HEIR OF LORETO MARAMAG vs EVA VERBA DE GUZMAN MARAMAG

Facts:

Petitioner filed against Respondent 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.

Petitioners were the legitimate wife and children of Loreto Maramag (Loreto), while respondents were
Loretos illegitimate family. 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); 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 petitioners
could not be deprived of their legitimes, which should be satisfied first.

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.

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. 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.

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.

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 752 and 772 of the Civil Code.
RTCtrial 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.

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.
CAdismissed 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.
Hence, this petition.
Issue: W/ N the proceeds of the insurance policy must be awarded to the Petitioner.
Held: No.
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. Pursuant to Section 12 of the Insurance Code, 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 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 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, 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.