DBP v CA and Estate of Juan Dans (represented by Candida Dans0 and DBP Mortgage Redemption Insurance Pool | 1994

| Quiason, J. Facts: 1987: Juan Dans (together with wife and children) applied for a loan of 500k with the DBP. He was advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool) because he was the principal mortgagor. He was 76 years old then. A 300k loan was then approved on August 4 and released on August 11. DBP deducted 1.466k as payment for the MRI premium from the proceeds. On August 15, Juan accomplished and submitted the MRI Application for Insurance and Health Statement for DBP MRI Pool. Later, the MRI premium (less 10% service fee) was credited by DBP to the savings account of the DBP MRI Pool. The latter was advised of the credit. On September 3, Juan died of cardiac arrest. This info was relayed by DBP to DBP MRI Pool. Subsequently, the latter informed the former that Juan wasnt eligible for MRI coverage, being over the acceptance age limit of 60 years of age at the time of application. DBP told Candida (the wife) of the Juans MRI application. It offered to refund the premium (1.476k) but Candida refused to accept, demanding the payment of the face value of the MRI or an amount equivalent to the loan. She also refused to accept an ex gratia settlement of 30k which the DBP offered. Juans Estate (Candida as administratix) then filed a complaint against DBP and the insurance pool for collection of sum of money with damages. It alleged that Juan became insured by the insurance pool when DBP (with full knowledge of Juans age at the time of application) required him to apply to MRI and later collected the insurance premium. It prayed for 139.5k (which it paid under protest for the loan) reimbursement, the mortgage debt be declared fully paid and damages. Trial court favoured the Estate but absolved DBP MRI pool. It found no privity of contract between it and the deceased. It held DBP to be in estoppel for having led Juan into applying for MRI and collecting the premium and service fee, despite knowledge of his age inegibility. It ordered DBP to reimburse the 139.5k, consider the mortgage loan settled, 10k attys fees and 10k litigation expenses. CA affirmed in toto. Issues: W/N MRI Pool is liable. No, there was no privity between it and Juan. Juan personally signed a Health Statement for DBP MRI Pool; under it, the MRI coverage shall take effect when the application shall be approved by the insurance pool and when the full premium is paid during continued good health of applicant; Both must concur; At case, however, the DBP MRI Pool did not approve the application of Juan;

There was no showing that it accepted the premium which DBP credited to its account with full knowledge that it was payment for Juans premium; There was no perfected contract of insurance;

W/N DBP is liable. Yes. In dealing with Juan, DBP was a lender and an insurance agent. As an insurance agent: DBP made Juan go thru the motion of applying for said insurance, thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of the policy was forthcoming; -

DBP had full knowledge that Dan's application was never going to be approved. The maximum age for MRI acceptance is 60 years as clearly and specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned;

Article 1987 of CC:

"the agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers."
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DBP is not authorized to accept applications for MRI when its clients are more than 60 years of age; Knowing Juans advanced age, DBP exceeded the scope of its aurthority when it accepted Juans application for MRI by collecting the insurance premium, and deducting its agents commission and service fee.

Liability of agent who exceeds the scope of his authority: Depends upon

whether the third person is aware of the limits of the agent's powers; There is no showing that Dans knew of the limitation on DBP's authority to solicit applications for MRI; If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the non-disclosure thereof by the agent, then

the latter is liable for damages to him (Tolentino); Rule founded upon the supposition that there has been some wrong or omission on his part either in misrepresenting, or in affirming, or concealing the authority under which he assumes to act; Inasmuch the non-disclosure carries the implication that a deception was perpetrated on the unsuspecting client, the provisions of Articles 19, 20 and 21 of the CC come into play;

DBPs liability: not entire value of the insurance policy. Highly speculative that Juan could have secured another insurance considering his advanced age; SC also notes his immediate death after applying for the MRI (19 days after) and release of loan (23 days after); Juans Estate entitled to moral damages (50k) and to the premium he paid. MODIFIED.