-appellee. September 1, 1960, the Insurance Commissioner informed the plaintiff-
appellant of his willingness to act as the single arbitrator, provided that
both parties to the dispute manifest in writing their conformity thereto
Antonio M. Mendoza for plaintiff-appellant. and to abide by the arbitrator's award. The defendant-appellee, on the
Josue H. Gustilo and Associates for defendant-appellee. other hand, informed the Insurance Commissioner on September 22,
1960 that it could not consent to the above proposal since "the claim of
REGALA, J.: the plaintiff cannot be resolved by arbitration, as recourse to arbitration
referred to in the policy contract, envisioned only differences or disputes,
This is an appeal by the plaintiff-appellant, Alfonso G. Lopez, from an 'with respect to the amount of the company's liability,' and not to cases
order of the Court of First Instance of Manila, dated January 25, 1962, where the company does not admit its liability to the insured." With this
dismissing his complaint against the defendant-appellee, Filipinas rejection, the plaintiff-appellant filed his complaint with the Court of First
Compañia de Seguros. Instance of Manila on September 19, 1961.

Prior to April 22, 1959, the plaintiff applied with the defendant company Against the above complaint, the defendant-appellee filed on September
for the insurance of his property consisting of a Biederman truck tractor 29, 1961 a motion to dismiss on the ground of prescription. The latter
and a Winter Weils trailer from loss or damage in the amount of argued that the plaintiff's claim had already prescribed since it was not
P26,000.00 and P10,000.00, respectively. In connection with the above filed within twelve months from its rejection by the insurance company
application, the defendant company inquired of the plaintiff the as stipulated under paragraph 9 of the General Conditions of Commercial
following: Vehicle Comprehensive Policy Nos. 5598 and 5599, to wit:

5. Has any company in respect of the insurance of any car or If a claim be made and rejected and an action or suit be not
vehicle (a) declined, cancelled or refused to renew your commenced within twelve months after such rejection or (in
insurance? case of an arbitration taking place as provided herein) within
twelve months after the arbitrator, arbitrators, or umpire shall
have made their award then the claim shall for all purposes be
(b) increased your premium on renewal? deemed to have been abandoned and shall not thereafter be
recovered hereunder.
To both questions, the plaintiff answered: "none," though the truth was
at that time, the American International Underwriters of the Philippines On January 25, 1962, the court a quo sustained the above motion and
(AIU) had already declined a similar application for insurance by the dismissed the complaint. Thus, the instant appeal.
plaintiff in respect of the above-described vehicles.
The principal issue raised in this appeal is simple: Was the complaint
On April 22, 1959, the defendant-appellee issued to the plaintiff- filed by the plaintiff-appellant with the Office of the Insurance
appellant two Commercial Vehicle Comprehensive Policies covering the Commissioner on May 27, 1960 a commencement of an "action or suit"
above properties. On August 30, 1959, while the said policies were in within the meaning and intent of general condition quoted above?, If it
force, the aforementioned vehicles figured in an accident at Bagabag, was, then the plaintiff's complaint has not yet prescribed since the
Nueva Vizcaya, resulting in the total loss of the tractor and partial complaint filed with the said office was made on May 27, 1960 or just
damage to the trailer. Accordingly, the plaintiff gave notice of the same to about a month after his claim was rejected by the defendant-appellee on
the defendant company and made demand upon the latter for the April 28 1960. On the other hand, if the above-quoted condition refers
payment to him of P27,962.00, the total amount of damages resulting alone to an "action or suit" filed with a court of justice, as the Order
from the accident. appealed from urges and as the herein appellee maintains, then, indeed,
must the finding or prescription in this incident be upheld. For, while the
On April 28, 1960, the defendant-appellant rejected the above claim by plaintiff's claim was rejected on April 28, 1960 by the insurance
reason of, among others, the claimant's alleged "concealment of a company, the "action or suit" thereon with a court of justice was filed
material fact," namely: that the insured property previously been some 17 months later, September 19, 1961.
declined insurance by another company.
We find for the appellee.
In view of the rejection of his claim by the defendant company, the
plaintiff-appellant filed on May 27, 1960 with the Office of the Insurance In 1 Moran 86 (1963 ed.), the following jurisprudence is expressed:
Commissioner a complaint against the said company. On June 7, 1960,
the Assistant Insurance Commissioner requested the defendant
company to give its side of the above complaint and, thereafter, or on Action is the act by which one sues another in a court of
August 1, 1960, the said official "transmitted to the plaintiff, thru his justice for the enforcement or protection of a right, or the
counsel, the 'self-explanatory letters' dated June 12, 1960 of the prevention or redress of a wrong. Special proceeding is the act
American International Underwriters of the Philippines, Inc., and June by which one seeks to establish the status or right of a party, or
21, 1960 of the defendant, which the said office had received from said a particular fact. Hence, an action is distinguished from special
parties in connection with plaintiff's complaint, with the suggestion that proceeding in that the former is a formal demand of a right by
in view of the reluctant attitude of plaintiff 'towards the company's one against another, while the latter is but a petition or a
proposal for the matter to be settled thru arbitration, and considering the declaration of a status, right or fact. (Emphasis supplied.)
informative facts disclosed, in the letter of the AIUPI, plaintiff should
pursue his case to the Court which has proper competence to resolve The above distinction was laid down in connection with the definition of
said matter." "action" in Rule 2, Section 1 of the Rules of Court that:

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Section 1. Action defined.—Action means an ordinary suit in

a Court of Justice by which one party prosecutes another for
the enforcement or protection of a right, or the prevention or
redress of a wrong. (Emphasis supplied.)

Also, in 1 Am. Jur. 407, as cited in Francisco, Civil Procedure, p. 91, a suit is
defined as:

Suit is the prosecution or pursuit of some claim or demand in

a court of justice or any proceeding in a court of justice in which
a plaintiff pursues his remedy to recover a right or claim.
(Emphasis supplied.)

Upon the authorities, therefore, it is settled that the terms "action" and
"suit" are synonymous. Moreover, it is clear that the determinative or
operative fact which converts a claim into an "action or suit" is the filing
of the same with a "court or justice." Filed elsewhere, as with some other
body or office not a court of justice, the claim may not properly be
categorized under either term.

Apart from the foregoing, however, there is yet one other reason why the
appellant's recourse to the Office of the Insurance Commissioner could
not have been an "action or suit" which could have halted the running of
the prescriptive period stipulated in the insurance policies involved. An
"action or suit" is essentially "for the enforcement or protection of a right,
or the prevention or redress of a wrong." (Rule 2, Sec. 1, Rules of Court).
There is nothing in the Insurance Law, Act No. 2427, as amended, nor in
any of its allied Legislations, which empowers the Insurance
Commissioner to adjudicate on disputes relating to an insurance
company's liability to an insured under a policy issued by the former to
the latter. The validity of an insured's claim under a specific policy, its
amount, and all such other matters as might involve the interpretation
and construction of the insurance policy, are issues which only a regular
court of justice may resolve and settle. Consequently, the complaint filed
by the appellant herein with the Office of the Insurance Commission
could not have been an "action or suit."

The other assignments of error in the appellant's brief spring from or are
consequences of the latter's view that the claim be filed with the Office of
the Insurance Commissioner was an "action or suit" within the
contemplation of paragraph 9 of the general condition earlier quoted.
With our ruling above, therefore, the necessity to pass on them becomes

Wherefore, the order appealed from is hereby affirmed, with costs.

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G.R. No. 82036 May 22, 1997 . . . The evidence shows that at the moment the
victim was bumped by the vehicle, the latter was
TRAVELLERS INSURANCE & SURETY running fast, so much so that because of the
CORPORATION, petitioner, strong impact the old woman was thrown away
vs. and she fell on the pavement. . . . In truth, in that
HON. COURT OF APPEALS and VICENTE related criminal case against defendant Dumlao .
MENDOZA, respondents. . . the trial court found as a fact that therein
accused "was driving the subject taxicab in a
careless, reckless and imprudent manner and at
a speed greater than what was reasonable and
proper without taking the necessary precaution to
HERMOSISIMA, JR., J.: avoid accident to persons . . . considering the
condition of the traffic at the place at the time
The petition herein seeks the review and reversal of the decision 1 of aforementioned" . . . Moreover, the driver fled
respondent Court of Appeals 2 affirming in totothe judgment 3 of the from the scene of the accident and without
Regional Trial Court 4 in an action for damages 5 filed by private rendering assistance to the victim. . . .
respondent Vicente Mendoza, Jr. as heir of his mother who was killed
in a vehicular accident. . . . Three (3) witnesses who were at the scene at
the time identified the taxi involved, though not
Before the trial court, the complainant lumped the erring taxicab driver, necessarily the driver thereof. Marvilla saw a lone
the owner of the taxicab, and the alleged insurer of the vehicle which taxi speeding away just after the bumping which,
featured in the vehicular accident into one complaint. The erring when it passed by him, said witness noticed to be
taxicab was allegedly covered by a third-party liability insurance policy a Lady Love Taxi with Plate No. 438, painted
issued by petitioner Travellers Insurance & Surety Corporation. maroon, with baggage bar attached on the
baggage compartment and with an antenae [sic]
attached at the right rear side. The same
The evidence presented before the trial court established the following descriptions were revealed by Ernesto Lopez,
facts: who further described the taxi to have . . .
reflectorized decorations on the edges of the
At about 5:30 o'clock in the morning of July 20, glass at the back . . . A third witness in the person
1980, a 78-year old woman by the name of Feliza of Eulogio Tabalno . . . made similar descriptions
Vineza de Mendoza was on her way to hear although, because of the fast speed of the taxi, he
mass at the Tayuman Cathedral. While walking was only able to detect the last digit of the plate
along Tayuman corner Gregorio Perfecto Streets, number which is "8". . . . [T]he police proceeded to
she was bumped by a taxi that was running fast. the garage of Lady Love Taxi and then and there
Several persons witnessed the accident, among they took possession of such a taxi and later
whom were Rolando Marvilla, Ernesto Lopez and impounded it in the impounding area of the
Eulogio Tabalno. After the bumping, the old agency concerned. . . . [T]he eyewitnesses . . .
woman was seen sprawled on the pavement. were unanimous in pointing to that Lady Love
Right away, the good Samaritan that he was, Taxi with Plate No. 438, obviously the vehicle
Mavilla ran towards the old woman and held her involved herein.
on his lap to inquire from her what had happened,
but obviously she was already in shock and could . . . During the investigation, defendant Armando
not talk. At this moment, a private jeep stopped. Abellon, the registered owner of Lady Love Taxi
With the driver of that vehicle, the two helped bearing No. 438-HA Pilipinas Taxi 1980, certified
board the old woman on the jeep and brought her to the fact "that the vehicle was driven last July 20,
to the Mary Johnston Hospital in Tondo. 1980 by one Rodrigo Dumlao. . ." . . . It was on
the basis of this affidavit of the registered owner
. . . Ernesto Lopez, a driver of a passenger that caused the police to apprehend Rodrigo
jeepney plying along Tayuman Street from Pritil, Dumlao, and consequently to have him
Tondo, to Rizal Avenue and vice-versa, also prosecuted and eventually convicted of the
witnessed the incident. It was on his return trip offense . . . . . . . [S]aid Dumlao absconded in that
from Rizal Avenue when Lopez saw the plaintiff criminal case, specially at the time of the
and his brother who were crying near the scene promulgation of the judgment therein so much so
of the accident. Upon learning that the two were that he is now a fugitive from justice.6
the sons of the old woman, Lopez told them what
had happened. The Mendoza brothers were then Private respondent filed a complaint for damages against Armando
able to trace their mother at the Mary Johnston Abellon as the owner of the Lady Love Taxi and Rodrigo Dumlao as
Hospital where they were advised by the the driver of the Lady Love taxicab that bumped private respondent's
attending physician that they should bring the mother. Subsequently, private respondent amended his complaint to
patient to the National Orthopedic Hospital include petitioner as the compulsory insurer of the said taxicab under
because of her fractured bones. Instead, the Certificate of Cover No. 1447785-3.
victim was brought to the U.S.T. Hospital where
she expired at 9:00 o'clock that same morning.
Death was caused by "traumatic shock" as a After trial, the trial court rendered judgment in favor of private
result of the severe injuries she sustained . . . respondent, the dispositive portion of which reads:

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WHEREFORE, judgment is hereby rendered in It is significant to point out at this juncture that the right of a third
favor of the plaintiff, or more particularly the "Heirs person to sue the insurer depends on whether the contract of
of the late Feliza Vineza de Mendoza," and insurance is intended to benefit third persons also or only the insured.
against defendants Rodrigo Dumlao, Armando
Abellon and Travellers Insurance and Surety [A] policy . . . whereby the insurer agreed to
Corporation, by ordering the latter to pay, jointly indemnify the insured "against all sums . . . which
and severally, the former the following amounts: the Insured shall become legally liable to pay in
respect of: a. death of or bodily injury to any
(a) The sum of P2,924.70, as person . . . is one for indemnity against liability;
actual and compensatory from the fact then that the insured is liable to the
damages, with interest third person, such third person is entitled to sue
thereon at the rate of 12% per the insurer.
annum from October 17,
1980, when the complaint The right of the person injured to sue the insurer
was filed, until the said of the party at fault (insured), depends on whether
amount is fully paid; the contract of insurance is intended to benefit
third persons also or on the insured And the test
(b) P30,000.00 as death applied has been this: Where the contract
indemnity; provides for indemnity against liability to third
persons, then third persons to whom the insured
(c) P25,000.00 as moral is liable can sue the insurer. Where the contract is
damages; for indemnity against actual loss or payment, then
third persons cannot proceed against the insurer,
the contract being solely to reimburse the insured
(d) P10,000.00 as by way of for liability actually discharged by him thru
corrective or exemplary payment to third persons, said third persons'
damages; and recourse being thus limited to the insured alone. 10

(e) Another P10,000.00 by Since private respondent failed to attach a copy of the insurance
way of attorney's fees and contract to his complaint, the trial court could not have been able to
other litigation expenses. apprise itself of the real nature and pecuniary limits of petitioner's
liability. More importantly, the trial court could not have possibly
Defendants are further ordered to pay, jointly and ascertained the right of private respondent as third person to sue
severally, the costs of this suit. petitioner as insurer of the Lady Love taxicab because the trial court
never saw nor read the insurance contract and learned of its terms
SO ORDERED. 7 and conditions.

Petitioner appealed from the aforecited decision to the respondent Petitioner, understandably, did not volunteer to present any insurance
Court of Appeals. The decision of the trial court was affirmed by contract covering the Lady Love taxicab that fatally hit private
respondent appellate court. Petitioner's Motion for respondent's mother, considering that petitioner precisely presented
Reconsideration 8 of September 22, 1987 was denied in a the defense of lack of insurance coverage before the trial court.
Resolution 9 dated February 9, 1988. Neither did the trial court issue a subpoena duces tecum to have the
insurance contract produced before it under pain of contempt.

Hence this petition.

We thus find hardly a basis in the records for the trial court to have
validly found petitioner liable jointly and severally with the owner and
Petitioner mainly contends that it did not issue an insurance policy as the driver of the Lady Love taxicab, for damages accruing to private
compulsory insurer of the Lady Love Taxi and that, assuming respondent.
arguendo that it had indeed covered said taxicab for third-party liability
insurance, private respondent failed to file a written notice of claim with
petitioner as required by Section 384 of P.D. No. 612, otherwise Apparently, the trial court did not distinguish between the private
known as the Insurance Code. respondent's cause of action against the owner and the driver of the
Lady Love taxicab and his cause of action against petitioner. The
former is based on torts and quasi-delicts while the latter is based on
We find the petition to be meritorious. contract. Confusing these two sources of obligations as they arise
from the same act of the taxicab fatally hitting private respondent's
I mother, and in the face of overwhelming evidence of the reckless
imprudence of the driver of the Lady Love taxicab, the trial court
brushed aside its ignorance of the terms and conditions of the
When private respondent filed his amended complaint to implead
insurance contract and forthwith found all three — the driver of the
petitioner as party defendant and therein alleged that petitioner was
taxicab, the owner of the taxicab, and the alleged insurer of the
the third-party liability insurer of the Lady Love taxicab that fatally hit
taxicab — jointly and severally liable for actual, moral and exemplary
private respondent's mother, private respondent did not attach a copy
damages as well as attorney's fees and litigation expenses. This is
of the insurance contract to the amended complaint. Private
clearly a misapplication of the law by the trial court, and respondent
respondent does not deny this omission.
appellate court grievously erred in not having reversed the trial court
on this ground.

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While it is true that where the insurance contract At the time of the vehicular incident which resulted in the death of
provides for indemnity against liability to third private respondent's mother, during which time the Insurance Code
persons, such third persons can directly sue the had not yet been amended by Batas Pambansa (B.P.) Blg. 874,
insurer, however, the direct liability of the insurer Section 384 provided as follows:
under indemnity contracts against third-party
liability does not mean that the insurer can be held Any person having any claim upon the policy
solidarily liable with the insured and/or the other issued pursuant to this chapter shall, without any
parties found at fault. The liability of the insurer is unnecessary delay, present to the insurance
based on contract; that of the insured is based on company concerned a written notice of claim
tort. 11 setting forth the amount of his loss, and/or the
nature, extent and duration of the injuries
Applying this principle underlying solidary obligation and sustained as certified by a duly licensed
insurance contracts, we ruled in one case that: physician. Notice of claim must be filed within six
months from date of the accident, otherwise, the
In solidary obligation, the creditor may enforce the claim shall be deemed waived. Action or suit for
entire obligation against one of the solidary recovery of damage due to loss or injury must be
debtors. On the other hand, insurance is defined brought in proper cases, with the Commission or
as "a contract whereby one undertakes for a the Courts within one year from date of accident,
consideration to indemnify another against loss, otherwise the claimant's right of action shall
damage or liability arising from an unknown or prescribe [emphasis supplied].
contingent event."
In the landmark case of Summit Guaranty and Insurance
In the case at bar, the trial court held petitioner Co., Inc. v. De Guzman, 13 we ruled that the one year prescription
together with respondents Sio Choy and San period to bring suit in court against the insurer should be counted from
Leon Rice Mills Inc. solidarily liable to respondent the time that the insurer rejects the written claim filed therewith by the
Vallejos for a total amount of P29,103.00, with the insured, the beneficiary or the third person interested under the
qualification that petitioner's liability is only up to insurance policy. We explained:
P20,000.00. In the context of a solidary obligation,
petitioner may be compelled by respondent It is very obvious that petitioner company is trying
Vallejos to pay the entire obligation of P29,103.00, to use Section 384 of the Insurance Code as a
notwithstanding the qualification made by the trial cloak to hide itself from its liabilities. The facts of
court. But, how can petitioner be obliged to pay these cases evidently reflect the deliberate efforts
the entire obligation when the amount stated in its of petitioner company to prevent the filing of a
insurance policy with respondent Sio Choy for formal action against it. Bearing in mind that if it
indemnity against third-party liability is only succeeds in doing so until one year lapses from
P20,000.00? Moreover, the qualification made in the date of the accident it could set up the
the decision of the trial court to the effect that defense of prescription, petitioner company made
petitioner is sentenced to pay up to P20,000.00 private respondents believe that their claims
only when the obligation to pay P29,103.00 is would be settled in order that the latter will not find
made solidary is an evident breach of the concept it necessary to immediately bring suit. In violation
of a solidary obligation. 12 of its duties to adopt and implement reasonable
standards for the prompt investigation of claims
The above principles take on more significance in the light of the and to effectuate prompt, fair and equitable
counter-allegation of petitioner that, assuming arguendo that it is the settlement of claims, and with manifest bad faith,
insurer of the Lady Love taxicab in question, its liability is limited to petitioner company devised means and ways of
only P50,000.00, this being its standard amount of coverage in vehicle stalling the settlement proceeding . . . [N]o steps
insurance policies. It bears repeating that no copy of the insurance were taken to process the claim and no rejection
contract was ever proffered before the trial court by the private of said claim was ever made even if private
respondent, notwithstanding knowledge of the fact that the latter's respondent had already complied with all the
complaint against petitioner is one under a written contract. Thus, the requirements. . . .
trial court proceeded to hold petitioner liable for an award of damages
exceeding its limited liability of P50,000.00. This only shows beyond This Court has made the observation that some
doubt that the trial court was under the erroneous presumption that insurance companies have been inventing
petitioner could be found liable absent proof of the contract and based excuses to avoid their just obligations and it is
merely on the proof of reckless imprudence on the part of the driver of only the State that can give the protection which
the Lady Love taxicab that fatally hit private respondent's mother. the insuring public needs from possible abuses of
the insurers. 14
It is significant to note that the aforecited Section 384 was amended
Petitioner did not tire in arguing before the trial court and the by B.P. Blg. 874 to categorically provide that "action or suit for
respondent appellate court that, assuming arguendo that it had issued recovery of damage due to loss or injury must be brought in proper
the insurance contract over the Lady Love taxicab, private cases, with the Commissioner or the Courts within one year from
respondent's cause of action against petitioner did not successfully denial of the claim, otherwise the claimant's right of action shall
accrue because he failed to file with petitioner a written notice of claim prescribe" [emphasis ours]. 15
within six (6) months from the date of the accident as required by
Section 384 of the Insurance Code. We have certainly ruled with consistency that the prescriptive period to
bring suit in court under an insurance policy, begins to run from the

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date of the insurer's rejection of the claim filed by the insured, the
beneficiary or any person claiming under an insurance contract. This
ruling is premised upon the compliance by the persons suing under
an insurance contract, with the indispensable requirement of having
filed the written claim mandated by Section 384 of the insurance Code
before and after its amendment. Absent such written claim filed by the
person suing under an insurance contract, no cause of action accrues
under such insurance contract, considering that it is the rejection of
that claim that triggers the running of the one-year prescriptive period
to bring suit in court, and there can be no opportunity for the insurer to
even reject a claim if none has been filed in the first place, as in the
instant case.

The one-year period should instead be counted

from the date of rejection by the insurer as this is
the time when the cause of action accrues. . . .

In Eagle Star Insurance Co., Ltd., et al. vs. Chia

Yu, this Court ruled:

The plaintiff's cause of action did not accrue until

his claim was finally rejected by the insurance
company. This is because, before such final
rejection, there was no real necessity for bringing

The philosophy of the above pronouncement was

pointed out in the case of ACCFA vs. Alpha
Insurance and Surety Co., viz:

Since a cause of action requires, as essential

elements, not only a legal right of the plaintiff and
a correlative obligation of the defendant but also
an act or omission of the defendant in violation of
said legal right, the cause of action does not
accrue until the party obligated refuses, expressly
or impliedly, to comply with its duty. 16

When petitioner asseverates, thus, that no written claim was filed by

private respondent and rejected by petitioner, and private respondent
does not dispute such asseveration through a denial in his pleadings,
we are constrained to rule that respondent appellate court committed
reversible error in finding petitioner liable under an insurance contract
the existence of which had not at all been proven in court. Even if
there were such a contract, private respondent's cause of action can
not prevail because he failed to file the written claim mandated by
Section 384 of the Insurance Code. He is deemed, under this legal
provision, to have waived his rights as against petitioner-insurer.

WHEREFORE, the instant petition is HEREBY GRANTED. The

decision of the Court of Appeals in CA-G.R. CV No. 09416 and the
decision of the Regional Trial Court in Civil Case No. 135486 are
REVERSED and SET ASIDE insofar as Travelers Insurance &
Surety Corporation was found jointly and severally liable to pay actual,
moral and exemplary damages, death indemnity, attorney's fees and
litigation expenses in Civil Case No. 135486. The complaint against
Travellers Insurance & Surety Corporation in said case is hereby
ordered dismissed.

No pronouncement as to costs.


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G.R. No. L-15862 July 31, 1961 On February 12, 1959, plaintiffs filed a reply to the above answer of
the Fulton Fire Insurance, alleging that on May 11, 1956, plaintiffs had
PAULO ANG and SALLY C. ANG, plaintiffs-appellees, instituted Civil Case No. 2949 in the Court of First Instance of Manila,
vs. to assert the claim; that this case was dismissed without prejudice on
FULTON FIRE INSURANCE CO., ET AL., defendants. September 3, 1957 and that deducting the period within which said
FULTON FIRE INSURANCE CO., defendant-appellant. action was pending, the present action was still within the 12 month
period from April 12, 1956. The court below held that the bringing of
the action in the Court of First Instance of Manila on May 11, 1956,
Santiago Ranada for plaintiffs-appellees. tolled the running of the 12 month period within which the action must
Benjamin S. Valte for defendant-appellant. be filed. Said the court on this point:

LABRADOR, J.: True, indeed, plaintiffs committed a procedural mistake in

first suing the agent instead of its principal, the herein
The present action was instituted by the spouses Paulo Ang and Sally defendant, as correctly pointed out by counsel for the
C. Ang against the Fulton Fire Insurance Company and the defendant, for 'Un agente residente de una compania de
Paramount Surety and Insurance Company, Inc. to recover from seguros extranjera que comercia en las Islas Filipinos no es
them the face value of a fire insurance policy issued in plaintiffs' favor responsable como mandante ni como mandatario, en virtud
covering a store owned and operated by them in Laoag, Ilocos Norte. de contratas de seguro expendidos a nombre de la
From a judgment of the court ordering the defendant Fulton Fire compania', (Macias & Co. vs. Warner, Barnes & Co., 43
Insurance Co. to pay the plaintiffs the sum of P10,000.00, with Phil. 161). But the mistake being merely procedural, and the
interest, and an additional sum of P2,000.00 as attorney's fees, and defendant not having been misled by the error, 'There is
costs, the defendants have appealed directly to this Court. nothing sacred about process or pleadings, their forms or
contents. Their sole purpose is to facilitate the application of
On September 9, 1953, defendant Fulton Fire Insurance Company justice to the rival claims of contending parties. They were
issued a policy No. F-4730340, in favor of P. & S Department Store created not to hinder and delay, but to facilitate and promote
(Sally C. Ang) over stocks of general merchandise, consisting the administration of justice (Alonso vs. Villamor, 16 Phil
principally of dry goods, contained in a building occupied by the 578.)
plaintiffs at Laoag, Ilocos Norte. The premium is P500.00 annually.
The insurance was issued for one year, but the same was renewed The complaint, Exh. 'C', was dismissed by the Court without
for another year on September 31, 1954. On December 17, 1954, the prejudice (Exh. 'H-1') on September 3, 1957, and motion for
store containing the goods insured was destroyed by fire. On reconsideration dated September 21, 1957. The instant
December 30, following, plaintiffs executed the first claim form. The complaint was filed on May 8, 1958. The Rules of Court
claim together with all the necessary papers relating thereto, were (See 132 thereof) is applicable in the computation of time.
forwarded to he Manila Adjustment Company, the defendants' Now, as correctly pointed out by the plaintiffs' counsel, by
adjusters and received by the latter on Jane 8, 1955. On January 12, simple mathematical computation, the present action was
1955, the Manila Adjustment Company accepted receipt of the claim filed leas thin nine (9) months after the notice of rejection
and requested the submission of the books of accounts of the insured received by plaintiffs on April 19, 1956, because the filing of
for the year 1953-1954 and a clearance from the Philippine the original complaint stopped the running of the period."
Constabulary and the police. On April 6, 1956, the Fulton Fire (Decision, pp. 42-43, R.O.A.)
Insurance Company wrote the plaintiffs that their claim was denied.
This denial of the claim was received by the plaintiffs on April 19, In view of the reasons thus above quoted, the court rendered decision
1956. On January 13, 1955, plaintiff Paulo Ang and ten others were in favor of the plaintiffs.
charged for arson in Criminal Case No. 1429 in the Justice of the
Peace Court of Laoag, Ilocos Norte. The case was remanded for trial
to the Court of First Instance of Ilocos Norte and there docketed as On the appeal before this Court, defendant-appellant argues that the
Criminal Case No. 2017. The said court in a decision dated court below erred in holding that the filing of the previous suit tolled or
December 9, 1957, acquitted plaintiff Paulo Ang of the crime of arson. suspended the running of the prescriptive period.

The present action was instituted on May 5, 1958. The action was The clause subject of the issue is paragraph 13 of the policy, which
originally instituted against both the Fulton Fire Insurance Company reads as follows:
and the Paramount Surety and Insurance Company, Inc., but on June
16, 1958, upon motion of the Paramount Surety, the latter was 13. If the claim be in any respect fraudulent, or if any false
dropped from the complaint. declaration is made or used in support thereof, or if any
fraudulent means or devices are used by the Insured or any
On May 26, 1958, the defendant Fulton Fire Insurance Company filed one acting on his behalf to obtain any benefit under this
an answer to the complaint, admitting the existence of the contract of Policy, or, if the loss or damage be occasioned by the willful
insurance, its renewal and the loss by fire of the department store and act or with connivance of the Insured, or, if the claim be
the merchandise contained therein, but denying that the loss by the made and rejected and an action or suit be not commenced
fire was accidental, alleging that it was occasioned by the willful act of within twelve months after such rejection or (in case of
the plaintiff Paulo Ang himself. It claims that under paragraph 13 of the arbitration place in pursuance of the 18th condition of this
policy, if the loss or damage is occasioned by the willful act of the Policy) within twelve months after the arbitrator or arbitrators
insured, or if the claim is made and rejected but no action is or umpire shall have made their award, all benefits under
commenced within 12 months after such rejection, all benefits under this Policy shall be forfeited. (Emphasis supplied). (Decision.
the policy would be forfeited, and that since the claim of the plaintiffs p. 10, R.O.A.).
was denied and plaintiffs received notice of denial on April 18, 1956,
and they brought the action only on May 5, 1958, all the benefits The appellant cites in support of its contention the cases of E. Macias
under the policy have been forfeited. & Co. vs. Warner, Barnes & Co., Ltd., 43 Phil 155; E. Macias & Co.

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vs. China Fire Insurance Co., 46 Phil. 345 and Castillo etc. vs.
Metropolitan Insurance Co., 47 O.G. (September, 1951).

In answer to appellant's contention, counsel for appellees contend

that the action of the plaintiffs against the defendant had not yet
prescribed at the time of the bringing of the action, because the period
of prescription was interrupted by the filing of the first action against
the Paramount Surety & Insurance Co., in accordance with Article
1155 of the Civil Code. Counsel further argues that the basis of
prescription of an action is the abandonment by a person of his right of
action or claim, so that any act of said person tending to show his
intention not to abandon his right of action or claim, as the filing of the
previous action in the case at bar, interrupts the period of prescription.
Furthermore, counsel argues, the dismissal of the previous action is
without prejudice, which means that plaintiffs have the right to file
another complaint against the principal.

The basic error committed by the trial court is its view that the filing of
the action against the agent of the defendant company was "merely a
procedural mistake of no significance or consequence, which may be
overlooked." The condition contained in the insurance policy that
claims must be presented within one year after rejection is not merely
a procedural requirement. The condition is an important matter,
essential to a prompt settlement of claims against insurance
companies, as it demands that insurance suits be brought by the
insured while the evidence as to the origin and cause of destruction
have not yet disappeared. It is in the nature of a condition precedent to
the liability of the insurer, or in other terms, a resolutory cause, the
purpose of which is to terminate all liabilities in case the action is not
filed by the insured within the period stipulated.

The bringing of the action against the Paramount Surety & Insurance
Company, the agent of the defendant Company cannot have any
legal effect except that of notifying the agent of the claim. Beyond
such notification, the filing of the action can serve no other purpose.
There is no law giving any effect to such action upon the principal.
Besides, there is no condition in the policy that the action must be filed
against the agent, and this Court can not by interpretation, extend the
clear scope of the agreement beyond what is agreed upon by the

The case of E. Macias & Co. vs. China Fire Insurance Co. has settled
the issue presented by the appellees in the case at bar definitely
against their claim. In that case, We declared that the contractual
station in an insurance policy prevails over the statutory limitation, as
well as over the exceptions to the statutory limitations that the contract
necessarily supersedes the statute (of limitations) and the limitation is
in all phases governed by the former. (E. Macias & Co. vs. China Fire
Insurance & Co., 46 Phil. pp. 345-353). As stated in said case and in
accordance with the decision of the Supreme Court of the United
States in Riddlesbarger vs. Hartford Fire Insurance Co. (7 Wall., 386),
the rights of the parties flow from the contract of insurance, hence they
are not bound by the statute of limitations nor by exemptions thereto.
In the words of our own law, their contract is the law between the
parties, and their agreement that an action on a claim denied by the
insurer must be brought within one year from the denial, governs, not
the rules on the prescription of actions.

The judgment appealed from is hereby set aside and the case
dismissed, with costs against the plaintiffs-appellees.

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G.R. No. 103883 November 14, 1996 The trial court dismissed the case against ECDC for the failure of
petitioner to take steps to cause the service of the
JACQUELINE JIMENEZ VDA. DE GABRIEL, petitioner, fourth alias summons on ECDC. The dismissal was without prejudice.
HON. COURT OF APPEALS and FORTUNE INSURANCE & The case proceeded against private respondent alone. On 28 May
SURETY COMPANY, INC., respondents. 1987, the trial court rendered its decision 11 in favor (partly) of
petitioner's claim. In arriving at its conclusion, the trial court held that
private respondent was deemed to have waived the defense, i.e., that
the cause of Gabriel's death was not covered by the policy, when the
latter failed to impugn by evidence petitioner's averment on the matter.
VITUG, J.: With regard to the defense of prescription, the court considered the
complaint to have been timely filed or within one (1) year from private
The petition for review on certiorari in this case seeks the reversal of respondent's denial of the claim.
the decision 1 of the Court of Appeals setting aside the judgment of
the Regional Trial Court of Manila, Branch 55, which has ordered Petitioner and private respondent both appealed to the Court of
private respondent Fortune Insurance & Surety Company, Inc., to pay Appeals. Petitioner contended that the lower court should have
petitioner Jacqueline Jimenez vda. de Gabriel, the surviving spouse awarded all the claims she had asked for. Private respondent
and beneficiary in an accident (group) insurance of her deceased asserted, on its part, that the lower court erred in ruling (a) that the
husband, the amount of P100,000.00, plus legal interest. insurer had waived the defense that Gabriel's death was not caused
by the insured peril ("violent accidental external and visible means")
Marcelino Gabriel, the insured, was employed by Emerald specified in the policy and (b) that the cause of action had not
Construction & Development Corporation ("ECDC") at its construction prescribed.
project in Iraq. He was covered by a personal accident insurance in
the amount of P100,000.00 under a group policy 2 procured from The Court of Appeals, on 18 September 1991, reversed the decision
private respondent by ECDC for its overseas workers. The insured of the lower court. The appellate court held that petitioner had failed to
risk was for "(b)odily injury caused by violent accidental external and substantiate her allegation that her husband's death was caused by a
visible means which injury (would) solely and independently of any risk insured against. The appellate court observed that the only
other cause" 3 result in death or disability. evidence presented by petitioner, in her attempt to show the
circumstances that led to the death of the insured, were her own
On 22 May 1982, within the life of the policy, Gabriel died in Iraq. A affidavit and a letter allegedly written by a co-worker of the deceased
year later, or on 12 July 1983, ECDC reported Gabriel's death to in Iraq which, unfortunately for her, were held to be both
private respondent by telephone. 4 Among the documents thereafter hearsay. 12
submitted to private respondent were a copy of the death
certificate 5 issued by the Ministry of Health of the Republic of Iraq — The motion for reconsideration was denied. 13
which stated
Petitioner's recourse to this Court must also fail.
On the issue of "prescription," private respondent correctly invoked
Section 384 of the Insurance Code; viz:
and an autopsy report 7 of the National Bureau of
Investigation ("NBI") to the effect that "(d)ue to advanced
state of postmortem decomposition, cause of death (could) Sec. 384. Any person having any claim upon the
not be determined." 8 Private respondent referred the policy issued pursuant to this chapter shall,
insurance claim to Mission Adjustment Service, Inc. without any unnecessary delay, present to the
insurance company concerned a written notice of
claim setting forth the nature, extent and duration
Following a series of communications between petitioner and private of the injuries sustained as certified by a duly
respondent, the latter, on 22 September 1983, ultimately denied the licensed physician. Notice of claim must be filed
claim of ECDC on the ground of prescription. 9 Petitioner went to the within six months from date of the accident,
Regional Trial Court of Manila. In her complaint against ECDC and otherwise, the claim shall be deemed waived.
private respondent, she averred that her husband died of Action or suit for recovery of damage due to loss
electrocution while in the performance of his work and prayed for the or injury must be brought, in proper cases, with
recovery of P100,000.00 for insurance indemnification and of various the Commissioner or the Courts within one year
other sums by way of actual, moral, and exemplary damages, plus from denial of the claim, otherwise, the claimant's
attorney's fees and costs of suit. right of action shall prescribe.

Private respondent filed its answer, which was not verified, admitting The notice of death was given to private respondent,
the genuineness and due execution of the insurance policy; it alleged, concededly, more than a year after the death of petitioner's
however, that since both the death certificate issued by the Iraqi husband. Private respondent, in invoking prescription, was
Ministry of Health and the autopsy report of the NBI failed to disclose not referring to the one-year period from the denial of the
the cause of Gabriel's death, it denied liability under the policy. In claim within which to file an action against an insurer but
addition, private respondent raised the defense of "prescription," obviously to the written notice of claim that had to be
invoking Section 384 10 of the Insurance Code. Later, private submitted within six months from the time of the accident.
respondent filed an amended answer, still unverified, reiterating its
original defenses but, this time, additionally putting up a counterclaim
and a crossclaim. Petitioner argues that private respondent must be deemed to have
waived its right to controvert the claim, that is, to show that the cause
of death is an excepted peril, by failing to have its answers (to the

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Request for Admission sent by petitioner) duly verified. It is true that a death of plaintiff-appellant's husband was not
matter of which a written request for admission is made shall be caused by violent accidental external and visible
deemed impliedly admitted "unless, within a period designated in the means' as contemplated in the insurance policy.
request, which shall not be less than ten (10) days after service The Death Certificate (Exh. 9) and the Autopsy
thereof, or within such further time as the court may allow on motion Report (Exh. 10), more than controverted the
and notice, the party to whom the request is directed serves upon the allegation of the plaintiff-appellant as to the cause
party requesting the admission a sworn statement either denying of death of her husband. 17
specifically the matters of which an admission is requested or setting
forth in detail the reasons why he cannot truthfully either admit or deny The insurance policy expressly provided that to be compensable, the
those matters;" 14 however, the verification, like in most cases required injury or death should be caused by "violent accidental external and
by the rules of procedure, is a formal, not jurisdictional, requirement, visible means." In attempting to prove the cause of her husband's
and mainly intended to secure an assurance that matters which are death, all that petitioner could submit were a letter sent to her by her
alleged are done in good faith or are true and correct and not of mere husband's co-worker, stating that Gabriel died when he tried to haul
speculation. When circumstances warrant, the court may simply order water out of a tank while its submerged motor was still
the correction of unverified pleadings or act on it and waive strict functioning, 18 and petitioner's sinumpaang
compliance with the rules in order that the ends of justice may thereby salaysay 19 which merely confirmed the receipt and stated contents of
be served. 15 In the case of answers to written requests for admission the letter. Said the appellate court in this regard:
particularly, the court can allow the party making the admission,
whether made expressly or deemed to have been made impliedly, "to
withdraw or amend it upon such terms as may be just." 16 . . . . It must be noted that the only evidence
presented by her to prove the circumstances
surrounding her husband's death were her
The appellate court acted neither erroneously nor with grave abuse of purported affidavit and the letter allegedly written
discretion when it seconded the court a quoand ruled: by the deceased co-worker in Iraq. The said
affidavit however suffers from procedural infirmity
As to the allegation of the plaintiff-appellant that as it was not even testified to or identified by the
the matters requested by her to be admitted by affiant (plaintiff-appellant) herself. This self-serving
the defendant-appellant under the Request for affidavit therefore is a mere hearsay under the
Admission were already deemed admitted by the rules, . . . .
latter for its failure to answer it under oath, has
already been properly laid to rest when the lower xxx xxx xxx
court in its Order of May 28, 1987 correctly ruled:
In like manner, the letter allegedly written by the
At the outset, it must be deceased's co-worker which was never identified
stressed that the defendant to in court by the supposed author, suffers from
indeed filed a written answer the same defect as the affidavit of the plaintiff-
to the request for appellant. 20
admission, sans verification.
The case of Motor Service
Co., Inc. vs. Yellow Taxicab Not one of the other documents submitted, to wit, the POEA
Co., Inc., et al. may not decision, dated 06 June 1984, 21 the death certificate issued
therefore be controlling, or by the Ministry of Health of Iraq and the NBI autopsy
actually opposite. In said report, 22 could give any probative value to petitioner's claim.
case, there was an absolute The POEA decision did not make any categorical holding
failure on the part of the on the specific cause of Gabriel's death. Neither did the
defendant to answer the death certificate issued by the health authorities in Iraq nor
request for admission, and the NBI autopsy report provide any clue on the cause of
thus the court was justified in death. All that appeared to be clear was the fact of Gabriel's
rendering a summary demise on 22 May 1982 in Iraq.
judgment. Here, however, as
clearly intimated elsewhere Evidence, in fine, is utterly wanting to establish that the insured
above, the defendant suffered from an accidental death, the risk covered by the policy. In an
answered in writing practically accident insurance, the insured's beneficiary has the burden of proof
every question posed in the in demonstrating that the cause of death is due to the covered peril.
request for admission. The Once that fact is established, the burden then shifts to the insurer to
Court believes, under the show any excepted peril that may have been stipulated by the parties.
peculiar circumstance, that An "accident insurance" is not thus to be likened to an ordinary life
the more controlling insurance where the insured's death, regardless of the cause thereof,
jurisprudence on the mater would normally be compensable. The latter is akin in property
would be those cited by the insurance to an "all risk" coverage where the insured, on the aspect of
defendant in its burden of proof, has merely to show the condition of the property
memorandum, particularly the insured when the policy attaches and the fact of loss or damage
case of Quimpo vs. de la during the period of the policy and where, thereafter, the burden would
Victoria, 46 SCRA 139. be on the insurer to show any "excluded peril." When, however, the
insured risk is specified, like in the case before us, it lies with the
Prescinding from the foregoing, there is absolutely claimant of the insurance proceeds to initially prove that the loss is
no basis in fact and in law for the lower court to caused by the covered peril.
hold that the appellant insurance company was
deemed to have waived the defense, that the
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While petitioner did fail in substantiating her allegation that the death of
her husband was due to an accident, considering, however, the
uncertainty on the real cause of death, private respondent might find
its way clear into still taking a second look on the matter and perhaps
help ease the load of petitioner's loss.

WHEREFORE, the decision appealed from is AFFIRMED. No costs.


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