CASE DOCTRINE

INSURABLE INTEREST
GERCIO v. SUNLIFE ASSURANCE OF CANADA Whether the insured the husband has the power to change
(1925 case) the beneficiary the former wife and to name instead his
actual wife, where the insured and the beneficiary have been
divorced and where the policy of insurance does not expressly
reserve to the insured the right to change the beneficiary.

The wife has an insurable interest in the life of her husband. The
beneficiary has an absolute vested interest in the policy from the
date of its issuance and delivery. So when a policy of life
insurance is taken out by the husband in which the wife is named
as beneficiary, she has a subsisting interest in the policy. And this
applies to a policy to which there are attached the incidents of a
loan value, cash surrender value, an automatic extension by
premiums paid, and to an endowment policy, as well as to an
ordinary life insurance policy. If the husband wishes to retain to
himself the control and ownership of the policy he may so
provide in the policy. But if the policy contains no provision
authorizing a change of beneficiary without the beneficiary's
consent, the insured cannot make such change. Accordingly, it is
held that a life insurance policy of a husband made payable to the
wife as beneficiary, is the separate property of the beneficiary
and beyond the control of the husband.

As to the effect produced by the divorce, the Philippine Divorce

Law, Act No. 2710, merely provides in section 9 that the decree
of divorce shall dissolve the community property as soon as such
decree becomes final. Unlike the statutes of a few jurisdictions,
there is no provision in the Philippine Law permitting the
beneficiary in a policy for the benefit of the wife of the husband
to be changed after a divorce. It must follow, therefore, in the
absence of a statute to the contrary, that if a policy is taken out
upon a husband's life the wife is named as beneficiary therein, a
subsequent divorce does not destroy her rights under the policy.

LALICAN v. INSULAR LIFE ASSURANCE An insurable interest is one of the most basic and essential
requirements in an insurance contract. In general, an insurable
interest is that interest which a person is deemed to have in the
subject matter insured, where he has a relation or connection
with or concern in it, such that the person will derive pecuniary
benefit or advantage from the preservation of the subject matter
insured and will suffer pecuniary loss or damage from its
destruction, termination, or injury by the happening of the event
insured against.[35] The existence of an insurable interest gives a
person the legal right to insure the subject matter of the policy
of insurance.[36] Section 10 of the Insurance Code indeed
provides that every person has an insurable interest in his own
life.[37] Section 19 of the same code also states that an interest in
the life or health of a person insured must exist when the
insurance takes effect, but need not exist thereafter or when the
loss occurs.

While Eulogio was still alive, he had an insurable interest in his

own life, which he did insure under Policy No. 9011992. The real
 point of contention herein is whether Eulogio was able to
reinstate the lapsed insurance policy on his life before his death
on 17 September 1998.

To reinstate a policy means to restore the same to premium-

paying status after it has been permitted to lapse. The stipulation
in a life insurance policy giving the insured the privilege to
reinstate it upon written application does not give the insured
absolute right to such reinstatement by the mere filing of an
application. The insurer has the right to deny the
reinstatement if it is not satisfied as to the insurability of the
insured and if the latter does not pay all overdue premium and
all other indebtedness to the insurer. After the death of the
insured the insurance Company cannot be compelled to
entertain an application for reinstatement of the policy
because the conditions precedent to reinstatement can no longer
be determined and satisfied.

MANILA BANKERS LIFE INSURANCE v. ABAN The "incontestability clause" is a provision in law that after a
policy of life insurance made payable on the death of the insured
shall have been in force during the lifetime of the insured for a
period of two (2) years from the date of its issue or of its last
reinstatement, the insurer cannot prove that the policy is void ab
initio or is rescindible by reason of fraudulent concealment or
misrepresentation of the insured or his agent.

The purpose of the law is to give protection to the insured or his

beneficiary by limiting the rescinding of the contract of
insurance on the ground of fraudulent concealment or
misrepresentation to a period of only two (2) years from the
issuance of the policy or its last reinstatement.

The insurer is deemed to have the necessary facilities to discover

such fraudulent concealment or misrepresentation within a
period of two (2) years. It is not fair for the insurer to collect the
premiums as long as the insured is still alive, only to raise the
issue of fraudulent concealment or misrepresentation when the
insured dies in order to defeat the right of the beneficiary to
recover under the policy.

At least two (2) years from the issuance of the policy or its last
reinstatement, the beneficiary is given the stability to recover
under the policy when the insured dies. The provision also
makes clear when the two-year period should commence in case
the policy should lapse and is reinstated, that is, from the date of
the last reinstatement.

After two years, the defenses of concealment or

misrepresentation, no matter how patent or well-founded, will
no longer lie.
GAISANO CAGAYAN v. INSURANCE COMPANY OF Section 13 of our Insurance Code defines insurable interest as
NORTH AMERICA "every interest in property, whether real or personal, or any
relation thereto, or liability in respect thereof, of such nature that
a contemplated peril might directly damnify the insured."
Parenthetically, under Section 14 of the same Code, an insurable
interest in property may consist in: (a) an existing interest; (b)
an inchoate interest founded on existing interest; or (c) an
expectancy, coupled with an existing interest in that out of which
the expectancy arises.

Therefore, an insurable interest in property does not necessarily

imply a property interest in, or a lien upon, or possession of, the
subject matter of the insurance, and neither the title nor a
beneficial interest is requisite to the existence of such an
interest, it is sufficient that the insured is so situated with
reference to the property that he would be liable to loss should
it be injured or destroyed by the peril against which it is
insured.29 Anyone has an insurable interest in property who
derives a benefit from its existence or would suffer loss from its
destruction.30Indeed, a vendor or seller retains an insurable
interest in the property sold so long as he has any interest
therein, in other words, so long as he would suffer by its
destruction, as where he has a vendor's lien.

In this case, the insurable interest of IMC and LSPI pertain to the
unpaid accounts appearing in their Books of Account 45 days
after the time of the loss covered by the policies.

FILIPINO MERCHANT INSURANCE v. COURT OF Section 13 of the Insurance Code defines insurable interest in
APPEALS property as every interest in property, whether real or personal,
or any relation thereto, or liability in respect thereof, of such
nature that a contemplated peril might directly damnify the
insured. In principle, anyone has an insurable interest in
property who derives a benefit from its existence or would suffer
loss from its destruction whether he has or has not any title in,
or lien upon or possession of the property y. 16 Insurable interest
in property may consist in (a) an existing interest; (b) an
inchoate interest founded on an existing interest; or (c) an
expectancy, coupled with an existing interest in that out of which
the expectancy arises. 17

Herein private respondent, as vendee/consignee of the goods in

transit has such existing interest therein as may be the subject of
a valid contract of insurance. His interest over the goods is based
on the perfected contract of sale. 18The perfected contract of sale
between him and the shipper of the goods operates to vest in him
an equitable title even before delivery or before be performed
the conditions of the sale. 19 The contract of shipment, whether
under F.O.B., C.I.F., or C. & F. as in this case, is immaterial in the
determination of whether the vendee has an insurable interest
or not in the goods in transit. The perfected contract of sale even
without delivery vests in the vendee an equitable title, an
existing interest over the goods sufficient to be the subject of
insurance.
VICENTE ONG LIM SING, JR. v. FEB LEASING It is settled that the parties are free to agree to such stipulations,
clauses, terms, and conditions as they may want to include in a
contract. As long as such agreements are not contrary to law,
morals, good customs, public policy, or public order, they shall
have the force of law between the parties.[26] Contracting parties
may stipulate on terms and conditions as they may see fit and
these have the force of law between them.[27]

The stipulation in Section 14[28] of the lease contract, that the

equipment shall be insured at the cost and expense of the lessee
against loss, damage, or destruction from fire, theft, accident, or
other insurable risk for the full term of the lease, is a binding and
valid stipulation. Petitioner, as a lessee, has an insurable interest
in the equipment and motor vehicles leased. Section 17 of the
Insurance Code provides that the measure of an insurable
interest in property is the extent to which the insured might be
damnified by loss or injury thereof. It cannot be denied that JVL
will be directly damnified in case of loss, damage, or destruction
of any of the properties leased.

GEOGONIA v. COURT OF APPEALS As to a mortgaged property, the mortgagor and the mortgagee
have each an independent insurable interest therein and both
interests may be one policy, or each may take out a separate
policy covering his interest, either at the same or at separate
times. 18 The mortgagor's insurable interest covers the full value
of the mortgaged property, even though the mortgage debt is
equivalent to the full value of the property.19 The mortgagee's
insurable interest is to the extent of the debt, since the property
is relied upon as security thereof, and in insuring he is not
insuring the property but his interest or lien thereon. His
insurable interest is prima facie the value mortgaged and
extends only to the amount of the debt, not exceeding the value
of the mortgaged property. 20 Thus, separate insurances
covering different insurable interests may be obtained by the
mortgagor and the mortgagee.

A mortgagor may, however, take out insurance for the benefit of

the mortgagee, which is the usual practice. The mortgagee may
be made the beneficial payee in several ways. He may become
the assignee of the policy with the consent of the insurer; or the
mere pledgee without such consent; or the original policy may
contain a mortgage clause; or a rider making the policy payable
to the mortgagee "as his interest may appear" may be attached;
or a "standard mortgage clause," containing a collateral
independent contract between the mortgagee and insurer, may
be attached; or the policy, though by its terms payable absolutely
to the mortgagor, may have been procured by a mortgagor under
a contract duty to insure for the mortgagee's benefit, in which
case the mortgagee acquires an equitable lien upon the
proceeds. 21

In the policy obtained by the mortgagor with loss payable clause

in favor of the mortgagee as his interest may appear, the
mortgagee is only a beneficiary under the contract, and
recognized as such by the insurer but not made a party to the
 contract himself. Hence, any act of the mortgagor which defeats
his right will also defeat the right of the mortgagee. 22 This kind
of policy covers only such interest as the mortgagee has at the
issuing of the policy.23

On the other hand, a mortgagee may also procure a policy as a

contracting party in accordance with the terms of an agreement
by which the mortgagor is to pay the premiums upon such
insurance. 24 It has been noted, however, that although the
mortgagee is himself the insured, as where he applies for a
policy, fully informs the authorized agent of his interest, pays the
premiums, and obtains on the assurance that it insures him, the
policy is in fact in the form used to insure a mortgagor with loss
payable clause.

A double insurance exists where the same person is insured by

several insurers separately in respect of the same subject and
interest. As earlier stated, the insurable interests of a mortgagor
and a mortgagee on the mortgaged property are distinct and
separate. Since the two policies of the PFIC do not cover the same
interest as that covered by the policy of the private respondent,
no double insurance exists. The non-disclosure then of the
former policies was not fatal to the petitioner's right to recover
on the private respondent's policy.

GREAT PACIFIC LIFE ASSURANCE CORP. v. The rationale of a group insurance policy of mortgagors,
COURT OF APPEALS otherwise known as the mortgage redemption insurance, is a
device for the protection of both the mortgagee and the
mortgagor. On the part of the mortgagee, it has to enter into such
form of contract so that in the event of the unexpected demise of
the mortgagor during the subsistence of the mortgage contract,
the proceeds from such insurance will be applied to the payment
of the mortgage debt, thereby relieving the heirs of the
mortgagor from paying the obligation. In a similar vein, ample
protection is given to the mortgagor under such a concept so that
in the event of death; the mortgage obligation will be
extinguished by the application of the insurance proceeds to the
mortgage indebtedness. Consequently, where the mortgagor
pays the insurance premium under the group insurance policy,
making the loss payable to the mortgagee, the insurance is on the
mortgagors interest, and the mortgagor continues to be a party
to the contract. In this type of policy insurance, the mortgagee is
simply an appointee of the insurance fund, such loss-payable
clause does not make the mortgagee a party to the contract.

SPS. CHA v. COURT OF APPEALS A non-life insurance policy such as the fire insurance policy
taken by petitioner-spouses over their merchandise is primarily
a contract of indemnity. Insurable interest in the property
insured must exist at the time the insurance takes effect and at
the time the loss occurs.[4] The basis of such requirement of
insurable interest in property insured is based on sound public
policy: to prevent a person from taking out an insurance policy
on property upon which he has no insurable interest and
collecting the proceeds of said policy in case of loss of the
 property.In such a case, the contract of insurance is a mere
wager which is void under Section 25 of the Insurance Code.

Therefore, respondent CKS cannot, under the Insurance Code a

special law be validly a beneficiary of the fire insurance policy
taken by the petitioner-spouses over their merchandise. This
insurable interest over said merchandise remains with the
insured, the Cha spouses. The automatic assignment of the policy
to CKS under the provision of the lease contract previously
quoted is void for being contrary to law and/or public
policy. The proceeds of the fire insurance policy thus rightfully
belong to the spouses Nilo Cha and Stella Uy-Cha (herein co-
petitioners). The insurer (United) cannot be compelled to pay
the proceeds of the fire insurance policy to a person (CKS) who
has no insurable interest in the property insured.

PREMIUM
UCPB GEN. INSURANCE v. MASAGANA While the import of Section 77 is that prepayment of premiums
TELEMART is strictly required as a condition to the validity of the contract,
We are not prepared to rule that the request to make installment
payments duly approved by the insurer would prevent the entire
contract of insurance from going into effect despite payment and
acceptance of the initial premium or first installment. Section 78
of the Insurance Code in effect allows waiver by the insurer of
the condition of prepayment by making an acknowledgment in
the insurance policy of receipt of premium as conclusive
evidence of payment so far as to make the policy binding despite
the fact that premium is actually unpaid. Section 77 merely
precludes the parties from stipulating that the policy is valid
even if premiums are not paid, but does not expressly prohibit
an agreement granting credit extension, and such an agreement
is not contrary to morals, good customs, public order or public
policy (De Leon, The Insurance Code, p. 175). So is an
understanding to allow insured to pay premiums in installments
not so prescribed. At the very least, both parties should be
deemed in estoppel to question the arrangement they have
voluntarily accepted.

MAKATI TUSCANY CONDOMINIUM v. COURT OF It argues that where the premiums is not actually paid in full, the
APPEALS policy would only be effective if there is an acknowledgment in
the policy of the receipt of premium pursuant to Sec. 78 of the
Insurance Code. The absence of an express acknowledgment in
the policies of such receipt of the corresponding premium
payments, and petitioner's failure to pay said premiums on or
before the effective dates of said policies rendered them invalid.
Petitioner thus concludes that there cannot be a perfected
contract of insurance upon mere partial payment of the
premiums because under Sec. 77 of the Insurance Code, no
contract of insurance is valid and binding unless the premium
thereof has been paid, notwithstanding any agreement to the
contrary. As a consequence, petitioner seeks a refund of all
premium payments made on the alleged invalid insurance
policies.
 We hold that the subject policies are valid even if the premiums
were paid on installments. The records clearly show that
petitioner and private respondent intended subject insurance
policies to be binding and effective notwithstanding the
staggered payment of the premiums. The initial insurance
contract entered into in 1982 was renewed in 1983, then in
1984. In those three (3) years, the insurer accepted all the
installment payments. Such acceptance of payments speaks
loudly of the insurer's intention to honor the policies it issued to
petitioner. Certainly, basic principles of equity and fairness
would not allow the insurer to continue collecting and accepting
the premiums, although paid on installments, and later deny
liability on the lame excuse that the premiums were not
prepared in full.

SOUTH SEA SURETY v. COURT OF APPEALS Sec. 306. . . . Any insurance company which delivers to an
insurance agent or insurance broker a policy or contract of
insurance shall be deemed to have authorized such agent or
broker to receive on its behalf payment of any premium which is
due on such policy of contract of insurance at the time of its
issuance or delivery or which becomes due thereon.

On cross-examination in behalf of South Sea Surety and

Insurance Co., Inc. Mr. Chua testified that the marine cargo
insurance policy for the plaintiff's logs was delivered to him on
21 January 1984 at his office to be delivered to the plaintiff.
When the appellant South Sea Surety and Insurance Co., Inc.
delivered to Mr. Chua the marine cargo insurance policy for the
plaintiffs logs, he is deemed to have been authorized by the South
Sea Surety and Insurance Co., Inc. to receive the premium which
is due on its behalf.

When therefore the insured logs were lost, the insured had
already paid the premium to an agent of the South Sea Surety and
Insurance Co., Inc., which is consequently liable to pay the
insurance proceeds under the policy it issued to the insured.

ASCERTAINING AND CONTROLLING RISK

FLORENDO v. PHILAM PLANS, INC. Concealment entitles the insurer the right to rescind the contract
of insurance provided that the same has been raised before the
lapse of the incontestability period stipulated in a contract, or in
the absence thereof, prescribed period under the law.
 Case Doctrine
Lorcom Thirteen, LTD. v. Zurich Insurance Co. The insured must prove that an insurable
interest existed in order to prove loss. The test is
whether the insured will incur financial loss, or will fail
to derive an anticipated financial benefit, if the event
insured against occurs. In principle, the object of
insurance must be in existence at the time of the
occurrence of the peril insured against. If the insured
has no interest at the time of the occurrence of the
event insured against, he cannot suffer any loss or
damage.

The bases for Lorcoms insurable interest in the

Buccaneer fishing vessel were as follows:
Lorcom was the sole shareholder of the owner
of the vessel.
In terms of a purchase agreement, Lorcom
would become the owner on effective date:
that is, upon full payment.
Lorcom had the right of use of the vessel.
Lorcom held the fishing permit.

Alpha Insurance & Surety Co. v. Castor Contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the
terms which the parties themselves have used. If such
terms are clear and unambiguous, they must be taken
and understood in their plain, ordinary and popular
sense. Accordingly, in interpreting the exclusions in an
insurance contract, the terms used specifying the
excluded classes therein are to be given their meaning
as understood in common speech.
Adverse to petitioners claim, the words "loss" and
"damage" mean different things in common ordinary
usage. The word "loss" refers to the act or fact of losing,
or failure to keep possession, while the word "damage"
means deterioration or injury to property.
Therefore, petitioner cannot exclude the loss of
respondents vehicle under the insurance policy under
paragraph 4 of "Exceptions to Section III," since the
same refers only to "malicious damage," or more
specifically, "injury" to the motor vehicle caused by a
person under the insureds service. Paragraph 4 clearly
does not contemplate "loss of property."

It is a basic rule in the interpretation of contracts that

the terms of a contract are to be construed according to
the sense and meaning of the terms which the parties
thereto have used. In the case of property insurance
policies, the evident intention of the contracting
parties, i.e., the insurer and the assured, determine the
import of the various terms and provisions embodied
in the policy. However, when the terms of the insurance
 policy are ambiguous, equivocal or uncertain, such that
the parties themselves disagree about the meaning of
particular provisions, the policy will be construed by
the courts liberally in favor of the assured and strictly
against the insurer.

Lastly, a contract of insurance is a contract of adhesion.

So, when the terms of the insurance contract contain
limitations on liability, courts should construe them in
such a way as to preclude the insurer from non-
compliance with his obligation.

Fortune Insurance & Surety Co., Inc. v. Ca An insurance contract is a contract of indemnity upon
the terms and conditions specified therein. It is settled
that the terms of the policy constitute the measure of
the insurer's liability. In the absence of statutory
prohibition to the contrary, insurance companies have
the same rights as individuals to limit their liability and
to impose whatever conditions they deem best upon
their obligations not inconsistent with public policy.

It was its intention to exclude and exempt from

protection and coverage losses arising from dishonest,
fraudulent, or criminal acts of persons granted or
having unrestricted access to insureds money or
payroll. When it used then the term "employee," it must
have had in mind any person who qualifies as such as
generally and universally understood, or
jurisprudentially established in the light of the four
standards in the determination of the employer-
employee relationship, or as statutorily declared even
in a limited sense as in the case of Article 106 of the
Labor Code which considers the employees under a
"labor-only" contract as employees of the party
employing them and not of the party who supplied
them to the employer.

MMPSEU v. Mitsubishi Motors Phils. Corp. The collateral source rule is predicated on the theory
that a tortfeasor has no interest in, and therefore no
right to benefit from monies received by the injured
person from sources unconnected with the defendant.
(cannot apply insurer has no fault)

To constitute unjust enrichment, it must be shown that

a party was unjustly enriched in the sense that the term
unjustly could mean illegally or unlawfully. A claim for
unjust enrichment fails when the person who will
benefit has a valid claim to such benefit.

Principle of indemnity - proscribes the insured from

recovering greater than the loss. Otherwise, to profit
from the loss will lead to unjust enrichment.
Almendras Mining Corp. v. Office of the Insurance The provisions of the Insurance Code (Presidential
Commission Decree No. 1460), as amended, clearly indicate that the
Office of the Insurance Commission is an
administrative agency vested with regulatory power as
well as with adjudicatory authority. Among the several
regulatory or non-quasi-judicial duties of the Insurance
Commissioner under the Insurance Code is the
authority to issue, or refuse issuance of, a Certificate of
Authority to a person or entity desirous of engaging in
insurance business in the Philippines, and to revoke or
suspend such Certificate of Authority upon a finding of
the existence of statutory grounds for such revocation
or suspension. The grounds for revocation or
suspension of an insurer's Certificate of Authority are
set out in Section 241 and in Section 247 of the
Insurance Code as amended. The general regulatory
authority of the Insurance Commissioner is described
in Section 414 of the Insurance Code, as amended, in
the following terms:

Section 414. The Insurance Commissioner shall have

the duty to see that all laws relating to insurance,
insurance companies and other insurance matters,
mutual benefit associations, and trusts for charitable
uses are faithfully executed and to perform the duties
imposed upon him by this Code, and shall,
notwithstanding any existing laws to contrary, have
sole and exclusive authority to regulate the issuance
and sale of variable contracts as defined in section two
hundred thirty-two and to provide for the licensing of
persons selling such contracts, and to issue such
reasonable rules and regulations governing the same.
The Commissioner may issue such rulings, instructions,
circulars, orders and decisions as he may deem
necessary to secure the enforcement of the provisions
of this Code, subject to the approval of the Secretary of
Finance. Except as otherwise specified decisions made
by the Commissioner shall be appealable to the
Secretary of Finance. (Emphasis supplied) which
Section also specifies the authority to which a decision
of the Insurance Commissioner rendered in the
exercise of its regulatory function may be appealed.

The adjudicatory authority of the Insurance

Commissioner is generally described in Section 416 of
the Insurance Code, as amended, which reads as
follows:
Sec. 416. The Commissioner shall have the power to
adjudicate claims and complaints involving any loss,
damage or liability for which an insurer may be
answerable under any kind of policy or contract of
insurance, or for which such insurer may be liable
under a contract of membership, or for which a
reinsurer may be sued under any contract or
reinsurance it may have entered into, or for which a
mutual benefit association may be held liable under the
membership certificates it has issued to its members,
where the amount of any such loss, damage or liability,
excluding interests, cost and attorney's fees, being
claimed or sued upon any kind of insurance, bond,
reinsurance contract, or membership certificate does
not exceed in any single claim one hundred thousand
pesos.
xxx xxx xxx
The authority to adjudicate granted to the
Commissioner under this section shall be concurrent
with that of the civil courts, but the filing of a complaint
with the Commissioner shall preclude the civil courts
from taking cognizance of a suit involving the same
subject matter. (Emphasis supplied)
Continuing, Section 416 (as amended by B.P. Blg. 874)
also specifies the authority to which appeal may be
taken from a final order or decision of the
Commissioner given in the exercise of his adjuclicatory
or quasi-judicial power:
Any decision, order or ruling rendered by the
Commissioner after a hearing shall have the force and
effect of a judgment. Any party may appeal from a final
order, ruling or decision of the Commissioner by filing
with the Commissioner within thirty days from receipt
of copy of such order, ruling or decision a notice of
appeal to the Intermediate Appellate Court (now the
Court of appeals) in the manner provided for in the
Rules of Court for appeals from the Regional Trial Court
to the Intermediate Appellate Court (now the Court of
Appeals).
xxx xxx xxx (Emphasis supplied)
It may be noted that under Section 9 (3) of B.P. Blg. 129,
appeals from a final decision of the Insurance
Commissioner rendered in the exercise of his
adjudicatory authority now fall within the exclusive
appellate jurisdiction of the Court of Appeals.

Insurance Commissioners resolution and order were

issued in the performance of administrative and
regulatory duties and function = appellate jurisdiction
> Sec. of Finance

Insurance Commissioners final order or decision given

in the exercise of adjudicatory or quasi-judicial power
(not exceeding Php 100,000) = appeallate jurisdiction
> Court of Appeals
Heirs of Loreto Maramag v. Maramag 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.

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.

BPI v. Posadas The proceeds of a life insurance policy payable to the

insured persons estate, on which the premiums were
paid by the conjugal partnership, constitute the
community property, and belong one-half to the
husband exclusively, and the other half to the wife.

If the premium were paid partly with paraphernal, and

partly conjugal funds, the proceeds are in like
proportion paraphernal in part and conjugal in part.