Title:Artex Development Co VS Wellington InsuranceTopic: ReinsuranceFACTS:

Wellington insurance insured for P24,346,509 the building stocks andmachinery of

plaintiff Artex against loss or damage by fire or lightning uponaugust 2, 1963 with
an additional sum of P833,034.
Another insurance against business interruption (use and occupancy)forP5,200,000.
On September 22, 1963 the building, and machineries were burned and anotice of
loss and damage was given to Wellington.
Insurance adjusters computed the loss for the fire as P10,106,544.40 andWellington
paid only 6,481,870.07, leaving a balance of 3,624,683.43
The computed business interruption loss was P3M but Wellington paid
onlyP1,864,134.08 leaving a balance of P1,748,460 (computation based on case)
Artex through counsel Norberto Quisumbing made a manifestation that onlyabout
P397,ooo is the remaining balance and liability which was the subjectof reinsurance
with Alexander and Alexander Inc, of New York, Artexacknowledging here the receipt
of P3,600,000 as FINAL and FULLSETTLEMENT of all claims against Welllington
Artex further prays to the court to affirm the lower courts decision of liquidation
and prayed for modification of the amount of liability to be fixed toP397,813.00 plus
12% interest per annum thereof for the late payment untilapril 10, 1969 and
attorneys fees of 15% of the recovery, expenses of litigation, no writ of execution
however to be made within 3years from july10, 1969 per collateral agreement of
the parties.
Wellington in its brief raises the issue that Artex deemed to have agreed tolook
SOLELY to the reinsurers for indemnity in case of loss since their paid upcapital
stock is only P500,000 and that they have to secure such reinsurancecoverage the
over P24M fire insurance coverage of the policy issued byWellington to

Artex.Issue:WON reinsurance contract of the parties makes the insured to look

SOLELY tothe reinsurers for indemnity in case of lossRuling:NO, the insured who is
not directly a party or privy to the reinsurance contractbetween Wellington and
Alexander and Alexander Inc., cannot demand enforcementof such insurance
contracts.The Contracts take effect only between the parties, their assigns and heirs
asprovide by Art 1311 of our civil code. Further it provides that a contract
withstipulations pour autrui or in favor of a third person not a party to the contract,
theparties must have CLEARLY and DELIBERATELY conferred favor upon a
thirdperson.