INSURABLE INTEREST

1.

Common law wife may not be a beneficiary

SEC. 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.
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;
(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.
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: +.wph!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 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: +.wph!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 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: +.wph!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;
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: +.
wph!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 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: +.wph!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 thanjudicial
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."
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.
2.

Beneficiaries may be revoked

Sec. 11
SEC. 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.
3.

Effects of irrevocable designation of beneficiaries

Sec. 11
4.

Forfeiture of interest of beneficiary

Sec. 12
5.

Beneficiaries required to have insurable interest in property

SEC. 18. No contract or policy of insurance on property shall be enforceable except for the benefit of some person
having an insurable interest in the property insured.
6.
7.
8.

Beneficiaries not required to have insurable interest in life

Predecease of beneficiary
Only beneficiaries entitled to proceed

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 Loretos 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 LoretoOdessa, Karl Brian, and Trisha Angeliewere 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 P320,000.00 as actual litigation expenses and attorneys 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; and that it
released Odessas 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 Loretos 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.
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 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 Loretos 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 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 Loretos
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 courts 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 courts 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
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 Evas 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 Evas 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 Loretos 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.20The 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 Loretos
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.