Development Bank of the Philippines v CA

231 SCRA 370

March 21, 1994
Facts:
Juan B. Dans, together with his family applied for a loan of P500,000 with DBP. As principal mortgagor,
Dans, then 76 years of age was advised by DBP to obtain a mortgage redemption insurance (MRI) with
DBP MRI pool. A loan in the reduced amount was approved and released by DBP. From the proceeds of
the loan, DBP deducted the payment for the MRI premium. The MRI premium of 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.
Dans died of cardiac arrest. DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage,
being over the acceptance age limit of 60 years at the time of application. DBP apprised Candida Dans of
the disapproval of her late husbands MRI application. DBP offered to refund the premium which the
deceased had paid, but Candida Dans refused to accept the same demanding payment of the face value
of the MRI or an amount equivalent of the loan. She, likewise, refused to accept an ex gratia settlement
which DBP later offered. Hence the case at bar.
Issue:
Whether or not the DBP MRI Pool should be held liable on the ground that the contract was already
perfected?
Held:
No, it is not liable. The power to approve MRI application is lodged with the DBP MRI Pool. The pool,
however, did not approve the application. There is also no showing that it accepted the sum which DBP
credited to its account with full knowledge that it was payment for the premium. There was as a result
no perfected contract of insurance hence the DBP MRI Pool cannot be held liable on a contract that
does not exist
In dealing with Dans, DBP was wearing 2 legal hats: the first as a lender and the second as an insurance
agent. As an insurance agent, DBP made Dans go through the motion of applying for said insurance,
thereby leading him and his family to believe that they had already fulfilled all the requirements for the
MRI and that the issuance of their policy was forthcoming. DBP had full knowledge that the application
was never going to be approved. The DBP is not authorized to accept applications for MRI when its
clients are more than 60 years of age. Knowing all the while that Dans was ineligible, DBP exceeded the
scope of its authority when it accepted the application for MRI by collecting the insurance premium and
deducting its agents commission and service fee. Since the third person dealing with an agent is
unaware of the limits of the authority conferred by the principal on the agent and he has been deceived
by the non-disclosure thereof by the agent, then the latter is liable for damages to him.

Enriquez v. SunLife- Insurance Policy

41 PHIL 269
Facts:
On September 24, 1917, Joaquin Herrer made application to the Sun Life Assurance Company
of Canada through its office in Manila for a life annuity. He then paid the sum of P6,000 to the
manager of the company's Manila office and was given a receipt. The application was immediately
forwarded to the head office of the company at Montreal, Canada. On November 26, 1917, the head
office gave notice of acceptance by cable to Manila.
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.
On trial, Rafael Enriquez, the administrator of the estate, testified that he had gone through the
effects of the deceased and had found no letter of notification from the insurance company to Mr.
Herrer. The evidence showed that the letter of November 26, 1917, notifying Mr. Herrer that his
application had been accepted
but as far as we know, was never actually mailed and thus was never received by the applicant.
Issue:
Whether or not there was a perfected life annuity insurance contract.
Held:
NO.
The second paragraph of article 1262 of the 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
pertinent fact is, that according to the provisional receipt, three things had to be accomplished by the
insurance company before there was a contract: (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 contract for life annuity was NOT perfected because it had NOT been proved satisfactorily that the
acceptance of the application ever came to the knowledge of the applicant. An acceptance of an offer
of insurance NOT actually or constructively communicated to the proposer does NOT make a contract of
insurance, as the locus poenitentiae is ended when an acceptance has passed beyond the control of the
party.
NOTE: Life annuity is the opposite of a life insurance. In life annuity, a big amount is given to the
insurance company, and if after a certain period of time the insured is still living, he is entitled to regular
smaller amounts for the rest of his life. Examples of Life annuity are pensions. Life Insurance on the
other hand, the insured during the period of the coverage makes small regular payments and upon his
death, the insurer pays a big amount to his beneficiaries.

GREAT PACIFIC LIFE ASSURANCE COMPANY vs. HONORABLE COURT OF APPEALS

[G.R. No. L-31845 April 30, 1979]

FACTS:
It appears that on March 14, 1957, private respondent Ngo Hing filed an application with the Great
Pacific Life Assurance Company (hereinafter referred to as Pacific Life) for a twenty-year endowment
policy in the amount of P50,000.00 on the life of his one-year old daughter Helen Go. Said respondent
supplied the essential data which petitioner Lapulapu D. Mondragon, Branch Manager of the Pacific
Life in Cebu City wrote on the corresponding form in his own handwriting. Mondragon finally typewrote the data on the application form which was signed by private respondent Ngo Hing. The latter
paid the annual premium the sum of P1,077.75 going over to the Company, but he retained the
amount of P1,317.00 as his commission for being a duly authorized agent of Pacific Life. Upon
the payment of the insurance premium, the binding deposit receipt was issued to private respondent
Ngo Hing. Likewise, petitioner Mondragon handwrote at the bottom of the back page of the application
form his strong recommendation for the approval of the insurance application. Then on April 30, 1957,
Mondragon received a letter from Pacific Life disapproving the insurance application. The letter stated
that the said life insurance application for 20-year endowment plan is not available for minors below
seven years old, but Pacific Life can consider the same under the Juvenile Triple Action Plan, and
advised that if the offer is acceptable, the Juvenile Non-Medical Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner
Mondragon to private respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote back Pacific
Life again strongly recommending the approval of the 20-year endowment insurance plan to children,
pointing out that since 1954 the customers, especially the Chinese, were asking for such coverage.
It was when things were in such state that on May 28, 1957 Helen Go died of influenza with
complication of bronchopneumonia. Thereupon, private respondent sought the payment of the
proceeds of the insurance, but having failed in his effort, he filed the action for the recovery of the
same before the Court of First Instance of Cebu, which rendered the adverse decision as earlier
referred to against both petitioners.
ISSUE:
Whether the respondent is entitled to the insurance
SC:
Since petitioner Pacific Life disapproved the insurance application of respondent Ngo Hing, the binding
deposit receipt in question had never become in force at any time.
As held by this Court, where an agreement is made between the applicant and the agent, no liability
shall attach until the principal approves the risk and a receipt is given by the agent. The acceptance is
merely conditional and is subordinated to the act of the company in approving or rejecting the
application. Thus, in life insurance, a "binding slip" or "binding receipt" does not insure by itself
It bears repeating that through the intra-company communication of April 30, 1957 Pacific Life
disapproved the insurance application in question on the ground that it is not offering the twenty-year
endowment insurance policy to children less than seven years of age. What it offered instead is
another plan known as the Juvenile Triple Action, which private respondent failed to accept. In the
absence of a meeting of the minds between petitioner Pacific Life and private respondent Ngo Hing
over the 20-year endowment life insurance in the amount of P50,000.00 in favor of the latter's oneyear old daughter, and with the non-compliance of the above quoted conditions stated in the disputed
binding deposit receipt, there could have been no insurance contract duly perfected between then
Acordingly, the deposit paid by private respondent shall have to be refunded by Pacific Life.
We are not impressed with private respondent's contention that failure of petitioner
Mondragon to communicate to him the rejection of the insurance application would not
have any adverse effect on the allegedly perfected temporary contract In this first place,
there was no contract perfected between the parties who had no meeting of their minds.
Private respondent, being an authorized insurance agent of Pacific Life at Cebu branch
office, is indubitably aware that said company does not offer the life insurance applied for.
When he filed the insurance application in dispute, private respondent was, therefore, only taking the
chance that Pacific Life will approve the recommendation of Mondragon for the acceptance and
approval of the application in question along with his proposal that the insurance company starts to
offer the 20-year endowment insurance plan for children less than seven years. Nonetheless, the
record discloses that Pacific Life had rejected the proposal and recommendation. Secondly, having an
insurable interest on the life of his one-year old daughter, aside from being an insurance agent and an
offense associate of petitioner Mondragon, private respondent Ngo Hing must have known and
followed the progress on the processing of such application and could not pretend ignorance of the
Company's rejection of the 20-year endowment life insurance application.

This Court is of the firm belief that private respondent had deliberately concealed the state of health
and physical condition of his daughter Helen Go. Where private respondent supplied the required
essential data for the insurance application form, he was fully aware that his one-year old
daughter is typically a mongoloid child. Such a congenital physical defect could never be
ensconced nor distinguished. Nonetheless, private respondent, in apparent bad faith,
withheld the fact material to the risk to be assumed by the insurance company. As an
insurance agent of Pacific Life, he ought to know, as he surely must have known. his duty
and responsibility to such a material fact. Had he diamond said significant fact in the insurance
application form Pacific Life would have verified the same and would have had no choice but to
disapprove the application outright.
Whether intentional or unintentional the concealment entitles the insurer to rescind the contract of
insurance. Private respondent appears guilty thereof.
We are thus constrained to hold that no insurance contract was perfected between the parties with the
noncompliance of the conditions provided in the binding receipt, and concealment, as legally defined,
having been combated by herein private respondent.