THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, PETITIONER, VS. HONORABLE GREGORIO G. PINEDA, IN HIS CAPACITY AS JUDGE OF THE COURT OF FIRST INSTANCE OF RIZAL, AND RODOLFO C. DI…

Challenged before Us in this petition for review on certiorari
are the Orders of the respondent Judge dated March 19, 1980 and June 10, 1980
granting the prayer in the petition in Sp. Proc. No. 9210 and denying
petitioner’s Motion for Reconsideration, respectively.

The undisputed facts are as follows:

On January 15, 1968,
private respondent procured an ordinary life insurance policy from the
petitioner company and designated his wife and children as irrevocable
beneficiaries of said policy.

Under date February 22, 1980 private respondent filed a petition
which was docketed as Civil Case No. 9210 of the then Court of First Instance
of Rizal to amend the designation of the
beneficiaries in his life policy from irrevocable to revocable.

Petitioner, on March 10,
1980 filed an Urgent Motion to Reset Hearing.  Also on the same date, petitioner filed its
Comment and/or Opposition to Petition.

When the petition was called for hearing on March 19, 1980, the respondent Judge Gregorio G.
Pineda, presiding Judge of the then Court of First Instance of Rizal, Pasig Branch XXI, denied
petitioner’s Urgent Motion, thus allowing the private respondent to adduce
evidence, the consequence of which was the issuance of
the questioned Order granting the petition.

Petitioner promptly filed a Motion for Reconsideration but the
same was denied in an Order dated June
10, 1980.  Hence, this
petition raising the following issues for resolution:

I

WHETHER OR NOT THE DESIGNATION OF THE IRREVOCABLE BENEFICIARIES
COULD BE CHANGED OR AMENDED WITHOUT THE CONSENT OF ALL THE IRREVOCABLE
BENEFICIARIES.

II

WHETHER OR NOT THE IRREVOCABLE BENEFICIARIES HEREIN, ONE OF WHOM
IS ALREADY DECEASED WHILE THE OTHERS ARE ALL MINORS, COULD VALIDLY GIVE CONSENT
TO THE CHANGE OR AMENDMENT IN THE DESIGNATION OF THE IRREVOCABLE BENEFICIARIES.

We are of the opinion that his Honor, the respondent Judge, was
in error in issuing the questioned Orders.

Needless to say, the applicable law in the instant case is the
Insurance Act, otherwise known as Act No. 2427 as amended, the policy having
been procured in 1968.  Under the said
law, 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 (Gercio v. Sun Life Ins. Co. of Canada, 48
Phil. 53; Go v. Redfern and the International
Assurance Co., Ltd., 72 Phil. 71).

In this regard, it is worth noting that the Beneficiary
Designation Indorsement in the policy which forms
part of Policy Number 0794461 in the name of Rodolfo Cailles
Dimayuga states that the designation of the
beneficiaries is irrevocable (Annex “A” of Petition in Sp. Proc. No.
9210, Annex “C” of the Petition for Review on Certiorari), to wit:

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. (Petitioner’s Memorandum, p.72, Rollo)

Be it noted that the foregoing is a fact which the private
respondent did not bother to disprove.

Inevitably therefore, based on the aforequoted
provision of the contract, not to mention the law then applicable, it is only
with the consent of all the beneficiaries that any change or amendment in the
policy concerning the irrevocable beneficiaries may be legally and validly
effected.  Both the law and the policy do
not provide for any other exception, thus, abrogating the contention of the
private respondent that said designation can be amended if the Court finds a
just, reasonable ground to do so.

Similarly, the alleged acquiescence of the six (6) children
beneficiaries of the policy (the beneficiary-wife predeceased the insured)
cannot be considered an effective ratification to the change of the
beneficiaries from irrevocable to revocable. 
Indubitable is the fact that all the six (6) children named as
beneficiaries were minors at that time,* for which reason, they could not
validly give their consent.  Neither
could they act through their father-insured since their interests are quite
divergent from one another.  In point is
an excerpt from the Notes and Cases on Insurance Law by Campos
and Campos, 1960, reading –

“The insured xxx can do nothing to divest the beneficiary
of his rights without his consent.  He
cannot assign his policy, nor even take its cash surrender value without the
consent of the beneficiary.  Neither can
the insured’s creditors seize the policy or any right thereunder.  The insured may not even add another
beneficiary because by doing so, he diminishes the amount which the beneficiary
may recover and this he cannot do without the beneficiary’s consent.

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. 
Where there is nothing in the contract which is contrary to law, good
morals, good customs, public policy or public order the validity of the
contract must be sustained.  Likewise,
contracts which are the private laws of the contracting parties should be
fulfilled according to the literal sense of their stipulations, if their terms
are clear and leave no room for doubt as to the intention of the contracting
parties, for contracts are obligatory, no matter in what form they may be,
whenever the essential requisites for their validity are present (Phoenix
Assurance Co., Ltd. vs. United States Lines, 22 SCRA 675, Phil. American
General Insurance Co., Inc. vs. Mutuc, 61 SCRA 22).

In the recent case of Francisco Herrera vs. Petrophil
Corporation, 146 SCRA 385, this Court ruled that:

“x x x it is settled that the parties may establish such
stipulations, clauses, terms, and conditions as they may want to include; and
as long as such agreements are not contrary to law, good morals, good customs,
public policy or public order, they shall have the force of law between them.”

Undeniably, the contract in the case at bar, contains the
indispensable elements for its validity and does not in any way violate the
law, morals, customs, orders, etc. leaving no reason for Us to deny sanction
thereto.

Finally, the fact that the contract of insurance does not contain
a contingency when the change in the designation of beneficiaries could be
validly effected means that it was never within the
contemplation of the parties.  The lower
court, in gratuitously providing for such contingency, made a new contract for
them, a proceeding which we cannot tolerate. 
Ergo, We cannot help but conclude that the lower court acted in excess
of its authority when it issued the Order dated March 19, 1980 amending the
designation of the beneficiaries from “irrevocable” to “revocable” over the
disapprobation of the petitioner insurance company.

WHEREFORE, premises considered, the questioned Orders of
the respondent Judge are hereby nullified and set aside.

SO ORDERED.

Melencio-Herrera, (Chairman), Sarmiento, and Regalado, JJ., concur.

Padilla, J., no part.

*
Annex “C”, Petition, p.18, Rollo