Case Summary (G.R. No. 188376)
Procedural History
Plaintiff Aurelio Lacson sued Malayan Insurance Co., Inc. in CFI Negros Occidental for recovery under a "private car comprehensive" insurance policy after his insured Toyota Land Cruiser was taken without permission from a repair shop and was subsequently damaged in a vehicular accident. The CFI rendered judgment in favor of Lacson. The Court of Appeals affirmed the CFI decision. Malayan Insurance sought review by certiorari in the Supreme Court, advancing four principal assignments of error. The Supreme Court denied the petition and affirmed the appellate decision in toto.
Facts Relevant to Liability
The insured vehicle (Toyota NP Land Cruiser, Model 1972) was insured under policy No. BIFC/PV-0767 for the period Dec. 3, 1974 to Dec. 3, 1975. Lacson delivered the vehicle to Carlos Jamelo’s repair shop on Dec. 1, 1975. On Dec. 2, 1975, employees of Jamelo — including Rogelio Mahinay — took and drove the vehicle without permission, and it met an accident in Bo. Taculing, Bacolod City, causing damage estimated at P21,849.62. Jamelo filed a criminal complaint for Qualified Theft against his employees; one accused, Rogelio Mahinay, pleaded guilty and was subsequently convicted of theft. Lacson presented a demand letter to the insurer before filing suit; the insurer refused payment, asserting the driver at the time of the accident lacked a valid license and thus the claim was not covered.
Insurance Policy Coverage and Claim
The policy was a comprehensive private car policy with a theft coverage clause. The policy expressly fixed the insurer’s liability for the vehicle at a maximum of P20,000, subject to a deductible franchise of P800. Lacson claimed the full extent of his loss under the policy after the insurer refused payment. He submitted an estimate from Fidelity Motor Company showing damage of P21,849.62 and a prior written demand for payment to the insurer.
Insurer’s Principal Defenses and Assignments of Error
- The insurer argued that a criminal conviction for theft is necessary before a theft-coverage claim becomes payable; absent such conviction, the taking was not proven as theft under the policy.
- The insurer contended that the evidence did not sufficiently establish actual damages warranting the award of P20,000.00.
- The insurer raised nonjoinder of the real party in interest, asserting that Bacolod IFC (BIFC), named in the policy as having an interest, should have been impleaded or that Lacson lacked standing to sue for the full amount.
- The insurer claimed error in the award of interest from the date of filing the complaint rather than from the date of decision or finality.
Court’s Interpretation of “Theft” Coverage and Necessity of Criminal Conviction
The courts (trial and appellate) held that the unauthorized taking of the vehicle by another person without permission or authority from the owner or person-in-charge falls within the ambit of “theft” as contemplated in the insurance policy and is therefore compensable. The Supreme Court agreed with this interpretation and found that a criminal conviction is not an absolute prerequisite for recovery under the theft coverage. The fact that one of the accused, Rogelio Mahinay, pleaded guilty and was convicted of theft further removed any doubt that the taking was unlawful. The court emphasized that the unlawful taking and subsequent accident causing damage were established by unrebutted testimony.
Evidence of Damages and Policy Limits
The appellate court found no error in awarding the policy limit (P20,000 less the P800 deductible) as actual damage, despite the Fidelity Motor Company estimate of P21,849.62. The courts reasoned that actual repair is not a prerequisite for recovery because the insured has the option either to pay for repairs and claim reimbursement or to await insurance proceeds. Given the policy’s fixed liability limit, the insurer’s exposure was capped. The evidence presented — the Fidelity estimate and the unrebutted testimony regarding the taking and damage — was held to be competent and sufficient to support the award.
Real Party in Interest and Nonjoinder Issue
The policy contained a clause stating loss or damage under the policy shall be payable to Bacolod IFC as their interest may appear, subject to policy terms and conditions. The appellate court and the Supreme Court noted that Bacolod IFC’s recorded interest in the vehicle was relatively small (P2,000) compared with Lacson’s interest (P26,000). Bacolod IFC did not intervene or join as plaintiff despite being aware, through its counsel, that Lacson was pursuing a claim against the insurer. The courts inferred that BIFC was not interested in joining the suit and therefore lacked a basis to upset Lacson’s action as the party prosecuting the claim.
...continue readingCase Syllabus (G.R. No. 188376)
Procedural Posture
- Petition by certiorari to the Supreme Court seeking review of the Decision of the Court of Appeals in CA-G.R. No. 63398-R (Aurelio Lacson vs. Malayan Insurance Co., Inc.), which affirmed the judgment of the Court of First Instance (CFI) of Negros Occidental.
- Trial court (CFI) had held petitioner (Malayan Insurance Co., Inc.) liable to pay private respondent Aurelio Lacson the amount of P20,000.00 (less deductible franchise), with legal interest from date of filing of the complaint, P5,000.00 as attorney's fees and litigation expenses, and costs.
- The Court of Appeals affirmed the trial court judgment and denied petitioner’s motion for reconsideration.
- Petitioner brought the instant petition to the Supreme Court raising four principal grounds of error; the Supreme Court denied the petition for lack of merit and affirmed the decision in toto.
Parties and Subject Matter
- Petitioner-appellant: Malayan Insurance Co., Inc. (defendant in the trial court).
- Respondents-appellees: The Honorable Court of Appeals and Aurelio Lacson (plaintiff in the trial court).
- Private respondent (plaintiff): Aurelio Lacson, owner of the insured vehicle.
- Third-party/identified interest: Bacolod IFC (Bacolod Industrial Finance Corporation, abbreviated BIFC or Bacolod IFC) identified in the policy memorandum as having an interest in the loss or damage "as their interest may appear."
Facts of the Case
- Insured vehicle: Toyota NP Land Cruiser, Model 1972, Plate No. NY-362, Engine No. F-374325.
- Insurance policy: "Private car comprehensive" policy No. BIFC/PV-0767 for the period Dec. 3, 1974 to Dec. 3, 1975.
- On Dec. 1, 1975, Lacson delivered the vehicle to the repair shop of Carlos Jamelo for repair.
- On Dec. 2, 1975, while at Jamelo’s shop, the vehicle was taken and driven by Rogelio Mahinay together with co-employees Johnny Mahinay, Rogelio Macapagong, and Rogelio Francisco, resulting in an accident at Bo. Taculing, Bacolod City.
- The accident caused damage to the vehicle estimated at P21,849.62.
- Shopowner Carlos Jamelo reported the incident to the police and later instituted a criminal case for Qualified Theft against his employees who had taken the vehicle.
- One of the accused (Rogelio Mahinay) pleaded guilty and was convicted of Theft in the criminal case; the unlawful taker drove the vehicle and the damage was sustained in the course of the unlawful taking.
- Prior to filing suit, private respondent sent a letter of demand (Exh. "H") to petitioner for payment of P21,849.62 as estimated by Fidelity Motor Company; petitioner refused to pay, prompting the civil action.
Insurance Policy Coverage and Limits
- Policy described as "private car comprehensive" covering the insured vehicle for the one-year insurance period.
- The policy (Exh. "A") fixed petitioner’s liability at P20,000.00, less a deductible franchise of P800.00 — i.e., maximum coverage under the policy is P20,000.00 subject to the deductible.
- The policy memorandum contained the statement: "LOSS on DAMAGE, IF ANY, under this policy shall be payable to the Bacolod IFC as their interest may appear, subject otherwise to the terms and conditions, clauses and warranties of this policy."
Trial Court Judgment
- The CFI of Negros Occidental rendered judgment in favor of plaintiff Aurelio Lacson.
- The trial court ordered petitioner to pay private respondent the amount of P20,000.00 less deductible franchise (P800.00), which is the maximum coverage of the policy.
- The trial court awarded legal interest from the date of filing of the complaint, P5,000.00 as attorney’s fees and expenses in litigation, and costs.
Court of Appeals Decision
- The Court of Appeals affirmed the decision of the trial court.
- The appellate court rejected petitioner’s contentions and upheld the trial court’s findings on coverage, evidentiary sufficiency for damages, the nonjoinder/real party in interest issue, and the award of interest from filing.
- The Court of Appeals articulated that the taking of the vehicle by another without permission or authority falls within the ambit of "theft" as contemplated in the policy and is compensable.
- The appellate court accepted the Fidelity Motor Company estimate of P21,849.62 as the basis for actual damage and held that actual repair is not necessary because the insured may either advance repair expenses or await insurance proceeds.
Assignments of Error Presented by Petitioner
- First: The Court of Appeals erred in holding that conviction of theft is not necessary for a claim to be compensable under