GR 138941; (October, 2001) (Digest)
G.R. No. 138941; October 8, 2001
AMERICAN HOME ASSURANCE COMPANY, petitioner, vs. TANTUCO ENTERPRISES, INC., respondent.
FACTS
Respondent Tantuco Enterprises, Inc., a coconut oil milling company, owned two oil mills in Lucena City. Both mills were insured by petitioner American Home Assurance Co. under separate policies. The new oil mill was insured for P6 million under Policy No. 306-7432321-9. A fire on September 30, 1991, gutted this new oil mill. Petitioner rejected the claim, arguing the policy’s boundary description pertained to the old mill, not the burned one (Building No. 14), and that respondent failed to correct the alleged misdescription despite a policy notice. Respondent filed a complaint for specific performance. The trial court ruled in favor of respondent, ordering petitioner to pay the insurance proceeds. The Court of Appeals affirmed the decision.
ISSUE
Whether the insurance policy covered the burned new oil mill despite the alleged misdescription in the boundary details of the policy.
RULING
Yes, the policy covered the burned mill. The Court applied the principle that in construing descriptions of insured property, courts show liberality to give effect to the insurance contract based on the parties’ manifest intent. The policy explicitly stated it covered properties “whilst contained in the new oil mill building.” This categorical designation as “new” clearly identified the intended subject. The specific boundary description, though possibly inaccurate, did not override this clear intent. It would be absurd to assume respondent insured its old mill twice under separate policies and left the new mill uncovered. The Court also found petitioner’s other defenses unmeritorious. The issue of premium non-payment, raised only on appeal, was correctly disregarded. Regarding the “Fire Extinguishing Appliances Warranty,” the Court held it must be reasonably interpreted; the presence of numerous portable extinguishers, an emergency fire engine, and a hose connected to an external hydrant substantially complied with the requirement for an internal hydrant. Thus, no reversible error was committed by the lower courts. The petition was dismissed.