Case Summary (G.R. No. 181132)
Key Dates and Procedural Posture
Trial court proceedings began with a petition for revocation/reduction of insurance proceeds and a request for TRO and preliminary injunction. The trial court initially dismissed the complaint as to the illegitimate children (Order dated September 21, 2004), then, on reconsideration, dismissed the entire case (Resolution dated June 16, 2005). Petitioners appealed to the Court of Appeals, which dismissed the appeal for lack of jurisdiction (Resolution dated January 8, 2008). Petitioners filed a petition for certiorari under Rule 45 in the Supreme Court, which denied the petition.
Applicable Law
- 1987 Philippine Constitution (applicable as decision date is post-1990).
- Insurance Code (notably Section 53 on application of insurance proceeds; Section 12 on forfeiture where beneficiary causes insured’s death).
- Civil Code provisions on donations and prohibited donees (Articles 739, 750, 752, 772, and Article 2011 which defers to special laws for insurance matters).
- Rules of Court (Rule 16, Section 1(g) on motion to dismiss for failure to state a cause of action; Rule 45 for certiorari).
- Relevant jurisprudence cited by the courts (e.g., Southern Luzon Employees’ Ass’n v. Golpeo; Del Val v. Del Val; Insular Life v. Ebrado; and other cited authorities on when Civil Code rules supplement the Insurance Code).
Facts (as pleaded and as asserted in answers)
Petitioners alleged they were the legitimate spouse and children of Loreto; respondents constituted Loreto’s illegitimate family. Petitioners alleged Eva was a concubine and a suspect in Loreto’s killing, disqualifying her from beneficiary status; that the illegitimate children were entitled to only half the legitime of legitimate children; and that petitioners’ legitimes should be protected and satisfied first. Insular admitted that Loreto had represented Eva and the children as legitimate beneficiaries, that it disqualified Eva upon learning she was not a legal wife, and that it paid Odessa’s share while withholding minors’ shares pending guardianship. Grepalife denied designation of Eva, alleged Loreto’s ineligibility for insurance due to age misrepresentation, and denied claim assertions as premature. The illegitimate family was declared in default for failing to answer; petitioners sought injunctive relief and attorneys’ fees.
Trial Court’s Rulings and Rationale
- September 21, 2004: Trial court granted motion to dismiss with respect to Odessa, Karl Brian, and Trisha (holding beneficiaries named in policies have vested rights under Section 53 of the Insurance Code), but retained the case against Eva, Insular, and Grepalife because the designation of a concubine as beneficiary may be void under Article 739 of the Civil Code and the court could entertain a nullity action.
- June 16, 2005 (after motions for reconsideration by Insular and Grepalife): Trial court granted reconsideration and dismissed the entire case. The court accepted insurers’ assertions that Eva had been revoked/disqualified in one or both policies and concluded that the proceeds should be applied to the remaining designated beneficiaries (the illegitimate children). The court also held that distribution of insurance proceeds is governed primarily by the Insurance Code and that Civil Code rules on donations and legitime reduction were inapplicable.
Court of Appeals Disposition
The Court of Appeals dismissed petitioners’ appeal for lack of jurisdiction, treating the trial court’s dismissal for failure to state a cause of action as a pure question of law and therefore not appealable in that posture. The CA also noted petitioners’ failure to timely file reconsideration as to the September 21, 2004 Resolution which became final regarding dismissal as to the illegitimate children.
Legal Issues Presented to the Supreme Court
- Whether, in deciding a motion to dismiss for failure to state a cause of action, the trial court may consider matters outside the complaint, particularly defenses alleged in defendants’ answers.
- Whether the trial court improperly resolved factual matters and assessed probative value by granting defendants’ motions for reconsideration premised on factual allegations in answers that were unproven.
- Whether legitimate heirs are entitled to insurance proceeds designated for a concubine.
Supreme Court’s Legal Analysis on Motion to Dismiss Standard
- A motion to dismiss for failure to state a cause of action must be decided on the allegations in the complaint, assumed true, and the complaint must contain the three elements of a cause of action: legal right of plaintiff, correlative obligation of defendant, and act/omission violating the legal right.
- Exceptions permit consideration of matters outside the complaint when falsity is subject to judicial notice, allegations are legally impossible, refer to facts inadmissible in evidence, are contradicted by the record or documents in the pleading, or when parties have submitted evidence by stipulation or during hearings. Relevant authorities support these exceptions.
Application of Governing Law to the Case Facts
- The face of the complaint shows petitioners were not named beneficiaries; insurance proceeds are generally applied exclusively to the proper interest of the person named (Section 53, Insurance Code). Beneficiaries thus have vested rights to proceeds upon maturation. Petitioners are third parties to the insurance contracts and, absent a legal basis, have no direct entitlement to proceeds.
- The exception where proceeds may redound to the estate occurs only when no beneficiary is designated or the only designated beneficiary is disqualified by law. Disqualification of a concubine is addressed via Article 739 of the Civil Code only insofar as it prohibits certain donations; if a concubine is named beneficiary, the contract remains valid but the award may go to the legal heirs. However, here the insurers’ actions and the valid designation of the illegitimate children as beneficiaries meant proceeds, including any portion that might have been allocated to Eva, would devolve to those designated children rather than to petitioners.
- The Court concluded that the trial court’s acceptance of insurers’ factual averments (revocation/disqualification of Eva and valid
Case Syllabus (G.R. No. 181132)
Nature of the Case and Relief Sought
- Petition for review on certiorari under Rule 45 seeking reversal and setting aside of the Court of Appeals Resolution dated January 8, 2008 in CA-G.R. CV No. 85948, which dismissed petitioners' appeal for lack of jurisdiction.
- Underlying action in the Regional Trial Court, Branch 29: petition for revocation and/or reduction of insurance proceeds on the ground that they were void and/or inofficious, with a prayer for temporary restraining order (TRO) and writ of preliminary injunction.
- Petitioners also prayed for actual litigation expenses and attorney's fees in the amount of P320,000.00.
Parties and Their Alleged Statuses
- Petitioners: Heirs of Loreto C. Maramag, represented by surviving spouse Vicenta Pangilinan Maramag (legitimate family).
- Respondents:
- Eva Verna de Guzman Maramag (alleged concubine of Loreto; alleged suspect in Loreto's killing).
- Odessa de Guzman Maramag, Karl Brian de Guzman Maramag, Trisha Angelie Maramag (alleged illegitimate children of Loreto with Eva).
- The Insular Life Assurance Company, Ltd. (Insular).
- Great Pacific Life Assurance Corporation (Grepalife).
- Statusal allegations included: petitioners as legitimate wife and children; respondents Eva and her children as the illegitimate family of Loreto.
Relevant Insurance Policies and Monetary Amounts
- Insular Life policies:
- Policy No. A001544070 — P1,500,000.00.
- Policy No. 1643029 (also cited as A001693029 in the record) — P500,000.00.
- Grepalife plans:
- Pension Plan PTLIG 1000326-0000 — maturity value P1,000,000.00.
- Pension Plan PTLIG 1000344-0000 — maturity value P500,000.00.
- Memorial Plan M0109-159064-0000 — plan value P50,000.00.
- Allegation that part of Insular proceeds had already been released in favor of Odessa; remaining proceeds for minor children Karl Brian and Trisha Angelie withheld pending appointment of legal guardian.
Petitioners’ Core Allegations and Legal Contentions
- Eva was a concubine of Loreto and a suspect in his killing; as such, she was disqualified to receive any proceeds of Loreto’s insurance policies.
- Eva’s designation as beneficiary was void (or subject to revocation/forfeiture), and portions of the proceeds released to Odessa and to be released to Karl Brian and Trisha Angelie were inofficious and should be reduced to protect petitioners’ legitimes.
- Illegitimate children (Odessa, Karl Brian, Trisha Angelie) allegedly entitled only to one-half of the legitime of legitimate children; petitioners could not be deprived of their legitimes which should be satisfied first.
- Sought TRO and preliminary injunction to prevent further release of proceeds.
- Sought award of P320,000.00 for litigation expenses and attorney’s fees.
Answers, Defenses and Counterclaims of Respondents
- Insular’s Answer:
- Admitted Loreto misrepresented Eva as his legitimate wife and the three children as legitimate.
- When Insular ascertained that Eva was not the legal wife, it disqualified her as beneficiary in one policy and divided proceeds among the remaining designated beneficiaries (the children).
- Released Odessa’s share (of age); withheld shares of minors Karl Brian and Trisha Angelie pending guardianship letters.
- Contended petition failed to state cause of action insofar as plaintiffs sought to declare Eva’s designation void because Loreto purportedly revoked Eva in Policy No. A001544070 and Insular disqualified her in the other policy; Insular claimed it was bound to honor designations pursuant to Section 53 of the Insurance Code.
- Grepalife’s Answer with Compulsory Counterclaim:
- Alleged Eva was not designated beneficiary in its policy(ies); that claims by Odessa, Karl Brian and Trisha Angelie were denied because Loreto was ineligible due to material misrepresentation of age in his application (claimed birthdate rendered him over age limit).
- Alleged case premature as no claim filed by Loreto’s legitimate family; contended succession law does not apply when designation of insurance beneficiaries is clear.
- Asserted premiums had been refunded in its policy.
- Both insurers raised defenses that the insurance proceeds belonged to designated beneficiaries and not to estate/heirs, invoking the Insurance Code.
Procedural History in the Trial Court
- Summons by publication resorted to due to unknown whereabouts of Eva and her children; those respondents failed to answer and were declared in default on May 7, 2004 upon motion of petitioners.
- Pre-trial on July 28, 2004: Insular and Grepalife moved for resolution of issues raised in their answers first; trial court ordered petitioners to comment within 15 days.
- Trial court (September 21, 2004) Resolution:
- Granted motion to dismiss as to defendants Odessa, Karl Brian and Trisha Maramag; ordered action to proceed with respect to Eva, Insular and Grepalife.
- Rationale included reliance on Article 2011 of the Civil Code (insurance governed by special laws) and Section 53 of the Insurance Code (proceeds applied exclusively to proper interest of person for whose benefit it is made), plus prior jurisprudence (e.g., Enriquez v. Sun Life; Grecio v. Sunlife; Del Val v. Del Val; Southern Luzon Employees' Ass'n v. Golpeo).
- Recognized cause of action against Eva on ground that designation of a concubine as beneficiary might be void under Article 739 of the Civil Code and that indemnity in such case should go to legal heirs.
- Motions for Reconsideration filed by Insular and Grepalife, arguing petition failed to state cause of action; Insular reiterated disqualification/revocation of Eva in the policies; Grepalife reiterated premiums refunded and other issues.