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Development Bank of The Phils. v. Court of Appeals

The document discusses a case where a man and his wife applied for a loan and were required to obtain mortgage redemption insurance. The insurance agent knew the man was ineligible due to his age but still accepted his application and collected a premium. After the man died, his estate sued the bank for deceiving him into applying for ineligible insurance. The court ruled in favor of the estate, ordering the bank to reimburse premiums and pay moral damages and attorney fees.

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June Karl Cepida
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101 views2 pages

Development Bank of The Phils. v. Court of Appeals

The document discusses a case where a man and his wife applied for a loan and were required to obtain mortgage redemption insurance. The insurance agent knew the man was ineligible due to his age but still accepted his application and collected a premium. After the man died, his estate sued the bank for deceiving him into applying for ineligible insurance. The court ruled in favor of the estate, ordering the bank to reimburse premiums and pay moral damages and attorney fees.

Uploaded by

June Karl Cepida
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Development Bank of the Phils. v.

Court of Appeals
G.R. No. 109937, [March 21, 1994], 301 PHIL 375-383
Doctrine:
The lender and insurance agent can be held liable for deceiving a person
into applying for Mortgage redemption insurance despite knowing that the
latter was ineligible.
Facts:
Juan B. Dans and his wife Candida applied for a loan of P500,000.00 with
the Development Bank of the Philippines (DBP), Basilan Branch in May 1987. DBP
advised Dans to obtain a mortgage redemption insurance (MRI) with the DBP
Mortgage Redemption Insurance Pool (DBP MRI Pool).
A loan of P300,000.00 was approved by DBP on August 4, 1987, and
released on August 11, 1987. DBP deducted the amount of P1,476.00 as payment
for the MRI premium from the loan proceeds.
Dans submitted the "MRI Application for Insurance" and the "Health
Statement for DBP MRI Pool" on August 15, 1987.
On September 23, 1987, the DBP MRI Pool notified DBP that Dans was not
eligible for MRI coverage due to his age, as he was over the acceptance age limit
of 60 years at the time of application.
Dans died on September 3, 1987, and his wife, Candida Dans, refused to
accept the refund of the premium and demanded payment of the face value of
the MRI or an amount equivalent to the loan.
Issue:
Whether DBP is liable for the MRI premium.
Ruling:
The court ruled in favor of the Estate of Juan B. Dans and against DBP.
The court stated that while the DBP MRI Pool cannot be held liable for the
insurance coverage since there was no perfected contract of insurance, DBP, as
the lender and insurance agent, can be held liable for deceiving Dans into
applying for MRI despite knowing that he was ineligible due to his age.
DBP required Dans to secure MRI coverage and deducted the premium
from the loan proceeds. By accepting Dans' application and collecting the
premium, DBP exceeded the scope of its authority.
The court applied Article 19, 20, and 21 of the Civil Code, which provide for
the duty to act with justice, indemnification for willful or negligent damage, and
compensation for loss or injury caused in a manner contrary to morals, good
customs, or public policy.
The court awarded moral damages due to DBP's deception and awarded
attorney's fees as well. However, the court did not award compensatory damages
as it was speculative whether Dans could have obtained insurance coverage from
another company and there was no proof of pecuniary loss.
DBP was ordered to reimburse the amount of P1,476.00 paid for the MRI
premium, pay moral damages in the amount of P50,000.00, and pay attorney's
fees in the amount of P10,000.00.

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