9/5/2019 Case Digest: INTERNATIONAL EXCHANGE BANK NOW UNION BANK OF PHILIPPINES v. SPS.

JEROME AND QUINNIE BRIONES

by BETHANY CONDE
    
INTERNATIONAL EXCHANGE BANK NOW UNION BANK OF PHILIPPINES v. SPS. JEROME AND QUINNIE
BRIONES, GR No. 205657, 2017-03-29 (/juris/view/cf612?
user=gUlRSbGFMY1F4TGdBVFVwOFpQUTRMWEtOTUZ5dG1kSHNoYmVCNll6YS9vVT0=)

Facts:

On July 2, 2003, spouses Jerome and Quinnie Briones (Spouses Briones) took out a loan of P3,789,216.00
from iBank to purchase a BMW Z4 Roadster.[6] The monthly amortization for two (2) years was P78,942.00.
[7] The Spouses Briones executed a promissory note with chattel mortgage that required them to take out an
insurance policy on the vehicle.[8] The promissory note also gave iBank, as the Spouses Briones' attorney-in-
fact, irrevocable authority to le an insurance claim in case of loss or damage to the vehicle.[9] The insurance
proceeds were to be made payable to iBank.[10] On November 5, 2003, at about 10:50 p.m., the mortgaged
BMW Z4 Roadster was carnapped by three (3) armed men in front of Metrobank Banlat Branch in Tandang
Sora, Quezon City.[11] Jerome Briones (Jerome) immediately reported the incident to the Philippine National
Police Traf c Management Group.[12] The Spouses Briones declared the loss to iBank, which instructed them
to continue paying the next three (3) monthly installments "as a sign of good faith," a directive they complied
with.[13] On March 26, 2004, or after the Spouses Briones nished paying the three (3)-month installment,
iBank sent them a letter demanding full payment of the lost vehicle.[14] On April 30, 2004, the Spouses
Briones submitted a notice of claim with their insurance company, which denied the claim on June 29, 2004
due to the delayed reporting of the lost vehicle.[15] On May 14, 2004, iBank led a complaint for replevin
and/or sum of money against the Spouses Briones and a person named John Doe.[16] The Complaint alleged
that the Spouses Briones defaulted in paying the monthly amortizations of the mortgaged vehicle.[17] After
no settlement was arrived at during the Pre-trial Conference, the case was referred to Mediation and Judicial
Dispute Resolution.[18] However, the parties still failed to agree on a compromise settlement.[19] After pre-
trial and trial on the merits, the Regional Trial Court[20] dismissed iBank's complaint. It ruled that as the duly
constituted attorney-in-fact of the Spouses Briones, iBank had the obligation to facilitate the ling of the
notice of claim and then to pursue the release of the insurance proceeds.

The Regional Trial Court's Decision was appealed by iBank to the Court of Appeals, which dismissed[24] it on
September 27, 2012.

Issues:

The issues for this Court's resolution are as follows: First, whether an agency relationship existed between
the parties; Second, whether the agency relationship was revoked or terminated; and Finally, whether
petitioner is entitled to the return of the mortgaged vehicle or, in the alternative, payment of the outstanding
balance of the loan taken out for the mortgaged vehicle.

Ruling:

The Regional Trial Court's Decision was appealed by iBank to the Court of Appeals, which dismissed[24] it on
September 27, 2012. The

The Petition is devoid of merit.

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In a contract of agency, "a person binds himself to render some service or to do something in representation
or on behalf of another, with the consent or authority of the latter."[44] Furthermore, Article 1884 of the Civil
Code provides that "the agent is bound by his acceptance to carry out the agency, and is liable for the
damages which, through his non-performance, the principal may suffer."

All the elements of agency exist in this case. Under the promissory note with chattel mortgage, Spouses
Briones appointed iBank as their attorney-in-fact, authorizing it to le a claim with the insurance company if
the mortgaged vehicle was lost or damaged.[48] Petitioner was also authorized to collect the insurance
proceeds as the bene ciary of the insurance policy.

The determination of agency is ultimately factual in nature and this Court sees no reason to reverse the
ndings of the Regional Trial Court and the Court of Appeals. They both found the existence of an agency
relationship between the Spouses Briones and iBank, based on the clear wording of Sections 6 and 22 of the
promissory note with chattel mortgage, which petitioner prepared and respondents signed.

Petitioner asserts that the Spouses Briones effectively revoked the agency granted under the promissory
note when they led a claim with the insurance company.[52] Petitioner is mistaken. Revocation as a form of
extinguishing an agency under Article 1924[53] of the Civil Code only applies in cases of incompatibility, such
as when the principal disregards or bypasses the agent in order to deal with a third person in a way that
excludes the agent.[54] In the case at bar, the mortgaged vehicle was carnapped on November 5, 2003 and
the Spouses Briones immediately informed petitioner about the loss.[55] The Spouses Briones continued
paying the monthly installment for the next three (3) months following the vehicle's loss to show their good
faith.

However, on March 26, 2004, petitioner demanded full payment from Spouses Briones for the lost vehicle.
[57] The Spouses Briones were thus constrained to le a claim for loss with the insurance company on April
30, 2004, precisely because petitioner failed to do so despite being their agent and being authorized to le a
claim under the insurance policy.[58] Not surprisingly, the insurance company declined the claim for belated
ling. The Spouses Briones' claim for loss cannot be seen as an implied revocation of the agency or their way
of excluding petitioner. They did not disregard or bypass petitioner when they made an insurance claim;
rather, they had no choice but to personally do it because of their agent's negligence. This is not the implied
termination or revocation of an agency provided for under Article 1924 of the Civil Code.

In the promissory note with chattel mortgage, the Spouses Briones authorized petitioner to claim, collect, and
apply the insurance proceeds towards the full satisfaction of their loan if the mortgaged vehicle were lost or
damaged. Clearly, a bilateral contract existed between the parties, making the agency irrevocable. Petitioner
was also aware of the bilateral contract; thus, it included the designation of an irrevocable agency in the
promissory note with chattel mortgage that it prepared for the Spouses Briones to sign.

Petitioner asserts that the insurance coverage is only an alternative available to the Spouses Briones;[63] and
with the denial of the insurance claim, the Spouses Briones are obligated to pay the remaining balance plus
interest of the mortgaged vehicle.[64] The petitioner is again mistaken. As the agent, petitioner was
mandated to look after the interests of the Spouses Briones. However, instead of going after the insurance
proceeds, as expected of it as the agent, petitioner opted to claim the full amount from the Spouses Briones,
disregard the established principal-agency relationship, and put its own interests before those of its principal.
The facts show that the insurance policy was valid when the vehicle was lost, and that the insurance claim was
only denied because of the belated ling. Having been negligent in its duties as the duly constituted agent,
petitioner must be held liable for the damages suffered by the Spouses Briones because of non-
performance[65] of its obligation as the agent, and because it prioritized its interests over that of its principal.

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[66] Furthermore, petitioner's bad faith was evident when it advised the Spouses Briones to continue paying
three (3) monthly installments after the loss, purportedly to show their good faith.[67] A principal and an
agent enjoy a duciary relationship marked with trust and con dence, therefore, the agent has the duty "to
act in good faith [to advance] the interests of [its] principal."[68] If petitioner was indeed acting in good faith,
it could have timely informed the Spouses Briones that it was terminating the agency and its right to le an
insurance claim, and could have advised them to facilitate the insurance proceeds themselves. Petitioner's
failure to do so only compounds its negligence and underscores its bad faith. Thus, it will be inequitable now
to compel the Spouses Briones to pay the full amount of the lost property.

Principles:

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