Case Summary (G.R. No. L-31845)
Petitioner and Respondent
Petitioners:
- Great Pacific Life Assurance Company
- Lapulapu D. Mondragon (Branch Manager and agent)
Respondent:
- Ngo Hing (private respondent and authorized agent; father of the insured)
Key Dates
- Application Filed: March 14, 1957
- Company’s Rejection Letter: April 30, 1957
- Insured’s Death: May 28, 1957
- Consolidation of Petitions: April 29, 1970
- Supreme Court Decision: April 30, 1979
Applicable Law
- Constitution: 1935 Constitution (in force at the time of decision)
- Statutes and Jurisprudence: Act No. 2427 (Insurance Law), Civil Code on contracts, De Lim v. Sun Life Assurance Co. (41 Phil. 264), and doctrines on uberrima fides (utmost good faith).
Background of the Insurance Application
Ngo Hing applied for a ₱50,000 twenty-year endowment policy for his daughter. He paid an annual premium of ₱1,077.75 and received a binding deposit receipt (Exhibit E), which Mondragon annotated and recommended for approval.
Issues for Resolution
- Whether Exhibit E constituted a binding, though temporary, insurance contract.
- Whether Ngo Hing concealed material information—his daughter’s congenital condition—voiding any provisional coverage.
Nature and Effect of the Binding Deposit Receipt
Exhibit E expressly provided that coverage would only become effective if:
- The company was satisfied the proposed insured was “insurable on standard rates.”
- Any alternative policy offered by the company was accepted by the applicant, or else the deposit would be refunded.
- Upon outright disapproval, the deposit had to be returned and no coverage would ever attach.
Thus, the receipt merely acknowledged the application and premium, subject to the insurer’s final approval.
Disapproval of the Application and Lack of Meeting of Minds
Pacific Life’s internal memorandum (Exhibit 3-M) refused issuance of a twenty-year endowment to minors under seven, proposing the Juvenile Triple Action Plan instead. Ngo Hing did not accept that alternative. Absent mutual assent on the essential terms, no contract arose. Under De Lim v. Sun Life Assurance Co., a “binding receipt” cannot obligate the insurer until it approves the risk and all conditions are met.
Communication of the Rejection
Although Mondragon did not personally inform Ngo Hing of the rejection, the Court imputed knowledge to Ngo Hing—an experienced agent and proponent of the application—regarding the company’s policy. He could not claim ignorance of the rejection or the policy limitations applicable to minors.
Concealment of Material Facts
Ngo Hing knowingly omitted his daughter’s mongoloid condition—a fact that would
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Consolidation
- The Supreme Court, by Resolution dated April 29, 1970, consolidated two petitions:
• G.R. No. L-31845 – Great Pacific Life Assurance Company vs. Court of Appeals
• G.R. No. L-31878 – Lapulapu D. Mondragon vs. Court of Appeals and Ngo Hing - Both petitioners sought certiorari by way of appeal from the amended decision of the Court of Appeals, which had affirmed in toto the Cebu Court of First Instance order requiring payment of insurance proceeds and attorney’s fees.
Facts
- March 14, 1957: Ngo Hing applied for a 20-year endowment policy (P50,000) on the life of his one-year-old daughter, Helen Go.
- Application form was handwritten and typed by Branch Manager Mondragon, who also recommended approval.
- Ngo Hing paid an annual premium of P1,077.75 to Pacific Life; he retained P1,317.00 as his agent’s commission.
- Pacific Life issued a binding deposit receipt (Exhibit E) upon payment.
- April 30, 1957: Pacific Life sent a letter (Exhibit 3-M) disapproving the 20-year endowment plan for minors under seven, offering instead the Juvenile Triple Action Plan, pending submission of a non-medical declaration.
- May 6, 1957: Mondragon wrote back, reiterating his strong recommendation for the original 20-year endowment plan.
- May 28, 1957: Helen Go died of influenza with broncho-pneumonia complications.
- Ngo Hing’s claim for the policy proceeds was denied; he then sued in the Cebu Court of First Instance.
Procedural History
- Court of First Instance of Cebu rendered judgment ordering Great Pacific Life and Mondragon, jointly and severally, to pay