ZENITH INSURANCE CORPORATION v.

CA
GR No. 85296 May 14, 1990
By Kylie Dado
FACTS:
Private Respondent Lawrence Fernandez insured his car
for own damage with Zenith Insurance. On July 6, 1983,
the car figured in an accident and suffered actual
damages amounting to P3,640.
After allegedly being given a run around by Zenith for 2
months, Fernandez filed a complaint with the RTC-Cebu
for sum of money and damages resulting form the refusal
of Zenith to pay the amount claimed.
o Aside from the actual damages + interests, he also
prayed from moral damages (P10K), exemplary
damages (P5K), attys fees (P3K) and litigation
expenses (P3K).
Zenith filed an answer: it offered to pay the claim
pursuant to the terms and conditions of the contract but
Fernandez refused to receive it.
Procedure:
o RTC = scheduled a pre-trial but terminated it upon
petitioners motion.
o Zenith failed to present its evidence as it failed to
appear in court w/o justifiable reason so the trial
court submitted the case for decision.
o Zenith = filed petition for certiorari
Denied due course
RTC: Ruled in favor of Fernandez.
Zenith filed a notice of appeal before the trial court.
It was granted in the same order granting
Fernandezs motion for execution pending
appeal

CA: Affirmed in toto the decision of the trial court.

Petitioners contention:
o Legal basis of CA in awarding moral,
exemplary and attorneys fees in an amount
more than prayed for in the complaint:
Amount prayed for:
Amount awarded
MD = P10K
MD = P20K
ED = P5K
ED = P20K
Attys fees = P3K
Attys fees = P5K
o Award of actual damages of P3,460 instead of
only P1,927.59, which arrived at after
deducting P250 and P274 as deductible
franchise and 20% depreciation on parts as
agreed upon in the contract of insurance.
ISSUE: W/N CAs the amount of damages awarded by the
CA is correct
SC: No, except attorneys fees.
Under the Insurance Code, in case of unreasonable delay
in the payment of proceeds, the damages that may be
awarded are:
1. Attys fees
2. Other expenses incurred by the insured person by
reason of such unreasonable delay
3. Interest at twice the ceiling prescribed by the
Monetary Board of the amount of the claim due the
injured
4. Amount of the claim
Award of moral and exemplary damages, Civil Code shall
govern. The purpose of moral damage is essentially
indemnity/reparation, not punishment.
As to moral damages
In the instant case, the act of Zenith of delaying payment
for 2 months cannot be considered as so wanton or
malevolent to justify an award of P20K as moral
damages, taking into consideration also the fact that the

actual damage was only P3460. The reason for Zeniths

failure was that the parties could not come to an
agreement as regards the amount of the actual damage.
Thus, P10K as moral damages as prayed for by Fernandez
is equitable.
As to exemplary damages
In the case of Noda v. Cruz-Arnaldo, ED was not awarded,
as the insurance company had not acted in wanton,
oppressive or malevolent manner. The same is true in the
case at abr.

As to attorneys fees
P5K is justified considering that there were other petitions
filed and defended by Fernandez in connection with this
case.
As to actual damages
P3640 had been established before the trial court and
affirmed by CA. CA correctly ruled that the deductions
aboved-mentioned had no basis.