Stipulation pour autrui
French term meaning ‘stipulation for others’ others’ or stipulation in favour of other parties
It is a stipulation in a contract c learly and deliberately conferring a benefit upon a third person w ho has the right to demand its fulfilment, provided he communicated his acceptance o f the benefit to the o bligor before its revocation by the obligee or the original parties.
It is also an exception to the general rule of relativity, one of the characteristics of a contract, stating that contracts take effect only between parties, their assigns and heirs. (Civil Code, Art. 1311)
Requisites of a Stipulation pour autrui 1.
There must be a stipulation in favour of a third person; 2 classes of stipulations in favour of a third person: a.
Those where the stipulation is intended for the sole benefit of such person;
b. Those where an obligation is due from the promise to the third person which the former seeks to discharge by means of such stipulation, such as where a tr ansfer of property is coupled with the purchaser’s purchaser’s promise to pay a debt owing from the seller to a third person . 2.
The stipulation is a part, not the whole of the contract;
3.
The contracting parties clearly and deliberately conferred a favour to the third person – person – the favour is not an incidental benefit;
4.
The favour is unconditional and uncompensated; That the favourable stipulation should not be conditioned or compensated by any kind of obligation whatsoever
5.
The third person communicated his or her acceptance of the favour before its revocation by the original parties;
6.
The contracting parties do not r epresent, or are not authorized by, t he third party.
Example: Benito leased his house to Procopia for 2 years at an agreed r ental of P10, 000.00 a month. They stipulated that the P10000 monthly rental should be given to Celso, a godson of Benito, as his monthly allowance. Celso communicated his acceptance of the benefit to Abel, the debtor, before Benito B enito could revoke the same. The stipulation in the contract between Be nito and Procopia expressly granting a benefit to C elso who accepts the same is known as stipulation pour autrui. Other example: Narvaez vs. Alciso, GR No. 165907, July 27, 2009
NOTES: 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 o r interest of a person is not sufficient. The contracting parties must have clearly and de liberately conferred a favor upon a third person.
In Limitless Potentials, Inc. v. Quilala,15 the Court laid down the requisites of a stipulation pour autrui: (1) there is a stipulation in favor of a third person; (2) the stipulation is a part, not the whole, of the contract; (3) the contracting parties clearly and deliberately conferred a favor to the third person — the favor is not an incidental benefit; (4) the favor is unconditional and uncompensated; (5) the third person communicated his or her acceptance of the favor before its revocation; and (6) the contracting parties do not represent, or are not authorized by, the third party.
All the requisites are present in t he instant case: (1) there is a stipulation in favor of Alciso; (2) the stipulation is a part, not the whole, of the contract; co ntract; (3) Bate and the Spouses S pouses Narvaez clearly and deliberately conferred a favor to A lciso; (4) the favor is unconditional and uncompensated; (5) Alciso communicated her acceptance of the favor before its revocation — she demanded that a stipulation be included in the 14 August 1981 Deed of Sale of Realty allowing her to repurchase the property from the Spouses Narvaez, and she informed the Spouses Narvaez that she wanted t o repurchase the property; and (6) Bate and the Spouses Narvaez did not represent, and wer e not authorized by, Alciso. acceptance may be made at any time before the favorable stipulation stipulation is revoked and that the acceptance may be in any form — it does not have to be formal or express but may be implied. we believe the fairest test, in this jurisdiction at least, whereby to determine whether the interest of a third person in a contract is a stipulation pour autrui or merely an incidental interest, is to rely upon the inte ntion of the parties as disclosed by their contract. If a third person claims an enforcible interest in the contract, that question must be settled by determining whether the contracting parties desired to tender him such an interest. Did they deliberately insert terms in t heir agreement with the avowed purpose of conferring a favor upon such thi rd person? In resolving this question, of course, the ordinary rules of construction and i nterpretation of writings must be observed. rd
Neither of the contracting parties bears the legal representation or authorization of 3 party
