HEIRS OF LORETO C.

MARAMAG VS DE GUZMAN MARAMAG

FACTS:
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Petitioners were the legitimate wife and children of Loreto Maramag, while,
the defendants were the illegitimate family of Loreto
Petitioner alleged that Eva de Guzman Maramag, concubine of Loreto, and
the illegitimate children, Odessa, Karl Brian and Trisha Angelie, are disqualified
to receive the proceeds from Loretos insurance policies, both from Insular Life
Assurance Company (Insular) and Great Pacific Life Assurance Corporation
(Grepalife)
In answer, Insular admitted that Loreto misrepresented Eva as his legitimate
wife and Odessa, Karl Brian and Trisha Angelie as his legitimate children
Insular already disqualified Eva as beneficiary and divided the proceeds
among the illegitimate children
Insular further claimed that it was bound to honor the insurance policies
designating the illegitimate children as beneficiaries pursuant to Section 53 of
Insurance Code
Grepalife, on the other hand, alleged that Eva was not designated as
beneficiary in the insurance policy and that the claims filed by the illegitimate
children were denied due to Loretos misrepresentation in his application form
The Court declared the illegitimate family in default after failing to submit their
answer
In a comment, petitioner alleged that the designation of a beneficiary is an
act of liberality or a donation, which is subject to the provisions of Arts 752 [8]
and 772 [9] of the Civil Code
In reply, both the insurance companies 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
The trial court granted the motion to dismiss incorporated in the answer of the
insurance companies with respect to the illegitimate children, but the action
shall proceed with respect to Eva and the insurance companies
According to the trial court, principal law on insurance is the Insurance Code
and in case of deficiency in the Insurance Code, the Civil Code may be
resorted to
Regarding to whom the insurance proceeds shall be paid, Section 53 of the
Insurance Code states that the insurance proceeds shall be applied
exclusively to the proper interest of the person in whose name of for whose
benefit is made, unless specified in the policy.
No evidence was shown that the plaintiffs were included as beneficiaries. This
is because the beneficiary has a vested right to the indemnity, unless the
insured reserves the right to change the beneficiary
The law on donations cannot also be invoked because the beneficiary in the
contract of insurance is not the donee under the law of donation.
With regard to Eva, any person is forbidden from receiving any donation
under art 739 cannot be named beneficiary of a life insurance policy of the
person who cannot make any donation to him, as stated in art 2012 of the
Civil code
Since the designation of Eva as one of the beneficiaries is void under art 739
of the Civil Code, the insurance proceeds should go to the legal heirs of the
deceased
Insular and Grepalife filed their respective motions for reconsideration, while
the petitioners reiterated their earlier arguments
The Court granted the motions of Insular and Grepalife
The Court ruled that the entire proceeds would be paid to the illegitimate
children pursuant to Sec 53 of the Inurance Code and only in cases where

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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 the 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
The trial court, with respect to Grepalife, dismissed the case as to the
illegitimate children
Petitioners appealed to the CA but dismissed it for lack of jurisdiction
Petitioners elevated the matter to the SC
ISSUE:
Whether or not the members of the legitimate family are entitled to the
proceeds of the insurance for the concubine

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HELD:
The legitimate family are not entitle to the proceeds
According to the court, although they are the legitimate heirs, they were not
named as beneficiaries in the insurance policies
Petitioners are not entitled to a favorable judgment in light of Art 2011 of the
Civil Code which expressly provides that insurance contracts shall be
governed by specials laws
According to Sec 53 of the Insurance Code, the only people entitled to claim
the insurance proceeds are either the insured, if still alive; or the beneficiary,, if
the insured is already deceased
The exception to the 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 he insurer
The revocation of Eva as beneficiary in one policy, and her disqualification in
the other are of no moment considering that the designation of the
illegitimate children as beneficiaries remains valid
No legal prescription exists in naming as beneficiaries the children of illicit
relationships by the insured, the shares of Eva, whether forfeited by the court
in view of the prohibition on donations under ar 739 of the CC or by the
insurers themselves for reasons based on the insurance contracts, must be
awarded to the said illegitimate children, the designated beneficiaries
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