[G.R. No. L-2294. May 25, 1951.
] Commission, dated April 9, 1943, paid to the respondent the
FILIPINAS COMPAÑIA DE SEGUROS, Petitioner, v. CHRISTERN,
HUENEFELD & CO., INC., Respondent.
Ramirez & Ortigas for Petitioner.
Ewald Huenefeld for Respondent.
SYLLABUS
1. CORPORATIONS; NATIONALITY OF PRIVATE CORPORATION;
CONTROL TEST. — The nationality of a private corporation is
determined by the character or citizenship of its controlling
stockholders.
2. ID.; ID.; ID.; INTERNATIONAL LAW; EFFECT OF WAR. —
Where majority of the stockholders of a corporation were
German subjects, the corporation became an enemy
corporation upon the outbreak of the war between the United
States and Germany.
3. INSURANCE; TERMINATION OF POLICY OF PUBLIC ENEMY. —
As the Philippine Insurance Law (Act No. 2427, as amended), in
its section 8, provides that "anyone except a public enemy may
be insured," an insurance policy ceases to be allowable as soon
as an insured becomes a public enemy.
4. ID.; ID.; RETURN OF PREMIUMS UPON TERMINATION OF
POLICY BY REASON OF WAR. — Where an insurance policy
ceases to be effective by reason of war, which has made the
insured an enemy, the premiums paid for the period covered
by the policy from the date war is declared, should be returned.
DECISION
PARAS, C.J. :
On October 1, 1941, the respondent corporation, Christern,
Huenefeld & Co., Inc., after payment of corresponding
premium, obtained from the petitioner, Filipinas Cia. de
Seguros, fire policy No. 29333 in the sum of P100,000, covering
merchandise contained in a building located at No. 711 Roman
Street, Binondo, Manila. On February 27, 1942, or during the
Japanese military occupation, the building and insured
merchandise were burned. In due time the respondent
submitted to the petitioner its claim under the policy. The
salvaged goods were sold at public auction and, after deducting
their value, the total loss suffered by the respondent was fixed
at P92,650. The petitioner refused to pay the claim on the
ground that the policy in favor of the respondent had ceased to
be in force on the date the United States declared war against
Germany, the respondent corporation (though organized under
and by virtue of the laws of the Philippines) being controlled by
German subjects and the petitioner being a company under
American jurisdiction when said policy was issued on October
1, 1941. The petitioner, however, in pursuance of the order of
the Director of the Bureau of Financing, Philippine Executive
sum of P92,650 on April 19, 1943.
The present action was filed on August 6, 1946, in the Court of
First Instance of Manila for the purpose of recovering from the
respondent the sum of P92,650 above mentioned. The theory
of the petitioner is that the insured merchandise were burned
after the policy issued in 1941 in favor of the respondent
corporation had ceased to be effective because of the outbreak
of the war between the United States and Germany on
December 10, 1941, and that the payment made by the
petitioner to the respondent corporation during the Japanese
military occupation was under pressure. After trial, the Court of
First Instance of Manila dismissed the action without
pronouncement as to costs. Upon appeal to the Court of
Appeals, the judgment of the Court of First Instance of Manila
was affirmed, with costs. The case is now before us on appeal
by certiorari from the decision of the Court of Appeals.
The Court of Appeals overruled the contention of the petitioner
that the respondent corporation became an enemy when the
United States declared war against Germany, relying on English
and American cases which held that a corporation is a citizen of
the country or state by and under the laws of which it was
created or organized. It rejected the theory that the nationality
of a private corporation is determined by the character or
citizenship of its controlling stockholders.
There is no question that majority of the stockholders of the
respondent corporation were German subjects. This being so,
we have to rule that said respondent became an enemy
corporation upon the outbreak of the war between the United
States and Germany. The English and American cases relied
upon by the Court of Appeals have lost their force in view of
the latest decision of the Supreme Court of the United States in
Clark v. Uebersee Finanz Korporation, decided on December 8,
1947, 92 Law. Ed. Advance Opinions, No. 4, pp. 148-153, in
which the control test has been adopted. In "Enemy
Corporations" by Martin Domke, a paper presented to the
Second International Conference of the Legal Profession held at
The Hague (Netherlands) in August, 1948, the following
enlightening passages appear
"Since World War I, the determination of enemy nationality of
corporations has been discussed in many countries, belligerent
and neutral. A corporation was subject to enemy legislation
when it was controlled by enemies, namely managed under the
influence of individuals or corporations themselves considered
as enemies. It was the English courts which first in the Daimler
case applied this new concept of "piercing the corporate veil’,
which was adopted by the Peace Treaties of 1919 and the
Mixed Arbitral Tribunals established after the First World War.
"The United States of America did not adopt the control test
during the First World War. Courts refused to recognize the
concept whereby American-registered corporations could be
considered as enemies and thus subject to domestic legislation
and administrative measures regarding enemy property.
"World War II revived the problem again. It was known that
German and other enemy interests were cloaked by domestic
corporation structure. It was not only by legal ownership of
shares that a material influence could be exercised on the
management of the corporation but also by long-term loans
and other factual situations. For that reason, legislation on
enemy property enacted in various countries during World War
II adopted by statutory provisions the control test and
determined, to various degrees, the incidents of control. Court
decisions were rendered on the basis of such newly enacted
statutory provisions in determining enemy character of
domestic corporation.
"The United States did not, in the amendments of the Trading
with the Enemy Act during the last war, include as did other
legislations, the application of the control test and again, as in
World War I, courts refused to apply this concept whereby the
enemy character of an American or neutral-registered
corporation is determined by the enemy nationality of the
controlling stockholders.
"Measures of blocking foreign funds, the so called freezing
regulations, and other administrative practice in the treatment
of foreign-owned property in the United States allowed to a
large degree the determination of enemy interests in domestic
corporations and thus the application of the control test. Court
decisions sanctioned such administrative practice enacted
under the First War Powers Act of 1941, and more recently, on
December 8, 1947, the Supreme Court of the United States
definitely approved of the control theory. In Clark v. Uebersee
Finanz Korporation, A. G., dealing with a Swiss corporation
allegedly controlled by German interests, the Court said: ’The
property of all foreign interest was placed within the reach of
the vesting power (of the Alien Property Custodian) not to
appropriate friendly or neutral assets but to reach enemy
interests which masqueraded under those innocent fronts. . . .
The power of seizure and vesting was extended to all property
of any foreign country or national so that no innocent
appearing device could become a Trojan horse.’"
It becomes unnecessary, therefore, to dwell at length on the
authorities cited in support of the appealed decision. However,
we may add that, in Haw Pia v. China Banking Corporation, * 45
Off. Gaz., (Supp. 9) 229, we already held that the China Banking
Corporation came within the meaning of the word "enemy" as
used in the Trading with the Enemy Acts of civilized countries
not only because it was incorporated under the laws of an
enemy country but because it was controlled by enemies.
The Philippine Insurance Law (Act No. 2427, as amended), in
section 8, provides that "anyone except a public enemy may be
insured." It stands to reason that an insurance policy ceases to
be allowable as soon as an insured becomes a public enemy.
"Effect of war, generally. — All intercourse between citizens of
belligerent powers which is inconsistent with a state of war is
prohibited by the law of nations. Such prohibition includes all
negotiations, commerce, or trading with the enemy; all acts
which will increase, or tend to increase, its income or
resources; all acts of voluntary submission to it; or of receiving
its protection; also, all acts concerning the transmission of
money or goods; and all contracts relating thereto are thereby
nullified. It further prohibits insurance upon trade with or by
the enemy, and upon the life or lives of aliens engaged in
service with the enemy; this for the reason that the subjects of
one country cannot be permitted to lend their assistance to
protect by insurance the commerce or property of belligerent,
alien subjects, or to do anything detrimental to their country’s
interest. The purpose of war is to cripple the power and
exhaust the resources of the enemy, and it is inconsistent that
one country should destroy its enemy’s property and repay in
insurances the value of what has been so destroyed, or that it
should in such manner increase the resources of the enemy, or
render it aid, and the commencement of war determines, for
like reasons, all trading intercourse with the enemy, which prior
thereto may have been lawful. All individuals, therefore, who
compose the belligerent powers, exist, as to each other, in a
state of utter exclusion, and are public enemies." (6 Couch, Cyc.
of Ins. Law, pp. 5352-5353.)
"In the case of an ordinary fire policy, which grants insurance
only from year to year, or for some other specified term it is
plain that when the parties become alien enemies, the
contractual tie is broken and the contractual rights of the
parties, so far as not vested, lost." (Vance, the Law on
Insurance, Sec. 44, p. 112.)
The respondent having become an enemy corporation on
December 10, 1941, the insurance policy issued in its favor on
October 1, 1941, by the petitioner (a Philippine corporation)
had ceased to be valid and enforceable, and since the insured
goods were burned after December 10, 1941, and during the
war, the respondent was not entitled to any indemnity under
said policy from the petitioner. However, elementary rules of
justice (in the absence of specific provision in the Insurance
Law) require that the premium paid by the respondent for the
period covered by its policy from December 11, 1941, should
be returned by the petitioner.
The Court of Appeals, in deciding the case, stated that the main
issue hinges on the question of whether the policy in question
became null and void upon the declaration of war between the
United States and Germany on December 10, 1941, and its
judgment in favor of the respondent corporation was
predicated on its conclusion that the policy did not cease to be
in force. The Court of Appeals necessarily assumed that, even if
the payment by the petitioner to the respondent was
involuntary, its action is not tenable in view of the ruling on the
validity of the policy. As a matter of fact, the Court of Appeals
held that "any intimidation resorted to by the appellee was not
unjust but the exercise of its lawful right to claim for and
receive the payment of the insurance policy," and that the
ruling of the Bureau of Financing to the effect that "the
appellee was entitled to payment from the appellant, was well
founded." Factually, there can be no doubt that the Director of
the Bureau of Financing, in ordering the petitioner to pay the
claim of the respondent, merely obeyed the instructions of the
Japanese Military Administration, as may be seen from the
following: "In view of the findings and conclusion of this office
contained in its decision on Administrative Case dated February
9, 1943 copy of which was sent to your office and the
concurrence therein of the Financial Department of the
Japanese Military Administration, and following the
instructions of said authority, you are hereby ordered to pay
the claim of Messrs. Christern, Huenefeld & Co., Inc. The
payment of said claim, however, should be made by means of
crossed check." (Italics supplied.) .
It results that the petitioner is entitled to recover what was
paid to the respondent under the circumstances of this case.
However, the petitioner will be entitled to recover only the
equivalent, in actual Philippine currency, of P92,650 paid on
April 19, 1943, in accordance with the rate fixed in the
Ballantyne scale.
Wherefore, the appealed decision is hereby reversed and the
respondent corporation is ordered to pay to the petitioner the
sum of P77,208.39, Philippine currency, less the amount of the
premium, in Philippine currency, that should be returned by
the petitioner for the unexpired term of the policy in question,
beginning December 11, 1941. Without costs. So ordered.
[G.R. No. L-21642. July 30, 1966.]
SOCIAL SECURITY SYSTEM, Petitioner-Appellee, v. CANDELARIA
D. DAVAC, ET AL., Respondents, LOURDES TUPLANO,
Respondent-Appellant.
J. Ma. Francisco and N. G. Bravo for Respondent-Appellant.
Solicitor General Arturo A. Alafriz, Solicitor Camilo D. Quiason
and E. T. Duran, for Petitioner-Appellee.
SYLLABUS
1. SOCIAL SECURITY SYSTEM; NATURE OF BENEFITS UNDER THE
SOCIAL SECURITY ACT; VALIDLY DESIGNATED BENEFICIARY
ENTITLED TO BENEFITS. — The benefit receivable under the
Social Security Act is in the nature of a special privilege or an
arrangement secured by the law, pursuant to the policy of the
State to provide social security to the workingmen. The
amounts that may thus be received cannot be considered as
property earned by the member during his lifetime, and, hence,
do not form part of the properties of the conjugal partnership
or of the estate of the said member. They are disbursed from a
public special fund created by Congress pursuant to the
declared policy of the Republic "to develop, establish gradually
and perfect a social security system which . . . shall provide
protection against the hazards of disability, sickness, old age
and death." (Section 1, Republic Act No. 1792.) Consequently, if
there is a named beneficiary and the designation is not invalid,
it is not the heirs of the employee who are entitled to receive
the benefits, unless they are the designated beneficiaries
themselves. It is only when there is no designated beneficiary
or when the designation is void that the laws of succession
become applicable. The Social Security Act is not a law of
succession. (See Tecson v. Social Security System, G. R. No. L-
15798, December 23, 1961.)
DECISION
BARRERA, J.:
This is an appeal from the resolution of the Social Security
Commission declaring respondent Candelaria Davac as the
person entitled to receive the death benefits payable for the
death of Petronilo Davac.
The facts of the case as found by the Social Security
Commission, briefly are: The late Petronilo Davac, a former
employee of Lianga Bay Logging Co. Inc. became a member of
the Social Security System (SSS for short) on September 1,
1957. As such member, he was assigned SS I.D. No. 08-007137.
In SSS Form E-1 (Member’s Record) which he accomplished and
filed with the SSS on November 21, 1957, he designated
respondent Candelaria Davac as his beneficiary and indicated
his relationship to her as that of "wife." He died on April 5,
1959 and, thereupon, each of the respondents (Candelaria
Davac and Lourdes Tuplano) filed their claims for death benefit
with the SSS. It appears from their respective claims and the
documents submitted in support thereof, that the deceased
contracted two marriages, the first, with claimant Lourdes
Tuplano on August 29, 1946, who bore him a child, Romeo
Davac? and the second, with claimant Candelaria Davac on
January 18, 1949, with whom he had a minor daughter,
Elizabeth Davac. Due to their conflicting claims, the processing
thereof was held in abeyance, whereupon the SSS filed this
petition praying that respondents be required to interplead and
litigate between themselves their conflicting claims over the
death benefits in question.
On February 25, 1963, the Social Security Commission issued
the resolution referred to above. Not satisfied with the said
resolution, respondent Lourdes Tuplano brought to us the
present appeal.
The only question to be determined herein is whether or not
the Social Security Commission acted correctly in declaring
respondent Candelaria Davac as the person entitled to receive
the death benefits in question.
Section 13, Republic Act No. 1161, as amended by Republic Act
No. 1792, in force at the time of Petronilo Davac’s death on
April 5, 1959, provides
"SEC. 13. Upon the covered employee’s death or total and
permanent disability under such conditions as the Commission
may define, before becoming eligible for retirement and if
either such death or disability is not compensable under the
Workmen’s Compensation Act, he or in case of his death, his
beneficiaries, as recorded by his employer shall be entitled to
the following benefit: . . ." (Emphasis supplied.)
Under this provision, the beneficiary "as recorded" by the
employee’s employer is the one entitled to the death benefits.
In the case of Tecson v. Social Security System, L-15798,
December 28, 1961), this Court, construing said Section 13, said
"It may be true that the purpose of the coverage under the
Social Security System is protection of the employee as well as
of his family, but this purpose or intention of the law cannot be
enforced to the extent of contradicting the very provisions of
said law as contained in Section 13, thereof, . . . When the
provisions of a law are clear and explicit, the courts can do
nothing but apply its clear and explicit provisions (Velasco v.
Lopez, 1 Phil. 720; Caminetti v. U.S., 242 U.S. 470, 61 L. ed.
442)."
But appellant contends that the designation herein made in the
person of the second and, therefore, bigamous wife is null and
void, because (1) it contravenes the provisions of the Civil
Code, and (2) it deprives the lawful wife of her share in the
conjugal property as well as of her own and her child’s legitime
in the inheritance.
As to the first point, appellant argues that a beneficiary under
the Social Security System partakes of the nature of a
beneficiary in a life insurance policy and, therefore, the same
qualifications and disqualifications should be applied.
Article 2012 of the New Civil Code provides
"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."
And, Article 739 of the same Code prescribes
"ART. 739. The following donations shall be void
"(1) Those made between persons who were guilty of adultery
or concubinage at the time of the donation;
x x x "Sec. 15. Non-transferability of benefit. — The System shall pay
Without deciding whether the naming of a beneficiary of the
benefits accruing from membership in the Social Security
System is a donation, or that it creates a situation analogous to
the relation of an insured and the beneficiary under a life
insurance policy, it is enough, for the purpose of the instant
case, to state that the disqualification mentioned in Article 739
is not applicable to herein appellee Candelaria Davac because
she was not guilty of concubinage, there being no proof that
she had knowledge of the previous marriage of her husband
Petronilo. 1
Regarding the second point raised by appellant, the benefits
accruing from membership in the Social Security System do not
form part of the properties of the conjugal partnership of the
covered member. They are disbursed from a public special fund
created by Congress in pursuance to the declared policy of the
Republic "to develop, establish gradually and perfect a social
security system which . . . shall provide protection against the
hazards of disability, sickness, old age and death." 2
The sources of this special fund are the covered employee’s
contribution (equal to 2-1/2 per cent of the employee’s
monthly compensation); 3 the employer’s contribution
(equivalent to 3-1/2 per cent of the monthly compensation of
the covered employee); 4 and the Government contribution
which consists in yearly appropriation of public funds to assure
the maintenance of an adequate working balance of the funds
of the System. 5 Additionally, Section 21 of the Social Security
Act, as amended by Republic Act 1792, provides
"Sec. 21. Government Guarantee. The benefits prescribed in
this Act shall not be diminished and to guarantee said benefits
the Government of the Republic of the Philippines accepts
general responsibility for the solvency of the System."
From the foregoing provisions, it appears that the benefit
receivable under the Act is in the nature of a special privilege or
an arrangement secured by the law pursuant to the policy of
the State to provide social security to the workingmen. The
amounts that may thus be received cannot be considered as
property earned by the member during his lifetime. His
contribution to the fund, it may be noted, constitutes only an
insignificant portion thereof. Then, the benefits are specifically
declared not transferable, 6 and exempted from tax, legal
processes, and lien. 7 Furthermore, in the settlement of claims
thereunder, the procedure to be observed is governed not by
the general provisions of law, but by rules and regulations
promulgated by the Commission. Thus, if the money is payable
to the estate of a deceased member, it is the Commission, not
the probate or regular court that determines the person or
persons to whom it is payable. 8 That the benefits under the
Social Security Act are not intended by the lawmaking body to
form part of the estate of the covered members may be
gathered from the subsequent amendment made to Section 15
thereof, as follows
the benefits provided for in this Act to such person as may be
entitled thereto in accordance with the provisions of this Act.
Such benefits are not transferable and no power of attorney or
other document executed by those entitled thereto in favor of
any agent, attorney, or any other individual for the collection
thereof in their behalf shall be recognized except when they
are physically and legally unable to collect personally such
benefits: Provided, however, That in the case of death benefits,
if no beneficiary has been designated or the designation
thereof is void, said benefits shall be paid to the legal heirs in
accordance with the laws of succession." (Rep. Act 2658,
amending Rep. Act 1161.)
In short, if there is a named beneficiary and the designation is
not invalid (as it is not so in this case), it is not the heirs of the
employee who are entitled to receive the benefits (unless they
are the designated beneficiaries themselves). It is only when
there is no designated beneficiaries or when the designation is
void, that the laws of succession are applicable. And we have
already held that the Social Security Act is not a law of
succession. 9
WHEREFORE, in view of the foregoing considerations, the
resolution of the Social Security Commission appealed from is
hereby affirmed, with costs against the appellant. So ordered.
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 February,
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, Carponia 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.
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:
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 memoranda 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:
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 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 is not
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 affirm 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:
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;
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 beneficiary 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:
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 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.
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."

It is hardly necessary to add that even in the absence of the ACCORDINGLY, the appealed judgment of the lower court is
above pronouncement, any other conclusion cannot stand the hereby affirmed. Carponia T. Ebrado is hereby declared
test of scrutiny. It would be to indict the frame of the Civil Code disqualified to be the beneficiary of the late Buenaventura C.
for a failure to apply a laudable rule to a situation which in its Ebrado in his life insurance policy. As a consequence, the
essentials cannot be distinguished. Moreover, if it is at all to be proceeds of the policy are hereby held payable to the estate of
differentiated the policy of the law which embodies a deeply the deceased insured. Costs against Carponia T. Ebrado.
rooted notion of what is just and what is right would be
nullified if such irregular relationship instead of being visited SO ORDERED.
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:

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