BENEFICIARIES (FULL TEXT)

G.R. No. 181132 June 5, 2009

HEIRS OF LORETO C. MARAMAG, represented by surviving spouse VICENTA

PANGILINAN MARAMAG,Petitioners,
vs.
EVA VERNA DE GUZMAN MARAMAG, ODESSA DE GUZMAN MARAMAG, KARL
BRIAN DE GUZMAN MARAMAG, TRISHA ANGELIE MARAMAG, THE INSULAR LIFE
ASSURANCE COMPANY, LTD., and GREAT PACIFIC LIFE ASSURANCE
CORPORATION, Respondents.

DECISION

NACHURA, J.:

This is a petition1 for review on certiorari under Rule 45 of the Rules, seeking to reverse
and set aside the Resolution2 dated January 8, 2008 of the Court of Appeals (CA), in CA-
G.R. CV No. 85948, dismissing petitioners’ appeal for lack of jurisdiction.

The case stems from a petition3 filed against respondents with the Regional Trial Court,
Branch 29, for revocation and/or reduction of insurance proceeds for being void and/or
inofficious, with prayer for a temporary restraining order (TRO) and a writ of preliminary
injunction.

The petition alleged that: (1) petitioners were the legitimate wife and children of Loreto
Maramag (Loreto), while respondents were Loreto’s illegitimate family; (2) Eva de
Guzman Maramag (Eva) was a concubine of Loreto and a suspect in the killing of the
latter, thus, she is disqualified to receive any proceeds from his insurance policies from
Insular Life Assurance Company, Ltd. (Insular)4 and Great Pacific Life Assurance
Corporation (Grepalife);5 (3) the illegitimate children of Loreto—Odessa, Karl Brian, and
Trisha Angelie—were entitled only to one-half of the legitime of the legitimate children,
thus, the proceeds released to Odessa and those to be released to Karl Brian and Trisha
Angelie were inofficious and should be reduced; and (4) petitioners could not be deprived
of their legitimes, which should be satisfied first.

In support of the prayer for TRO and writ of preliminary injunction, petitioners alleged,
among others, that part of the insurance proceeds had already been released in favor of
Odessa, while the rest of the proceeds are to be released in favor of Karl Brian and Trisha
Angelie, both minors, upon the appointment of their legal guardian. Petitioners also
prayed for the total amount of ₱320,000.00 as actual litigation expenses and attorney’s
fees.

In answer,6 Insular admitted that Loreto misrepresented Eva as his legitimate wife and
Odessa, Karl Brian, and Trisha Angelie as his legitimate children, and that they filed their
claims for the insurance proceeds of the insurance policies; that when it ascertained that
Eva was not the legal wife of Loreto, it disqualified her as a beneficiary and divided the
proceeds among Odessa, Karl Brian, and Trisha Angelie, as the remaining designated
BENEFICIARIES (FULL TEXT)

beneficiaries; and that it released Odessa’s share as she was of age, but withheld the
release of the shares of minors Karl Brian and Trisha Angelie pending submission of
letters of guardianship. Insular alleged that the complaint or petition failed to state a cause
of action insofar as it sought to declare as void the designation of Eva as beneficiary,
because Loreto revoked her designation as such in Policy No. A001544070 and it
disqualified her in Policy No. A001693029; and insofar as it sought to declare as
inofficious the shares of Odessa, Karl Brian, and Trisha Angelie, considering that no
settlement of Loreto’s estate had been filed nor had the respective shares of the heirs
been determined. Insular further claimed that it was bound to honor the insurance policies
designating the children of Loreto with Eva as beneficiaries pursuant to Section 53 of the
Insurance Code.

In its own answer7 with compulsory counterclaim, Grepalife alleged that Eva was not
designated as an insurance policy beneficiary; that the claims filed by Odessa, Karl Brian,
and Trisha Angelie were denied because Loreto was ineligible for insurance due to a
misrepresentation in his application form that he was born on December 10, 1936 and,
thus, not more than 65 years old when he signed it in September 2001; that the case was
premature, there being no claim filed by the legitimate family of Loreto; and that the law
on succession does not apply where the designation of insurance beneficiaries is clear.

As the whereabouts of Eva, Odessa, Karl Brian, and Trisha Angelie were not known to
petitioners, summons by publication was resorted to. Still, the illegitimate family of Loreto
failed to file their answer. Hence, the trial court, upon motion of petitioners, declared them
in default in its Order dated May 7, 2004.

During the pre-trial on July 28, 2004, both Insular and Grepalife moved that the issues
raised in their respective answers be resolved first. The trial court ordered petitioners to
comment within 15 days.

In their comment, petitioners alleged that the issue raised by Insular and Grepalife was
purely legal – whether the complaint itself was proper or not – and that the designation of
a beneficiary is an act of liberality or a donation and, therefore, subject to the provisions
of Articles 7528 and 7729 of the Civil Code.

In reply, both Insular and Grepalife countered that the insurance proceeds belong
exclusively to the designated beneficiaries in the policies, not to the estate or to the heirs
of the insured. Grepalife also reiterated that it had disqualified Eva as a beneficiary when
it ascertained that Loreto was legally married to Vicenta Pangilinan Maramag.

On September 21, 2004, the trial court issued a Resolution, the dispositive portion of
which reads –

WHEREFORE, the motion to dismiss incorporated in the answer of defendants Insular

Life and Grepalife is granted with respect to defendants Odessa, Karl Brian and Trisha
Maramag. The action shall proceed with respect to the other defendants Eva Verna de
Guzman, Insular Life and Grepalife.
BENEFICIARIES (FULL TEXT)

SO ORDERED.10

In so ruling, the trial court ratiocinated thus –

Art. 2011 of the Civil Code provides that the contract of insurance is governed by the (sic)
special laws. Matters not expressly provided for in such special laws shall be regulated
by this Code. The principal law on insurance is the Insurance Code, as amended. Only in
case of deficiency in the Insurance Code that the Civil Code may be resorted to. (Enriquez
v. Sun Life Assurance Co., 41 Phil. 269.)

The Insurance Code, as amended, contains a provision regarding to whom the insurance
proceeds shall be paid. It is very clear under Sec. 53 thereof that the insurance proceeds
shall be applied exclusively to the proper interest of the person in whose name or for
whose benefit it is made, unless otherwise specified in the policy. Since the defendants
are the ones named as the primary beneficiary (sic) in the insurances (sic) taken by the
deceased Loreto C. Maramag and there is no showing that herein plaintiffs were also
included as beneficiary (sic) therein the insurance proceeds shall exclusively be paid to
them. This is because the beneficiary has a vested right to the indemnity, unless the
insured reserves the right to change the beneficiary. (Grecio v. Sunlife Assurance Co. of
Canada, 48 Phil. [sic] 63).

Neither could the plaintiffs invoked (sic) the law on donations or the rules on testamentary
succession in order to defeat the right of herein defendants to collect the insurance
indemnity. The beneficiary in a contract of insurance is not the donee spoken in the law
of donation. The rules on testamentary succession cannot apply here, for the insurance
indemnity does not partake of a donation. As such, the insurance indemnity cannot be
considered as an advance of the inheritance which can be subject to collation (Del Val v.
Del Val, 29 Phil. 534). In the case of Southern Luzon Employees’ Association v. Juanita
Golpeo, et al., the Honorable Supreme Court made the following pronouncements[:]

"With the finding of the trial court that the proceeds to the Life Insurance Policy belongs
exclusively to the defendant as his individual and separate property, we agree that the
proceeds of an insurance policy belong exclusively to the beneficiary and not to the estate
of the person whose life was insured, and that such proceeds are the separate and
individual property of the beneficiary and not of the heirs of the person whose life was
insured, is the doctrine in America. We believe that the same doctrine obtains in these
Islands by virtue of Section 428 of the Code of Commerce x x x."

In [the] light of the above pronouncements, it is very clear that the plaintiffs has (sic) no
sufficient cause of action against defendants Odessa, Karl Brian and Trisha Angelie
Maramag for the reduction and/or declaration of inofficiousness of donation as primary
beneficiary (sic) in the insurances (sic) of the late Loreto C. Maramag.

However, herein plaintiffs are not totally bereft of any cause of action. One of the named
beneficiary (sic) in the insurances (sic) taken by the late Loreto C. Maramag is his
concubine Eva Verna De Guzman. Any person who is forbidden from receiving any
BENEFICIARIES (FULL TEXT)

donation under Article 739 cannot be named beneficiary of a life insurance policy of the
person who cannot make any donation to him, according to said article (Art. 2012, Civil
Code). If a concubine is made the beneficiary, it is believed that the insurance contract
will still remain valid, but the indemnity must go to the legal heirs and not to the concubine,
for evidently, what is prohibited under Art. 2012 is the naming of the improper beneficiary.
In such case, the action for the declaration of nullity may be brought by the spouse of the
donor or donee, and the guilt of the donor and donee may be proved by preponderance
of evidence in the same action (Comment of Edgardo L. Paras, Civil Code of the
Philippines, page 897). Since the designation of defendant Eva Verna de Guzman as one
of the primary beneficiary (sic) in the insurances (sic) taken by the late Loreto C. Maramag
is void under Art. 739 of the Civil Code, the insurance indemnity that should be paid to
her must go to the legal heirs of the deceased which this court may properly take
cognizance as the action for the declaration for the nullity of a void donation falls within
the general jurisdiction of this Court.11

Insular12 and Grepalife13 filed their respective motions for reconsideration, arguing, in the
main, that the petition failed to state a cause of action. Insular further averred that the
proceeds were divided among the three children as the remaining named beneficiaries.
Grepalife, for its part, also alleged that the premiums paid had already been refunded.

Petitioners, in their comment, reiterated their earlier arguments and posited that whether
the complaint may be dismissed for failure to state a cause of action must be determined
solely on the basis of the allegations in the complaint, such that the defenses of Insular
and Grepalife would be better threshed out during trial.1avvphi1

On June 16, 2005, the trial court issued a Resolution, disposing, as follows:

WHEREFORE, in view of the foregoing disquisitions, the Motions for Reconsideration

filed by defendants Grepalife and Insular Life are hereby GRANTED. Accordingly, the
portion of the Resolution of this Court dated 21 September 2004 which ordered the
prosecution of the case against defendant Eva Verna De Guzman, Grepalife and Insular
Life is hereby SET ASIDE, and the case against them is hereby ordered DISMISSED.

SO ORDERED.14

In granting the motions for reconsideration of Insular and Grepalife, the trial court
considered the allegations of Insular that Loreto revoked the designation of Eva in one
policy and that Insular disqualified her as a beneficiary in the other policy such that the
entire proceeds would be paid to the illegitimate children of Loreto with Eva pursuant to
Section 53 of the Insurance Code. It ruled that it is only in cases where there are no
beneficiaries designated, or when the only designated beneficiary is disqualified, that the
proceeds should be paid to the estate of the insured. As to the claim that the proceeds to
be paid to Loreto’s illegitimate children should be reduced based on the rules on legitime,
the trial court held that the distribution of the insurance proceeds is governed primarily by
the Insurance Code, and the provisions of the Civil Code are irrelevant and inapplicable.
With respect to the Grepalife policy, the trial court noted that Eva was never designated
BENEFICIARIES (FULL TEXT)

as a beneficiary, but only Odessa, Karl Brian, and Trisha Angelie; thus, it upheld the
dismissal of the case as to the illegitimate children. It further held that the matter of
Loreto’s misrepresentation was premature; the appropriate action may be filed only upon
denial of the claim of the named beneficiaries for the insurance proceeds by Grepalife.

Petitioners appealed the June 16, 2005 Resolution to the CA, but it dismissed the appeal
for lack of jurisdiction, holding that the decision of the trial court dismissing the complaint
for failure to state a cause of action involved a pure question of law. The appellate court
also noted that petitioners did not file within the reglementary period a motion for
reconsideration of the trial court’s Resolution, dated September 21, 2004, dismissing the
complaint as against Odessa, Karl Brian, and Trisha Angelie; thus, the said Resolution
had already attained finality.

Hence, this petition raising the following issues:

a. In determining the merits of a motion to dismiss for failure to state a cause of

action, may the Court consider matters which were not alleged in the Complaint,
particularly the defenses put up by the defendants in their Answer?

b. In granting a motion for reconsideration of a motion to dismiss for failure to state

a cause of action, did not the Regional Trial Court engage in the examination and
determination of what were the facts and their probative value, or the truth thereof,
when it premised the dismissal on allegations of the defendants in their answer –
which had not been proven?

c. x x x (A)re the members of the legitimate family entitled to the proceeds of the
insurance for the concubine?15

In essence, petitioners posit that their petition before the trial court should not have been
dismissed for failure to state a cause of action because the finding that Eva was either
disqualified as a beneficiary by the insurance companies or that her designation was
revoked by Loreto, hypothetically admitted as true, was raised only in the answers and
motions for reconsideration of both Insular and Grepalife. They argue that for a motion to
dismiss to prosper on that ground, only the allegations in the complaint should be
considered. They further contend that, even assuming Insular disqualified Eva as a
beneficiary, her share should not have been distributed to her children with Loreto but,
instead, awarded to them, being the legitimate heirs of the insured deceased, in
accordance with law and jurisprudence.

The petition should be denied.

The grant of the motion to dismiss was based on the trial court’s finding that the petition
failed to state a cause of action, as provided in Rule 16, Section 1(g), of the Rules of
Court, which reads –
BENEFICIARIES (FULL TEXT)

SECTION 1. Grounds. – Within the time for but before filing the answer to the complaint
or pleading asserting a claim, a motion to dismiss may be made on any of the following
grounds:

xxxx

(g) That the pleading asserting the claim states no cause of action.

A cause of action is the act or omission by which a party violates a right of another. 16 A
complaint states a cause of action when it contains the three (3) elements of a cause of
action—(1) the legal right of the plaintiff; (2) the correlative obligation of the defendant;
and (3) the act or omission of the defendant in violation of the legal right. If any of these
elements is absent, the complaint becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action.17

When a motion to dismiss is premised on this ground, the ruling thereon should be based
only on the facts alleged in the complaint. The court must resolve the issue on the strength
of such allegations, assuming them to be true. The test of sufficiency of a cause of action
rests on whether, hypothetically admitting the facts alleged in the complaint to be true,
the court can render a valid judgment upon the same, in accordance with the prayer in
the complaint. This is the general rule.

However, this rule is subject to well-recognized exceptions, such that there is no

hypothetical admission of the veracity of the allegations if:

1. the falsity of the allegations is subject to judicial notice;

2. such allegations are legally impossible;

3. the allegations refer to facts which are inadmissible in evidence;

4. by the record or document in the pleading, the allegations appear unfounded;

or

5. there is evidence which has been presented to the court by stipulation of the
parties or in the course of the hearings related to the case.18

In this case, it is clear from the petition filed before the trial court that, although petitioners
are the legitimate heirs of Loreto, they were not named as beneficiaries in the insurance
policies issued by Insular and Grepalife. The basis of petitioners’ claim is that Eva, being
a concubine of Loreto and a suspect in his murder, is disqualified from being designated
as beneficiary of the insurance policies, and that Eva’s children with Loreto, being
illegitimate children, are entitled to a lesser share of the proceeds of the policies. They
also argued that pursuant to Section 12 of the Insurance Code,19 Eva’s share in the
proceeds should be forfeited in their favor, the former having brought about the death of
Loreto. Thus, they prayed that the share of Eva and portions of the shares of Loreto’s
BENEFICIARIES (FULL TEXT)

illegitimate children should be awarded to them, being the legitimate heirs of Loreto
entitled to their respective legitimes.

It is evident from the face of the complaint that petitioners are not entitled to a favorable
judgment in light of Article 2011 of the Civil Code which expressly provides that insurance
contracts shall be governed by special laws, i.e., the Insurance Code. Section 53 of the
Insurance Code states—

SECTION 53. The insurance proceeds shall be applied exclusively to the proper interest
of the person in whose name or for whose benefit it is made unless otherwise specified
in the policy.

Pursuant thereto, it is obvious that the only persons entitled to claim the insurance
proceeds are either the insured, if still alive; or the beneficiary, if the insured is already
deceased, upon the maturation of the policy.20 The exception to this rule is a situation
where the insurance contract was intended to benefit third persons who are not parties to
the same in the form of favorable stipulations or indemnity. In such a case, third parties
may directly sue and claim from the insurer.21

Petitioners are third parties to the insurance contracts with Insular and Grepalife and,
thus, are not entitled to the proceeds thereof. Accordingly, respondents Insular and
Grepalife have no legal obligation to turn over the insurance proceeds to petitioners. The
revocation of Eva as a beneficiary in one policy and her disqualification as such in another
are of no moment considering that the designation of the illegitimate children as
beneficiaries in Loreto’s insurance policies remains valid. Because no legal proscription
exists in naming as beneficiaries the children of illicit relationships by the insured, 22 the
shares of Eva in the insurance proceeds, whether forfeited by the court in view of the
prohibition on donations under Article 739 of the Civil Code or by the insurers themselves
for reasons based on the insurance contracts, must be awarded to the said illegitimate
children, the designated beneficiaries, to the exclusion of petitioners. It is only in cases
where the insured has not designated any beneficiary, 23 or when the designated
beneficiary is disqualified by law to receive the proceeds, 24 that the insurance policy
proceeds shall redound to the benefit of the estate of the insured.

In this regard, the assailed June 16, 2005 Resolution of the trial court should be upheld.
In the same light, the Decision of the CA dated January 8, 2008 should be sustained.
Indeed, the appellate court had no jurisdiction to take cognizance of the appeal; the issue
of failure to state a cause of action is a question of law and not of fact, there being no
findings of fact in the first place.25

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.
BENEFICIARIES (FULL TEXT)

G.R. No. L-6114 October 30, 1954

SOUTHERN LUZON EMPLOYEES' ASSOCIATION, plaintiff,

vs.
JUANITA GOLPEO, ET AL., defendants-appellants;
AQUILINO MALOLES , ET AL., defendants-appellees;
ELSIE HICBAN, ET AL., defendants;
MARCELINO CONCEPCION, ET AL., intervenors-appellants.

Enrique Al. Capistrano, Pio O. Golfeo, Jose E. Erfe and Hilario Mutuc for appellants.
Manuel Alvero and Elden B. Brion for appellees.
Juan A. Baes for defendant Elsie Hicban.

PARAS, C.J.:

The plaintiff, Southern Luzon Employees' Association is composed of laborers and

employees of Laguna tayabas Bus Co., and Batangas Transportation Company, and one
of its purposes is mutual aid of its members and their defendants in case of death. Roman
A. Concepcion was a member until his death on December 13, 1950. The association
adopted on September 17, 1949 the following resolution:

RESOLVED: That a family record card of each member be printed wherein the
members will put down his dependents and/or beneficiaries.

BE IT RESOLVED, FURTHER, that a member may, if he chooses, put down his

common-law wife as his beneficiary and/or children had with her as the case may
be; that in case of a widower, he may put down his legitimate children with the first
marriage who are below 21 years of age, single, and may at the same time, also
name his common-law wife, if he has any, as dependents and/or beneficiaries; and

BE IT RESOLVED: That such person so named by the member will be sole

persons to be recognized by the Association regarding claims for condolence
contributions.

In the form required by the association to be accomplished by its members, with reference
to the death benefit, Roman A. Concepcion listed as his beneficiaries Aquilina Maloles,
Roman M. Concepcion, Jr., Estela M. Concepcion, Rolando M. Concepcion and Robin
M. Concepcion. After the death of Roman A. Concepcion, the association was able to
collect voluntary contributions from its members amounting to P2,5055. Three sets of
claimants presented themselves, namely, (1) Juanita Golpeo, legal wife of Roman A.
Concepcion, and her children, named beneficiaries by the deceased; and (3) Elsie
Hicban, another common law wife of Roman A. Concepcion, and her child. The plaintiff
association was accordingly constrained to institute in the Court of First Instance of
Laguna the present action for interpleading against the three conflicting claimants as
defendants. Marcelino and Josefina Concepcion, children of the deceased Roman A.
Concepcion with Juanita Golpeo, intervened in their own rights, aligning themselves with
BENEFICIARIES (FULL TEXT)

the defendants, Juanita Golpeo and her minor children. After hearing, the court rendered
a decision, declaring the defendants Aquilina Maloles and her children the sole
beneficiaries of the sum of P2,505.00, and ordering the plaintiff to deliver said amount to
them. From this decision only the defendants Juanita Golpeo and her minor children and
the intervenors Marcelino and Josefina Concepcion have appealed to this court.

The decision is based mainly on the theory that the contract between the plaintiff and the
deceased Roman A. Concepcion partook of the nature of an insurance and that,
therefore, the amount in question belonged exclusively to the beneficiaries, invoking the
following pronouncements of this Court in the case of Del Val vs. Del Val, 29 Phil., 534:

With the finding of the trial court that the proceeds of the life-insurance policy
belongs exclusively to the defendant as his individual and separate property, we
agree. That the proceeds of an insurance policy belong exclusively to the
beneficiary and not to the estate of the person whose life was insured, and that
such proceeds are the separate and individual property of the beneficiary, and not
of the heirs of the person whose life was insured, is the doctrine in America. We
believe that the same doctrine obtains in these Islands by virtue of section 428 of
the Code of Commerce, which reads:

"The amounts which the underwriter must deliver to the person insured, in
fulfillment of the contract, shall be the property creditors of any kind whatsoever of
the person who effected the insurance in favor of the formers."

It is claimed by the attorney for the plaintiffs that the section just quoted in
subordinated to the provisions of the civil code as found in article 10035. This
article reads:

"An heir by force of law surviving with others of the same character to a succession
must bring into the hereditary estate the property or securities he may bring into
the hereditary estate the property or securities he may have been received from
the deceased during the life of the same, by way of dowry, gift, or for any good
consideration, in order to compute it in fixing the legal portions and in the amount
of the division."

Counsel also claims that the proceed of the insurance policy were donation or gift
made by the father during his lifetime to the defendant and that, as such, its
ultimate destination is determined by those provisions of the Civil Code which
relate to donations, especially article 819. This article provides that "gifts made to
children which are not betterments shall be considered as part of their legal
portion."

We cannot agree with these contention. The contract of life insurance is a special
contract and the destination of the proceeds thereof is determined by special laws
which deal exclusively with that subject. The Civil Code has no provisions which
relate directly and specifically to life-insurance contract or to the destination of life-
BENEFICIARIES (FULL TEXT)

insurance proceeds. That subject is regulate exclusively by the Code of Commerce

which provides for the terms of the contract, the relations of the parties and the
destination of the proceeds of the policy. (Supra, pp. 540-541.)

It is argued for the appellants, however, that the Insurance Law is not applicable because
the plaintiff is a mutual benefit association as defined in section 1628 of the Revised
Administrative Code. This argument evidently ignore the fact that the trial court has no
considered the plaintiff as a regular insurance company but merely ruled that the death
benefit in question is analogous to an insurance. Moreover, section 1628 of the Revised
Administrative Code defines a mutual benefit association as one, among others,
"providing for any method of accident or life insurance among its members out of dues or
assessments collected from the membership." The comparison made in the appealed
decision is, therefore, well taken.

Appellant also contend that the stipulation between the plaintiff and the deceased Roman
A. Concepcion regarding the specification of the latter's beneficiaries, and the resolution
of September 17, 1949, are void for the being contrary to law, moral or public policy.
Specifically, the appellants cite article 2012 of the new Civil Code providing that "Any
person who is forbidden from receiving any donation under article 739 cannot be named
beneficiary of a life insurance policy and by the person who cannot make any donation to
him, according to said article." Inasmuch as, according to article 739 of the new Civil
Code, a donation is valid when made "between persons who are guilty or adultery or
concubinage at the time of the donation," it is alleged that the defendant-appellee Aquilina
Maloles, cannot be named a beneficiary, every assuming that the insurance law is
applicable. Without considering the intimation in the brief for the defendant appellees that
appellant Juanita Golpeo, by her silence and actions, had acquiesced in the illicit relations
between her husband and appellee Aquilina Maloles, appellant argument would certainly
not apply to the children of Aquilina likewise named beneficiaries by the deceased Roman
A. Concepcion. As a matter of a fact the new Civil Code recognized certain successional
rights of illegitimate children. (Article 287.)

The other contention advanced rather exhaustively by counsel for appellants, and the
citations in support there of are either negative or rendered inapplicable by the decisive
considerations already stated. In this connection it is noteworthy that the estate of the
deceased Roman A. Concepcion was not entirely left without anything legally due it since
it is an admitted fact that the sum of P2,500 was paid by Laguna Tayabas Bus Co.,
employer of the deceased to the appellants under the Workmen's Compensation Act.
Wherefore, the appealed decision is affirmed, and it is so ordered without costs.
BENEFICIARIES (FULL TEXT)

G.R. No. L-28093 January 30, 1971

BASILIA BERDIN VDA. DE CONSUEGRA; JULIANA, PACITA, MARIA LOURDES,

JOSE, JR., RODRIGO, LINEDA and LUIS, all surnamed CONSUEGRA, petitioners-
appellants,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, COMMISSIONER OF PUBLIC
HIGHWAYS, HIGHWAY DISTRICT ENGINEER OF SURIGAO DEL NORTE,
COMMISSIONER OF CIVIL SERVICE, and ROSARIO DIAZ, respondents-appellees.

Bernardino O. Almeda for petitioners-appellants.

Binag and Arevalo, Jr. for respondent-appellee Government Service Insurance System.

Office of the Solicitor General for other respondents-appellees.

ZALDIVAR, J.:

Appeal on purely questions of law from the decision of the Court of First Instance of
Surigao del Norte, dated March 7, 1967, in its Special Proceeding No. 1720.

The pertinent facts, culled from the stipulation of facts submitted by the parties, are the
following:

The late Jose Consuegra, at the time of his death, was employed as a shop foreman of
the office of the District Engineer in the province of Surigao del Norte. In his lifetime,
Consuegra contracted two marriages, the first with herein respondent Rosario Diaz,
solemnized in the parish church of San Nicolas de Tolentino, Surigao, Surigao, on July
15, 1937, out of which marriage were born two children, namely, Jose Consuegra, Jr. and
Pedro Consuegra, but both predeceased their father; and the second, which was
contracted in good faith while the first marriage was subsisting, with herein petitioner
Basilia Berdin, on May 1, 1957 in the same parish and municipality, out of which marriage
were born seven children, namely, Juliana, Pacita, Maria Lourdes, Jose, Rodrigo, Lenida
and Luz, all surnamed Consuegra.

Being a member of the Government Service Insurance System (GSIS, for short) when
Consuegra died on September 26, 1965, the proceeds of his life insurance under policy
No. 601801 were paid by the GSIS to petitioner Basilia Berdin and her children who were
the beneficiaries named in the policy. Having been in the service of the government for
22.5028 years, Consuegra was entitled to retirement insurance benefits in the sum of
P6,304.47 pursuant to Section 12(c) of Commonwealth Act 186 as amended by Republic
Acts 1616 and 3836. Consuegra did not designate any beneficiary who would receive the
retirement insurance benefits due to him. Respondent Rosario Diaz, the widow by the
first marriage, filed a claim with the GSIS asking that the retirement insurance benefits be
BENEFICIARIES (FULL TEXT)

paid to her as the only legal heir of Consuegra, considering that the deceased did not
designate any beneficiary with respect to his retirement insurance benefits. Petitioner
Basilia Berdin and her children, likewise, filed a similar claim with the GSIS, asserting that
being the beneficiaries named in the life insurance policy of Consuegra, they are the only
ones entitled to receive the retirement insurance benefits due the deceased Consuegra.
Resolving the conflicting claims, the GSIS ruled that the legal heirs of the late Jose
Consuegra were Rosario Diaz, his widow by his first marriage who is entitled to one-half,
or 8/16, of the retirement insurance benefits, on the one hand; and Basilia Berdin, his
widow by the second marriage and their seven children, on the other hand, who are
entitled to the remaining one-half, or 8/16, each of them to receive an equal share of 1/16.

Dissatisfied with the foregoing ruling and apportionment made by the GSIS, Basilia Berdin
and her children1 filed on October 10, 1966 a petition for mandamus with preliminary
injunction in the Court of First Instance of Surigao, naming as respondents the GSIS, the
Commissioner of Public Highways, the Highway District Engineer of Surigao del Norte,
the Commissioner of Civil Service, and Rosario Diaz, praying that they (petitioners
therein) be declared the legal heirs and exclusive beneficiaries of the retirement insurance
of the late Jose Consuegra, and that a writ of preliminary injunction be issued restraining
the implementation of the adjudication made by the GSIS. On October 26, 1966, the trial
court issued an order requiring therein respondents to file their respective answers, but
refrained from issuing the writ of preliminary injunction prayed for. On February 11, 1967,
the parties submitted a stipulation of facts, prayed that the same be admitted and
approved and that judgment be rendered on the basis of the stipulation of facts. On March
7, 1967, the court below rendered judgment, the pertinent portions of which are quoted
hereunder:

This Court, in conformity with the foregoing stipulation of facts, likewise is in full accord
with the parties with respect to the authority cited by them in support of said stipulation
and which is herein-below cited for purposes of this judgment, to wit:

"When two women innocently and in good faith are legally united in holy matrimony to the
same man, they and their children, born of said wedlock, will be regarded as legitimate
children and each family be entitled to one half of the estate. Lao & Lao vs. Dee Tim, 45
Phil. 739; Estrella vs. Laong Masa, Inc., (CA) 39 OG 79; Pisalbon vs. Bejec, 74 Phil. 88.

WHEREFORE, in view of the above premises, this Court is of the opinion that the
foregoing stipulation of facts is in order and in accordance with law and the same is hereby
approved. Judgment, therefore, is hereby rendered declaring the petitioner Basilia Berdin
Vda. de Consuegra and her co-petitioners Juliana, Pacita, Maria Lourdes, Jose, Jr.,
Rodrigo, Lenida and Luis, all surnamed Consuegra, beneficiary and entitled to one-half
(1/2) of the retirement benefit in the amount of Six Thousand Three Hundred Four Pesos
and Fourty-Seven Centavos (P6,304.47) due to the deceased Jose Consuegra from the
Government Service Insurance System or the amount of P3,152.235 to be divided equally
among them in the proportional amount of 1/16 each. Likewise, the respondent Rosario
Diaz Vda. de Consuegra is hereby declared beneficiary and entitled to the other half of
the retirement benefit of the late Jose Consuegra or the amount of P3,152.235. The case
BENEFICIARIES (FULL TEXT)

with respect to the Highway District Engineer of Surigao del Norte is hereby ordered
dismissed.

Hence the present appeal by herein petitioners-appellants, Basilia Berdin and her
children.

It is the contention of appellants that the lower court erred in not holding that the
designated beneficiaries in the life insurance of the late Jose Consuegra are also the
exclusive beneficiaries in the retirement insurance of said deceased. In other words, it is
the submission of appellants that because the deceased Jose Consuegra failed to
designate the beneficiaries in his retirement insurance, the appellants who were the
beneficiaries named in the life insurance should automatically be considered the
beneficiaries to receive the retirement insurance benefits, to the exclusion of respondent
Rosario Diaz. From the arguments adduced by appellants in their brief We gather that it
is their stand that the system of life insurance and the system of retirement insurance,
that are provided for in Commonwealth Act 186 as amended, are simply complementary
to each other, or that one is a part or an extension of the other, such that whoever is
named the beneficiary in the life insurance is also the beneficiary in the retirement
insurance when no such beneficiary is named in the retirement insurance.

The contention of appellants is untenable.

It should be noted that the law creating the Government Service Insurance System is
Commonwealth Act 186 which was enacted by the National Assembly on November 14,
1936. As originally approved, Commonwealth Act 186 provided for the compulsory
membership in the Government Service Insurance System of all regularly and
permanently appointed officials and employees of the government, considering as
automatically insured on life all such officials and employees, and issuing to them the
corresponding membership policy under the terms and conditions as provided in the Act.2

Originally, Commonwealth Act 186 provided for life insurance only. Commonwealth Act
186 was amended by Republic Act 660 which was enacted by the Congress of the
Philippines on June 16, 1951, and, among others, the amendatory Act provided that aside
from the system of life insurance under the Government Service Insurance System there
was also established the system of retirement insurance. Thus, We will note in Republic
Act 660 that there is a chapter on life insurance and another chapter on retirement
insurance. 3 Under the chapter on life insurance are sections 8, 9 and 10 of
Commonwealth Act 186, as amended; and under the chapter on retirement insurance are
sections 11, 12, 13 and 13-A. On May 31, 1957, Republic Act 1616 was enacted by
Congress, amending section 12 of Commonwealth Act 186 as amended by Republic Act
660, by adding thereto two new subsections, designated as subsections (b) and (c). This
subsection (c) of section 12 of Commonwealth Act 186, as amended by Republic Acts
660, 1616 and 3096, was again amended by Republic Act 3836 which was enacted on
June 22, 1963.lâwphî1.ñèt The pertinent provisions of subsection (c) of Section 12 of
Commonwealth Act 186, as thus amended and reamended, read as follows:
BENEFICIARIES (FULL TEXT)

(c) Retirement is likewise allowed to a member, regardless of age, who has rendered at
least twenty years of service. The benefit shall, in addition to the return of his personal
contributions plus interest and the payment of the corresponding employer's premiums
described in subsection (a) of Section 5 hereof, without interest, be only a gratuity
equivalent to one month's salary for every year of service, based on the highest rate
received, but not to exceed twenty-four months; Provided, That the retiring officer or
employee has been in the service of the said employer or office for at least four years,
immediately preceding his retirement.

xxx xxx xxx

The gratuity is payable by the employer or office concerned which is hereby authorized
to provide the necessary appropriation to pay the same from any unexpended items of
appropriations.

Elective or appointive officials and employees paid gratuity under this subsection shall be
entitled to the commutation of the unused vacation and sick leave, based on the highest
rate received, which they may have to their credit at the time of retirement.

Jose Consuegra died on September 26, 1965, and so at the time of his death he had
acquired rights under the above-quoted provisions of subsection (c) of Section 12 of Com.
Act 186, as finally amended by Rep. Act 3836 on June 22, 1963. When Consuegra died
on September 26, 1965, he had to his credit 22.5028 years of service in the government,
and pursuant to the above-quoted provisions of subsection (c) of Section 12 of Com. Act
186, as amended, on the basis of the highest rate of salary received by him which was
P282.83 per month, he was entitled to receive retirement insurance benefits in the amount
of P6,304.47. This is the retirement benefits that are the subject of dispute between the
appellants, on the one hand, and the appellee Rosario Diaz, on the other, in the present
case. The question posed is: to whom should this retirement insurance benefits of Jose
Consuegra be paid, because he did not, or failed to, designate the beneficiary of his
retirement insurance?

If Consuegra had 22.5028 years of service in the government when he died on September
26, 1965, it follows that he started in the government service sometime during the early
part of 1943, or before 1943. In 1943 Com. Act 186 was not yet amended, and the only
benefits then provided for in said Com. Act 186 were those that proceed from a life
insurance. Upon entering the government service Consuegra became a compulsory
member of the GSIS, being automatically insured on his life, pursuant to the provisions
of Com. Act 186 which was in force at the time. During 1943 the operation of the
Government Service Insurance System was suspended because of the war, and the
operation was resumed sometime in 1946. When Consuegra designated his beneficiaries
in his life insurance he could not have intended those beneficiaries of his life insurance
as also the beneficiaries of his retirement insurance because the provisions on retirement
insurance under the GSIS came about only when Com. Act 186 was amended by Rep.
Act 660 on June 16, 1951. Hence, it cannot be said that because herein appellants were
designated beneficiaries in Consuegra's life insurance they automatically became the
BENEFICIARIES (FULL TEXT)

beneficiaries also of his retirement insurance. Rep. Act 660 added to Com. Act 186
provisions regarding retirement insurance, which are Sections 11, 12, and 13 of Com. Act
186, as amended. Subsection (b) of Section 11 of Com. Act 186, as amended by Rep.
Act 660, provides as follows:

(b) Survivors benefit. — Upon death before he becomes eligible for retirement, his
beneficiaries as recorded in the application for retirement annuity filed with the System
shall be paid his own premiums with interest of three per centum per annum,
compounded monthly. If on his death he is eligible for retirement, then the automatic
retirement annuity or the annuity chosen by him previously shall be paid accordingly.

The above-quoted provisions of subsection (b) of Section 11 of Commonwealth Act 186,

as amended by Rep. Act 660, clearly indicate that there is need for the employee to file
an application for retirement insurance benefits when he becomes a member of the GSIS,
and he should state in his application the beneficiary of his retirement insurance. Hence,
the beneficiary named in the life insurance does not automatically become the beneficiary
in the retirement insurance unless the same beneficiary in the life insurance is so
designated in the application for retirement insurance.

Section 24 of Commonwealth Act 186, as amended by Rep. Act 660, provides for a life
insurance fund and for a retirement insurance fund. There was no such provision in Com.
Act 186 before it was amended by Rep. Act 660. Thus, subsections (a) and (b) of Section
24 of Commonwealth Act 186, as amended by Rep. Act 660, partly read as follows:

(a) Life insurance fund. — This shall consist of all premiums for life insurance benefit
and/or earnings and savings therefrom. It shall meet death claims as they may arise or
such equities as any member may be entitled to, under the conditions of his policy, and
shall maintain the required reserves to the end of guaranteeing the fulfillment of the life
insurance contracts issued by the System ...

(b) Retirement insurance fund. — This shall consist of all contributions for retirement
insurance benefit and of earnings and savings therefrom. It shall meet annuity payments
and establish the required reserves to the end of guaranteeing the fulfillment of the
contracts issued by the System. ...

Thus, We see that the GSIS offers two separate and distinct systems of benefits to its
members — one is the life insurance and the other is the retirement insurance. These two
distinct systems of benefits are paid out from two distinct and separate funds that are
maintained by the GSIS.

In the case of the proceeds of a life insurance, the same are paid to whoever is named
the beneficiary in the life insurance policy. As in the case of a life insurance provided for
in the Insurance Act (Act 2427, as amended), the beneficiary in a life insurance under the
GSIS may not necessarily be a heir of the insured. The insured in a life insurance may
designate any person as beneficiary unless disqualified to be so under the provisions of
BENEFICIARIES (FULL TEXT)

the Civil Code.4 And in the absence of any beneficiary named in the life insurance policy,
the proceeds of the insurance will go to the estate of the insured.

Retirement insurance is primarily intended for the benefit of the employee — to provide
for his old age, or incapacity, after rendering service in the government for a required
number of years. If the employee reaches the age of retirement, he gets the retirement
benefits even to the exclusion of the beneficiary or beneficiaries named in his application
for retirement insurance. The beneficiary of the retirement insurance can only claim the
proceeds of the retirement insurance if the employee dies before retirement. If the
employee failed or overlooked to state the beneficiary of his retirement insurance, the
retirement benefits will accrue to his estate and will be given to his legal heirs in
accordance with law, as in the case of a life insurance if no beneficiary is named in the
insurance policy.

It is Our view, therefore, that the respondent GSIS had correctly acted when it ruled that
the proceeds of the retirement insurance of the late Jose Consuegra should be divided
equally between his first living wife Rosario Diaz, on the one hand, and his second wife
Basilia Berdin and his children by her, on the other; and the lower court did not commit
error when it confirmed the action of the GSIS, it being accepted as a fact that the second
marriage of Jose Consuegra to Basilia Berdin was contracted in good faith. The lower
court has correctly applied the ruling of this Court in the case of Lao, et al. vs. Dee Tim,
et al., 45 Phil. 739 as cited in the stipulation of facts and in the decision appealed from.5 In
the recent case of Gomez vs. Lipana, L-23214, June 30, 1970,6 this Court, in construing
the rights of two women who were married to the same man — a situation more or less
similar to the case of appellant Basilia Berdin and appellee Rosario Diaz — held "that
since the defendant's first marriage has not been dissolved or declared void the conjugal
partnership established by that marriage has not ceased. Nor has the first wife lost or
relinquished her status as putative heir of her husband under the new Civil Code, entitled
to share in his estate upon his death should she survive him. Consequently, whether as
conjugal partner in a still subsisting marriage or as such putative heir she has an interest
in the husband's share in the property here in dispute.... " And with respect to the right of
the second wife, this Court observed that although the second marriage can be presumed
to be void ab initio as it was celebrated while the first marriage was still subsisting, still
there is need for judicial declaration of such nullity. And inasmuch as the conjugal
partnership formed by the second marriage was dissolved before judicial declaration of
its nullity, "[t]he only lust and equitable solution in this case would be to recognize the
right of the second wife to her share of one-half in the property acquired by her and her
husband and consider the other half as pertaining to the conjugal partnership of the first
marriage."

WHEREFORE, the decision appealed from is affirmed, with costs against petitioners-
appellants. It is so ordered.
BENEFICIARIES (FULL TEXT)

G.R. No. L-44059 October 28, 1977

THE INSULAR LIFE ASSURANCE COMPANY, LTD., plaintiff-appellee,

vs.

CARPONIA T. EBRADO and PASCUALA VDA. DE EBRADO, defendants-appellants.

MARTIN, J.:

This is a novel question in insurance law: Can a common-law wife named as beneficiary
in the life insurance policy of a legally married man claim the proceeds thereof in case of
death of the latter?

On September 1, 1968, Buenaventura Cristor Ebrado was issued by The Life Assurance
Co., Ltd., Policy No. 009929 on a whole-life for P5,882.00 with a, rider for Accidental
Death for the same amount Buenaventura C. Ebrado designated T. Ebrado as the
revocable beneficiary in his policy. He to her as his wife.

On October 21, 1969, Buenaventura C. Ebrado died as a result of an t when he was hit
by a failing branch of a tree. As the policy was in force, The Insular Life Assurance Co.,
Ltd. liable to pay the coverage in the total amount of P11,745.73, representing the face
value of the policy in the amount of P5,882.00 plus the additional benefits for accidental
death also in the amount of P5,882.00 and the refund of P18.00 paid for the premium due
November, 1969, minus the unpaid premiums and interest thereon due for January and
Fbruary, 1969, in the sum of P36.27.

Carponia T. Ebrado filed with the insurer a claim for the proceeds of the Policy as the
designated beneficiary therein, although she admits that she and the insured
Buenaventura C. Ebrado 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. She
asserts that she is the one entitled to the insurance proceeds, not the common-law wife,
Caronia T. Ebrado.

In doubt as to whom the insurance proceeds shall be paid, the insurer, The Insular Life
Assurance Co., Ltd. commenced an action for Interpleader before the Court of First
Instance of Rizal on April 29, 1970.
BENEFICIARIES (FULL TEXT)

After the issues have been joined, a pre-trial conference was held on July 8, 1972, after
which, a pre-trial order was entered reading as follows: ñé+.£ªwph!1

During the pre-trial conference, the parties manifested to the court. that there is no
possibility of amicable settlement. Hence, the Court proceeded to have the parties submit
their evidence for the purpose of the pre-trial and make admissions for the purpose of
pretrial. During this conference, parties Carponia T. Ebrado and Pascuala Ebrado agreed
and stipulated: 1) that the deceased Buenaventura Ebrado was married to Pascuala
Ebrado with whom she has six — (legitimate) namely; Hernando, Cresencio, Elsa,
Erlinda, Felizardo and Helen, all surnamed Ebrado; 2) that during the lifetime of the
deceased, he was insured with Insular Life Assurance Co. Under Policy No. 009929
whole life plan, dated September 1, 1968 for the sum of P5,882.00 with the rider for
accidental death benefit as evidenced by Exhibits A for plaintiffs and Exhibit 1 for the
defendant Pascuala and Exhibit 7 for Carponia Ebrado; 3) that during the lifetime of
Buenaventura Ebrado, he was living with his common-wife, Carponia Ebrado, with whom
she had 2 children although he was not legally separated from his legal wife; 4) that
Buenaventura in accident on October 21, 1969 as evidenced by the death Exhibit 3 and
affidavit of the police report of his death Exhibit 5; 5) that complainant Carponia Ebrado
filed claim with the Insular Life Assurance Co. which was contested by Pascuala Ebrado
who also filed claim for the proceeds of said policy 6) that in view ofthe adverse claims
the insurance company filed this action against the two herein claimants Carponia and
Pascuala Ebrado; 7) that there is now due from the Insular Life Assurance Co. as
proceeds of the policy P11,745.73; 8) that the beneficiary designated by the insured in
the policy is Carponia Ebrado and the insured made reservation to change the beneficiary
but although the insured made the option to change the beneficiary, same was never
changed up to the time of his death and the wife did not have any opportunity to write the
company that there was reservation to change the designation of the parties agreed that
a decision be rendered based on and stipulation of facts as to who among the two
claimants is entitled to the policy.

Upon motion of the parties, they are given ten (10) days to file their simultaneous
meoranda from the receipt of this order.

SO ORDERED.

On September 25, 1972, the trial court rendered judgment declaring among others,
Carponia T. Ebrado disqualified from becoming beneficiary of the insured Buenaventura
Cristor Ebrado and directing the payment of the insurance proceeds to the estate of the
deceased insured. The trial court held: ñé+.£ªwph!1

It is patent from the last paragraph of Art. 739 of the Civil Code that a criminal conviction
for adultery or concubinage is not essential in order to establish the disqualification
mentioned therein. Neither is it also necessary that a finding of such guilt or commission
of those acts be made in a separate independent action brought for the purpose. The guilt
BENEFICIARIES (FULL TEXT)

of the donee (beneficiary) may be proved by preponderance of evidence in the same

proceeding (the action brought to declare the nullity of the donation).

It is, however, essential that such adultery or concubinage exists at the time defendant
Carponia T. Ebrado was made beneficiary in the policy in question for the disqualification
and incapacity to exist and that it is only necessary that such fact be established by
preponderance of evidence in the trial. Since it is agreed in their stipulation above-quoted
that the deceased insured and defendant Carponia T. Ebrado were living together as
husband and wife without being legally married and that the marriage of the insured with
the other defendant Pascuala Vda. de Ebrado was valid and still existing at the time the
insurance in question was purchased there is no question that defendant Carponia T.
Ebrado is disqualified from becoming the beneficiary of the policy in question and as such
she isnot entitled to the proceeds of the insurance upon the death of the insured.

From this judgment, Carponia T. Ebrado appealed to the Court of Appeals, but on July
11, 1976, the Appellate Court certified the case to Us as involving only questions of law.

We ffirm the judgment of the lower court

1. It is quite unfortunate that the Insurance Act (RA 2327, as amended) or even the
new Insurance Code (PD No. 612, as amended) does not contain any specific provision
grossly resolutory of the prime question at hand. Section 50 of the Insurance Act which
provides that "(t)he insurance shag be applied exclusively to the proper interest of the
person in whose name it is made" 1 cannot be validly seized upon to hold that the mm
includes the beneficiary. The word "interest" highly suggests that the provision refers only
to the "insured" and not to the beneficiary, since a contract of insurance is personal in
character. 2 Otherwise, the prohibitory laws against illicit relationships especially on
property and descent will be rendered nugatory, as the same could easily be
circumvented by modes of insurance. Rather, the general rules of civil law should be
applied to resolve this void in the Insurance Law. Article 2011 of the New Civil Code
states: "The contract of insurance is governed by special laws. Matters not expressly
provided for in such special laws shall be regulated by this Code." When not otherwise
specifically provided for by the Insurance Law, the contract of life insurance is governed
by the general rules of the civil law regulating contracts. 3 And under Article 2012 of the
same Code, "any person who is forbidden from receiving any donation under Article 739
cannot be named beneficiary of a fife insurance policy by the person who cannot make a
donation to him. 4 Common-law spouses are, definitely, barred from receiving donations
from each other. Article 739 of the new Civil Code provides: ñé+.£ªwph!1

The following donations shall be void:

1. Those made between persons who were guilty of adultery or concubinage at the
time of donation;

Those made between persons found guilty of the same criminal offense, in consideration
thereof;
BENEFICIARIES (FULL TEXT)

3. Those made to a public officer or his wife, descendants or ascendants by reason

of his office.

In the case referred to in No. 1, the action for declaration of nullity may be brought by the
spouse of the donor or donee; and the guilt of the donee may be proved by
preponderance of evidence in the same action

2. In essence, a life insurance policy is no different from a civil donation insofar as

the beneficiary is concerned. Both are founded 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 or profits of said insurance.
As a consequence, the proscription in Article 739 of the new Civil Code should equally
operate in life insurance contracts. The mandate of Article 2012 cannot be laid aside: any
person who cannot receive a donation cannot be named as beneficiary in the life
insurance policy of the person who cannot make the donation. 5 Under American law, a
policy of life insurance is considered as a testament and in construing it, the courts will,
so far as possible treat it as a will and determine the effect of a clause designating the
beneficary by rules under which wins are interpreted. 6

3. 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 policies since the same are
based on similar consideration As above pointed out, a beneficiary in a fife insurance
policy is no different from a donee. Both are recipients of pure beneficence. So long as
manage remains the threshold of family laws, reason and morality dictate that the
impediments imposed upon married couple should likewise be imposed upon extra-
marital relationship. If legitimate relationship is circumscribed by these legal disabilities,
with more reason should an illicit relationship be restricted by these disabilities. Thus, in
Matabuena v. Cervantes, 7 this Court, through Justice Fernando, said: ñé+.£ªwph!1

If the policy of the law is, in the language of the opinion of the then Justice J.B.L. Reyes
of that court (Court of Appeals), 'to prohibit donations in favor of the other consort and his
descendants because of and undue and improper pressure and influence upon the donor,
a prejudice deeply rooted in our ancient law;" por-que no se enganen desponjandose el
uno al otro por amor que han de consuno' (According to) the Partidas (Part IV, Tit. XI,
LAW IV), reiterating the rationale 'No Mutuato amore invicem spoliarentur' the Pandects
(Bk, 24, Titl. 1, De donat, inter virum et uxorem); then there is very reason to apply the
same prohibitive policy to persons living together as husband and wife without the benefit
of nuptials. For it is not to be doubted that assent to such irregular connection for thirty
years bespeaks greater influence of one party over the other, so that the danger that the
law seeks to avoid is correspondingly increased. Moreover, as already pointed out by
Ulpian (in his lib. 32 ad Sabinum, fr. 1), 'it would not be just that such donations should
subsist, lest the condition 6f those who incurred guilt should turn out to be better.' So long
BENEFICIARIES (FULL TEXT)

as marriage remains the cornerstone of our family law, reason and morality alike demand
that the disabilities attached to marriage should likewise attach to concubinage.

It is hardly necessary to add that even in the absence of the above pronouncement, any
other conclusion cannot stand the test of scrutiny. It would be to indict the frame of the
Civil Code for a failure to apply a laudable rule to a situation which in its essentials cannot
be distinguished. Moreover, if it is at all to be differentiated the policy of the law which
embodies a deeply rooted notion of what is just and what is right would be nullified if such
irregular relationship instead of being visited with disabilities would be attended with
benefits. Certainly a legal norm should not be susceptible to such a reproach. If there is
every any occasion where the principle of statutory construction that what is within the
spirit of the law is as much a part of it as what is written, this is it. Otherwise the basic
purpose discernible in such codal provision would not be attained. Whatever omission
may be apparent in an interpretation purely literal of the language used must be remedied
by an adherence to its avowed objective.

4. We do not think that a conviction for adultery or concubinage is exacted before the
disabilities mentioned in Article 739 may effectuate. More specifically, with record to the
disability on "persons who were guilty of adultery or concubinage at the time of the
donation," Article 739 itself provides: ñé+.£ªwph!1

In the case referred to in No. 1, the action for declaration of nullity may be brought by the
spouse of the donor or donee; and the guilty of the donee may be proved by
preponderance of evidence in the same action.

The underscored clause neatly conveys that no criminal conviction for the offense is a
condition precedent. In fact, it cannot even be from the aforequoted provision that a
prosecution is needed. On the contrary, the law plainly states that the guilt of the party
may be proved "in the same acting for declaration of nullity of donation. And, it would be
sufficient if evidence preponderates upon the guilt of the consort for the offense indicated.
The quantum of proof in criminal cases is not demanded.

In the caw before Us, the requisite proof of common-law relationship between the insured
and the beneficiary has been conveniently supplied by the stipulations between the
parties in the pre-trial conference of the case. It case agreed upon and stipulated therein
that the deceased insured Buenaventura C. Ebrado was married to Pascuala Ebrado with
whom she has six legitimate children; that during his lifetime, the deceased insured was
living with his common-law wife, Carponia Ebrado, with whom he has two children. These
stipulations are nothing less than judicial admissions which, as a consequence, no longer
require proof and cannot be contradicted. 8 A fortiori, on the basis of these admissions,
a judgment may be validly rendered without going through the rigors of a trial for the sole
purpose of proving the illicit liaison between the insured and the beneficiary. In fact, in
that pretrial, the parties even agreed "that a decision be rendered based on this
agreement and stipulation of facts as to who among the two claimants is entitled to the
policy."
BENEFICIARIES (FULL TEXT)

ACCORDINGLY, the appealed judgment of the lower court is hereby affirmed. Carponia
T. Ebrado is hereby declared disqualified to be the beneficiary of the late Buenaventura
C. Ebrado in his life insurance policy. As a consequence, the proceeds of the policy are
hereby held payable to the estate of the deceased insured. Costs against Carponia T.
Ebrado.

SO ORDERED.