G.R. No. L-54171 – JEWEL VILLACORTA, assisted by her husband, GUERRERO VILLACORTA, petitioner, vs. THE INSURANCE COMMISSION and EMPIRE INSURANCE COMPANY, respondents.
TEEHANKEE, Acting C.J.
Rule Synopsis
The unlawful taking of an insured personal property, i.e. car, puts into operation the theft clause of the insurance policy and not the authorized driver clause. Hence, it is irrelevant whether, at the time of loss, the same is driver by an “authorized driver.”
Facts
Jewel Villcorta (insured) filed a claim for total loss with Empire Insurance Company under its comprehensive motor car insurance policy. The policy covers losses from own damage or theft and third-party liability. The claim was on account of the extensive damages sustained by the insured vehicle when it figured in a collision while being used by residents of Sunday Machine Works, Inc. The car was delivered by the insured to the latter for a general check-up and repairs, and the insured’s car was taken without his knowledge or consent. The insurer claimed that the loss was not covered since the person then driving was not authorized in violation of the “Authorized Driver” clause.
Issue
Should Empire Insurance Company be held liable for the total loss of the insured vehicle?
Ruling and Discussion
Yes. Empire Insurance Company should be held liable for the total loss of the insured vehicle.
The Supreme Court found the insurer liable for the total loss of the insured vehicle. It held that where the insured’s car is wrongfully taken without the insured’s consent from the car service and repair shop to whom it had been entrusted for check-up and repairs (assuming that such taking was for a joy ride, in the course of which it was smashed in an accident), respondent insurer is liable and must pay insured for the total loss of the insured vehicle under the theft clause of the policy.
The SC here held that the car was being driven by an “authorized driver” at the time that the accident happened, for upon entrusting the keys of her car to the repair shop, the latter and its employees were presumed to have been permitted to drive the car for legitimate purposes, e.g. test driving. That that car was taken for unauthorized purposes in violation of the trust reposed by the insured will not bar recovery.
The Court also said that it was irrelevant whether the driver was authorized or not since it is the “theft” clause that applies. It held that where a car is unlawfully and wrongfully taken by some people, be they employees of the car shop or not to whom it had been entrusted, and taken on a long trip without the owner’s consent or knowledge, such taking constitutes or partakes of the nature of theft.
Dispositive
Decision set aside.