Jewel Villacorta vs The Insurance Commission & Empire Insurance

Company (1980)

Jewel was the owner of a Colt Lancer, Model 1976, insured with respondent
company under Private Car Policy. 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. On their way, it met an accident, ,
hitting and bumping a gravel and sand truck parked. Driver died and other suffered
injuries. Car has extensive damage.

Jewel claimed to company for total loss, but it was denied. The insurance only
covers: 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, self-ignition or lightning or burglary,
housebreaking or theft; and (c) by malicious act.

Insurance Commission dismissed the claim on the ground of 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.

Issue: Is the Insurance Company liable?

SC: YES

The use of "authorized driver" 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

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.

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.
Second issue of theft that there must be deliberate intent and not temporary joy
ride,NO. It is within the RPC Theft. Decision set aside.