Malayan Insurance Co., Inc. vs. Lin

The filing of a civil case for collection of insurance proceeds does not constitute forum shopping when pursued concurrently with an administrative complaint for unfair claim settlement practice before the Insurance Commission, provided that the reliefs sought, issues involved, quantum of evidence required, and procedures followed are distinct such that a judgment in one proceeding would not amount to res judicata in the other.

Emma Concepcion L. Lin obtained loans from Rizal Commercial Banking Corporation (RCBC) secured by six clustered warehouses in Plaridel, Bulacan. Five of these warehouses were insured with Malayan Insurance Co., Inc. (Malayan) against fire for ₱56 million, while the remaining warehouse was insured for ₱2 million. On February 24, 2008, the five warehouses were destroyed by fire. The Bureau of Fire Protection (BFP) issued a Fire Clearance Certification on April 8, 2008, determining the cause of fire as accidental. Despite this certification, Malayan denied Lin's insurance claim based on the findings of its forensic investigators that the fire was caused by arson. Lin sought assistance from the Insurance Commission (IC), which recommended that Malayan pay the claim or accord weight to the BFP's findings. Malayan refused to comply with this recommendation.

• Nature of the Action: Lin instituted Civil Case No. 10-122738 against Malayan, its officers (Yvonne Yuchengco, Atty. Emmanuel Villanueva, Sonny Rubin, Engr. Francisco Mondelo, and Michael Requijo), and RCBC for Collection of Sum of Money with Damages. She alleged that Malayan unjustifiably refused to pay her fire insurance claim despite the BFP's determination that the fire was accidental, and that RCBC refused to pursue the insurer while demanding payment and compounding interest on her loans.
• Reliefs Sought in Civil Case: Lin prayed for payment of the insurance claim plus interest; extinguishment of her loans and mortgage to RCBC as of February 2008; injunction against foreclosure; and award of filing fees, exemplary damages, and attorney's fees.
• The Administrative Complaint: On June 17, 2010, Lin filed Administrative Case No. 431 before the IC against Malayan, represented by Yvonne Yuchengco. She alleged unfair claim settlement practice under Section 241 in relation to Section 247 of the Insurance Code due to Malayan's unjustified refusal to settle her claim despite the BFP findings and the IC recommendation. She prayed for the revocation or suspension of Malayan's license to operate as a non-life insurance company until it complied with the IC Resolution to accord weight to the BFP's findings.
• Motion to Dismiss: Petitioners filed a Motion to Dismiss the civil case on August 17, 2010, arguing that the administrative case was instituted to prompt the IC to order payment of the insurance claim; that there was identity of parties because the same officers were involved; that there was identity of causes of action and reliefs because the administrative case was merely a disguised claim for payment; and that Lin violated her Certification on Non-Forum Shopping by failing to notify the RTC of the administrative case within five days.
• Lower Court Rulings: The RTC denied the Motion to Dismiss and the Motion for Reconsideration, finding distinct reliefs in the two cases and no res judicata. The CA upheld the RTC, finding that only the element of identity of parties was present, but not identity of rights or reliefs, and that the judgments would not be res judicata to each other.

• Identity of Parties: Petitioners argued that substantial identity of parties existed for res judicata purposes, as the same individuals represented Malayan in both proceedings, and Lin was the complainant in both actions.
• Identity of Causes of Action: Petitioners maintained that the ultimate objective of both cases was to compel Malayan to pay the fire insurance claim, constituting identity of causes of action regardless of the different nomenclature used.
• Res Judicata: Petitioners contended that Lin could not escape the operation of res judicata merely by varying the form of action or method of presenting the case.
• Inapplicability of Precedents: Petitioners argued that Go v. Office of the Ombudsman was inapplicable because it involved unreasonable delay in withholding claims, not whether insurers should pay the claim; and that Almendras Mining Corporation v. Office of the Insurance Commission was inapplicable because the parties therein agreed to submit the case solely on the issue of license revocation.
• Irreparable Injury: Petitioners asserted they would suffer irreparable injury from having to defend themselves in a case that should have been dismissed for forum shopping.

• Distinct Nature of Actions: Lin countered that the administrative case for unfair claim settlement practice could proceed simultaneously with the civil case for collection, as held in Go v. Office of the Ombudsman, because a judgment in one would not amount to res judicata in the other due to differences in issues, quantum of evidence, and procedure.
• No Identity of Parties: Lin argued she was only a complaining witness in the administrative case, where the real party in interest was the IC, whereas she was the plaintiff in the civil case.
• Different Causes of Action and Reliefs: Lin maintained that the civil case involved Malayan's failure to pay the insurance claim, while the administrative case involved unfair claim settlement practice; the civil case sought payment of money and damages, while the administrative case sought revocation or suspension of the insurer's license.
• Purpose of Forum Shopping Rule: Lin argued that the rule against forum shopping was designed to serve justice and could not be interpreted to subvert that purpose.

• Forum Shopping: Whether the simultaneous filing of a civil case for collection of insurance proceeds and an administrative case for unfair claim settlement practice constitutes forum shopping.
• Certification Compliance: Whether Lin violated her undertaking in the Certification on Non-Forum Shopping by failing to notify the RTC of the pending administrative case within five days.

• Forum Shopping: Forum shopping was not established. The elements of litis pendentia and res judicata were not present. While identity of parties existed, there was no identity of rights asserted and reliefs prayed for. The civil case sought recovery of the insurance claim and damages based on contractual breach, requiring preponderance of evidence under the Rules of Court. The administrative case sought the revocation or suspension of Malayan's license based on unfair claim settlement practice, requiring substantial evidence under the IC's regulatory authority. The issues, quantum of evidence, and procedures were distinct, such that any judgment in the civil case would not amount to res judicata in the administrative case, and vice versa.
• Certification Compliance: The failure to notify the RTC of the administrative case within five days did not warrant dismissal because the administrative case was not a similar action involving the same issues and reliefs as the civil case. The certification requirement applies only to pending actions involving the same issues, which was not the case here.
• Grave Abuse of Discretion: Petitioners failed to prove that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying the Motion to Dismiss. An order denying a motion to dismiss is interlocutory and not appealable, and certiorari lies only where there is a patent and gross abuse of discretion equivalent to an evasion of a positive duty or virtual refusal to perform a duty enjoined by law.

• Forum Shopping — The essence of forum shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. It exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another.
• Litis Pendentia — The requisites are: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars is such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.
• Res Judicata — The requisites are: (1) the former judgment must be final; (2) it must have been rendered by a court having jurisdiction over the subject matter and over the parties; (3) it must be a judgment on the merits; and (4) there must be, between the first and second actions, (a) identity of parties, (b) identity of subject matter, and (c) identity of cause of action.
• Concurrent Jurisdiction of Courts and Insurance Commission — Civil cases for collection of insurance proceeds and administrative cases for unfair claim settlement practice may proceed simultaneously. The findings of the trial court will not foreclose the administrative case, or vice versa. Although the parties and factual backdrop may be the same, the issues to be resolved, quantum of evidence (preponderance of evidence in civil courts vs. substantial evidence in administrative proceedings), and procedure (Rules of Court vs. administrative rules) are different. The Insurance Commission exercises regulatory power (issuance, revocation, or suspension of Certificates of Authority under Sections 241 and 247 of the Insurance Code) distinct from its adjudicatory authority (settlement of claims not exceeding ₱100,000 under Section 416).

• "The essence of forum shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. It exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another."
• "The findings of the trial court will not necessarily foreclose the administrative case before the [IC], 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."
• "The settled rule is that criminal and civil cases are altogether different from administrative matters, such that the disposition in the first two will not inevitably govern the third and vice versa."

• Go v. Office of the Ombudsman, 460 Phil. 14 (2003) — Controlling precedent establishing that a civil case for collection of insurance proceeds and an administrative case for unfair claim settlement practice may proceed simultaneously because they involve different issues, quantum of evidence, and reliefs, and judgments in one do not amount to res judicata in the other.
• Almendras Mining Corporation v. Office of the Insurance Commission, 243 Phil. 805 (1988) — Controlling precedent distinguishing the regulatory and adjudicatory functions of the Insurance Commission under the Insurance Code.
• Bradford United Church of Christ, Inc. v. Ando, G.R. No. 195669, May 30, 2016 — Cited for the definition of the elements of litis pendentia.
• Spouses Melo v. Court of Appeals, 376 Phil. 204 (1999) — Cited for the definition of the elements of litis pendentia.
• Custodio v. Corrado, 479 Phil. 415 (2004) — Cited for the requisites of res judicata.
• Suzuki v. Atty. Tiamson, 508 Phil. 130 (2005) — Cited for the principle that criminal and civil cases are different from administrative matters.
• P/Chief Inspector Billedo v. Judge Wagan, 669 Phil. 221 (2011) — Cited for the rule that an order denying a motion to dismiss is interlocutory and not appealable.
• Spouses Carlos v. Court of Appeals, 562 Phil. 834 (2007) — Cited for the definition of grave abuse of discretion.
• Unicapital, Inc. v. Coming, Jr., 717 Phil. 689 (2013) — Cited for the definition of grave abuse of discretion.

• Section 5, Rule 7, Rules of Court — Requires certification against forum shopping and imposes duties to report pending similar actions; violation constitutes grounds for dismissal.
• Section 241 (now Section 247), Presidential Decree No. 1460 (Insurance Code), as amended — Enumerates grounds for suspension or revocation of an insurer's Certificate of Authority, including unfair claim settlement practices.
• Section 247 (now Section 254), Presidential Decree No. 1460 (Insurance Code), as amended — Related provision on unfair claim settlement practices (now Section 254 under Republic Act No. 10607).
• Section 414 (now Section 437), Presidential Decree No. 1460 (Insurance Code), as amended — Grants the Insurance Commissioner regulatory authority to issue, refuse, revoke, or suspend Certificates of Authority.
• Section 416 (now Section 439), Presidential Decree No. 1460 (Insurance Code), as amended — Grants the Insurance Commissioner adjudicatory authority to settle claims not exceeding ₱100,000, concurrent with civil courts.
• Section 244 (now Section 250), Presidential Decree No. 1460 (Insurance Code), as amended — Prescribes damages for unreasonable delay or denial of claims.

Maria Lourdes P.A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Estela M. Perlas-Bernabe, and Alfredo Benjamin S. Caguioa.