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SEGUROS,
INC., petitioner,
vs.
APPEALS and MILAGROS CAYAS ,
When the decision in Civil Case No. NC-794 was about to be executed
against her, Milagros Cayas led a complaint against PCSI in the Oce of the
Insurance Commissioner praying that PCSI be ordered to pay P40,000.00 for all
the claims against her arising from the vehicular accident plus legal and other
expenses. 8 Realizing her procedural mistake, she later withdrew said complaint.
9
No. N-4161, the dispositive portion of which was quoted earlier, finding that:
prLL
We have ruled in Stokes vs. Malayan Insurance Co., Inc. , 14 that the terms
of the contract constitute the measure of the insurer's liability and compliance
therewith is a condition precedent to the insured's right of recovery from the
insurer.
llcd
In the case at bar, the insurance policy clearly and categorically placed
petitioner's liability for all damages arising out of death or bodily injury
sustained by one person as a result of any one accident at P12,000.00. Said
amount complied with the minimum xed by the law then prevailing, Section
377 of Presidential Decree No. 612 (which was retained by P.D. No. 1460, the
Insurance Code of 1978), which provided that the liability of land transportation
vehicle operators for bodily injuries sustained by a passenger arising out of the
use of their vehicles shall not be less than P12,000. In other words, under the
law, the minimum liability is P12,000 per passenger. Petitioner's liability under
the insurance contract not being less than P12,000.00, and therefore not
contrary to law, morals, good customs, public order or public policy, said
stipulation must be upheld as effective, valid and binding as between the parties.
15
In like manner, we rule as valid and binding upon private respondent the
condition above-quoted requiring her to secure the written permission of
petitioner before eecting any payment in settlement of any claim against her.
There is nothing unreasonable, arbitrary or objectionable in this stipulation as
would warrant its nullication. The same was obviously designed to safeguard
the insurer's interest against collusion between the insured and the claimants.
In her cross-examination before the trial court, Milagros Cayas admitted,
thus:
"Atty. Yabut:
q
With respect to the other injured passengers of your bus wherein you
made payments you did not secure the consent of defendant (herein
petitioner) Perla Compania de Seguros when you made those
payments?
But they did not give you the written authority that you were
supposed to pay those claims?
No, sir." 16
Clearly, the fundamental principle that contracts are respected as the law
between the contracting parties nds application in the present case. 17 Thus, it
was error on the part of the trial and appellate courts to have disregarded the
stipulations of the parties and to have substituted their own interpretation of the
insurance policy. In Phil. American General Insurance Co., Inc. vs. Mutuc, 18 we
ruled that contracts which are the private laws of the contracting parties should
be fullled according to the literal sense of their stipulations, if their terms are
clear and leave no room for doubt as to the intention of the contracting parties,
for contracts are obligatory, no matter what form they may be, whenever the
essential requisites for their validity are present.
Moreover, we stated in Pacic Oxygen & Acetylene Co. vs. Central Bank , 19
that the rst and fundamental duty of the courts is the application of the law
according to its express terms, interpretation being called for only when such
literal application is impossible.
We observe that although Milagros Cayas was able to prove a total loss of
only P44,000.00, petitioner was made liable for the amount of P50,000.00, the
maximum liability per accident stipulated in the policy. This is patent error. An
insurance indemnity, being merely an assistance or restitution insofar as can be
fairly ascertained, cannot be availed of by any accident victim or claimant as an
instrument of enrichment by reason of an accident. 20
Finally, we find no reason to disturb the award of attorney's fees.
Jose A.R. Melo, J., ponente, with Esteban M. Lising and Celso L. Magsino, JJ.,
concurring.
2.
3.
p. 25, Rollo.
4.
Exh. B.
5.
Exh. A.
6.
7.
Exh. C.
8.
Exh. G.
9.
Exh. H.
10.
11.
12.
p. 24, Rollo.
13.
14.
L-34768, February 28, 1984, 127 SCRA 766, 769, citing Young vs. Midland
Textile Insurance, Co., 30 Phil. 617.
15.
16.
17.
Henson vs. Intermediate Appellate Court, G.R. No. 72456, February 19,
1987, 148 SCRA 11; Dihiansan, et al. vs. Court of Appeals, G.R. No. 49839,
September 14, 1987, 153 SCRA 712; Escano vs. Court of Appeals, 100
SCRA 197.
18.
G.R. No. L-19632, November 13, 1974, 61 SCRA 22, cited in Castro vs.
Court of Appeals, G.R. No. L-44727, September 11, 1980, 99 SCRA 197.
19.
20.