Philam v Pineda G.R. No. L-54216 July 19, 1989

J. Paras 

Facts:

Pineda  procured an ordinary life insurance policy from the petitioner company and designated his wife and children as irrevocable beneficiaries.

He then filed a petition to amend the designation of the beneficiaries in his life policy from irrevocable to revocable.

The judge granted the request.

Petitioner promptly filed a motion but was denied. Hence, this petition.

Issues:

1. WON the designation of the irrevocable beneficiaries could be changed or amended without the consent of all the irrevocable beneficiaries.

2. WON the irrevocable minor beneficiaries could give consent to the change in designation

Held: No to both. Petition dismissed.

Ratio:

Under the Insurance Act, the beneficiary designated in a life insurance contract cannot be changed without the consent of the beneficiary because he has a vested interest in the policy.

There was an express stipulation to this effect: “It is hereby understood and agreed that, notwithstanding the provisions of this policy to the contrary, inasmuch as the designation of the primary/contingent beneficiary/beneficiaries in this Policy has been made without reserving the right to change said beneficiary/ beneficiaries, such designation may not be surrendered to the Company, released or assigned; and no right or privilege under the Policy may be exercised, or agreement made with the Company to any change in or amendment to the Policy, without the consent of the said beneficiary/beneficiaries.”

The alleged acquiescence of the six (6) children beneficiaries of the policy cannot be considered an effective ratification due to the fact that they were minors. Neither could they act through their father insured since their interests are quite divergent from one another.

Therefore, the parent-insured cannot exercise rights and/or privileges pertaining to the insurance contract, for otherwise, the vested rights of the irrevocable beneficiaries would be rendered inconsequential.  

Of equal importance is the well-settled rule that the contract between the parties is the law binding on both of them and for so many times, this court has consistently issued pronouncements upholding the validity and effectivity of contracts. Likewise, contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations, for contracts are obligatory, no matter in what form they may be, whenever the essential requisites for their validity are present

The change in the designation of was not within the contemplation of the parties. The lower court instead made a new contract for them. It acted in excess of its authority when it did so.