Great Pacific Life Assurance Co. vs. CA G.R. No. L-31845; L-31878 (Digest)

 

Great Pacific Life Assurance Co. vs. CA

G.R. No. L-31845; L-31878

 

Facts:

            Private respondent Ngo Hing filed an application with the Great Pacific Life Assurance Company for a twenty-year endownment policy in the amount of P50,000.00 on the life of his one-year old daughter Helen Go. Upon the payment of the insurance premuim, the binding deposit receipt (Exhibit E) 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 CFI Cebu, which rendered the decision which held that Great Pacific Life Assurance Company and Mondragon jointly and severally to pay plaintiff (herein private respondent Ngo Hing.  CA affirmed the CFI.

 

Issue 1:

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

 

Held:

            NO. the binding deposit receipt in question 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.

            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 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.

 

 

Issue 2:

            Whether private respondent Ngo Hing concealed the state of health and physical condition of Helen Go

 

Held:

            YES. When 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 disguised. Nonetheless, private respondent, in apparent bad faith, withheld the fact material to the risk to be assumed by the insurance company.

            A neglect to communicate that which a party knows and ought to communicate, is called a concealment. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.