SECOND DIVISION xxx

G.R. No. 171379 : January 10, 2011 Sometime in August 1993, FEBIBI, upon the advice of FEBTC,
facilitated the procurement and processing from Makati Insurance
Company of four separate and independent fire insurance policies
JOSE MARQUES and MAXILITE TECHNOLOGIES, INC.,
over the trust receipted merchandise: (1) Policy No. BR-F-1016333,
Petitioners, v. FAR EAST BANK AND TRUST COMPANY, FAR
issued on 15 September 1993, covering the period 12 August 1993
EAST BANK INSURANCE BROKERS, INC., and MAKATI
to 12 November 1993 in the amount of P 1, 000, 000.00;(2) Policy
INSURANCE COMPANY, Respondents.
No. BR-F-1016888, issued on 15 September 1993 covering the
period 8 September 1993 to 8 December 1993 in the amount of P
G.R. No. 171419 : January 10, 2011 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 P 527, 723.66; and (4) Policy No. BR-F-1018392,
FAR EAST BANK AND TRUST COMPANY and MAKATI issued on 14 December 1993, covering the period 1 December 1993
INSURANCE COMPANY, Petitioners, v. JOSE MARQUES and to 1 March 1994 in the amount of P 725, 000.00. Maxilite paid the
MAXILITE TECHNOLOGIES, INC., Respondents. premiums for these policies through debit arrangement. FEBTC
would debit Maxilite's account for the premium payments, as
DECISION reflected in statements of accounts sent by FEBTC to Maxilite.

CARPIO, J.: On 19 August 1994, Insurance Policy No. 1024439, covering the
period 24 June 1994 to 24 June 1995, was released to cover the
trust receipted merchandise. The policy relevantly provides:
The Case

2. This policy including any renewal thereof and/or any endorsement

These consolidated petitions for review assail the 31 May 2005 thereon is not in force until the premium has been fully paid to and
Decision and the 26 January 2006 Resolutioncralaw 3cralaw of the duly receipted by the Company in the manner provided herein.
Court of Appeals-Cebu City in CA-G.R. CV No. 62105. The Court of
Appeals affirmed with modifications the 4 September 1998
Decisioncralaw4cralaw of the Regional Trial Court of Cebu City, Any supplementary agreement seeking to amend this condition
Branch 58, in Civil Case No. CEB-18979. prepared by agent, broker or Company official, shall be deemed
invalid and of no effect.
The Facts
Finding that Maxilite failed to pay the insurance premium in the sum
of P 8, 265.60 for Insurance Policy No. 1024439 covering the period
Maxilite Technologies, Inc. (Maxilite) is a domestic corporation 24 June 1994 to 24 June 1995, FEBIBI sent written reminders to
engaged in the importation and trading of equipment for energy- FEBTC, dated 19 October 1994, 24 January 1995, and 6 March
efficiency systems. Jose N. Marques (Marques) is the President and 1995, to debit Maxilite's account.
controlling stockholder of Maxilite.

On 24 and 26 October 1994, Maxilite fully settled its trust receipt

Far East Bank and Trust Co. (FEBTC) is a local bank which handled account.
the financing and related requirements of Marques and Maxilite.
Marques and Maxilite maintained accounts with FEBTC.
On 9 March 1995, a fire gutted the Aboitiz Sea Transport Building
along M.J. Cuenco Avenue, Cebu City, where Maxilite's office and
Accordingly, FEBTC financed Maxilite's capital and operational warehouse were located. As a result, Maxilite suffered losses
requirements through loans secured with properties of Marques amounting to at least P 2.1 million, which Maxilite claimed against
under the latter's name. Among Maxilite's and Marques' transactions the fire insurance policy with Makati Insurance Company. Makati
with FEBTC were: Insurance Company denied the fire loss claim on the ground of non-
payment of premium. FEBTC and FEBIBI disclaimed any
a. A straight loan in the name of Jose N. Marques for Maxilite at the responsibility for the denial of the claim.
original principal amount of P 1 million. This is secured by real estate
mortgage. From said original principal amount, the bank increased it Maxilite and Marques sued FEBTC, FEBIBI, and Makati Insurance
by P 300, 000.00 about 26 October 1994 to enable the wiping out of Company. Maxilite prayed for (1) actual damages totaling P 2.3
Maxilite's Trust Receipts Account and simplify the remaining million representing full insurance coverage and "business
accounts into straight loan accounts. opportunity losses, " (2) moral damages, and (3) exemplary
damages. On the other hand, Marques sought payment of actual,
b. A straight loan in the name of Maxilite Technologies, Inc. for a moral and exemplary damages, attorney's fees, and litigation
principal amount of P 2 million. This is secured with a Real Estate expenses. Maxilite and Marques also sought the issuance of a
Mortgage of Marques' residential property. preliminary injunction or a temporary restraining to enjoin FEBTC
from (1) imposing penalties on their obligations; (2) foreclosing the
real estate mortage securing their straight loan accounts; and (3)
c. Master Card transactions covering two (2) Master Card Accounts initiating actions to collect their obligations.
of Marques, and

FEBTC, FEBIBI, and Makati Insurance Company countered that

d. Local credit card transactions covering one credit card account of Maxilite and Marques have no cause of action against them and
Marques. essentially denied the allegations in the complaint.

Far East Bank Insurance Brokers, Inc. (FEBIBI) is a local insurance The Ruling of the Trial Court
brokerage corporation while Makati Insurance Company is a local
insurance company. Both companies are subsidiaries of FEBTC.
In ruling in favor of Maxilite and Marques, the Regional Trial Court of
Cebu City, Branch 58, explained:
On 17 June 1993, Maxilite and Marques entered into a trust receipt
transaction with FEBTC, in the sum of US$80, 765.00, for the
shipment of various high-technology equipment from the United Considering the interest of the defendant FEBTC in the property
States, with the merchandise serving as collateral. The foregoing insured, hence, its concern that the insurance policy therefor has to
importation was covered by a trust receipt document signed by be effected and enforceable, and considering that the payment of
Marques on behalf of Maxilite, which pertinently reads: the premium thereof was the procedure adopted by debiting the
plaintiffs' account, the Court is of the view that the non-payment of
the premium of the insurance policy in question was due to the fault
The undersigned (Marques) further agree(s) to keep said or negligence of the defendant FEBTC. What could have happened
merchandise insured against fire to its full value, payable to the said to the interest of the defendant FEBTC in the insurance policy in
bank, at the cost and expense of the undersigned, who hereby question had the fire occurred prior to the full settlement and
further agree(s) to pay all charges for storage on said merchandise payment of plaintiff's Maxilite trust receipt account? Would
or any or other expenses incurred thereon. defendant FEBTC have tossed the blame on the non-payment of
premium to the plaintiffs?
Although there were reminders by defendant FEBIBI of the non- For another, if We were to believe defendants' claim that the
payment of the premium, the same were made by said defendant premium for the subject policy was not paid, then defendants should
through the defendant FEBTC and not to the plaintiffs directly. have cancelled the policy long before. But even up to the time the
Despite said reminders, the first of which was made on October 19, fire gutted plaintiffs' warehouse in March 1995, defendants
1994 when plaintiff Maxilite has sufficient fund in its trust receipt acknowledged that the subject policy remained effective. x x x
account, defendant FEBTC did not heed the same and more so did
it not care to pay the premium after the plaintiff Maxilite fully and
Furthermore, there was no notice of cancellation or any
finally settled its trust receipt account with defendant FEBTC as the
communication from defendants sent to plaintiffs that the policy shall
latter has already lost its interest in the insurance policy in question
be cancelled because of non-payment of premiums. Thus, the more
by virtue of said full payment. But despite the non-payment of the
reasonable and logical conclusion is that the subject policy was still
insurance premium, the defendant Makati Insurance did not cancel
fully in force because plaintiffs are still paying its premiums and
the policy in question nor informed plaintiffs of its cancellation if the
defendants are collecting the same through debit account.
insurance premium should not be paid. Just as defendant FEBIBI
failed to notify directly the plaintiffs of the said non-payment.
Considering the relationship of the three (3) defendants herein, as The Court of Appeals disposed of the case as follows:
undeniably sister companies, the non-payment of the premium of
the insurance policy in question should be imputable to their fault or
UPON THE VIEW WE TAKE OF THIS CASE, judgment appealed
negligence. Under the factual milieu in the case at bar, the Court
from is hereby MODIFIED in such that:
finds it just and equitable to hold said defendants liable to pay all the
consequent damages suffered by the plaintiffs and their liability is
solidary (Art. 2194, Civil Code). a. the interest shall be at the rate of six percent (6%) per annum to
run from the time of demand on April 11, 1995, in accordance with
Article 1589 of the Civil Code, until the finality of this decision;
The trial court disposed of the case as follows:

b. the moral damages of P 400, 000.00 is reduced to P 50, 000.00;

WHEREFORE, premises considered, judgment is hereby rendered
ordering the defendants to pay jointly and severally to the plaintiff
Maxilite the sum of Two Million One Hundred Thousand Pesos ( P 2, c. the exemplary damages of P 500, 000.00 is reduced to P 50,
100, 000.00), Philippine Currency, representing the full coverage of 000.00; and
Insurance Policy No. 1024439 (Exh. 'A'), as actual damages, plus
interest of 12% per annum from filing of Complaint on July 11, 1996
until fully paid, to the plaintiff Marque[s] the sum of P 400, 000.00 as d. the writ of preliminary injunction previously issued lifted and set
moral damages, to both plaintiffs the sum of P 500, 000.00 as aside.
exemplary damages, the sum of P 50, 000.00 as attorney's fees, the
sum of P 23, 082.50, representing the filing fees, as litigation In all other respects, judgment appealed from is AFFIRMED. Without
expenses, and to pay the costs. pronouncement as to costs.

The counter-claims are hereby dismissed. SO ORDERED.

The writ of preliminary injunction is hereby made permanent. Hence, these petitions.

SO ORDERED. The Issues

The Ruling of the Court of Appeals In G.R. No. 171379, petitioners assail the Court of Appeals'
reduction of (1) the interest rate from 12% to 6% per annum to be
The Court of Appeals affirmed the trial court's decision, with imposed on respondents' liabilities; and (2) the award of moral and
modifications, on the following grounds: exemplary damages. Petitioners also question the portion of the
Court of Appeals' judgment allowing FEBTC to foreclose the real
estate mortgage securing petitioners' loans and disallowing legal
First, the relations among defendants with each other are closely compensation for the parties' mutual obligations.
related and so intertwined. The said three defendants, FEBTC,
FEBIBI and MICI, are sister companies. This was never denied by
the defendants themselves. In G.R. No. 171419, petitioners challenge the Court of Appeals'
findings that (1) the premium for the subject insurance policy has in
fact been paid; (2) FEBTC, FEBIBI and Makati Insurance Company
Second, the insurance coverage was the business of sister are jointly and severally liable to pay respondents the full coverage
companies FEBIBI and Makati Insurance, not with FEBTC, which of the subject insurance policy despite (a) their separate juridical
has been the bank of plaintiffs which handled the latter's financing personalities; (b) the absence of any fault or negligence on their
and related transactions. Stated a bit differently, defendant FEBTC part; and (c) respondents' failure to prove the extent of the alleged
handled the financing and related requirements of plaintiffs; loss. Petitioners further impugn the award of damages and
defendant FEBIBI on the other hand is an insurance brokerage attorney's fees.
company of defendant FEBTC, while Makati Insurance is the
insurance (arm) company of both defendants FEBIBI and FEBTC.
The Court's Ruling

Third, defendant FEBTC caused FEBIBI to facilitate the insurance

coverage of plaintiffs. FEBIBI then asked Makati Insurance to issue The petition in G.R. No. 171319 lacks merit, whereas the petition in
the subject policy. Makati Insurance delivered the policy to FEBIBI G.R. No. 171419 is partially meritorious.
which it tasked with the collection of premium. FEBIBI in turn
delivered the policy to FEBTC from where it sought the payment of Essentially, Maxilite and Marques invoke estoppel in claiming
the premiums. against FEBTC, FEBIBI, and Makati Insurance Company the face
value of the insurance policy. In their complaint, Maxilite and
Fourth, it must be noted that the cover note and policy was Marques alleged they were led to believe and they in fact believed
supposedly issued and made effective on June 24, 1994, when the that the settlement of Maxilite's trust receipt account included the
trust receipt account was still outstanding and the insured payment of the insurance premium. Maxilite and Marques faulted
merchandise was still theoretically owned by the bank. Thus, for all FEBTC "if it failed to transmit the premium payments on subject
intents and purposes, it was to the best interest and protection of the insurance coverage contrary to its represented standard operating
bank to see to it that the goods were properly covered by insurance. procedure of solely handling the insurance coverage and past
practice of debiting [Maxilite's] account.

Fifth, the payment of premium has never been made an issue when
the subject policy was still separated into three. Or even after the Article 1431 of the Civil Code defines estoppel as follows:
said consolidation into one policy (No. 1024439), still, payment of
the premium has never become an issue. Art. 1431. Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be
xxx denied or disproved as against the person relying thereon.
Meanwhile, Section 2(a), Rule 131 of the Rules of Court provides: Contrary to Maxilite's and Marques' view, FEBTC is solely liable for
the payment of the face value of the insurance policy and the
monetary awards stated in the Court of Appeals' decision. Suffice it
SEC. 2. Conclusive presumptions. - The following are instances of
to state that FEBTC, FEBIBI, and Makati Insurance Company are
conclusive presumptions:
independent and separate juridical entities, even if FEBIBI and
Makati Insurance Company are subsidiaries of FEBTC. Absent any
(a) Whenever a party has, by his own declaration, act, or omission, showing of its illegitimate or illegal functions, a subsidiary's separate
intentionally and deliberately led another to believe a particular thing existence shall be respected, and the liability of the parent
is true, and to act upon such belief, he cannot, in any litigation corporation as well as the subsidiary shall be confined to those
arising out of such declaration, act or omission, be permitted to arising in their respective business. Besides, the records are bereft
falsify it. of any evidence warranting the piercing of corporate veil in order to
treat FEBTC, FEBIBI, and Makati Insurance Company as a single
entity. Likewise, there is no evidence showing FEBIBI's and Makati
In estoppel, a party creating an appearance of fact, which is false, is Insurance Company's negligence as regards the non-payment of the
bound by that appearance as against another person who acted in insurance premium.
good faith on it. Estoppel is based on public policy, fair dealing, good
faith and justice. Its purpose is to forbid one to speak against his
own act, representations, or commitments to the injury of one who The Court agrees with the Court of Appeals in reducing the interest
reasonably relied thereon. It springs from equity, and is designed to rate from 12% to 6% as the obligation to pay does not arise from a
aid the law in the administration of justice where without its aid loan or forbearance of money. In Eastern Shipping Lines, Inc. v.
injustice might result. Court of Appeals, the Court laid down the following guidelines for the
application of the proper interest rates:
In Santiago Syjuco, Inc. v. Castro, the Court stated that "estoppel
may arise from silence as well as from words." 'Estoppel by silence' I. When an obligation, regardless of its source, i.e., law, contracts,
arises where a person, who by force of circumstances is obliged to quasi-contracts, delicts or quasi-delicts is breached, the contravenor
another to speak, refrains from doing so and thereby induces the can be held liable for damages. The provisions under Title XVIII on
other to believe in the existence of a state of facts in reliance on "Damages" of the Civil Code govern in determining the measure of
which he acts to his prejudice. Silence may support an estoppel recoverable damages.
whether the failure to speak is intentional or negligent.
II. With regard particularly to an award of interest in the concept of
Both trial and appellate courts basically agree that FEBTC is actual and compensatory damages, the rate of interest, as well as
estopped from claiming that the insurance premium has been the accrual thereof, is imposed, as follows:
unpaid. That FEBTC induced Maxilite and Marques to believe that
the insurance premium has in fact been debited from Maxilite's
1. When the obligation is breached, and it consists in the payment of
account is grounded on the the following facts: (1) FEBTC
a sum of money, i.e., a loan or forbearance of money, the interest
represented and committed to handle Maxilite's financing and capital
due should be that which may have been stipulated in writing.
requirements, including the related transactions such as the
Furthermore, the interest due shall itself earn legal interest from the
insurance of the trust receipted merchandise; (2) prior to the subject
time it is judicially demanded. In the absence of stipulation, the rate
Insurance Policy No. 1024439, the premiums for the three separate
of interest shall be 12% per annum to be computed from default, i.
fire insurance policies had been paid through automatic debit
e., from judicial or extrajudicial demand under and subject to the
arrangement; (3) FEBIBI sent FEBTC, not Maxilite nor Marques,
provisions of Article 1169 of the Civil Code.
written reminders dated 19 October 1994, 24 January 1995, and 6
March 1995 to debit Maxilite's account, establishing FEBTC's
obligation to automatically debit Maxilite's account for the premium 2. When an obligation, not constituting a loan or forbearance of
amount; (4) there was no written demand from FEBTC or Makati money, is breached, an interest on the amount of damages awarded
Insurance Company for Maxilite or Marques to pay the insurance may be imposed at the discretion of the court at the rate of 6% per
premium; (5) the subject insurance policy was released to Maxilite annum. No interest, however, shall be adjudged on unliquidated
on 19 August 1994; and (6) the subject insurance policy remained claims or damages except when or until the demand can be
uncancelled despite the alleged non-payment of the premium, established with reasonable certainty. Accordingly, where the
making it appear that the insurance policy remained in force and demand is established with reasonable certainty, the interest shall
binding. begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
be so reasonably established at the time the demand is made, the
Moreover, prior to the full settlement of the trust receipt account on
interest shall begin to run only from the date the judgment of the
24 and 26 October 1994, FEBTC had insurable interest over the
court is made (at which time the quantification of damages may be
merchandise, and thus had greater reason to debit Maxilite's
deemed to have been reasonably ascertained). The actual base for
account. Further, as found by the trial court, and apparently
the computation of legal interest shall, in any case, be . . . the
undisputed by FEBTC, FEBIBI and Makati Insurance Company,
amount finally adjudged.
Maxilite had sufficient funds at the time the first reminder, dated 19
October 1994, was sent by FEBIBI to FEBTC to debit Maxilite's
account for the payment of the insurance premium. Since (1) 3. When the judgment of the court awarding a sum of money
FEBTC committed to debit Maxilite's account corresponding to the becomes final and executory, the rate of legal interest, whether the
insurance premium; (2) FEBTC had insurable interest over the case falls under paragraph 1 or paragraph 2, above, shall be 12%
property prior to the settlement of the trust receipt account; and (3) per annum from such finality until its satisfaction, this interim period
Maxilite's bank account had sufficient funds to pay the insurance being deemed to be by then an equivalent to forbearance of credit.
premium prior to the settlement of the trust receipt account, FEBTC (Emphasis supplied)
should have debited Maxilite's account as what it had repeatedly
done, as an established practice, with respect to the previous
With respect to Maxilite's and Marques' invocation of legal
insurance policies. However, FEBTC failed to debit and instead
compensation, we find the same devoid of merit. Aside from their
disregarded the written reminder from FEBIBI to debit Maxilite's
bare allegations, there is no clear and convincing evidence that legal
account. FEBTC's conduct clearly constitutes negligence in handling
compensation exists in this case. In other words, Maxilite and
Maxilite's and Marques' accounts. Negligence is defined as "the
Marques failed to establish the essential elements of legal
omission to do something which a reasonable man, guided upon
compensation. Therefore, Maxilite's and Marques' claim of legal
those considerations which ordinarily regulate the conduct of human
compensation must fail.
affairs, would do, or the doing of something which a prudent man
and reasonable man could not do.
WHEREFORE , we AFFIRM with MODIFICATION the 31 May 2005
Decision and the 26 January 2006 Resolution of the Court of
As a consequence of its negligence, FEBTC must be held liable for
Appeals-Cebu City in CA-G.R. CV No. 62105. Only Far East Bank
damages pursuant to Article 2176 of the Civil Code which states
and Trust Company, and not Far East Bank Insurance Brokers, Inc.
"whoever by act or omission causes damage to another, there being
or Makati Insurance Company, is ORDERED to PAY the face value
fault or negligence, is obliged to pay for the damage done."
of the subject insurance policy and the monetary awards stated in
Indisputably, had the insurance premium been paid, through the
the Court of Appeals' decision.
automatic debit arrangement with FEBTC, Maxilite's fire loss claim
would have been approved. Hence, Maxilite suffered damage to the
extent of the face value of the insurance policy or the sum of P 2.1 SO ORDERE
million.
JOSE MARQUES and MAXILITE TECHNOLOGIES, INC.,
Petitioners, v. MAXILITE and MARQUES:

FAR EAST BANK AND TRUST COMPANY, FAR EAST BANK  Invoke estoppel in claiming against FEBTC, FEBIBI, and
INSURANCE BROKERS, INC., and MAKATI INSURANCE Makati Insurance Company the face value of the
COMPANY, Respondents. insurance policy.

FACTS: ISSUE:

Maxilite Technologies, is a domestic corporation engaged in the WON FEBTC IS ESTOPPED FROM CLAIMING THAT THE
importation and trading of equipment for energy-efficiency systems. INSURANCE PREMIUM HAS BEEN UNPAID.

Jose N. Marques is the President and controlling stockholder of

Maxilite.
HELD:
Far East Bank and Trust Company (FEBTC) is a local bank which
The SC said Yes.
handled the financing and related requirements of Maxilite
Technologies. Petitioners alleged that they were led to believe and they in fact
believed that the settlement of Maxilite's trust receipt account
Far East Bank Insurance Brokers, Inc. (FEBIBI) is a local
included the payment of the insurance premium.
insurance brokerage corporation while Makati Insurance Company
is a local insurance company. Both companies are subsidiaries of Maxilite and Marques faulted FEBTC "if it failed to transmit the
FEBTC. premium payments on subject insurance coverage contrary to its
represented standard operating procedure of solely handling the
Maxilite maintained accounts with FEBTC. Accordingly, FEBTC
insurance coverage and past practice of debiting [Maxilite's]
financed Maxilite's capital and operational requirements through
account."
loans secured with properties of Marques under the latter's name.
Article 1431 of the Civil Code defines estoppel as follows:
On 17 June 1993, Maxilite entered into a trust receipt transaction
with FEBTC, for the shipment of various high-technology equipment Through estoppel an admission or representation is rendered
from the United States, with the merchandise serving as collateral. conclusive upon the person making it, and cannot be denied or
The foregoing importation was covered by a trust receipt document disproved as against the person relying thereon.
signed by Marques on behalf of Maxilite,
Meanwhile, Section 2(a), Rule 131 of the Rules of Court provides:
Sometime in August 1993, FEBIBI, upon the advice of FEBTC,
facilitated the procurement and processing from Makati Insurance SEC. 2. Conclusive presumptions. - The following are instances of
Company of four separate and independent fire insurance policies conclusive presumptions:
over the trust receipted merchandise.
(a) Whenever a party has, by his own declaration, act, or omission,
Maxilite paid the premiums for these policies through debit intentionally and deliberately led another to believe a particular thing
arrangement. FEBTC would debit Maxilite's account for the premium is true, and to act upon such belief, he cannot, in any litigation
payments, as reflected in statements of accounts sent by FEBTC to arising out of such declaration, act or omission, be permitted to
Maxilite. falsify it.

On August 19, 1994, an Insurance Policy covering the period June In estoppel, a party creating an appearance of fact, which is false, is
24, 1994 to June 24, 1995, was released to cover the trust receipted bound by that appearance as against another person who acted in
merchandise. good faith on it.

Finding that Maxilite failed to pay the insurance premium in the sum Estoppel is based on public policy, fair dealing, good faith and
of P 8, 265.60 for the Insurance Policy covering the period June 24, justice. Its purpose is to forbid one to speak against his own act,
1994 to June 24, 1995, FEBIBI sent written reminders to FEBTC, representations, or commitments to the injury of one who reasonably
dated October 19, 1994, January 24, 1995, and March 6, 1995, to relied thereon. It springs from equity, and is designed to aid the law
debit Maxilite's account. in the administration of justice where without its aid injustice might
result.
On October 24 and 26 of 1994, Maxilite fully settled its trust receipt
account. The Court cited the case of Santiago Syjuco, Inc. v. Castro, the
Court stated that "estoppel may arise from silence as well as from
On March 9, 1995, a fire gutted the Aboitiz Sea Transport Building words."
in Cebu City, where Maxilite's office and warehouse were located.
'Estoppel by silence' arises where a person, who by force of
As a result, Maxilite suffered losses amounting to at least P 2.1 circumstances is obliged to another to speak, refrains from doing so
million, which Maxilite claimed against the fire insurance policy with and thereby induces the other to believe in the existence of a state
Makati Insurance Company. of facts in reliance on which he acts to his prejudice. Silence may
support an estoppel whether the failure to speak is intentional or
negligent.
FEBTC, FEBIBI, and Makati Insurance Company :
Both trial and appellate courts basically agree that FEBTC is
estopped from claiming that the insurance premium has been
 Denied the fire loss claim on the ground of non-payment unpaid. That FEBTC induced Maxilite and Marques to believe that
of premium. the insurance premium has in fact been debited from Maxilite's
account is grounded on the following facts:
 FEBTC and FEBIBI disclaimed any responsibility for the
denial of the claim. (1) FEBTC represented and committed to handle Maxilite's
financing and capital requirements, including the related
transactions such as the insurance of the trust receipted
merchandise;
Maxilite and Marques sued FEBTC, FEBIBI, and Makati Insurance
Company. Maxilite prayed for actual damages totaling P 2.3 million (2) prior to the subject Insurance Policy, the premiums for the three
representing full insurance coverage and "business opportunity separate fire insurance policies had been paid through automatic
losses, debit arrangement;
(3) FEBIBI sent FEBTC, not Maxilite nor Marques, written reminders
to debit Maxilite's account, establishing FEBTC's obligation to
automatically debit Maxilite's account for the premium amount;

(4) there was no written demand from FEBTC or Makati Insurance

Company for Maxilite or Marques to pay the insurance premium;

(5) the subject insurance policy was released to Maxilite; and

(6) the subject insurance policy remained uncancelled despite the

alleged non-payment of the premium, making it appear that the
insurance policy remained in force and binding.

As a consequence of its negligence, FEBTC must be held liable for

damages.