Recall Section 12.
Section 12 provides: The interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice or accessory in willfully bringing about the death of the insured; in which event, the nearest relative of the insured shall receive the proceeds of said insurance if not otherwise qualified.
So?
It is an exception to Section 53.
What does Art. 2127 of the CC say?
Art. 2127. The mortgage extends to the natural accession, to the improvements, growing fruits and the rents or income not yet received when the obligation becomes due, and the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use, with declarations, amplifications and limitations established by law, whether the estate remains in the possession of the mortgagor or it passes into the hands of a third person.
Problems.
A had taken out a policy on his car with the stipulation: “loss if any payable to Z, the mortgagee of the car”. The car got lost and X, the owner of the auto repair shop where the car was fixed filed a claim with the insurance company. Is X entitled to collect the cost of repair?
NO. As far as the insurance company is concerned, X is not privy to the insurance contract. Even if there was a provision in the contract authorizing either A or Z to contract for repairs, this does not mean that X became entitled to claim the proceeds. In this case, the proceeds must be paid to Z, and in case Z was the one who contracted for the repairs, Z must pay X.
Cases:
(85) Bonifacio Bros. v. Mora 20 SCRA 262
Facts:
Enrique Mora mortgaged his Odlsmobile sedan car to HS Reyes Inc. with the condition that Mora would insure the car with HS Reyes as beneficiary.
The car was then insured with State Insurance Company and the policy delivered to Mora.
During the effectivity of the insurance contract, the car figured in an accident. The company then assigned the accident to an insurance appraiser for investigation and appraisal of the damage.
Mora without the knowledge and consent of HS Reyes, authorized Bonifacio Bros to fix the car, using materials supplied by the Ayala Auto Parts Company.
For the cost of Labor and materials, Mora was billed P2,102.73. The bill was sent to the insurer’s 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 proper party.
The car was delivered to Mora without the consent of HS Reyes, and without payment to Bonifacio Bros and Ayala.
Upon the theory that the insurance proceeds should be directly paid to them, Bonifacio and Ayala filed a complaint against Mora and the insurer with the municipal court for the collection of P2,102.73.
The insurance company filed its answer with a counterclaim for interpleader, requiring Bonifacio and HS Reyes to interplead in order to determine who has a better right to the proceeds.
Issue: WON there is privity of contract between Bonficacio and Ayala on one hand and State Insurance on the other.
Held: NONE.
It is fundamental that contracts take effect only between the parties thereto, except in some specific instance provided by law where the contract contains some stipulation in favor of a third person. Such stipulation is known as a stipulation pour autrui; or a provision in favor of a third person not a party to the contract.
Under this 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 person. Consequently, a
third person NOT a party to the contract has NO action against the aprties thereto, and cannot generally demand the enforcement of the same.
The question of whether a third person has an enforceable interest in a contract must be 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 this connection, this court has laid down the rule that the fairest test to determine whether the interest of a 3rd person in a contract is a stipulation pour autrui or merely an incidental interest, is to rely upon the intention of the parties as disclosed by their contract.
In the instant case the insurance contract does not contain any words or clauses to disclose an intent to give any benefit to any repairmen or material men in case of repair of the car in question. The parties to the insurance contract omitted such stipulation, which is a circumstance that supports the said 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 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, by the insured and third person. In this case, no contract of trust, express or implied. In this case, no contract of trust, expressed or implied exists. We, therefore, agree with the trial court that no cause of action exists in favor of the appellants in so far as the proceeds of insurance are concerned. The appellant's claim, if at all, is merely equitable in nature and must be made effective through Enrique Mora who entered into a contract with the Bonifacio Bros Inc. 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 section 50 of the Insurance Act (now Sec. 53).
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.
(86) Coquia v. Fieldmen’s Insurance 26 SCRA 172
Facts:
On Dec. 1, 1961, Fieldmen’s Insurance co. Issued in favor of the Manila Yellow Taxicab a common carrier insurance policy with a stipulation that the company shall indemnify the insured of the sums which the latter wmy be held liable for with respect to “death or bodily injury to any faire-paying passenger including the driver and conductor”.
The policy also stated that in “the event of the death of the driver, the Company shall indemnify his personal representatives and at the Company’s option may make indemnity payable directly to the claimants or heirs of the claimants.”
During the policy’s lifetime, a taxicab of the insured driven by Coquia met an accident and Coquia died.
When the company refused to pay the only heirs of Coquia, his parents, they institued this complaint. The company contends that plaintiffs have no cause of action since the Coquias have no contractual relationship with the company.
Issue: WON plaintiffs have the right to collect on the policy.
Held: YES.
Athough, in general, only parties to a contract may bring an action based thereon, this rule is subject to exceptions, one of which is found in the second paragraph of Article 1311 of the Civil Code of the Philippines, reading: "If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person." This is but the restatement of a well-known principle concerning contracts pour autrui, the enforcement of which may be demanded by a third party for whose benefit it was made, although not a party to the contract, before the stipulation in his favor has been revoked by the contracting parties
In the case at bar, the policy under consideration is typical of contracts pour autrui this character being made more manifest by the fact that the deceased driver paid fifty percent (50%) of the corresponding premiums, which were deducted from his weekly commissions. Under these conditions, it is clear that the Coquias — who, admittedly, are the sole heirs of the deceased — have a direct cause of action against the Company, and, since they could have maintained this action by themselves, without the assistance of the insured it goes without saying that they could and did properly join the latter in filing the complaint herein.
(87) Guingon v. Del Monte 80 SCRA 181
Facts:
The insured owned a fleet of jeepneys. He insured the operation of his jeepneys against “accidents with third part liability” with Capital Insurance and Surety Co.
One day, one of his jeepney dirivers, bumped and killed Guingon.
An action for damages was then filed against the owner-insured, the driver and the company.
The company sough to dismiss the charges against it on the ground of lack of cause of action against it.
Issue: WON there is a cause of action against the company.
Held: YES.
The right of a person injured to sue the insurer of the party at fault depends on whether the contract of insurance was intended to benefit third persons. The test applied here is: Where the contract provides for indemnity against liability to third persons, then third persons to whom the insured is liable, can sue the insurer. On the other hand, where the contract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged by him through payment to third persons, said third persons' recourse being thus limited to the insured alone
The policy in the present case, is one whereby the insurer agreed to indemnify the insured "against all sums . which the Insured shall become legally liable to pay in respect of: a. death of or bodily injury to any person . . ." Clearly, therefore, it is one for indemnity against liabilityfrom the fact then that the insured is liable to the third person, such third person is entitled to sue the insurer.
Since the policy in questioned contained a stipulation pour autrui, then the insurance company must deliver the proceeds to the claimants.
(88) Del Val v. Del Val 29 Phil 535 Facts:
Petitioners and private respondents are brothers and Sisters and are the only heirs and next of kin of Gregorio del Val who died intestate.
It was found out that the deceased took out insurance on his life for the sum of 40T and made it payable to private respondents as sole beneficiary.
After Gregorio’s death, Andres collected the proceeds of the policy.
Of the said policy, Andres paid 18T to redeem some real property which Gregorio had sold to third persons during his lifetime.
Said redemption of the property was made by Andres’ laywer in the name of Andres and the petitioners. (Accdg to Andres, said redemption in the name of Petitioners and himself was without his knowledge and that since the redemption, petitioners have been in possession of the property)
Petitioners now contend that the amount of the insurance policy belonged to the estate of the deceased and not to Andres personally.
Pet filed a complaint for partition of property including the insurance proceeds
Andress claims that he is the sole owner of the proceeds and prayed that he be declared:
Sole owner of the real property, redeemed with the use of the insurance proceeds and its remainder;
Petitioners to account for the use and occupation of the premises.
Issue: WON the petitioners have a right to the insurance proceeds?
Held: NOPE.
The contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with the subject. Our civil code has no provisions which relate directly and specifically to life-insurance contracts of to the destination of life-life-insurance proceeds that subject is regulated exclusively by the Code of Commerce. Thus, contention of petitioners that proceeds should be considered as a dontation or gift and should be included in the estate of the deceased is UNTENABLE.
Since the repurchase has been made n the names of all the heirs instead of the defendant alone, petitioners claim that the property belongs to the heirs in common and not to the defendant alone. The SC held that if it is established by
evidence that that was his intention and that the real estate was delivered to the plaintiffs with that understanding, then it is probable that their contention is correct and that they are entitled to share equally with the defendant. HOWEVER, it appears from the evidence that the conveyances were taken in the name of the plaintiffs without the knowledge and consent of Andres, or that it was not his intention to make a gift to them of real estate, when it belongs to him.
(89) Insular Life. Ebrado 80 SCRA 181