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CA and the
ESTATE OF THE LATE JUAN B. DANS
(WENCESLAO)
PRINCIPAL
AGENT
THIRD PARTY/INSURANCE
DANS
DBP
DBP MRI
DOCTRINES
I.
Liability of the agent who exceeds the scope of his
authority depends upon whether the 3 rd person is aware
of the limits of agents powers.
II.
If the third person dealing with an agent is unaware of
the limits of the authority conferred by the principal on
the agent and the third person has been deceived by the
non-disclosure by the agent, the the agent is liable for
damages to him.
III.
The rule that the agent is liable when he acts without
authority is founded upon the supposition that there has
been some wrong or omission on his part either in
misrepresenting or in affirming or concealing the
authority under which he assumes to act.
FACTS
May 1987Juan Dans with wife Candida, his son and
daughter-in-law applied for a loan of P500,000 with the DBP.
(May 1987 loan)
As the principal-mortgagor, Dans (76 years old) was advised
by the DPB to obtain a mortgage redemption insurance
(MRI) with the DBP MRI Pool in August 1987.
A loan with a reduced amount of P300,000 was approved
and released by DBP. From the proceeds of the May 1987
loan, DBP deducted the amount of P1,476 as payment for
the MRI premium with service fee of 10% of the premium
collected.
Dans accomplished and submitted the MRI Application for
Insurance and the Health Statement for DBP MRI Pool.
Sept 3, 1987Dans died of cardiac arrest. The DPB, upon
notice, relayed this information to the DBP MRI Pool. DBP
MRI Pool notified DBP that Dans was not eligible for MRI
Coverage being over the age limit (60 years old).
DBP apprised Candida of the disapproval of her husbands
MRI application. DBP offered to refund the premium paid by
ISSUE/S
Whether DBP is liable for damages to the Estae of Dans? YES
HELD/RATIO
Issue of Agency: YES, DBP is liable to pay moral damages to Dans.
Art. 1897: The agent who acts as such is not personally
liable to the party with whom he contracts, unless he
expressly binds himself or exceeds the limits of his authority
without giving such party sufficient of his powers.
DBP is not authorized to accept applications for MRI when its
clients are more than 60 yeats of age (as shown in Exhibit 1
Article 1 of the Group Mortgage Redemption Insurance
Policy signed in 1984 by all insurance companies)
Knowing all the while that Dans was ineligible for MRI
coverage because of his advanced agewhen it
accepted Dans application for MRI and collected
insurance premium with the deduction of service hee
DBP exceeded its authority.
The liability of an agent who exceeds the scope of his
authority depends upon whether the 3rd person is aware of
the limits of the agents powers. There is no showing that
Dans knew of the limitation on DBPs authority to
solicit applications for MRI.
If the non-disclosure of the limits of the agency carries with
it the implication that a deception was perpetrated on the
RULING
DANS WON! Court ordered DBP to reimburse the Estate of the
amount of P1,476 with legal interest + P50,000 for moral damages
+ P10,000 as attorneys fees.