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Case No. Finman General Assurance Corporation v. Court of Appeals

6 G.R. No. 138737. July 12, 2001
Topic: Claims Settlement and Subrogation

Private respondent Usiphil Incorporated obtained a fire insurance policy from petitioner
Finman General Assurance Corporation covering certain properties, e.g., office, furniture,
fixtures, shop machinery and other trade equipment. Under Policy No. F3100 issued to
private respondent, petitioner undertook to indemnify private respondent for any damage
to or loss of said properties arising from fire.

Usiphil filed with petitioner an insurance claim amounting to P987,126.11 for the
loss of the insured properties due to fire. Acting thereon, petitioner appointed Adjuster
H.H. Bayne to undertake the valuation and adjustment of the loss. H.H. Bayne then
required private respondent to file a formal claim and submit proof of loss. In compliance
therewith, private respondent submitted its Sworn Statement of Loss and Formal Claim,
signed by Reynaldo Cayetano, private respondent’s Manager. Respondent likewise
submitted Proof of Loss signed by its Accounting Manager Pedro Palallos and
countersigned by H.H. Bayne’s Adjuster F.C. Medina.

Palallos personally followed-up private respondent’s claim with petitioner’s President

Joaquin Ortega. During their meeting, Ortega instructed their Finance Manager, Rosauro
Maghirang, to reconcile the records. Thereafter, Maghirang and Palallos signed a
Statement/Agreement, which indicated that the amount due respondent was
P842,683.40.

Despite repeated demands by private respondent, petitioner refused to pay the insurance
FACTS:
claim. Thus, private respondent was constrained to file a complaint against petitioner for
the unpaid insurance claim. In its Answer, petitioner maintained that the claim of private
respondent could not be allowed because it failed to comply with Policy Condition
No. 13 regarding the submission of certain documents to prove the loss.

The trial court rendered judgment in favor of Usiphil. The CA substantially affirmed the
decision of the trial court.

Petitioner argues that the disallowance of private respondent’s claim is justified by its
failure to submit the required documents in accordance with Policy Condition No. 13.
Said requirements were allegedly communicated to private respondent in the two
letters of H.H. Bayne to private respondent.

According to petitioner, in complete disregard of the foregoing requirements, private

respondent never submitted any of the documents mentioned therein (e.g. formal claim,
certification from the appropriate gov. office, proof of premium payment, 3 colors
photographs of the debris, etc.). Further, petitioner assails the award in favor of private
respondent of an interest rate of 24% per annum. Since there was allegedly no express
finding that petitioner unreasonably denied or withheld the payment of the subject
insurance claim, then the award of 24% per annum is not proper. Petitioner opines that
the judgment should only bear the legal interest rate of 12% per annum for the delay in
the payment of the claim.
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Whether or not private respondent complied with the submission of documents to
ISSUE/S: prove loss.

YES. Both the trial court and the CA concur in holding that private respondent had
substantially complied with Policy Condition No. 13 (See Annex).

A perusal of the records shows that private respondent, after the occurrence of the fire,
immediately notified petitioner thereof. Thereafter, private respondent submitted the
following documents: (1) Sworn Statement of Loss and Formal Claim (Exhibit C) and; (2)
Proof of Loss (Exhibit D). The submission of these documents, to the Court’s mind,
constitutes substantial compliance with the above provision. Indeed, as regards
the submission of documents to prove loss, substantial, not strict as urged by
petitioner, compliance with the requirements will always be deemed sufficient.

In any case, petitioner itself acknowledged its liability when through its Finance
Manager, Rosauro Maghirang, it signed the document indicating that the amount
due private respondent is P842,683.40

Anent the payment of 24% interest per annum computed from May 3, 1985 until fully
HELD: paid, suffice it to say that the same is authorized by Sections 243 and 244 of the
Insurance Code (See Annex).

Notably, under Section 244, a prima facie evidence of unreasonable delay in payment of
the claim is created by the failure of the insurer to pay the claim within the time fixed in
both Sections 243 and 244. Further, Section 29 of the policy itself provides for the
payment of such interest,

The policy itself obliges petitioner to pay the insurance claim within thirty days
after proof of loss and ascertainment of the loss made in an agreement between
private respondent and petitioner. In this case, as found by the CA, petitioner and
private respondent signed the agreement (Exhibit E) indicating that the amount due
private respondent was P842,683.40 on April 2, 1985. Petitioner thus had until May 2,
1985 to pay private respondent’s insurance. For its failure to do so, the CA and the trial
court rightfully directed petitioner to pay, inter alia, 24% interest per annum in accordance
with the above quoted provisions.

Policy Condition No. 13:

13. The insured shall give immediate written notice to the Company of any loss, protect
the property from further damage, forthwith separate the damaged and undamaged
personal property, put it in the best possible order, furnish a complete inventory of the
destroyed, damaged, and undamaged property, showing in detail quantities, costs, actual
ANNEX
cash value and the amount of loss claimed; AND WITHIN SIXTY DAYS AFTER THE
LOSS, UNLESS SUCH TIME IS EXTENDED IN WRITING BY THE COMPANY, THE
INSURED SHALL RENDER TO THE COMPANY A PROOF OF LOSS, signed and sworn
to by the insured, stating the knowledge and belief of the insured as to the following: the
time and origin of the loss, the interest of the insured and of all others in the property, the
actual cash value of each item thereof and the amount of loss thereto, all encumbrances
thereon, all other contracts of insurance, whether valid or not, covering any of said
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property, any changes in the title, use, occupation, location, possession or exposures of
said property since the issuing of this policy by whom and for what purpose any buildings
herein described and the several parts thereof were occupied at the time of loss and
whether or not it then stood on leased ground, and shall furnish a copy of all the
descriptions and schedules in all policies, and if required verified plans and specifications
of any building, fixtures, or machinery destroyed or damaged. The insured, as often as
may be reasonably required, shall exhibit to any person designated by the company all
that remains of any property herein described, and submit to examination under oath by
any person named by the Company, and subscribe the same; and, as often as may be
reasonably required, shall produce for examination all books of account, bills, invoices,
and other vouchers or certified copies thereof if originals be lost, at such reasonable time
and place as may be designated by the Company or its representative and shall permit
extracts and copies thereof to be made.

No claim under this policy shall be payable unless the terms of this condition have been
complied with.

Sec. 243. The amount of any loss or damage for which an insurer may be liable, under
any policy other than life insurance policy, shall be paid within thirty days after proof of
loss is received by the insurer and ascertainment of the loss or damage is made either
by agreement between the insured and the insurer or by arbitration; but if such
ascertainment is not had or made within sixty days after such receipt by the insurer of the
proof of loss, then the loss or damage shall be paid within ninety days after such receipt.
Refusal or failure to pay the loss or damage within the time prescribed herein will entitle
the assured to collect interest on the proceeds of the policy for the duration of the delay
at the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or
refusal to pay is based on the ground that the claim is fraudulent.

Sec. 244. In case of any litigation for the enforcement of any policy or contract of
insurance, it shall be the duty of the Commissioner or the Court, as the case may be, to
make a finding as to whether the payment of the claim of the insured has been
unreasonably denied or withheld; and in the affirmative case, the insurance company
shall be adjudged to pay damages which shall consist of attorney’s fees and other
expenses incurred by the insured person by reason of such unreasonable denial or
withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board
of the amount of the claim due the insured, from the date following the time prescribed in
section two hundred forty-two or in section two hundred forty-three, as the case may be,
until the claim is fully satisfied: Provided, That the failure to pay any such claim within the
time prescribed in said sections shall be considered prima facie evidence of reasonable
delay in payment.