11. Villacorta vs.

Insurance Commission (1980)

Facts: Villacorta had her Colt Lancer car insured with Empire Insurance Company against own
damage, theft, and third-party liability. While the car was in Sunday Machine Works, Inc., a
repair shop, one of the employees of the said repair shop took it out for a joyride after which it
figured in a vehicular accident. This resulted to the death of the driver and some of the
passengers. It also caused extensive damage to the car.

Villacorta filed a claim for total loss with the said insurance company. However, the latter denied
the claim on the ground that the accident did not fall within the provisions of the policy either for
the “Own Damage” or “Theft” coverage, invoking the policy provision on Authorized Driver
Clause. This was upheld by the Insurance Commission which further stated that the car was not
stolen and therefore not covered by the “Theft Clause”; that it is not evident that the person who
took the car for a joyride intends to permanently deprive the insured of her car.

Issue: Whether the insurer company should pay the claim?

Ruling: Yes. 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, respondent
insurer is liable and must pay the insured for the total loss of the insured vehicle under the “Theft
Clause” of the policy.

Assuming, despite the totally of inadequate evidence, that the taking was “temporary” and for a
joyride only, the Supreme Court holds that when a person, either with the object of going to a
certain place, or learning how to drive, or enjoying a free ride, takes possession of a vehicle
belonging to another, without the consent of its owner, he is guilty of theft because by taking
possession of the personal property belonging to another and using it, his intent to gain is evident
since he derives there from utility, satisfaction, enjoyment, and pleasure.

Accordingly, the appealed decision is set aside and judgment is hereby rendered sentencing
private respondent to pay the petitioner the sum of P35,000.00 with legal interest from the filing
of the complaint until full payment is made and to pay the costs of suit.

Main point: The mere happenstance that the employees used the car for their own illicit purpose
does not mean that the Authorized Driver Clause has been violated so as to bar recovery,
provided that such employee is duly qualified under a valid driver’s license. Moreover, when a
person takes possession of a vehicle belonging to another, without the consent of its owner, he is
guilty of theft because his intent to gain is evident since he derives utility, satisfaction,
enjoyment, and pleasure there from. Hence, the insurer must indemnify the insured under the
“Theft Clause” of the policy.

Authorized Driver Clause - it indemnifies the insured owner against loss or damage to the car but
limits the use of the insured vehicle to: (1) the insured himself, or (2) any person who drives on
his order or with his permission.