Insurance Case Digest: Misamis Lumber Corp. v. Capital Ins. and Surety Co., Inc. (1966)

G.R. No. L-21380             May 20, 1966

Lessons Applicable: Judicial Construction Cannot Alter Terms (Insurance)

FACTS:

• Misamis Lumber Corporation (Misamis), formerly Lanao Timber Mills, Inc., insured its Ford Falcon motor car with Capital Insurance & Surety Company (Capital)
• November 25, 1961 11 pm: The car broke when it hit a hollow block lying alongside the water hole which the driver did not see because the on-coming car did not dim its light
• The car was towed and repaired by Morosi Motors costing P302.27 
• November 29, 1961: After the repairs were made, Misamis made a report to Capital who only admits liability of P150
• CFI: paragraph 4 of the policy is clear and specific and leaves no room for interpretation that the repair liability is limited to P150

ISSUE: W/N Misamis is entitled to an amount exceeding P150

HELD: NO.

• insurance contract may be rather onerous (one-sided) but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties

Jurisprudence: G.R. No. L-21380

EN BANC

G.R. No. L-21380             May 20, 1966

MISAMIS LUMBER CORPORATION, plaintiff and appellee,
vs.
CAPITAL INSURANCE and SURETY CO., INC., defendant and appellant.

Achacoso, Nera and Ocampo for defendant and appellant.
F. Capistrano, Jr. for plaintiff and appellee.

REYES, J.B.L., J.:

Plaintiff-appellee Misamis Lumber Corporation, under its former name, Lanao Timber Mills, Inc., insured its Ford Falcon motor car for the amount of P14,000 with the defendant-appellant, Capital Insurance & Surety Company, Inc. The pertinent provisions of the policy provided, as follows:

1. The Company will subject to the Limits of Liability indemnify the Insured against loss or damage to the Motor Vehicle and its accessories and spare parts whilst thereon.

2. (a) by accidental collision or overturning or collision or overturning consequent when mechanical breakdown or consequent upon wear and tear.

x x x           x x x           x x x

3. At its option, the Company may pay in cash the amount of the loss or damage or may repair, reinstate or replace the Motor Vehicle or any part thereof or its accessories or spare parts. The liability of the Company shall not exceed the value of the parts lost or damaged and the reasonable cost of fitting such parts or the value of the Motor Vehicle at the time of the loss or damage whichever is the loss. The Insured's estimate of value stated in the schedule shall be the maximum amount payable by the Company in respect of any claim for loss or damage.

x x x           x x x           x x x

4. The Insured may authorize the repair of the Motor Vehicle necessitated by damage for which the Company may be liable under this policy provided that:

(a) the estimated cost of such repair does not exceed the authorized Repair Limit.

(b) a detailed estimate of the cost is forwarded to the Company without delay.

and providing also that the authorized repair limit is P150.00.

At around eleven o'clock in the evening of 25 November 1961, and while the above-mentioned insurance policy was in force, the insured car, while traveling along in Aurora Boulevard in front of the Pepsi-Cola plant in Quezon City, passed over a water hole which the driver did not see because an oncoming car did not dim its light. The crankcase and flywheel housing of the car broke when it hit a hollow block lying alongside the water hole. At the instance of the plaintiff-appellee, the car was towed and repaired by Morosi Motors at its shop at 1906 Taft Avenue Extension at a total cost of P302.27.

On 29 November 1961, when the repairs on the car had already been made, the plaintiff-appellee made a report of the accident to the defendant-appellant Capital Insurance & Surety Company.

Since the defendant-appellant refused to pay for the total cost of to wage and repairs, suit was filed in the municipal court originally.

The case before Us is now a direct appeal on a point of law from the judgment of the Court of First Instance of Manila finding for the plaintiff and against the defendant-insurer in its Civil Case No. 51757. Per our resolution on 13 February 1964, it was resolved to proceed with the case without the appellee's brief, which was filed late.

The defendant-appellant admits liability in the amount of P150, but not for any excess thereof.

The lower court did not exonerate the said appellant for the excess because, according to it, the company's absolution would render the insurance contract one-sided and that the said insurer had not shown that the cost of repairs in the sum of P302.27 is unreasonable, excessive or padded, nor had it shown that it could have undertaken the repairs itself at less expense.

The above reasoning is beside the point, because the insurance policy stipulated in paragraph 4 that if the insured authorizes the repair the liability of the insurer, per its sub-paragraph (a), is limited to P150.00. The literal meaning of this stipulation must control, it being the actual contract, expressly and plainly provided for in the policy (Art. 1370, Civil Code; Young vs. Midland Textile Ins. Co., 30 Phil. 617; Ty vs. First Nat. Surety & Assur. Co., Inc., L-16138-45, 29 April 1961).

The lower court's recourse to legal hermeneutics is not called for because paragraph 4 of the policy is clear and specific and leaves no room for interpretation. The interpretation given is even unjustified because it opposes what was specifically stipulated. Thus, it will be observed that the policy drew out not only the limits of the insurer's liability but also the mechanics that the insured had to follow to be entitled to full indemnity of repairs. The option to undertake the repairs is accorded to the insurance company per paragraph 2. The said company was deprived of the option because the insured took it upon itself to have the repairs made, and only notified the insurer when the repairs were done. As a consequence, paragraph 4, which limits the company's liability to P150.00, applies.

The insurance contract may be rather onerous ("one-sided", as the lower court put it), but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties.

Finally, to require the insurer to prove that the cost of the repairs ordered by the insured is unreasonable, as the appealed decision does, when the insurer was not given an opportunity to inspect and assess the damage before the repairs were made, strikes Us as contrary to elementary justice and equity.

For the foregoing reasons, the appealed decision is hereby modified by ordering the defendant-appellant Capital Insurance & Surety Company, Inc. to pay not more than P150.00 to the plaintiff-appellee Misamis Lumber Corporation. Each party shall bear its own costs and attorney's fees.

Bengzon, C.J., Bautista Angelo, Concepcion, Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., and Sanchez, JJ., concur.
Zaldivar, J., took no part.

Torts and Damages Case Digest: Anuran v. Buno (1966)

G.R. Nos. L-21353 and L-21354           May 20, 1966

Lessons Applicable:  Last Clear Chance (Torts and Damages)

FACTS:

• January 12, 1958 noon: passenger jeepney owned by Pedro Gahol and Luisa Alcantara and driven by Pepito Buño overloaded with (14-16 passengers) was parked on the road to Taal, Batangas when a speeding motor truck owned by Anselmo Maligaya and Ceferina Aro driven by Guillermo Razon negligently bumped it from behind, with such violence that three passengers died and two others suffered injuries that required their confinement at the Provincial Hospital for many days
• Jeepney was parked to let a passanger alight in such a way that 1/2 of its width (the left wheels) was on the asphalted pavement of the road and the other half, on the right shoulder of the road 
• suits were instituted by the representatives of the dead and of the injured, to recover consequently damages against the driver and the owners of the truck and also against the driver and the owners of the jeepney
• CFI: absolving the driver of the jeepney and its owners, but it required the truck driver and the owners to make compensation
• CA: Affirmed exoneration of the jeepney

ISSUE: W/N the doctrine of last clear chance can apply so that truck driver guilty of greater negligence which was the efficient cause of the collision will be solely liable

HELD: NO. The three defendants last mentioned are required to pay solidarily with the other defendants-respondents the amounts fixed by the appealed decision.

• New Civil Code requires "utmost diligence" from the carriers (Art. 1755) who are "presumed to have been at fault or to have acted negligently, unless they prove that they have observed extraordinary diligence" (Art. 1756)
• principle about the "last clear chance" would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence

Jurisprudence: G.R. Nos. L-21353 and L-21354

EN BANC

G.R. Nos. L-21353 and L-21354             May 20, 1966

GREGORIO ANURAN, MARIA MALIGAYA, LAPAZ LARO, ET AL., petitioners,
vs.
PEPITO BUÑO, PEDRO GAHOL, LUISA ALCANTARA, GUILLERMO RAZON, ANSELMO MALIGAYA and CEFERINA ARO, respondents.

Victoriano A. Endaya for petitioners.
Trinidad and Borromeo for respondents Buño, et al.
Contreras and Adapon for respondents Razon, et al.

BENGZON, C.J.:

At noon of January 12, 1958, a passenger jeepney was parked on the road to Taal, Batangas. A motor truck speeding along, negligently bumped it from behind, with such violence that three of its passengers died, even as two others (passengers too) suffered injuries that required their confinement at the Provincial Hospital for many days.

So, in February 1958 these suits were instituted by the representatives of the dead and of the injured, to recover consequently damages against the driver and the owners of the truck and also against the driver and the owners of the jeepney.

The Batangas Court of First Instance, after trial, rendered judgment absolving the driver of the jeepney and its owners, but it required the truck driver and the owners thereof to make compensation.

The plaintiffs appealed to the Court of Appeals insisting that the driver and the owners of the jeepney should also be made liable for damages.

The last mentioned court, upon reviewing the record, declared that:

It is admitted that at about noontime on January 13, 1958, the passenger jeepney owned by defendants spouses Pedro Gahol and Luisa Alcantara, bearing plate No. TPU-13548, then being driven by their regular driver, defendant Pepito Buño was on its regular route travelling from Mahabang Ludlud, Taal, Batangas, towards the poblacion of the said municipality. When said passenger jeepney crossed the bridge separating Barrios Mahabang Ludlud and Balisong, Taal, Batangas, it had fourteen passengers, excluding the driver, according to the testimony of defendant Buño (pp. 12 and 18, t.s.n. July 17, 1958), or sixteen passengers according to the testimony of plaintiff Edita de Sagun, (pp. 9, 12 and 13, t.s.n. June 26, 1958). However, the fact remains that the vehicle was overloaded with passengers at the time, because according to the partial stipulation of facts "the maximum capacity of the jeepney bearing plate No. TPU-13548 of said defendants was eleven (11) passengers including the driver. (Printed Record on Appeal, pp. 35, 37.)

After crossing the bridge, defendant Buño stopped his vehicle in order to allow one of his passengers to alight. But he so parked his jeepney in such a way that one-half of its width (the left wheels) was on the asphalted pavement of the road and the other half, on the right shoulder of said road (pp. 21-22, t.s.n. May 26, 1958; p. 12 t.s.n. July 17, 1958). Approximately five minutes later and before Buño could start his vehicle, a speeding water truck, which bore plate No. T-17526 and owned by defendants-spouses Anselmo Maligaya and Ceferina Aro, then being driven by Guillermo Razon from the direction of Mahabang Ludlud, Taal, Batangas, towards the poblacion of that municipality, violently smashed against the parked jeepney from behind, causing it to turn turtle into a nearby ditch.

Then said Appellate Court went on to affirm the exoneration of the jeepney driver and of its owners. It explained that although "the driver of the ill-starred vehicle was not free from fault, for he was guilty of an antecedent negligence in parking his vehicle with a portion thereof occupying the asphalted road", it considered the truck driver guilty of greater negligence which was the efficient cause of the collision; and applying the doctrine of the "last clear chance"¹ said Court ordered the owners of the truck to pay, solidarily with its driver, damages as follows:

x x x the sum of P6,000.00 for the death of their daughter Emelita, another sum of P5,000.00 as moral damages and the sum of P500.00 as actual damages, and to plaintiffs Simplicio, Alberto, Avelina and Alfredo, all surnamed Arriola, and represented by their guardian ad litem Agustin Arriola, the sum of P6,000.00 for the death of their natural mother, Leonor Masongsong, another sum of P5,000.00 as moral damages the sum of P3,600.00 for loss of earning capacity of said deceased and the sum of P850.00 as actual damages.

The plaintiffs brought the matter to this Supreme Court insisting that the driver and the owners of the jeepney should also be made liable.

We gave due course to the petition for review, because we thought the decision meant exoneration of the carrier from liability to its passengers, notwithstanding the negligence of its driver.

Upon further and more extended consideration of the matter, we have become convinced that error of law was committed in releasing the jeepney from liability. It must be remembered that the obligation of the carrier to transport its passengers safely is such that the New Civil Code requires "utmost diligence" from the carriers (Art. 1755) who are "presumed to have been at fault or to have acted negligently, unless they prove that they have observed extraordinary diligence" (Art. 1756). In this instance, this legal presumption of negligence is confirmed by the Court of Appeals' finding that the driver of the jeepney in question was at fault in parking the vehicle improperly. It must follow that the driver — and the owners — of the jeepney must answer for injuries to its passengers.

The principle about the "last clear chance" would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence.

Now as to damages. The driver and the owners of the truck have not appealed from the Court of Appeals' assessment. The plaintiffs (petitioners) have not asked here for a greater amount of indemnity. They merely pray for a declaration that Pepito Buño, Pedro Gahol and Luisa Alcantara (the driver and the owners of the jeepney, respectively) be declared jointly and severally liable with the other defendants.

Wherefore, affirming the decision under review, we hereby modify it in the sense prayed for by plaintiffs-petitioners. The three defendants last mentioned are required to pay solidarily with the other defendants-respondents the amounts fixed by the appealed decision. Costs of both appeals against said three defendants. So ordered.

Bautista Angelo, Concepcion, J.B.L. Reyes, Dizon, Regala, Makalintal and Bengzon, J.P., JJ., concur.
Barrera, Zaldivar and Sanchez, JJ., took no part.

Footnotes

¹Picart v. Smith, 37 Phil. 809.