Grepalife v. CA

89 SCRA 543

Facts:

>  On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr endowment policy for 50T on the life of his one year old daughter Helen Go.

>  All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the branch manager of Grepalife-Cebu.  Mondragon then typed the data on the application form which was later signed by Ngo.

>  Ngo then paid the insurance premium and a binding deposit receipt was issued to him.  The binding receipt contained the following provision: “If the applicant shall not have been insurable xxx and the Company declines to approve the application, the insurance applied for shall not have been in force at any time and the sum paid shall be returned to the applicant upon the surrender of this receipt.”

>  Mondragon wrote on the bottom of the application form his strong recommendation for the approval of the insurance application.

>  On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the insurance application of Ngo for the simple reason that the 20yr endowment plan is not available for minors below 7 yrs old.

>  Mondragon wrote back the main office again strongly recommending the approval of the endowment plan on the life of Helen, adding that Grepalife was the only insurance company NOT selling endowment plans to children.

>  On may 1957, Helen died of influenza with complication of broncho pneumonia.  Ngo filed a claim with Gepalife, but the latter denied liability on the ground that there was no contract between the insurer and the insured and a binding receipt is NOT evidence of such contract.

Issue:

Whether or not the binding deposit receipt, constituted a temporary contract of life insurance.

Held:

NO.

The binding receipt in question was merely an acknowledgement 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 on the basis of whether or not the applicant is insurable on standard rates.

Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt had never became on force at any time, pursuant to par. E of the said receipt.  A binding receipt is manifestly merely conditional and does NOT insure outright.  Where an agreement is made between the applicant and the agent, NO liability shall attach until the principal approves the risk and a receipt is given by the agent.

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.