1 Bonifacio Vs.

Mora

Enrique Mora . owner of oldsmobile sedan model 1956, bearing plate no. Qc mortgaged the same to the
H.S reyes, Inc. with the condition that the former would insure the automobile with the latter as
beneficiary. The automobile was thereafter insured on with the state bonding & INSURACE CO, INC. AND
MOTOR CAR INSURANCE POLICY a-0615 WAS ISSUED TO ENRIQUE Mora. One of the pertinent provisions
is that the insured may authorize the repair of the motor vehicle necessitated by damage for which the
company may be liable under this policy provided that : a. the estimated cost such repair does not
exceed the authorized repair limit, b. a detailed estimate of the cost is forwarded to the company
without subject to the condition that loss, if any is payable to H.S reyes inc, by virtue of the fact that
said oldsmobile sedan was mortgaged in favor of the said H.s Reyes ,Inc. and that under a clause in said
insurance policy, any loss was made payable to the H.S reyes, inc. as mortgagee.

During the effectivity of the insurance contract. The car met with an accident. After the
accident, the company then assigned somebody , a insurance appraiser for investigation and appraised
for the investigation. Mora without the knowledge and consent of H.R reyes , authorized Bonifacio Bros
to fix the car, using the supplies from ayala auto parts cp. For the cost, labor and materials. Mora was
billed at 2,102.73 through the H.h bayne Adjustment Co. the bill was sent to the Insurers appraiser. The
insurance company drew a check in the amount of the insurance proceeds and entrusted the check to
its appraiser for delivery to the property party. The car was delivered to Enrique Mora withput the
consent of H. S. reyes inc. and without payment to the bonifacio broz. Inc. and the ayala parts. Auto
parts. Co.

Upon the theory that the insurance proceeds should be paid directly to them, the Bros. Inc. and
ayala auto parts Co. inc.filed a complaint with the Municipal trial court of MANILA Against Enrique Mora
and the State Bonding, & insurance co, inc for the collection of the sum of 2,002.73. the insurance
company filed its answer with counterclaim for interpleader , requiring bonifacio Bros. inc and h.s reyes.
Inc, to interplead who has better right to the insurance proceeds. However the counsel of for the
bonifacio bros, inc , ayala auto parts co, and state bonding & insurance co, inc, submitted a stipulation of
the facts on the basis of which are municipal court rendered a decision.

Municipal trial court rendered a decision declaring the h.s REYES INC. AS having a better right of
the disputed amount and ordering state bonding & insurance co. inc. to pay to h. s reyes , inc. the
collection of the sum 2,002.73. The court of first instance of the manila affirmed the mtc decision.

Issue raised is whether there is privity of contract between the bonifacio bros. inc. and the ayala auto
parts co, on the one hand and the insurance company on the other.

Held : no

it can be seen from the the contract between mora ad the insurance company that there was no
mention of bonifacio bros and ayala auto in the contract .except in some specific instances provided by
law where the contract contains some stipulation in favor of a third person. Such stipulation is known as
stipulation pour autrui; or a provision in favor of a third person not a party to the contract.
Under his doctrine , a 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 persons . a third party person not a party to the contract has no action against the parties thereto
and cannot generally demand the enforcement of the same.

The question whether a third person has an enforceable interest in a contract must settled by
determining whether the contracting parties intended to tender him such an interest by deliberately
inserting terms in their agreement with the avowed purpose of conferring favor upon such third person.
In the instance case the insurance contract does not contain any words or the parties disclose an intent
to give any repairmen ore materialmen in case of repair of the car in the question. The parties to the
insurance contract omitted such stipulation, which is a circumstance that support the saud conclusion.
On the other hand , the 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.

A policy insurance is a distinct and independent contract between the insured and the insurer, and the
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, by the insured and third person. In this case, no
contract of trust, expressed or implied exist. We, therefore, agree with the trial court that no cause of
action exists in favor of all the appellants in so far as the proceeds of the insurance are concerned. THE
Appellants claim, iof at all is merely equitable in the nature and must be made effective through Enrique
mora who entered into a contract with the BONIFACIO bros. INC. this . THIS conclusion is deducible not
only from the principle governing the operation and effect of insurance contracts in general, but is
clearly covered by the express provisions of Sec . 50 of the insurance act which read.

The insurance shall be applied exclusively to the proper interest of the person in whose name it is
made shows the intention of the parties.

The policy in question has been so framed that loss , if any is payable to h. s Reyes,.inc,. which
unmistakably shows the intention of the parties.

The final contention of the appellants is that the right of the H. s REYES, INC. TO The insurance proceeds
arises only there was loss and not where there is mere damage as the instant case. Suffice it to say that
any attempt to draw a distinction between LOSS AND DAMAGES IS UNCALLED for, because the word,
loss in insurance law embraces injury or damages.
2. pan Malayan

On December 10, 1985 , Panmalay Filed a complaint for damages with the Rtc of Makati against private respondents
erlinda Fabie and her driver. Panmalayan averred the following ; that it insured a Mitsubishi Colt Lancer car with plate no.
DDZ-431 and registered in the name of Canlubang Automotive Resources Corporation that on May 26, 1985, sue to the careless
, recklessness and imprudence, of the unkown driver of a pick up with Plate no. Pcr-220, the insured car was hit and suffered
damages in the amount of 42,052 that Panmalayan defrayed the cost of repair of the insured car and therefore was subrogated
to the rights of CANLUBANG against the driver of the pick up and his employer, Erlinda Fabie; and that despite repeated
demands, defendants failed and refused to pay the claim of Panmalay. Private respondents filed a Motion to dismiss alleging
that Panmalay had no cause of action against them. They argued that the payment under the own damage clause of the
insurance policy precluded subrogation ubder article 2207 of the civil code since indemnification was made on the assumption
that there was no wrongdoer or no third party at fault. After hearings conducted on the motion, the orders were upheld by the
court of appeals . deliberating on the various arguments adduced in the pleadings, The court finds merit in the petition.

The RTC dismissed Panmalay s complaint and ruled that payment under the OWN DAMAGE clause was an
admission by the insurer that the damage was caused by the assured and/ or Its representatives. On the other hand, The court
of appeals in applying the ejusdem generis ruke held that Section III-1 POLICY which was the basis for settlement of
Canlubangs claim, did not cover damage arising from collision or overturning due to to the negligence of third parties as one of
the insurable risk. Both tribunals concluded that Panmalay could not now invoke article 2207 and claim reimbursement from
private respondents as alleged wrongdoers or parties responsible for the damages.

Issue : Whether or not the insurer Panmalay subrogated to the rights of the driver and employee.

Held : Yes

Panmalay is correct. Under 2207 of the civil code is founded on the well settled principle of subrogation. If the insured
property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon
the payment to the assured, will be subrogated to the rights of the assured to recover from the wrong doer to the extent that
the insurer has been obligated to pay. Payment by the insurer to the assured operates as an equitable or negligence of a third
party. The right of subrogation is not dependent upon , nor does it grow out of , any privity of contract or upon written
assignment of claim. It accrues simply upon the payment of the insurance claim by the insurer. Panmalay could not be
deemed subrogated to the rights of its assured under the said article. They could still have a cause of action against private
respondents. Respondent Court of appeals therefore committed reversible error in sustaining the lower courts order which
dismissed Panmalays complaint against private respondents for no cause of action. Hence , it is now for the trial court to
determine if in fact the damage caused to the insured vehicle was due to carelessness, recklessness nd imprudence of the
driver of the private respondent erlinda fabie.

Wherefore , in view of the foregoing, the present petition is granted. Petitioners complaint for damages against private
respondents is hereby Reinstated. Let the case be remanded to the lower court for trial on the merits.