DBP vs.

CA 449 SCRA 57
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner vs. Court of Appeals and
the ESTATE OF THE LATE JUAN B. DANS, represented by CANDIDA G. DANS, and
the DBP MORTGAGE REDEMPTION INSURANCE POOL, respondents.
FACTS: Juan B. Dans, 76 years of age, together with his family, applied for a loan worth
Php 500, 000 at the Development Bank of the Philipppines on May 1987. The loan was
approved by the bank dated August 4, 1987 but in the reduced amount of Php 300, 000.
Mr. Dans was advised by DBP to obtain a mortgage redemption insurance at DBP MRI
pool. DBP deducted the amount to be paid for MRI Premium that is worth Php 1476.00.
The insurance of Mr. Dans, less the DBP service fee of 10%, was credited by DBP to the
savings account of DBP MRI-Pool. Accordingly, the DBP MRI Pool was advised of the
credit.
On September 3, 1987, Mr. Dans died of cardiac arrest. DBP MRI notified DBP
was not eligible for the coverage of insurance for he was beyond the maximum age of
60. The wife, Candida, filed a complaint to the Regional Trial Court Branch I Basilan
against DBP and DBP MRI pool for Collection of Sum of Money with Damages. Prior to
that, DBP offered the administratrix (Mrs. Dans) a refund of the MRI payment but she
refused for insisting that the family of the deceased must receive the amount equivalent
of the loan. DBP also offered and ex gratia for settlement worth Php 30, 000. Mrs. Dans
refused to take the offer. The decision of the RTC rendered in favor of the family of the
deceased and against DBP. However, DBP appealed to the court.
ISSUE: Whether or not the DBP MRI Pool should be held liable on the ground that the
contract was already perfected.
HELD: No. DBP MRI Pool is not liable. Though the power to approve the insurance is
lodged to the pool, the DBP MRI Pool did not approve the application of the deceased.
There was no perfected contract between the insurance pool and Mr. Dans.
DBP was wearing two legal hats: as a lender and insurance agent. As an
insurance agent, DBP made believed that the family already fulfilled the requirements for
the said insurance although DBP had a full knowledge that the application would never
be approved. DBP acted beyond the scope of its authority for accepting applications for
MRI. If the third person who contracted is unaware of the authority conferred by the
principal on the agent and he has been deceived, the latter is liable for damages. The
limits of the agency carries with it the implication that a deception was perpetrated
Articles 19-21 come into play.
However, DBP is not entitled to compensate the family of the deceased with
the entire value of the insurance policy. Speculative damages are too remote to be
included in the cost of damages. Mr. Dans is entitled only to moral damages. Such
damages do not need a proof of pecuniary loss for assessment. The court granted only
moral damages (Php 50, 000) plus attorney feess (Php 10, 000) and the reimbursement
of the MRI fees with legal interest from the date of the filing of the complaint until fully
paid.