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G.R. No. L-109937 March 21, 1994 the MRI premium.

the MRI premium. On August 15, 1987, Dans The DBP and the DBP MRI Pool separately filed their
accomplished and submitted the "MRI Application for answers, with the former asserting a cross-claim
DEVELOPMENT BANK OF THE Insurance" and the "Health Statement for DBP MRI against the latter.
PHILIPPINES, petitioner, Pool."
vs. At the pre-trial, DBP and the DBP MRI Pool admitted
COURT OF APPEALS and the ESTATE OF THE On August 20, 1987, the MRI premium of Dans, less all the documents and exhibits submitted by
LATE JUAN B. DANS, represented by CANDIDA the DBP service fee of 10 percent, was credited by respondent Estate. As a result of these admissions,
G. DANS, and the DBP MORTGAGE DBP to the savings account of the DBP MRI Pool. the trial court narrowed down the issues and, without
REDEMPTION INSURANCE POOL, respondents. Accordingly, the DBP MRI Pool was advised of the opposition from the parties, found the case ripe for
credit. summary judgment. Consequently, the trial court
Office of the Legal Counsel for petitioner. ordered the parties to submit their respective position
On September 3, 1987, Dans died of cardiac arrest. papers and documentary evidence, which may serve
Reyes, Santayana, Molo & Alegre for DBP Mortgage The DBP, upon notice, relayed this information to the as basis for the judgment.
Redemption Insurance Pool. DBP MRI Pool. On September 23, 1987, the DBP
MRI Pool notified DBP that Dans was not eligible for On March 10, 1990, the trial court rendered a
MRI coverage, being over the acceptance age limit of decision in favor of respondent Estate and against
60 years at the time of application. DBP. The DBP MRI Pool, however, was absolved
from liability, after the trial court found no privity of
QUIASON, J.: contract between it and the deceased. The trial court
On October 21, 1987, DBP apprised Candida Dans
of the disapproval of her late husband's MRI declared DBP in estoppel for having led Dans into
This is a petition for review on certiorari under Rule application. The DBP offered to refund the premium applying for MRI and actually collecting the premium
45 of the Revised Rules of Court to reverse and set of P1,476.00 which the deceased had paid, but and the service fee, despite knowledge of his age
aside the decision of the Court of Appeals in CA-G.R Candida Dans refused to accept the same, ineligibility. The dispositive portion of the decision
CV No. 26434 and its resolution denying demanding payment of the face value of the MRI or read as follows:
reconsideration thereof. an amount equivalent to the loan. She, likewise,
refused to accept an ex gratia settlement of WHEREFORE, in view of the foregoing
We affirm the decision of the Court of Appeals with P30,000.00, which the DBP later offered. consideration and in the furtherance of justice
modification. and equity, the Court finds judgment for the
On February 10, 1989, respondent Estate, through plaintiff and against Defendant DBP, ordering
I Candida Dans as administratrix, filed a complaint with the latter:
the Regional Trial Court, Branch I, Basilan, against
In May 1987, Juan B. Dans, together with his wife DBP and the insurance pool for "Collection of Sum of 1. To return and reimburse plaintiff the amount
Candida, his son and daughter-in-law, applied for a Money with Damages." Respondent Estate alleged of P139,500.00 plus legal rate of interest as
loan of P500,000.00 with the Development Bank of that Dans became insured by the DBP MRI Pool amortization payment paid under protest;
the Philippines (DBP), Basilan Branch. As the when DBP, with full knowledge of Dans' age at the
principal mortgagor, Dans, then 76 years of age, was time of application, required him to apply for MRI, and 2. To consider the mortgage loan of
advised by DBP to obtain a mortgage redemption later collected the insurance premium thereon. P300,000.00 including all interest accumulated
insurance (MRI) with the DBP Mortgage Redemption Respondent Estate therefore prayed: (1) that the sum or otherwise to have been settled, satisfied or
Insurance Pool (DBP MRI Pool). of P139,500.00, which it paid under protest for the set-off by virtue of the insurance coverage of
loan, be reimbursed; (2) that the mortgage debt of the the late Juan B. Dans;
A loan, in the reduced amount of P300,000.00, was deceased be declared fully paid; and (3) that
approved by DBP on August 4, 1987 and released on damages be awarded.
3. To pay plaintiff the amount of P10,000.00 as
August 11, 1987. From the proceeds of the loan, DBP attorney's fees;
deducted the amount of P1,476.00 as payment for
4. To pay plaintiff in the amount of P10,000.00 Undisputably, the power to approve MRI applications Under Article 1987 of the Civil Code of the
as costs of litigation and other expenses, and is lodged with the DBP MRI Pool. The pool, however, Philippines, "the agent who acts as such is not
other relief just and equitable. did not approve the application of Dans. There is also personally liable to the party with whom he contracts,
no showing that it accepted the sum of P1,476.00, unless he expressly binds himself or exceeds the
The Counterclaims of Defendants which DBP credited to its account with full knowledge limits of his authority without giving such party
DBP and DBP MRI POOL are that it was payment for Dan's premium. There was, sufficient notice of his powers."
hereby dismissed. The Cross-claim as a result, no perfected contract of insurance; hence,
of Defendant DBP is likewise the DBP MRI Pool cannot be held liable on a contract The DBP is not authorized to accept applications for
dismissed (Rollo, p. 79) that does not exist. MRI when its clients are more than 60 years of age
(Exh. "1-Pool"). Knowing all the while that Dans was
The DBP appealed to the Court of Appeals. In a The liability of DBP is another matter. ineligible for MRI coverage because of his advanced
decision dated September 7, 1992, the appellate age, DBP exceeded the scope of its authority when it
court affirmed in toto the decision of the trial court. It was DBP, as a matter of policy and practice, that accepted Dan's application for MRI by collecting the
The DBP's motion for reconsideration was denied in required Dans, the borrower, to secure MRI insurance premium, and deducting its agent's
a resolution dated April 20, 1993. coverage. Instead of allowing Dans to look for his own commission and service fee.
insurance carrier or some other form of insurance
Hence, this recourse. policy, DBP compelled him to apply with the DBP MRI The liability of an agent who exceeds the scope of his
Pool for MRI coverage. When Dan's loan was authority depends upon whether the third person is
II released on August 11, 1987, DBP already deducted aware of the limits of the agent's powers. There is no
from the proceeds thereof the MRI premium. Four showing that Dans knew of the limitation on DBP's
days latter, DBP made Dans fill up and sign his authority to solicit applications for MRI.
When Dans applied for MRI, he filled up and application for MRI, as well as his health statement.
personally signed a "Health Statement for DBP MRI The DBP later submitted both the application form
Pool" (Exh. "5-Bank") with the following declaration: If the third person dealing with an agent is unaware
and health statement to the DBP MRI Pool at the DBP of the limits of the authority conferred by the principal
Main Building, Makati Metro Manila. As service fee, on the agent and he (third person) has been deceived
I hereby declare and agree that all DBP deducted 10 percent of the premium collected by the non-disclosure thereof by the agent, then the
the statements and answers by it from Dans. latter is liable for damages to him (V Tolentino,
contained herein are true, complete Commentaries and Jurisprudence on the Civil Code
and correct to the best of my In dealing with Dans, DBP was wearing two legal of the Philippines, p. 422 [1992], citing Sentencia
knowledge and belief and form part hats: the first as a lender, and the second as an [Cuba] of September 25, 1907). The rule that the
of my application for insurance. It is insurance agent. agent is liable when he acts without authority is
understood and agreed that no founded upon the supposition that there has been
insurance coverage shall be effected some wrong or omission on his part either in
unless and until this application is As an insurance agent, DBP made Dans go through
the motion of applying for said insurance, thereby misrepresenting, or in affirming, or concealing the
approved and the full premium is authority under which he assumes to act (Francisco,
leading him and his family to believe that they had
paid during my continued good V., Agency 307 [1952], citing Hall v. Lauderdale, 46
already fulfilled all the requirements for the MRI and
health (Records, p. 40). N.Y. 70, 75). Inasmuch as the non-disclosure of the
that the issuance of their policy was forthcoming.
Apparently, DBP had full knowledge that Dan's limits of the agency carries with it the implication that
Under the aforementioned provisions, the MRI application was never going to be approved. The a deception was perpetrated on the unsuspecting
coverage shall take effect: (1) when the application maximum age for MRI acceptance is 60 years as client, the provisions of Articles 19, 20 and 21 of the
shall be approved by the insurance pool; and (2) clearly and specifically provided in Article 1 of the Civil Code of the Philippines come into play.
when the full premium is paid during the continued Group Mortgage Redemption Insurance Policy
good health of the applicant. These two conditions, signed in 1984 by all the insurance companies Article 19 provides:
being joined conjunctively, must concur. concerned (Exh. "1-Pool").
Every person must, in the exercise of accurate estimate of damages (Sun Life Assurance of the Philippines (DBP), Basilan Branch. As the principal
his rights and in the performance of v. Rueda Hermanos, 37 Phil. 844 [1918]). mortgagor, Dans, then 76 years of age, was advised by
his duties, act with justice give DBP
everyone his due and observe to obtain a mortgage redemption insurance (MRI) with the
While Dans is not entitled to compensatory damages, DBP Mortgage Redemption Insurance Pool (DBP MRI
honesty and good faith. he is entitled to moral damages. No proof of Pool).
pecuniary loss is required in the assessment of said A reduced amount of loan was approved and released by
Article 20 provides: kind of damages (Civil Code of Philippines, Art. DBP, and deducted the amount of P1,476.00 as payment
2216). The same may be recovered in acts referred for
to in Article 2219 of the Civil Code. the MRI premium. Days after, Dans died of cardiac arrest.
Every person who, contrary to law,
DBP informed his wife that her husband was not eligible of
willfully or negligently causes MRI, being over the acceptance age limit of 60 years at
damage to another, shall indemnify The assessment of moral damages is left to the the
the latter for the same. discretion of the court according to the circumstances time of application, and offered the return of premium. The
of each case (Civil Code of the Philippines, Art. wife as administratrix of the estate, filed a complaint
Article 21 provides: 2216). Considering that DBP had offered to pay against
P30,000.00 to respondent Estate in ex DBP, which was later sustained in toto by the appellate
gratia settlement of its claim and that DBP's non- court.
Any person, who willfully causes loss ISSUE
disclosure of the limits of its authority amounted to a
or injury to another in a manner that Whether or not there is a perfected contract of insurance.
is contrary to morals, good customs deception to its client, an award of moral damages in
or public policy shall compensate the the amount of P50,000.00 would be reasonable. NO. The MRI coverage shall take effect: (1) when the
latter for the damage. application shall be approved by the insurance pool; and
The award of attorney's fees is also just and equitable (2)
under the circumstances (Civil Code of the when the full premium is paid during the continued good
The DBP's liability, however, cannot be for the entire health of the applicant. These two conditions, being joined
value of the insurance policy. To assume that were it Philippines, Article 2208 [11]).
conjunctively, must concur. Undisputably, the power to
not for DBP's concealment of the limits of its authority, approve MRI applications is lodged with the DBP MRI
Dans would have secured an MRI from another WHEREFORE, the decision of the Court of Appeals Pool.
insurance company, and therefore would have been in CA G.R.-CV The pool, however, did not approve the application of
fully insured by the time he died, is highly speculative. No. 26434 is MODIFIED and petitioner DBP is Dans.
Considering his advanced age, there is no absolute ORDERED: (1) to REIMBURSE respondent Estate of There is also no showing that it accepted the sum of
certainty that Dans could obtain an insurance Juan B. Dans the amount of P1,476.00 with legal P1,476.00, which DBP credited to its account with full
interest from the date of the filing of the complaint knowledge that it was payment for Dan's premium. There
coverage from another company. It must also be
until fully paid; and (2) to PAY said Estate the amount was, as a result, no perfected contract of insurance;
noted that Dans died almost immediately, i.e., on the hence,
nineteenth day after applying for the MRI, and on the of Fifty Thousand Pesos (P50,000.00) as moral
the DBP MRI Pool cannot be held liable on a contract tha
twenty-third day from the date of release of his loan. damages and the amount of Ten Thousand Pesos does not exist.
(P10,000.00) as attorney's fees. With costs against
petitioner. Enriquez v. Sun Life Assurance Company of
One is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly
SO ORDERED. G.R. No. L-15895. November 29, 1920.
proved (Civil Code of the Philippines, Art. 2199). FACTS
Damages, to be recoverable, must not only be Joaquin Herrer made application to the Sun Life Assurance
capable of proof, but must be actually proved with a Development Bank of the Philippines v. Court of Company of Canada through its office in Manila for a life
reasonable degree of certainty (Refractories Appeals annuity. Two days later he paid the sum of P6,000 to the
G.R. No. L-109937 March 21, 1994 manager of the company's Manila office and was given a
Corporation v. Intermediate Appellate Court, 176 receipt. The pertinent fact is, that according to the
SCRA 539 [1989]; Choa Tek Hee v. Philippine provisional receipt, three things had to be accomplished by
Juan B. Dans applied for a loan with the Development
Publishing Co., 34 Phil. 447 [1916]). Speculative Bank
the insurance company before there was a contract:
damages are too remote to be included in an (1) There had to be a medical examination of the applicant;
(2) there had to be approval of the application by the head
office of the company; and
(3) this approval had in some way to be communicated by
the company to the applicant.
The application was immediately forwarded to the head
office of the company at Montreal, Canada. On December 4,
1917, the policy was issued at Montreal. On December 18,
1917, Attorney Aurelio A. Torres wrote to the Manila office of
the company stating that Herrer desired to withdraw his
application. The following day the local office replied to Mr.
Torres, stating that the policy had been issued, and called
attention to the notification of November 26, 1917. This letter
was received by Mr. Torres on the morning of December 21,
1917. Mr. Herrer died on December 20, 1917.
Whether or not there was a perfected contract of insurance.
NO. The law applicable to the case is found to be the second
paragraph of article 1262 of the (old) Civil Code providing
that an acceptance made by letter shall not bind the person
making the offer except from the time it came to his
knowledge. The further admitted facts are that the head
office in Montreal did accept the application, did cable the
Manila office to that effect, did actually issue the policy and
did, through its agent in Manila, actually write the letter of
notification and place it in the usual channels for
transmission to the addressee. The fact as to the letter of
notification thus fails to concur with the essential elements of
the general rule pertaining to the mailing and delivery of mail
matter as announced by the American courts, namely, when
a letter or other mail matter is addressed and mailed with
postage prepaid there is a rebuttable presumption of fact
that it was received by the addressee as soon as it could
have been transmitted to him in the ordinary course of the
mails. But if any one of these elemental facts fails to appear,
it is fatal to the presumption. For instance, a letter will not be
presumed to have been received by the addressee unless it
is shown that it was deposited in the post-office, properly
addressed and stamped.