G.R. No. 142913 - Estate of Salvador Serra Serra vs. Heirs of Hernaez

The insured, Emilia Chan Lugay, owner of the Cebu Filipina Press, acquired seven fire insurance policies issued by six different insurance companies for a total sum of P4,000,000.
The policies, issued by Cathay Insurance Company, Empire Insurance Company, Union Insurance Society of Canton, Ltd., Paramount Insurance Corp., Philippine British Insurance Company (two policies), and Philippine First Insurance Company, covered a one-storey building constructed of strong materials and the associated stocks of printing materials, papers, and general merchandise.

The insured property comprised a one-storey building of strong materials housing the Cebu Filipina Press, located at UNNO Pres. Quirino cor. Don V. Sotto Sts., Mabolo, Cebu City.
The policies described the insured property broadly as stocks of printing materials and other items usual in the trade, with a note of co-insurers mentioned on each policy.
Except for one policy (Paramount Insurance Corp.’s), all were renewals of earlier policies covering the same risks.

On December 18, 1981, at approximately ten in the morning, the Cebu Filipina Press was destroyed by an electrical fire that razed the building along with all stocks and merchandise.
The insured, Mrs. Lugay, subsequently submitted sworn Statements of Loss and Formal Claims to each insurer on January 15, 1982, along with the necessary proofs of loss as required by the adjusters.
The actual claim amounted to P4,595,000, while the policies summed up to P4,000,000, indicating a dispute over the precise quantum of loss and the insurer’s obligation.

Despite prompt submission of the required proofs of loss during a period from January 15, 1982, through June 21, 1982, the insurers delayed payment for nearly ten months.
The insurance companies denied liability citing alleged violations of certain policy conditions, misdeclaration, and even a claim of arson (though the latter was not vigorously pursued).
Pre-trial negotiations saw the petitioners offering to settle at 50% of the claimed amount, which the insured rejected, insisting on full recovery.

The trial court rendered judgment in favor of the insured, directing payment by each insurance company according to the face value of the respective policies, together with additional expenses, attorney’s fees, and double interest computed at twice the ceiling rate prescribed by the Monetary Board.
The Court of Appeals affirmed the trial court’s decision in toto.
On appeal to the Supreme Court, the petitioners contested five main grounds related to the timeliness of the cause of action, sufficiency of proof, alleged inflation of the loss, the award of double interest, and the quantum of attorney’s fees awarded.

Whether the insured’s cause of action had already accrued at the time she filed the complaint on December 15, 1982, given the statutory period for payment under Section 243 of the Insurance Code.
Whether the action was premature as contended by the petitioners.

Whether the insured complied with the stipulated conditions of the insurance policies, particularly Condition No. 13 concerning the submission of proofs of loss, despite the insurers’ demand for additional documents such as bank statements.
Whether the proofs of loss filed by the insured were sufficient to warrant payment.

Whether the insured’s claim for loss, amounting to P4,595,000, was improperly inflated beyond the face amount of the policies.
Whether the evidence supported the insured’s claim being “more than enough” to justify the payment on the policies.

Whether awarding double interest (twice the ceiling prescribed by the Monetary Board) was proper under Sections 243 and 244 of the Insurance Code in light of any alleged unreasonable delay.
The appropriateness of characterizing the delay in payment as “unreasonable” and thus justifying the double interest award.

Whether the award of attorney’s fees amounting to 20% of the policy proceeds was excessive.
If the trial court and appellate court erred in awarding such fees given the circumstances and the substantial efforts expended by the insured in pursuing the claim.