G.R. No. 105562, 27 September 1993
FACTS:
Prime Marine Services, Inc. (PMSI) procured Group Policy from respondent-appellant Insular Life Assurance Co., Ltd. to provide life insurance coverage to its sea-based employees enrolled under the plan. Six covered employees of the PMSI perished at sea when their vessel sunk. They were survived by complainants-appellees, the beneficiaries under the policy.
Complainants-appellees sought to claim death benefits due them and, for this purpose, they approached the President and General Manager of PMSI, Capt. Roberto Nuval who evinced willingness to assist complainants-appellees to recover benefits. They were thus made to execute special powers of attorney authorizing Capt. Nuval to, among others ‘follow up, ask, demand, collect and receive’ for their benefit indemnities of sums of money due them relative to the sinking of M/V Nemos.
Unknown to them, however, the PMSI, in its capacity as employer and policyholder of the life insurance of its deceased workers, filed with respondent-appellant formal claims for and in behalf of the beneficiaries, through its President, Capt. Nuval. Among the documents submitted by the latter for the processing of the claims were the five special powers of attorney executed by complainants-appellees. Respondent-appellant drew against its account six (6) checks. Capt. Nuval deposited the checks in his own account.
Upon learning that they were entitled to life insurance benefits under a group policy, complainants-appellees sought to recover these benefits from Insular Life but the latter denied their claim on the ground that the liability to them was already extinguished upon delivery to and receipt by PMSI of the six (6) checks.
The Insurance Commission ruled that the special powers of attorney “do not contain in unequivocal and clear terms authority to Capt. Nuval to obtain, receive, receipt from respondent company insurance proceeds arising from the death of the seaman-insured. On the contrary, the said powers of attorney are couched in terms which could easily arouse suspicion of an ordinary man. The RULING is principally premised on its opinion that there is nothing in the law which mandates a specific or special power of attorney to be executed to collect insurance proceeds. Such authority is not included in the enumeration of art. 1878 of the New Civil Code. Neither do we perceive collection of insurance claims as an act of strict dominion as to require a special power of attorney.
ISSUE:
Whether Insular Life should still be liable to the complainants when they relied on the special powers of attorney, which Capt. Nuval presented as documents, when they released the checks to the latter.
RULING:
Yes.
PMSI, through its President and General Manager, Capt. Nuval, acted as the agent of Insular Life. The latter is thus bound by the misconduct of its agent.
Insular Life, however, likewise recognized Capt. Nuval as the attorney-in-fact of the petitioners. Unfortunately, through its official, it acted imprudently and negligently in the premises by relying without question on the special power of attorney. In Strong v. Repide, this Court ruled that it is among the established principles in the civil law of Europe as well as the common law of America that third persons deal with agents at their peril and are bound to inquire as to the extent of the power of the agent with whom they contract. And in Harry E. Keller Electric Co. v. Rodriguez, this Court, quoting Mechem on Agency, stated that:
“The person dealing with an agent must also act with ordinary prudence and reasonable diligence. Obviously, if he knows or has good reason to believe that the agent is exceeding his authority, he cannot claim protection. So if the suggestions of probable limitations be of such a clear and reasonable quality, or if the character assumed by the agent is of such a suspicious or unreasonable nature, or if the authority which he seeks to exercise is of such an unusual or improbable character, as would suffice to put an ordinarily prudent man upon his guard, the party dealing with him may not shut his eyes to the real state of the case, but should either refuse to deal with the agent at all, or should ascertain from the principal the true condition of affairs.”
Even granting for the sake of argument that the special powers of attorney were in due from, Insular Life was grossly negligent in delivering the checks, drawn in favor of the petitioners, to a party who is not the agent mentioned in the special power of attorney.
*Case digest by Legine S. Ramayla, JD – 4, Andres Bonifacio College, SY 2019 – 2020