Lim v. Sun Life

41 PHIL 263

Facts:

>  On July 6, 1917, Luis Lim Y Garcia of Zamboanga applied for a policy of life insurance with Sunlife in the amount of 5T.

>  He designated his wife Pilar Lim as the beneficiary.  The first premium of P433 was paid by Lim and company issued a “provisional policy”

>  Such policy contained the following provisions “xx the abovementioned life is to be assured in accordance with the terms and conditions contained or inserted by the Company in the policy which may be granted by it in this particular case for 4 months only from the date of the application, PROVIDED that the company shall confirm this agreement by issuing a policy on said application xxx. Should the company NOT issue such a policy, then this agreement shall be null and void ab initio and the Company shall be held not to have been on the risk at all, but in such case, the amount herein shall be returned.

>  Lim died on Aug. 23, 1917 after the issuance of the provisional policy but before the approval of the application by the home office of the insurance company.

>  The instant action is brought by the beneficiary to recover from Sun Life the sum of 5T.

Issue:

Whether or not the beneficiary can collect the 5T.

Held:

NO.

The contract of insurance was not consummated by the parties.  The above quoted agreement clearly stated that the agreement should NOT go into effect until the home office of the Company shall confirm it by issuing a policy.  It was nothing but an acknowledgment by the Company that it has received a sum of money agreed upon as the first year’s premium upon a policy to be issued upon the application if it is accepted by the Company.

When an agreement is made between the applicant and the agent whether by signing an application containing such condition or otherwise, that no liability shall attach until the principal approves the risk and a receipt is given by the agent, such acceptance is merely conditional and is subordinated to the company’s act in approving or rejecting; so in life insurance a “binding slip or receipt” does not insure itself.