Case Summary (G.R. No. 244256)
Key Dates and Applicable Constitution
Acquisition and Mortgages: April 1975.
Fire Loss: July 31, 1975.
Insurance Commission Decision: 1977.
Supreme Court Resolution: February 29, 1988.
Applicable Constitution: 1973 Philippine Constitution (decision rendered before 1990).
Factual Background
The Palomos acquired land and a building subject to an outstanding mortgage in favor of SSS and later borrowed ₱100,000 from Tai Tong Chuache & Co., securing the obligation by a second mortgage. Petitioner, through its representative Arsenio Chua, procured a fire insurance policy (No. 599-DV) with Travellers Multi-Indemnity Corporation for the full loan amount. Additional fire policies covering the same property were issued by Zenith Insurance, Philippine British Assurance, and SSS Accredited Group. On July 31, 1975, the property was totally destroyed by fire.
Claims and Adjustments
Adjustment Standard Corporation apportioned the ₱90,257.81 loss among the several insurers. The Palomos and co-insurers settled their respective shares, while Travellers refused payment. The Palomos then sought from Zenith, Philippine British Assurance, and SSS Accredited the unpaid portion of their shares, which they also paid.
Procedural History
The Palomos initially filed a complaint before the Insurance Commission to compel Travellers’ payment, which was dismissed on the ground that the policy had been taken out solely for the mortgagee’s interest. Tai Tong Chuache filed a complaint in intervention, which the Commission likewise dismissed for lack of evidence proving the Palomos’ outstanding indebtedness to the intervenor. A motion for reconsideration was denied, prompting the present petition for certiorari before the Supreme Court.
Issue
Whether Travellers Multi-Indemnity Corporation was liable under Policy No. 599-DV and whether petitioner maintained an insurable interest at the time of the fire.
Supreme Court Ruling
The Supreme Court set aside the Insurance Commission’s decision and held Travellers liable to pay the full face amount of Policy No. 599-DV (₱100,000) to the petitioner, Tai Tong Chuache & Co.
Legal Reasoning
- Burden of Proof: Petitioner, asserting a right to insurance proceeds, bore the affirmative burden of proof, as did Travellers in pleading lack of insurable interest.
- Insurable Interest: The mortgage remained uncancelled and unreleased; under established jurisprudence, possession of the credit instrument presumes nonpayment. Petitioner’s evidence and corroborating testimony from Azucena Palomo established the unpaid status of the loan.
- Representat
Case Syllabus (G.R. No. 244256)
Parties
- Petitioner: Tai Tong Chuache & Co., as intervenor-mortgagee under Fire Insurance Policy No. 599-DV issued by Travellers Multi-Indemnity Corporation
- Original complainants: Pedro and Azucena Palomo, mortgagors of the insured property
- Respondents:
- The Insurance Commission (Commissioner Gregoria Cruz-Arnaldo, penning the decision in IC Case No. 367)
- Travellers Multi-Indemnity Corporation (issuer of Policy No. 599-DV)
- Zenith Insurance Corporation
- Philippine British Assurance Company
- S.S.S. Accredited Group of Insurers
Factual Background
- Pedro and Azucena Palomo acquired land and building in San Rafael Village, Davao City, and assumed a mortgage in favor of S.S.S., insured for ₱25,000.00
- On April 19, 1975, Azucena Palomo obtained a ₱100,000.00 loan from Tai Tong Chuache & Co., secured by a mortgage over the same property
- On April 25, 1975, Arsenio Chua, representing Tai Tong Chuache & Co., procured Fire Insurance Policy No. 599-DV from Travellers Multi-Indemnity for ₱100,000.00 (₱70,000.00 on the building; ₱30,000.00 on contents)
- Additional policies were issued on June 11 and July 16, 1975, by Zenith Insurance (₱50,000.00 on building) and Philippine British Assurance (₱50,000.00 on building; ₱70,000.00 on contents) respectively
Fire Incident and Loss Adjustment
- On July 31, 1975, the insured building and contents were totally destroyed by fire
- Adjustment Standard Corporation computed the total insured value and apportioned ₱90,257.81 among the insurers, excluding Travellers Multi-Indemnity
- An alternative computation including Travellers’ policy still yielded the same total payout of ₱90,257.81
- Zenith, Philippine British, and S.S.S. Accredited paid their shares; Travellers refused to pay
Procedural History before the Insurance Commission
- Palomos filed IC Case No. 367 for recovery of the alleged unpaid balance of insurance proceeds
- Zenith and Philippine British admitted liability but contended payment in full and