G.R. No. 147039 ; January 27, 2006
DBP POOL OF ACCREDITED INSURANCE COMPANIES, Petitioner, vs. RADIO MINDANAO NETWORK, INC., Respondent.

FACTS

Respondent Radio Mindanao Network, Inc. (RMN) owned a radio station in Bacolod City insured against fire by petitioner DBP Pool and another company. On July 27, 1988, the station was razed by fire. RMN filed claims under the insurance policies, but the insurers denied liability. They invoked policy exclusions for loss caused by “mutiny, riot, military or popular rising, insurrection, rebellion, revolution, military or usurped power,” asserting that the fire was intentionally set by members of the Communist Party of the Philippines/New People’s Army (CPP/NPA). RMN was thus constrained to file a civil case for recovery of insurance benefits.
The Regional Trial Court ruled in favor of RMN, ordering the insurers to pay the insured amounts. The Court of Appeals affirmed the decision but modified the interest rate. Petitioner DBP Pool elevated the case to the Supreme Court, arguing that the appellate court erred in finding insufficient evidence that CPP/NPA members caused the fire, which was an excepted risk under the policy.

ISSUE

Did the petitioner sufficiently prove that the loss was caused by an excluded risk, thereby exempting it from liability under the fire insurance policy?

RULING

No. The Supreme Court affirmed the decisions of the lower courts, holding that the petitioner failed to discharge its burden of proving that the cause of the loss fell within the policy exclusions. The insurance policy is a contract of adhesion, and any ambiguity regarding exemptions must be construed strictly against the insurer. The burden rests upon the insurer to establish that the loss is attributable to an excepted cause.
The Court examined the evidence presented, which included a police blotter, a police certification, a fire investigation report, and testimonies. These documents merely stated that the armed men were “believed to be” or “suspected” of being CPP/NPA members. The testimonies of witnesses were based on hearsay, as they were not present during the incident and relied on accounts from unnamed bystanders. Suspicion and belief, without conclusive proof, do not constitute the preponderance of evidence required in civil cases.
Consequently, the petitioner did not convincingly prove that the fire was directly caused by rebellion or insurrection, an excluded peril. The insurer’s denial of the claim was therefore unjustified. RMN, having paid the premiums and suffered a covered loss, is entitled to indemnity. The petition was dismissed for lack of merit.