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Case Digest: Rebecca C. Young, et.al. vs Court of Appeals, et.al., G.R. No. 79518

Rebecca C. Young, et.al. vs Court of Appeals, et.al., GR No. 79518, January 13, 1989

Subject: Obligations and Contracts

Facts

The Defendant Philippine Holding, Inc. is the former owner of a piece of land. The owner Philippine Holding, Inc. secured an order from the City Engineer of Manila to demolish the building situated on that land. Antonio Young, then a tenant, filed an action to annul the City Engineer's demolition As an incident in said case, the parties submitted a Compromise Agreement to the Court. Paragraph 3 of said agreement provides that plaintiff (Antonio S. Young) and Rebecca Young and all persons claiming rights under them bind themselves to voluntarily and peacefully vacate the premises which they were occupying as lessees which are the subject of the condemnation and demolition order and to surrender possession. A case was filed to the RTC and Young contended that even assuming that her supposed right of first refusal is a stipulation for the benefit of a third person, she did not inform the obligor of her acceptance as required by the second paragraph of Article 1311 of the Civil Code. The claim of Rebecca C. Young was  rejected by the trial court on the following grounds: (1) that she was not a party in the Civil Case No. 123883, wherein subject compromise agreement was submitted and approved by the trial court apart from the fact that she did not even affix her signature to the said compromise agreement; (2) that Rebecca Young had failed to present any evidence to show that she had demanded from the defendants-owners, observance of her right of first refusal before the said owners sold units 1356, 1358 and 1360; (3) that even assuming that her supposed right of first refusal is a stipulation for the benefit of a third person, she did not inform the obligor of her acceptance as required by the second paragraph of Article 1311 of the Civil Code. Chui Wan and Felisa Tan Yu and Rebecca C. Young, assisted by her husband, appealed to the Court of Appeals which dismissed the same on August 7, 1987, for lack of merit.

Issue

Whether or not a stipulation pour autrui is applicable in this case.

Ruling

Yes.

Under the law, the requisites of a stipulation pour autrui or a stipulation in favor of a third person are the following: (1) there must be a stipulation in favor of a third person; (2) the stipulation must be a part, not the whole, of the contract; (3) The contracting parties must have clearly and deliberately conferred a favor upon a third person, not a mere incidental benefit or interest; (4) the third person must have communicated his acceptance to the obligor before its revocation; and, (5) neither of the contracting parties bears the legal representation or authorization of the third party.

In this case, such a stipulation is binding on said third person, although he may not be a signatory to the contract.

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