FIRE INSURANCE LAW

Camu, Madelaine
Narvasa, Jameshel
Patriarca, Ace
Yan, Alyssa
3CLM

RIZAL SURETY & INSURANCE COMPANY VS COURT OF APPEALS

GR NO 112360, JULY 18, 2000

FACTS:
Transworld Knitting Mills procured a Fire Insurance with
Rizal Suretyship & insurance Company initially for P 1,000,000
and eventually increased to P 1,500,000 covering the period
from April 14, 1980 to March 13, 1981. A four span building
was part of the policy. The same pieces of property were also
insured with New India Assurance Company. On January 12,
1981, fire broke out in the compound of Transworld, raging the
middle portion of its four span building, together with the twostorey building behind it where gaming machines were stored.
The company filed its claims with Rizal Surety & Insurance and
New India Assurance but to no avail. Hence, Transworld
bought a suit in court aiming to make Rizal Surety & Insurance
Company pay for almost 3 million including legal interest and
damages. Rizal Surety & Insurance Company claimed that the
policy only covered damages on the four span building and
not the two-storey building. The trial court ruled in favor of
Transworld ordering Rizal Surety &Insurance Company to pay

ISSUE:
Whether or not Rizal Surety &
Insurance Company is liable for loss of
the two-storey building considering
that the fire insurance sued upon
covered only the contents of the fourspan building.

HELD:
Yes, Rizal Surety & Insurance Company should have
specifically excluded from the coverage the two-storey
building if it was intended to be excluded. But Rizal Surety
&Insurance Company instead continue to provide fire
insurance covering the materials stored within Transworlds
Premises knowing the existence of such building adjoining
and intercommunicating with the four-span building. There
has been a creation of doubt regarding the stipulation as to
the coverage of the insurance policy. As the provision of
the Insurance Code provide, Terms in an Insurance policy,
which are ambiguous, equivocal or uncertain are to be
construed against the insurer. In this case, doubt should be
resolved against Rizal Surety & Insurance Company whose
officer drafted the Fire Insurance Policy.

American Home Assurance Company vs. Tantuco

Enterprises, Inc. G.R. No. 138941, Oct. 8, 2001
Facts:
Respondent Tantuco Enterprises Inc, is engaged in
coconut oil milling industry. It owns two oil mills which
were separately ensured with fire insurance policy
issued by the petitioner. The first oil mill was insured
for P3000000 for the period March 1, 1991-1992. The
second oil mill was insured for P6000000 for the same
term. Offucial receipts were issued by the petitioner's
agent for the payment of full amount of premium. On
September 30, 1991, a fire broke out and burned the
second oil mill. Tantuco immediately notified the
petitioner who sent it appraisers to inspect the burned
premises. Thereafter a letter was sent by the
petitioner rejecting Tantuco's claim for damage on the
ground that no policy was issued by it covering the
burned oil mill. A complaint for specific performaces

Issue:
Whether or not the Court of Appeals
erred in its legal interpretation of "Fire
Extinguishing Appliances Warranty" of
the policy.

Held:
No, the court did not erred in its legal interpretation
of the policy. In continuing the words used descriptive
of a building insured , the greatest liberality is shown
by the court in giving effect to the insurance. In view
of custom of insurance agents to examine the
building before writing policies upon them, and since
a mistake as to identity and character of the building
is extremely unlikely, the courts are inclined to
consider that the insurance policy covers any building
which the parties manifestly intended to insure,
however inaccurate the description maybe.