great pacific life assurance company vs

7/30/2019 Great Pacific Life Assurance Company Vs

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No. L-3185, April 30, 1979LAPU-LAPU D. MONDRAGON, petitioner, vs. HON. COURT OF

APPEALS and NGO HING

Great Pacific Life

Assurance Company vs.Court of Appeals


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FACTS

On March 14, 1957, privaterespondent Ngo Hing filed anapplication with the GreatPacific Life Assurance Companyfor a twenty-year endowment

policy in the amount ofP50,000.00 on the life of hisone-year old daughter HelenGo. Said respondent filed theessential data which petitioner

Lapulapu D. Mondragon, BranchManager of the Pacific Life inCebu City wrote in thecorresponding


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FACTS OF THE CASE

form in his own handwriting. Mondragonfinally type-wrote the data on theapplication form which was signed byprivate respondent Ngo Hing. The latterpaid the annual premium the sum ofP1,077.75 going over to the Company, but

he retained the amount of P1,317.00 as hiscommission for being a duly authorizedagent of Pacific Life.

Upon the payment of the insurancepremium, the binding deposit receipt wasissued to private respondent Ngo Hing.

Likewise, petitioner Mondragon handwroteat the bottom of the back page of theapplication form his strongrecommendation for the approval of theinsurance application.


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FACTS OF THE CASE

Then on April 30, 1957, Mondragon received a

letter from Pacific Life disapproving the insuranceapplication. 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-MedicalDeclaration be sent to the company.


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FACTS OF THE CASE

The non-acceptance of theinsurance plan by Pacific Lifewas allegedly notcommunicated by petitionerMondragon to private

respondent Ngo Hing. Instead,on May 6, 1957, Mondragonwrote back Pacific Life againstrongly recommending theapproval of the 20-year

endowment insurance plan tochildren, pointing out that since1954 the customers, especiallythe Chinese, were asking forsuch coverage.


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Bronchopneumonia

It was when things were in such

state that on May 28, 1957Helen 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 therecovery of the same before the

Court of First Instance of Cebu,

which rendered the adverse decision

as earlier referred to against both

petitioners.

inflammation of the lungsbeginning in the terminalbronchioles caused by infectionfrom viruses, bacteria, or fungi.


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ISSUES

1) whether the binding deposit receiptconstituted a temporary contract of thelife insurance in question;

(2) whether private respondent Ngo Hingconcealed the state of health and physicalcondition of Helen Go,


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RULING

Binding deposit receipt is intended to be merely aprovisional or temporary insurance contract and onlyupon compliance of the following conditions: (1) thatthe company shall be satisfied that the applicant wasinsurable on standard rates; (2) that if the companydoes not accept the application and offers to issue apolicy for a different plan, the insurance contract shallnot be binding until the applicant accepts the policyoffered; otherwise, the deposit shall be refunded; and(3) that if the applicant is not able according to the

standard rates, and the company disapproves theapplication, the insurance applied for shall not be inforce at any time, and the premium paid shall bereturned to the applicant.


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RULING

Upon this premise, the binding deposit receiptmanifestly, merely conditional and does not insureoutright. As held by this Court, where anagreement is made between the applicant and the

agent, no liability shall attach until the principalapproves the risk and a receipt is given by theagent. The acceptance is merely conditional and issubordinated to the act of the company inapproving or rejecting the application. Thus, in life

insurance, a "binding slip" or "binding receipt"does not insure by itself (De Lim vs. Sun LifeAssurance Company of Canada, 41 Phil. 264)


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DISSENTING OPINION

Appelate Associate Justice Ruperto G. MartinOf course, there is the insinuation that neither the memorandum of rejection (Exhibit 3-M) nor

the reply thereto of appellant Mondragon reiterating the desire for applicant's father tohave the application considered as one for a 20-year endowment plan was ever dulycommunicated to Ngo; Hing, father of the minor applicant. I am not quite convinced thatthis was so. Ngo Hing, as father of the applicant herself, was precisely the "underwriterwho wrote this case.The unchallenged statement of appellant Mondragon in his letter of

May 6, 1957 specifically admits that said Ngo Hing was "our associate" and that it was thelatter who "insisted that the plan be placed on the 20-year endowment plan." Under thesecircumstances, it is inconceivable that the progress in the processing of the application wasnot brought home to his knowledge. He must have been duly apprised of the rejection ofthe application for a 20-year endowment plan otherwise Mondragon would not haveasserted that it was Ngo Hing himself who insisted on the application as originally filed,thereby implicitly declining the offer to consider the application under the Juvenile Triple

Action Plan. Besides, the associate of Mondragon that he was, Ngo Hing should only bepresumed to know what kind of policies are available in the company for minors below 7years old. What he and Mondragon were apparently trying to do in the premises wasmerely to prod the company into going into the business of issuing endowment policies forminors just as other insurance companies allegedly do. Until such a definite policy ishowever, adopted by the company, it can hardly be said that it could have been bound atall under the binding slip for a plan of insurance that it could not have, by then issued at

all.


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RULING

Relative to the second issue of alleged concealment. thisCourt is of the firm belief that private respondent haddeliberately concealed the state of health and physicalcondition of his daughter Helen Go. Where private respondentsupplied the required essential data for the insurance

application form, he was fully aware that his one-year olddaughter is typically a mongoloid child. Such a congenitalphysical 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 theinsurance company. As an insurance agent of Pacific Life, he

ought to know, as he surely must have known. his duty andresponsibility to such a material fact. Had he diamond saidsignificant fact in the insurance application from Pacific Lifewould have verified the same and would have had no choicebut to disapprove the application outright.


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RULING

The CA constrained to hold that no insurance contract wasperfected between the parties with the noncompliance of theconditions provided in the binding receipt, and concealment,as legally defined, having been committed by herein privaterespondent.

WHEREFORE, the decision appealed from is hereby set aside,and in lieu thereof, one is hereby entered absolvingpetitioners Lapulapu D. Mondragon and Great Pacific LifeAssurance Company from their civil liabilities as found byrespondent Court and ordering the aforesaid insurance

company to reimburse the amount of P1,077.75, withoutinterest, to private respondent, Ngo Hing. Costs againstprivate respondent.

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