No. L-23276. November 29, 1968.
MELECIO COQUIA, MARIA ESPANUEVA and MANILA YELLOW TAXICAB Co., INC., plaintiffs-appellees,
vs. FIELDMEN'S INSURANCE Co., INC., defendant-appellant.
Pleading and practice; Parties; Cause of action; Only parties to a contract may bring an action thereon; Exception;
Contracts pour autrui.—Although, 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: "// 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."
179
VOL. 26, NOVEMBER 29, 1968
179
Coquia vs. Fieldmen's Insurance Co., Inc.
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stipulation in his favor has been revoked by the contracting parties.
Insurance law; Where an insurance policy is typical of a contract pour autrui; Case at bar.—In the case at bar, the
insurance policy contains stipulations pursuant to which the insurance company "will indemnify any authorized
Driver who is driving the Motor Vehicle" of the Insured and, in the event of death of said driver, the Company shall,
likewise, "indemnify his personal representatives," and the Company "may, at its option, make indemnity payable
directly to the claimants or heirs of claimants x x x it being the true intention of this Policy to protect x x x the
liabilities of the Insured towards the passengers of the Motor Vehicle and the Public" in other words, third parties.
Thus, 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 (Uy Tam v. Leonard, 30 Phil. 471, 485-486;
Kauffman v. Philippine National Bank, 42 Phil. 182, 187, 189), 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 (Guingon v. Capital Insurance & Surety Co., Inc., L-22042, Aug. 17, 1967).
Same; Where a condition in the policy concerning reference of dispute to an arbitrator, as a condition precedent to a
right of action or suit upon a policy, was deemed waived; Case at bar.—Section 17 of the policy under consideration
reads: "If any difference or dispute shall arise with respect to the amount of the Company's liability under this
Policy, the same shall be referred to the decision of a single arbitrator to be agreed upon by both parties or failing
such agreement of a single arbitrator, to the decision of two arbitrators, one to be appointed in writing by each of the
parties within one calendar month after having been required in writing so to do by either of the parties and in case
of disagreement between the arbitrators, to the decision of an umpire who shall have been appointed in writing by
the arbitrators. before entering on the reference and the costs of and incidental ,to the reference shall be dealt with in
the Award. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of
action or suit upon this Policy that the award by such arbitrator, arbitrators
or umpire of the amount of the Company's liability hereunder if disputed shall be first obtained."
The record shows, however, that none of the parties to the contract invoked this section, or made any reference to
arbitration, during the negotiations preceding the institution of the present case. In fact, counsel for both parties
stipulated, in the trial court, that none of them had, at any time during said negotiations, even suggested the
settlement of the issue between them by arbitration, as provided in said section. Their aforementioned acts or
omissions had the effect of a waiver of their respective right to demand an arbitration (Kahnweiler v. Phenix
Insurance Co. of Brooklyn, 67 Fed. 483; Independent School District No. 35, St. Louis County v. A. Hedenberg &
Co., Inc., 7 NW 2nd, 511). Coquia vs. Fieldmen's Insurance Co., Inc., 26 SCRA 178, No. L-23276. November 29,
1968
