Case Digest (G.R. No. 198174)
Facts:
The case involves a petition for review on certiorari filed by Alpha Insurance and Surety Co. (petitioner) against Arsenia Sonia Castor (respondent). The events leading to the case began on February 21, 2007, when the respondent entered into a contract of insurance, specifically Motor Car Policy No. MAND/CV-00186, with the petitioner for her motor vehicle, a Toyota Revo DLX DSL. The insurance policy stipulated that the petitioner would indemnify the respondent for any loss or damage to the vehicle during the coverage period from February 26, 2007, to February 26, 2008, up to the amount of Six Hundred Thirty Thousand Pesos (P630,000.00).
On April 16, 2007, the respondent instructed her driver, Jose Joel Salazar Lanuza, to take the vehicle for a tune-up. However, Lanuza did not return with the vehicle, and despite the respondent's diligent efforts to locate it, the vehicle remained missing. The respondent subsequently reported the incident to the police and notified the p...
Case Digest (G.R. No. 198174)
Facts:
Contract of Insurance: On February 21, 2007, respondent Arsenia Sonia Castor entered into a contract of insurance (Motor Car Policy No. MAND/CV-00186) with petitioner Alpha Insurance and Surety Co. for her Toyota Revo DLX DSL vehicle. The policy covered the period from February 26, 2007, to February 26, 2008, with a coverage amount of P630,000.00 in case of loss or damage.
Theft of the Vehicle: On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza, to take the vehicle to an auto-shop for a tune-up. However, Lanuza did not return the vehicle, and despite diligent efforts, it could not be located. Respondent reported the theft to the police and notified petitioner of the loss, demanding payment of the insurance proceeds.
Denial of Claim: In a letter dated July 5, 2007, petitioner denied respondent's claim, citing an exclusion clause in the policy. The clause stated that the company would not be liable for "any malicious damage caused by the Insured, any member of his family, or by a person in the Insured's service." Petitioner argued that the theft by respondent's driver fell under this exception.
RTC Decision: Respondent filed a Complaint for Sum of Money with Damages before the Regional Trial Court (RTC) of Quezon City. On December 19, 2008, the RTC ruled in favor of respondent, ordering petitioner to pay P466,000.00 plus legal interest, attorney’s fees, and costs of suit.
CA Decision: Petitioner appealed to the Court of Appeals (CA), which affirmed the RTC decision in toto on May 31, 2011. Petitioner's Motion for Reconsideration was denied on August 10, 2011.
Petition to the Supreme Court: Petitioner filed a Petition for Review on Certiorari, arguing that the CA erred in ruling that the exclusion clause did not cover loss but only damage.
Issue:
The core issue is whether the loss of respondent's vehicle due to theft by her driver is excluded under the insurance policy, specifically under the "malicious damage" exception in Section III of the policy.
Ruling:
The Supreme Court denied the petition and affirmed the CA decision. The Court ruled that the loss of respondent's vehicle is not excluded under the insurance policy.
Ratio:
Interpretation of "Loss" and "Damage": The Court held that the terms "loss" and "damage" have distinct meanings in common usage. "Loss" refers to the act of losing possession, while "damage" refers to injury or harm to property. The exclusion clause in the policy specifically refers to "malicious damage," which pertains to injury caused by a person in the insured's service, not the loss of the vehicle.
No Ambiguity in Policy Terms: The Court found no ambiguity in the policy terms. The policy clearly delineates between "loss" and "damage" throughout its provisions. Since the exclusion clause only mentions "damage," it cannot be construed to include "loss."
Contract of Adhesion: Insurance contracts are contracts of adhesion, and any ambiguity in their terms must be construed liberally in favor of the insured and strictly against the insurer. The Court emphasized that limitations on liability should be interpreted in a way that precludes the insurer from evading its obligations.
Theft by Driver Not Excluded: The Court agreed with the RTC and CA that theft perpetrated by the insured's driver is not an exception under the policy. The policy does not qualify who may commit the theft, and there is no categorical declaration excluding theft by a person in the insured's service.
Fraud Not Proven: The Court noted that if the theft had been committed by the insured herself, it would constitute fraud and be excluded under the policy. However, there was no evidence of fraud or collusion by the insured in this case.
Conclusion:
The Supreme Court upheld the CA decision, ruling that the loss of respondent's vehicle due to theft by her driver is covered under the insurance policy. The exclusion clause for "malicious damage" does not apply to the loss of the vehicle.