Great Pacific Life Insurance Company v.

Court of Appeals
(1979)
Petitioner: Great Pacific Life Insurance Company (Pacific Life) and
LapuLapu Mondragon Branch Manager of Pacific Life in Cebu
City
Respondent: Ngo Hing
Doctrine/s: 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 by 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.
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.
Contract of insurance is one of perfect good faith.
Concealment is a neglect to communicate that which a party known
and ought to communicate. Whether intentional or unintentional, the
concealment entitles the insurer to rescind the contract of insurance.
Facts: On March 14, 1957, Ngo Hing filed an application with the
Pacific Life for a 20 year endowment policy in the amount of
50,000.00php on the life of his 1 yr. old daughter Helen Go. Ngo
Hing paid the annual premium, the sum of 1,077.75php going over
the Company. Upon the payment of the premium, a binding deposit
receipt was issued to Ngo Hing.

On April 30, 1957, Mondragon received a letter from the

Pacific Life disapproving the insurance application. The letter stated
that the insurance application is not available for minors below 7 yrs.
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.
Instead of communicating the non-acceptance of the
insurance to Ngo Hing, Mondragon wrote back to pacific life
strongly recommending the approval of the 20-year endowment life
insurance on the ground that Pacific Life is the only insurance
company not selling the 20 year endowment insurance plan to
children, especially the Chinese were asking for such coverage.
On May 28, 1957, Helen Go died of influenza with
complication of broncho-pneumonia. Thereupon, Ngo Hing sought
the payment of the proceeds of the insurance, but having failed in his
effort, Ngo Hing filed an action for recovery before the CFI.
CFI: ordered the Pacific Life and Mondragon solidarily liable to pay
Ngo Hing for the amount of 50,000.00php with 6% interest from the
date of the filing of the complaint.
CA: Affirmed the decision of the CFI
Hence this petition.
Issue/s: 1.) Does the binding deposit receipt constituted a temporary
contract of life insurance? No
2.) Does Ngo Hing concealed the state of health and physical
condition of Helen Go, which rendered the binding deposit receipt
void? Yes
Ratio:

1.) The binding deposit receipt in question is merely an

acknowledgment, on behalf of the company, that the
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 company 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, the binding
receipt in question had never become in force at any time. Upon the
premise, the binding deposit receipt is manifestly, merely conditional
and does not insure outright.
When 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 a life insurance, a
binding slip or binding receipt does not insure by itself.
In the absence of the meeting of the minds between Ngo
Hing and Pacific Life over the 20 years endowment life insurance in
the amount of 50,000.00php in favor of the Ngo Hings daughter and
with the non-compliance of the conditions stated in the disputed
binding receipt, there could have been no insurance contract duly
perfected between them. Accordingly, the deposit paid shall have
been refunded by the Pacific Life.

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.
2.) Contract of insurance is one perfected good faith. Concealment is a
neglect to communicate that which a party known and ought to
communicate. Whether intentional or unintentional, the concealment
entitles the insurer to rescind the contract of insurance.
Ngo Hing deliberately concealed the state of health and
physical condition of his daughter Helen Go. When Ngo Hing
supplied the required essential data for the insurance application
form, he was fully aware that his daughter is typically a mongoloid
child. Such congenital physical defect could never be ensconced nor
disguised. Nonetheless, Ngo Hing, in apparent bad faith withheld the
fact material to the risk to be assumed by the insurer.
Hence, there is no insurance contract that was perfected between the
parties due to the noncompliance of the conditions provided in the
binding receipt, and concealment, having been committed by Ngo
Hing. The Court ordered the Pacific life to reimburse the amount of
1,077.75php to Ngo Hing.