THIRD DIVISION

G.R. No. 173773 : November 28, 2012

PARAMOUNT INSURANCE CORPORATION, Petitioner, v. SPOUSES YVES and

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking the reversal and setting aside of the Decision1  dated April 12, 2005 and
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Resolution2  dated July 20, 2006 of the Court of Appeals in CA-G.R. CV No. 61490.
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The undisputed facts follow.

On May 26, 1994, respondents insured with petitioner their 1994

Toyota Corolla sedan under a comprehensive motor vehicle insurance policy for one
year.

During the effectivity of said insurance, respondents car was unlawfully taken. Hence,
they immediately reported the theft to the Traffic Management Command of the PNP
who made them accomplish a complaint sheet. In said complaint sheet, respondents
alleged that a certain Ricardo Sales (Sales) took possession of the subject vehicle to
add accessories and improvements thereon, however, Sales failed to return the subject
vehicle within the agreed three-day period.

As a result, respondents notified petitioner to claim for the reimbursement of their lost
vehicle. However, petitioner refused to pay.

Accordingly, respondents lodged a complaint for a sum of money against petitioner

After presentation of respondents evidence, petitioner filed a Demurrer to Evidence.

Acting thereon, the trial court dismissed the complaint filed by respondents. The full
text of said Order3  reads:
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Before the Court is an action filed by the plaintiffs, spouses Yves and Maria Teresa
Remondeulaz against the defendant, Paramount Insurance Corporation, to recover from
the defendant the insured value of the motor vehicle.

It appears that on 26 May 1994, plaintiffs insured their vehicle, a 1994 Toyota Corolla
XL with chassis number EE-100-9524505, with defendant under Private Car Policy No.
PC-37396 for Own Damage, Theft, Third-Party Property Damage and Third-Party
Personal Injury, for the period commencing 26 May 1994 to 26 May 1995. Then on 1
December 1994, defendants received from plaintiff a demand letter asking for the
payment of the proceeds in the amount of PhP409,000.00 under their policy. They
alleged the loss of the vehicle and claimed the same to be covered by the policys
provision on "Theft." Defendant disagreed and refused to pay.

It appears, however, that plaintiff had successfully prosecuted and had been awarded
the amount claimed in this action, in another action (Civil Case No. 95-1524 entitled
Sps. Yves and Maria Teresa Remondeulaz versus Standard Insurance Company, Inc.),
which involved the loss of the same vehicle under the same circumstances although
under a different policy and insurance company. This, considered with the principle that
an insured may not recover more than its interest in any property subject of an
insurance, leads the court to dismiss this action.

SO ORDERED.4 ςrνll

Not in conformity with the trial courts Order, respondents interposed an appeal to the
Court of Appeals (appellate court).

In its Decision dated April 12, 2005, the appellate court reversed and set aside the
Order issued by the trial court, to wit: chanroblesvirtuallawlibrary

Indeed, the trial court erred when it dismissed the action on the ground of double
recovery since it is clear that the subject car is different from the one insured with
another insurance company, the Standard Insurance Company. In this case, defendant-
appellee herein petitioner denied the reimbursement for the lost vehicle on the ground
that the said loss could not fall within the concept of the "theft clause" under the
insurance policy x x x

xxx

WHEREFORE, the October 7, 1998 Order of the Regional Trial Court of Makati City,
Branch 63, is hereby REVERSED and SET ASIDE

x x x.

SO ORDERED.5 ςrνll

Petitioner, thereafter, filed a motion for reconsideration against said Decision, but the
same was denied by the appellate court in a Resolution dated July 20, 2006.

Consequently, petitioner filed a petition for review on certiorari before this Court
praying that the appellate courts Decision and Resolution be reversed and set aside.

In its petition, petitioner raises this issue for our resolution: chanroblesvirtuallawlibrary

Whether or not the Court of Appeals decided the case a quo in a way not in accord with
law and/or applicable jurisprudence when it promulgated in favor of the respondents
Remondeulaz, making Paramount liable for the alleged "theft" of respondents vehicle.6 ςrνll
Essentially, the issue is whether or not petitioner is liable under the insurance policy for
the loss of respondents vehicle.

Petitioner argues that the loss of respondents vehicle is not a peril covered by the
policy. It maintains that it is not liable for the loss, since the car cannot be classified as
stolen as respondents entrusted the possession thereof to another person.

We do not agree.

Adverse to petitioners claim, respondents policy clearly undertook to indemnify the

SECTION III LOSS OR DAMAGE

1. The Company will, subject to the Limits of Liability, indemnify the insured against
loss of or damage to the Scheduled Vehicle and its accessories and spare parts whilst
thereon:

(a) by accidental collision or overturning, or collision or overturning consequent upon

(b) by fire, external explosion, self-ignition or lightning or burglary, housebreaking or

(c) by malicious act;

(d) whilst in transit (including the process of loading and unloading) incidental to such
transit by road, rail, inland waterway, lift or elevator.7ςrνll

Apropos, we now resolve the issue of whether the loss of respondents vehicle falls
within the concept of the "theft clause" under the insurance policy.

In People v. Bustinera,8  this Court had the occasion to interpret the "theft clause" of an
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insurance policy. In this case, the Court explained that when one takes the motor
vehicle of another without the latters consent even if the motor vehicle is later
returned, there is theft there being intent to gain as the use of the thing unlawfully
taken constitutes gain.

Also, in Malayan Insurance Co., Inc. v. Court of Appeals,9  this Court held that the
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taking of a vehicle by another person without the permission or authority from the
owner thereof is sufficient to place it within the ambit of the word theft as contemplated
in the policy, and is therefore, compensable.

Moreover, the case of Santos v. People10  is worthy of note. Similarly in Santos, the
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owner of a car entrusted his vehicle to therein petitioner Lauro Santos who owns a
repair shop for carburetor repair and repainting. However, when the owner tried to
retrieve her car, she was not able to do so since Santos had abandoned his shop. In the
said case, the crime that was actually committed was Qualified Theft. However, the
Court held that because of the fact that it was not alleged in the information that the
object of the crime was a car, which is a qualifying circumstance, the Court found that
Santos was only guilty of the crime of Theft and merely considered the qualifying
circumstance as an aggravating circumstance in the imposition of the appropriate
penalty. The Court therein clarified the distinction between the crime of Estafa and
Theft, to wit:
chanroblesvirtuallawlibrary

x x x The principal distinction between the two crimes is that in theft the thing is taken
while in estafa the accused receives the property and converts it to his own use or
benefit. However, there may be theft even if the accused has possession of the
property. If he was entrusted only with the material or physical (natural) or de facto
possession of the thing, his misappropriation of the same constitutes theft, but if he has
the juridical possession of the thing his conversion of the same constitutes
embezzlement or estafa.11 ςrνll

In the instant case, Sales did not have juridical possession over the vehicle. Hence, it is
apparent that the taking of repondents vehicle by Sales is without any consent or
authority from the former.

Records would show that respondents entrusted possession of their vehicle only to the
extent that Sales will introduce repairs and improvements thereon, and not to
permanently deprive them of possession thereof. Since, Theft can also be committed
through misappropriation, the fact that Sales failed to return the subject vehicle to
respondents constitutes Qualified Theft. Hence, since repondents car is undeniably
covered by a Comprehensive Motor Vehicle Insurance Policy that allows for recovery in
cases of theft, petitioner is liable under the policy for the loss of respondents vehicle
under the "theft clause."

All told, Sales act of depriving respondents of their motor vehicle at, or soon after the
transfer of physical possession of the movable property, constitutes theft under the
insurance policy, which is compensable.12 ςrνll

WHEREFORE, the instant petition is DENIED. The Decision dated April 12, 2005 and
Resolution dated July 20, 2006 of the Court of Appeals are hereby AFFIRMED in toto. ςrαlαωlιbrαr

SO ORDERED.