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MELECIO COQUIA, Maria Espanueva and Manila Yellow Taxicab Co. Inc.

, ⇒ The heirs have a direct cause of action. They could have

plaintiffs-appellees, vs. FIELDMEN’S INSURANCE CO., INC., defendant- maintained an independent action w/o the assistance of the insured. All the
appellant [1968] more that they can properly join the latter in filing this complaint.

⇒ Dec. 1, 1961: Fieldmen’s Insurance (Company) issued in favor of Manila 2. WON insured failed to comply w/the provisions of the policy
Yellow Taxicab (Insured) a common carrier accident insurance policy from concerning arbitration.
the period of Dec. 1, 1961 up to Dec. 1, 1962. Terms of the contract: ⇒ Claim is based on Sec. 17 of the policy w/c provides that should any
1. Company will indemnify the Insured in the event of accident caused difference/dispute arise, it shall be referred to the decision of a single
by/arising out of the use of Motor Vehicle against all sums w/Insured arbitrator agreed upon by both parties or failing such agreement, to the
will be legally liable to pay in respect of death/bodily injury to any fare- decision of 2 arbitrators.
paying passenger including the driver, conductor, and/or inspector ⇒ However, none of the parties invoked this section or made any reference to
riding in the motor vehicle insured at the time of accident/injury. arbitration during the negotiations before case was instituted. Counsels did
2. In the event of the death of any person entitled to indemnity, the not suggest the settlement of the issue by arbitration. Such may be
Company will indemnify his personal representatives as though they considered as a waiver of their respective rts to demand arbitration.
were the Insured, observe, fulfill & be subject to the terms of this policy,
insofar as they can apply. Holding: Decision appealed from affirmed in toto.
3. Company has the option to make the indemnity payable directly to the
claimants/heirs of claimants w/ or w/o securing the consent of or prior
notification to the Insured.
⇒ Feb. 10, 1962: Insured’s taxicab driven by Carlito Coquia met
an accident as a result of w/c, the driver died. Insured filed for a claim of
P5k, Company then offered to pay P2k. Insured rejected such & made a
counter-offer of P4k but such was rejected. Thus, Insured & heirs of Carlito
filed a complaint against the Company to collect proceeds of the policy.
⇒ Trial court sentenced company to pay plaintiffs P4k + costs.

Issues & Ratio:

1. WON the Coquias (heirs of the driver) have a contractual relation
with the company & thus entitled to indemnity. – YES.
⇒ General rule: only parties to a contract may bring an action
based thereon.
⇒ Exception: CC Art. 1311 – If a contract should contain some
stipulation in favor of a 3rd person, he may demand its fulfillment provided
he communicated his acceptance to the obligor before its revocation.
⇒ Exception is the well-known principle concerning contracts
pour autrui, enforcement of w/c may be demanded by a 3rd party for whose
benefit it was made, although not a party to the contract, before the
stipulation in his favor has been revoked.
⇒ Terms of the policy clearly show that the heirs of the driver are
entitled to indemnity. True intention of the policy was to protect the liabilities
of the insured towards the passengers of the motor vehicle & the public or
third persons in other words.
⇒ This is further strengthened by the fact that the driver paid
50% of the corresponding premiums w/c were deducted from his weekly