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 P500,000 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 (P50,000) plus attorney fees’s (P10,000) and the reimbursement of the
MRI fees with legal interest from the date of the filing of the complaint until fully paid.