Great Pacific Life Assurance Company vs. Court of Appeals 89 SCRA 543 (Insurance Law)

Great Pacific Life Assurance Company vs. Court of Appeals

89 SCRA 543 (G.R. No. L-31845 and L-31878)

April 30, 1979

Petitioners:       Great Pacific Life Assurance Company (G.R. No. L-31845), Lapulapu Mondragon (G.R. No. L-31878)

Respondent:     Court of Appeals (both in G.R. No. L-31845 and L-31878), Ngo Hing (G.R. No. L-31878)

J. De Castro:

FACTS:

On March 4, 1957 respondent Ngo Hing filed an application with the Great Pacific Life Assurance Company for twenty-year endowment policy for ₱50,000.00 on the life of his one-year old Helen Go.

Upon payment of the insurance premium, a binding deposit receipt was issued to Hing by the branch manager of the insurer in Cebu.

On May 28, 1957, the child died of influenza with complication of broncho pneumonia.

ISSUE:

Whether the binding deposit receipt constituted a temporary contract of the life insurance in question.

HELD:

No. The provisions printed on the Binding Receipt show that the binding deposit receipt is intended to be merely 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 different plan, the insurance contract shall not be binding until the applicant accepts the policy offered; otherwise the deposit shall be refunded; and

3.  That if the applicant is not insurable 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;

Clearly implied from the aforesaid conditions is that the binding deposit receipt in question is merely 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 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 Pacific Life disapproved the insurance application of Hing, the binding deposit receipt in question had never become in force at any time.

Upon this premise, the binding deposit receipt is, manifestly, merely conditional and does not insure outright. 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 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. (De Lim vs. Sun Life Assurance Company of Canada, 41 Phil. 264)

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 Pacific Life and Hing over the 20 year endowment life insurance in the amount of ₱50,000.00 in favor of the latter’s one year old daughter, and with non-compliance of the above-quoted conditions stated in the disputed binding deposit receipt, there could have been no insurance contract duly perfected between them. Accordingly, the deposit paid by private respondent shall have to be refunded by Pacific Life.