The Rules of Procedure for Small Claims Cases in the Insurance Commission

September 1, 2016

INSURANCE MEMORANDUM CIRCULAR NO. 001-16

RULES OF PROCEDURE FOR SMALL CLAIMS CASES IN THE INSURANCE COMMISSION

Pursuant to the provisions of Sections 437, 438 and 439 of Insurance Code of the Philippines, as amended by R.A. No. 10607, and Section 55 of the Pre-Need Code of the Philippines, the following Rules of Procedure for Small Claims Cases are hereby adopted and promulgated:

SECTION 1. Title. — This Rules shall be known as "The Rules of Procedure for Small Claims Cases in the Insurance Commission."

SECTION 2. Scope. — This Rules shall govern hearings of such claims and complaints in actions before the Insurance Commission where the amount being claimed or sued upon does not exceed Two Hundred Thousand Pesos (P200,000.00) in any single claim, exclusive of interest, costs, and attorney's fees. Except as to the amount of actual damages, legal interest, attorney's fees and costs, which include filing fees and litigation expenses, no other form of damages shall be recoverable.

SECTION 3. Definition of Terms. — For purposes of this Rule:

(a) Complainant refers to the party, whether a natural or juridical person, who initiated a small claims action against an insurance company, pre-need company, or mutual benefit association doing business in the Philippines, for 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 a contract of reinsurance it may have entered into, or for which a pre-need company may be held liable under any pre-need policy it has issued, or for which a mutual benefit association may be held liable under the membership certificates it has issued to its members. The term also includes a respondent who has filed a compulsory counterclaim;

(b) Respondent is the insurance company, pre-need company, or mutual benefit association against whom the relief sought is directed. The term also includes a complainant against whom a compulsory counterclaim is filed;

(c) Person is a natural individual, corporation, partnership, limited liability partnership, association, or other juridical entity endowed with personality by law;

(d) Motion means a party's request, written or oral, formal or informal to the Commission for an order or other action;

(e) Good cause means circumstances sufficient to justify the requested order or other action, as determined by the hearing officer;

(i) Affidavit means a written statement or declaration of facts of personal knowledge that are sworn to or affirmed to be true;

(g) Actionable Document refers to the insurance policy, contract of insurance, contract of suretyship, contract of reinsurance, pre-need contract, or certificate of insurance for which a respondent may be held answerable. It also includes an affidavit executed by the complainant stating why the complainant cannot attach a copy of the policy or any of the required documents;

(h) Next-of-kin refers to relatives who share in the estate according to the statute of distribution including those claiming per stripes or by representation;

(i) Commission refers to the Insurance Commission and its District Offices; and

(j) Hearing Officer refers to a lawyer/s under the Claims Adjudication Division and the District Offices with the position of at least IC Attorney I;

(k) Compulsory Counterclaim is limited to claims for attorney's fees and costs by the respondent against a complainant.

SECTION 4. Commencement of Small Claims Action. — A small claims action under this Rules may be commenced by any of the following, to wit:

a. By filing with the Commission of an accomplished and verified Statement of Claim (Form 1-IC) in duplicate, accompanied by a Certification of Non-forum Shopping (Form 1-A-IC), and two (2) photocopies of the actionable document/s subject of the claim, written notice of claim to the respondent with proof of service, written denial of the claim made by the respondent, as well as the affidavits of witnesses and other evidence to support the claim. No evidence shall be allowed during the hearing which was not attached to or submitted together with the Claim, unless good cause is shown for the admission of additional evidence; or

b. By filing a verified complaint with a Certificate of Non-Forum Shopping prepared by a lawyer provided that the complaint states the following material allegations:

i. The names and addresses of the parties;

ii. A brief statement of facts narrating how and when the loss occurred;

iii. The grounds relied upon in support of the claim;

iv. The amount of the claim which should not exceed Two Hundred Thousand Pesos (P200,000.00) exclusive of interest, costs, and attorney's fees;

v. An allegation that there is final denial of the claim made by the respondent; and

vi. That there is no pending mediation conference in the Public Assistance and Mediation Division of this Commission.

vii. Accompanied by photocopies of the actionable document/s subject of the claim, written notice of claim to the respondent with proof of service, as well as the affidavits of witnesses and other evidence to support the claim.

SECTION 5. Joinder of Claims. — Complainant may join in a single statement of claim one or more separate small claims against a respondent provided that the total amount claimed, exclusive of interest and costs, does not exceed P200,000.00.

SECTION 6. Affidavits. — The affidavits submitted under this Rule shall state only facts of direct personal knowledge of the affiants to be admissible as evidence.

SECTION 7. Payment of Filing Fees. — Unless the complainant is allowed to litigate as an indigent, the basis in determining the filing fee is the principal amount claimed, exclusive of interest and attorney's fees, is as follows:

i. Less than P100,000.00 — P1,000.00

ii. P100,000.00 or more but less than P200,000.00 — P2,000.00

Plus an amount equivalent to one percent (1%) of the filing fee but in no case lower than Ten Pesos (P10.00) to be collected as Legal Research Fund Fee in accordance with R.A. No. 3870, as amended by Presidential Decree No. 1856 dated December 26, 1982.

A claim filed with a Motion to Sue as Indigent (Form 6-IC) shall be referred to the Division Manager of the Claims Adjudication Division or the District Offices for immediate action. If the motion is granted, the case shall be assigned to the Hearing Officer designated to hear small claims cases and the filing fees shall be a lien on any judgment rendered in the case favorably to the indigent litigant, unless the Commission otherwise provides. If the motion is denied, the complainant shall be given five (5) days within which to pay the docket fees, otherwise, the case shall be dismissed without prejudice.

SECTION 8. Payment of Summons Fee. — In addition to the payment of the filing fee, the complainant shall pay the amount of P1,000.00, as fee for the service of summons and processes. In no case shall a complainant, even if declared an indigent, be exempt from the payment of the Summons Fee.

SECTION 9. Dismissal of the Claim. — After the Hearing Officer or Division Manager determines that the case falls under this Rule, the Commission may motu proprio order the dismissal of the case at any time based on the allegations of the Statement of Claim and evidence attached thereto for any of the grounds for the dismissal of a complaint under Rule 6 of Insurance Memorandum Circular No. 2014-01 and Rule 16 of the Rules of Court.

SECTION 10. Summons and Notice of Hearing. — If no ground for dismissal is found, upon payment of the Filing Fee and Summons Fee, the Commission shall forthwith issue a Summons (Form 2-IC) on the day of receipt of the Statement of Claim, directing the respondent to submit a verified Response.

The Commission shall also issue a Notice (Form 3-IC) to both parties, directing them to appear before it on a specific date and time for hearing, with a warning that no unjustified postponement shall be allowed, as provided in Section 19 of this Rule.

The Summons and Notice to be served on the respondent shall be accompanied by a copy of the Statement of Claim and documents submitted by the complainant, and a copy of the Response (Form 4-IC) to be accomplished by the respondent. The Notice shall contain an express prohibition against the filing of a motion to dismiss or any other motion under Section 13 of this Rule.

SECTION 11. Response. — The respondent shall file with the Commission and serve on the complainant within a non-extendible period of ten (10) days from receipt of summons, a verified Response by any of the following means, to wit:

a. By filing with the Commission and serving on the complainant a duly accomplished and verified Response (Form 4-IC). The Response shall be accompanied by photocopies of the written denial of complainant's claim with the grounds for its denial stated therein, the adjuster's report, if any, as well as affidavits of witnesses and other evidence in support thereof. No evidence shall be allowed during the hearing which was not attached to or submitted together with the Response, unless good cause is shown for the admission of additional evidence. The grounds for the dismissal of the claim, under Rule 6 of Insurance Memorandum Circular No. 2014-01 and Rule 16 of the Rules of Court, should be pleaded; or

b. By filing a verified Response prepared by a lawyer provided that the response contains the following, to wit:

i. The names and addresses of the parties;

ii. A brief statement of facts narrating how and when the loss occurred;

iii. The grounds relied upon in the denial of the claim;

iv. Any of the grounds for the dismissal of an action under Rule 6 of Insurance Memorandum Circular No. 2014-01 and under Rule 16 of the Rules of Court, if any; and

v. Accompanied by photocopies of the written denial of complainant's claim with the grounds for its denial stated therein, the adjuster's report, if any, as well as affidavits of witnesses and other evidence in support thereof.

SECTION 12. Effect of Failure to File Response. — Should the respondent fail to file his Response within the required period, the Commission shall render judgment as may be warranted by the Statement of Claim and other evidence attached.

SECTION 13. Prohibited Pleadings and Motions. — The following pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule:

(a) Motion to dismiss the complaint;

(b) Motion for a bill of particulars;

(c) Motion for new trial, or for reconsideration of a judgment, or for reopening of trial;

(d) Petition for relief from judgment;

(e) Motion for extension of time to file pleadings, affidavits, or any other paper;

(f) Memoranda;

(g) Petition for certiorari, mandamus, or prohibition against any interlocutory order issued by the Commission;

(h) Motion to declare the respondent in default;

(i) Dilatory motions for postponement;

(j) Reply;

(k) Third-party complaints; and

(l) Interventions.

SECTION 14. Availability of Forms; Assistance by Personnel. — The personnel of the Claims Adjudication Division and the District Offices shall provide such assistance as may be requested by a complainant or a respondent regarding the availability of forms and other information about the coverage, requirements as well as procedure for small claims cases.

SECTION 15. Appearance. — The parties shall appear at the designated date of hearing personally.

Appearance through a representative may be allowed for a valid cause. The representative of an individual-party must not be a lawyer, and must be related to or next-of-kin of the individual-party. Juridical entities shall not be represented by a lawyer in any capacity.

The representative must be authorized under a Special Power of Attorney (Form 7-IC) to enter into an amicable settlement of the dispute and to enter into stipulations or admissions of facts and of documentary exhibits.

SECTION 16. Appearance of Attorneys Not Allowed. — No attorney shall appear in behalf of or represent a party at the hearing, unless the attorney is the complainant.

If the Hearing Officer determines that a party cannot properly present his/her claim or defense and needs assistance, the Hearing Officer may allow another individual who is not an attorney to assist that party upon the latter's consent.

SECTION 17. Non-Appearance of Parties. — Failure of the complainant to appear shall be cause for the dismissal of the claim without prejudice. The respondent who appears shall be entitled to judgment only on a compulsory counterclaim.

Failure of the respondent to appear shall have the same effect as failure to file a Response under Section 12 of this Rule.

Failure of both parties to appear shall cause the dismissal of both the claim and counterclaim without prejudice.

SECTION 18. Postponement When Allowed. — A request for postponement of a hearing may be granted only upon proof of the physical inability of the party to appear before the Commission on the scheduled date and time and upon payment of postponement fee in the amount of Five Hundred Pesos (P500.00) as provided under IC Circular Letter No. 2014-15. A party may avail of only one (1) postponement.

SECTION 19. Duty of the Hearing Officer. — At the beginning of the session, the hearing officer shall read aloud a short statement explaining the nature, purpose and the rule of procedure of small claims cases.

SECTION 20. Hearing. — The Hearing Officer shall endeavor to bring the parties to an amicable settlement of their dispute. Any settlement of the dispute shall be reduced into writing, signed by the parties and submitted to the Division Manager for approval (Form 8-IC).

Settlement discussions shall be strictly confidential and any reference to any settlement made in the course of such discussions shall be punishable by contempt.

SECTION 21. Failure of Settlement. — If efforts at settlement fail, the hearing shall proceed in an informal and expeditious manner and shall be terminated within five (5) hearing days.

SECTION 22. Decision. — The Commission shall render its decision within thirty (30) days from the last scheduled hearing based on evidence presented. The decision shall immediately be entered in the docket for small claims cases and a copy served to the parties.

The decision shall be final and unappealable.

SECTION 23. Execution. — Upon motion (Form 11-IC) by the interested party, a Pre-Execution Conference shall be set by the Hearing Officer and an Order of execution and satisfaction of judgement shall be executed.

SECTION 24. Applicability Insurance Memorandum Circular No. 2014-01 and of the Rules of Civil Procedure. — Insurance Memorandum Circular No. 2014-01 and the Rules of Civil Procedure shall be suppletory insofar as they are not inconsistent with this Rule.

SECTION 25. Separability Clause. — If any provision of this Code or any part hereof be declared invalid or unconstitutional, the remainder of the law or other provisions not otherwise affected shall remain valid and subsisting.

SECTION 26. Effectivity. — This Circular shall be published in any of the top three (3) major broadsheet newspapers circulated nationwide and shall take effect on September 1, 2016.

(SGD.) EMMANUEL F. DOOCInsurance Commissioner

FORM 1-IC

Statement of Claim

FORM 1-A-IC

Verification and Certification against Non-Forum Shopping

FORM 2-IC

Summons

FORM 3-IC

Notice of Hearing

FORM 4-IC

Response

FORM 5-SCC

Plaintiff's Return/Manifestation

FORM 5-A-SCC

Plaintiff's Return/Manifestation

FORM 6-IC

Motion to Plead as Indigent

FORM 7-IC

Special Power of Attorney

FORM 8-IC

Motion for Approval of Compromise Agreement

FORM 11-IC

Motion for Execution