BANK OF THE PHILIPPINE ISLANDS AND FGU INSURANCE CORPORATION (PRESENTLY KNOWN AS BPI/MS INSURANCE CORPORATION) VS. YOLANDA LAINGO, G.R. No. 205206, March 16, 2016.
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Under the law, an agent is one who binds himself to render some service or to do something in representation of another.1 In Doles v. Angeles,2 we held that the basis of an agency is representation. The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of intention. Agency may even be implied from the words and conduct of the parties and the circumstances of the particular case. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts. The law in fact contemplates impersonal dealings where the principal need not personally know or meet the third person with whom the agent transacts: precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent.
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In Eurotech Industrial Technologies, Inc. v. Cuizon,3 we held that when an agency relationship is established, the agent acts for the principal insofar as the world is concerned. Consequently, the acts of the agent on behalf of the principal within the scope of the delegated authority have the same legal effect and consequence as though the principal had been the one so acting in the given situation.
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Articles 1884 and 1887 of the Civil Code state:
Art. 1884. 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.
He must also finish the business already begun on the death of the principal, should delay entail any danger.
Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.
In default, thereof, he shall do all that a good father of a family would do, as required by the nature of the business.
The provision is clear that an agent is bound to carry out the agency. The relationship existing between principal and agent is a fiduciary one, demanding conditions of trust and confidence. It is the duty of the agent to act in good faith for the advancement of the interests of the principal. In this case, BPI had the obligation to carry out the agency by informing the beneficiary, who appeared before BPI to withdraw funds of the insured who was BPI’s depositor, not only of the existence of the insurance contract but also the accompanying terms and conditions of the insurance policy in order for the beneficiary to be able to properly and timely claim the benefit.
Upon Rheozel’s death, which was properly communicated to BPI by his mother Laingo, BPI, in turn, should have fulfilled its duty, as agent of FGU Insurance, of advising Laingo that there was an added benefit of insurance coverage in Rheozel’s savings account. An insurance company has the duty to communicate with the beneficiary upon receipt of notice of the death of the insured. This notification is how a good father of a family should have acted within the scope of its business dealings with its clients. BPI is expected not only to provide utmost customer satisfaction in terms of its own products and services but also to give assurance that its business concerns with its partner entities are implemented accordingly.
There is a rationale in the contract of agency, which flows from the “doctrine of representation,” that notice to the agent is notice to the principal,4 Here, BPI had been informed of Rheozel’s death by the latter’s family. Since BPI is the agent of FGU Insurance, then such notice of death to BPI is considered as notice to FGU Insurance as well. FGU Insurance cannot now justify the denial of a beneficiary’s insurance claim for being filed out of time when notice of death had been communicated to its agent within a few days after the death of the depositor-insured. In short, there was timely notice of Rheozel’s death given to FGU Insurance within three months from Rheozel’s death as required by the insurance company.
The records show that BPI had ample opportunity to inform Laingo, whether verbally or in writing, regarding the existence of the insurance policy attached to the deposit account. First, Rheozel’s death was headlined in a daily major newspaper a day after his death. Second, not only was Laingo, through her representative, able to inquire about Rheozel’s deposit account with BPI two days after his death but she was also allowed by BPI’s Claveria, Davao City branch to withdraw from the funds in order to help defray Rheozel’s funeral and burial expenses. Lastly, an employee of BPI visited Rheozel’s wake and submitted documents for Laingo to sign in order to process the withdrawal request. These circumstances show that despite being given many opportunities to communicate with Laingo regarding the existence of the insurance contract, BPI neglected to carry out its duty.
Since BPI, as agent of FGU Insurance, fell short in notifying Laingo of the existence of the insurance policy, Laingo had no means to ascertain that she was entitled to the insurance claim. It would be unfair for Laingo to shoulder the burden of loss when BPI was remiss in its duty to properly notify her that she was a beneficiary.
Thus, as correctly decided by the appellate court, BPI and FGU Insurance shall bear the loss and must compensate Laingo for the actual damages suffered by her family plus attorney’s fees. Likewise, FGU Insurance has the obligation to pay the insurance proceeds of Rheozel’s personal accident insurance coverage to Laingo, as Rheozel’s named beneficiary.
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