G.R. No. 85296 - Zenith Insurance Corp. vs. Court of Appeals

On January 25, 1983, private respondent Lawrence Fernandez entered into an insurance contract with Zenith Insurance Corporation, insuring his car for own damage under Policy No. 50459.
On July 6, 1983, the insured car was involved in an accident which resulted in actual damages amounting to P3,640.00.

After allegedly experiencing a two-month delay by Zenith in addressing his claim, Fernandez filed a complaint with the Regional Trial Court (RTC) of Cebu, Branch XX, in Civil Case No. CEB-1215.
In his complaint, Fernandez sought:

Pre-trial was initially scheduled on October 17, 1983, but was rescheduled to November 4, 1983, allegedly to explore settlement options at a lower amount than that claimed by Fernandez.
Despite pre-trial proceedings being terminated on November 14, 1983, Fernandez proceeded to present his evidence.
Zenith Insurance Corporation failed to present its evidence due to its nonappearance without justification.
Consequently, on August 23, 1984, the RTC submitted the case for decision without Zenith’s evidence, a decision later contested by Zenith through a petition for certiorari which was eventually denied.

Before the expiration of the appeal period, the RTC ordered the execution of its decision pending appeal.
Zenith later filed a notice of appeal and raised three primary errors:

Denial of the opportunity to adduce evidence.
Incorrect computation and awarding of the actual damage claim.
Exceeding in the awards for moral damages, exemplary damages, and attorneys' fees compared to what was prayed for in the complaint.

On August 17, 1988, the Court of Appeals reviewed the case and affirmed in toto the RTC decision, indicating that the matter regarding the denial of evidence had already been settled and was no longer open for appeal.
The resultant awards were ultimately modified:

Actual damages of P3,640.00 were upheld;
Moral damages were reduced to P10,000.00;
The award for exemplary damages was deleted; and
Attorneys' fees of P5,000.00 and litigation expenses of P3,000.00 were sustained.

Rendered awards for moral damages, exemplary damages, and attorneys' fees exceeding the amounts prayed for in the complaint, and
Erred in awarding actual damages in the amount of P3,640.00 rather than a lower computed figure based on deductible franchise and depreciation provisions allegedly contained in the insurance contract.

Whether the trial court erred in denying Zenith the opportunity to present its evidence during the trial, thereby prejudicing its defense.
Whether the lower court committed a reversible error by awarding actual damages of P3,640.00 instead of a lesser amount after allegedly deducting a deductible franchise of P250.00 and 20% depreciation on parts.
Whether the awarding of moral damages at P20,000.00, exemplary damages at P20,000.00, and attorneys' fees at P5,000.00 exceeded what was prayed for in the complaint and lacked factual or legal basis.
Whether the Court of Appeals correctly applied the provisions of the Insurance Code and the New Civil Code in assessing damages for the alleged unreasonable delay in the payment of the insurance claim.