G.R. No. L-20853 May 29, 1967
Lessons Applicable: stipulation pour autrui (Insurance)
FACTS:
- Enrique Mora, owner of Oldsmobile sedan model 1956, mortgaged it to H.S. Reyes, Inc., with the condition that they would be the beneficiary of its insurance
- June 23, 1959: The sedan was insured with State Bonding & Insurance Co., Inc
- During the period of effectivity, the sedan met an accident and it was appraised by Bayne Adjustment Co. and repaired it with Bonifacio Bros. and the parts were supplied by Ayala Auto Parts Co. This was all done without the knowledge of H.S. Reyes. Enrique was billed P2,102.73 through Bayne. The insurance company drew a check deducting P100 for franchise and entrusted it to Bayne payable to Enrique or H.S. Reyes.
- Still unpaid, the sedan was delivered to Enrique without the Knowledge of H.S. Reyes
- Bonifacio Bros and Ayala Auto filed in the MTC on the theory that the insurance proceeds should be paid directly to them
- CFI affirmed MTC: H.S. Reyes, Inc. as having a better right
ISSUE: W/N there is privity between Bonifacio Bro and Ayala Auto against the insurance company
HELD: NO. Judgment affirmed
- GR: contracts take effect only between the parties thereto
- EX: some specific instances provided by law where the contract contains some stipulation in favor of a third person - stipulation pour autrui
- provision in favor of a third person not a party to the contract
- third person is allowed to avail himself of a benefit granted to him by the terms of the contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such person
- stipulation pour autrui must be clearly expressed - none here
- "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.
- stipulation merely establishes the procedure that the insured has to follow in order to be entitled to indemnity for repair
- a policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract of trust, expressed or implied between the insured and third person
- "loss" in insurance law embraces injury or damage
- The injury or damage sustained by the insured in consequence of the happening of one or more of the accidents or misfortune against which the insurer, in consideration of the premium, has undertaken to indemnify the insured