Case Digest (G.R. No. 171379)
Facts:
Maxilite Technologies, Inc. (Maxilite) and Jose N. Marques (Marques) entered into trust receipt financing with Far East Bank and Trust Co. (FEBTC) for imported merchandise, and insurance for the goods was procured through Far East Bank Insurance Brokers, Inc. (FEBIBI) from Makati Insurance Company; the merchandise was covered by consolidated Policy No. 1024439 released on 19 August 1994. A fire on 9 March 1995 destroyed Maxilite's warehouse; Makati denied the claim for non‑payment of premium, plaintiffs sued, the Regional Trial Court awarded recovery against the defendants, the Court of Appeals affirmed with modifications, and the consolidated petitions reached the Supreme Court.
Issues:
- Are FEBTC, FEBIBI, and Makati Insurance Company jointly and severally liable for the face value of the insurance policy?
- Is estoppel available against FEBTC to bar its denial that the insurance premium was paid?
- Did FEBTC commit negligence obligating it to pay damages under Article 2176 of the Civil Code?
- What rate of legal interest applies to the award, twelve percent or six percent per annum?
- Did plaintiffs establish legal compensation to offset their obligations?
Ruling:
The petition in G.R. No. 171379 lacked merit, and the petition in G.R. No. 171419 was partially meritorious; the Court affirmed with modification the Court of Appeals' decision but held only Far East Bank and Trust Company liable to pay the face value of the subject insurance policy and the monetary awards previously adjudged. The Court agreed that interest should be six percent per annum from demand and that plaintiffs failed to prove legal compensation.
Ratio:
The Court found estoppel applicable because FEBTC had represented and practiced automatic debit of premiums, reminders were sent to FEBTC (not to plaintiffs), the policy was released and not cancelled, and plaintiffs reasonably relied on those circumstances; therefore FEBTC was estopped from denying payment. The Court held FEBTC negligent under Article 2176 for failing to debit plaintiffs' account despite sufficient funds and its insurable interest, but declined to pierce corporate separateness to hold FEBIBI or Makati Insurance Company liable in the absence of proof warranting veil piercing. Applying the guidelines in Eastern Shipping Lines, Inc. v. Court of Appeals, the Court imposed six percent interest for this non‑loan obligation and rejected plaintiffs' unsupported claim of legal compensation.
Doctrine:
- Estoppel binds a party who, by act or omission, intentionally or negligently induced another to believe a fact and to act upon it (see Article 1431 and Sec. 2(a), Rule 131, Rules of Court).
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