The recovery of a carnapped vehicle does not prevent its insured owner from claiming and receiving full payment for monetary claim under an insurance policy, the Supreme Court (SC) ruled.

The SC pointed out that insurance would lose its purpose if the insured had to wait indefinitely for the recovery of the carnapped vehicle or was forced to buy a replacement only to have the original vehicle returned later.

In a decision written by Associate Justice Henri Jean Paul B. Inting and made public on Tuesday, Aug. 19, the SC directed UCPB General Insurance Co., Inc. (UCPВ) to pay Wilfrido C. Wijangco for the loss of his stolen Jaguar vehicle which was carnapped on Aug. 24, 2006 in Paranaque City.

A summary of the decision issued by the SC’s Office of the Spokesperson stated that Wilfrido’s son, Andrew, was held at gunpoint in a parking lot. The armed men threatened him and drove away with the car.

The theft was reported to the police, and Wilfrido filed an insurance claim with UCPB, submitting all the required documents.

UCPB later informed Wilfrido that the vehicle had been recovered by the Traffic Management Group (TMG). UCPB put his claim on hold and said it would close it unless he submitted a TMG investigation clearance.

With no progress on his claim, Wilfrido filed a case against the insurer.

The Regional Trial Court (RTC) granted the insurance claim as it ruled that the theft triggered UCPB’s liability regardless of the recovery of the vehicle.

The Court of Appeals (CA) reversed the RTC’s ruling. Wilfrido, represented by his son, elevated the case to the SC.

In resolving the petition, the SC said that under Section 2(a) of the Insurance Code, a contract of insurance refers to "an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event."

It said that it is indubitable that Wilfrido, as the registered owner of the carnapped vehicle, has an insurable interest over it at the time when the Insurance Policy took effect and when the vehicle was supposedly lost.

It also said that there was no dispute that when the vehicle was carnapped, Wilfrido had already paid the insurance premium such that the Insurance Policy was in effect at the time of the vehicle's loss.

Thus, the SC said that UCPB Insurance is bound by contract to indemnify Wilfrido against the loss of the subject vehicle, provided that the loss arose from a risk or peril covered by the Insurance Policy.

It pointed out that in non-life insurance, Section 249 of the Insurance Code creates an obligation on the part of the insurer to pay an insurance claim within specified periods of time after it has received proof of loss from the insured.

It stressed that Section 249 provides a maximum period of 90 days after receipt of the proof of loss within which an insurance claim under a non-life insurance must be paid by the insurer; otherwise, the insured would be entitled to interest on the insurance proceeds at the rate of twice the ceiling prescribed by the Monetary Board.

In Wilfrido’s case, the SC said that through a letter dated March 21, 2007, UCPB Insurance informed Wilfrido that the subject vehicle was recovered by Task Force Limbas.

By then, 162 days had already elapsed from the time when Andrew submitted the proof of loss to UCPB Insurance's adjuster on October 10, 2006, it also said.

“Clearly, Wilfrido cannot be compelled to accept the recovered vehicle, as he was informed of its recovery beyond the 90-day period for payment in Section 249 of the Insurance Code,” it stressed.

In the dispositive portion of the decision, the SC directed UCPB General Insurance to pay Wilfrido the insurance proceeds of P1.8 million; attorney’s fees of P180,000; double interest on aggregate amount of P1.98 million; moral damages of P100,000; exemplary damages of P100,000; and the cost of suit.