Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 85296 May 14, 1990

ZENITH INSURANCE
CORPORATION, petitioner,
vs.
COURT OF APPEALS and LAWRENCE
FERNANDEZ, respondents.
Vicente R. Layawen for petitioner.
Lawrence L. Fernandez & Associates for
private respondent.

MEDIALDEA, J.:
Assailed in this petition is the decision of the
Court of Appeals in CA-G.R. C.V. No. 13498
entitled, "Lawrence L. Fernandez, plaintiffappellee v. Zenith Insurance Corp., defendantappellant" which affirmed in toto the decision
of the Regional Trial Court of Cebu, Branch
XX in Civil Case No. CEB-1215 and the denial
of petitioner's Motion for Reconsideration.
The antecedent facts are as follows:
On January 25, 1983, private respondent
Lawrence Fernandez insured his car for "own
damage" under private car Policy No. 50459
with petitioner Zenith Insurance Corporation.
On July 6, 1983, the car figured in an accident
and suffered actual damages in the amount of
P3,640.00. After allegedly being given a run
around by Zenith for two (2) months,
Fernandez filed a complaint with the Regional
Trial Court of Cebu for sum of money and

damages resulting from the refusal of Zenith

to pay the amount claimed. The complaint
was docketed as Civil Case No. CEB-1215.
Aside from actual damages and interests,
Fernandez also prayed for moral damages in
the amount of P10,000.00, exemplary
damages of P5,000.00, attorney's fees of
P3,000.00 and litigation expenses of
P3,000.00.
On September 28, 1983, Zenith filed an
answer alleging that it offered to pay the claim
of Fernandez pursuant to the terms and
conditions of the contract which, the private
respondent rejected. After the issues had
been joined, the pre-trial was scheduled on
October 17, 1983 but the same was moved to
November 4, 1983 upon petitioner's motion,
allegedly to explore ways to settle the case
although at an amount lower than private
respondent's claim. On November 14, 1983,
the trial court terminated the pre-trial.
Subsequently, Fernandez presented his
evidence. Petitioner Zenith, however, failed to
present its evidence in view of its failure to
appear in court, without justifiable reason, on
the day scheduled for the purpose. The trial
court issued an order on August 23, 1984
submitting the case for decision without
Zenith's evidence (pp. 10-11, Rollo). Petitioner
filed a petition for certiorari with the Court of
Appeals assailing the order of the trial court
submitting the case for decision without
petitioner's evidence. The petition was
docketed as C.A.-G.R. No. 04644. However,
the petition was denied due course on April
29, 1986 (p. 56, Rollo).
On June 4, 1986, a decision was rendered by
the trial court in favor of private respondent
Fernandez. The dispositive portion of the trial
court's decision provides:
WHEREFORE, defendant is hereby ordered
to pay to the plaintiff:

1. The amount of P3,640.00 representing the

damage incurred plus interest at the rate of
twice the prevailing interest rates;
2. The amount of P20,000.00 by way of moral
damages;
3. The amount of P20,000.00 by way of
exemplary damages;
4. The amount of P5,000.00 as attorney's
fees;
5. The amount of P3,000.00 as litigation
expenses; and
6. Costs. (p. 9, Rollo)
Upon motion of Fernandez and before the
expiration of the period to appeal, the trial
court, on June 20, 1986, ordered the
execution of the decision pending appeal. The
order was assailed by petitioner in a petition
forcertiorari with the Court of Appeals on
October 23, 1986 in C.A. G.R. No. 10420 but
which petition was also dismissed on
December 24, 1986 (p. 69, Rollo).
On June 10, 1986, petitioner filed a notice of
appeal before the trial court. The notice of
appeal was granted in the same order
granting private respondent's motion for
execution pending appeal. The appeal to
respondent court assigned the following
errors:
I. The lower court erred in denying defendant
appellant to adduce evidence in its behalf.
II. The lower court erred in ordering Zenith
Insurance Corporation to pay the amount of
P3,640.00 in its decision.
III. The lower court erred in awarding moral
damages, attorneys fees and exemplary
damages, the worst is that, the court awarded

damages more than what are prayed for in the

complaint. (p. 12,Rollo)
On August 17, 1988, the Court of Appeals
rendered its decision affirming in toto the
decision of the trial court. It also ruled that the
matter of the trial court's denial of Fernandez's
right to adduce evidence is a closed matter in
view of its (CA) ruling in AC-G.R. 04644
wherein Zenith's petition questioning the trial
court's order submitting the case for decision
without Zenith's evidence, was dismissed.
The Motion for Reconsideration of the
decision of the Court of Appeals dated August
17, 1988 was denied on September 29, 1988,
for lack of merit. Hence, the instant petition
was filed by Zenith on October 18, 1988 on
the allegation that respondent Court of
Appeals' decision and resolution ran counter
to applicable decisions of this Court and that
they were rendered without or in excess of
jurisdiction. The issues raised by petitioners in
this petition are:
a) The legal basis of respondent Court of
Appeals in awarding moral damages,
exemplary damages and attomey's fees in an
amount more than that prayed for in the
complaint.
b) The award of actual damages of P3,460.00
instead of only P1,927.50 which was arrived
at after deducting P250.00 and P274.00 as
deductible franchise and 20% depreciation on
parts as agreed upon in the contract of
insurance.
Petitioner contends that while the complaint of
private respondent prayed for P10,000.00
moral damages, the lower court awarded
twice the amount, or P20,000.00 without
factual or legal basis; while private respondent
prayed for P5,000.00 exemplary damages,
the trial court awarded P20,000.00; and while
private respondent prayed for P3,000.00

attorney's fees, the trial court awarded

P5,000.00.

amount of the claim due the injured; and 4)

the amount of the claim.

The propriety of the award of moral damages,

exemplary damages and attorney's fees is the
main issue raised herein by petitioner.

As regards the award of moral and exemplary

damages, the rules under the Civil Code of
the Philippines shall govern.

The award of damages in case of

unreasonable delay in the payment of
insurance claims is governed by the Philippine
Insurance Code, which provides:

"The purpose of moral damages is essentially

indemnity or reparation, not punishment or
correction. Moral damages are emphatically
not intended to enrich a complainant at the
expense of a defendant, they are awarded
only to enable the injured party to obtain
means, diversions or amusements that will
serve to alleviate the moral suffering he has
undergone by reason of the defendant's
culpable action." (J. Cezar S. Sangco,
Philippine Law on Torts and Damages,
Revised Edition, p. 539) (See also R and B
Surety & Insurance Co., Inc. v. IAC, G.R. No.
64515, June 22, 1984; 129 SCRA 745). While
it is true that no proof of pecuniary loss is
necessary in order that moral damages may
be adjudicated, the assessment of which is
left to the discretion of the court according to
the circumstances of each case (Art. 2216,
New Civil Code), it is equally true that in
awarding moral damages in case of breach of
contract, there must be a showing that the
breach was wanton and deliberately injurious
or the one responsible acted fraudently or in
bad faith (Perez v. Court of Appeals, G.R. No.
L-20238, January 30,1965; 13 SCRA 137;
Solis v. Salvador, G.R. No. L-17022, August
14, 1965; 14 SCRA 887). In the instant case,
there was a finding that private respondent
was given a "run-around" for two months,
which is the basis for the award of the
damages granted under the Insurance Code
for unreasonable delay in the payment of the
claim. However, the act of petitioner of
delaying payment for two months cannot be
considered as so wanton or malevolent to
justify an award of P20,000.00 as moral
damages, taking into consideration also the
fact that the actual damage on the car was

Sec. 244. In case of any litigation for the

enforcement of any policy or contract of
insurance, it shall be the duty of the
Commissioner or the Court, as the case may
be, to make a finding as to whether the
payment of the claim of the insured has been
unreasonably denied or withheld; and in the
affirmative case, the insurance company shall
be adjudged to pay damages which shall
consist of attomey's fees and other expenses
incurred by the insured person by reason of
such unreasonable denial or withholding of
payment plus interest of twice the ceiling
prescribed by the Monetary Board of the
amount of the claim due the insured, from the
date following the time prescribed in section
two hundred forty-two or in section two
hundred forty-three, as the case may be, until
the claim is fully satisfied; Provided, That the
failure to pay any such claim within the time
prescribed in said sections shall be
considered prima facie evidence of
unreasonable delay in payment.
It is clear that under the Insurance Code, in
case of unreasonable delay in the payment of
the proceeds of an insurance policy, the
damages that may be awarded are: 1)
attorney's fees; 2) other expenses incurred by
the insured person by reason of such
unreasonable denial or withholding of
payment; 3) interest at twice the ceiling
prescribed by the Monetary Board of the

only P3,460. In the pre-trial of the case, it was

shown that there was no total disclaimer by
respondent. The reason for petitioner's failure
to indemnify private respondent within the
two-month period was that the parties could
not come to an agreement as regards the
amount of the actual damage on the car. The
amount of P10,000.00 prayed for by private
respondent as moral damages is equitable.

The policy (Exhibit G, pp. 4-9, Record), does

not mntion any deductible franchise, . . . (p.
13, Rollo)

On the other hand, exemplary or corrective

damages are imposed by way of example or
correction for the public good (Art. 2229, New
Civil Code of the Philippines). In the case
of Noda v. Cruz-Arnaldo, G.R. No. 57322,
June 22,1987; 151 SCRA 227, exemplary
damages were not awarded as the insurance
company had not acted in wanton, oppressive
or malevolent manner. The same is true in the
case at bar.

1) P3,640.00 as actual claim plus interest of

twice the ceiling prescribed by the Monetary
Board computed from the time of submission
of proof of loss;

The amount of P5,000.00 awarded as

attomey's fees is justified under the
circumstances of this case considering that
there were other petitions filed and defended
by private respondent in connection with this
case.

5) Costs.

As regards the actual damages incurred by

private respondent, the amount of P3,640.00
had been established before the trial court
and affirmed by the appellate court.
Respondent appellate court correctly ruled
that the deductions of P250.00 and P274.00
as deductible franchise and 20% depreciation
on parts, respectively claimed by petitioners
as agreed upon in the contract, had no basis.
Respondent court ruled:

Narvasa, Cruz and Grio-Aquino, JJ., concur.

Under its second assigned error, defendantappellant puts forward two arguments, both of
which are entirely without merit. It is contented
that the amount recoverable under the
insurance policy defendant-appellant issued
over the car of plaintiff-appellee is subject to
deductible franchise, and . . . .

Therefore, the award of moral damages is

reduced to P10,000.00 and the award of
exemplary damages is hereby deleted. The
awards due to private respondent Fernandez
are as follows:

2) P10,000.00 as moral damages;

3) P5,000.00 as attorney's fees;
4) P3,000.00 as litigation expenses; and

ACCORDINGLY, the appealed decision is

MODIFIED as above stated.
SO ORDERED.

Gancayco, J., is on leave.

G.R. No. 92383 July 17, 1992

SUN INSURANCE OFFICE, LTD., petitioner,
vs.
THE HON. COURT OF APPEALS and
NERISSA LIM, respondents.

CRUZ, J.:
The petitioner issued Personal Accident Policy
No. 05687 to Felix Lim, Jr. with a face value of
P200,000.00. Two months later, he was dead
with a bullet wound in his head. As
beneficiary, his wife Nerissa Lim sought
payment on the policy but her claim was
rejected. The petitioner agreed that there was
no suicide. It argued, however that there was
no accident either.
Pilar Nalagon, Lim's secretary, was the only
eyewitness to his death. It happened on
October 6, 1982, at about 10 o'clock in the
evening, after his mother's birthday party.
According to Nalagon, Lim was in a happy
mood (but not drunk) and was playing with his
handgun, from which he had previously
removed the magazine. As she watched
television, he stood in front of her and pointed
the gun at her. She pushed it aside and said it
might he loaded. He assured her it was not
and then pointed it to his temple. The next
moment there was an explosion and Lim
slumped to the floor. He was dead before he
fell. 1

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

The widow sued the petitioner in the Regional

Trial Court of Zamboanga City and was
sustained. 2 The petitioner was sentenced to
pay her P200,000.00, representing the face
value of the policy, with interest at the legal rate;
P10,000.00 as moral damages; P5,000.00 as
exemplary damages; P5,000.00 as actual and

compensatory damages; and P5,000.00 as

attorney's fees, plus the costs of the suit. This
decision was affirmed on appeal, and the motion
for reconsideration was denied. 3 The petitioner
then came to this Court to fault the Court of
Appeals for approving the payment of the claim
and the award of damages.

independent and unforeseen happening occurs

which produces or brings about their injury or
death." There was such a happening. This was
the firing of the gun, which was the additional
unexpected and independent and unforeseen
occurrence that led to the insured person's
death.

The term "accident" has been defined as

follows:

The petitioner also cites one of the four

exceptions provided for in the insurance
contract and contends that the private
petitioner's claim is barred by such provision.
It is there stated:

The words "accident" and "accidental" have

never acquired any technical signification in
law, and when used in an insurance contract
are to be construed and considered according
to the ordinary understanding and common
usage and speech of people generally. Insubstance, the courts are practically agreed
that the words "accident" and "accidental"
mean that which happens by chance or
fortuitously, without intention or design, and
which is unexpected, unusual, and
unforeseen. The definition that has usually
been adopted by the courts is that an accident
is an event that takes place without one's
foresight or expectation an event that
proceeds from an unknown cause, or is an
unusual effect of a known case, and therefore
not expected. 4
An accident is an event which happens
without any human agency or, if happening
through human agency, an event which, under
the circumstances, is unusual to and not
expected by the person to whom it happens. It
has also been defined as an injury which
happens by reason of some violence or
casualty to the injured without his design,
consent, or voluntary co-operation. 5
In light of these definitions, the Court is
convinced that the incident that resulted in
Lim's death was indeed an accident. The
petitioner, invoking the case of De la Cruz v.
Capital Insurance, 6 says that "there is no
accident when a deliberate act is performed
unless some additional, unexpected,

Exceptions
The company shall not be liable in respect of
1. Bodily injury
xxx xxx xxx
b. consequent upon
i) The insured person attempting to commit
suicide or willfully exposing himself to
needless peril except in an attempt to save
human life.
To repeat, the parties agree that Lim did not
commit suicide. Nevertheless, the petitioner
contends that the insured willfully exposed
himself to needless peril and thus removed
himself from the coverage of the insurance
policy.
It should be noted at the outset that suicide
and willful exposure to needless peril are in
pari materia because they both signify a
disregard for one's life. The only difference is
in degree, as suicide imports a positive act of
ending such life whereas the second act
indicates a reckless risking of it that is almost
suicidal in intent. To illustrate, a person who
walks a tightrope one thousand meters above
the ground and without any safety device may
not actually be intending to commit suicide,

but his act is nonetheless suicidal. He would

thus be considered as "willfully exposing
himself to needless peril" within the meaning
of the exception in question.
The petitioner maintains that by the mere act
of pointing the gun to hip temple, Lim had
willfully exposed himself to needless peril and
so came under the exception. The theory is
that a gun is per se dangerous and should
therefore be handled cautiously in every case.
That posture is arguable. But what is not is
that, as the secretary testified, Lim had
removed the magazine from the gun and
believed it was no longer dangerous. He
expressly assured her that the gun was not
loaded. It is submitted that Lim did not willfully
expose himself to needless peril when he
pointed the gun to his temple because the fact
is that he thought it was not unsafe to do so.
The act was precisely intended to assure
Nalagon that the gun was indeed harmless.
The contrary view is expressed by the
petitioner thus:
Accident insurance policies were never
intended to reward the insured for his
tendency to show off or for his
miscalculations. They were intended to
provide for contingencies. Hence, when I
miscalculate and jump from the Quezon
Bridge into the Pasig River in the belief that I
can overcome the current, I have wilfully
exposed myself to peril and must accept the
consequences of my act. If I drown I cannot
go to the insurance company to ask them to
compensate me for my failure to swim as well
as I thought I could. The insured in the case at
bar deliberately put the gun to his head and
pulled the trigger. He wilfully exposed himself
to peril.
The Court certainly agrees that a drowned
man cannot go to the insurance company to

ask for compensation. That might frighten the

insurance people to death. We also agree that
under the circumstances narrated, his
beneficiary would not be able to collect on the
insurance policy for it is clear that when he
braved the currents below,
he deliberately exposed himself to
a known peril.
The private respondent maintains that Lim did
not. That is where she says the analogy fails.
The petitioner's hypothetical swimmer knew
when he dived off the Quezon Bridge that the
currents below were dangerous. By contrast,
Lim did not know that the gun he put to his
head was loaded.
Lim was unquestionably negligent and that
negligence cost him his own life. But it should
not prevent his widow from recovering from
the insurance policy he obtained precisely
against accident. There is nothing in the policy
that relieves the insurer of the responsibility to
pay the indemnity agreed upon if the insured
is shown to have contributed to his own
accident. Indeed, most accidents are caused
by negligence. There are only four exceptions
expressly made in the contract to relieve the
insurer from liability, and none of these
exceptions is applicable in the case at bar. **
It bears noting that insurance contracts are as
a rule supposed to be interpreted liberally in
favor of the assured. There is no reason to
deviate from this rule, especially in view of the
circumstances of this case as above
analyzed.
On the second assigned error, however, the
Court must rule in favor of the petitioner. The
basic issue raised in this case is, as the
petitioner correctly observed, one of first
impression. It is evident that the petitioner was
acting in good faith then it resisted the private
respondent's claim on the ground that the
death of the insured was covered by the

exception. The issue was indeed debatable

and was clearly not raised only for the
purpose of evading a legitimate obligation. We
hold therefore that the award of moral and
exemplary damages and of attorney's fees is
unjust and so must be disapproved.
In order that a person may be made liable to
the payment of moral damages, the law
requires that his act be wrongful. The adverse
result of an action does not per se make the
act wrongful and subject the act or to the
payment of moral damages. The law could not
have meant to impose a penalty on the right
to litigate; such right is so precious that moral
damages may not be charged on those who
may exercise it erroneously. For these the law
taxes costs. 7
The fact that the results of the trial were adverse
to Barreto did not alone make his act in bringing
the action wrongful because in most cases one
party will lose; we would be imposing an unjust
condition or limitation on the right to litigate. We
hold that the award of moral damages in the
case at bar is not justified by the facts had
circumstances as well as the law.

If a party wins, he cannot, as a rule, recover

attorney's fees and litigation expenses, since
it is not the fact of winning alone that entitles
him to recover such damages of the
exceptional circumstances enumerated in Art.
2208. Otherwise, every time a defendant
wins, automatically the plaintiff must pay
attorney's fees thereby putting a premium on
the right to litigate which should not be so. For
those expenses, the law deems the award of
costs as sufficient. 8
WHEREFORE, the challenged decision of the
Court of Appeals is AFFIRMED in so far as it
holds the petitioner liable to the private
respondent in the sum of P200,000.00
representing the face value of the insurance
contract, with interest at the legal rate from the
date of the filing of the complaint until the full

amount is paid, but MODIFIED with the

deletion of all awards for damages, including
attorney's fees, except the costs of the suit.
SO ORDERED.
Grio-Aquino, Medialdea and Bellosillo, JJ.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-54171 October 28, 1980
JEWEL VILLACORTA, assisted by her
husband, GUERRERO
VILLACORTA, petitioner,
vs.
THE INSURANCE COMMISSION and
EMPIRE INSURANCE
COMPANY, respondents.

TEEHANKEE, Acting C.J.:

The Court sets aside respondent Insurance
Commission's dismissal of petitioner's
complaint and holds 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 undisputed facts of the case as found in
the appealed decision of April 14, 1980 of
respondent insurance commission are as
follows:
Complainant [petitioner] was the owner of a
Colt Lancer, Model 1976, insured with
respondent company under Private Car Policy
No. MBI/PC-0704 for P35,000.00 Own
Damage; P30,000.00 Theft; and
P30,000.00 Third Party Liability, effective
May 16, 1977 to May 16, 1978. On May 9,
1978, the vehicle was brought to the Sunday
Machine Works, Inc., for general check-up
and repairs. On May 11, 1978, while it was in
the custody of the Sunday Machine Works,
the car was allegedly taken by six (6) persons
and driven out to Montalban, Rizal. While
travelling along Mabini St., Sitio Palyasan,
Barrio Burgos, going North at Montalban,
Rizal, the car figured in an accident, hitting
and bumping a gravel and sand truck parked
at the right side of the road going south. As a
consequence, the gravel and sand truck
veered to the right side of the pavement going
south and the car veered to the right side of
the pavement going north. The driver, Benito
Mabasa, and one of the passengers died and
the other four sustained physical injuries. The
car, as well, suffered extensive damage.
Complainant, thereafter, filed a claim for total
loss with the respondent company but claim
was denied. Hence, complainant, was
compelled to institute the present action.

The comprehensive motor car insurance

policy for P35,000.00 issued by respondent
Empire Insurance Company admittedly
undertook to indemnify the petitioner-insured
against loss or damage to the car (a) by
accidental collision or overturning, or collision
or overturning consequent upon mechanical
breakdown or consequent upon wear and
tear; (b) by fire, external explosion, selfignition or lightning or burglary, housebreaking
or theft; and (c) by malicious act.
Respondent insurance commission, however,
dismissed petitioner's complaint for recovery
of the total loss of the vehicle against private
respondent, sustaining respondent insurer's
contention 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. 1
Respondent commission upheld private
respondent's contention on the "Authorized
Driver" clause in this wise: "It must be
observed that under the above-quoted
provisions, the policy limits the use of the
insured vehicle to two (2) persons only,
namely: the insured himself or any person on
his (insured's) permission. Under the second
category, it is to be noted that the words "any
person' is qualified by the phrase
... on the insured's order or with his
permission.' It is therefore clear that if the
person driving is other than the insured, he
must have been duly authorized by the
insured, to drive the vehicle to make the
insurance company liable for the driver's
negligence. Complainant admitted that she
did not know the person who drove her
vehicle at the time of the accident, much less
consented to the use of the same (par. 5 of
the complaint). Her husband likewise admitted
that he neither knew this driver Benito Mabasa
(Exhibit '4'). With these declarations of

complainant and her husband, we hold that

the person who drove the vehicle, in the
person of Benito Mabasa, is not an authorized
driver of the complainant. Apparently, this is a
violation of the 'Authorized Driver' clause of
the policy.
Respondent commission likewise upheld
private respondent's assertion that the car
was not stolen and therefore not covered by
the Theft clause, ruling that "The element of
'taking' in Article 308 of the Revised Penal
Code means that the act of depriving another
of the possession and dominion of a movable
thing is coupled ... with the intention. at the
time of the 'taking', of withholding it with the
character of permanency (People vs. Galang,
7 Appt. Ct. Rep. 13). In other words, there
must have been shown a felonious intent
upon the part of the taker of the car, and the
intent must be an intent permanently to
deprive the insured of his car," and that "Such
was not the case in this instance. The fact that
the car was taken by one of the residents of
the Sunday Machine Works, and the
withholding of the same, for a joy ride should
not be construed to mean 'taking' under Art.
308 of the Revised Penal Code. If at all there
was a 'taking', the same was merely
temporary in nature. A temporary taking is
held not a taking insured against (48 A LR 2d.,
page 15)."
The Court finds respondent commission's
dismissal of the complaint to be contrary to
the evidence and the law.
First, respondent commission's ruling that the
person who drove the vehicle in the person of
Benito Mabasa, who, according to its finding,
was one of the residents of the Sunday
Machine Works, Inc. to whom the car had
been entrusted for general check-up and
repairs was not an "authorized driver" of
petitioner-complainant is too restrictive and
contrary to the established principle that

insurance contracts, being contracts of

adhesion where the only participation of the
other party is the signing of his signature or
his "adhesion" thereto, "obviously call for
greater strictness and vigilance on the part of
courts of justice with a view of protecting the
weaker party from abuse and imposition, and
prevent their becoming traps for the unwary. 2
The main purpose of the "authorized driver"
clause, as may be seen from its text, supra, is
that a person other than the insured owner,
who drives the car on the insured's order,
such as his regular driver, or with his
permission, such as a friend or member of the
family or the employees of a car service or
repair shop must be duly licensed drivers and
have no disqualification to drive a motor
vehicle.
A car owner who entrusts his car to an
established car service and repair shop
necessarily entrusts his car key to the shop
owner and employees who are presumed to
have the insured's permission to drive the car
for legitimate purposes of checking or roadtesting the car. The mere happenstance that
the employee(s) of the shop owner diverts the
use of the car to his own illicit or unauthorized
purpose in violation of the trust reposed in the
shop by the insured car owner does not mean
that the "authorized driver" clause has been
violated such as to bar recovery, provided that
such employee is duly qualified to drive under
a valid driver's license.
The situation is no different from the regular or
family driver, who instead of carrying out the
owner's order to fetch the children from school
takes out his girl friend instead for a joy ride
and instead wrecks the car. There is no
question of his being an "authorized driver"
which allows recovery of the loss although his
trip was for a personal or illicit purpose without
the owner's authorization.

Secondly, and independently of the foregoing

(since when a car is unlawfully taken, it is the
theft clause, not the "authorized driver"
clause, that applies), where a car is admittedly
as in this case 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 to Montalban without
the owner's consent or knowledge, such
taking constitutes or partakes of the nature of
theft as defined in Article 308 of the Revised
Penal Code, viz. "Who are liable for theft.
Theft is committed by any person who, with
intent to gain but without violence against or
intimidation of persons nor force upon things,
shall take personal property of another without
the latter's consent," for purposes of
recovering the loss under the policy in
question.
The Court rejects respondent commission's
premise that there must be an intent on the
part of the taker of the car "permanently to
deprive the insured of his car" and that since
the taking here was for a "joy ride" and
"merely temporary in nature," a "temporary
taking is held not a taking insured against."
The evidence does not warrant respondent
commission's findings that it was a mere "joy
ride". From the very investigator's report cited
in its comment, 3 the police found from the waist
of the car driver Benito Mabasa Bartolome who
smashed the car and was found dead right after
the incident "one cal. 45 Colt. and one apple
type grenade," hardly the materials one would
bring along on a "joy ride". Then, again, it is
equally evident that the taking proved to be quite
permanent rather than temporary, for the car
was totally smashed in the fatal accident and
was never returned in serviceable and useful
condition to petitioner-owner.

Assuming, despite the totally inadequate

evidence, that the taking was "temporary" and
for a "joy ride", the Court sustains as the
better view that which 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
therefrom utility, satisfaction, enjoyment and
pleasure. Justice Ramon C. Aquino cites in his
work Groizard who holds that the use of a
thing constitutes gain and Cuello Calon who
calls it "hurt de uso. " 4
The insurer must therefore indemnify the
petitioner-owner for the total loss of the
insured car in the sum of P35,000.00 under
the theft clause of the policy, subject to the
filing of such claim for reimbursement or
payment as it may have as subrogee against
the Sunday Machine Works, Inc.
ACCORDINGLY, the appealed decision is set
aside and judgment is hereby rendered
sentencing private respondent to pay
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.
SO ORDERED.
Makasiar, Fernandez, Guerrero and MelencioHerrera, JJ., concur.