INSURANCE companies remain liable for theft claims even if a stolen vehicle is later recovered, the Supreme Court (SC) said, as it ruled that recovery does not nullify the insured’s right to payment under an insurance policy.
In a 38-page decision penned by Associate Justice Henri Jean Paul B. Inting, the tribunal said theft is consummated once a vehicle is unlawfully taken, and later recovery — especially if delayed or in poor condition — does not erase the insurer’s obligation.
“Common sense dictates that the mere recovery of a stolen vehicle does not and will not erase the fact of theft,” according to the ruling released on Tuesday.
“Several cases decided by the court also laid down the rule that the subsequent recovery of a stolen motor vehicle does not negate theft, which is perfected from the moment of unlawful taking.”
The high tribunal stressed that the purpose of insurance would be undermined if policyholders were forced to wait indefinitely for the possible return of a stolen vehicle or compelled to accept a compromised one.
Citing Section 249 of the Insurance Code, the court noted that insurers are required to pay claims within specified periods after receiving proof of loss.
“Once this period lapses and before the insured vehicle is recovered, the insurer’s payment for the loss becomes final, and the insured cannot be compelled to accept the recovered vehicle,” it added in a separate statement.
Applying this principle, the Supreme Court ordered UCPB General Insurance Co. to pay businessman Wilfrido C. Wijangco P1.8 million in insurance proceeds, along with double interest, P180,000 in attorney’s fees, and P200,000 in damages.
Mr. Wijangco’s Jaguar was stolen at gunpoint and later recovered in poor condition after UCPB failed to settle the claim within the 90-day period mandated under the Insurance Code.
The decision clarifies insurers’ obligations in theft cases, reinforcing that recovery of stolen property — particularly when untimely or damaged — does not absolve them of liability. — Chloe Mari A. Hufana
