Calsado, Lourdes Antonette V.

151662
Jose Marques and Maxilite Technologies, Inc. vs Far East Bank and Trust Company, Far East Bank
Insurance Brokers, Inc., and Makati Insurance Company; Far East Bank and Trust Company and Makati
Insurance Company vs. Jose Marques and Maxilite Technologies, Inc.
G.R. No. 171379/G.R. No. 171419; January 10, 2011
Estoppel - Article 1431

FACTS:
● Jose Marques (Marques) is the president and controlling stockholder of Maxilite Technologies Inc.
(Maxilite) which is a corporation engaged in importation and trading of energy-efficiency systems.
● Far East Bank and Trust Company (FEBTC) is a bank that handles accounts for Marques and Maxilite.
● Far East Bank Insurance Brokers Inc. (FEBIBI) and Makati Insurance Company are subsidiaries of
FEBTC.
● On June 17, 1993, Marques and Maxilite executed a trust receipt with FEBTC for US$80,765.00 for
the shipment of equipment from the US with the merchandise as collateral which states that:
X X X
The undersigned (Marques) further agree(s) to keep said merchandise insured against fire to its
full value, payable to the said bank, at the cost and expense of the undersigned, who hereby
further agree(s) to pay all charges for storage on said merchandise or any or other expenses
incurred thereon.
● FEBIBI carried out 4 fire insurance policies with Makati Insurance Company for this trust receipt*.
Maxilite paid for these policies through debit arrangement. It stipulated that the policy would not be in
effect until the premium was fully paid.
● Maxilite failed to pay the premium for 24 June 1994 to 24 June 1995 despite FEBIBI reminding
FEBTC to debit Maxilite’s account on multiple occasions.
● On 24 and 26 October 1994, Maxilite fully settled its trust receipt account.
● On 9 March 1995, a fire took down the Maxilite office and warehouse. Maxilite suffered 2.1M in losses
which Maxilite claimed from the fire insurance policy with Makati Insurance Company. Makati
Insurance Company denied this on the ground of non-payment of premium. FEBTC and FEBIBI
disclaimed any responsibility for the denial of the claim.
● Maxilite and Marques sued FEBTC, FEBIBI, and Makati Insurance Company for full insurance
coverage and Marques sued for damages and other fees. Maxilite and Marques also sought to issue a
preliminary injunction or TRO to enjoin FEBTC from imposing penalties or foreclosing real estate
mortgage or collecting payment from obligations. FEBTC, FEBIBI, and MIC countered that there was
no cause of action against them.
● RTC of Cebu ruled in favor of Maxilite and Marques because the non-payment was due to negligence
on the part of FEBTC. Further, while FEBIBI notified FEBTC to pay, it did not notify the plaintiffs
directly. Finally, the policy should have been canceled at the instance of non-payment but MIC did not
cancel it nor did they contact Maxilite regarding the problem so they were jointly and severally liable
for the insurance coverage and damages with 12% interest per annum plus fees.
● CA affirmed the decision of the RTC with modifications. It reduced the payment for damages and
reduced the interest from 12% to 6%. It also lifted the preliminary injunction in place.
ISSUE:
A. Marques vs FEBTC
1. Whether or not the reduction of interest for payment of liabilities in the CA decision is
reasonable?
2. Whether or not CA erred in allowing FEBTC to foreclose the real estate mortgage securing
Marques’ loans?
B. FEBTC vs Marques
1. Whether or not the premium of the insurance has been paid?
2. Whether or not FEBTC, FEBIBI, and MIC are jointly and severally liable to pay full
coverage for insurance policy of Marques and Maxilite despite being a) separate and
distinct juridical personalities, b) absence of any fault or negligence, and c) Marques’
failure to prove extent of alleged loss?
RULING:
Marques’ petition lacks merit while the petition of FEBTC is partially meritorious. Maxilite and
Marques invoke estoppel against FEBTC, FEBIBI, and MIC regarding the insurance policy. Maxilite and
Marques alleged that they were led to believe that the trust receipt transaction covered the insurance
premium. In estoppel, a party creating an appearance of the fact, which is false, is bound by that
appearance as against that person who acted on it in good faith. Estoppel is based on public policy,
fair dealing, good faith and justice. It forbids someone from injuring someone else by misrepresentation.
The court mentions the case of Santiago Syjuco, Inc. v. Castro, "estoppel may arise from silence
as well as from words." Silence may support an estoppel whether the failure to speak is intentional or
negligent because the other party may rely on what the party may have said and not thought about the
things that were not discussed.
FEBTC is estopped from claiming that the insurance policy was unpaid because the facts of the
case show that FEBTC induced Maxilite and Marques to believe that it would be paid for through debit
arrangement. Additionally, FEBIBI notified FEBTC not Marques about the non-payment which
establishes the obligation of FEBTC to handle the payment of policy for Marques. Moreover, the fact that
the insurance policy was not cancelled makes Marques’ claim stronger. In this view though, only FEBTC
is liable for the insurance coverage because it has a separate personality from FEBIBI and MIC despite
them being subsidiaries of FEBTC.

DISPOSITIVE:
WHEREFORE, we AFFIRM with MODIFICATION the 31 May 2005 Decision and the 26 January
2006 Resolution of the Court of Appeals-Cebu City in CA-G.R. CV No. 62105. Only Far East Bank and
Trust Company, and not Far East Bank Insurance Brokers, Inc. or Makati Insurance Company, is
ORDERED to PAY the face value of the subject insurance policy and the monetary awards stated in the
Court of Appeals’ decision.

* (1) Policy No. BR-F-1016333, issued on 15 September 1993, covering the period 12 August 1993 to 12
November 1993 in the amount of ₱1,000,000.00;(2) Policy No. BR-F-1016888, issued on 15 September
1993 covering the period 8 September 1993 to 8 December 1993 in the amount of ₱605,494.28; (3)
Policy No. BR-F-1016930, issued on 18 October 1993, covering the period 14 October 1993 to 12
January 1994 in the amount of ₱527,723.66; and (4) Policy No. BR-F-1018392, issued on 14 December
1993, covering the period 1 December 1993 to 1 March 1994 in the amount of ₱725,000.00.