GR 198174; (September, 2013) (Digest)
G.R. No. 198174; September 2, 2013
ALPHA INSURANCE AND SURETY CO., PETITIONER, vs. ARSENIA SONIA CASTOR, RESPONDENT.
FACTS
Respondent Arsenia Sonia Castor insured her vehicle with petitioner Alpha Insurance and Surety Co. under a Motor Car Policy. The policy obligated the insurer to indemnify the insured for loss or damage up to ₱630,000.00. On April 16, 2007, the insured vehicle, entrusted to the respondent’s driver for a tune-up, was stolen by the driver and never recovered. The respondent reported the theft to the police and filed a claim with the insurer.
The insurer denied the claim based on an exception clause in the policy, which stated the company shall 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.” The insurer argued that the theft by the driver, a person in the insured’s service, constituted a malicious “damage” excluded from coverage. The respondent contended the exception referred only to physical “damage,” not “loss” due to theft.
ISSUE
Whether the loss of the vehicle due to theft by the insured’s driver is excluded from coverage under the insurance policy’s exception for “malicious damage” caused by a person in the insured’s service.
RULING
The Supreme Court ruled in favor of the respondent, affirming the lower courts’ decisions ordering the insurer to pay the claim. The Court held that the loss from theft was not excluded. The insurance policy’s coverage under Section III explicitly listed “theft” as a covered peril. The exception clause relied upon by the insurer, however, used only the term “malicious damage.”
The Court applied the rule that insurance contracts are contracts of adhesion, and ambiguities are construed strictly against the insurer and liberally in favor of the insured. The term “damage” in the exception clause is not synonymous with “loss.” “Damage” typically refers to injury or harm to property, while “loss” signifies being deprived of property. Had the insurer intended to exclude loss from theft by a servant, it could have clearly stated so in the exception. Its failure to do so renders the clause ambiguous, and it cannot be extended to exclude the loss in this case. Therefore, the insurer remains liable under the policy’s clear coverage for loss due to theft.