EN BANC

[G.R. No. 23703. September 28, 1925. ]

HILARIO GERCIO, Plaintiff-Appellee, v. SUN LIFE ASSURANCE CO. OF CANADA ET AL., Defendants. SUN LIFE
ASSURANCE CO. OF CANADA, Appellant.

Fisher, DeWitt, Perkins & Brady and Jesus Trinidad for Appellant.

Vicente Romualdez, Feria & La O and P. J. Sevilla for Appellee.

SYLLABUS

1. INSURANCE; LAW APPLICABLE IN THE PHILIPPINES. The Philippine Law of Insurance should be supplemented by the
general principles prevailing on the subject. The purpose should be to have the Philippine Law of Insurance conform as nearly as
possible to the modern Law of Insurance as found in the United States proper.

2. ID.; ID.; INSURABLE INTEREST OF WIFE. The wife has an insurable interest in the life of her husband.

3. ID., ID.; ID.; BENEFICIARIES. The beneficiary has an absolute vested interest in the policy from the date of its issuance and
delivery.

4. ID.; ID.; ID.; ID. 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 attached the incidents of a loan value, cash surrender
value, and automatic extension by premiums paid, and to an endowment policy, as well as to an ordinary life insurance policy.

5. ID.; ID.; ID.; ID.; RIGHT TO CHANGE BENEFICIARY. If the policy contains no provision authorizing a change of
beneficiary without the beneficiarys consent, the insured cannot make such change.

6. ID.; ID.; ID., ID.; ID. 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.

7. ID.; ID.; ID.; ID.; ID.; EFFECT OF DIVORCE. In the absence of a statute to the contrary, if a policy is taken out upon a
husbands life and the wife is named as beneficiary therein, a subsequent divorce does not destroy her rights under the policy.

8. ID.; ID.; ID.; ID.; ID.; ID. The insured the husband has no power to change 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.

DECISION

MALCOLM, J.:

The question of first impression in the law of life insurance to be here decided is whether the insured the husband has the power
to change 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 Although the
authorities have been exhausted, no legal situation exactly like the one before us has been encountered.

Hilario Gercio, the insured, is the plaintiff. The Sun Life Assurance Co. of Canada, the insurer, and Andrea Zialcita, the beneficiary,
are the defendants. The complaint is in the nature of mandamus. Its purpose is to compel the defendant Sun Life Assurance Co. of
Canada to change the beneficiary in the policy issued by the defendant company on the life of the plaintiff Hilario Gercio with one
Andrea Zialcita as beneficiary.

A default judgment was taken in the lower court against the defendant Andrea Zialcita. The other defendant, the Sun Life Assurance
Co. of Canada, first demurred to the complaint and when the demurrer was overruled, filed an answer in the nature of a general denial.
The case was then submitted for decision on an agreed statement of facts. The judgment of the trial court was in favor of the plaintiff
without costs, and ordered the defendant company to eliminate from the insurance policy the name of Andrea Zialcita as beneficiary
and to substitute therefor such name as the plaintiff might furnish to the defendant for that purpose.

The Sun Life Assurance Co. of Canada has appealed and has signed three errors alleged to have been committed by the lower court.
The appellee has countered with a motion which asks the court to dismiss the appeal of the defendant Sun Life Assurance Co. of
Canada, with costs.

As the motion presented by the appellee and the first two errors assigned by the appellant are preliminary in nature, we will pass upon
them first. Appellee argues that the "substantial defendant" was Andrea Zialcita, and that since she was adjudged in default, the Sun
Life Assurance Co. of Canada has no interest in the appeal. It will be noticed, however, that the complaint prays for affirmative relief
against the insurance company. It will be noticed further that it is stipulated that the insurance company has persistently refused to
change the beneficiary as desired by the plaintiff. As the rights of Andrea Zialcita in the policy are rights which are enforceable by her
only against the insurance company, the defendant insurance company will only be fully protected if the question at issue is
conclusively determined. Accordingly, we have decided not to accede to the motion of the appellee and not to order the dismissal of
the appeal of the Appellant.

This brings us to the main issue. Before, however, discussing its legal aspects, it is advisable to have before us the essential facts. As
they are stipulated, this part of the decision can easily be accomplished.

On January 29, 1910, the Sun Life Assurance Co. of Canada issued insurance policy No. 161481 on the life of Hilario Gercio. The
policy was what is known as a twenty-year endowment policy. By its terms, the insurance company agreed to insure the life of Hilario
Gercio for the sum of P2,000, to be paid him on February 1, 1930, or if the insured should die before said date, then to his wife, Mrs.
Andrea Zialcita, should she survive him; otherwise, to the executors, administrators, or assigns of the insured. The policy also
contained a schedule of reserves, amounts in cash, paid-up policies, and renewed insurance, guaranteed. The policy did not include
any provision reserving to the insured the right to change the beneficiary.

On the date the policy was issued, Andrea Zialcita was the lawful wife of Hilario Gercio. Towards the end of the year 1919, she was
convicted of the crime of adultery. On September 4, 1920, a decree of divorce was issued in civil case No. 17955, which had the effect
of completely dissolving the bonds of matrimony contracted by Hilario Gercio and Andrea Zialcita.

On March 4, 1922, Hilario Gercio formally notified the Sun Life Assurance Co. of Canada that he had revoked his donation in favor
of Andrea Zialcita, and that he had designated in her stead his present wife, Adela Garcia de Gercio, as the beneficiary of the policy.
Gercio requested the insurance company to eliminate Andrea Zialcita as beneficiary. This, the insurance company has refused and still
refuses to do.

With all of these introductory matters disposed of and with the legal question to the forefront, it becomes our first duty to determine
what law should be applied to the facts. In this connection, it should be remembered that the insurance policy was taken out in 1910,
that the Insurance Act, No. 2427, became effective in 1914, and that the effort to change the beneficiary was made in 1922. Should the
provisions of the Code of Commerce and the Civil Code in force in 1910, or the provisions of the Inssurance Act now in force, or the
general principles of law, guide the court in its decision?
On the supposition, first, that the Code of Commerce is applicable, yet there can be found in it no provision either permitting or
prohibiting the insured to change the beneficiary.

On the supposition, next, that the Civil Code regulates insurance contracts, it would be most difficult, if indeed it is practicable, to test
a life insurance policy by its provisions. Should the insurance contract, whereby the husband names the wife as the beneficiary, be
denominated a donation inter vivos, a donation causa mortis, a contract in favor of a third person, or an aleatory contract? The subject
is further complicated by the fact that if an insurance contract should be considered a donation, a husband may then never insure his
life in favor of his wife and vice versa, inasmuch as article 1334 prohibits all donations between spouses during marriage. It would
seem, therefore, that this court was right when in the case of Del Val v. Del Val ([1915], 29 Phil., 534), it declined to consider the
proceeds of the insurance policy as a donation or gift, saying "the contract of life insurance is a special contract and the destination of
the proceeds thereof is determined by special laws which deal exclusively with that subject. The Civil Code has no provisions which
relate directly and specifically to life-insurance contracts or to the destination of life-insurance proceeds. . . ." Some satisfaction is
gathered from the perplexities of the Louisiana Supreme Court, a civil law jurisdiction, where the jurists have disagreed as to the
classification of the insurance contract, but have agreed in their conclusions as we will hereafter see. (Re Succession of Leonce
Desforges [1914], 52 L. R. A. [N. S. ], 689; Lambert v. Penn Mutual Life Insurance Company of Philadelphia and LHote & Co.
[1898], 50 La. Ann., 1027.)

On the further supposition that the Insurance Act applies, it will be found that in this Law, there is likewise no provision either
permitting or prohibiting the insured to change the beneficiary.

We must perforce conclude that whether the case be considered as of 1910, or 1914, or 1922, and whether the case be considered in
the light of the Code of Commerce, the Civil Code, or the Insurance Act, the deficiencies in the law will have to be supplemented by
the general principles prevailing on the subject. To that end, we have gathered the rules which follow from the best considered
American authorities. In adopting these rules, we do so with the purpose of having the Philippine Law of Insurance conform as nearly
as possible to the modern Law of Insurance as found in the United States proper.

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 beneficiarys 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 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 husbands life and the
wife is named as beneficiary therein, a subsequent divorce does not destroy her rights under the policy.

These are some of the pertinent principles of the Law of Insurance. To reinforce them, we would, even at the expense of clogging the
decision with unnecessary citation of authority, bring to notice certain decisions which seem to us to have controlling influence.

To begin with, it is said that our Insurance Act is mostly taken from the statute of California. It should prove of interests therefore, to
know the stand taken by the Supreme Court of that State. A California decision oft cited in the Cyclopedias is Yore v. Booth ([1895],
110 Cal., 238; 52 Am. St. Rep., 81), in which we find the following:jgc:chanrobles.com.ph
". . . It seems to be the settled doctrine, with but slight dissent in the courts of this country, that a person who procures a policy upon
his own life, payable to a designated beneficiary, although he pays the premiums himself, and keeps the policy in his exclusive
possession, has no power to change the beneficiary, unless the policy itself, or the charter of the insurance company, so provides. In
other words, it is held that the beneficiary named in the policy, although he has parted with nothing, and is simply the object of
anothers bounty, has acquired a vested and irrevocable interest in the policy, which he may keep alive for his own benefit by paying
the premiums or assessments if the person who effected the insurance fails or refuses to do so."cralaw virtua1aw library

As carrying great weight, there should also be taken into account two decisions coming from the Supreme Court of the United States.
The first of these decisions, in point of time, is Connecticut Mutual Life Insurance Company v. Schaefer ([1877], 94 U. S., 457).
There, Mr. Justice Bradley, delivering the opinion of the court, in part said:jgc:chanrobles.com.ph

"This was an action on a policy of life assurance issued July 25, 1868, on the joint lives of George F. and Francisca Schaefer, then
husband and wife, payable to the survivor on the death of either. In January, 1870, they were divorced, and alimony was decreed and
paid to the wife, and there was never any issue of the marriage. They both subsequently married again, after which, in February, 1871,
George F. Schaefer died. This action was brought by Francisca, the survivor.

x x x

"The other point, relating to the alleged cessation of insurable interest by reason of the divorce of the parties is entitled to more serious
consideration, although we have very little difficulty in disposing of it.

"It will be proper, in the first place, to ascertain what is an insurable interest. It is generally agreed that mere wager policies, that is,
policies in which the insured party has no interest whatever in the matter insured, but only an interest in its loss or destruction, are
void, as against public policy. . . But precisely what interest is necessary, in order to take a policy out of the category of mere wager,
has been the subject of much discussion. In marine and fire insurance the difficulty is not so great, because there insurance is
considered as strictly an indemnity. But in life insurance the loss can seldom be measured by pecuniary values. Still, an interest of
some sort in the insured life must exist. A man cannot take out insurance on the life of a total stranger, nor on that of one who is not so
connected with him as to make the continuance of the life a matter of some real interest to him.

"It is well settled that a man has an insurable interest in his own life and in that of his wife and children; a woman in the life of her
husband; and the creditor in the life of his debtor. Indeed it may be said generally that any reasonable expectation of pecuniary benefit
or advantage from the continued life of another creates an insurable interest in such life. And there is no doubt that a man may effect
an insurance on his own life for the benefit of a relative or friend; or two or more persons, on their joint lives, for the benefit of the
survivor or survivors. The old tontines were based substantially on this principle, and their validity has never been called-in question.

x x x

"The policy in question might, in our opinion, be sustained as a joint insurance, without reference to any other interest, or to the
question whether the cessation of interest avoids a policy good at its inception. We do not hesitate to say, however, that a policy taken
out in good faith and valid at its inception, is not avoided by the cessation of the insurable interest, unless such be the necessary effect
of the provisions of the policy itself. . . .

". . . In our judgment a life policy, originally valid, does not cease to be so by the cessation of the assured partys interest in the life
insured."cralaw virtua1aw library

Another controlling decision of the United States Supreme Court is that of Central National Bank of Washington City v. Hume
([1888], 128 U. S., 134). Therein, Mr. Chief Justice Fuller, as the organ of the court, announced the following
doctrines:jgc:chanrobles.com.ph

"We think it cannot be doubted that in the instance of contracts of insurance with a wife or children, or both, upon their insurable
interest in the life of the husband or father, the latter, while they are living, can exercise no power of disposition over the same without
their consent, nor has he any interest therein of which he can avail himself; nor upon his death have his personal representatives or his
creditors any interest in the proceeds of such contracts, which belong to the beneficiaries to whom they are payable.

"It is indeed the general rule that a policy, and the money to become due under it, belong, the moment it is issued, to the person or
persons named in it as the beneficiary or beneficiaries, and that there is no power in the person procuring the insurance, by any act of
his, by deed or by will, to transfer to any other person the interest of the person named."cralaw virtua1aw library

A jurisdiction which found itself in somewhat the same situation as the Philippines, because of having to reconcile the civil law with
the more modern principles of insurance, is Louisiana. In a case coming before the Federal Courts, In re Dreuil & Co. ([1915], 221
Fed., 796), the facts were that an endowment insurance policy provided for payment of the amount thereof at the expiration of twenty
years to the insured, or his executors, administrators, or assigns, with the proviso that, if the insured die within such period, payment
was to be made to his wife if she survive him. It was held that the wife has a vested interest in the policy, of which she cannot be
deprived without her consent. Foster, District Judge, announced:jgc:chanrobles.com.ph

"In so far as the law of Louisiana is concerned, it may also be considered settled that where a policy is of the semitontine variety, as in
this case, the beneficiary has a vested right in the policy, of which she cannot be deprived without her consent. (Lambert v. Penn
Mutual Life Ins. Co., 50 La. Ann., 1027; 24 South., 16.)" (See in same connection a leading decision of the Louisiana Supreme Court,
Re Succession of Leonce Desforges, [1914], 52 L. R. A. [N. S. ], 689.)

Some question has arisen as to the power of the insured to destroy the vested interest of the beneficiary in the policy. That point is well
covered in the case of Entwistle v. Travelers Insurance Company ([1902], 202 Pa. St., 141). To quote:jgc:chanrobles.com.ph

". . .The interest of the wife was wholly contingent upon her surviving her husband, and she could convey no greater interest in the
policy than she herself had. The interest of the children of the insured, which was created for them by the contract when the policy was
issued; vested in them at the same time that the interest of the wife became vested in her. Both interests were contingent. If the wife
die before the insured, she will take nothing under the policy. If the insured should die before the wife, then the children take nothing
under the policy. We see no reason to discriminate between the wife and the children. They are all payees, under the policy, and
together constitute the assured.

"The contingency which will determine whether the wife, or the children as a class will take the proceeds, has not as yet happened; all
the beneficiaries are living, and nothing has occurred by which the rights of the parties are in any way changed. The provision that the
policy may be converted into cash at the option of the holder does not change the relative rights of the parties. We agree entirely with
the suggestion that holder or holders, as used in this connection, means those who in law are the owners of the policy, and are
entitled to the rights and benefits which may accrue under it; in other words, all the beneficiaries; in the present case, not only the
wife, but the children of the insured. If for any reason, prudence required the conversion of the policy into cash, a guardian would
have no special difficulty in reasonably protecting the interest of his wards. But however that may be, it is manifest that the option can
only be exercised by those having the full legal interest in the policy, or by their assignee. Neither the husband, nor the wife, nor both
together had power to destroy the vested interest of the children in the policy."cralaw virtua1aw library

The case most nearly on all fours with the one at bar is that of Wallace v. Mutual Benefit Life Insurance Co. ([1906], 97 Minn., 27; 3
L. R. A. [N. S. ], 478). The opinion there delivered also invokes added interest when it is noted that it was written by Mr. Justice
Elliott, the author of a text on insurance, later a member of this court. In the Minnesota case cited, one Wallace effected a "twenty year
endowment" policy of insurance on his life, payable in the event of his death within twenty years to Emma G. Wallace, his wife, but,
if he lived, to himself at the end of twenty years. If Wallace died before the death of his wife, within the twenty years, the policy was
payable to the personal representatives of the insured. During the Pendency of divorce proceedings, the parties signed a contract by
which Wallace agreed that, if a divorce was granted to Mrs. Wallace, the court might award her certain specified property as alimony,
and Mrs. Wallace agreed to relinquish all claim to any property arising out of the relation of husband and wife. The divorce was
granted. An action was brought by Wallace to compel Mrs. Wallace to relinquish her interest in the insurance policy. Mr. Justice
Elliott said:jgc:chanrobles.com.ph

"As soon as the policy was issued Mrs. Wallace acquired a vested interest therein of which she could be deprived without her consent,
except under the terms of the contract with the insurance company. No right to change the beneficiary was reserved. Her interest in the
policy was her individual property, subject to be divested only by her death, the lapse of time, or by the failure of the insured to pay
the premiums. She could keep the policy alive by paying the premiums, is the insured did not do so. It was contingent upon these
events, but it was free from the control of her husband. He had no interest in her properties in this policy, contingent or other wise. Her
interest was free from any claim on the part of the insured or his creditors. He could deprive her of her interest absolutely in but one
way, by living more than twenty years. We are unable to see how the plaintiffs interest in the policy was primary or superior to that of
the husband. Both interests were contingent, but they were entirely separate and distinct, the one from the other. The wifes interest
was not affected by the decree of court which dissolved the marriage contract between the parties. It remains her separate property,
after the divorce as before. . .

". . . The fact that she was his wife at the time the policy was issued may have been, and undoubtedly was, the reason why she was
named as beneficiary in the event of his death. But her property interest in the policy after it was issued did not in any reasonable
sense arise out of the marriage relation."cralaw virtua1aw library

Somewhat the same question came before the supreme Court of Kansas in the leading case of Filey v. Illinois Life Insurance Company
([1914], 91 Kansas, 220; L. R. A. [1915 D], 130). It was held, following consideration extending to two motions for rehearing, as
follows:jgc:chanrobles.com.ph

"The benefit accruing from a policy of life insurance upon the life of a married man, payable upon his death to his wife, naming her, is
payable to the surviving beneficiary named, although she may have years thereafter secured a divorce from her husband, and he was
thereafter again married to one who sustained the relation of wife to him at the time of his death.

"The rights of a beneficiary in an ordinary life insurance policy become vested upon the issuance of the policy, and can thereafter,
during the life of the beneficiary, be defeated only as provided by the terms of the policy."cralaw virtua1aw library

If space permitted, the following corroborative authority could also be taken into account: Joyce, The Law of Insurance, second
edition, vol. 2, pp. 1649 at seq.; 37 Corpus Juris, pp. 349 et seq.; 14 R. C. L., pp. 1376 et seq.; Green v. Green ([1912], 147 Ky., 608;
39 L. R. A. [N. S. ], 370); Washington Life Insurance Co. v. Berwald ([1903], 97 Tex., 111); Begley v. miller ([1907], 137 Ill. App.,
278); Blum v. New York L. Ins. Co. ([1906], 197 Mo., 513; 8 L. R. A. [N. S. ], 923); Union Central Life Ins. Co, v. Buxer ([1900], 62
Ohio St., 385; 49 L. R. A., 737); Griffith v. New York Life Ins. Co. ([1894], 101 Cal., 627; 40 Am. St. Rep., 96); Preston v. Conn
Mut. L. Ins. Co. of Hartford ([1902], 95 Md., 101); Snyder v. Supreme Ruler of Fraternal Mystic Circle ([1909], 122 Tenn., 248; 45 L.
R. A. [N. S. ], 209); Lloyd v. Royal Union Mut. L. Ins. Co. ([1917], 245 Fed., 162); Phoenix Mut. L. Ins. Co. v. Dunham ([1878], 46
Conn., 79; 33 Am. Rep., 14); Mckee v. Phoenix Ins Co. ([1859], 28 Mo., 383; 75 Am. Rep., 129); Supreme Council American Legion
of Honor v. Overhiser ([1900], 63 Ohio St., 77; 81 Am St. Rep., 612; 50 L. R. A., 552); Condon v. New York life Insurance Co.
([1918], 183 Iowa, 658); with which compare Foster v. Gile ([1880], 50 Wis., 603) and Hatch v. Hatch ([1904], 35 Tex. Civ. App.,
373).

On the admitted facts and the authorities supporting the nearly universally accepted principles of insurance, we are irresistibly led to
the conclusion that the question at issue must be answered in the negative.
The judgment appealed from will be reversed and the complaint ordered dismissed as to the appellant, without special pronouncement
as to the costs in either instance So ordered.

Street, Villamor, Ostrand, Johns and Villa-Real, JJ., concur.

 FIRST DIVISION

[G.R. No. L-44059. October 28, 1977.]

THE INSULAR LIFE ASSURANCE COMPANY, LTD., Plaintiff-Appellee, v. CARPONIA T. EBRADO and PASCUALA
VDA. DE EBRADO, Defendants-Appellants.

DECISION

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 Insular Life Assurance Co., Ltd., Policy No. 009929 on a
whole-life plan for P5,882.00 with a rider for Accidental Death Benefits for the same amount. Buenaventura C. Ebrado designated
Carponia T. Ebrado as the revocable beneficiary in his policy. He referred to her as his wife.

On October 21, 1969, Buenventura C. Ebrado died as a result of an accident when he was hit by a falling branch of a tree. As the
insurance policy was in force, The Insular Life Assurance Co., Ltd. stands liable to pay the coverage of the policy in an 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.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

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:jgc:chanrobles.com.ph

"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 purposes of the pre-trial and make admissions for the purpose of pre-
trial. 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-law wife, Carponia Ebrado, with whom
she had 2 children although he was not legally separated from his legal wife; 4) that Buenaventura Ebrado died by accident on October
21, 1969 as evidenced by the death certificate 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 of the 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 legal wife did not have any opportunity to write the company that there was reservation to change the designation of the
beneficiary; 9) the parties 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.

"Upon motion of the parties, they are given ten (10) days to file their simultaneous memoranda from the receipt of this order.

SO ORDERED."cralaw virtua1aw library

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:jgc:chanrobles.com.ph

"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." chanrobles virtual lawlibrary

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 shall 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 same 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 life 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:jgc:chanrobles.com.ph
"The following donations shall be void:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

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 wills are interpreted. 6

3. Policy considerations and dictates of morality rightly justify the institution of a barrier between common-law spouses in regard to
property relations since such relationship 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 life insurance policy
is no different from a donee. Both the recipients of pure beneficence. So long as marriage 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:jgc:chanrobles.com.ph

"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 fear 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 of
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 of 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 framers 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." chanrobles law library
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 regard to the disability on "persons who were guilty of adultery or concubinage at the time of the
donation," Article 739 itself provides:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

The underscored clause neatly conveys that no criminal conviction for the disqualifying offense is a condition precedent. In fact, it
cannot even be gleaned from the aforequoted provision that a criminal prosecution is needed. On the contrary, the law plainly states
that the guilt of the party may be proved "in the same action" 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 case 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 than judicial 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 pre-trial, 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." chanrobles virtual lawlibrary

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.

Teehankee (Chairman), Makasiar, Muoz Palma, Fernandez and Guerrero, JJ., concur.
 SECOND DIVISION

[G.R. No. 113899. October 13, 1999.]

GREAT PACIFIC LIFE ASSURANCE CORP., Petitioner, v. COURT OF APPEALS AND MEDARDA V.
LEUTERIO, Respondents.

DECISION

QUISUMBING, J.:

This petition for review, under Rule 45 of the Rules of Court, assails the Decision 1 dated May 17, 1993, of the Court of Appeals and
its Resolution 2 dated January 4, 1994 in CA-G.R. CV No. 18341. The appellate court affirmed in toto the judgment of the Misamis
Oriental Regional Trial Court, Branch 18, in an insurance claim filed by private respondent against Great Pacific Life Assurance Co.
The dispositive portion of the trial courts decision reads:

"WHEREFORE, judgment is rendered adjudging the defendant GREAT PACIFIC LIFE ASSURANCE CORPORATION as insurer
under its Group policy No. G-1907, in relation to Certification B-18558 liable and ordered to pay to the DEVELOPMENT BANK OF
THE PHILIPPINES as creditor of the insured Dr. Wilfredo Leuterio, the amount of EIGHTY SIX THOUSAND TWO HUNDRED
PESOS (P86,200.00); dismissing the claims for damages, attorneys fees and litigation expenses in the complaint and counterclaim,
with costs against the defendant and dismissing the complaint in respect to the plaintiffs, other than the widow-beneficiary, for lack of
cause of action." 3

The facts, as found by the Court of Appeals, are as follows:chanroblesvirtual|awlibrary

A contract of group life insurance was executed between petitioner Great Pacific Life Assurance Corporation (hereinafter Grepalife)
and Development Bank of the Philippines (hereinafter DBP). Grepalife agreed to insure the lives of eligible housing loan mortgagors
of DBP.

On November 11, 1983, Dr. Wilfredo Leuterio, a physician and a housing debtor of DBP applied for membership in the group life
insurance plan. In an application form, Dr. Leuterio answered questions concerning his health condition as
follows:jgc:chanrobles.com.ph

"7. Have you ever had, or consulted, a physician for a heart condition, high blood pressure, cancer, diabetes, lung, kidney or stomach
disorder or any other physical impairment?

Answer: No. If so give details ___________.

8. Are you now, to the best of your knowledge, in good health?

Answer: [ x ] Yes [ ] No." 4chanroblesvirtuallawlibrary:red

On November 15, 1983, Grepalife issued Certificate No. B-18558, as insurance coverage of Dr. Leuterio, to the extent of his DBP
mortgage indebtedness amounting to eighty-six thousand, two hundred (P86,200.00) pesos.

On August 6, 1984, Dr. Leuterio died due to "massive cerebral hemorrhage." Consequently, DBP submitted a death claim to
Grepalife. Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage
on November 15, 1983. Grepalife insisted that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused
his death. Allegedly, such non-disclosure constituted concealment that justified the denial of the claim.

On October 20, 1986, the widow of the late Dr. Leuterio, respondent Medarda V. Leuterio, filed a complaint with the Regional Trial
Court of Misamis Oriental, Branch 18, against Grepalife for "Specific Performance with Damages." 5 During the trial, Dr. Hernando
Mejia, who issued the death certificate, was called to testify. Dr. Mejias findings, based partly from the information given by the
respondent widow, stated that Dr. Leuterio complained of headaches presumably due to high blood pressure. The inference was not
conclusive because Dr. Leuterio was not autopsied, hence, other causes were not ruled out.chanroblesvirtual|awlibrary

On February 22, 1988, the trial court rendered a decision in favor of respondent widow and against Grepalife. On May 17, 1993, the
Court of Appeals sustained the trial courts decision. Hence, the present petition. Petitioners interposed the following assigned
errors:jgc:chanrobles.com.ph

"1. THE LOWER COURT ERRED IN HOLDING DEFENDANT-APPELLANT LIABLE TO THE DEVELOPMENT BANK OF
THE PHILIPPINES (DBP) WHICH IS NOT A PARTY TO THE CASE FOR PAYMENT OF THE PROCEEDS OF A MORTGAGE
REDEMPTION INSURANCE ON THE LIFE OF PLAINTIFFS HUSBAND WILFREDO LEUTERIO ONE OF ITS LOAN
BORROWERS, INSTEAD OF DISMISSING THE CASE AGAINST DEFENDANT-APPELLANT [Petitioner Grepalife] FOR
LACK OF CAUSE OF ACTION.

2. THE LOWER COURT ERRED IN NOT DISMISSING THE CASE FOR WANT OF JURISDICTION OVER THE SUBJECT OR
NATURE OF THE ACTION AND OVER THE PERSON OF THE DEFENDANT.

3. THE LOWER COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO PAY TO DBP THE AMOUNT OF P86,200.00
IN THE ABSENCE OF ANY EVIDENCE TO SHOW HOW MUCH WAS THE ACTUAL AMOUNT PAYABLE TO DBP IN
ACCORDANCE WITH ITS GROUP INSURANCE CONTRACT WITH DEFENDANT-APPELLANT.chanroblesvirtual|awlibrary

4. THE LOWER COURT ERRED IN - HOLDING THAT THERE WAS NO CONCEALMENT OF MATERIAL INFORMATION
ON THE PART OF WILFREDO LEUTERIO IN HIS APPLICATION FOR MEMBERSHIP IN THE GROUP LIFE INSURANCE
PLAN BETWEEN DEFENDANT-APPELLANT OF THE INSURANCE CLAIM ARISING FROM THE DEATH OF WILFREDO
LEUTERIO." 6

Synthesized below are the assigned errors for our resolution:chanrob1es virtual 1aw library

1. Whether the Court of Appeals erred in holding petitioner liable to DBP as beneficiary in a group life insurance contract from a
complaint filed by the widow of the decedent/mortgagor?

2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he had hypertension, which would vitiate the
insurance contract?

3. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty six thousand, two hundred (P86,200.00)
pesos without proof of the actual outstanding mortgage payable by the mortgagor to DBP.

Petitioner alleges that the complaint was instituted by the widow of Dr. Leuterio, not the real party in interest, hence the trial court
acquired no jurisdiction over the case. It argues that when the Court of Appeals affirmed the trial courts judgment, Grepalife was held
liable to pay the proceeds of insurance contract in favor of DBP, the indispensable party who was not joined in the
suit.chanrobles.com : virtual law library
To resolve the issue, we must consider the insurable interest in mortgaged properties and the parties to this type of contract. The
rationale of a group insurance policy of mortgagors, 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.
7 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. 8 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. 9

Section 8 of the Insurance Code provides:jgc:chanrobles.com.ph

"Unless the policy provides, where a mortgagor of property effects insurance in his own name providing that the loss shall be payable
to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon the interest of the mortgagor,
who does not cease to be a party to the original contract, and any act of his, prior to the loss, which would otherwise avoid the
insurance, will have the same effect, although the property is in the hands of the mortgagee, but any act which, under the contract of
insurance, is to be performed by the mortgagor, may be performed by the mortgagee therein named, with the same effect as if it had
been performed by the mortgagor." chanrobles.com : virtual law library

The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance, the policy stating that: "In the
event of the debtors death before his indebtedness with the Creditor [DBP] shall have been fully paid, an amount to pay the
outstanding indebtedness shall first be paid to the creditor and the balance of sum assured, if there is any, shall then be paid to the
beneficiary/ies designated by the debtor." 10 When DBP submitted the insurance claim against petitioner, the latter denied payment
thereof, interposing the defense of concealment committed by the insured. Thereafter, DBP collected the debt from the mortgagor and
took the necessary action of foreclosure on the residential lot of private Respondent. 11 In Gonzales La O v. Yek Tong Lin Fire &
Marine Ins. Co. 12 we held:jgc:chanrobles.com.ph

"Insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon. . . . Subject to some
exceptions, insured may thus sue, although the policy is taken wholly or in part for the benefit of another person named or unnamed,
and although it is expressly made payable to another as his interest may appear or otherwise. . . . Although a policy issued to a
mortgagor is taken out for the benefit of the mortgagee and is made payable to him, yet the mortgagor may sue thereon in his own
name, especially where the mortgagees interest is less than the full amount recoverable under the policy, . . . .

And in volume 33, page 82, of the same work, we read the following:chanrob1es virtual 1aw library

Insured may be regarded as the real party in interest, although he has assigned the policy for the purpose of collection, or has assigned
as collateral security any judgment he may obtain." 13chanrobles virtual lawlibrary

And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable
interest or not, and such person may recover it whatever the insured might have recovered, 14 the widow of the decedent Dr. Leuterio
may file the suit against the insurer, Grepalife.

The second assigned error refers to an alleged concealment that the petitioner interposed as its defense to annul the insurance contract.
Petitioner contends that Dr. Leuterio failed to disclose that he had hypertension, which might have caused his death. Concealment
exists where the assured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assured, but he designedly and intentionally withholds the same. 15
Petitioner merely relied on the testimony of the attending physician, Dr. Hernando Mejia, as supported by the information given by the
widow of the decedent. Grepalife asserts that Dr. Mejias technical diagnosis of the cause of death of Dr. Leuterio was a duly
documented hospital record, and that the widows declaration that her husband had "possible hypertension several years ago" should
not be considered as hearsay, but as part of res gestae.

On the contrary the medical findings were not conclusive because Dr. Mejia did not conduct an autopsy on the body of the decedent.
As the attending physician, Dr. Mejia stated that he had no knowledge of Dr. Leuterios any previous hospital confinement. 16 Dr.
Leuterios death certificate stated that hypertension was only "the possible cause of death." The private respondents statement, as to
the medical history of her husband, was due to her unreliable recollection of events. Hence, the statement of the physician was
properly considered by the trial court as hearsay.chanroblesvirtual|awlibrary

The question of whether there was concealment was aptly answered by the appellate court, thus:jgc:chanrobles.com.ph

"The insured, Dr. Leuterio, had answered in his insurance application that he was in good health and that he had not consulted a doctor
or any of the enumerated ailments, including hypertension; when he died the attending physician had certified in the death certificate
that the former died of cerebral hemorrhage, probably secondary to hypertension. From this report, the appellant insurance company
refused to pay the insurance claim. Appellant alleged that the insured had concealed the fact that he had hypertension.

Contrary to appellants allegations, there was no sufficient proof that the insured had suffered from hypertension. Aside from the
statement of the insureds widow who was not even sure if the medicines taken by Dr. Leuterio were for hypertension, the appellant
had not proven nor produced any witness who could attest to Dr. Leuterios medical history. . .

x x x
Appellant insurance company had failed to establish that there was concealment made by the insured, hence, it cannot refuse payment
of the claim." 17chanrobles.com : virtual law library

The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. 18 Misrepresentation
as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and
convincing evidence rests upon the insurer. 19 In the case at bar, the petitioner failed to clearly and satisfactorily establish its defense,
and is therefore liable to pay the proceeds of the insurance.

And that brings us to the last point in the review of the case at bar. Petitioner claims that there was no evidence as to the amount of Dr.
Leuterios outstanding indebtedness to DBP at the time of the mortgagors death. Hence, for private respondents failure to establish
the same, the action for specific performance should be dismissed. Petitioners claim is without merit. A life insurance policy is a
valued policy. 20 Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity
under a policy of insurance upon life or health is the sum fixed in the policy. 21 The mortgagor paid the premium according to the
coverage of his insurance, which states that:

"The policy states that upon receipt of due proof of the Debtors death during the terms of this insurance, a death benefit in the amount
of P86,200.00 shall be paid.

In the event of the debtors death before his indebtedness with the creditor shall have been fully paid, an amount to pay the
outstanding indebtedness shall first be paid to the Creditor and the balance of the Sum Assured, if there is any shall then be paid to the
beneficiary/ies designated by the debtor." 22 (Emphasis omitted)

However, we noted that the Court of Appeals decision was promulgated on May 17, 1993. In private respondents memorandum, she
states that DBP foreclosed in 1995 their residential lot, in satisfaction of mortgagors outstanding loan. Considering this supervening
event, the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. Equity dictates that
 DBP should not unjustly enrich itself at the expense of another (Nemo cum alterius detrimenio protest). Hence, it cannot collect the
insurance proceeds, after it already foreclosed on the mortgage. The proceeds now rightly belong to Dr. Leuterios heirs represented
by his widow, herein private respondent Medarda Leuterio.

WHEREFORE, the petition is hereby DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV 18341 is
AFFIRMED with MODIFICATION that the petitioner is ORDERED to pay the insurance proceeds amounting to Eighty-six
thousand, two hundred (P86,200.00) pesos to the heirs of the insured, Dr. Wilfredo Leuterio (deceased), upon presentation of proof of
prior settlement of mortgagors indebtedness to Development Bank of the Philippines. Costs against petitioner.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

SO ORDERED.

Mendoza, Buena and De Leon Jr., JJ., concur.

Bellosillo, J., on official leave.