G.R. No.

L-25920 January 30, 1970

CCC INSURANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS (Fourth Division) and CARLOS F. ROBES, respondents.
Kalaw and Felipe for petitioner.
Adalia B. Francisco for respondents.

REYES, J.B.L., J.:
Petition for review of the decision of the Court of Appeals, affirming that of the Court of First
Instance of Rizal (Quezon City) allowing insurance indemnification of plaintiff for his damaged
car and the payment of attorney's fees.
The following facts are not in dispute:
On 1 March 1961, Carlos F. Robes took an insurance, with the CCC Insurance Corporation, on
his Dodge Kingsway car against loss or damage through accident for an amount not exceeding
P8,000.00 (Policy No. M1156). On 25 June 1961, and during the effectivity of the policy, the
insured vehicle, while being driven by the owner's driver, became involved in a vehicular
collision along Rizal Avenue Extension, Potrero, Malabon, Rizal. The car was damaged, and the
repair was estimated to cost P5,300.00.
As the insurance company refused either to pay for the repair or to cause the restoration of
the car to its original condition, Robes instituted Civil Case No. Q-6063 in the Court of First
Instance of Rizal for recovery not only of the amount necessary for the repair of the insured car
but also of actual and moral damages, attorneys' fees and costs. Resisting plaintiff's claim, the
insurance company disclaimed liability for payment, alleging that there had been violation of
the insurance contract because the one driving the car at the time of the incident was not an
"authorized driver."
After due hearing, judgment was rendered for the plaintiff, and defendant insurer was ordered
to pay unto the former the cost of repair of the car in the sum of P5,031.28; the sum of
P150.00, for the hauling and impounding of the car at the repair shop; P2,000.00 as actual
damages; and P1,000.00 as attorneys' fees, plus costs.
The insurance company went to the Court of Appeals, raising inter alia the questions of the
qualification of plaintiff's driver to operate the insured vehicle and the correctness of the trial
court's award to plaintiff of the amount of P5,013.28 as cost of repairs, and of actual damages
and attorneys' fees. In its decision of 31 January 1966, the Court of Appeals affirmed the ruling
of the lower court except the award of actual damages in the sum of P2,000.00, which was
eliminated on the ground that it was too speculative. Not content, the insurance company filed
the present petition for review of the aforesaid decision of the Court of Appeals on two
grounds: (1) that the proceedings observed in the trial court were irregular and invalid; and (2)
that the damage to the insured car was not covered by the insurance policy because at the
time of the accident it was being driven by one who was not an authorized driver.
The second issue constitutes the main contention of herein appellant, and will be considered
first. It is vigorously urged by the insurer that the one driving the insured vehicle at the time of
the accident was not an authorized driver thereof within the purview of the following provision
of the insurance policy:
AUTHORIZED DRIVER:
Any of the following: (a) The insured;
(b) Any person driving on the Insured's order or with his permission, provided that the person
driving is  permitted in accordance with licensing laws or regulations to drive the motor
vehicle covered by this Policy, or has been so permitted and is not disqualified by order of a
court of law or by reason of any enactment or regulation from driving such Motor Vehicle.
(Emphasis ours)
It has been found as a fact by the Court of Appeals that Domingo Reyes, the, driver who was at
the wheel of the insured car at the time of the accident, does not know how to read and
write; that he was able to secure a driver's license, without passing any examination therefor,
by paying P25.00 to a certain woman; and that the Cavite agency of the Motor Vehicles Office
has certified not having issued Reyes' purported driver's license No. 271703 DP.
In holding that the damage sustained by the car comes within the coverage of the insurance
policy, the Court of Appeals argued that since Reyes' purported driver's license (Exhibit "A")
bears all the earmarks of a duly issued license, then it is a public document, and petitioner
insurance company then has the burden of disproving its genuineness, which the latter has
failed to do. In this respect the Court of Appeals ruled:
... . The fact that the Cavite Agency of the Motor Vehicles Office states that Driver's License No.
271703 DP was not issued by that office, does not remove the possibility that said office may
have been mistaken or that said license was issued by another agency. Indeed Exhibit 13 shows
that a certain Gloria Presa made the notation thereon "no license issued" and which notation
was the basis of the 1st Indorsement, Exhibit 12, signed by the MVO Cavite City Agency's
officer-in-charge. Neither Gloria Presa nor the officer-in-charge Marciano A. Monzon was
placed on the witness stand to be examined in order to determine whether said license is
indeed void. As it is, as heretofore pointed out, the fact remains that Domingo Reyes is in
possession of a driver's license issued by the Motor Vehicles Office which on its face appears to
have been regularly issued.
In effect, the Court of Appeals found that the driver's license No. 271703 DP was genuine, that
is, one really issued by the Motor Vehicles Office or its authorized deputy; and this finding of
fact is now conclusive and may not be questioned in this appeal.
Nevertheless, the appellant insurer insists that, under the established facts of this case, Reyes,
being admittedly one who cannot read and write, who has never passed any examination for
drivers, and has not applied for a license from the duly constituted government agency
entrusted with the duty of licensing drivers, cannot be considered an authorized driver.
The fatal flaw in appellant's argument is that it studiously ignores the provisions of law
existing at the time of the mishap. Under Section 24 of the Revised Motor Vehicles Law, Act
3992 of the Philippine Legislature, as amended by Republic Acts Nos. 587, 1204 and 2863, 1
An examination or demonstration to show any applicant's ability to operate motor vehicles
may also be required in the discretion of the Chief, Motor Vehicles Office or his deputies.
(Emphasis supplied)
and reinforcing such discretion, Section 26 of the Act prescribes further:
SEC. 26. Issuance of chauffeur's license; professional badge: If, after examination, or without the
same, the Chief, Motor Vehicles Office or his deputies, believe the applicant to possess the
necessary qualifications and knowledge, they shall issue to such applicant a license to operate
as chauffeur ... (Emphasis supplied)
It is thus clear that the issuance of a driving license without previous examination does not
necessarily imply that the license issued is invalid. As the law stood in 1961, when the claim
arose, the examinations could be dispensed with in the discretion of the Motor Vehicles
Office official officials. Whether discretion was abused in issuing the license without
examination is not a proper subject of inquiry in these proceedings, though, as a matter of
legislative policy, the discretion should be eliminated. There is no proof that the owner of the
automobile knew that the circumstance surrounding such issuance showed that it was
irregular.
The issuance of the license is proof that the Motor Vehicles Office official considered Reyes,
the driver of the insured- appellee, qualified to operate motor vehicles, and the insured was
entitled to rely upon such license. In this connection, it should be observed that the chauffeur,
Reyes, had been driving since 1957, 2 and without mishap, for all the record shows. Considering
that, as pointed out by the Court of Appeals, the weight of authority is in favor of a liberal
interpretation of the insurance policy for the benefit of the party insured, and strictly against
the insurer, We find no reason to diverge from the conclusion reached by the Court of Appeals
that no breach was committed of the above-quoted provision of the policy.
The next issue assigned is anchored on the fact that the decision of the trial court was based on
evidence presented to and received by the clerk of court who acted as commissioner, although
allegedly, there was no written court order constituting him as such commissioner, no written
request for his commission was made by the parties; he did not take an oath prior to entering
into the discharge of his commission; no written report of his findings was ever submitted to
the court; and no notice thereof was sent to the parties, contrary to the specific provisions of
Rule 33 of the Rules of Court.
Actually there is nothing basically wrong with the practice of delegating to a commissioner,
usually the clerk of court, who is a duly sworn court officer, the reception of both parties and
for him to submit a report thereon to the court. In fact, this procedure is expressly sanctioned
by Revised Rule 33 of the Rules of Court. 3 Petitioner's objection in this case, however, is
directed not against its referral to the clerk of court but against the alleged non-observance of
the prescribed steps in connection with such delegation.
We find no cause sufficient to invalidate the proceedings had in the trial court. We note that
this issue was brought up by the appellant insurance company or the first time only in its
motion for reconsideration filed in the Court of Appeals. It was not raised in the trial court,
where the defect could still be remedied. This circumstance precludes ventilation of the issue of
validity of the hearing at this stage; for, if such irregularity is to vitiate the proceeding, the
question should have been seasonably raised, i.e., either before the parties proceeded with the
hearing or before the court handed down its ruling. 4 It is a procedural point that can be waived
by consent of the parties, express or implied.5
For the same reason, appellant cannot insist now on the annulment of the proceeding on the
basis of alleged lack of written consent of the parties to the commission, or of an order
appointing the clerk as commissioner, or of notice of the submission of his report to the court.
Furthermore, appellant has presented no proof that the clerk of court committed any mistake
or abuse in the performance of the task entrusted to him, or that the trial court was not able to
properly appreciate the evidence in the case because it was received by another person. If
indeed there were errors at all, they would be non-prejudicial and could not justify the holding
of a new trial, as urged by herein petitioner. 6
WHEREFORE, the decision of the Court of Appeals is affirmed, with costs against appellant CCC
Insurance Corporation.
G.R. No. L-29749 April 15, 1988
PLACIDA PEZA et al., petitioners,
vs.
HON. FEDERICO C. ALIKPALA, etc., et al., respondents.
Chaves, Elio Chaves & Associates for petitioners.
Jacinto D. Jimenez for respondents.

NARVASA, J.:
Presented in the proceeding at bar is the sorry situation of the loss by a party of the right to
argue the merits of a cause on appeal due to an obsessive pre-occupation with a question of
admissibility of evidence, like a man who, it is said, "fails to see the forest for the trees."
The case had its origin in an unfortunate vehicular accident. Two (2) children ran across the
path of a vehicle as it was running along the national highway at barrio Makiling Calamba,
Laguna. They were killed.
The vehicle, a Chevrolet "Carry-All", belonged to a partnership known as Diman & Company ,
and was then being driven by its driver, Perfecto Amar. It was insured with the Empire
Insurance Co., Inc. under a so-called 'comprehensive coverage" policy, loss by theft excluded.
The policy was in force at the time of the accident.
Placida Peza, the managing partner of Diman & Co. filed a claim with the insurance company,
hereafter simply, Empire, for payment of compensation to the family of the two (2) children
who died as a result of the accident. Empire refused to pay on the ground that the driver had
no authority to operate the vehicle, a fact which expressly excepted it from liability under the
policy. What Peza did was to negotiate directly with the deceased children father for an out-of-
court settlement. The father agreed to accept P 6,200.00 in fun settlement of the liability of the
vehicles owner and driver, and Peza paid him this sum.
Peza thereafter sued Empire to recover this sum of P6,200.00 as actual damages, as well as
P20,000.00 as moral damages, P10,000.00 as exemplary damages, and P10,000.00 as attorney's
fees. She amended her complaint shortly thereafter to include Diman & Co. as alternative party
plaintiff. 1
Empire's basic defense to the suit was anchored on the explicit requirement in the policy
limiting the operation of the insured vehicle to the "authorized driver" therein defined,
namely, (a) the insured, or (b) any person driving on the insured order or with his permission,
provided that-
... that the person driving is permited in accordance with the licensing or other laws or
regulations to drive the Motor vehicle or has been so permitted and is not disqualified by order
of the Court of Law of by reason of any enactment or regulation in that behalf from driving such
Motor Vehicle.-
It appearing, according to Empire, that at the time of the mishap, the driver Perfecto Amar
only had a temporary operator's permit (TVR) —  already expired — his drivers license having
earlier been confiscated by an agent of the Land Transportation Commission for an alleged
violation of Land Transportation and Traffic Rules, he was not permitted by law and was in
truth disqualified to operate any motor vehicle; and this operated to relieve it (Empire) from
liability under its policy.
The fact of Amar's having only an expired TVR at the time of the accident was duly
established during the trial. It does not seem to have been seriously disputed by the plaintiffs.
What plaintiff's counsel attempted to do, to neutralize that fact, was to offer rebuttal testimony
(1) to explain the circumstances attending the issuance of the TVR by the LTC officer to Amar —
in proof of the proposition that there was no reason for confiscation of Amar's license and the
issuance to him of a TVR, and the LTC agent was wrong in doing so, and also, to (2) prove that,
"contrary to the implication' of one of Empire's exhibits, Amar's license had not expired, but
had been renewed. The respondent Judge however sustained the objection of Empire's councel
to the evidence on the ground that it was irrelevant to the issue. 2 The Judge also denied
plaintiffs' request for time to present additional rebuttal evidence in proof of the same
propositions. 3
The plaintiffs having moved for reconsideration, and the Court having refused, said plaintiffs
have come to this Court seeking communication on certiorari of the above describe orders,
assailing them as being tainted by grave abuse of discretion.
It would seem fairly obvious that whether the LTC agent was correct or not in his opinion that
driver Amar had violated some traffic regulation warranting confiscation of his license and
issuance of a TVR in lieu thereof, this would not alter the undisputed fact that Amar's licence
had indeed been confiscated and a TVR issued to him, and the TVR had already expired at the
time that the vehicle being operated by him killed two children by accident. Neither would
proof of the renewal of Amar's license change the fact that it had really been earlier confiscated
by the LTC agent. The plaintiffs' proferred proof therefore had no logical connection with the
facts thereby sought to be refuted, the proof had no rational tendency to establish the
improbability of the facts demonstrated by Empire's evidence. The proofs were thus correctly
by the respondent Judge as being irrelevant.
Even positing error in the Judge's analysis of the evidence attempted to be introduced and his
rejection thereof, it is clear that it was at most an error of judgment, not such an error as may
be branded a grave abuse of discretion, i.e., such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction, against which the writ of certiorari will lie. 4 In any event,
the established principle is "that ruling of the trial court on procedural questions and on
admissibility of evidence during the course of the trial are interlocutory in nature and may not
be the subject of separate appeal or review on certiorari, but are to be assigned as errors and
reviewed in the appeal properly taken from the decision rendered by the trial court on the
merits of the case. 5
In the meantime, respondent Judge Alikpala rendered judgment on the merits, since the case
was then already ripe for adjudication. The judgment ordered dismissal of the case for failure
on the part of the plaintiff to prove their cause of action against Empire. Notice of the judgment
was served on the parties in due course. The plaintiffs did not appeal. instead, they filed a
motion praying that Judge Alikpala be declared guilty of contempt of court for having decided
the case on the merits despite the pendency in this Court of the the certiorari action instituted
by the plaintiffs.
It is elementary that the mere pendency of a special civil action for certiorari, commenced in
relation to a case pending before a lower Court, does not interrupt the course of the latter
when there is no writ of injunction restraining it. This was particularly true in the case of the
respondent Judge in the light of the requirement of the Judiciary Act that a case be decided
within ninety (90) days from date of submission. 6 As His Honor has pointed out, he but did his
duty under the law, and hence, by no stretch of the imagination may his act be regarded as
contempt of court, much less an 'affront to the Tribunal.' He is right, and must therefore be
absolved of any responsibility for contempt.
In their eagerness to prove the respondent Judge wrong in sustaining objections to their
proffered proofs, and to have him punished for contempt for rendering judgment on the merits
adversely to them despite his being a respondent in their certiorari suit before this Court, the
plaintiff failed to perfect an appeal from that judgment on the merits. Judge Alikpala's
judgment has thus become and executory, and this is an additional factor precluding relief to
the petitioners.
WHEREFORE, the petition is DISMISSED for lack of merit, without pronouncement as to costs.
G.R. No. L-34768. February 24, 1984.
JAMES STOKES, as Attorney-in-Fact of Daniel Stephen Adolfson and DANIEL STEPHEN
ADOLFSON, Plaintiffs-Appellees, v. MALAYAN
INSURANCE CO., INC., Defendant-Appellant.
SYLLABUS
1. MERCANTILE LAW; INSURANCE CONTRACT; COMPLIANCE WITH TERMS THEREOF, A
CONDITION PRECEDENT TO RECOVERY. — A contract of insurance is a contract of indemnity
upon the terms and conditions specified therein. When the insurer is called upon to pay in case
of loss or damage, he has the right to insist upon compliance with the terms of the contract. If
the insured cannot bring himself within the terms and conditions of the contract, he is not
entitled as a rule to recover for the loss or damage suffered. For the terms of the contract
constitute the measure of the insurer’s liability, and compliance therewith is a condition
precedent to the right of recovery. (Young v. Midland Textile Insurance Co., 30 Phil. 617.)
2. ID.; ID.; ID.; "AUTHORIZED DRIVER" CLAUSE, MEANING. — Under the "authorized driver"
clause, an authorized driver must not only be permitted to drive by the insured. It is also
essential that he is permitted under the law and regulations to drive the motor vehicle and is
not disqualified from so doing under any enactment or regulation. At the time of the accident,
Stokes had been in the Philippines for more than 90 days. Hence, under the law, he could not
drive a motor vehicle without a Philippine driver’s license. He was therefore not an "authorized
driver" under the terms of the insurance policy in question, and MALAYAN was right in denying
the claim of the insured.
3. ID.; ID.; ACCEPTANCE OF PREMIUM WITHIN THE STIPULATED PERIOD FOR PAYMENT DOES
NOT ESTOP INSURER FROM INTERPOSING ANY VALID DEFENSE. — Acceptance of premium
within the stipulated period for payment thereof, including the agreed period of grace, merely
assures continued effectivity of the insurance policy in accordance with its terms. Such
acceptance does not estop the insurer from interposing any valid defense under the terms of
the insurance policy.
4. CIVIL LAW; PRINCIPLE OF ESTOPPEL, DEFINED; NOT APPLICABLE TO CASE AT BAR. — The
principle of estoppel is an equitable principle rooted upon natural justice which prevents a
person from going back on his own acts and representations to the prejudice of another whom
he has led to rely upon them. The principle does not apply to the instant case. In accepting the
premium payment of the insured, MALAYAN was not guilty of any inequitable act or
representation. There is nothing inconsistent between acceptance of premium due under an
insurance policy and the enforcement of its terms.
DECISION
PLANA, J.:
This is an appeal by Malayan Insurance Company, Inc. (MALAYAN) from a decision of Court of
First Instance of Manila ordering it to pay the insured under a car insurance policy issued by
MALAYAN to Daniel Stephen Adolfson against own damage as well as third party liability.
The facts are not in dispute, Adolfson had a subsisting MALAYAN car insurance policy with the
above coverage on November 23, 1969 when his car collided with a car owned by Cesar
Poblete, resulting in damage to both vehicles. At the time of the accident, Adolfson’s car was
being driven by James Stokes, who was authorized to do so by Adolfson. Stokes, an Irish
citizen who had been in the Philippines as a tourist for more than ninety days, had a valid and
subsisting Irish driver’s license but without a Philippine driver’s license.
After the collision, Adolfson filed a claim with MALAYAN but the latter refused to pay,
contending that Stokes was not an authorized driver under the "Authorized Driver" clause of
the insurance policy in relation to Section 21 of the Land Transportation and Traffic Code.
Under the insurance policy, "authorized driver" refers to —
"(a) The insured
"(b) Any person driving on the insured’s order or with his permission.
"PROVIDED that the person driving is permitted in accordance with the licensing or other laws
or regulations to drive the motor vehicle and is not disqualified from driving such motor vehicle
by order of a court of law or by reason of any enactment or regulation in that behalf.
The cited Section 21 of the Land Transportation and Traffic Code provides:
"Operation of motor vehicles by tourists. — Bona fide tourists and similar transients who are
duly licensed to operate motor vehicles in their respective countries may be allowed to operate
motor vehicles during but not after ninety days of their sojourn in the Philippines.
x x x
"After ninety days, any tourist or transient desiring to operate motor vehicles shall pay fees and
obtain and carry a license as hereinafter provided." (Emphasis supplied.)
Unable to convince MALAYAN to pay, Stokes and Adolfson brought suit before the Court of First
Instance of Manila and succeeded in getting a favorable judgment, although Stokes had ceased
to be authorized to drive a motor vehicle in the Philippines at the time of the accident, he
having stayed therein as a tourist for over 90 days without having obtained a Philippine driver’s
license. The Court held that Stokes’ lack of a Philippine driver’s license was not fatal to the
enforcement of the insurance policy; and the MALAYAN was estopped from denying liability
under the insurance policy because it accepted premium payment made by the insured one day
after the accident. It said:
"Defendant cannot evade liability under the policy by virtue of the above provision of the Land
Transportation and Traffic Code. This is an insurance case. The basis of insurance contracts is
good faith and trust between the insurer and the insured. The matter of the failure on the part
of Stokes to have a Philippine driver’s license is not such a defect that can be considered as fatal
to the contract of insurance, because the fact is that Stokes still had a valid and unexpired Irish
license. As a matter of fact, the traffic officer who investigated the incident gave Stokes a traffic
violation receipt and not a ticket for driving without license.
"Then the Court believes that defendant is in estoppel in this case because it allowed the
plaintiff to pay the insurance premium even after the accident occurred. Admitting for the sake
of argument that there was a violation of the terms of the policy before the incident, the
admission or acceptance by the insurance company of the premium should be considered as a
waiver on its part to contest the claim of the plaintiffs.
In this appeal, the two issues resolved by the court a quo are raised anew. We find the appeal
meritorious.
1. A contract of insurance is a contract of indemnity upon the terms and conditions specified
therein. When the insurer is called upon to pay in case of loss or damage, he has the right to
insist upon compliance with the terms of the contract. If the insured cannot bring himself
within the terms and conditions of the contract, he is not entitled as a rule to recover for the
loss or damage suffered. For the terms of the contract constitute the measure of the insurer’s
liability, and compliance therewith is a condition precedent to the right of recovery. (Young v.
Midland Textile Insurance Co., 30 Phil. 617.)
Under the "authorized driver" clause, an authorized driver must not only be permitted to drive
by the insured. It is also essential that he is permitted under the law and regulations to drive
the motor vehicle and is not disqualified from so doing under any enactment or regulation.
At the time of the accident, Stokes had been in the Philippines for more than 90 days. Hence,
under the law, he could not drive a motor vehicle without a Philippine driver’s license. He was
therefore not an "authorized driver" under the terms of the insurance policy in question, and
MALAYAN was right in denying the claim of the insured.
2. Acceptance of premium within the stipulated period for payment thereof, including the
agreed period of grace, merely assures continued effectivity of the insurance policy in
accordance with its terms. Such acceptance does not estop the insurer from interposing any
valid defense under the terms of the insurance policy.
The principle of estoppel is an equitable principle rooted upon natural justice which prevents a
person from going back on his own acts and representations to the prejudice of another whom
he has led to rely upon them. The principle does not apply to the instant case. In accepting the
premium payment of the insured, MALAYAN was not guilty of any inequitable act or
representation. There is nothing inconsistent between acceptance of premium due under an
insurance policy and the enforcement of its terms.
WHEREFORE, the appealed judgment is reversed. The complaint is dismissed. Costs against the
appellees.

G.R. No. L-28772. September 21, 1983.

ASSOCIATION OF BAPTISTS FOR WORLD EVANGELISM, INC., Plaintiff, v. FIELDMEN’S
INSURANCE CO., INC., Defendant-Appellant.
SYLLABUS
1. MERCANTILE LAW; INSURANCE; COMPREHENSIVE POLICY; UNLAWFUL AND WRONGFUL
TAKING OF VEHICLE FOR A JOY RIDE CONSTITUTES THEFT WITHIN THE MEANING OF
INSURANCE POLICY; RECOVERY FOR DAMAGE NOT BARRED BY THE ILLEGAL USE OF THE
VEHICLE. — The Comprehensive Policy issued by the insurance company includes loss of or
damage to the motor vehicle by "burglary . . . or theft." It is settled that the act of Catiben in
taking the vehicle for a joy ride to Toril, Davao City, constitutes theft within the meaning of the
insurance policy and that recovery for damage to the car is not barred by the illegal use of the
car by one of the station boys.
2. ID.; ID.; ID.; ID.; ID.; LIABILITY OF INSURER UNDER THE THEFT CLAUSE OF AN INSURANCE
POLICY; PRIOR CONVICTION NOT REQUIRED IN AN ACTION FOR RECOVERY ON AN
AUTOMOBILE INSURANCE; CASE AT BAR. — There need be no prior conviction for the crime of
theft to make an insurer liable under the theft clause of the policy. Upon the facts stipulated by
the parties it is admitted that Catiben had taken the vehicle for a joy ride and while the same
was in his possession he bumped it against an electric post resulting in damages. That act is
theft within a policy of insurance. In a civil action for recovery on an automobile insurance, the
question whether a person using a certain automobile at the time of the accident stole it or not
is to be determined by a fair preponderance of evidence and not by the rule of criminal law
requiring proof of guilt beyond reasonable doubt (Villacorta v. Insurance Commission, 100 SCRA
467 [1980]). Besides, there is no provision in the policy requiring prior criminal conviction for
theft.
RESOLUTION
MELENCIO-HERRERA, J.:
This case for "Indemnity for Damages and Attorney’s Fees" was elevated to this Tribunal by the
then Court of Appeals on a question of law.
The Stipulation of Facts submitted by the parties before the Court of First Instance of Davao,
Branch I, in Case No. 3789, reads as follows:
"COMES the parties in the above entitled case, through their respective counsels and to this
Honorable Court respectfully submit the following stipulations of facts:
1. That plaintiff is a religious corporation duly organized and registered under the laws of the
Philippines, while defendant is also a domestic corporation duly organized and existing under
the laws of the Philippines;
2. That plaintiff, having an insurable interest in a Chevrolet Carry-all, 1955 Model, with Motor
No. 032433272555 and Plate No. E-73317 covered by Registration Certificate No. 288141 Rizal,
issued by the Davao Motor Vehicles Office Agency No. 20 and owned by Reverend Clinton
Bonnel, insured said vehicle with the defendant under Fieldmen’s Insurance Co., Inc. Private
Car Comprehensive Policy No. 22 Jl 1107, attached hereto as Annex ‘A’ to ‘A-2’ against loss or
damage up to the amount of P5,000.00;
3. That in the latter part of 1961, through plaintiff’s representative, Dr. Antonio Lim, the
aforementioned Chevrolet Carry-all was placed at the Jones Monument Mobilgas Service
Station at Davao City, under the care of said station’s operator, Rene Te so that said carry-all
could be displayed as being for sale, with the understanding that the latter or any of his station
boys would receive a 2% commission should they sell said vehicle.
4. That on the night of January 18, 1962, Romeo Catiben one of the boys at the
aforementioned Jones Monument Service Station and a nephew of the wife of Rene Te who is
residing with them, took the aforementioned chevrolet carry-all for a joy ride to Toril, Davao
City, without the prior permission, authority or consent of either the plaintiff or its
representative Dr. Antonio Lim, or of Rene Te, and on its way back to Davao City, said vehicle,
due to some mechanical defect accidentally bumped an electric post causing actual damages
valued at P5,518.61.
‘5. That the issue before the Honorable Court is whether or not for the damage to the
abovementioned Chevrolet Carry-all to be compensable under the aforementioned Fieldmen’s
Private Car Comprehensive Policy No. 22 JL 11107, there must be a prior criminal conviction of
Romeo Catiben for theft.
WHEREFORE, it is respectfully prayed that this Honorable Court render judgment on the facts
and issues above stipulated after the parties shall have submitted their respective memoranda.
The Trial Court rendered judgment based on the facts stipulated and ordered defendant
insurance company to pay plaintiff association the amount of P5,000.00 as indemnity for the
damage sustained by the vehicle, P2,000.00 for attorney’s fees, and costs. Dissatisfied, the
insurance company interposed an appeal to the Appellate Court, docketed as CA-G.R. No.
33543-R, which as above stated, elevated it to this instance.
We affirm. The Comprehensive Policy issued by the insurance company includes loss of or
damage to the motor vehicle by "burglary . . . or theft." It is settled that the act of Catiben in
taking the vehicle for a joy ride to Toril, Davao City, constitutes theft within the meaning of
the insurance policy and that recovery for damage to the car is not barred by the illegal use of
the car by one of the station boys.
". . . 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.’(W)ho
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 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 ‘hurto de uso.’ 1
There need be no prior conviction for the crime of theft to make an insurer liable under the
theft clause of the policy. Upon the facts stipulated by the parties it is admitted that Catiben
had taken the vehicle for a joy ride and while the same was in his possession he bumped it
against an electric post resulting in damages. That act is theft within a policy of insurance. In a
civil action for recovery on an automobile insurance, the question whether a person using a
certain automobile at the time of the accident stole it or not is to be determined by a fair
preponderance of evidence and not by the rule of criminal law requiring proof of guilt beyond
reasonable doubt. 2 Besides, there is no provision in the policy requiring prior criminal
conviction for theft.
ACCORDINGLY, finding no error in the judgment appealed from, the same is hereby affirmed.
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, self-ignition 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 road-testing 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 girlfriend 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.