G.R. No.

23703 September 28, 1925

HILARIO GERCIO, plaintiff-appellee, vs. SUN LIFE ASSURANCE OF CANADA, ET AL., defendants.
SUN LIFE ASSURANCE OF CANADA, appellant.

Facts:
On January 29, 1910, an insurance policy was issued on the life of Hilario Gercio by Sun Life Assurance Co.
Being a twenty-year endowment policy, the insurance company agreed to pay him P2,000 on February 1, 1930. If he
dies before said date, the beneficiary would be Andrea Zialcita, who was then his lawful wife, if she should survive
him. Otherwise, it would be the executors, administrators, or assigns.
The policy did not include any provision reserving to the insured the right to change the beneficiary.
Near the end of 1919, Andrea was convicted of adultery. On September 4, 1920, a decree of divorce was issued
which had the effect of completely dissolving the bonds of matrimony contracted between Hilario and Andrea.
On March 4, 1922, Hilario formally notified Sun Life that he had revoked his donation in favor of Andrea Zialcita, and
that he had designated in her stead his present wife, Adela Garcia de Gercio, as the beneficiary of the policy.
He requested to eliminate Andrea as the beneficiary. Sun Life refused.

Issue: WON the insured husband has the power to change the former wifes designation as beneficiary where the
insured and the beneficiary have been divorced and the policy of insurance does not expressly reserve to the insured the
right to change the beneficiary?

Held/Ratio: NO.
As a primary consideration, the Court dealt with which law to be applied among the Code of Commerce and the Civil
Code which were both in force when the policy was taken out in 1910 or the Insurance Act No. 2427, which became
effective in 1914, considering that the effort to change the beneficiary was made in 1922.
Both the Code of Commerce and the Insurance Act were held to have no provision either permitting or prohibition the
insured to change the beneficiary. Meanwhile, the application of Civil Code provisions was deemed problematic in
light of characterizing an insurance policy as a donation, which by virtue of Article 1344, is prohibited between
spouses.
Therefore, the deficiencies in the law will have to be supplemented by the general principles prevailing on the subject.
In light of this, the Court cited a handful of US cases.
Generally, these cases ruled along the line that the beneficiary acquires a vested interest in the policy from the
moment of its inception, and such property right cannot be impaired by any action of the insured unless such right
has been expressly reserved him/her in the stipulations of the insurance policy.
In the instant case, the wife had an insurable interest in the life of her husband upon the issuance of the policy and
has acquired an absolute vested interest therein. Since the policy contained no provision authorizing a change of
beneficiary without the beneciarys consent, the insured cannot make such a change.
The Court accordingly held that the life insurance policy of the husband made payable to his former wife as
beneficiary is the separate property of the beneficiary and beyond the control of the husband.
As the divorce merely dissolved the community property, and in the absence of a statute to the contrary, the
subsequent divorce does not destroy the wifes rights under the policy.

Concurring in the Result. Johnson, J.

The question presented is a purely academic one. The rights of the persons involved in the insurance policy are not
yet due and payable. It may never become due and payable.
Many other things could occur before the policy becomes due. The action is premature and should have been
dismissed.