LUZ B. PASCUA, PLAINTIFF AND APPELLANT, VS. THE EMPLOYEES SAVINGS AND LOAN ASSOCIATION OF THE MANILA WATER SYSTEM, DEFENDANT AND APPELLEE. BEATRIZ MANINGAS VDA. DE CABRERA, GUAR…

Leoncio G. Pascua, who died in 1956, was formerly an employee of the
Metropolitan Water District (which was subsequently merged with the
National Waterworks and Sewerage Authority). As such employee, he
became in 1947, upon application, a member of the Employee’s Savings A
Loan Association of the Manila Water System (hereinafter referred to as
the Association), a duly organized non-stock corporation to which any
employee of the Metropolitan Water District is qualified to become a
member. Section 25 of the Constitution and By-Laws of the said
association provides:

“SEC. 25 Whenever any active member of the
Association dies, all the other members shall contribute the sum of
FIVE PESOS (P5.00) each and the amount thus collected shall be payable
to the beneficiary named in the membership application papers of the
deceased member.”

In his membership application, the deceased Leoncio 6. Pascua
designated his wife, Luz B. Pascua, as his beneficiary. However, by
letter dated February 29, 1956 addressed to the Board of Directors of
the Association, the said deceased requested that “my son, Leoncio M.
Pascua, Jr., born of Beatriz M. Vda. de Cabrera, be made a
co-beneficiary, in equal share, with my legal wife, Luz B. Pascua, in
whatever interests I have in this Association.” The request was
approved by the Board in its resolution No. 30, series of 1956.

After the death of Leoncio G. Pascua and upon the refusal of the Association to deliver to her in full the fund benefits^[1]
allegedly due her as the beneficiary designated by the deceased in his
application for membership, Luz B. Pascua filed with the Court of First
Instance of Manila the present action against the Association.

In its answer, the defendant Association expressed willingness to
pay the benefits to the rightful claimants, but in justification of its
refusal to deliver the funds in full to the plaintiff, it alleged,
among other things, that while plaintiff was named beneficiary in the
membership application of her deceased husband, the same was duly
modified by the deceased himself during his lifetime by including his
son, Leoncio M. Pascua, Jr., born of Beatriz M. Vda. de Cabrera, as
co-beneficiary with said plaintiff in equal share to said funds or
benefits. The Association also alleged that the original designation of
beneficiary by the deceased was apparently further modified by the said
deceased in a document purporting to be his last will and testament now
under probate, naming Beatriz M. Vda. de Cabrera a co-beneficiary with
minor Leoncio M. Pascua, Jr., to the half interest left by the said
deceased in the Association.

Leoncio M. Pascua, Jr., thru his guardian ad litem, having been
allowed by leave of court to intervene, also filed an answer claiming
that as one of the beneficiaries he is entitled to one-half of the
benefits due from the defendant Association. Upon the filing of an
adequate bond, the sum of P2,000.00 was partially paid to him by the
Association.

After trial, the lower court rendered decision, ordering the
Association to pay to the intervenor one-half of the benefits, less the
sum of P2,000.00 already received by the latter, with costs against the
plaintiff. From that decision, the plaintiff appealed to the Court of
Appeals. Upon joint motion by the intervenor and the defendant, with
plaintiff’s conformity, the case was elevated to this Court. The
decisive question to be determined is whether or not the deceased
Leoncio G. Pascua validly changed his beneficiary as to a portion of
the benefits due upon his death from the defendant Association by
designating his son, herein intervenor-appellee, as co-beneficiary of
his legal wife. The weight of authority in the United States answers
the question in the affirmative. Thus—

“Even in the absence of any provision in the
Constitution or by laws of the society expressly authorizing a change
of beneficiaries, it is generally held that inasmuch as a member of a
benevolent and beneficial association may terminate his membership
therein at any time he sees fit and thereby destroy all opportunity on
the part of his beneficiary to enjoy the benefits called for by his
certificate, a beneficiary named in such certificate does not acquire
any vested right in it, nor a right to anything, during the lifetime of
the member to whom it is issued, but merely an expectancy which becomes
a vested or absolute right to its proceeds only upon the death of a
member, after which time such right cannot be impaired. Consequently,
where as is usually the case, the beneficiary under the certificate is
a mere volunteer having no contractual relations with either the
association or the assured, a member is deemed to have the power to
change his beneficiary at will, so long as the statutes of the state or
rules and regulations of the order do not expressly prohibit such a
change.” (38 Am. Jur. pp. 570-571.)

In other words, a member of a mutual aid association, in the absence
of a contract between him and the original beneficiary based upon a
sufficient consideration by which the latter is to receive a benefit,
and there is nothing to the contrary in the statutes or in the
association’s charter or laws, may, at his pleasure, designate a new
beneficiary and thus defeat the original beneficiary’s contingent
rights to benefits. (See also 46 C. J. S. pp. 950-952.) Unlike in
insurance contracts, therefore, where the insured cannot revoke a
designation of beneficiary named in his policy unless he reserved the
right to make such a change (Gercio vs. Sun Life Assurance
Co., 48 Phil., 53), in mutual benefit societies, like the defendant
Association, the rule is that a member has the power to change his
beneficiary at will, so long as the statutes or the rules and
regulations of the society do not expressly prohibit such change.

In this jurisdiction, we are not aware of any law expressly
prohibiting the change of beneficiary in mutual benefit associations or
societies. Plaintiff does not pretend that her designation as
beneficiary was for some sufficient consideration. And while the
charter and by-laws of the defendant Association do not expressly
authorize a member to change beneficiaries, it, however, does not also
prohibit the making of such change; It seems clear, therefore, that the
deceased Leoncio G. Pascua had a perfect right to designate his son,
herein intervenor-appellee, a co-beneficiary of his wife. The defendant
Association itself, recognizing the right of its members to change
beneficiaries, approved the designation.

Plaintiff argues that since this Court, in the case of Southern
Employees Association vs. Gulpeo et al. (96 Phil., 83) has opined that
mutual death benefits are analogous to insurance benefits, the
principles of insurance, especially the prohibition against the change
of beneficiary in the absence of an express reservation thereto, should
be applied to mutual aid associations. This Court, however, in the case
cited, did not consider the plaintiff therein, a mutual benefit
association, as a regular insurance company. And while there is no
denying that a mutual benefit association is similar to an insurance
company in several respects, the difference between them in respect to
the right to. change beneficiaries, however, has been frequently
commented upon and is firmly established. (Supreme Council R. A. vs. Behrend, 247 U. S. 394.)

“For most purposes, mutual benefit associations are
insurance companies and certificates issued by them are policies of
life insurance. There are, however, some essential differences, one of
which is the power on the part of the assured in mutual benefit
associations to change the beneficiary; Holland vs. Taylor,
111 Ind. 121.12 N.E. 116. In a policy of insurance, the beneficiary has
a vested right. In a benevolent society, the beneficiary has no vested
right in the certificate before the death of the member; Masonic
Benevolent Association vs. Bunch, 109 Mo. 560, 19 S.W. 25 * * * The
member may change the beneficiary without the latter’s consent; Masonic
Benevolent Association vs. Bunch, supra; he may change as to a portion of the insurance (mutual benefit). (Woodruff vs. Tillman, 70 N. W. 420.” (I Bouvier’s Law Dictionary, 336.)

It is also argued for plaintiff that the notarial will of the
deceased Leoncio G. Pascua, containing the disposition: “Ang kalahati
ng abuloy ng Employees’ Savings Loan Association of the Manila Water
System ng M.W.D. ay dapat maibigay din sa nasabing mag-ina (herein
intervenor-appellee and his mother)”, which was executed later than the
letter of the deceased designating the intervenor as plaintiff’s
co-beneficiary, abrogated the “disposition” in said letter in favor of
the intervenor alone. And as the will is still under probate, the
intervenor, according to plaintiff, cannot take anything by virtue
thereof. Benefits front a mutual benefit association, however, like
proceeds of an insurance policy, belong exclusively to the beneficiary
and not to the member, who has no property in them, but merely a power
to appoint someone to receive them. (46 C. J. S. 942.) The disposition
of such benefits, therefore, is not governed by the law on succession.
Moreover, “an invalid or informal will, although inoperative as a
bequest, may constitute a sufficient designation of beneficiaries.” (46
C. J. S. 945). Consequently, the probate of a will is not a condition
precedent to the payment of mutual aid benefits to the beneficiaries
designated in said will.

It would appear that Beatriz M. Vda. de Cabrera, herein intervenor’s
mother, was, together with said intervenor, designated in the will
aforementioned as beneficiary to one-half of the benefits due from the
defendant Association. She has, however, not claimed for herself any
portion of said benefits. In the circumstances, we see no necessity for
disturbing the judgment of the lower court adjudicating one-half of the
benefits due from defendant Association to herein intervenor-appellee.

Wherefore, the decision appealed from is hereby affirmed. Without costs.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Barrera, JJ., concur.

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^[1] The net amount credited
in favor of the deceased Leoncio G. Pascua and payable to his
beneficiary or beneficiaries totalled P6,067.12.