GR L 109937; (March, 1994) (Digest)
G.R. No. L-109937 March 21, 1994
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
In May 1987, Juan B. Dans, then 76 years old, applied for a loan with the Development Bank of the Philippines (DBP). DBP advised him to obtain a mortgage redemption insurance (MRI) from the DBP MRI Pool. A loan of P300,000.00 was approved and released on August 11, 1987, from which DBP deducted P1,476.00 as MRI premium. Dans submitted the MRI application and health statement on August 15, 1987. The premium, less a 10% service fee, was credited to the DBP MRI Pool’s account on August 20, 1987. Dans died on September 3, 1987. The DBP MRI Pool later notified DBP that Dans was ineligible for coverage due to the age limit of 60 years. DBP offered to refund the premium and later an ex gratia settlement of P30,000.00 to Candida Dans, who refused both. The Estate filed a complaint for collection against DBP and the DBP MRI Pool. The trial court ruled in favor of the Estate against DBP, absolving the DBP MRI Pool. The Court of Appeals affirmed the decision in toto. DBP filed the present petition.
ISSUE
Whether DBP is liable to the Estate of Juan B. Dans for damages arising from its act of accepting his MRI application and premium despite his ineligibility due to age.
RULING
Yes, DBP is liable, but not for the full value of the insurance policy. The Supreme Court affirmed the Court of Appeals’ decision with modification. The DBP MRI Pool was not liable as there was no perfected insurance contract, as it did not approve Dans’ application. However, DBP, acting as an insurance agent, exceeded its authority by accepting Dans’ application and collecting the premium despite knowing he was over the age limit of 60, without disclosing this limitation to Dans. This non-disclosure constituted a deception, making DBP liable for damages under Articles 19, 20, and 21 of the Civil Code. The Estate is not entitled to compensatory damages equivalent to the loan or insurance value, as such recovery is speculative. However, the Estate is entitled to moral damages due to the deceptive practice. The Court modified the award, ordering DBP to: (1) reimburse the premium of P1,476.00 with legal interest; (2) pay moral damages of P50,000.00; and (3) pay attorney’s fees of P10,000.00.