Rizal Surety v CA G.R. No. 112360. July 18, 2000Facts:Rizal Surety issued a 1 million peso fre insurance policy with Transworld. This was increased to 1.5 million. A four span building was part of the policy. A fre broke out and gutted the building together with a two storey building behind it weregaming machines were stored. The company fled its claims but to no a!ail. "ence it brought a suit in court. #t aimed to make Rizal pay for almost $ million including legal interest anddamages. Rizal claimed that the policy only co!ered damage on the four span building and not the two storey building. The trial court ruled in Transworld%s fa!or and ordered Rizal to pay actual damages only. The court of appeals increased the damages. The insurance company fled a &'R. The (A answered by modifying the imposition of interest. )ot satisfed the insurance company petitioned to the Supreme (ourt.ssue:*+) Rizal Surety is liable for loss of the two,storey building considering that the fre insurance policy sued upon co!ered only the contents of the four,span building.!el": -es. .etition dismissed.Ratio/The policy had clauses on the building co!erage that read/0contained and1or stored during the currency of this .olicy in the premises occupied by them forming part of the buildings situated within own (ompound00'irst said properties must be contained and1or stored in the areas occupied by Transworld and second said areas must form part of the building described in the policy 22203oth the trial court and the (A found that the so,called 4anne25 as not an anne2 building but an integral and inseparablepart of the four,span building described in the policy and conse6uently the machines and spare parts stored therein were co!ered by the fre insurance in dispute.So also considering that the two,storey building aforementioned was already e2isting when sub7ect fre insurance policy contract was entered into on 8an. 19 1:;1 ha!ing been constructed some time in 1:ulf Resorts is the owner of the .laza Resort situated at Agoo =a Cnion and had its properties insaid resort insured originally with the American "ome Assurance (ompany FA"A(G. #n the frst K policiesissued the risks of loss from earth6uake shock was e2tended only to petitioner%s two swimming pools. >ulfResorts agreed to insure with .hil (harter the properties co!ered by the A"A( policy pro!ided that thepolicy wording and rates in said policy be copied in the policy to be issued by .hil (harter. .hil (harterissued.olicy)o. $1:KKto>ulf Resortsco!eringtheperiodof &arch1K 1::Dto&arch1K 1::1for.1Dulf Resortspaid only .$:$.DD as premium against earth6uake shock F@SG. #n .olicy )o. $1:KK issued by defendant theshock endorsement pro!ided that 4#n consideration of the payment by the insured to the company of thesumincludedadditional premiumthe(ompanyagrees notwithstandingwhat isstatedintheprintedconditions of this policy due to the contrary that this insuranceco!ers loss or damage to shock to any ofthe property insured by this .olicy occasioned by or through or in conse6uence of earth6uake F@2hs. 01,E009,E0 0$,A0 0K,30 05,A0 0L,E0and0reat .acifc =ife Assurance (orp !s (ourt of AppealsFacts: A contract of group life insurance was e2ecuted between >repalife and E3.. The former agreed toinsure the li!es of eligible housing loan mortgagors of E3.. Er. =euterio applied membership in the grouplife insurance plan. "e answered in the application form that he has ne!er consulted a physician for heartcondition high blood pressure cancer diabetes lung kidney or stomach disorderor any other physicalimpairment andthattothebestof hisknowledgeheisingoodcondition. Euringthesubsistenceoftheinsurance he died frommassi!e cerebral hemorrhage. >repalife denied the claimbecause ofconcealment since it was disco!ered that he had high blood. "is widow fled a claim. ssue: *hether or not there was misrepresentaion so as to warrant denial of claimI *hether or not thewidow of =euterio is a real party in interest !el": The Supreme (ourt ruled that there was no suHcient proof that the insured su?ered fromhypertension. #t isawell,settledruledthat thefraudulent intent onthepart of theinsuredmust beestablished to entitle the insurer to rescind the contract. As regards the second issue the widow can beregarded as real party in interest because in mortgage redemption insurance the mortgagor and not themortgageeis thecontractingparty. Themortgagor merelyassigns theproceeds tothemortgagee.Therefore since by principle of succession the widow may claim.ETERNAL GARDENS V PHILAMLIFEFAC(S: Respondent .hilamlife entered into an agreement denominated as (reditor >roup =ife .olicy with petitioner @ternal >ardens &emorial .ark (orporation F@ternalG. Cnder the policy the clients of @ternal whopurchased burial lots from it on installment basis would be insured by .hilamlife. The amount of insurance co!erage depended upon the e2isting balance of the purchased burial lots.The rele!ant pro!isions of the policy are/&FF&C('& *A(& +F ,&N&F(. (-e i.sura.ce o/ a.y eli0i1le $ot #urc-aser s-all 1e e2ective o. t-e "ate -e co.tracts a loa. 3it- t-e Assure". !o3ever, t-ere s-all 1e .o i.sura.ce i/ t-e a44licatio. o/ t-e $ot #urc-aser is .ot a44rove" 1y t-e Co54a.y.22@ternal was re6uired under the policy to submit to .hilamlife a list of all new lot purchasers together with a copy of the application of each purchaser and the amounts of the respecti!e unpaid balances of all insured lot purchasers. @ternal complied by submitting a letter dated Eecember 9: 1:;9 containing a list of insurable balances of its lot buyers for +ctober 1:;9. +ne of those included in the list as 4new business5was a certain 8ohn (huang. "is balance of payments was 1DDQ. on August 9 1:;K (huang died. @ternal sent a letter dated to .hilamlife which ser!ed as an insurance claim for (huang%s death. Attached to the claim were certain documents. #n reply .hilamlife wrote @ternal a letter re6uiring @ternal to submit the additional documents relati!e to its insurance claim for (huang%s death. @ternal transmitted the re6uired documents through a letter which was recei!ed by .hilamlife.After more than a year .hilamlife had not furnished @ternal with any reply to the latter%s insurance claim. This prompted @ternal to demand from .hilamlife the payment of the claim for .h. 1DDDDD.#n response to @ternal%s demand .hilamlife denied @ternal%s insurance claim in a letter a portion of which reads/The deceased was 5: years old when he entered into (ontract R:55; and :59: with @ternal >ardens &emorial .ark in +ctober 1:;9 for the total ma2imum insurable amount of .1DDDDD.DD each. No a44licatio. /or Grou4 .sura.ce 3as su15itte" in our oHce prior to his death on August 9 1:;K@ternal fled a case with the RT( for a sum of money against .hilamlife which decided in fa!or of @ternal ordering .hilamlife to pay the former 1DDQ representing the proceeds of the policy.(A re!ersed. "ence this petition.SS)&: *+) .hilamlife should pay the 1DDQ insurance proceeds !&$*: 4etitio. 0ra.te". 6&S An e2amination of the pro!ision of the .+=#(- under e2ective "ate o/ 1e.e7t would show ambiguity between its two sentences. The frst sentence appears to state that the insurance co!erage of the clients of @ternal already became e?ecti!e upon contracting a loan with @ternal while the second sentence appears to re6uire .hilamlife to appro!e the insurance contract before the same can become e?ecti!e.#t must be remembered that an insurance contract is a contract of adhesion which must be construed liberally in fa!or of the insured and strictly against the insurer in order to safeguard the latter%s interest +n the other hand the seemingly conSicting pro!isions must be harmonized to mean that upon a party%s purchase of a memorial lot on installment from @ternal an insurance contract co!ering the lot purchaser is created and the same is e?ecti!e !alid and binding until terminated by .hilamlife by disappro!ing the insurance application. The second sentence of the (reditor >roup =ife .olicy on the @?ecti!e Eate of 3eneft is in the nature of a resolutory condition which would lead to the cessation of the insurance contract. &oreo!er the mere inaction of the insurer on the insurance application must not work to pre7udice the insuredI it cannot be interpreted as a termination of the insurance contract. The termination of the insurance contract by the insurer must be e2plicit and unambiguous.*evelo45e.t ,a.8 o/ t-e #-ili44i.es vs. Court o/ A44eals 9GR 10::3;, 21 %arc- 1::