6. Villacorta vs.

Insurance Commission (1980)

Facts: Villacorta had her Colt Lancer car insured with Empire Insurance Company against own
damage, theft, and 3rd 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 said 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 “joy ride” only, the 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 therefrom 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. Hence, the insurer must indemnify the insured under the Theft Clause.

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.