Rizal Surety & Insurance Company v. Court of Appeals

Summary

Rizal Surety & Insurance Company issued fire insurance policy to Transworld Knitting Mills covering property within compound. When fire destroyed main building and adjacent two-storey structure containing machinery and spare parts, insurer denied coverage claiming annex building was not covered. Supreme Court affirmed lower courts' finding that two-storey building was integral part of insured premises, not separate annex. Court applied Article 1377 requiring ambiguous contract terms be construed against drafter (insurer) and in favor of insured. Since building existed when policy was issued and insurer failed to specifically exclude it despite knowing its existence, coverage extended to destroyed property therein. Decision established precedent for liberal interpretation of insurance policies favoring insured parties and comprehensive coverage analysis.