G.R. No. 54216 July 19, 1989
THE PHILIPPINE AMERICAN INSURANCE COMPANY, petitioner, vs. HONORABLE GREGORIO G. PINEDA in his capacity as Judge of the Court of First Instance of Rizal, and RODOLFO C. DIMAYUGA, respondents.

FACTS

On January 15, 1968, private respondent Rodolfo Dimayuga procured an ordinary life insurance policy from petitioner Philippine American Insurance Company. He designated his wife and children as irrevocable beneficiaries. On February 22, 1980, Dimayuga filed a petition in the Court of First Instance of Rizal to amend the designation from irrevocable to revocable. The petitioner insurance company filed an opposition.
When the petition was heard, respondent Judge Gregorio Pineda denied the insurer’s motion to reset, allowed Dimayuga to present evidence, and subsequently issued an order granting the petition to change the beneficiary designation. The insurer’s motion for reconsideration was denied. The insurer elevated the case, arguing the change required the beneficiaries’ consent and that the lower court acted in excess of its authority.

ISSUE

The primary issue is whether the designation of irrevocable beneficiaries in a life insurance policy can be changed to revocable without the consent of all such beneficiaries.

RULING

The Supreme Court ruled in the negative, nullifying the orders of the respondent judge. The legal logic is anchored on the applicable Insurance Act (Act No. 2427) and the specific terms of the insurance contract. Under the prevailing law, an irrevocable beneficiary acquires a vested interest in the policy, and any change, surrender, assignment, or amendment cannot be effected without that beneficiary’s consent. This principle, established in precedents like Gercio v. Sun Life, is contractualized in the policy’s Beneficiary Designation Indorsement, which explicitly states no change can be made without the consent of the irrevocable beneficiaries.
The Court rejected the argument that a court could authorize such a change upon finding a just and reasonable ground, as neither the law nor the contract provides for such an exception. It also found the alleged acquiescence of the children beneficiaries legally ineffective because all were minors at the time and thus incapable of giving valid consent. Their father, the insured, could not act on their behalf due to a conflict of interest, as his desire to change the designation was adverse to their vested rights. The Court emphasized that contracts, as the private law of the parties, must be fulfilled according to their clear stipulations when they are not contrary to law or public policy. By ordering the amendment over the insurer’s objection, the lower court effectively made a new contract for the parties, an act beyond its authority.