Part VII.
Persons Entitled to recover on the policy and conditions to recovery
A. Beneficiary
"Section 11. The insured shall have the right to
change the beneficiary he designated in the
policy, unless he has expressly waived this right
in said policy. Notwithstanding the foregoing, in
the event the insured does not change the
beneficiary during his lifetime, the designation
shall be deemed irrevocable.
"Section 12. The interest of a beneficiary in a
life insurance policy shall be forfeited when the
beneficiary is the principal, accomplice, or
accessory in willfully bringing about the death
of the insured. In such a case, the share
forfeited shall pass on to the other
beneficiaries, unless otherwise disqualified. In
the absence of other beneficiaries, the proceeds
shall be paid in accordance with the policy
contract. If the policy contract is silent, the
proceeds shall be paid to the estate of the
insured.
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.
Section 56. When the description of the insured
in a policy is so general that it may comprehend
any person or any class of persons, only he who
can show that it was intended to include him,
can claim the benefit of the policy.
Section 57. A policy may be so framed that it
will inure to the benefit of whomsoever, during
the continuance of the risk, may become the
owner of the interest insured.
B. Limitations on the appointment of beneficiary
Art. 2012. Any person who is forbidden from
receiving any donation under Article 739 cannot
be named beneficiary of a life insurance policy
by the person who cannot make any donation
to him, according to said article.
Art. 739. The following donations shall be void:
1
(1) Those made between persons who were
guilty of adultery or concubinage at the time of
the donation;
(2) Those made between persons found guilty
of the same criminal offense, in consideration
thereof;
(3) Those made to a public officer or his wife,
descedants and 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 donor and donee may be proved by
preponderance of evidence in the same action
C. Rule when insurance if made by partner or
part owner
Section 54. When an insurance contract is
executed with an agent or trustee as the
insured, the fact that his principal or beneficiary
is the real party in interest may be indicated by
describing the insured as agent or trustee, or by
other general words in the policy
D. Rule when insurance if made by partner or
part owner
Section 55. To render an insurance effected by
one partner or part-owner, applicable to the
interest of his co-partners or other part-owners,
it is necessary that the terms of the policy
should be such as are applicable to the joint or
common interest.
E. Loss
TITLE 9
LOSS
"Section 85. An agreement not to transfer the
claim of the insured against the insurer after the
loss has happened, is void if made before the
loss except as otherwise provided in the case of
life insurance.
Part VII. Persons Entitled to recover on the policy and conditions to recovery
"Section 86. Unless otherwise provided by the
policy, an insurer is liable for a loss of which a
peril insured against was the proximate cause,
although a peril not contemplated by the
contract may have been a remote cause of the
loss; but he is not liable for a loss of which the
peril insured against was only a remote cause.
"Section 87. An insurer is liable where the thing
insured is rescued from a peril insured against
that would otherwise have caused a loss, if, in
the course of such rescue, the thing is exposed
to a peril not insured against, which
permanently deprives the insured of its
possession, in whole or in part; or where a loss
is caused by efforts to rescue the thing insured
from a peril insured against.
"Section 88. Where a peril is especially excepted
in a contract of insurance, a loss, which would
not have occurred but for such peril, is thereby
excepted although the immediate cause of the
loss was a peril which was not excepted.
"Section 89. An insurer is not liable for a loss
caused by the willful act or through the
connivance of the insured; but he is not
exonerated by the negligence of the insured, or
of the insurance agents or others.
"TITLE 10
"NOTICE OF LOSS
"Section 90. In case of loss upon an insurance
against fire, an insurer is exonerated, if written
notice thereof be not given to him by an
insured, or some person entitled to the benefit
of the insurance, without unnecessary delay.
For other non-life insurance, the Commissioner
may specify the period for the submission of the
notice of loss.
"Section 91. When a preliminary proof of loss is
required by a policy, the insured is not bound to
give such proof as would be necessary in a court
of justice; but it is sufficient for him to give the
best evidence which he has in his power at the
time.
2
"Section 92. All defects in a notice of loss, or in
preliminary proof thereof, which the insured
might remedy, and which the insurer omits to
specify to him, without unnecessary delay, as
grounds of objection, are waived.
"Section 93. Delay in the presentation to an
insurer of notice or proof of loss is waived if
caused by any act of him, or if he omits to take
objection promptly and specifically upon that
ground.
"Section 94. If the policy requires, by way of
preliminary proof of loss, the certificate or
testimony of a person other than the insured, it
is sufficient for the insured to use reasonable
diligence to procure it, and in case of the refusal
of such person to give it, then to furnish
reasonable evidence to the insurer that such
refusal was not induced by any just grounds of
disbelief in the facts necessary to be certified or
testified.
"Section 175. No policy of fire insurance shall
be pledged, hypothecated, or transferred to any
person, firm or company who acts as agent for
or otherwise represents the issuing company,
and any such pledge, hypothecation, or transfer
hereafter made shall be void and of no effect
insofar as it may affect other creditors of the
insured.
Section 184. A policy of insurance upon life or
health may pass by transfer, will or succession
to any person, whether he has an insurable
interest or not, and such person may recover
upon it whatever the insured might have
recovered.
"Section 185. Notice to an insurer of a transfer
or bequest thereof is not necessary to preserve
the validity of a policy of insurance upon life or
health, unless thereby expressly required.
Part VII. Persons Entitled to recover on the policy and conditions to recovery
CASES
Bonifacio Bros. v. Mora
20 SCRA 262
Facts:
> Enrique Mora mortgaged his Odlsmobile
sedan car to HS Reyes Inc. with the condition
that Mora would insure the car with HS Reyes
as beneficiary.
> The car was then insured with State
Insurance Company and the policy delivered to
Mora.
> During the effectivity of the insurance
contract, the car figured in an accident. The
company then assigned the accident to an
insurance appraiser for investigation and
appraisal of the damage.
> Mora without the knowledge and consent of
HS Reyes, authorized Bonifacio Bros to fix the
car, using materials supplied by the Ayala Auto
Parts Company.
> For the cost of Labor and materials, Mora was
billed P2,102.73. The bill was sent to the
insurer’s appraiser. The insurance company
drew a check in the amount of the insurance
proceeds and entrusted the check to its
appraiser for delivery to the proper party.
> The car was delivered to Mora without the
consent of HS Reyes, and without payment to
Bonifacio Bros and Ayala.
> Upon the theory that the insurance proceeds
should be directly paid to them, Bonifacio and
Ayala filed a complaint against Mora and the
insurer with the municipal court for the
collection of P2,102.73.
> The insurance company filed its answer with
a counterclaim for interpleader, requiring
Bonifacio and HS Reyes to interplead in order to
determine who has a better right to the
proceeds.
3
Issue:
Whether or not there is privity of contract
between Bonficacio and Ayala on one hand and
State Insurance on the other.
Held:
NONE.
It is fundamental that contracts take effect only
between the parties thereto, except in some
specific instance provided by law where the
contract contains some stipulation in favor of a
third person. Such stipulation is known as a
stipulation pour autrui; or a provision in favor of
a third person not a party to the contract.
Under this doctrine, a third person is ed to avail
himself of a benefit granted to him by the terms
of the contract, provided that the contracting
parties have clearly and deliberately conferred a
favor upon such person. Consequently, a third
person NOT a party to the contract has NO
action against the aprties thereto, and cannot
generally demand the enforcement of the
same.
The question of whether a third person has an
enforceable interest in a contract must be
settled by determining whether the contracting
parties intended to tender him such an interest
by deliberately inserting terms in their
agreement with the avowed purpose of
conferring favor upon such third person. IN this
connection, this court has laid down the rule
that the fairest test to determine whether the
interest of a 3rd person in a contract is a
stipulation pour autrui or merely an incidental
interest, is to rely upon the intention of the
parties as disclosed by their contract.
In the instant case the insurance contract does
not contain any words or clauses to disclose an
intent to give any benefit to any repairmen or
material men in case of repair of the car in
question. The parties to the insurance contract
omitted such stipulation, which is a
circumstance that supports the said conclusion.
On the other hand, the "loss payable" clause of
the insurance policy stipulates that "Loss, if any,
is payable to H.S. Reyes, Inc." indicating that it
Part VII. Persons Entitled to recover on the policy and conditions to recovery
was only the H.S. Reyes, Inc. which they
intended to benefit.
A policy of insurance is a distinct and
independent contract between the insured and
insurer, and third persons have no right either
in a court of equity, or in a court of law, to the
proceeds of it, unless there be some contract of
trust, expressed or implied, by the insured and
third person. In this case, no contract of trust,
express or implied. In this case, no contract of
trust, expressed or implied exists. We,
therefore, agree with the trial court that no
cause of action exists in favor of the appellants
in so far as the proceeds of insurance are
concerned. The appellant's claim, if at all, is
merely equitable in nature and must be made
effective through Enrique Mora who entered
into a contract with the Bonifacio Bros Inc. This
conclusion is deducible not only from the
principle governing the operation and effect of
insurance contracts in general, but is clearly
covered by the express provisions of section 50
of the Insurance Act (now Sec. 53).
The policy in question has been so framed that
"Loss, if any, is payable to H. S. Reyes, Inc."
which unmistakably shows the intention of the
parties.
Insular Life vs. Ebrado
80 SCRA 181
Facts:
> Buenaventura Ebrado was issued al life plan
by Insular Company. He designated Capriona as
his beneficiary, referring to her as his wife.
> The insured then died and Carponia tried to
claim the proceeds of the said plan.
> She admitted to being only the common law
wife of the insured.
> Pascuala, the legal wife, also filed a claim
asserting her right as the legal wife. The
company then filed an action for interpleader.
4
Issue:
Whether or not the common law wife named as
beneficiary can collect the proceeds.
Held:
NO.
The civil code prohibitions on donations made
between persons guilty of adulterous
concubinage applies to insurance contracts. On
matters not specifically provided for by the
Insurance Law, the general rules on Civil law
shall apply. A life insurance policy is no
different from a civil donation as far as the
beneficiary is concerned, since both are
founded on liberality.
Why was the common law wife not ed to collect
the proceeds despite the fact that she was the
beneficiary? Isn’t this against Sec. 53?
It is true that SC went against Sec. 53. However,
Sec. 53 is NOT the only provision that the SC
had to consider. Art. 739 and 2012 of CC
prohibit persons who are guilty of adultery or
concubinage from being beneficiaries of the life
insurance policies of the persons with whom
they committed adultery or concubinage. If the
SC used only Sec. 53, it would have gone against
Art. 739 and 2012.
Vda. De Consuegra v. GSIS - Retirement
Insurance Benefits
37 SCRA 315
Facts:
> Jose Consuegra was employed as a shop
foreman of the Office of the District Engineer in
Surigao Del Norte.
> When he was still alive, he contracted two
marriages:
o First – Rosario Diaz; 2 children = Jose
Consuegra Jr. and Pedro but both predeceased
him
Part VII. Persons Entitled to recover on the policy and conditions to recovery
o 2nd – Basilia Berdin; 7 children. (this was
contracted in GF while the first marriage
subsisted)
> Being a GSIS member when he died, the
proceeds of his life insurance were paid by the
GSIS to Berdin and her children who were the
beneficiaries named in the policy.
> Since he was in the gov’t service for 22.5028
years, he was entitled to retirement insurance
benefits, for which no beneficiary was
designated.
> Both families filed their claims with the GSIS,
which ruled that the legal heirs were Diaz who
is entitled to one-half or 8/16 of the retirement
benefits and Berdin and her children were
entitled to the remaining half, each to receive
an equal share of 1/16.
> Berdin went to CFI on appeal. CFI affirmed
GSIS decision.
Issue:
To whom should the retirement insurance
benefits be paid?
Held:
Both families are entitled to half of the
retirement benefits.
The beneficiary named in the life insurance
does NOT automatically become the beneficiary
in the retirement insurance. When Consuegra,
during the early part of 1943, or before 1943,
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 CA 186 was amended by RA
660 on June 18, 1951.
Sec. 11(b) clearly indicates that there is need for
the employee to file an application for
retirement insurance benefits when he
becomes a GSIS member and to state his
beneficiary. The life insurance and the
retirement insurance are two separate and
5
distinct systems of benefits paid out from 2
separate and distinct funds.
In case of failure to name a beneficiary in an
insurance policy, the proceeds will accrue to the
estate of the insured. And when there exists
two marriages, each family will be entitled to
one-half of the estate.
Go vs. Redfern, GR 47705, 25 April 1941
Note: Original decision in Spanish [Rough
translation]
Facts:
In October 1937, Edward K. Redfern obtained
an insurance policy against accidents from the
International Assurance Co, Ltd. On 31 August
1938, Redfern died from an accident. The
mother of the deceased, presenting the
necessary evidence of the death of Redfern,
sought to claim the proceeds of the insurance
policy from the insurance company. The
company, however, denied such claim, on the
ground that the insurance policy was amended
on 22 November 1937 to include another
beneficiary, Concordia Go. Hence, an action was
filed to determine who has the right to collect
the insurance proceeds of the deceased
Redfern. The mother claimed that the addition
of the co-beneficiary is illegal. Go, on her part,
alleged the contrary. The trial court ruled in
favor of Angela Redfern, the mother. Go
appealed.
Issue:
Whether the addition of Go’s name as co-
beneficiary can be allowed for her share in the
insurance proceeds
Held:
When designated in a policy, the beneficiary
acquires a right of which he cannot be deprived
of without his consent, unless the right has
been reserved specifically to the insured to
modify the policy. The same doctrine was
enunciated by the Court in the cases of Gercio
vs. Sun Life Assurance Co. of Canada (48 Phil.
55) and Insular Life vs. Suva (34 Off. Gaz. 861).
Thus, unless the insured has reserved
specifically the right to change or to modify the
Part VII. Persons Entitled to recover on the policy and conditions to recovery
policy, with respect to the beneficiary, said
policy constitutes an acquired right of the
beneficiary, which cannot be modified except
with the consent of the latter. Herein, it is
admitted that Redfern did not reserve expressly
his right to change or modify the policy. Change
implies the idea of an alteration. The addition of
Go's name as one of the beneficiaries of the
policy constitutes change as all addition is an
alteration. The addition of Go's name changed
the policy inasmuch as there are two
beneficiaries instead of one, and thus in effect
the original beneficiary cannot receive the full
amount of the policy. The Supreme Court
affirmed the appealed judgment in all of its
parts, with costs against Go.
Country Bankers Insurance Corp. v. Lianga Bay
and Community Multi-Purpose Cooperative
G.R.No. 136914, 25 January 2002, 308 SCRA
559
FACTS:
1. Respondent, Llanga Bay and Community
Multi-Purpose Cooperative, and petitioner
entered into a contract of fire insurance to
protect respondent’s stocks-in-trade against fire
loss, damage or liability for P200,000.00;
2. The respondent’s building was gutted in a fire
resulting in the total loss of the respondent’s
stocks-in-trade, pieces of furniture and fixtures,
equipment and records.
3. The petitioner denied the insurance claim on
the ground that the building was set on fire by
two (2) NPA rebels who wanted to obtain
canned goods, rice and medicines as provisions
for their comrades in the forest, and that such
loss was an excepted risk under paragraph No. 6
of the policy conditions of Fire Insurance Policy.
4. Paragraph 6 provides that the insurance does
not cover any loss or damage through or in
consequence of mutiny, riot, military or popular
uprising, insurrection, rebellion, revolution,
military or usurped power.
6
5. RTC – Found for the respondent; CA –
affirmed RTC’s decision
ISSUE:
Whether the stocks-in-trade were burned by
NPA rebels and thus an excepted risk under the
fire insurance policy.
HELD:
NO.
A party is bound by his own affirmative
allegations. This is a well-known postulate
echoed in Section 1 of Rule 131 of the Revised
Rules of Court. Each party must prove his own
affirmative allegations by the amount of
evidence required by law which in civil cases, as
in this case, is preponderance of evidence, to
obtain a favorable judgment. In the instant
case, the petitioner does not dispute that the
respondent’s stocks-in-trade were insured
against fire loss, damage or liability under Fire
Insurance Policy No. F- 1397 and that the
respondent lost its stocks-in-trade in a fire that
occurred on July 1, 1989, within the duration of
said fire insurance. The petitioner, however,
posits the view that the cause of the loss was an
excepted risk under the terms of the fire
insurance policy. Where a risk is excepted by
the terms of a policy which insures against
other perils or hazards, loss from such a risk
constitutes a defense which the insurer may
urge, since it has not assumed that risk, and
from this it follows that an insurer seeking to
defeat a claim because of an exception or
limitation in the policy has the burden of
proving that the loss comes within the purview
of the exception or limitation set up. If a proof is
made of a loss apparently within a contract of
insurance, the burden is upon the insurer to
prove that the loss arose from a cause of loss
which is excepted or for which it is not liable, or
from a cause which limits its liability. Stated
elsewise, since the petitioner in this case is
defending on the ground of non-coverage and
relying upon an exemption or exception clause
in the fire insurance policy, it has the burden of
proving the facts upon which such excepted risk
Part VII. Persons Entitled to recover on the policy and conditions to recovery
is based, by a preponderance of evidence. But
petitioner failed to do so. The Sworn
Statements of Jose Lomocso and Ernesto
Urbiztondo are inadmissible in evidence, for
being hearsay, inasmuch as they did not take
the witness stand and could not therefore be
cross-examined. The petitioner’s evidence to
prove its defense is sadly wanting and thus,
gives rise to its liability to the respondent under
Fire Insurance Policy No. F-1397.
Heirs of Maramag v. Maramag
G.R. No. 181132 , June 5, 2009
FACTS:
The case stems from a petition filed against
respondents with the RTC for revocation and/or
reduction of insurance proceeds for being void
and/or inofficious. 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)
and Great Pacific Life Assurance Corporation
(Grepalife) (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. 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; and that it released Odessa’s
share as she was of age, but withheld the
release of the shares of minors Karl Brian and
7
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. 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.
ISSUE:
Whether or not illegitimate children can be
beneficiaries in an insurance contract.
RULING:
Yes. Section 53 of the Insurance Code states
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.
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.The exception to this rule is a situation
where the insurance contract was intended to
benefit third persons who are not parties to the
Part VII. Persons Entitled to recover on the policy and conditions to recovery
same in the form of favorable stipulations or
indemnity. In such a case, third parties may
directly sue and claim from the insurer.

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, 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, or when the
designated beneficiary is disqualified by law to
receive the proceeds, that the insurance policy
proceeds shall redound to the benefit of the
estate of the insured.