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HEIRS OF MACARAMAG VS. DE GUZMAN, INSULAR LIFE, AND GREPALIFE
G.R. NO. 181132
JUNE 5, 2009


FACTS:

LM's surviving spouse and legitimate children filed a petition against the former's concubine, illegitimate children and two insurance companies for the revocation and/or reduction of insurance proceeds for being void and/or inofficious, with prayer for restraining order and injunctive relief.

According to the petitioners, LM's designation of his concubine as a beneficiary in his life insurance policies is void and therefore disqualified to receive any proceeds from the said policies.  Furthermore, the illegitimate children, also designated as beneficiaries, were entitled only to one-half of the legitime of the legitimate children, thus, the proceeds released to them were inofficious and should be reduced in order to satisfy first the legitime of the legal spouse and the legitimate children.

On the other hand, the two insurance companies claim that they already disqualified the concubine as a beneficiary in the policies having found out that she was not the legal wife of LM.  However, it also claimed that the legitimate family still has no right over the proceeds of the policies because they were not specifically designated as beneficiaries.  It was bound to honor the insurance policies designating the illegitimate children as beneficiaries pursuant to Section 53 of the Insurance Code.

ISSUE:

Are the proceeds of life insurance subject to the law on testate succession specifically the rules on legitime?

HELD:

NO. 

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. 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.

Petitioners are third parties to the insurance contracts and, thus, are not entitled to the proceeds thereof. Accordingly, the two insurance companies have no legal obligation to turn over the insurance proceeds to petitioners. The revocation of the concubine 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 LM’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 the concubine 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.


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