G.R. No. L‑3562

Facts: Gutierrez Hermanos (plaintiff) sued Antonio Vallejo y Valencia (defendant) for payment of goods sold totaling ₱8,517.21. The defendant filed a counterclaim seeking the insurance proceeds from a policy on the launch Concha, belonging to the defendant’s principal, Rafael Molina, which was lost in a typhoon on 22 September 1905. The policy, insured for 40,000 francs, had been assigned as collateral to the plaintiff’s account; the plaintiff had advanced and continued to advance the insurance premiums even after the launch had been sold. To sustain the counterclaim, the defendant needed to prove that the policy was still in force at the time of loss and that the proceeds were payable to him after satisfying the pledge.

Issue: Whether the defendant’s counterclaim for the insurance proceeds is meritorious, given the alleged lack of proof that the policy was alive and enforceable in his favor; and whether the interest on the judgment should be at the contractual rate of 8 % per annum or the 6 % rate granted by the trial court.

Ruling: The Court finds that the defendant failed to prove the existence and enforceability of the insurance policy at the time of loss; consequently, the counterclaim is dismissed. The plaintiff’s appeal does not challenge the interest award, so the trial court’s judgmentincluding interest at 6 % per annumis affirmed. The decision of the Court of First Instance of Manila is affirmed with costs.