First Quezon City Insurance Company, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: On June 10, 1984, Jose V. del Rosario boarded a De Dios Marikina Transportation Company (DMTC) bus. While the bus was moving slowly with its doors open, del Rosario was on the running board with his hand on the handle bar. The bus suddenly accelerated, causing del Rosario to fall and be dragged for about two seconds. The driver, Gil Agpalo, an employee of DMTC, stopped the bus and fled the scene. Del Rosario sustained severe injuries to his right leg, requiring two major surgical operations and a 40-day hospital confinement, incurring P69,444.41 in medical expenses and P7,500.00 in lost earnings. Procedural History: Del Rosario filed a complaint against DMTC and its driver. The driver was dropped as a party defendant. DMTC filed a third-party complaint against its insurer, First Quezon City Insurance Company, Inc. (FCQCI). The Regional Trial Court (RTC) ordered DMTC to pay del Rosario P76,944.41 in actual and compensatory damages, P15,000.00 in moral and exemplary damages, and P33,641.50 in attorney's fees. FCQCI was ordered to indemnify DMTC in the sum of P12,000.00 with legal interest. The Court of Appeals (CA) modified the award of attorney's fees to P5,000.00 and deleted the cost of suit, but increased FCQCI's liability to P50,090.00 with legal interest. The Petition: FCQCI filed a petition for review, assailing the CA's interpretation of the insurance contract regarding the limit of its liability.
Issue(s)
Whether the Court of Appeals erred in ordering First Quezon City Insurance Co., Inc., to indemnify De Dios Marikina Transportation Co., Inc., beyond the P12,000.00 per passenger limit stipulated in the insurance contract. Whether the Court of Appeals' interpretation of the insurance contract, specifically regarding the limits of liability, was correct, considering the explicit per-passenger and per-accident limits.
Ruling
The petition for review is GRANTED. The decision of the Court of Appeals is modified by reducing the award against First Quezon City Insurance Co., Inc. to P12,000.00 only. Costs against De Dios Marikina Transportation Co., Inc.
Ratio Decidendi
On the limit of the insurer's liability: The Supreme Court held that the insurance company's liability is limited by the terms of the insurance contract, which clearly stipulated a maximum limit of P12,000.00 per passenger for damages arising from death or bodily injury, and a maximum liability of P50,000.00 per accident. Since only one passenger, Jose V. del Rosario, was injured, the insurer's liability is pegged to the P12,000.00 limit per passenger. The P50,000.00 limit per accident means the insurer's liability for any single accident will not exceed P50,000.00, regardless of the number of passengers injured. Therefore, the bus company could not recover more than P12,000.00 per injured passenger, even if the judgment against the bus operator exceeded this amount. The trial court's interpretation was deemed correct. On the interpretation of the insurance contract: The Court emphasized that the plain wording of the insurance policy dictates the extent of the insurer's obligation, explicitly setting a per-passenger limit and a per-accident limit. The Court of Appeals' decision to award P50,090.00 disregarded these contractual limitations. The Supreme Court reiterated that the bus company may not recover from the insurance company more than the stipulated P12,000.00 per passenger or P50,000.00 per accident, irrespective of the judgment rendered against the insured. The Court concluded that the trial court's adherence to the contractual limits was the proper application of the law and the contract.
Main Doctrine
The liability of an insurer under a compulsory motor vehicle liability insurance policy is limited to the maximum amount specified in the policy per passenger or per accident, as the case may be, even if the judgment against the insured exceeds such limits.