03 RAFAEL (REX) VERENDIA vs. CA and FIDELITY & SURETY CO.

OF THE PHILIPPINES
G.R. No. 75605 January 22, 1993|Melo|Pabrua
Topic: Interpretation insurer's liability and compliance therewith is a condition precedent to the
insured's right to recovery from the insurer. As it is also a contract of adhesion,
Doctrine: An insurance contract, which is a contract of adhesion, should be an insurance contract should be liberally construed in favor of the insured and
liberally construed in favor of the insured and strictly against the insurer strictly against the insurer company which usually prepares it.
company which usually prepares it. However, when the insured acts in bad
faith, the terms of the policy should be strictly construed against the insured. Considering, however, the fact that Verendia used a false lease contract to
support his claim under Fire Insurance Policy, the terms of the policy should be
Facts: strictly construed against the insured.
1. Fidelity issued a Fire Insurance Policy covering Verendia's residential building.
2. Verendia also insured the same building with The Country Bankers Insurance Verendia failed to live by the terms of the policy, specifically Section 13 thereof
for P56,000.00, and The Development Insurance for P400,000.00. which is expressed in terms that are clear and unambiguous, that all benefits
3. While the three fire insurance policies were in force, the insured property was under the policy shall be forfeited "If the claim be in any respect fraudulent, or
completely destroyed by fire. if any false declaration be made or used in support thereof, or if any fraudulent
4. Fidelity was informed of the loss and despite demands, refused payment means or devises are used by the Insured or anyone acting in his behalf to
under its policy. obtain any benefit under the policy". Verendia, having presented a false
5. Verendia filed a complaint praying for payment of P385,000.00, legal interest, declaration to support his claim for benefits in the form of a fraudulent lease
plus attorney's fees and litigation expenses. contract, he forfeited all benefits therein by virtue of Section 13 of the policy in
6. Fidelity averred that the policy was avoided by reason of over-insurance; that the absence of proof that Fidelity waived such provision. Worse yet, by
Verendia maliciously represented that the building at the time of the fire was presenting a false lease contract, Verendia, reprehensibly disregarded the
leased under a contract executed in favor of Roberto Garcia, when actually it principle that insurance contracts are uberrimae fidae and demand the most
was a Marcelo Garcia who was the lessee. abundant good faith
7. TC: in favor of Fidelity. Paragraph 3 of the policy was violated by Verendia
when he failed to inform Fidelity of his other insurance coverages.
8. IAC: reversed TC. There was no misrepresentation concerning the lease for
the contract was signed by Marcelo Garcia in the name of Roberto Garcia;
and Paragraph 3 of the policy contract requiring Verendia to give notice to
Fidelity of other contracts of insurance was waived by Fidelity as shown by its
conduct in attempting to settle the claim of Verendia.
9. SC: Verendia used a false lease contract to support his claim under Fire
Insurance Policy. Verendia admitted that it was not Robert Garcia who signed
the lease contract. According to Verendia, it was signed by Marcelo Garcia,
cousin of Robert, who had been paying the rentals all the while. Verendia,
however, failed to explain why Marcelo had to sign his cousin's name when he
in fact was paying for the rent and why he (Verendia) himself, the lessor,
allowed such a ruse. Fidelity's conclusions on these proven facts appear,
therefore, to have sufficient bases; Verendia concocted the lease contract to
deflect responsibility for the fire towards an alleged "lessee", inflated the value
of the property by the alleged monthly rental of P6,500 when in fact, the
Provincial Assessor of Rizal had assessed the property's fair market value to be
only P40,300.00, insured the same property with two other insurance companies
for a total coverage of around P900,000.

Issue: WON the insurance contract be construed in favor of Verendia –No.

Held: Basically a contract of indemnity, an insurance contract is the law

between the parties. Its terms and conditions constitute the measure of the