Rizal Surety & Insurance Company vs. Court of Appeals; G.R. No. 112360. July 18, 2000


Rizal Surety & Insurance issued Fire Insurance Policy on buildings in favor of Transworld for 1.5M.  The same pieces of property were also insured with New India Assurance. The policy covers all that is “contained and/or stored in the premises occupied or forming part of the building situated in the Compound”.

A fire broke out in the compound of Transworld which partly destroyed its four-span building while completely damaged its 2 story annex building. Private respondent brought an action for collection of sum of money and damages, against Rizal Insurance and New India.

Rizal Surety argued that the fire insurance policy only covers contents of the main building and did not include those stored in the two-storey annex building.

The private respondent theorized that the so called “annex” was not an annex but was actually an integral part of the four-span building and therefore, the goods and items stored therein were covered by the same fire insurance policy.

The RTC dismissed the case against New India and ordered Rizal Surety to pay Transworld actual value of the losses suffered by it.


WON the fire insurance policy in question did not limit its coverage to what were stored in the four-span building.


YES. The so called “annex” was not an annex building but an integral and inseparable part of the four-span building described in the policy. Article 1377 of the New Civil Code provides: The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.”

Conformably, it stands to reason that the doubt should be resolved against the petitioner, Rizal Surety Insurance Company, whose lawyer or managers drafted the fire insurance policy contract under scrutiny.

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