AMERICAN HOME ASSURANCE COMPANY vs. TANTUCO ENTERPRISES, INC.

G.R. No. 138941

October 8, 2001

FACTS:
Respondent Tantuco Enterprises, Inc. is engaged in the coconut oil
milling and refining industry. It owns two oil mills which were separately covered by
fire insurance policies issued by petitioner American Home Assurance Co., Philippine
Branch. The first oil mill was insured for P3,000,000.00 under Policy No. 3067432324-3 for the period March 1, 1991 to 1992. The new oil mill was insured for
P6,000,000.00 under Policy No. 306-7432321-9 for the same term. Official receipts
indicating payment for the full amount of the premium were issued by the
petitioner's agent.
A fire that broke out in the early morning of September 30,1991 gutted and
consumed the new oil mill. Respondent immediately notified the petitioner of the
incident but petitioner rejected respondent's claim for the insurance proceeds on
the ground that no policy was issued by it covering the burned oil mill. It stated that
the description of the insured establishment referred to another building thus: "Our
policy nos. 306-7432321-9 (Ps 6M) and 306-7432324-4 (Ps 3M) extend insurance
coverage to your oil mill under Building No. 5, whilst the affected oil mill was under
Building No. 14. "
ISSUE:Whether or not the Court of Appeals erred in its legal interpretation of 'Fire
Extinguishing Appliances Warranty' of the policy.
HELD: In construing the words used descriptive of a building insured, the greatest
liberality is shown by the courts in giving effect to the insurance. In view of the
custom of insurance agents to examine buildings before writing policies upon them,
and since a mistake as to the identity and character of the building is extremely
unlikely, the courts are inclined to consider that the policy of insurance covers any
building which the parties manifestly intended to insure, however inaccurate the
description may be.
Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to
our mind, that what the parties manifestly intended to insure was the new oil mill. If
the parties really intended to protect the first oil mill, then there is no need to
specify it as new.
In determining what the parties intended, the courts will read and construe the
policy as a whole and if possible, give effect to all the parts of the contract, keeping

in mind always, however, the prime rule that in the event of doubt, this doubt is to
be resolved against the insurer. In determining the intent of the parties to the
contract, the courts will consider the purpose and object of the contract.

Sun Insurance Office Ltd. vs. Court of Appeals [GR 92383, 17 July 1992] First
Division, Cruz (J): 3 concur Facts: Sun Insurance Office Ltd. issued Personal Accident
Policy 05687 to Felix Lim, Jr. with a face value of P200,000.00. Two months later, he
was dead with a bullet wound in his head. As beneficiary, his wife Nerissa Lim
sought payment on the policy but her claim was rejected. Sun Insurance agreed
that there was no suicide. It argued, however, that there was no accident either.
Pilar Nalagon, Lim's secretary, was the only eyewitness to his death. It happened on
6 October 1982, at about 10 p.m., after his mother's birthday party. According to
Nalagon, Lim was in a happy mood (but not drunk) and was playing with his
handgun, from which he had previously removed the magazine. As she watched the
television, he stood in front of her and pointed the gun at her. She pushed it aside
and said it might be loaded. He assured her it was not and then pointed it to his
temple. The next moment there was an explosion and Lim slumped to the floor. He
was dead before he fell. The widow sued Sun Insurance in the Regional Trial Court of
Zamboanga City and was sustained. Sun Insurance was sentenced to pay her
P200,000.00, representing the face value of the policy, with interest at the legal
rate; P10,000.00 as moral damages; P5,000.00 as exemplary damages; P50,000.00
as actual and compensatory damages; and P5,000.00 as attorney's fees, plus the
cost of the suit. This decision was affirmed on appeal, and the motion for
reconsideration was denied. Sun Insurance then came to the Supreme Court. Issue:
Whether the insured willfully exposed himself to needless peril and thus removed
himself from the coverage of the insurance policy. Held: NO. An accident is an event
which happens without any human agency or, if happening through human agency,
an event which, under the circumstances, is unusual to and not expected by the
person to whom it happens. It has also been defined as an injury which happens by
reason of some violence or casualty to the insured without his design, consent, or
voluntary co-operation. Herein, the incident that resulted in Lim's death was indeed
an accident. On the other hand, the parties agree that Lim did not commit suicide.
Nevertheless, Sun Insurance contends that the insured willfully exposed himself to
needless peril and thus removed himself from the coverage of the insurance policy.
It should be noted at the outset that suicide and willful exposure to needless peril
are in pari materia because they both signify a disregard for one's life. The only
difference is in degree, as suicide imports a positive act of ending such life whereas
the second act indicates a reckless risking of it that is almost suicidal in intent. The
posture -- that by the mere act of pointing the gun to his temple, Lim had willfully
exposed himself to needless peril and so came under the exception -- is arguable.
But what is not is that Lim had removed the magazine from the gun and believed it
was no longer dangerous. He expressed assured her that the gun was not loaded. It
is submitted that Lim did not willfully expose himself to needless peril when he
pointed the gun to his temple because the fact is that he thought it was not unsafe
to do so. The act was precisely intended to assure Nalagon that the gun was indeed
harmless. Lim was unquestionably negligent and that negligence cost him his own
life. But it should not prevent his widow from recovering from the insurance policy
he obtained precisely against accident. There is nothing in the policy that relieves

the insurer of the responsibility to pay the indemnity agreed upon if the insured is
shown to have contributed to his own accident. Indeed, most accidents are caused
by negligence. There are only four exceptions expressly made in the contract to
relieve the insurer from liability, and none of these exceptions is applicable in the
present case. It bears noting that insurance contracts are as a rule supposed to be
interpreted liberally in favor of the assured. There is no reason to deviate from this
rule, especially in view of the circumstances of the case.