Commercial Law- Insurance- Misamis Lumber vs. Capital Insurance, G.R. L-21380, May 20, 1966

Misamis Lumber vs. Capital Insurance, G.R. L-21380, May 20, 1966

Facts:

The vehicle owned by the petitioner was covered by an insurance policy issued by the respondent. In such policy it contained instructions and details on how to proceed with the claim for repairs.

When the time came for the vehicle to be repaired, the petitioner took it upon himself to have the vehicle repaired without the authority from the insurer, in the policy if such an event is to occur, and a repair was done without the authority of the insurer, its liability is limited only to 150 pesos. The repair bill exceeded such amount.

Upon filing of claim the insurer refused payment in excess of 150 pesos.

Issue(s):

1.) Can the respondent be made to reimburse the petitioner for the actual cost of repairs which exceed the repair limit amount?

Ruling:

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 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 for repairs. The option to undertake 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 are done. As a consequence, paragraph 4, which limits the company’s liability to P150.00 applies.


Summary of Ruling:

The court ruled in this manner because the policy expressly limits the liability for authorized repair at P150.00, and being expressed and unambiguous it leaves no room for interpretation, and it must be applied as such. The cardinal principle of insurance law of interpreting insurance contracts favorably to the insured is applicable only in cases of doubt, not when the intention of the policy is clear or the language is sufficiently clear to convey the meaning of the parties, although the contract may be onerous.

I hope this helps.

Jeff David