Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76101-02 September 30, 1991
TIO KE CIO, petitioner,
vs.
TE ONOR!"#E COURT O$ !PPE!#S %&' E!STERN !SSUR!NCE !N( SURET)
CORPOR!TION,respondents.
Rodolfo M. Morelos for petitioner.
Ferrer, Mariano, Sangalang & Gatdula for private respondent.

$ERN!N, C.J.:p
The issue in this petition for certiorari and prohibition is the leal rate of interest to be i!posed in
actions for da!aes arisin fro! unpaid insurance clai!s. Petitioner Tio "he #hio clai!s that it
should be t$elve %&'() per cent pursuant to *rticles '+, and '++ of the Insurance #ode $hile
private respondent -astern *ssurance and Suret. #orporation %-*S#O) clai!s that it should be si/
%0() per cent under *rticle ''12 of the #ivil #ode.
The facts are as follo$s3 On Dece!ber &4, &254, petitioner Tio "he #hio i!ported one thousand
%&,111) bas of fish!eal valued at 6,0,111.,1 fro! *ro I!pe/, 7.S.*. Dallas, Te/as, 7.S.*. The
oods $ere insured $ith respondent -*S#O and shipped on board the M8V Pes9ov, a vessel o$ned
b. :ar -astern Shippin #o!pan.. ;hen the oods reached Manila on <anuar. '4, &252, the. $ere
found to have been da!aed b. sea $ater $hich rendered the fish!eal useless. Petitioner filed a
clai! $ith -*S#O and :ar -astern Shippin. =oth refused to pa.. ;hereupon, petitioner sued the!
before the then #ourt of :irst Instance of #ebu, =ranch II for da!aes. -*S#O, as the insurer, filed
a counterclai! aainst the petitioner for the recover. of P&4,,45.40 representin the unpaid
insurance pre!iu!s.
On <une ,1, &24', the trial court rendered >ud!ent orderin -*S#O and :ar -astern Shippin to
pa. petitioner solidaril. the su! of P&1?,240.04 less the a!ount of P&4,,45.40 for unpaid pre!iu!s
$ith interest at the leal rate fro! the filin of the co!plaint, the su! of P&?,111.11 as attorne.@s
fees and the costs.
1
The >ud!ent beca!e final as to -*S#O but the shippin co!pan. appealed to the #ourt of
*ppeals and $as absolved fro! liabilit. b. the said court in *#AB.R. No. 11&0&, entitled "Tio Khe
Chio vs. Eastern ssurance and Suret! Corporation."
The trial court, upon !otion b. petitioner, issued a $rit of e/ecution aainst -*S#O. The sheriff
enforcin the $rit reportedl. fi/ed the leal rate of interest at t$elve %&'(). Respondent -*S#O
!oved to Cuash the $rit allein that the leal interest to be co!puted should be si/ %0() per cent
per annu! in accordance $ith *rticle ''12 of the #ivil #ode and not t$elve %&'() per cent as
insisted upon b. petitioner@s counsel. In its order of <ul. ,1, &240, the trial court denied -*S#O@s
!otion. -*S#O then filed a petition for certiorari and prohibition before the #ourt of *ppeals.
On <ul. ,1, &240, the *ppellate #ourt rendered the assailed >ud!ent, the dispositive part of $hich
states3
;H-R-:OR-, the order dated <ul. ,1, &240 is hereb. S-T *SID- in so far as it fi/es the interest at
&'( on the principal a!ount of P45,?24.4' fro! the date of filin of the co!plaint until the full
pa.!ent of the a!ount, and the interest that the private respondent is entitled to collect fro! the
petitioner is hereb. reduced to 0( per annu!.
No pronounce!ent as to costs.
2
In disputin the aforesaid decision of the #ourt of *ppeals, petitioner !aintains that not onl. is it
un>ust and unfair but it is also contrar. to the correct interpretation of the fi/in of interest rates under
Sections '+, and '++ of the Insurance #ode. *nd since petitioner@s clai!s is based on an insurance
contract, then it is the Insurance #ode $hich !ust overn and not the #ivil #ode.
;e rule for respondent -*S#O. The leal rate of interest in the case at bar is si/ %0() per annu! as
correctl. held b. the *ppellate #ourt.
Section '+, of the Insurance #ode provides3
The a!ount of an. loss or da!ae for $hich an insurer !a. be liable, under
an. polic. other than life insurance polic., shall be paid $ithin thirt. da.s
after proof of loss is received b. the insurer and ascertain!ent of the loss or
da!ae is !ade either b. aree!ent bet$een the insured and the insurer or
b. arbitrationD but if such ascertain!ent is not had or !ade $ithin si/t. da.s
after such receipt b. the insurer of the proof of loss, then the loss or da!ae
shall be paid $ithin ninet. da.s after such receipt. Refusal or failure to pa.
the loss or da!ae $ithin the ti!e prescribed herein $ill entitle the assured
to collect interest on the proceeds of the polic. for the duration of the dela. at
the rate of t$ice the ceilin prescribed b. the Monetar. =oard, unless such
failure or refusal to pa. is based on the round that the clai! is fraudulent.
Section '++ of the afore!entioned #ode also provides3
In case of an. litiation for the enforce!ent of an. polic. or contract of
insurance, it shall be the dut. of the #o!!issioner or the #ourt, as the case
!a. be, to !a9e a findin as to $hether the pa.!ent of the clai! of the
insured has been unreasonabl. denied or $ithheldD and in the affir!ative
case, the insurance co!pan. shall be ad>uded to pa. da!aes $hich shall
consist of attorne.@s fees and other e/penses incurred b. the insured person
b. reason of such undeniable denial or $ithholdin of pa.!ent plus interest
of t$ice the ceilin prescribed b. the Monetar. =oard of the a!ount of the
clai! due the insured, fro! the date follo$in the ti!e prescribed in section
t$o hundred fort.At$o or in section t$o hundred fort.Athree, as the case !a.
be, until the clai! is full. satisfiedD Provided, That the failure to pa. an. such
clai! $ithin the ti!e prescribed in said sections shall be considered pri!a
facie evidence of unreasonable dela. in pa.!ent.
In the case at bar, the #ourt of *ppeals !ade no findin that there $as an un>ustified refusal or
$ithholdin of pa.!ent on petitioner@s clai!. In fact, respondent court had this to sa. on -*S#O@s
refusal to settle the clai! of petitioner3
... -*S#O@s refusal to settle the clai! to Tio "he #hio $as based on so!e
round $hich, $hile not sufficient to free it fro! liabilit. under its polic.,
nevertheless is sufficient to neate an. assertion that in refusin to pa., it
acted un>ustifiabl..
/// /// ///
The case posed so!e enuine issues of interpretation of the ter!s of the
polic. as to $hich persons !a. honestl. differ. This is the reason the trial
court did not sa. -*S#O@s refusal $as un>ustified.
3
Si!pl. put, the aforecited sections of the Insurance #ode are not pertinent to the instant case. The.
appl. onl. $hen the court finds an unreasonable dela. or refusal in the pa.!ent of the clai!s.
Neither does #ircular No. +&0 of the #entral =an9 $hich too9 effect on <ul. '2, &25+ pursuant to
Presidential Decree No. &&0 %7sur. Ea$) $hich raised the leal rate of interest fro! si/ %0() to
t$elve %&'() per cent appl. to the case at bar as b. the petitioner. The ad>usted rate !entioned in
the circular refers onl. to loans or forbearances of !one., oods or credits and court >ud!ents
thereon but not to court >ud!ents for da!aes arisin fro! in>ur. to persons and loss of propert.
$hich does not involve a loan.
*
In the case of "hilippine Ra##it $us %ines, &nc. vs. Cru', B.R. No. 5&1&5, <ul. '4, &240, &+, S#R*
&?4, the #ourt declared that the leal rate of interest is si/ %0() per cent per annu!, and not t$elve
%&'() per cent, $here a >ud!ent a$ard is based on an action for da!aes for personal in>ur., not
use or forbearance of !one., oods or credit. In the sa!e vein, the #ourt held in GS&S vs. Court of
ppeals, B.R. No. ?'+54, October ,1, &240, &+? S#R* ,&&, that the rates under the 7sur. Ea$
%a!ended b. P.D. &&0) are applicable onl. to interest b. $a. of co!pensation for the use or
forbearance of !one., interest b. $a. of da!aes is overned b. *rticle ''12 of the #ivil #ode.
#learl., the applicable la$ is *rticle ''12 of the #ivil #ode $hich reads3
If the obliation consists in the pa.!ent of a su! of !one. and the debtor
incurs in dela., the inde!nit. for da!aes, there bein no stipulation to the
contrar., shall be the pa.!ent of interest areed upon, and in the absence of
stipulation, the leal interest $hich is si/ per cent per annu!.
*nd in the liht of the fact that the contendin parties did not allee the rate of interest stipulated in
the insurance contract, the leal interest $as properl. peed b. the *ppellate #ourt at si/ %0() per
cent.
;H-R-:OR-, in vie$ of the foreoin, the petition is D-NI-D for lac9 of !erit.
SO ORD-R-D.
Gutierre', (r., Feliciano, $idin and )avide, (r., ((., concur.

$oot&ote+
& Rollo, p. +?.
' Rollo, p. &&.
, Rollo, pp. 2, &&.
+ Refor!ina vs. To!ol, <r., B.R. No. ?2120, October &&, &24?, &,2AS#R*
'01.
The Ea$phil Pro>ect A *rellano Ea$ :oundation