Bonifacio Bros.

v Mora (1967)
Source: www.philippinelegalguide.com

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 had 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 complaint before 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