GR 171379; (January, 2011) (Digest)
G.R. No. 171379/G.R. No. 171419; January 10, 2011
JOSE MARQUES and MAXILITE TECHNOLOGIES, INC., Petitioners, vs. FAR EAST BANK AND TRUST COMPANY, FAR EAST BANK INSURANCE BROKERS, INC., and MAKATI INSURANCE COMPANY, Respondents. / FAR EAST BANK AND TRUST COMPANY and MAKATI INSURANCE COMPANY, Petitioners, vs. JOSE MARQUES and MAXILITE TECHNOLOGIES, INC., Respondents.
FACTS
Maxilite Technologies, Inc. (Maxilite), with its President Jose N. Marques (Marques), maintained accounts and obtained loans from Far East Bank and Trust Co. (FEBTC). On June 17, 1993, Maxilite and Marques entered into a trust receipt transaction with FEBTC for imported merchandise, which required them to keep the merchandise insured. FEBTC’s subsidiaries, Far East Bank Insurance Brokers, Inc. (FEBIBI) and Makati Insurance Company, facilitated the issuance of several fire insurance policies for the trust receipted merchandise, with premiums paid by Maxilite through a debit arrangement on its account with FEBTC. A subsequent policy (No. 1024439) was issued covering June 24, 1994, to June 24, 1995, with a condition that it would not be in force until the premium was fully paid. Maxilite failed to pay the premium for this policy. FEBIBI sent reminders to FEBTC to debit Maxilite’s account, but the premium remained unpaid. Maxilite fully settled its trust receipt account with FEBTC on October 24 and 26, 1994. On March 9, 1995, a fire destroyed Maxilite’s office and warehouse, causing losses of at least ₱2.1 million. Makati Insurance denied the fire loss claim due to non-payment of the premium. Maxilite and Marques sued FEBTC, FEBIBI, and Makati Insurance for damages.
ISSUE
Whether FEBTC, FEBIBI, and Makati Insurance Company are solidarily liable to Maxilite and Marques for the insured loss despite the non-payment of the insurance premium.
RULING
Yes. The Supreme Court affirmed the findings of the Court of Appeals, which upheld the trial court’s decision holding the defendants solidarily liable. The Court found that the non-payment of the premium was due to the fault or negligence of FEBTC, FEBIBI, and Makati Insurance. Given their close relationship as sister companies, FEBTC’s established practice of debiting Maxilite’s account for premiums, and its failure to act on FEBIBI’s reminders despite Maxilite having sufficient funds, the defendants’ collective inaction led to the lapse of the insurance coverage. Makati Insurance also did not cancel the policy or directly notify the insured of the non-payment. Under the circumstances, it was just and equitable to hold them solidarily liable for the consequent damages. The Court of Appeals modified the trial court’s award, deleting the moral and exemplary damages awarded to Marques and reducing the attorney’s fees, but affirmed the award of actual damages to Maxilite for the insurance coverage.