Misamis Lumber v Capital Insurance G.R. No. L-21380; May 20, 1966, Reyes, J.B.L., J.

Digest prepared by: Jackie Canlas (SORRY LATE!) FACTS: Misamis Lumber Corp insured its Ford Falcon motor car with Capital Insurance and Surety Company Inc. with the following stipulations: o Par 2 - At its option, Capital Insurance may pay or may repair, reinstate or replace the motor vehicle or any part. The liability of Capital insurance shall not exceed the value of the parts lost or damaged and the reasonable cost of fitting such parts. o Par 4 - Misamis Lumber may authorize the repair of motor vehicle necessitated by damage for which Capital insurance may be liable provided that the estimated cost of such repair does not exceed the authorized repair limit of P150 While travelling along Aurora Blvd, the motor vehicle passed over a water hole, which caused the cars crankcase and flyhouse to break. The car was towed and repaired by Morosi Motors. After the repairs, Misamis Lumber made a report of the accident to Capital Insurance, but the latter refused to pay for the total cost of the repairs. A case filed in the municipal court did not exonerate Capital Insurance for the excess (beyond P150) because (1) its absolution would render the insurance contract one-sided, and (2) said insurer had not shown that the cost of the repairs is unreasonable. ISSUE/HELD: WON Capital Insurance is liable for the amount in excess of the authorized repair limit of P150 NO RATIO: The insurance policy clearly stipulated that if the insured authorizes the repair the liability of the insurer is limited to P150. The literal meaning of this stipulation must control, it being the actual contract, expressly and plainly provided for in the policy. The option to undertake the repairs is accorded to Capital Insurance per Par 2. The insurer was deprived of the option because Misamis Lumber took it upon itself to have the repairs made, and only notified Capital insurance when the repairs were done. As a consequence, Par 4, which limits the liability to P150, applies. The insurance contract may rather be one-sided, as the lower court put it, but that does not justify the abrogation of its express terms which is the law between the contracting parties. To require Capital Insurance to prove that the cost of repairs is unreasonable without being given the opportunity to inspect and assess the damage before the repairs were done is contrary to elementary justice and equity. Judgement Modified. Capital Insurance ordered to pay not more than P150 to Misamis Lumber.