G.R. No. L-15774; November 29, 1920
PILAR C. DE LIM, plaintiff-appellant, vs. SUN LIFE ASSURANCE COMPANY OF CANADA, defendant-appellee.

FACTS:
On July 6, 1917, Luis Lim y Garcia applied for a life insurance policy with Sun Life Assurance Company of Canada for P5,000, designating his wife, Pilar C. de Lim, as the beneficiary. He paid the first premium of P433 and received a “provisional policy.” Luis Lim y Garcia died on August 23, 1917, before the home office in Montreal could approve the application and issue the formal policy. Pilar C. de Lim, as beneficiary, filed an action to recover the P5,000 from the insurance company. The Court of First Instance of Zamboanga sustained the defendant’s demurrer to the complaint on the ground that it failed to state a cause of action, prompting this appeal.

ISSUE:
Whether the “provisional policy” constituted a binding contract of insurance that obligated the company to pay the face value of the policy upon the death of the applicant before the formal approval and issuance of the policy by the home office.

RULING:
No. The Supreme Court affirmed the order of the lower court, holding that no binding contract of insurance was consummated. The “provisional policy” was merely a conditional receipt. Its clear stipulations made the agreement subject to the express condition that the company must confirm it by issuing a policy upon approval of the application by the head office. It stated that if the company did not issue such a policy, the agreement would be null and void ab initio, and the company would not be considered at risk. The Court ruled that the document amounted only to an acknowledgment of receipt of the premium, contingent upon the home office’s acceptance of the application. Since the applicant died before this approval, no contract of insurance had taken effect. The Court noted, however, that the company remained liable to return the premium of P433 to the estate of the deceased.