Republic of the Philippines SECTION
DEPENDENTS’ GROUP
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 175773               June 17, 2013
MITSUBISHI MOTORS PHILIPPINES SALARIED
EMPLOYEES UNION (MMPSEU), Petitioner,  a. The room and board must not exceed three
vs.
MITSUBISHI MOTORS PHILIPPINES
CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
The Collective Bargaining Agreement (CBA) of the
parties in this case provides that the company
shoulder the hospitalization expenses of the
dependents of covered employees subject to certain
limitations and restrictions. Accordingly, covered
employees pay part of the hospitalization insurance
premium through monthly salary deduction while the
company, upon hospitalization of the covered
employees' dependents, shall pay the hospitalization
expenses incurred for the same. The conflict arose
when a portion of the hospitalization expenses of the
covered employees' dependents were
paid/shouldered by the dependent's own health
insurance. While the company refused to pay the
portion of the hospital expenses already shouldered
by the dependents' own health insurance, the union
insists that the covered employees are entitled to the
whole and undiminished amount of said hospital
expenses.
By this Petition for Review on Certiorari,1 petitioner
Mitsubishi Motors Philippines Salaried Employees
Union (MMPSEU) assails the March 31, 2006
Decision2 and December 5, 2006 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 75630,
which reversed and set aside the 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’ hospitalization
expenses which were already shouldered by other
health insurance companies.
Factual Antecedents
The parties’ CBA5 covering the period August 1, 1996
to July 31, 1999 provides for the hospitalization
insurance benefits for the covered dependents, thus:
4.
HOSPITALIZATION INSURANCE – The COMPANY
shall obtain group hospitalization insurance coverage
or assume under a self-insurance basis
hospitalization for the dependents of regular
employees up to a maximum amount of forty
thousand pesos (₱40,000.00) per confinement subject
to the following:
hundred pesos (₱300.00) per day up to a
maximum of thirty-one (31) days. Similarly,
Doctor’s Call fees must not exceed three
hundred pesos (₱300.00) per day for a
maximum of thirty-one (31) days. Any excess
of this amount shall be borne by the
employee.
b. Confinement must be in a hospital
designated by the COMPANY. For this
purpose, the COMPANY shall designate
hospitals in different convenient places to be
availed of by the dependents of employees. In
cases of emergency where the dependent is
confined without the recommendation of the
company doctor or in a hospital not
designated by the COMPANY, the COMPANY
shall look into the circumstances of such
confinement and arrange for the payment of
the amount to the extent of the hospitalization
benefit.
c. The limitations and restrictions listed in
Annex "B" must be observed.
d. Payment shall be direct to the hospital and
doctor and must be covered by actual billings.
Each employee shall pay one hundred pesos
(₱100.00) per month 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 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 of benefits and subject to the same
limitations and restrictions provided for in Annex "B"
hereof.
The hospitalization expenses must be covered by
actual hospital and doctor’s bills and any amount in
excess of the above mentioned level of benefits will
be for the account of the employee.
For purposes of this provision, eligible dependents are
the covered employees’ natural parents, legal spouse
and legitimate or legally adopted or step children who
are unmarried, unemployed who have not attained
twenty-one (21) years of age and wholly dependent
upon the employee for support.
This provision applies only in cases of actual
confinement in the hospital for at least six (6) hours.
Maternity cases are not covered by this section but
will be under the next succeeding section on maternity
benefits.6
When the CBA expired on July 31, 1999, the parties
executed another CBA7 effective August 1, 1999 to
July 31, 2002 incorporating the same 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.
On separate occasions, three members of MMPSEU,
namely, Ernesto Calida (Calida), Hermie Juan Oabel
(Oabel) and Jocelyn Martin (Martin), filed claims for
reimbursement of hospitalization expenses of their
dependents.
MMPC paid only a portion of their hospitalization
insurance claims, not the full amount. In the case of
Calida, his wife, Lanie, was confined at Sto. Tomas
University Hospital from September 4 to 9, 1998 due
to Thyroidectomy. The medical expenses incurred
totalled ₱29,967.10. Of this amount, ₱9,000.00
representing professional fees was paid by MEDICard
Philippines, Inc. (MEDICard) which provides health
maintenance to Lanie.8 MMPC only paid
₱12,148.63.  It did not pay the ₱9,000.00 already paid
9
by MEDICard and the ₱6,278.47 not covered by
official receipts. It refused to give to Calida the
difference between the amount of medical expenses
of ₱27,427.1010 which he claimed to be entitled to
under the CBA and the ₱12,148.63 which MMPC
directly paid to the hospital.
In the case of Martin, his father, Jose, was admitted at
The Medical City from March 26 to 27, 2000 due to
Acid Peptic Disease and incurred medical expenses
amounting to ₱9,101.30.14 MEDICard paid
₱8,496.00. Consequently,
15
MMPC only paid
₱288.40,16 after deducting from the total medical
expenses the amount paid by MEDICard and the
₱316.90 discount given by the hospital.
Claiming that under the CBA, they are entitled to
hospital benefits amounting to ₱27,427.10, ₱6,769.35
and ₱8,123.80, respectively, which should not be
reduced by the amounts paid by MEDICard and by
Prosper, Calida, Oabel and Martin asked for
reimbursement from MMPC. However, MMPC denied
the claims contending that double insurance would
result if the said employees would receive from the
company the full amount of hospitalization expenses
despite having already received payment of portions
thereof from other health insurance providers.
This prompted the MMPSEU President to write the
MMPC President17 demanding full payment of the
hospitalization benefits. Alleging discrimination
against MMPSEU union members, she pointed out
that full reimbursement was given in a similar claim
filed by Luisito 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 basis of official receipts
submitted. It also denied the charge of discrimination
and explained that the case of Cruz involved an
entirely different matter since it concerned the
admissibility of certified true copies of documents for
reimbursement purposes, which case had been
settled through voluntary arbitration.
On August 28, 2000, MMPSEU referred the dispute to
the National Conciliation and Mediation Board and
requested for preventive mediation. 19
Proceedings before the Voluntary Arbitrator
On October 3, 2000, the case was referred to
Voluntary Arbitrator Rolando Capocyan for resolution
of the issue involving the interpretation of the subject
CBA provision.20
MMPSEU alleged that there is nothing in the CBA
which prohibits an employee from obtaining other
insurance or declares that medical expenses can be
reimbursed only upon presentation of original official
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
permitted, MMPC would be unjustly benefited from
the monthly premium contributed by the employees
through salary deduction. MMPSEU added that its
members had legitimate claims under the CBA and
that any doubt as to any of its provisions should be
resolved in favor of its members. Moreover, any
ambiguity should be resolved in favor of labor. 21
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 indemnity or double insurance, which is
circumscribed under the Insurance Code. Moreover, a
contract of insurance is a contract of indemnity and
the employees cannot be allowed to profit from their
dependents’ loss.22
Meanwhile, the parties separately sought for a legal
opinion from the Insurance Commission relative to the
issue at hand. In its letter 23 to the Insurance
Commission, MMPC requested for confirmation of its
position that the covered employees cannot claim
insurance benefits for a loss that had already been
covered or paid by another insurance company.
However, the Office of the Insurance Commission
opted not to render an opinion on the matter as the
same may become the subject of a formal complaint
before it.24 On the other hand, when queried by
MMPSEU,25the Insurance Commission, through Atty.
Richard David C. Funk II (Atty. Funk) of the Claims
Adjudication Division, rendered an opinion contained
in a letter,26 viz:
Ms. Cecilia L. ParasPresident
Mitsubishi Motors Phils.
[Salaried] Employees Union
Ortigas Avenue Extension,
Cainta, Rizal
Madam:
We acknowledge receipt of your letter which, to our
impression, basically poses the question of whether or
not recovery of medical expenses from a Health
Maintenance Organization bars recovery of the same
reimbursable amount of medical expenses under a
contract of health or medical insurance.
We wish to opine that in cases of claims for
reimbursement of medical expenses where there are
two contracts providing benefits to that effect,
recovery may be had on both simultaneously. In the
absence of an Other Insurance provision in these
coverages, the courts have uniformly held that an
insured is entitled to receive the insurance benefits
without 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 result is consistent with the public
policy underlying the collateral source rule – that is, x
x x the courts have usually concluded that the liability
of a health or accident insurer is not reduced by other
possible sources of indemnification or compensation.
(ibid).
Very truly yours,
RICHARD DAVID C. FUNK II
Officer-in-Charge
Claims Adjudication Division
(SGD.)
Attorney IV
On December 3, 2002, the Voluntary Arbitrator
rendered a Decision27 finding MMPC liable to pay or
reimburse the amount of hospitalization expenses
already paid by other health insurance companies.
The Voluntary Arbitrator held that the employees may
demand simultaneous payment from both the CBA
and their dependents’ separate health insurance
without resulting to double 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.
Proceedings before the Court of Appeals
MMPC filed a Petition for Review with Prayer for the
Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction28 before the CA. It
claimed that the Voluntary Arbitrator committed grave
abuse of discretion in not finding that recovery under
both insurance policies constitutes double insurance
as both had the same subject matter, interest insured
and risk or peril insured against; in relying solely on
the unauthorized legal opinion of Atty. Funk; and in
not finding that the employees will be benefited twice
for the same loss. In its Comment, 29 MMPSEU
countered that MMPC will unjustly enrich itself and
profit from the monthly premiums paid if full
reimbursement is not made.
On March 31, 2006, the CA found merit in MMPC’s
Petition. It ruled that despite the lack of a provision
which bars recovery in case of payment by other
insurers, the wordings of the subject provision of the
CBA showed that the parties intended to make MMPC
liable only for expenses actually incurred by an
employee’s qualified dependent. In particular, the
provision stipulates that payment should be made
directly to the hospital and that the claim should be
supported by actual hospital and doctor’s bills. These
mean that the employees shall only be paid amounts
not covered by other health insurance and is more in
keeping with the principle of indemnity in insurance
contracts. Besides, a contrary interpretation would
"allow unscrupulous employees to unduly profit from
the x x x benefits" and shall "open the floodgates to
questionable claims x x x."30
The dispositive portion of the CA Decision31 reads:
WHEREFORE, the instant petition is GRANTED. The
decision of the voluntary arbitrator dated December 3,
2002 is REVERSED and SET ASIDE and judgment is
rendered declaring that under Art. XI, Sec. 4 of the
Collective Bargaining Agreement between petitioner
and respondent effective August 1, 1999 to July 31,
2002, the former’s obligation to reimburse the Union
members for the hospitalization expenses incurred by
their dependents is exclusive of those paid by the
Union members to the hospital.
SO ORDERED.32
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. MMPSEU cited Samsel v. Allstate Insurance
Co.,34 wherein the Arizona Supreme Court explicitly
ruled that an insured may recover from separate
health insurance providers, regardless of whether one
of them has already paid the medical expenses
incurred. On the other hand, MMPC argued in its
Comment35 that the cited foreign case involves a
different set of facts.
The CA, in its Resolution36 dated December 5, 2006,
denied MMPSEU’s motion.
Hence, this Petition.
Issues
MMPSEU presented the following grounds in support
of its Petition:
A.
THE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT REVERSED THE DECISION DATED 03
[DECEMBER] 2002 OF THE VOLUNTARY
ARBITRATOR BELOW WHEN THE SAME WAS
SUPPORTED BY SUBSTANTIAL EVIDENCE,
INCLUDING THE OPINION OF THE INSURANCE
COMMISSION THAT RECOVERY FROM BOTH THE
CBA AND SEPARATE HEALTH CARDS IS NOT
PROHIBITED IN THE ABSENCE OF ANY SPECIFIC
PROVISION IN THE CBA.
B.
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN OVERTURNING THE
DECISION OF THE VOLUNTARY ARBITRATOR
WITHOUT EVEN GIVING ANY LEGAL OR
JUSTIFIABLE BASIS FOR SUCH REVERSAL.
C.
THE COURT OF APPEALS COMMITTED GRAVE
ERROR IN REFUSING TO CONSIDER OR EVEN
MENTION ANYTHING ABOUT THE AMERICAN
AUTHORITIES CITED IN THE RECORDS THAT DO
NOT PROHIBIT, BUT IN FACT ALLOW, RECOVERY
FROM TWO SEPARATE HEALTH PLANS.
D.
THE COURT OF APPEALS GRAVELY ERRED IN
GIVING MORE IMPORTANCE TO A POSSIBLE,
HENCE MERELY SPECULATIVE, ABUSE BY
EMPLOYEES OF THE BENEFITS IF DOUBLE
RECOVERY WERE ALLOWED INSTEAD OF THE
REAL INJURY TO THE EMPLOYEES WHO ARE
PAYING FOR THE CBA HOSPITALIZATION
BENEFITS THROUGH MONTHLY SALARY
DEDUCTIONS BUT WHO MAY NOT BE ABLE TO
AVAIL OF THE SAME IF THEY OR THEIR
DEPENDENTS HAVE OTHER HEALTH
INSURANCE.37
MMPSEU avers that the Decision of the Voluntary
Arbitrator deserves utmost respect and finality
because it is supported by substantial evidence and is
in accordance with the opinion rendered by the
Insurance Commission, an agency equipped with vast
knowledge concerning insurance contracts. It
maintains that under the CBA, member-employees
are entitled to full reimbursement of medical expenses
incurred by their dependents regardless of any
amounts paid by the latter’s health insurance provider.
Otherwise, non-recovery will 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.
Our Ruling
The Petition has no merit.
Atty. Funk erred in applying the
collateral source rule.
The Voluntary Arbitrator based his ruling on the
opinion of Atty. Funk that the employees may recover
benefits from different insurance providers without
regard to the amount of benefits paid by each.
According to him, this view is consistent with the
theory of the collateral source rule.
As part of American personal injury law, the collateral
source rule was originally applied to tort cases
wherein the defendant is prevented from 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 payment
should not be deducted from the damages which he
would otherwise collect from the tortfeasor. 39 In a
recent Decision40 by the Illinois Supreme Court, the
rule has been described as "an established exception
to the general rule that damages in negligence actions
must be compensatory." The Court went on to explain
that although the rule appears to allow a double
recovery, the collateral source will have a lien or
subrogation right to prevent such a double
recovery.41 In Mitchell v. Haldar,42 the collateral source
rule was rationalized by the Supreme Court of
Delaware:
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 by the injured
person from sources unconnected with the
defendant’. According to the collateral source rule, ‘a
tortfeasor has no right to any mitigation of damages
because of payments or compensation received 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 competing principles of tort law:
(1) a plaintiff is entitled to compensation sufficient to
make him whole, but no more; and (2) a defendant is
liable for all damages that proximately result from his
wrong. A plaintiff who receives a double recovery for a
single tort enjoys a windfall; a defendant who
escapes, in whole or in part, liability for his wrong
enjoys a windfall. Because the law must sanction one
windfall and deny the other, it favors the victim of the
wrong rather than the wrongdoer.
Thus, the tortfeasor is required to bear the cost for the
full value of his or her negligent conduct even if it
results in a windfall for the innocent plaintiff. (Citations
omitted)
As seen, the collateral source rule applies in order to
place the responsibility for losses on the party causing
them.43Its application is justified so that "'the
wrongdoer should not benefit from the expenditures
made by the injured party or take advantage of
contracts or other relations that may exist between the
injured party and third 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 generating the losses. 45 Here, it is clear
that MMPC is a no-fault insurer. Hence, it cannot be
obliged to pay the hospitalization expenses of the
dependents of its employees which had already been
paid by separate health insurance providers of said
dependents.
The Voluntary Arbitrator therefore erred in adopting
Atty. Funk’s view that the covered employees are
entitled to full payment of the hospital expenses
incurred by their dependents, including the amounts
already paid by other health insurance companies
based on the theory of collateral source rule.
The conditions set forth in the CBA provision indicate
an intention to limit MMPC’s liability only to actual
expenses incurred by the employees’ dependents,
that is, excluding the amounts paid by dependents’
other health insurance providers.
The Voluntary Arbitrator ruled that the CBA has no
express provision barring claims for hospitalization
expenses already paid by other insurers. Hence, the
covered employees can recover from both. The CA
did not agree, saying that the conditions set forth in
the CBA implied an intention of the parties to limit
MMPC’s liability only to the extent of the expenses
actually incurred by their dependents which excludes
the amounts shouldered by other health insurance
companies.
We agree with the CA. The condition that payment
should be direct to the hospital and doctor implies that
MMPC is only liable to pay medical expenses actually
shouldered by the employees’ dependents. It follows
that MMPC’s liability is limited, that is, it does not
include the amounts paid by other health insurance
providers. This condition is obviously intended to
thwart not only fraudulent claims but also double
claims for the same loss of the dependents of covered
employees.
It is well to note at this point that the CBA constitutes
a contract between 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 provision are clear and provide no room for
any other interpretation. As there is no ambiguity, the
terms must be taken in their plain, ordinary 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. 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
from a separate health insurer. In that case, the
Allstate automobile policy does not contain any clause
restricting medical payment coverage to expenses
actually paid by the insured nor does it specifically
provide for reduction of medical payments benefits by
a coordination of benefits.48 However, in the case
before us, the dependents’ group hospitalization
insurance provision in the CBA specifically contains a WHEREFORE, the Petition is DENIED. The Decision
condition which limits MMPC’s liability only up to the dated March 31, 2006 and Resolution dated
extent of the expenses that should be paid by the December 5, 2006 of the Court of Appeals in CA-G.R.
covered employee’s dependent to the hospital and SP No. 75630, are AFFIRMED.
doctor. This is evident from the portion which states
that "payment by MMPC shall be direct to the hospital SO ORDERED.
and doctor."49 In contrast, the Allstate automobile
policy expressly gives Allstate the authority to pay
directly to the insured person or on the latter’s behalf
all reasonable expenses actually incurred. Therefore,
reliance on Samsel is unavailing because the facts
therein are different and not decisive of the issues in
the present case.

To allow reimbursement of amounts paid

under other insurance policies shall
constitute double recovery which is not
sanctioned by law.

MMPSEU insists that MMPC is also liable for the SECOND DIVISION
amounts covered under other insurance policies;
otherwise, MMPC will unjustly profit from the G.R. No. 131399             October 17, 2003
premiums the employees contribute through monthly
salary deductions.
ANGELITA AMPARO GO, petitioner, 
vs.
This contention is unmeritorious. OFFICE OF THE OMBUDSMAN, INSURANCE
COMMISSIONER EDUARDO T. MALINIS and
To constitute unjust enrichment, it must be shown that NORBERTO F. CASTRO, respondents.
a party was unjustly enriched in the sense that the
term unjustly could mean illegally or unlawfully.50 A DECISION
claim for unjust enrichment fails when the person who
will benefit has a valid claim to such benefit. 51
AUSTRIA-MARTINEZ, J.:
The CBA has provided for MMPC’s limited liability
In this petition for review on certiorari under Rule 45 of
which extends only up to the amount to be paid to the
the Rules of Court, petitioner Angelita Amparo Go
hospital and doctor by the employees’ dependents,
seeks the reversal of the Resolution of the Office of
excluding those paid by other insurers. Consequently,
the Ombudsman in OMB-0-96-2225 dismissing her
the covered employees will not receive more than
charges against Insurance Commissioner Eduardo T.
what is due them; neither is MMPC under any
Malinis and Hearing Officer Norberto F. Castro for
obligation to give more than what is due under the
Violation of Section 3 [e] of Republic Act No. 3019,
CBA.
otherwise known as Anti-Graft and Corrupt Practices
Act, which provides:
Moreover, since the subject CBA provision is an
insurance contract, the rights and obligations of the
Sec. 3. Corrupt practices of public officers. -- In
parties must be determined in accordance with the
addition to acts omissions of public officers already
general principles of insurance law. 52 Being in the
penalized by existing law, the following shall
nature of a non-life insurance contract and essentially
constitute corrupt practices of any public officer and
a contract of indemnity, the CBA provision obligates
are hereby declared to be unlawful:
MMPC to indemnify the covered employees’ medical
expenses incurred by their dependents but only up to
the extent of the expenses actually incurred. 53 This is ...
consistent with the principle of indemnity which
proscribes the insured from recovering greater than (e) Causing any undue injury to any party, including
the loss.54 Indeed, to profit from a loss will lead to the Government, or giving any private party any
unjust enrichment and therefore should not be unwarranted benefits, advantage or preference in the
countenanced. As aptly ruled by the CA, to grant the discharge of his official, administrative or judicial
claims of MMPSEU will permit possible abuse by functions through manifest partiality, evident bad faith
employees. or gross inexcusable negligence. This provision shall
apply to officers and employees of offices or
government corporations charged with the grant of
licenses or permits or other concessions.
The facts of the case are as follows:
Petitioner is the Treasurer and Vice-President of Wear
Me Garment Manufacturing Inc. whose business and
factory are located in Nadurata 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 14
insurance companies:
(1) Prudential Guarentee & Assurance Inc. ₱
5,000,000.00
(2) Oriental Assutance Corporation ₱ 3,500,000.00
(3) Cibeles Insurance Corporation ₱ 1,000,000.00
(4) Pioneer Asia Insurance Corporation
1,500,000.00
(5) Western Guaranty Corp. ₱ 2,500,000.00
(6) Liberty Insurance Corporation ₱ 4,000,000.00
(7) Filipino Merchants Insurance Co. ₱ 1,000,000.00
(8) Reliance Surety & Insurance Co., Inc. ₱
500,000.00
(9) Central Surety & Insurance Co. ₱ 2,000,000.00
(10) Phil. British Assurance Corporation
1,500,000.00
(11) Philippine First Insurance Co.,
1,500,000.00
(12) Blue Cross Insurance Co., Inc. ₱ 2,500,000.00
(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, petitioner sought the assistance of
the Insurance Commission (Commission for brevity)
through her letter dated January 18, 1994. Acting on
1 
said letter, the Public Assistance & Information
Division of the Commission held a conference on
February 15, 1994 wherein petitioner and the
insurance companies’ respective representatives met.
The insurers manifested their official stance to deny
the claims of petitioner. As a result, the conference
2 
was terminated without prejudice to petitioner’s option
to pursue other legal remedies.3
Petitioner then sought the intercession of several
members and committees of the Legislature, such as,
then Senate President Edgardo Angara, Senator 4 
Heherson Alvarez and the Senate Blue Ribbon
Committee and the House Committee on Banks and
5 
Financial Intermediaries, accusing the Commission of
6 
acting in conspiracy with the insurance companies in
denying and delaying her claims. The legislators and
7 
the committees sent communications to the
Commission regarding petitioner’s claims. Acting on
8 
the matter, the Commission conducted several
meetings with petitioner and the insurance companies
in order to settle the claims. The Commission
apprised the legislators and their committees of the
actions taken by the Commission and vehemently
denied petitioner’s accusations.9
₱
On June 20, 1994, petitioner filed with the
Commission a complaint for 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 adjusters of Section
241 (b), (c), (d) and (e) of the Insurance Code, as
amended, to wit:
SEC. 241. (1) No insurance company doing business
in the Philippines 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 insurance company, if committed without
just cause and performed with such frequency as to
indicate a general business practice, shall constitute
Inc. ₱ unfair claim settlement practices:
...
(b) Failing to acknowledge with reasonable
promptness pertinent communications with respect to
claims arising under its policies;
(c) Failing to adopt and implement reasonable
standards for the the prompt investigation of claims
arising under its policies;
(d) Not attempting in good faith to effectuate prompt,
fair and equitable settlement of claims submitted in
which liability has become reasonably clear; or
(e) Compelling policyholders to institute suits to
recover amounts due under its policies by offering
without justifiable reason substantially less than the
amount ultimately recovered in suits brought by them.
mandating prompt investigation and settlement of
claims.10
Consequently, the Commission informed the
concerned legislative bodies that they could not
mediate any longer petitioner’s claims against the
insurers because to do so will conflict with its position
to maintain strict impartiality in the adjudication of
Adm. Case No. RD-156. 11
Preliminary hearings were conducted in Adm. Case
No. RD-156. On November 24, 1994, the complaint
12  Castro to conduct separate hearings on the claims.
was amended including therein several adjusters as
party-defendants. Petitioner also filed a Joint
13  Malinis who instructed him to conduct separate
Affidavit, together with her husband, and a Motion to
14  hearings. Petitioner asked respondent Malinis to
Admit Amended Complaint and Affidavit in Lieu of
Direct Testimony. 15
On February 27, 1995, while Adm. Case No. RD-156
is pending before the Commission, petitioner filed with
the Regional Trial Court of Quezon City (Branch 222)
a civil case for Specific Performance with Damages,
docketed as Civil Case No. Q-95-23135, against the
same defendants in Adm. Case No. RD-156. The 16 
complaint prayed that defendants be ordered to
perform their respective obligations as insurers under
the insurance policies and to pay damages and
attorney’s fees. 17
On March 28, 1995, the pre-trial in Adm. Case No.
RD-156 was terminated and consolidated hearings on
the case ensued. In its Order dated May 17, 1995,
18 
the Commission admitted petitioner’s Amended
Complaint and Joint Affidavit. Consolidated/joint
19  accusations. He maintains that he did not tell
hearings on the case then proceeded. 20
On motion to dismiss by two of the insurers, the
Commission ordered the suspension of Adm. Case
No. RD-156 until final determination of Civil Case No.
Q-95-23135. The Commission was of the opinion that
21  dismiss filed by the insurance companies, after due
the administrative case for revocation/suspension of
license of respondents and the civil case for specific
performance with the Regional Trial Court involve the
same set of parties, facts and circumstances; and that
the determination by the Commission of the validity of
the claims might conflict with that of the court, or vice-
versa.22
Aggrieved, petitioner filed with the Office of the
Ombudsman a Complaint-Affidavit against
Commissioner Malinis and Hearing Officer Castro of
the Regulation Division, charging them of Violation of
Section 3 [e] of Rep. Act No. 3019, as herein quoted
earlier.
In a gist, petitioner alleges in her Complaint-Affidavit,
as follows:
Some time in March 1994, petitioner went to the office
of respondent Commissioner Malinis to discuss her
claims and he informed her that he can settle the
claims. However, because respondent Malinis did not
fulfill his promise, she decided to file Adm. Case No.
RD-156, which was raffled 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 him 50% of it. In order for petitioner
to accede to respondent Malinis’ demand, he ordered
Castro admitted to petitioner that it was respondent
consolidate the hearings but instead, Malinis again
propositioned that he will settle her claims if petitioner
gives him 50%. Respondent Malinis then ordered the
suspension of Adm. Case No. RD-156 in his Order
dated August 29, 1995, which is patently void since
he was not the hearing officer, and the order violates
E.O. No. 26 and Insurance Circular Memorandum 1-
93 on the early disposition of insurance claims. 23
In his Counter-Affidavit, respondent Malinis denies
petitioner’s allegations. He contends that the
24 
Commission attended to petitioner’s claims as early
as January 1994 and that despite the fact that it was
beyond the jurisdiction of the Commission and the
insurance companies refused to grant the claims, he
nevertheless exerted efforts to mediate the dispute. 25
Respondent Castro also denies petitioner’s
petitioner that the holding of separate hearings was
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 suspension of
Adm. Case No. RD-156 was based on a motion to
hearing on the motion. 26
Graft Investigation Officer Ginez-Jabalde
recommended the dismissal of the charges against
respondents per Resolution dated January 13, 1997.
However, Ombudsman Desierto ordered further
clarificatory hearings. On March 18, 1997, a
27 
clarificatory hearing was held wherein respondent
Castro explained that although he scheduled separate
hearings, it was because the situation called for it as
there were various insurance companies, adjusters
and issues involved in the claims. 28
Thereafter, the Ombudsman approved the
recommendation of the Graft Investigation Officer to
dismiss the charges against respondents. Upon 29 
denial by the Ombudsman of her motion for
reconsideration, petitioner filed the present petition
30 
for review on certiorari.
Petitioner raises the following issues:
CAN AN ADMINISTRATIVE CASE PENDING
BEFORE AN ADMINISTRATIVE TRIBUNAL BE
PURSUED UNABATED AND INDEPENDENTLY
DESPITE SUBSEQUENT FILING OF A CIVIL CASE
IN A REGULAR COURT OF JUSTICE WHEREIN IN
BOTH CASES, IT (sic) INVOLVE THE SAME
PARTIES AND RELATIVELY INVOLVE THE SAME
INCIDENT?
WHETHER THE CONDUCT OF A (sic) SEPARATE
HEARINGS FOR EACH RESPONDENTS (sic)
CONSISTING OF FOURTEEN (14) INSURANCE
COMPANIES AND SIX (6) ADJUSTMENT
COMPANIES ON THE ONE HAND AND ONE (1)
COMPLAINANT ON THE OTHER HAND,
RESORTED BY THE HEARING OFFICER IN AN
ADMINISTRATIVE CASE PREDICATED ON THE
SAME ISSUE AND THE SAME SET OF FACTS AND
CIRCUMSTANCES, AND THE SUBSEQUENT
SUSPENSION OF THE PROCEEDINGS THEREON
VIOLATES SECTION 16, ARTICLE IV OF THE
CONSTITUTION AS WELL AS EXECUTIVE ORDER
NO. 26 AND INSURANCE MEMORANDUM
CIRCULAR 1-93 MANDATING THE SPEEDY
DISPOSITION OF ADMINISTRATIVE CASES. 31
The Court finds the petition devoid of merit. The
Ombudsman did not commit any grave abuse of
discretion when it found no probable cause and
dismissed the Complaint-Affidavit against
respondents.
The Ombudsman resolved to dismiss the charges
against respondents as the latter were able to
satisfactorily explain the reason for the holding of
separate hearings, i.e., expediency, and the
Commission is allowed under its rules of procedure to
order the suspension of Adm. Case No. RD-156. The
Ombudsman concluded:
The conduct of separate hearings and issuance of the
Order were all done in the regular performance of
duties by the respondents Insurance Commissioner
and Hearing Officer respetively (sic). Moreover, they
were done within the purview of the rules of procedure
governing the functions of the Insurance Commission.
Finally, complainant failed to substantiate her charge
with any concrete evidence, thus we can simply
regard the charge against respondent Eduardo T.
Malinis and Norberto F. Castro as if it does not exist
at all.
32
Petitioner insists that the filing of Civil Case No. Q-95-
23135 before the regular court does not abate or
suspend the proceedings in Adm. Case No. RD-156.
Petitioner argues further that the holding of separate
hearings violates her constitutional right to the speedy
disposition of her case.
It has been the Court’s policy to refrain from
interfering with the Ombudsman’s exercise of its
investigatory and prosecutory powers, unless there
are good and compelling reasons to rule
otherwise. We find no cogent reason that justifies the
33 
reversal of the dismissal of the charges against
respondents.
In her Affidavits, petitioner alleges that respondent
Malinis’ act of demanding 50% of the insurance
claims, instructing respondent Castro to conduct
separate hearings, and suspending Adm. Case No.
RD-156, caused her undue injury and gave the
insurance companies unwarranted benefits,
advantage and preference. Aside from such bare
34 
allegations, there is nothing on record proving that
respondent Malinis in fact demanded such 50%, or
that the holding of the separate hearings and the
suspension of the proceedings were done in order to
coerce petitioner into acceding to Malinis’ demand.
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. Indeed, the general rule is that failure to
35 
deny allegations in the complaint results in admission
thereof.  Such rule, however, is not absolute and
36 
admits of exceptions. In Florentino Atillo III vs. Court
37 
of Appeals, Amancor, Inc. and Michell Lhuillier, we 38 
held that in spite of the presence of judicial
admissions in a party’s pleading, the trial court is still
given leeway to consider other evidence
presented; or, as in the present case, the absence of
39
evidence for the petitioner to prove her claim.
It is fundamental that upon him who alleges rests the
burden of proof; hence, it is incumbent upon
40 
petitioner to prove her allegations with competent
evidence. She cannot simply rely on respondent
41 
Malinis’ failure to specifically deny her allegations to
prove that there was such an illegal proposition.
Respondents may not be indicted on mere
presumptions.
A review of the records shows that petitioner failed to
prove her claim such that respondents may not be
indicted for the acts complained of. As aptly found by
the Ombudsman, there was no concrete evidence
presented by petitioner to substantiate her charge.
To establish probable cause for Violation of Section
3[e] of R.A. 3019, the following elements must be
present:
(1) The accused is a public officer or a private person
charged in conspiracy with the former;
(2) The said public officer commits the prohibited acts
during the performance of his or her official duties or
in relation to his or her public positions;
(3) That he or she causes undue injury to any party,
whether the government or a private party;
(4) Such undue injury is caused by giving
unwarranted benefits, advantage or preference to
such parties; and
(5) That the public officer has acted with manifest
partiality, evident bad faith or gross inexcusable
negligence. 43
The causing of undue injury or the giving of any
unwarranted benefits, advantage or preference
through manifest partiality, evident bad faith or gross
inexcusable negligence constitutes the very act
punished under the foregoing section. 44
Petitioner complains that she found it "difficult and
burdensome to prosecute her case against the
insurers … not to mention that she had been rendered
despondent by the loss of her business due to
conflagration." Such difficulty and burden, however,
45 
do not, per se, constitute the undue injury
contemplated by law.
Jurisprudence has consistently interpreted the term
"undue injury" as synonymous to "actual damage." In
Llorente, Jr. vs. Sandiganbayan, we explained the
47 
concept of "undue injury" as an element of the offense
punishable under Section 3 [e] of Rep. Act No. 3019,
to wit:
… Undue has been defined as "more than necessary,
not proper, [or] illegal;" and injury as "any wrong or
damage done to another, either in his person, rights,
reputation or property[;] [that is, the] invasion of any
legally protected interest of another." Actual damage,
in the context of these definitions, is akin to that in civil
law.
… 1995, June 5, 1995, and July 3, 1995. This negates
Petitioner may have been fraught with attending and
42
litigating her claims against each of the fourteen
insurers as well as the insurance adjusters,
individually, but inconvenience is certainly not
constitutive of undue injury. 48
Moreover, petitioner failed to show that the conduct of
separate hearings was done by respondents through
manifest partiality, evident bad faith or gross
inexcusable negligence.
Records show that as early as January 1994, when
petitioner first brought the matter of the delay in her
insurance claims to the Commission, respondent
Malinis, upon the request of petitioner, exerted efforts
to mediate between her and the insurance companies
in order to amicably settle the claims notwithstanding
the fact that it was beyond the jurisdictional amount
cognizable by the Commission under the Insurance
Code, as amended.
1awphi1.nét
Paragraph 1, Section 416 of the Code provides that
the Insurance Commissioner shall have the power to
adjudicate claims and complaints involving any loss,
damage or liability for which an insurer may be
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 made known their official
position to deny the claims, respondent Malinis
persisted in holding meetings between the parties. It
was only after petitioner formally filed a complaint for
Revocation and/or Suspension of Licenses with the
Commission that settlement discussions were
discontinued as it may compromise the Commission’s
impartiality. These clearly are not indicative of evident
49 
bad faith, manifest partiality or gross inexcusable
negligence on respondents’ part. Thus, respondent
Malinis cannot be faulted for attempting to mediate
among the parties.
46 
Records also show that the separate hearings on the
case were held only 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. During the
50 
clarificatory hearing held before the Office of the
Ombudsman, respondent Castro explained that the
conduct of separate hearings was necessary because
petitioner’s claims involved several insurance
companies, adjusters and peculiar issues for each of
the companies. What petitioner conveniently omitted
51 
to add is that consolidated/joint hearings were in fact
held on August 25, 29, 1994, April 6, 1995, May 12,
52 
petitioner’s allegation that respondents were
deliberately holding separate hearings to her
prejudice. Notably, it was during the hearing of July 3,
1995 that the motion to dismiss the Amended
Complaint was heard and argued before respondent
Castro who eventually decided to order the
suspension of the proceedings. 53
The fact that the Commission suspended the
proceedings due to the pendency of Civil Case No. Q-
95-23135 does not constitute an indictable offense
under Section 3 [e] of R.A. No. 3019.
In Almendras Mining Corporation vs. Office of the
Insurance Commission, the Court expounded on the
54  pesos. (Emphasis supplied)
two-fold powers of the Insurance Commission under
the Insurance Code, as amended,  to wit:
55  Under its adjudicatory authority, the Insurance
. . . the Office of the Insurance Commission is an
administrative agency vested with regulatory power as
well as with adjudicatory authority. Among the several
regulatory or non-quasi-judicial duties of the
Insurance Commissioner under the Insurance Code is
the authority to issue, or refuse issuance of, a
Certificate of Authority to a person or entity desirous
of engaging in insurance business in the Philippines,
and to revoke or suspend such Certificate of Authority
upon a finding of the existence of statutory grounds
for such revocation or suspension. The grounds for
revocation or suspension of an insurer's Certificate of
Authority are set out in Section 241 and in Section
247 of the Insurance Code as amended. The general
regulatory authority of the Insurance Commissioner is
described in Section 414 of the Insurance Code, as
amended, in the following terms:
Sec. 414. The Insurance Commissioner shall have the
duty to see that all laws relating to insurance,
insurance companies and other insurance matters,
mutual benefit associations, and trusts for charitable
uses are faithfully executed and to perform the duties
imposed upon him by this Code, and shall,
notwithstanding any existing laws to the contrary,
have sole and exclusive authority to regulate the
issuance and sale of variable contracts as defined in
section two hundred thirty-two and to provide for the
licensing of persons selling such contracts, and to
issue such reasonable rules and regulations
governing the same.
...
The adjudicatory authority of the Insurance
Commissioner is generally described in Section 416
of the Insurance Code, as amended, which reads as
follows:
Sec. 416. The Commissioner shall have the power to
adjudicate claims and complaints involving any loss,
damage or liability for which an insurer may be
answerable under any kind of policy or contract of
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 reinsurance it may
have entered into, or for which a mutual benefit
association may be held liable under the membership
certificates it has issued to its members, where the
amount of any such loss, damage or liability,
excluding interests, cost and attorney's fees, being
claimed or sued upon any kind of insurance, bond,
reinsurance contract, or membership certificate does
not exceed in any single claim one hundred thousand
Commission has the original jurisdiction to adjudicate
and settle insurance claims 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 Metropolitan Trial Courts,
the Municipal Trial Courts and the Municipal Circuit
Trial Courts.
56
In addition to such adjudicatory power, the
Commissioner has the regulatory authority to revoke
or suspend the certificate or authority of an insurance
company upon finding the legal grounds for such
revocation or suspension under Sections 241 and 247
of the Insurance Code. Section 241 is quoted in the
early part of herein Decision. Section 247 provides:
SEC. 247. If the Commissioner is of the opinion upon
examination or 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 law or regulations obligatory upon it, or
that its condition or methods of business is such as to
render its proceedings hazardous to the public or 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 domestic mutual company,
or its security deposits, in the case of a foreign
company, is impaired or deficient, or that the margin
of solvency required of such company is deficient, the
Commissioner is authorized to suspend or revoke all
certificates of authority granted to such insurance
company, its officers and agents, and no new
business shall thereafter be done by such company or
for such company by its agent in the Philippines while
such suspension, revocation or disability continues or
until its authority to do business is restored by the
Commission. Before restoring such authority, the
Commissioner shall required the company concerned
to subject to him a business plan showing the
company’s estimated receipts and disbursements, as
well as the basis therefore, for the next succeeding
three years. (As amended by P.D. No. 1455)
Petitioner pursued her fire insurance claims through
the regular courts when she filed Civil Case No. Q-95-
23135 for Specific Performance with Damages with
the RTC-Quezon City (Branch 222), her claims being
beyond the jurisdiction of the Commission. In
resolving petitioner’s claims, the trial court must
therefore determine whether there was unreasonable
denial or withholding of the claims by the insurance
companies.
On the other hand, in Adm. Case No. RD-156 pending
before the 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 settlement of claims. The jurisdiction of the
Commission in this case is one that calls for the
exercise of its regulatory or non-quasi-judicial duty,
i.e., the authority to revoke or suspend an insurer’s
certificate of authority. Aside
57 
from the
revocation/suspension of license, the Insurance
Commissioner also has the discretion to impose upon
the erring insurance companies and its directors,
officers and agents, fines and penalties, as set out in
Section 415, viz.:
SEC. 415. In addition to the administrative sanction
provided elsewhere in this Code, the Insurance
Commissioner is hereby authorized, at his discretion,
to impose upon insurance companies, their directors
and/or officers and/or agents, for any willful failure or
refusal to comply with, or violation of any provision of
this Code, or any order, instruction, regulation or
ruling of the Insurance Commissioner, or any
commission of irregularities, and/or conducting
business in an unsafe or unsound manner as may be
determined by the Insurance Commissioner, the
following:
(a) Fines not in excess of five hundred pesos
a day; and
(b) Suspension, or after due hearing, removal
of directors and/or officers and/or agents.
The findings of the trial court will not necessarily
foreclose the administrative case before the
Commission, or vice versa. True, the parties are the
same, and both actions are predicated on the same
set of facts, and will require identical evidence. But
the issues to be resolved, the quantum of evidence,
the procedure to be followed and the reliefs to be
adjudged by these two bodies are different.
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, proofs of
losses and other supporting documents. Thus,
petitioner prays in her complaint that the insurers be
ordered to pay the full-insured value of the losses, as
embodied in their respective policies. Petitioner also
58 
sought payment of interests and damages in her favor
caused by the alleged delay and refusal of the
insurers to pay her claims. The principal issue then
59 
that must be resolved by the trial court is whether or
not petitioner is entitled to the payment of her
insurance claims and damages. The matter of
whether or not there is unreasonable delay or 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.
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. In Adm. Case No. RD-156,
60
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, while the 62 
Commission has its own set of rules and it is not 63 
bound by the rigidities of technical rules of
procedure. These two bodies conduct independent
64 
means of ascertaining the ultimate facts of their
respective cases that will serve as basis for their
respective decisions. 1a\^/phi1.net
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
Hence, Adm. Case No. RD-156 may proceed
alongside Civil Case No. Q-95-23135.
The suspension of Adm. Case No. RD-156 by
respondents, albeit erroneous, is not sufficient indicia
of evident bad faith, manifest partiality or gross
inexcusable negligence. Respondents’ mistaken
sense of prudence and judgment, dictated the
suspension of the proceedings. To hold respondents
responsible for such error would be nothing short of
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
WHEREFORE, the instant petition for review on
certiorari is hereby DENIED for lack of merit.
However, in the interest of orderly administration of
justice, the Insurance Commission is directed to
proceed with immediate dispatch in conducting the
hearings of Adm. Case No. RD-156 to determine
whether or not the licenses of the insurance
companies and adjusters may be revoked or
suspended as prayed for by petitioner.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 85296 May 14, 1990
ZENITH INSURANCE CORPORATION, petitioner,  29, 1986 (p. 56, Rollo).
vs.
COURT OF APPEALS and LAWRENCE
FERNANDEZ, respondents.
Vicente R. Layawen for petitioner.
Lawrence L. Fernandez & Associates for private
respondent.
MEDIALDEA, J.:
Assailed in this petition is the decision of the Court of Appeals in CA-G.R.
C.V. No. 13498 entitled, "Lawrence L. Fernandez, plaintiff-appellee v.
Zenith Insurance Corp., defendant-appellant" which affirmed in toto the
decision of the Regional Trial Court of Cebu, Branch XX in Civil Case No.
CEB-1215 and the denial of petitioner's Motion for Reconsideration.
The antecedent facts are as follows:
On January 25, 1983, private respondent Lawrence
Fernandez insured 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. After allegedly being given
a run around by Zenith for two (2) months, 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 the amount claimed. The
complaint was docketed as Civil Case No. CEB-1215.
Aside from actual damages and interests, Fernandez
also prayed 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
P3,000.00.
On September 28, 1983, Zenith filed an answer
alleging that it offered to pay the claim of Fernandez
pursuant to the terms and conditions of the contract
which, the private respondent rejected. After the
issues had been joined, the pre-trial was scheduled
on October 17, 1983 but the same was moved to
November 4, 1983 upon petitioner's motion, allegedly
to explore ways to settle the case although at an
amount lower than private respondent's claim. On
November 14, 1983, the trial court terminated the pre-
trial. Subsequently, Fernandez presented his
evidence. Petitioner Zenith, however, failed to present
its evidence in 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. 10-11, Rollo). Petitioner filed a
petition for certiorari with the Court of Appeals
assailing the order of the trial court submitting the
case for decision without petitioner's evidence. The
petition was docketed as C.A.-G.R. No. 04644.
However, the petition was denied due course on April
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 decision
provides:
 WHEREFORE, defendant is hereby
ordered to pay to the plaintiff:
1. The amount of P3,640.00
representing the damage incurred plus
interest at the rate of twice the
prevailing interest rates;
2. The amount of P20,000.00 by way
of moral damages;
3. The amount of P20,000.00 by way
of exemplary damages;
4. The amount of P5,000.00 as
attorney's fees;
5. The amount of P3,000.00 as
litigation expenses; and
6. Costs. (p. 9, Rollo)
Upon motion of Fernandez and before the expiration
of the period to appeal, the trial court, on June 20,
1986, ordered the execution of the decision pending
appeal. The order was assailed by petitioner in a
petition for certiorariwith the Court of Appeals on
October 23, 1986 in C.A. G.R. No. 10420 but which
petition was also dismissed on December 24, 1986 (p.
69, Rollo).
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 respondent court assigned the following
errors:
I. The lower court erred in denying defendant
appellant to adduce evidence in its behalf.
II. The lower court erred in ordering Zenith
Insurance Corporation to pay the amount of
P3,640.00 in its decision.
III. The lower court erred in awarding moral
damages, attorneys fees and exemplary
damages, the worst is that, the court awarded
damages more than what are prayed for in the
complaint. (p. 12, Rollo)
On August 17, 1988, the Court of Appeals rendered
its decision affirming in toto the decision of the trial
court. It also ruled that the matter of the trial court's
denial of Fernandez's right to adduce evidence is a
closed matter in view of its (CA) ruling in AC-G.R.
04644 wherein Zenith's petition questioning the trial
court's order submitting the case for decision without
Zenith's evidence, was dismissed.
The Motion for Reconsideration of the decision of the
Court of Appeals dated August 17, 1988 was denied
on September 29, 1988, for lack of merit. Hence, the
instant petition was filed by Zenith on October 18,
1988 on the allegation that respondent Court of
Appeals' decision and resolution ran counter to
applicable decisions of this Court and that they were
rendered without or in excess of jurisdiction. The
issues raised by petitioners in this petition are:
a) The legal basis of respondent Court
of Appeals in awarding moral
damages, exemplary damages and
attomey's fees in an amount more
than that prayed for in the complaint.
b) The award of actual damages of
P3,460.00 instead of only P1,927.50
which was arrived at after deducting
P250.00 and P274.00 as deductible
franchise and 20% depreciation on
parts as agreed upon in the contract of
insurance.
Petitioner contends that while the complaint of private
respondent prayed for P10,000.00 moral damages,
the lower court awarded twice the amount, or
P20,000.00 without factual or legal basis; while
private respondent prayed for P5,000.00 exemplary
damages, the trial court awarded P20,000.00; and
while private respondent prayed for P3,000.00
attorney's fees, the trial court awarded P5,000.00.
The propriety of the award of moral damages,
exemplary damages and attorney's fees is the main
issue raised herein by petitioner.
The award of damages in case of unreasonable delay
in the payment of insurance claims is governed by the
Philippine Insurance Code, which provides:
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
attomey'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
unreasonable delay in payment.
It is clear that under the Insurance Code, in case of
unreasonable delay in the payment of the proceeds of
an insurance policy, the damages that may be
awarded are: 1) attorney's fees; 2) other expenses
incurred by the insured person by reason of such
unreasonable denial or withholding of payment; 3)
interest at twice the ceiling prescribed by the
Monetary Board of the amount of the claim due the
injured; and 4) the amount of the claim.
As regards the award of moral and exemplary
damages, the rules under the Civil Code of the
Philippines shall govern.
"The purpose of moral damages is essentially
indemnity or reparation, not punishment or correction.
Moral damages are emphatically not intended to
enrich a complainant at the expense of a defendant,
they are 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. 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 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
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 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 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
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
payment of the claim. However, the act of petitioner of
delaying payment for two months cannot be
considered as so wanton or malevolent to justify an
award of P20,000.00 as moral damages, taking into
consideration also the fact that the actual damage on
the car was only P3,460. In the pre-trial of the case, it
was shown that there was no total disclaimer by
respondent. The reason for petitioner's failure to
indemnify private respondent within the two-month
period was that the parties could not come to an
agreement as regards the amount of the actual
damage on the car. The amount of P10,000.00
prayed for by private respondent as moral damages is
equitable.
On the other hand, exemplary or corrective damages
are imposed by 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 awarded as the
insurance company had not acted in wanton,
oppressive or malevolent manner. The same is true in
the case at bar.
The amount of P5,000.00 awarded as attomey's fees
is justified under the circumstances of this case
considering that there were other petitions filed and
defended by private respondent in connection with
this case.
As regards the actual damages incurred by private
respondent, the amount of P3,640.00 had been
established before the trial court and affirmed by the
appellate court. Respondent appellate court correctly
ruled that the deductions of P250.00 and P274.00 as
deductible franchise and 20% depreciation on parts,
respectively claimed by petitioners as agreed upon in
the contract, had no basis. Respondent court ruled:
Under its second assigned error, defendant-
appellant puts forward two arguments, both of
which are entirely without merit. It is contented
that the amount recoverable under the
insurance policy defendant-appellant issued
over the car of plaintiff-appellee is subject to
deductible franchise, and . . . .
The policy (Exhibit G, pp. 4-9, Record), does
not mntion any deductible franchise, . . . (p.
13, Rollo)
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 private respondent
Fernandez are as follows:
1) P3,640.00 as actual claim plus
interest of twice the ceiling prescribed
by the Monetary Board computed from
the time of submission of proof of loss;
 2) P10,000.00 as moral damages;
3) P5,000.00 as attorney's fees;
4) P3,000.00 as litigation expenses;
and
5) Costs.
ACCORDINGLY, the appealed decision is MODIFIED
as above stated.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19613             April 30, 1966
ALFONSO G. LOPEZ, plaintiff-appellant, 
vs.
FILIPINAS COMPAÑIA DE SEGUROS, defendant-
appellee.
Antonio M. Mendoza for plaintiff-appellant.
Josue H. Gustilo and Associates for defendant-
appellee.
REGALA, J.:
This is an appeal by the plaintiff-appellant, Alfonso G.
Lopez, from an order of the Court of First Instance of
Manila, dated January 25, 1962, dismissing his
complaint against the defendant-appellee, Filipinas
Compañia de Seguros.
Prior to April 22, 1959, the plaintiff applied with the
defendant company for the insurance of his property
consisting of a Biederman truck tractor and a Winter
Weils trailer from loss or damage in the amount of
P26,000.00 and P10,000.00, respectively. In
connection with the above application, the defendant
company inquired of the plaintiff the following:
5. Has any company in respect of the
insurance of any car or vehicle (a) declined,
cancelled or refused to renew your insurance?
(b) increased your premium on renewal?
To both questions, the plaintiff answered: "none,"
though the truth was at that time, the American
International Underwriters of the Philippines (AIU) had
already declined a similar application for insurance by
the plaintiff in respect of the above-described
vehicles.
On April 22, 1959, the defendant-appellee issued to
the plaintiff-appellant two Commercial Vehicle
Comprehensive Policies covering the above
properties. On August 30, 1959, while the said
policies were in force, the aforementioned vehicles
figured in an accident at Bagabag, Nueva Vizcaya,
resulting in the total loss of the tractor and partial
damage to the trailer. Accordingly, the plaintiff gave
notice of the same to the defendant company and
made demand upon the latter for the payment to him
of P27,962.00, the total amount of damages resulting
from the accident.
On April 28, 1960, the defendant-appellant rejected
the above claim by reason of, among others, the
claimant's alleged "concealment of a material fact,"
namely: that the insured property previously been
declined insurance by another company.
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 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 August 1, 1960, the said official
"transmitted to the plaintiff, thru his counsel, the 'self-
explanatory letters' dated June 12, 1960 of the
American International Underwriters of the
Philippines, Inc., and June 21, 1960 of the defendant,
which the said office had received from said parties in
connection with plaintiff's complaint, with the
suggestion that in view of the reluctant attitude of
plaintiff 'towards the company's proposal for the
matter to be settled thru arbitration, and considering
the informative facts disclosed, in the letter of the
AIUPI, plaintiff should pursue his case to the Court
which has proper competence to resolve said matter."
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 arbitration
and, in the premises, suggested that the Assistant
Insurance Commissioner be designated as the sole
arbitrator of the same. On 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 and to
abide by the arbitrator's award. The defendant-
appellee, on the other hand, informed the Insurance
Commissioner on September 22, 1960 that it could
not consent to the above proposal since "the claim of
the plaintiff cannot be resolved by arbitration, as
recourse to arbitration referred to in the policy
contract, envisioned only differences or disputes, 'with
respect to the amount of the company's liability,' and
not to cases where the company does not admit its
liability to the insured." With this rejection, the plaintiff-
appellant filed his complaint with the Court of First
Instance of Manila on September 19, 1961.
Against the above complaint, the defendant-appellee
filed on September 29, 1961 a motion to dismiss on
the ground of prescription. The latter argued that the
plaintiff's claim had already prescribed since it was
not filed within twelve months from its rejection by the
insurance company as stipulated under paragraph 9
of the General Conditions of Commercial Vehicle
Comprehensive Policy Nos. 5598 and 5599, to wit:
If a claim be made and rejected and an action
or suit be not commenced within twelve
months after such rejection or (in 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
deemed to have been abandoned and shall
not thereafter be recovered hereunder.
On January 25, 1962, the court a quo sustained the
above motion and dismissed the complaint. Thus, the
instant appeal.
The principal issue raised in this appeal is simple:
Was the complaint filed by the plaintiff-appellant with
the Office of the Insurance Commissioner on May 27,
1960 a commencement of an "action or suit" within
the meaning and intent of general condition quoted
above?, If it was, then the plaintiff's complaint has not
yet prescribed since the complaint filed with the said
office was made on May 27, 1960 or just about a
month after his claim was rejected by the defendant-
appellee on April 28 1960. On the other hand, if the
above-quoted condition refers alone to an "action or
suit" filed with a court of justice, as the Order
appealed from urges and as the herein appellee
maintains, then, indeed, must the finding or
prescription in this incident be upheld. For, while the
plaintiff's claim was rejected on April 28, 1960 by the
insurance company, the "action or suit" thereon with a
court of justice was filed some 17 months later,
September 19, 1961.
We find for the appellee.
In 1 Moran 86 (1963 ed.), the following jurisprudence
is expressed:
Action is the act by which one sues another in
a court of justice for the enforcement or
protection of a right, or the prevention or
redress of a wrong. Special proceeding is the
act by which one seeks to establish the status
or right of a party, or a particular fact. Hence,
an action is distinguished from special
proceeding in that the former is a formal
demand of a right by one against another,
while the latter is but a petition or a
declaration of a status, right or fact.
(Emphasis supplied.)
The above distinction was laid down in connection
with the definition of "action" in Rule 2, Section 1 of
the Rules of Court that:
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 inconsequential.
Wherefore, the order appealed from is hereby
affirmed, with costs.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
 
G.R. No. 103883 November 14, 1996
JACQUELINE JIMENEZ VDA. DE
GABRIEL, petitioner, 
vs.
HON. COURT OF APPEALS and FORTUNE
INSURANCE & SURETY COMPANY,
INC., respondents.
VITUG, J.:
The petition for review on certiorari in this case seeks
the reversal of the decision   of the Court of Appeals
1
setting aside the judgment of the Regional Trial Court
of Manila, Branch 55, which has ordered private
respondent Fortune Insurance & Surety Company,
Inc., to pay petitioner Jacqueline Jimenez vda. de
Gabriel, the surviving spouse and beneficiary in an
accident (group) insurance of her deceased husband,
the amount of P100,000.00, plus legal interest.
Marcelino Gabriel, the insured, was employed by
Emerald Construction & Development Corporation
("ECDC") at its construction project in Iraq. He was
covered by a personal accident insurance in the
amount of P100,000.00 under a group
policy   procured from private respondent by ECDC for
2
its overseas workers. The insured risk was for
"(b)odily injury caused by violent accidental external
and visible means which injury (would) solely and
independently of any other cause"   result in death or
3
disability.
On 22 May 1982, within the life of the policy, Gabriel
died in Iraq. A year later, or on 12 July 1983, ECDC
reported Gabriel's death to private respondent by
telephone.   Among
4
the documents thereafter
submitted to private respondent were a copy of the
death certificate   issued by the Ministry of Health of
5
the Republic of Iraq — which stated
REASON OF DEATH: UNDER
EXAMINATION NOW — NOT YET
KNOWN   —6
and an autopsy report   of the National Bureau
7
of Investigation ("NBI") to the effect that "(d)ue
to advanced state of postmortem
decomposition, cause of death (could) not be
determined."   Private respondent referred the
8
insurance claim to Mission Adjustment
Service, Inc.
Following a series of communications between
petitioner and private respondent, the latter, on 22
September 1983, ultimately denied the claim of ECDC
on the ground of prescription.   Petitioner went to the
9
Regional Trial Court of Manila. In her complaint
against ECDC and private respondent, she averred
that her husband died of electrocution while in the
performance of his work and prayed for the recovery
of P100,000.00 for insurance indemnification and of
various other sums by way of actual, moral, and
exemplary damages, plus attorney's fees and costs of
suit.
Private respondent filed its answer, which was not
verified, admitting the genuineness and due execution
of the insurance policy; it alleged, however, that since
both the death certificate issued by the Iraqi Ministry
of Health and the autopsy report of the NBI failed to
disclose the cause of Gabriel's death, it denied liability
under the policy. In addition, private respondent
raised the defense of "prescription," invoking Section
384   of the Insurance Code. Later, private
10
respondent filed an amended answer, still unverified,
reiterating its original defenses but, this time,
additionally putting up a counterclaim and a
crossclaim.
The trial court dismissed the case against ECDC for
the failure of petitioner to take steps to cause the
service of the fourth alias summons on ECDC. The
dismissal was without prejudice.
The case proceeded against private respondent
alone. On 28 May 1987, the trial court rendered its
decision   in favor (partly) of petitioner's claim. In
11
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. With regard to the defense of prescription, the
court considered the complaint to have been timely
filed or within one (1) year from private respondent's
denial of the claim.
Petitioner and private respondent both appealed to
the Court of Appeals. Petitioner contended that the
lower court should have awarded all the claims she
had asked for. Private respondent asserted, on its
part, that the lower court erred in ruling (a) that the
insurer had waived the defense that Gabriel's death
was not caused by the insured peril ("violent
accidental external and visible means") specified in
the policy and (b) that the cause of action had not
prescribed.
The Court of Appeals, on 18 September 1991,
reversed the decision of the lower court. The
appellate court held that petitioner had failed to
substantiate her allegation that her husband's death
was caused by a risk insured against. The appellate
court observed that the only evidence presented by
petitioner, in her attempt to show the circumstances
that led to the death of the insured, were her own
affidavit and a letter allegedly written by a co-worker
of the deceased in Iraq which, unfortunately for her,
were held to be both
hearsay. 12
The motion for reconsideration was denied.  13
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:
Sec. 384. Any person having any claim upon
the policy issued pursuant to this chapter
shall, without any unnecessary delay, present
to the insurance company concerned a written
notice of claim setting forth the nature, extent
and duration of the injuries sustained as
certified by a duly licensed physician. Notice
of claim must be filed within six months from
date of the accident, otherwise, the claim shall
be deemed waived. Action or suit for recovery
of damage due to loss or injury must be
brought, in proper cases, with the
Commissioner or the Courts within one year
from denial of the claim, otherwise, the
claimant's right of action shall prescribe.
The notice of death was given to private
respondent, concededly, more than a year
after the death of petitioner's husband. Private
respondent, in invoking prescription, was not
referring to the one-year period from the
denial of the claim within which to file an
action against an insurer but obviously to the
written notice of claim that had to be
submitted within six months from the time of
the accident.
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
Request for Admission sent by petitioner) duly
verified. It is true that a matter of which a written
request for admission is made shall be deemed
impliedly admitted "unless, within a period designated
in the request, which shall not be less than ten (10)
days after service thereof, or within such further time
as the court may allow on motion and notice, the party
to whom the request is directed serves upon the party
requesting the admission a sworn statement either
denying specifically the matters of which an admission
is requested or setting forth in detail the reasons why
he cannot truthfully either admit or deny those
matters;"   however, the verification, like in most
14
cases required by the rules of procedure, is a formal,
not jurisdictional, requirement, and mainly intended to
secure an assurance that matters which are alleged
are done in good faith or are true and correct and not
of mere speculation. When circumstances warrant,
the court may simply order the correction of unverified
pleadings or act on it and waive strict compliance with
the rules in order that the ends of justice may thereby
be served.   In the case of answers to written
15
requests for admission 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
The appellate court acted neither erroneously nor with
grave abuse of discretion when it seconded the
court a quoand ruled:
As to the allegation of the plaintiff-appellant that the
matters requested by her to be admitted by the
defendant-appellant under the Request for Admission
were already deemed admitted by the latter for its
failure to answer it under oath, has already been
properly laid to rest when the lower court in its Order
of May 28, 1987 correctly ruled:
 At the outset, it must be stressed that the
defendant indeed filed a written answer to the
request for admission, sans verification. The
case of Motor Service Co., Inc. vs. Yellow
Taxicab Co., Inc., et al. may not therefore be
controlling, or actually opposite. In said case,
there was an absolute failure on the part of
the defendant to answer the request for
admission, and thus the court was justified in
rendering a summary judgment. Here,
however, as clearly intimated elsewhere
above, the defendant answered in writing
practically every question posed in the request
for admission. The Court believes, under the
peculiar circumstance, that the more
controlling jurisprudence on the mater would
be those cited by the defendant in its
memorandum, particularly the case of Quimpo
vs. de la Victoria, 46 SCRA 139.
Prescinding from the foregoing, there is
absolutely no basis in fact and in law for the
lower court to hold that the appellant
insurance company was deemed to have
waived the defense, that the death of plaintiff-
appellant's husband was not caused by violent
accidental external and visible means' as
contemplated in the insurance policy. The
Death Certificate (Exh. 9) and the Autopsy
Report (Exh. 10), more than controverted the
allegation of the plaintiff-appellant as to the
cause of death of her husband.  17
The insurance policy expressly provided that to be
compensable, the injury or death should be caused by
"violent accidental external and visible means." In
attempting to prove the cause of her husband's death,
all that petitioner could submit were a letter sent to her
by her husband's co-worker, stating that Gabriel died
when he tried to haul water out of a tank while its
submerged motor was still functioning,   and 18
petitioner's sinumpaang
salaysay   which merely confirmed the receipt and
19
stated contents of the letter. Said the appellate court
in this regard:
. . . . It must be noted that the only evidence
presented by her to prove the circumstances
surrounding her husband's death were her
purported affidavit and the letter allegedly
written by the deceased co-worker in Iraq. The
said affidavit however suffers from procedural
infirmity as it was not even testified to or
identified by the affiant (plaintiff-appellant)
herself. This self-serving affidavit therefore is
a mere hearsay under the rules, . . . .
xxx xxx xxx
In like manner, the letter allegedly written by
the deceased's co-worker which was never
identified to in court by the supposed author,
suffers from the same defect as the affidavit of
the plaintiff-appellant. 
20
Not one of the other documents submitted, to
wit, the POEA decision, dated 06 June
1984,   the death certificate issued by the
21
Ministry of Health of Iraq and the NBI autopsy
report,   could give any probative value to
22
petitioner's claim. The POEA decision did not
make any categorical holding on the specific
cause of Gabriel's death. Neither did the death
certificate issued by the health authorities in
Iraq nor the NBI autopsy report provide any
clue on the cause of death. All that appeared
to be clear was the fact of Gabriel's demise on
22 May 1982 in Iraq.
Evidence, in fine, is utterly wanting to establish that
the insured suffered from an accidental death, the risk
covered by the policy. In an accident insurance, the
insured's beneficiary has the burden of proof in
demonstrating that the cause of death is due to the
covered peril. Once that fact is established, the
burden then shifts to the insurer to show any excepted
peril that may have been stipulated by the parties. An
"accident insurance" is not thus to be likened to an
ordinary life insurance where the insured's death,
regardless of the cause thereof, would normally be
compensable. The latter is akin in property insurance
to an "all risk" coverage where the insured, on the
aspect of burden of proof, has merely to show the
condition of the property insured when the policy
attaches and the fact of loss or damage during the
period of the policy and where, thereafter, the burden
would 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 claimant of the
insurance proceeds to initially prove that the loss is
caused by the covered peril.
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.
SO ORDERED.