Villacorta v. I.C.

100 SCRA 467 (1980)

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 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?

HELD:

YES.

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 totally 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.