G.R. No. L-31845 and L-31878. April 30, 1979.
GREAT PACIFIC LIFE ASSURANCE COMPANY and LAPULAPU D. MONDRAGON, petitioners, vs. THE HONORABLE COURT OF APPEALS and NGO HING, respondents.

FACTS

Ngo Hing applied with Great Pacific Life Assurance Company (Pacific Life) for a 20-year endowment policy on his one-year-old daughter, Helen Go. He paid the premium, and Pacific Life’s branch manager, Lapulapu Mondragon, issued a binding deposit receipt. Mondragon recommended approval of the application. However, Pacific Life’s head office later disapproved the specific endowment plan for a minor below seven years old, offering a different Juvenile Triple Action Plan instead. Mondragon did not communicate this rejection to Ngo Hing but instead wrote back to reiterate his recommendation for the original plan. Subsequently, Helen Go died. Ngo Hing claimed the insurance proceeds, but Pacific Life refused payment.
The trial court and the Court of Appeals ruled in favor of Ngo Hing, ordering Pacific Life and Mondragon to pay jointly and severally. The petitioners appealed, arguing that no insurance contract was perfected and that there was concealment of a material fact.

ISSUE

The decisive issues are: (1) whether the binding deposit receipt constituted a temporary contract of insurance, and (2) whether Ngo Hing concealed the state of health of the insured child.

RULING

The Supreme Court reversed the Court of Appeals and absolved the petitioners. On the first issue, the binding deposit receipt was not a perfected contract of insurance. The conditions printed on the receipt explicitly stated that the insurance would be in force only if the company was satisfied the applicant was insurable on standard rates. If the company disapproved the application, the insurance would not be in force at any time. Pacific Life had disapproved the specific 20-year endowment application for a minor, as it was not an available plan. Therefore, no contract was perfected under the terms of the receipt itself.
On the second issue, the Court found that Ngo Hing, who was also an insurance agent, deliberately concealed the material fact that his daughter was a mongoloid child. This congenital condition was undoubtedly material to the risk. Concealment, whether intentional or unintentional, entitles the insurer to rescind the contract under the Insurance Act. The Court emphasized that insurance contracts require the utmost good faith from both parties. Due to this concealment, any potential contract would be voidable. Consequently, the Supreme Court set aside the appealed decision, absolved the petitioners from liability, and ordered Pacific Life to refund the premium paid.