G.R. No. 85624 – CATHAY INSURANCE CO., INC., EMPIRE INSURANCE CO., UNION INSURANCE SOCIETY OF CANTON, LTD., PARAMOUNT INSURANCE CORP., PHILIPPINE BRITISH INSURANCE CO., & PHILIPPINE FIRST INSURANCE CO., petitioners, vs. HON. COURT OF APPEALS & EMILIA CHAN LUGAY, respondents.
GRIÑO-AQUINO, J.
Rule Synopsis
Where the insured satisfactorily furnished the insurer the proof of loss, the latter must pay the former the proceeds of the insurance policy within 90 days from the submission of said proof. Unreasonable delay thereon entitles the insured to recover double interest on the amount due.
Facts
Emilia Chan Lugay obtained seven fire insurance policies from six insurers for the Cebu Filipina Press, for her stocks of printing materials, papers, and general merchandise used in trade. Cathay Insurance Co., Inc. is one such insurer. When the insured premises burned, Lugay filed claims with the insurers, including required documents and proofs. The insurers failed to act on the claim. After 10 months, Lugay complained to collect said claims. The insurers disclaimed liability on grounds of violation of certain conditions of the policy, misdeclaration, and even arson. The insurers also offered a settlement of 50% of the claims during pre-trial.
Issues
- Should the insurers be held liable?
- Were the insurers liable for a double interest?
Ruling and Discussion
- Yes. The insurers should be held liable.
The Supreme Court found the insurers liable. It upheld the factual findings of the lower courts and also said that the insured’s cause of action already accrued at the time of the filing of the complaint. Citing Sec. 243 of the Insurance Code, the Court said that the insurers are bound to pay the claims of the insured within 90 days from his submission of the proof of loss, and also that such period already lapsed at the time of filing of the complaint. Also, as found by the lower courts, the insured fully complied with the requirements of Condition No. 13 (on proofs of loss). - Yes. The insurers were liable for a double interest.
The SC also affirmed the lower court’s award of double interest on the insured’s claims given the unreasonable delay in processing the claim and making payments. Sec. 243 entitles 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, in case of the insurer’s refusal or failure to pay the loss or damage within the time prescribed. Under Sec. 244, 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.
Dispositive
Decision affirmed.