FIRST DIVISION

[G.R. No. 55397. February 29, 1988.]

TAI TONG CHUACHE & CO. , petitioner, vs. THE INSURANCE COMMISSION
and TRAVELLERS MULTI-INDEMNITY CORPORATION , respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; BURDEN OF PROOF; EACH PARTY MUST

PROVE HIS OWN AFFIRMATIVE ALLEGATION BY PREPONDERANCE OF EVIDENCE. — It is
a well known postulate that the case of a party is constituted by his own af rmative
allegations. Under Section 1, Rule 131 each party must prove his own af rmative
allegations by the amount of evidence required by law which in civil cases as in the present
case is preponderance of evidence. The party, whether plaintiff or defendant, who asserts
the af rmative of the issue has the burden of presenting at the trial such amount of
evidence as required by law to obtain a favorable judgment. Thus, petitioner who is
claiming a right over the insurance must prove its case. Likewise, respondent insurance
company to avoid liability under the policy by setting up an af rmative defense of lack of
insurable interest on the part of the petitioner must prove its own affirmative allegations.
2. ID.; ID.; ID.; CREDITOR IN POSSESSION OF DOCUMENT OF CREDIT NEED NOT
PROVE NON-PAYMENT FOR IT IS PRESUMED. — It has been held in a long line of cases
that when the creditor is in possession of the document of credit, he need not prove non-
payment for it is presumed. The validity of the insurance policy taken by petitioner was not
assailed by private respondent. Moreover, petitioner's claim that the loan extended to the
Palomos has not yet been paid was corroborated by Azucena Palomo who testi ed that
they are still indebted to herein petitioner.
3. ID.; CIVIL ACTIONS; MUST BE BROUGHT IN THE NAME OF THE REAL PARTY IN
INTEREST; PARTNERSHIP MAY SUE AND BE SUED IN THE NAME OF ITS DULY
AUTHORIZED REPRESENTATIVE. — Citing Rule 3, Sec. 2 respondent pointed out that the
action must be brought in the name of the real party in interest. We agree. However, it
should be borne in mind that petitioner being a partnership may sue and be sued in its
name or by its duly authorized representative. The fact that Arsenio Lopez Chua is the
representative of petitioner is not questioned. Petitioner's declaration that Arsenio Lopez
Chua acts as the managing partner of the partnership was corroborated by respondent
insurance company. Thus Chua as the managing partner of the partnership may execute all
acts of administration including the right to sue debtors of the partnership in case of their
failure to pay their obligations when it became due and demandable. Or at the very least,
Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the
partnership. Being an agent, it is understood that he acted for and in behalf of the rm.
Public respondent's allegation that the civil case led by Arsenio Chua was in his capacity
as personal creditor of spouses Palomo has no basis.
4. MERCANTILE LAW; FIRE INSURANCE; TERMS AND CONDITIONS OF A VALID
POLICY CONTRACT BINDING UPON INSURANCE COMPANY. — The respondent insurance
company having issued a policy in favor of herein petitioner which policy was of legal force
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 and effect at the time of the re, it is bound by its terms and conditions. Upon its failure to
prove the allegation of lack of insurable interest on the part of the petitioner, respondent
insurance company is and must be held liable.

DECISION

GANCAYCO , J : p

This petition for review on certiorari seeks the reversal of the decision of the Insurance
Commission in IC Case #367 1 dismissing the complaint 2 for recovery of the alleged
unpaid balance of the proceeds of the Fire Insurance Policies issued by herein respondent
insurance company in favor of petitioner-intervenor.
The facts of the case as found by respondent Insurance Commission are as follows:
"Complainants acquired from a certain Rolando Gonzales a parcel of land and a
building located at San Rafael Village, Davao City. Complainants assumed the
mortgage of the building in favor of S.S.S., which building was insured with
respondent S.S.S. Accredited Group of Insurers for P25,000.00.
On April 19, 1975, Azucena Palomo obtained a loan from Tai Tong Chuache, Inc.
in the amount of P100,000.00. To secure the payment of the loan, a mortgage
was executed over the land and the building in favor of Tai Tong Chuache & Co.
(Exhibit "1" and "1-A"). On April 25, 1975, Arsenio Chua, representative of Thai
Tong Chuache & Co . insured the latter's interest with Travellers Multi-Indemnity
Corporation for P100,000.00 (P70,000.00 for the building and P30,000.00 for the
contents thereof) (Exhibit "A-a," contents thereof) (Exhibit "A-a").

On June 11, 1975, Pedro Palomo secured a Fire Insurance Policy No. F-02500
(Exhibit "A"), covering the building for P50,000.00 with respondent Zenith
Insurance Corporation. On July 16, 1975, another Fire Insurance Policy No. 8459
(Exhibit "B") was procured from respondent Philippine British Assurance
Company, covering the same building for P50,000,00 and the contents thereof for
P70,000.00.

On July 31, 1975, the building and the contents were totally razed by fire.

Adjustment Standard Corporation submitted a report as follow.

xxx xxx xxx

. . . Thus the apportioned share of each company is as follows:

Policy No. Company Risk Insures Pays
MIRO/ Zenith Building P50,000 P17,610.93
F-02500 Insurance
Corp.
F-84590 Phil. Household 70,000 24,655.31
British
Assco. Co.
Inc. FFF & F5 50,000 39,186.10
Policy No. Company Risk Insures Pays

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 FIC-15381 SSS Accredited
Group of Insurers
Building P25.000 P8,805.47
Totals P195,000 P90,257.81

We are showing hereunder another apportionment of the loss which includes the
Travellers Multi-indemnity policy for reference purposes.

Policy No. Company Risk Insures Pays

MIRO/ Zenith
F-02500 Insurance
Corp. Building P50,000 11,877.14
F-84590 Phil.
British
Assco. Co. I-Building 70,000 16,628.00
II-Building
FFF & P.E. 50,000 24,918.79

PVC-15181 SSS Accredited

Group of
Insurers Building 25,000 5,938.50
F-599 DV Insurers I-Ref 30,000 14,467.31
Multi II-Building 70.000 16.628.00
Totals P295,000 P90,257.81

Based on the computation of the loss, including the Travellers Multi-Indemnity,

respondents, Zenith Insurance, Phil. British Assurance and S.S.S. Accredited
Group of Insurers, paid their corresponding shares of the loss. Complainants were
paid the following: P41,546.79 by Philippine British Assurance Co., P11,877.14 by
Zenith Insurance Corporation, and P5,936.57 by S.S.S. Group of Accredited
Insurers (Par. 6. Amended Complaint). Demand was made from respondent
Travellers Multi-Indemnity for its share in the loss but the same was refused.
Hence, complainants demanded from the other three (3) respondents the balance
of each share in the loss based on the computation of the Adjustment Standards
Report excluding Travellers Multi-Indemnity in the amount of P30,894.31
(P5,732.79 — Zenith Insurance: P22,294.62, Phil. British: and P2,866.90, SSS
Accredited) but the same was refused, hence, this action.

In their answers, Philippine British Assurance and Zenith Insurance Corporation

admitted the material allegations in the complaint, but denied liability on the
ground that the claim of the complainants had already been waived, extinguished
or paid. Both companies set up counterclaim in the total amount of P91,546.79.

Instead of ling an answer, SSS Accredited Group of Insurers informed the

Commission in its letter of July 22, 1977 that the herein claim of complainants for
the balance had been paid in the amount of P5,938.57 in full, based on the
Adjustment Standards Corporation Report of September 22, 1975.
Travellers Insurance, on its part, admitted the issuance of the Policy No. 599 DV
and alleged as its special and af rmative defenses the following, to wit: that Fire
Policy No. 599 DV, covering the furniture and building of complainants was
secured by a certain Arsenio Chua, mortgage creditor, for the purpose of
protecting his mortgage credit against the complainants; that the said policy was
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 issued in the name of Azucena Palomo, only to indicate that she owns the insured
premises; that the policy contains an endorsement in favor of Arsenio Chua as his
mortgage interest may appear to indicate that insured was Arsenio Chua and the
complainants; that the premiums due on said re policy was paid by Arsenio
Chua; that respondent Travellers is not liable to pay complainants.
On May 31, 1977, Tai Tong Chuache & Co. led a complaint in intervention
claiming the proceeds of the re Insurance Policy No. F-559 DV, issued by
respondent Travellers Multi-Indemnity.
Travellers Insurance, in answer to the complaint in intervention, alleged that the
Intervenor is not entitled to indemnity under its Fire Insurance Policy for lack of
insurable interest before the loss of the insured premises and that the
complainants, spouses Pedro and Azucena Palomo, had already paid in full their
mortgage indebtedness to the intervenor." 3
As adverted to above respondent Insurance Commission dismissed spouses Palomos'
complaint on the ground that the insurance policy subject of the complaint was taken out
by Tai Tong Chuache & Company, petitioner herein, for its own interest only as mortgagee
of the insured property and thus complainant as mortgagors of the insured property have
no right of action against herein respondent. It likewise dismissed petitioner's complaint in
intervention in the following words:
"We move on the issue of liability of respondent Travellers Multi-Indemnity to the
Intervenor-mortgagee. The complainant testi ed that she was still indebted to
Intervenor in the amount of P100,000.00. Such allegation has not however, been
suf ciently proven by documentary evidence. The certi cation (Exhibit `E-e')
issued by the Court of First Instance of Davao, Branch 11, indicate that the
complainant was Antonio Lopez Chua and not Tai Tong Chuache & Company." 4

From the above decision, only intervenor Tai Tong Chuache led a motion for
reconsideration but it was likewise denied hence, the present petition.
It is the contention of the petitioner that respondent Insurance Commission decided an
issue not raised in the pleadings of the parties in that it ruled that a certain Arsenio Lopez
Chua is the one entitled to the insurance proceeds and not Tai Tong Chuache & Company.
This Court cannot fault petitioner for the above erroneous interpretation of the decision
appealed from considering the manner it was written. 5 As correctly pointed out by
respondent insurance commission in their comment, the decision did not pronounce that it
was Arsenio Lopez Chua who has insurable interest over the insured property. Perusal of
the decision reveals however that it readily absolved respondent insurance company from
liability on the basis of the commissioner's conclusion that at the time of the occurrence of
the peril insured against petitioner as mortgagee had no more insurable interest over the
insured property. It was based on the inference that the credit secured by the mortgaged
property was already paid by the Palomos before the said property was gutted down by
re. The foregoing conclusion was arrived at on the basis of the certi cation issued by the
then Court of First Instance of Davao, Branch II that in a certain civil action against the
Palomos, Antonio Lopez Chua stands as the complainant and not petitioner Tai Tong
Chuache & Company.
We nd the petition to be impressed with merit. It is a well known postulate that the case
of a party is constituted by his own af rmative allegations. Under Section 1, Rule 131 6
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 each party must prove his own af rmative allegations by the amount of evidence required
by law which in civil cases as in the present case is preponderance of evidence. The party,
whether plaintiff or defendant, who asserts the af rmative of the issue has the burden of
presenting at the trial such amount of evidence as required by law to obtain a favorable
judgment. 7 Thus, petitioner who is claiming a right over the insurance must prove its case.
Likewise, respondent insurance company to avoid liability under the policy by setting up an
af rmative defense of lack of insurable interest on the part of the petitioner must prove its
own affirmative allegations.
It will be recalled that respondent insurance company did not assail the validity of the
insurance policy taken out by petitioner over the mortgaged property. Neither did it deny
that the said property was totally razed by re within the period covered by the insurance.
Respondent, as mentioned earlier advanced an af rmative defense of lack of insurable
interest on the part of the petitioner alleging that before the occurrence of the peril insured
against the Palomos had already paid their credit due the petitioner. Respondent having
admitted the material allegations in the complaint, has the burden of proof to show that
petitioner has no insurable interest over the insured property at the time the contingency
took place. Upon that point, there is a failure of proof. Respondent, it will be noted, exerted
no effort to present any evidence to substantiate its claim, while petitioner did. For said
respondent's failure, the decision must be adverse to it.
However, as adverted to earlier, respondent Insurance Commission absolved respondent
insurance company from liability on the basis of the certi cation issued by the then Court
of First Instance of Davao, Branch II, that in a certain civil action against the Palomos,
Arsenio Lopez Chua stands as the complainant and not Tai Tong Chuache. From said
evidence respondent commission inferred that the credit extended by herein petitioner to
the Palomos secured by the insured property must have been paid Such is a glaring error
which this Court cannot sanction. Respondent Commission's ndings are based upon a
mere inference.
The record of the case shows that the petitioner to support its claim for the insurance
proceeds offered as evidence the contract of mortgage (Exh. 1) which has not been
cancelled nor released. It has been held in a long line of cases that when the creditor is in
possession of the document of credit, he need not prove non-payment for it is presumed. 8
The validity of the insurance policy taken by petitioner was not assailed by private
respondent. Moreover, petitioner's claim that the loan extended to the Palomos has not yet
been paid was corroborated by Azucena Palomo who testi ed that they are still indebted
to herein petitioner. 9
Public respondent argues however, that if the civil case really stemmed from the loan
granted to Azucena Palomo by petitioner the same should have been brought by Tai Tong
Chuache or by its representative in its own behalf. From the above premise respondent
concluded that the obligation secured by the insured property must have been paid.
The premise is correct but the conclusion is wrong. Citing Rule 3, Sec. 2 1 0 respondent
pointed out that the action must be brought in the name of the real party in interest. We
agree. However, it should be borne in mind that petitioner being a partnership may sue and
be sued in its name or by its duly authorized representative. The fact that Arsenio Lopez
Chua is the representative of petitioner is not questioned. Petitioner's declaration that
Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by
respondent insurance company. 1 1 Thus Chua as the managing partner of the partnership
may execute all acts of administration 1 2 including the right to sue debtors of the
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 partnership in case of their failure to pay their obligations when it became due and
demandable. Or at the very least, Chua being a partner of petitioner Tai Tong Chuache &
Company is an agent of the partnership. Being an agent, it is understood that he acted for
and in behalf of the rm. 1 3 Public respondent's allegation that the civil case led by
Arsenio Chua was in his capacity as personal creditor of spouses Palomo has no basis.
The respondent insurance company having issued a policy in favor of herein petitioner
which policy was of legal force and effect at the time of the re, it is bound by its terms
and conditions. Upon its failure to prove the allegation of lack of insurable interest on the
part of the petitioner, respondent insurance company is and must be held liable.
IN VIEW OF THE FOREGOING, the decision appealed from is hereby SET ASIDE and
ANOTHER judgment is rendered ordering private respondent Travellers Multi-Indemnity
Corporation to pay petitioner the face value of Insurance Policy No. 599-DV in the amount
of P100,000.00. Costs against said private respondent.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Griño-Aquino, JJ., concur.

Footnotes

1. Penned by Commissioner Gregoria Cruz-Arnaldo.

2. Filed by Pedro Palomo and Azucena Palomo.
3. Pages 30-34, Rollo.
4. Pages 35-36, Rollo.
5. See Supra.

6. Revised Rules of Court.

7. Vol. 6, Moran, Revised Rules of Court, Page 4, 1980 Ed.
8. Veloso, vs. Veloso, 8 Phil. 83; Merchant vs. International Banking Corporation, 9 Phil. 554;
Miller vs. Jones, 9 Phil. 648; Chua vs. Vargas, 11 Phil. 219; Gana vs. Sheriff of Laguna, et
al., 32 Phil. 236.
9. Pages 4, 6, Decision, I.C. Case No. 367.
10. Revised Rules of Court.
11. Page 4, Decision, Supra. (Respondent referred to the petitioner and Arsenio Lopez Chua
interchangeably).
12. Art. 1800 Civil Code.
13. Bachrach vs. a Protectora, 37 Phil. 441, 1918.

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