GERCIO V SUN LIFE ASSURANCE

G.R. No. 23703

FACTS: On January 29, 1910, the Sun Life Assurance issued an insurance policy on the life of
Hilario Gercio. The policy was what is known as a twenty-year endowment policy. By its terms,
the insurance company agreed to insure the life of Gercio for the sum of P/2,000, to be paid him
on February 1, 1930, or if the insured should die before said date, then to his wife, Andrea
Zialcita, should she survive him; otherwise to the executors, administrators, or assigns of the
insured. At the end of 1919, she was convicted of the crime of adultery. On September 4, 1920,
a decree of divorce was issued. Gercio formally notified the Sun Life Assurance that he had
revoked his donation in favor of Andrea Zialcita, and that he had designated in her stead his
present wife, Adela Garcia de Gercio, as the beneficiary of the policy. Gercio requested the
insurance company to eliminate Andrea Zialcita as beneficiary. This, the insurance company has
refused and still refuses to do. A default judgment was taken in the lower court against the
defendant Andrea Zialcita. The judgment of the trial court was in favor of the plaintiff, and
ordered the defendant company to eliminate from the insurance policy Andrea Zialcita as
beneficiary and to substitute Adela Garcia de Gercio therefor.
ISSUE: WON the insured may change the beneficiary in the insurance policy.
HELD: No. The Code of Commerce is applicable, yet there can be found in it no provision either
permitting or prohibiting the insured to change the beneficiary. The Civil Code has no provisions
which relate directly and specifically to life-insurance contracts or to the destination of lifeinsurance proceeds. The Insurance Act applies, it will be found that in this Law, there is likewise
no provision either permitting or prohibiting the insured to change the beneficiary. To that end,
we have gathered the rules which follow from the best considered American authorities. In
adopting these rules, we do so with the purpose of having the Philippine Law of Insurance
conform as nearly as possible to the modern Law of Insurance as found in the United States
proper. The wife has an insurable interest in the life of her husband. The beneficiary has an
absolute vested interest in the policy from the date of its issuance and delivery. So when a
policy of life insurance is taken out by the husband in which the wife is named as beneficiary,
she has a subsisting interest in the policy. If the husband wishes to retain to himself the control
and ownership of the policy he may so provide in the policy. But if the policy contains no
provision authorizing a change of beneficiary without the beneficiary's consent, the insured
cannot make such change. As to the effect produced by the divorce, the Philippine Divorce Law,
Act No. 2710, merely provides in section 9 that the decree of divorce shall dissolve the
community property as soon as such decree becomes final. Unlike the statutes of a few
jurisdictions, there is no provision in the Philippine Law permitting the beneficiary in a policy for
the benefit of the wife of the husband to be changed after a divorce. It must follow, therefore, in
the absence of a statute to the contrary, that if a policy is taken out upon a husband's life the
wife is named as beneficiary therein, a subsequent divorce does not destroy her rights under
the policy.

Nario v PhilamLife
Facts:
In June 1959, Philippine American Life Insurance Co. issued a life insurance to Mrs. Alejandra
Santos-Mario a life insurance policy under a 20-year endowment plan, with a face value of
P5,000 designating her husband Delfin Nario AND their minor son Ernesto Nario, as her
irrevocable beneficiaries. In June 1963, she applied for a loan on the above stated policy with
the Insurance Company, which she was entitled as a policy holder to avail of under one of the
provisions of said policy, and after the same has been in force for three (3) years. It is actually
for the purpose of using the proceeds for the school expenses of her minor son, Ernesto. She
submitted together with her loan application a written consent and signature of her husband in
two capacities, as irrevocable beneficiary and as a father-guardian of minor irrevocable
beneficiary Ernesto. Philam denied the application stating that the legal guardian must be first
authorized by the court in a competent guardianship proceeding. Upon denial, she opted to
surrender her insurance policy in exchange of its cash surrender value of P520 but it was also
denied on the same ground. On September of that year, spouses Nario brought suit against the
Philam Life contending that the written consent of Delfin was sufficient and there was no need of
authorizaton from court. RTC favored the insurance company ruling that the minor, Ernesto
already has a vested right so there is a need of court authorization before the guardian can give
a written consent over the disposition of the said minor's property. CA affirmed RTC and ruled
that the vested interest or right of the beneficiaries in the policy should be measured on its full
face value and not on its cash surrender value. Hence, this case.
Issue:
WON Philam Life can validly refuse the loan application by Mrs. Nario?
Ruling:
Yes. The court ruled that uder Articles 320 and 326 of Civil Code and Rule 93 Sec 7 of ROC, the
father is constituted as the minors legal administrator of his property, and when the property of
the child is worth more than P2000, the father must file a petition for guardianship and post a
guardianship bond with the court. In the case at bar, the property of Ernesto is P2500, which is
the half of the face value of the policy, but the Delfin did not file any petition for guardianship nor
post a guardianship bond, and as such cannot possibly exercise the powers vested on him as
legal administrator of the minors property. The consent given for and in behalf of the son
without prior court authorization to the loan application and the surrender was insufficient and
ineffective and PHILAMLIFE was justified in disapproving the said loan application. SC also
affirmed that the vested right shall be measured on the policy's full face value, and not on its
cash surrender value.

Intestate estate of the late Esperanza J. Villanueva. MARIANO J. VILLANUEVA

vs.
PABLO ORO
81 PHIL 464

FACTS:

The West Coast Life Insurance Company issued two policies of insurance on the life of
Esperanza J. Villanueva, one for two thousand pesos and maturing on April 1, 1943, and the
other for three thousand pesos and maturing on March 31, 1943.

In both policies, West agreed to pay Php 2000 either to Esperanza if still living on Apr 1,
1943; or to beneficiary Bartolome Villanueva, the father of the insured, immediately upon receipt
of the proof of prior death of Esperanza.

The policy also gave her the right to change the beneficiary.

In 1940, Bartolome died and was substituted as beneficiary under the policies by
Mariano, Esparanzas brother

Esperanza died in 1944 without having collected the insurance proceeds. Adverse
claims for the proceeds were presented by the estate of Esperanza on one hand and by
Mariano on the other.

CFI held that the estate of Esperanza was entitled to the proceeds to the exclusion of
the beneficiary, Mariano J. Villanueva, the latter has interposed the present appeal.

ISSUE:
Whether or not the estate of insured Esperanza should be entitled to the
insurance proceeds since she outlived the insurance policy

Ruling:
No. Under the policies, the insurer obligated itself to pay the insurance proceeds to: (1) the
insured if the latter lived on the dates of maturity; or (2) the beneficiary if the insured died during
the continuance of the policies. The first contingency excludes the second, and vice versa. In
other words, as the insured Esperanza was living on April 1 and March 31, 1943, the proceeds
are payable exclusively to her or to her estate unless she had before her death otherwise
assigned the matured policies.

The beneficiary could be entitled to said proceeds only in default of the first contingency. To
sustain theMarianos claim would be to altogether eliminate from the policies the condition that
the insurer agrees to pay to the insured if living.

THE PHILIPPINE AMERICAN INSURANCE COMPANY vs. HON. PINEDA and DIMAYUGA
G.R. No. L-54216; July 19, 1989
Ponente: Paras, J.

Doctrine:

The insured can do nothing to divest the beneficiary of his rights without his consent. He
cannot assign his policy, nor even take its cash surrender value without the consent of the
beneficiary. Neither can the insured's creditors seize the policy or any right thereunder. The
insured may not even add another beneficiary because by doing so, he diminishes the amount
which the beneficiary may recover and this he cannot do without the beneficiary's consent.

Where there is nothing in the contract which is contrary to law, good morals, good
customs, public policy or public order the validity of the contract must be sustained. Likewise,
contracts which are the private laws of the contracting parties should be fulfilled according to the
literal sense of their stipulations.

Facts:

In January 1968, private respondent procured an ordinary life insurance from petitioner
company.

Private respondent designated his wife and children as irrevocable beneficiaries.

In February 1980, private respondent filed a petition to the CFI Rizal to amend such
designation in his life policy from irrevocable to revocable.

In March 1980, petitioner filed an Urgent Motion to Reset Hearing, including its
Comment and/or Opposition to the Petition.

Urgent Motion was denied, allowing private respondent to adduce evidence.

An Order granting private respondent's petition was issued.

Issue/s:

1.
WON the designation of the irrevocable beneficiaries could be changed or amended
without the consent of all the beneficiaries.
2.
WON the irrevocable beneficiaries herein, one of whom is already dead while all the
others are all minors, could validly give consent to the change or amendment in the designation
of the irrevocable beneficiaries.

Held:
1.
The applicable law in the instant case is the Insurance Act, otherwise known as Act No.
2427 as amended, the policy having been procured in 1968. Under the said law, the beneficiary
designated in a life insurance contract cannot be changed without the consent of the beneficiary
because he has a vested interest in the policy. Also, the Beneficiary Designation Indorsement in
the policy forming part of the Policy in the name of Rodolfo Cailles Dimayuga states that the
designation of the beneficiaries is irrevocable. Such is a fact which the private respondent did
not bother to disprove.
Thus, based on the provision of the contract, not to mention the law then applicable, it is only
with the consent of all the beneficiaries that any change or amendment in the policy concerning
the irrevocable beneficiaries may be legally and validly effected. Both the law and the policy do
not provide for any other exception, thus, abrogating the contention of the private respondent
that said designation can be amended if the Court finds a just, reasonable ground to do so.

2.
Similarly, the alleged acquiescence of the six (6) children beneficiaries of the policy (the
beneficiary-wife predeceased the insured) cannot be considered an effective ratification to the
change of the beneficiaries from irrevocable to revocable. Indubitable is the fact that all the six
(6) children named as beneficiaries were minors at the time,** for which reason, they could not
validly give their consent. Neither could they act through their father insured since their interests
are quite divergent from one another.
In point is an excerpt from the Notes and Cases on Insurance Law by Campos and Campos,
1960, readingThe insured ... can do nothing to divest the beneficiary of his rights without his consent. He
cannot assign his policy, nor even take its cash surrender value without the consent of the
beneficiary. Neither can the insured's creditors seize the policy or any right thereunder. The
insured may not even add another beneficiary because by doing so, he diminishes the amount
which the beneficiary may recover and this he cannot do without the beneficiary's consent.
Therefore, the parent-insured cannot exercise rights and/or privileges pertaining to the
insurance contract, for otherwise, the vested rights of the irrevocable beneficiaries would be
rendered inconsequential.

Of equal importance is the well-settled rule that the contract between the parties is the law
binding on both of them and for so many times, this court has consistently issued
pronouncements upholding the validity and effectivity of contracts. Where there is nothing in the
contract which is contrary to law, good morals, good customs, public policy or public order the
validity of the contract must be sustained. Likewise, contracts which are the private laws of the
contracting parties should be fulfilled according to the literal sense of their stipulations, if their
terms are clear and leave no room for doubt as to the intention of the contracting parties, for
contracts are obligatory, no matter in what form they may be, whenever the essential requisites
for their validity are present.
Finally, the fact that the contract of insurance does not contain a contingency when the change
in the designation of beneficiaries could be validly effected means that it was never within the
contemplation of the parties. The lower court, in gratuitously providing for such contingency,
made a new contract for them, a proceeding which we cannot tolerate.

The Insular Life Assurance Company, Ltd. vs. Carponia T. Ebrado and Pascuala Vda. De
Ebrado
G.R. No. L - 44059
October 28, 1977

FACTS: On September 1, 1968 Buenaventura C. Ebrado contracted with the Life Assurance Co.
Ltd. a whole-life insurance for P5,882.00 with a, rider for Accidental Death. He designated
Carponia T. Ebrado as the revocable beneficiary in his policy as a wife.
On October 21, 1969 Buenaventura died when he was hit by a failing branch of a tree.
Carponia filed with the insurer a claim for the proceeds of the policy amounting to P11,745.73 as
the designated beneficiary therein, although she admits that she and the insured were merely
living as husband and wife without the benefit of marriage.
Pascuala Vda. De Ebrado also filed her claim as the widow of the deceased insured.
In doubt, the insurance company filed with the court an action for interpleader before the Court
of First Instance of Rizal on April 29, 1970.
On September 1972, the trial court rendered judgment declaring among others, Carponia T.
Ebrado disqualified from becoming beneficiary of the insured Buenaventura and directing the
payment of the insurance proceeds to the estate of the deceased insured in relation to Article
739 of the Civil Code providing that a criminal conviction for adultery or concubinage is not
essential in order to establish the disqualification mentioned therein.

From this judgment, Carponia appealed to the Court of Appeals, but the Appellate Court certified
the case to the Supreme Court as involving only questions of law.
ISSUE: WON a common-law wife may be the beneficiary in an insurance policy of a legally
married man?
HELD: No. An Insurance policy is no different from a civil donation insofar as the beneficiary is
concerned. Both are found upon the same consideration: liberality. A beneficiary is like a donee,
because from the premiums of the policy which the insured pays out of liberality, the beneficiary
will receive the proceeds of profits of said insurance. As a consequence, the proscription of
Article 739 of the Civil Code should equally operate the life insurance contracts. The mandate of
Article 2012 cannot be laid aside: any person who cannot receive a donation cannot be named
as a beneficiary in the life insurance policy of the person who cannot make the donation.
Policy Considerations and dictates of morality rightly justify the institution of a barrier between
common law spouses in record to Property relations since such hip ultimately encroaches upon
the nuptial and filial rights of the legitimate family. There is every reason to hold that the bar in
donations between legitimate spouses and those between illegitimate ones should be enforced
in life insurance policy is no different from a donee.
ACCORDINGLY, the appealed judgment of the lower court is hereby affirmed.

BACHRACH vs. BRITISH AMERICAN ASSURANCE CO.

FACTS:

Bachrach got a fire insurance policy for his building which had a furniture shop on the
ground floor from British American Assurance Company. The properties were subsequently
destroyed by a fire. When British American denied his claims from the said policy, he filed an
action from the former to recover the amount due.

Respondent alleged that the policy was nullified on various grounds which justified their
denial of the claims:
1.
Plaintiff maintained a paint and varnish shop in the said building where the goods which
were insured were stored.
2.
Plaintiff transferred his interest in and to the (1) property and (2) the goods therein
when he executed a chattel mortgage to H. W. Peabody & Co. and one Macke, respectively
3.
Plainfiff willfully placed a gasoline can containing 10 gallons of gasoline in the upper
story of said building in close proximity to a portion of said goods, wares, and merchandise,
thereby greatly increasing the risk of fire.
4.
That the plaintiff made no proof of the loss within the time required by a condition of said
policy, nor did the insured file a statement with the municipal or any other judge or court of the

goods alleged to have been in said building at the time of the alleged fire, nor of the goods
saved, nor the loss suffered.

The lower court ruled held respondent liable to the plaintiff.

ISSUE: Was British Americans denial of Bachrachs claim from his fire insurance policy valid?
SC RULING:NO.
1.
It is well settled that the keeping of inflammable oils on the premises, though prohibited
by the policy, does not void it if such keeping is incidental to the business. Thus, where a
furniture factory keeps benzine for the purposes of operation the insurer can not on that ground
avoid payment of loss, though the keeping of the benzine on the premises is expressly
prohibited.

It may be added that there was no provision in the policy prohibiting the keeping of paints and
varnishes upon the premises where the insured property was stored. If the company intended to
rely upon a condition of that character, it ought to have been plainly expressed in the policy.
2.
There is no provision in said policy prohibiting the plaintiff from placing a mortgage upon
the property insured, but, admitting that such a provision was intended, we think the lower court
has completely answered this contention of the defendant
It is claimed that the execution of a chattel mortgage on the insured property violated what is
known as the "alienation clause," which is now found in most policies, This clause has been the
subject of a vast number of judicial, and it is held by the great weight of authority that the
interest in property insured does not pass by the mere execution of a chattel mortgage and that
while a chattel mortgage is a conditional sale, there is no alienation within the meaning of the
insurance law until the mortgage acquires a right to take possession by default under the terms
of the mortgage. No such right is claimed to have accrued in the case at bar, and the alienation
clause is therefore inapplicable.
3.
The record discloses that some time prior to the commencement of this present action, a
criminal action was commenced against the plaintiff herein in the Court of First Instance of the
city of Manila, in which he was charged with willfully and maliciously burning the property
covered by the policy in the present case. .. the lower court, with the assistance of two
assessors, found that the evidence was insufficient to show beyond peradventure of doubt that
the defendant was guilty of the crime. The evidence adduced during the trial of the criminal
cause was introduced as evidence in the present cause. While the evidence shows some very
peculiar and suspicious circumstances concerning the burning of the goods covered by the said
policy, yet, nevertheless, in view of the findings of the lower court and in view of the apparent
conflict in the testimony, we can not find that there is a preponderance of evidence showing that
the plaintiff did actually set fire or cause fire to be set to the goods in question.

4.
Regardless of the question whether the plaintiff's letter of April 20 was a sufficient
compliance with the requirement that he furnish notice of loss, the fact remains that on the
following day the insurers replied by a letter declaring that the "policies were null and void," and
in effect denying liability. It is well settled by a preponderance of authorities that such a denial is
a waiver of notice of loss, because if the "policies are null and void," the furnishing of such
notice would be vain and useless. Besides, "immediate notice" is construed to mean only within
a reasonable time.

Much the same may be said as to the objection that the insured failed to furnish to the insurers
his books and papers or to present a detailed statement to the "juez municipal," in accordance
with article 404 of the Code of Commerce. The last-named provision is similar to one appearing
in many American policies requiring a certificate from a magistrate nearest the loss regarding
the circumstance thereof. A denial of liability on other grounds waives this requirement. Besides,
the insured might have had difficulty in attempting to comply with this clause, for there is no
longer an official here with the title of "juez municipal."

Besides the foregoing reasons, it may be added that there was no requirement in the policy in
question that such notice be given.
.

Ong Lim Sing v. Feb Leasing & Finance Corp. Digest

G.R. No. 168115

June 8, 2007

Ponente: Nachura, J

Facts:

FEB Leasing and Finance Corporation (FEB) entered into a lease of equipment and
motor vehicles with JVL Food Products (JVL). On the same date, Vicente Ong Lim Sing, Jr.
(Lim) executed an Individual Guaranty Agreement with FEB to guarantee the prompt and faithful
performance of the terms and conditions of the aforesaid lease agreement. Under the contract,
JVL was obliged to pay FEB.

JVL defaulted in the payment of the monthly rentals. As of July 31, 2000, the amount in
arrears, including penalty charges and insurance premiums, amounted to about P3M. FEB sent
a letter to JVL demanding payment of the said amount. However, JVL failed to pay.

FEB filed a Complaint with the Regional Trial Court for sum of money, damages, and
replevin against JVL and Lim.

JVL and Lim admitted the existence of the lease agreement but asserted that it is in
reality a sale of equipment on installment basis, with FEB acting as the financier. JVL and Lim
claimed that this intention was apparent from the fact that they were made to believe that when
full payment was effected, a Deed of Sale will be executed by FEB as vendor in favor of JVL
and Lim as vendees.

Issue:
Whether or not the petitioner Lim is a lessee with insurable interest over the subject
personal properties.

Ruling:
Yes. The S.C. ruled in favor of the respondent FEB. Petitioners claim that the real
intention of the parties was a contract of sale of personal property on installment basis is more
likely a mere afterthought in order to defeat the rights of the respondent. The validity of the
Lease between FEB and JVL should be upheld. JVL entered into the lease contract with full
knowledge of its terms and conditions. The contract was in force for more than four years. Since
its inception on March 9, 1995, JVL and Lim never questioned its provisions.

The stipulation in Section 14 of the lease contract, that the equipment shall be insured at
the cost and expense of the lessee against loss, damage, or destruction from fire, theft,
accident, or other insurable risk for the full term of the lease, is a binding and valid stipulation.
Petitioner, as a lessee, has an insurable interest in the equipment and motor vehicles leased.
Section 17 of the Insurance Code provides that the measure of an insurable interest in property
is the extent to which the insured might be damnified by loss or injury thereof. It cannot be
denied that JVL will be directly damnified in case of loss, damage, or destruction of any of the
properties leased.