Insurance Case Digest: Bonifacio Bros., Inc. V.

Mora (1967)
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