(82) Pacific Timber v.

CA
112 SCRA 199
Facts:
On March 13, 1963, Pacific secured temporary insurance from the Workemen’s Insurance Co. for its
exportation of logs to Japan. Workmen issued on said date Cover Note 1010 insuring said cargo.
The regular marine policies were issued by the company in favor of Pacific on Apr 2, 1963. The 2 marine
policies bore the number 53H01032 and 53H01033.
After the issuance of the cover note but BEFORE the issuance of the 2 policies, some of the logs intended
to be exported were lost due to a typhoon.
Pacific filed its claim with the company, but the latter refused, contending that said loss may not be
considered as covered under the cover note because such became null and void by virtue of the issuance
of the marine policies.
Issue: WON the cover not was without consideration, thus null and void.
Held: It was with consideration.
 SC upheld Pacific’s contention that said cover not was with consideration.
 The fact that no separate premium was paid on the cover note before the loss was insured against occurred
does not militate against the validity of Pacific’s contention, for no such premium could have been paid,
 since by the nature of the cover note, it did not contain, as all cover notes do not contain, particulars of the
shipment that would serve as basis for the computation of the premiums.
 As a logical consequence, no separate premiums are required to be paid on a cover note.

If the note is to be treated as a separate policy instead of integrating it to the regular policies
subsequently issued, its purpose would be meaningless for it is in a real sense a contract, not a mere
application.

(81) 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: WON 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.