38 – Great Pacific Life Assurance Company v.

CA

Facts: Ngo Hing, an agent of Grepalife, filed an application with Great Pacific Life Assurance Company
(“Grepalife”) for a 20 year endowment policy on the life of his one-year old daughter. He supplied the
required information to Mondragon, the branch manager of Grepalife in Cebu City, who wrote the said
information in the form. Ngo Hing likewise paid the premium to Mondragon. Upon payment of the premium,
Ngo Hing was issued a “binding deposit receipt.” Before submitting the application, Mondragon even wrote at
the back of the application form, indicating his strong recommendation for the approval thereof. Later,
Mondragon received a letter stating that the application was disapproved because the endowment plan is not
available for minors below seven years old. Grepalife suggested a different product under which Ngo Hing’s
daughter was eligible.

Mondragon wrote to Grepalife, again recommending the approval of Ngo Hing’s application for the 20-year
endowment plan. Meanwhile, Ngo Hing’s daughter died. Thus, Ngo Hing sought payment of the proceeds of
the policy. Having failed in this effort, he filed an action for the recovery of the proceeds before the CFI.

Issues:
- Did the binding deposit receipt constitute a temporary contract of the life insurance in question? (No)
- Did Ngo Hing conceal the state of health and physical condition of his daughter which rendered void the
binding deposit receipt? (Yes)

Held:

There were provisions printed at the back of the binding deposit receipt which show that the receipt was
intended merely to be a provisional or temporary insurance contract and only upon compliance of the
following conditions: (1) that the company shall be satisfied that the applicant was insurable on standard
rates; (2) that if the company does not accept the application and offers to issue a policy for a different plan,
the insurance contract shall not be binding until the applicant accepts the policy offered; otherwise, the
deposit shall be returned; and (3) that if the applicant is not able according to the standard rates, and the
company disapproves the application, the insurance applied for shall not be in force at any time, and the
premium paid shall be returned to the applicant.

These provisions show that the binding deposit receipt does not insure outright. It is merely an
acknowledgment on behalf of the company, that the latter's branch office had received from the applicant the
insurance premium and had accepted the application subject for processing by the insurance company; and
that the latter will either approve or reject the same on the basis of whether or not the applicant is "insurable
on standard rates." 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 in De Lim vs. Sun Life Assurance Company of Canada, "a contract of insurance, like other contracts,
must be assented to by both parties either in person or by their agents ... The contract, to be binding from the
date of the application, must have been a completed contract, one that leaves nothing to be done, nothing to
be completed, nothing to be passed upon, or determined, before it shall take effect. There can be no contract
of insurance unless the minds of the parties have met in agreement."

As regards the second issue, the SC was convinced that Ngo Hing concealed the state of health and physical
condition of his daughter when he supplied the requisite information to Mondragon. He was fully aware that
his daughter was a “mongoloid child.” Nonetheless, in apparent bad faith, he withheld this fact which he ought
to have known would affect the risk to be undertaken by the company.

-Monci