62. Perla Compania de Seguros Inc.

v Court of Appeals and Milagros Cayas

Facts:
- Milagros Cayas owns a Mazda bus which figured in an accident in Naic, Cavite
- The bus is insured with Perla Compania de Seguros under the following terms:
o SECTION I-Liability to the Public
xxx xxx xxx
3. The Limit of Liability stated in Schedule A as applicable (a) to THIRD PARTY is the limit of the
Company's liability for all damages arising out of death, bodily injury and damage to property combined so
sustained as the result of any one accident; (b) "per person" for PASSENGER liability is the limit of the
Company's liability for all damages arising out of death or bodily injury sustained by one person as the
result of any one accident: (c) "per accident" for PASSENGER liability is, subject to the above provisions
respecting per person, the total limit of the Company's liability for all such damages arising out of death or
bodily injury sustained by two or more persons as the result of any one accident.
Conditions Applicable to All Sections
xxx xxx xxx
5. No admission, offer, promise or payment shall be made by or on behalf of the insured without the
written consent of the Company which shall be entitled, if it so desires, to take over and conduct in his (sic)
name the defense or settlement of any claim, or to prosecute in his (sic) name for its own benefit any claim
for indemnity or damages or otherwise, and shall have full discretion in the conduct of any proceedings in
the settlement of any claim, and the insured shall give all such information and assistance as the Company
may require. If the Company shall make any payment in settlement of any claim, and such payment
includes any amount not covered by this Policy, the Insured shall repay the Company the amount not so
covered.
- One of the victims Edgardo Perea sued Cayas for damages for the injury he sustained while Rosario del Carmen,
Ricardo Magsarili and Charlie Antolin agreed to settle with Cayas for Php 4,000.00 each
- The Court rendered judgment in favor of Perea where he was awarded Pl0,000.00 for the medical predicament
P10,000.00 for exemplary damages; P5,000.00 for moral damages; and P7,000.00 for Attorney's fees
- Cayas now wants to reimburse from Perla Compania de Seguros all the expenses for the settlement of the
above claims
- Perla Compania refused to pay the amount demanded by Cayas on the ground that the provisions of the
insurance contract were not complied with and insisted that its liability be reduced to P12,000.00 for Perea and
none for the settlement with the 3 other victims of the accident
- RTC and CA ruling: to pay Cayas P50,000.00 under its maximum liability as provided for in the insurance policy;
and P5,000.00 as reasonable attorney's fee

Issue: WON the damages adjudicated by the RTC and CA were proper.

Ruling: No. The insurance policy involved explicitly limits petitioner's liability to P12,000.00 per person and to P50,000.00
per accident

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

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 fixed 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.