A Case Digest in Insurance law || Concealment || Binding deposit

Grepalife Assurance vs CA || G.R. NO. L-13845

FACTS:
 Private respondent Ngo Hing filed an application with the Great Pacific Life Assurance
Company for a twenty-year endowment policy on the life of his one-year old daughter
Helen Go.
 Private respondent paid the annual premium.
 Upon the payment of the insurance premium, the binding deposit receipt (Exhibit E) was
issued to private respondent Ngo Hing.
 Then on April 30, 1957, Mondragon, the branch manager of Cebu city, 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.
 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 life insurance on the ground that
Pacific Life is the only insurance company not selling the 20-year endowment insurance
plan to children.
 On May 1957, Helen Go died due to influenza.
 So, private respondent sought the payment of the proceeds of the insurance.
 But to no avail.
 So he filed the action for the recovery of the same before the Court of First Instance of
Cebu.
CFI:
Ruled in favor of private respondent.

ISSUE: whether the binding deposit receipt constituted a temporary contract of the life
insurance in question

2. whether private respondent concealed the state of health and physical condition of his
child.

RULING:

THE BINDING DEPOSIT IN QUESTION IS MERELY AN ACKNOWLEDGEMENT THE THE

BRANCH OFFICE HAD RECEIVED THE COPY OF THE APPLICATION.

1. 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.

- 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

NO MEETING OF THE MINDS

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 petitioner
Pacific Life and private respondent Ngo Hing over the 20- year endowment life insurance in
the amount of P50,000.00 in favor of the latter's one-year old daughter, there could have
been no insurance contract duly perfected between them.

- There can be no contract of insurance unless the minds of the parties have met in
agreement."

The SC does not agree with private respondent’s contention that failure of the
insurance company's agent to communicate to the applicant the rejection of the
insurance application would not have any adverse effect on the allegedly perfected
temporary contract.
- In the first place, there was no contract perfected between the parties who had no meeting
of their minds Private respondent, being an authorized agent is indubitably aware that said
company does not offer the life insurance applied for.
- Secondly, having an insurable interest on the life of his daughter, aside from being an
insurance agent and office associate of the branch, the applicant must have known and
followed the progress on the processing of such application and could not pretend ignorance
of the Company's rejection of the 20-year endowment life insurance application

2. Yes.
The contract of insurance is one of perfect good faith meaning the absence of any
concealment or deception, however slight.

Concealment is a neglect to communicate that which a party knows and ought to

communicate

Whether intentional or unintentional, the concealment entities the insurer to rescind the
contract of insurance.

Here, the failure of the father who applied for a life insurance policy on the life of his daughter
to divulge the fact that his daughter is a mongoloid, a congenital physical defect that could
never be disguised, constitutes such concealment as to render the policy void.