G.R. No. 205206. March 16, 2016.*

 
BANK OF THE PHILIPPINE ISLANDS and FGU INSURANCE
CORPORATION (presently known as BPI/MS INSURANCE
CORPORATION), petitioners, vs. YOLANDA LAINGO,
respondent.

Civil Law; Agency; Words and Phrases; Under the law, an agent is one
who binds himself to render some service or to do something in
representation of another.—Under the law, an agent is one

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*  SECOND DIVISION.

 
 

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542 SUPREME COURT REPORTS ANNOTATED

Bank of the Philippine Islands vs. Laingo

who binds himself to render some service or to do something in

representation of another. In Doles v. Angeles, 492 SCRA 607 (2006), 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.
 Same; Same; The relationship existing between principal and agent is
a fiduciary one, demanding conditions of trust and confidence.—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.
Same; Same; 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.—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. 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

 
 

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Bank of the Philippine Islands vs. Laingo

within three months from Rheozel’s death as required by the insurance

company.

PETITION for review on certiorari of the decision and resolutions of

the Court of Appeals.
The facts are stated in the opinion of the Court.
  The Law Firm of Garcia, Iñigo & Partners for petitioners.
  Europa, Dacanay, Cubelo, Europa, Flores & Caharian Law
Office for respondent.

CARPIO, J.:
 
The Case
 
This is a petition for review on certiorari1 assailing the Decision
dated 29 June 20122 and Resolution dated 11 December 20123 of the
Court of Appeals in C.A.-G.R. CV No. 01575.
On 20 July 1999, Rheozel Laingo (Rheozel), the son of
respondent Yolanda Laingo (Laingo), opened a “Platinum 2-in-1
Savings and Insurance” account with petitioner Bank of the
Philippine Islands (BPI) in its Claveria, Davao City branch. The
Platinum 2-in-1 Savings and Insurance account is a savings account
where depositors are automatically covered by an insurance policy
against disability or death issued by petitioner FGU Insurance
Corporation (FGU Insurance), now known as BPI/MS Insurance
Corporation. BPI issued Passbook No. 50298 to Rheozel
corresponding to Savings Account

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1  Under Rule 45 of the 1997 Revised Rules of Civil Procedure.

2  Rollo, pp. 8-19. Penned by Associate Justice Jhosep Y. Lopez, with Associate
Justices Edgardo T. Lloren and Maria Elisa Sempio Diy, concurring.
3  Id., at pp. 21-25. Penned by Associate Justice Jhosep Y. Lopez, with Associate
Justices Edgardo T. Lloren and Henri Jean Paul B. Inting, concurring.

 
 

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544 SUPREME COURT REPORTS ANNOTATED

Bank of the Philippine Islands vs. Laingo

No. 2233-0251-11. A Personal Accident Insurance Coverage

Certificate No. 043549 was also issued by FGU Insurance in the
name of Rheozel with Laingo as his named beneficiary.
On 25 September 2000, Rheozel died due to a vehicular accident
as evidenced by a Certificate of Death issued by the Office of the
Civil Registrar General of Tagum City, Davao del Norte. Since
Rheozel came from a reputable and affluent family, the Daily Mirror
headlined the story in its newspaper on 26 September 2000.
On 27 September 2000, Laingo instructed the family’s personal
secretary, Alice Torbanos (Alice) to go to BPI, Claveria, Davao City
branch and inquire about the savings account of Rheozel. Laingo
wanted to use the money in the savings account for Rheozel’s burial
and funeral expenses.
Alice went to BPI and talked to Jaime Ibe Rodriguez, BPI’s
Branch Manager regarding Laingo’s request. Due to Laingo’s credit
standing and relationship with BPI, BPI accommodated Laingo who
was allowed to withdraw P995,000 from the account of Rheozel. A
certain Ms. Laura Cabico, an employee of BPI, went to Rheozel’s
wake at the Cosmopolitan Funeral Parlor to verify some information
from Alice and brought with her a number of documents for Laingo
to sign for the withdrawal of the P995,000.
More than two years later or on 21 January 2003, Rheozel’s
sister, Rhealyn Laingo-Concepcion, while arranging Rheozel’s
personal things in his room at their residence in Ecoland, Davao
City, found the Personal Accident Insurance Coverage Certificate
No. 043549 issued by FGU Insurance. Rhealyn immediately
conveyed the information to Laingo.
Laingo sent two letters dated 11 September 2003 and 7
November 2003 to BPI and FGU Insurance requesting them to
process her claim as beneficiary of Rheozel’s insurance policy. On
19 February 2004, FGU Insurance sent a reply-letter to Laingo
denying her claim. FGU Insurance stated that Laingo should have
filed the claim within three calendar
 
 

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Bank of the Philippine Islands vs. Laingo

months from the death of Rheozel as required under paragraph 15

of the Personal Accident Certificate of Insurance which states:
 
15. Written notice of claim shall be given to and filed at
FGU Insurance Corporation within three calendar months of
death or disability.
 
On 20 February 2004, Laingo filed a Complaint4 for Specific
Performance with Damages and Attorney’s Fees with the Regional
Trial Court of Davao City, Branch 16 (trial court) against BPI and
FGU Insurance.
In a Decision5 dated 21 April 2008, the trial court decided the
case in favor of respondents. The trial court ruled that the
prescriptive period of 90 days shall commence from the time of
death of the insured and not from the knowledge of the beneficiary.
Since the insurance claim was filed more than 90 days from the
death of the insured, the case must be dismissed. The dispositive
portion of the Decision states:
 
PREMISES CONSIDERED, judgment is hereby rendered
dismissing both the complaint and the counterclaims.
SO ORDERED.6
 
Laingo filed an appeal with the Court of Appeals.
 
The Ruling of the Court of Appeals
  
In a Decision dated 29 June 2012, the Court of Appeals reversed
the ruling of the trial court. The Court of Appeals ruled that Laingo
could not be expected to do an obligation which she did not know
existed. The appellate court added

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4  Docketed as Civil Case No. 30,236-2004.

5  Rollo, pp. 72-74.
6  Id., at p. 74.

 
 

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546 SUPREME COURT REPORTS ANNOTATED

Bank of the Philippine Islands vs. Laingo

that Laingo was not a party to the insurance contract entered into
between Rheozel and petitioners. Thus, she could not be bound by
the 90-day stipulation. The dispositive portion of the Decision states:
 
WHEREFORE, the Appeal is hereby GRANTED. The
Decision dated April 21, 2008 of the Regional Trial Court,
Branch 16, Davao City, is hereby REVERSED and SET
ASIDE.
Appellee Bank of the Philippine Islands and FGU
Insurance Corporation are DIRECTED to PAY jointly and
severally appellant Yolanda Laingo Actual Damages in the
amount of P44,438.75 and Attorney’s Fees in the amount of
P200,000.00.
Appellee FGU Insurance Corporation is also DIRECTED
to PAY appellant the insurance proceeds of the Personal
Accident Insurance Coverage of Rheozel Laingo with legal
interest of six percent (6%) per annum reckoned from
February 20, 2004 until this Decision becomes final.
Thereafter, an interest of twelve percent (12%) per annum
shall be imposed until fully paid.
SO ORDERED.7
 
Petitioners filed a Motion for Reconsideration which was denied
by the appellate court in a Resolution dated 11 December 2012.
Hence, the instant petition.
 
The Issue
 
 The main issue for our resolution is whether or not Laingo, as
named beneficiary who had no knowledge of the existence of the
insurance contract, is bound by the three-calendar-month deadline
for filing a written notice of claim upon the death of the insured.

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7  Id., at pp. 18-19.

 
 

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Bank of the Philippine Islands vs. Laingo

The Court’s Ruling

 
The petition lacks merit.
Petitioners contend that the words or language used in the
insurance contract, particularly under paragraph 15, is clear and
plain or readily understandable by any reader which leaves no room
for construction. Petitioners also maintain that ignorance about the
insurance policy does not exempt respondent from abiding by the
deadline and petitioners cannot be faulted for respondent’s failure to
comply.
Respondent, on the other hand, insists that the insurance contract
is ambiguous since there is no provision indicating how the
beneficiary is to be informed of the three-calendar-month claim
period. Since petitioners did not notify her of the insurance coverage
of her son where she was named as beneficiary in case of his death,
then her lack of knowledge made it impossible for her to fulfill the
condition set forth in the insurance contract.
In the present case, the source of controversy stems from the
alleged noncompliance with the written notice of insurance claim to
FGU Insurance within three calendar months from the death of the
insured as specified in the insurance contract. Laingo contends that
as the named beneficiary entitled to the benefits of the insurance
claim she had no knowledge that Rheozel was covered by an
insurance policy against disability or death issued by FGU Insurance
that was attached to Rheozel’s savings account with BPI. Laingo
argues that she dealt with BPI after her son’s death, when she was
allowed to withdraw funds from his savings account in the amount
of P995,000. However, BPI did not notify her of the attached
insurance policy. Thus, Laingo attributes responsibility to BPI and
FGU Insurance for her failure to file the notice of insurance claim
within three months from her son’s death.
 We agree.
 
 

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548 SUPREME COURT REPORTS ANNOTATED

Bank of the Philippine Islands vs. Laingo

BPI offered a deposit savings account with life and disability

insurance coverage to its customers called the Platinum
2-in-1 Savings and Insurance account. This was a marketing strategy
promoted by BPI in order to entice customers to invest their money
with the added benefit of an insurance policy. Rheozel was one of
those who availed of this account, which not only included banking
convenience but also the promise of compensation for loss or injury,
to secure his family’s future.
As the main proponent of the 2-in-1 deposit account, BPI tied up
with its affiliate, FGU Insurance, as its partner. Any customer
interested to open a deposit account under this
2-in-1 product, after submitting all the required documents to BPI
and obtaining BPI’s approval, will automatically be given insurance
coverage. Thus, BPI acted as agent of FGU Insurance with respect
to the insurance feature of its own marketed product.
Under the law, an agent is one who binds himself to render some
service or to do something in representation of another.8 In Doles v.
Angeles,9 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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8  Article 1868 of the Civil Code.

9  525 Phil. 673; 492 SCRA 607 (2006).

 
 

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Bank of the Philippine Islands vs. Laingo

In this case, since the Platinum 2-in-1 Savings and Insurance

account was BPI’s commercial product, offering the insurance
coverage for free for every deposit account opened, Rheozel directly
communicated with BPI, the agent of FGU Insurance. BPI not only
facilitated the processing of the deposit account and the collection of
necessary documents but also the necessary endorsement for the
prompt approval of the insurance coverage without any other action
on Rheozel’s part. Rheozel did not interact with FGU Insurance
directly and every transaction was coursed through BPI.
In Eurotech Industrial Technologies, Inc. v. Cuizon,10 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.
BPI, as agent of FGU Insurance, had the primary responsibility
to ensure that the 2-in-1 account be reasonably carried out with full
disclosure to the parties concerned, particularly the beneficiaries.
Thus, it was incumbent upon BPI to give proper notice of the
existence of the insurance coverage and the stipulation in the
insurance contract for filing a claim to Laingo, as Rheozel’s
beneficiary, upon the latter’s death.
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 nonperformance, the principal may suffer.
He must also finish the business already begun on the
death of the principal, should delay entail any danger.

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10   550 Phil. 165; 521 SCRA 584 (2007). See also Rallos v. Felix Go Chan &
Sons Realty Corporation, 171 Phil. 222; 81 SCRA 251 (1978).

 
 

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Bank of the Philippine Islands vs. Laingo
 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.11 Here, BPI had been informed of

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11  Air France v. Court of Appeals, 211 Phil. 601; 126 SCRA 448 (1983).

 
 

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Bank of the Philippine Islands vs. Laingo

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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552 SUPREME COURT REPORTS ANNOTATED

Bank of the Philippine Islands vs. Laingo

WHEREFORE, we DENY the petition. We AFFIRM the

Decision dated 29 June 2012 and Resolution dated 11 December
2012 of the Court of Appeals in C.A.-G.R. CV No. 01575.
SO ORDERED.

Del Castillo and Mendoza, JJ., concur.

Brion, J., On Leave.
Leonen, J., On Official Leave.
 Petition denied, judgment and resolution affirmed.

Notes.—Well-settled is the rule that persons dealing with an

assumed agency are bound at their peril, if they would hold the
principal liable, to ascertain not only the fact of agency but also the
nature and extent of authority, and in case either is controverted, the
burden of proof is upon them to establish it. (Bautista vs. Jalandoni,
710 SCRA 670 [2013])
The doctrine of apparent authority provides that a corporation
will be estopped from denying the agent’s authority if it knowingly
permits one of its officers or any other agent to act within the scope
of an apparent authority, and it holds him out to the public as
possessing the power to do those acts. (Advance Paper Corporation
vs. Arma Traders Corporation, 712 SCRA 313 [2013])
 
 
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