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Great Pacific Life Assurance Company vs Court of Appeals

GR No. L-31845
April 30, 1979

Facts:

On March 14 1957, Ngo Hing, a duly authorized agent of the Great Pacific life Assurance
Company filed an application with the company for the for a 20 year endowment policy in the
amount of P 50,000.00 on the life of his one-year old daughter, Helen Go. He supplied the
necessary information to which Mondragon, the Branch Manager of Pacific Life in Cebu,
typewrote it in the application form and was signed by Ngo Hing. A binding deposit receipt was
issued to Ngo Hing upon his payment of the assurance premium.

Mondragon received a letter of disapproval from the insurance company. It stated that the
20 year endowment plan is not applicable for minors below 7 years old but would consider the
application for a different kind of policy which is Juvenile Triple Action plan. The disapproval of
the application was not communicated to Ngo Hing.

When Helen Go died of influenza with the complication of Bronchopneumonia on May


28, 1957, Ngo Hing sought for the payment of proceeds from the insurance company. He was
denied from getting any proceeds. He then filed an action against the insurance company for the
recovery of the same. The trial court ruled for Ngo Hing and was affirmed in the Court of
Appeals stating further the return of the premium paid.

Issue:

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

Held:

“xxx 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 the 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 the 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 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 is approving or
rejecting the application. Thus, in life insurance, a “binding slip” or “binding receipt” does not
insure by itself.”

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