GR 205657; (March, 2017) (Digest)
G.R. No. 205657 March 29, 2017
International Exchange Bank Now Union Bank of the Philippines, Petitioner vs. Spouses Jerome and Quinnie Briones, and John Doe, Respondents
FACTS
Spouses Jerome and Quinnie Briones obtained a loan from International Exchange Bank (iBank) to purchase a vehicle, executing a promissory note with chattel mortgage. The contract required them to insure the vehicle, with proceeds payable to iBank, and irrevocably appointed iBank as their attorney-in-fact to file insurance claims in case of loss. The vehicle was subsequently carnapped. The spouses reported the loss to iBank and, upon the bank’s instruction, continued paying three monthly installments as a sign of good faith.
After these payments, iBank demanded full payment of the loan balance. The spouses then directly filed a notice of claim with their insurer, which was denied due to late filing. iBank subsequently filed a complaint for sum of money against the spouses for loan default. The spouses contended that iBank, as their designated agent, failed in its duty to file the insurance claim promptly, leading to the denial.
ISSUE
Whether iBank, as the irrevocably appointed attorney-in-fact of the spouses, incurred liability for its failure to file the insurance claim, thereby prejudicing the spouses’ interests.
RULING
The Supreme Court denied iBank’s petition and affirmed the lower courts’ rulings. The legal logic centers on the law of agency. By accepting the agency through the contractual stipulation in the promissory note, iBank became bound to carry out its duties as an agent under Article 1884 of the Civil Code. Its primary duty was to act on behalf of its principal, the spouses, with regard to the insurance claim upon the carnapping.
The Court found that iBank failed to perform this duty. Instead of promptly acting to secure the insurance proceeds for the benefit of both itself (as mortgagee) and the spouses, iBank opted to demand full loan payment from the spouses. This inaction directly caused the denial of the insurance claim due to late filing. The Court rejected iBank’s argument that the spouses’ direct filing revoked the agency, noting that such an act was a mere consequence of iBank’s prior default. By preferring its own interest in collecting the loan over its fiduciary duty to file the claim, iBank violated its obligations as an agent. Consequently, iBank was liable for the damages suffered by the spouses, and its claim for the loan balance was properly dismissed.