Rizal Surety & Insurance Co. vs.

Court of Appeals
G.R. No. 112360, [July 18, 2000], 390 PHIL 1126-1140
Doctrine:
If the insurance policy did not specifically exclude an integral portion of
the said insured property or building, it should be considered covered by such
insurance.
Facts:
Rizal Surety & Insurance Company issued a fire insurance policy in favor of
Transworld Knitting Mills, Inc. The initial coverage was for P1,000,000.00, which
was later increased to P1,500,000.00.
On January 12, 1981, a fire broke out in Transworld's compound, damaging
the four-span building and a two-story building where fun and amusement
machines and spare parts were stored. Transworld filed insurance claims with
Rizal Surety and New India Assurance Company, but both claims were denied.
Transworld then filed a lawsuit against both insurance companies for the
collection of money and damages. The trial court dismissed the case against New
India Assurance but ordered Rizal Surety to pay Transworld P826,500.00 for the
losses suffered.
Both parties appealed to the Court of Appeals, which modified the decision
and ordered New India Assurance to pay P1,818,604.19 and Rizal Surety to pay
P470,328.67. Due to this, New India Assurance appealed to the Supreme Court,
but the appeal was denied.
Rizal Surety and Transworld filed a motion for reconsideration before the
Court of Appeals, which modified its decision regarding the imposition of interest.
Rizal Surety then filed a petition for review before the Supreme Court.
Issue:
Whether the two-story building where the fun and amusement machines
and spare parts were stored is covered by the fire insurance policy.
Ruling:
 The two-story building is covered by the fire insurance policy.
The trial court and the Court of Appeals found that the two-storey building
was not an annex but an integral part of the four-span building described in the
policy. Factual findings by the Court of Appeals are conclusive and should not be
reviewed by the Supreme Court.
The principle of interpreting ambiguous terms in insurance policies strictly
against the insurer and liberally in favor of the insured is applied. Since the policy
did not specifically exclude the two-storey building, it should be considered
covered by the insurance.