BUKIDNON STATE UNIVERSITY

COLLEGE OF LAW
MALAYBALAY CITY, BUKIDNON

Francisca Isabela A. Mojica

Commercial Law Review

INSURANCE LAW

I.

Pedro and Susan were married on January 4, 2020 in Malaybalay City, Bukidnon. A few months
thereafter, Pedro took out a life insurance policy on the life of Susan. In the life insurance policy, Pedro
is the sole beneficiary indicated. On January 4, 2021, Susan died of illness in Malaybalay City
Hospital. After the internment of Susan, Pedro notified the insurance carrier of the demise of his wife
and demanded that the insurance proceeds be paid to him.
a. The insurance carrier notified Pedro that they cannot pay the insurance proceeds to him. Is
the insurance carrier correct? Why? Explain
Answer: The insurance carrier is wrong. Pedro is not prohibited by law to insure the life of
his wife Susan and making himself the beneficiary.
Section 10 of RA 10607 provides that, every person has an insurable interest in the
life and health: (a) Of himself, of his spouse and of his children; (b) Of any person on
whom he depends wholly or in part for education or support, or in whom he has a
pecuniary interest; (c) Of any person under a legal obligation to him for the payment
of money, or respecting property or services, of which death or illness might delay or
prevent the performance; and (d) Of any person upon whose life any estate or interest
vested in him depends.
In the given facts, Pedro has an insurable interest on the life of his wife Susan.
Thus, Pedro may demand the insurance proceeds of his wife’s life insurance.

b. Would your answer be the same if Pedro and Susan were just common-law husband and
wife? Why? Explain.
Answer: No, my answer would not be the same. If Pedro and Susan are just common-law-
spouses, Pedro cannot be a beneficiary on the life insurance of Susan because this is
against public policy.
Under Article 2012 of the Civil Code, "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 a donation to him. 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; 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, descendants or ascendants by reason of his office.

c. Suppose Pedro is married, and lives happily with his wife [Laura] and their children in a
conjugal home in Casisang, Malaybalay City, and Susan is just a "KABIT" of Pedro, what
would be your answer? Why? Explain.
Answer: My answer would be the same. The life insurance contract would be against morals
and public policy. Thus, Pedro cannot be a beneficiary on the life insurance of
Susan.
Article 2012 of the Civil Code still applies which states that, "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 a donation to
him.”

П.
Carlito is the family driver of Joe Sobbre. Carlito, however, is not a regular driver who reports every
working day to drive and conduct Joe Sobbre or his family to the market, church or elsewhere. Joe
Sobbre, on December 2, 2020, took out a "term life insurance policy" on the life of Carlito with Joe
Sobbre as the beneficiary. On the eve of the New Year, 2020 - 2021, Carlito drove Joe Sobbre and his
family to Luxe Hotel in Cagayan De Oro City where the Sobbres will spend and celebrate new year.
Joe Sobbre allowed Carlito to return home to Malaybalay City and instructed him to just return on
January 3, 2021 to pick them up at the Luxe Hotel to take them, back to Malaybalay City. Carlito left
Luxe Hotel and drove back towards Bukidnon. On the way to Malaybalay City, he passed by the house
of his relatives in Ala-e, Manolo Fortich, Bukidnon and had an early celebration of the coming New
Year with his relatives thereat. Carlito was mindful with his time that he wanted to spend New Year's
eve with his family in Malaybalay City. At 9:00pm, he left Ala-e and drove immediately towards
Malaybalay City. A few minutes later, Carlito on board the vehicle he was driving, overshot a blind
curve at the Mangima roadway. Carlito did not survive the accident.
а. A few days after, Joe Sobbre went to the insurance carrier and collected the proceeds of the
insurance policy on the life of Carlito. Is Joe Sobbre a legal and proper beneficiary on the life of
Carlito?
Answer: No Joe Sobbre is not a legal and proper beneficiary on the life of Carlito. This is a
question of insurable interest. Section 10 of RA 10607 shall apply. It provides that, every
person has an insurable interest in the life and health: (a) Of himself, of his spouse and of
his children; (b) Of any person on whom he depends wholly or in part for education or
support, or in whom he has a pecuniary interest; (c) Of any person under a legal
obligation to him for the payment of money, or respecting property or services, of which
death or illness might delay or prevent the performance; and (d) Of any person upon
whose life any estate or interest vested in him depends.
Based on the given facts, Joe Sobbre is not economically dependent nor has no
pecuniary interest on the life of Carlito. Thus, Joe cannot be a legal and proper
beneficiary.

b. Upon learning of Joe Sobbre's collecting the insurance proceeds on the life of Carlito,
Carlito's wife went to court and sued Joe Sobbre and the insurance carrier. The wife is now
claiming the insurance proceeds arguing that Joe Sobbre is not qualified to be a beneficiary on
the life of Carlito. The wife demands and insists that the insurance proceeds be delivered to her.
Is Carlito' s wife correct? Why? Explain.
Answer: No Carlito’s wife is not correct. Although she has an insurable interest on the life
of his husband Carlito, she was not the one who insured her husband. She did not take
any part in paying the premium of the insurance. Thus, she does not have any claim on
the insurance proceeds.