Kauffman vs.

PNB (contracts; stipulation pour autrui)

Held: Yes; it is a stipulation pour autrui.
Should the contract contain any stipulation in favor of a third person, he may
demand its fulfillment, provided he has given notice of his acceptance to the
person bound before the stipulation has been revoked. (Art. 1257, par. 2, Civ.
Code.) In the light of the conclusion thus stated, the right of the plaintiff to
maintain the present action is clear enough; for it is undeniable that the bank's
promise to cause a definite sum of money to be paid to the plaintiff in NYC is a
stipulation in his favor within the meaning of the paragraph above quoted;
and the circumstances under which that promise was given disclose an evident
intention on the part of the contracting parties that the plaintiff should have
the money upon demand in NYC. The recognition of this unqualified right in
the plaintiff to receive the money implies in our opinion the right in him to
maintain an action to recover it.
It will be noted that under the paragraph cited a third person seeking to
enforce compliance with a stipulation in his favor must signify his acceptance
before it has been revoked. In this case the plaintiff clearly signified his
acceptance to the bank by demanding payment; and although PNB had
already directed its NY agency to withhold payment when this demand was
made, the rights of the plaintiff cannot be considered to as there used, must be
understood to imply revocation by the mutual consent of the contracting
parties, or at least by direction of the party purchasing he exchange.
Note: Legniti vs. Mechanics, etc. Bank (130 N.E. Rep., 597), decided by CA of
NYC on March 1, 1921, it was held that, by selling a cable transfer of funds on a
foreign country in ordinary course, a bank incurs a simple contractual
obligation, and cannot be considered as holding the money which was paid for
the transfer in the character of a specific trust. Thus, it was said, "Cable
transfers, therefore, mean a method of transmitting money by cable wherein
the seller engages that he has the balance at the point on which the payment is
ordered and that on receipt of the cable directing the transfer his
correspondent at such point will make payment to the beneficiary described in
the cable. All these transaction are matters of purchase and sale create no trust
relationship."
Facts: Kauffman, based in NYC, was the president of a Philippine Company;
he was entitled to receive a dividend so the treasurer of the company went to
the exchange department of PNB and requested to that a telegraphic transfer
of the money Kauffman was supposed to receive from the company. The PNB
agreed with additional charges for the transaction. The treasurer issued a
check to PNB and it was accepted. The PNBs representative in New York sent
a message suggesting the advisability of withholding this money from
Kauffman, in view of his reluctance to accept certain bills of the company.
PNB acquiesced in this and dispatched to its NY agency a message to withhold
the Kauffman payment as suggested. Meanwhile, Wicks then he informed
Kauffman that his dividends had been wired to his credit in the NY agency of
PNB. So Kauffman went to PNB office in NYC and demanded the money,
however, he was refused payment. So he filed this complaint. Does Kauffman
have a right of action against PNB?

Florentino vs. Encarnacion (contracts; stipulation pour autrui)

Held: The stipulation embodied on religious expenses is not revocable at the
unilateral option of the co-owners and neither is it binding to both parties
The stipulation in part of an extrajudicial partition duly agreed and signed by
the parties, hence the sanie must bind the contracting parties thereto and its
validity or compliance cannot be left to the will of one of them (Art. 1308,
N.C.C.). Under Art 1311 of the New Civil Code, this stipulation takes effect
between the parties, their assign and heirs. The article provides:
Art. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in cases where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision
of law. The heir is not liable beyond the value of the property he received from
the decedent.
If a contract should contain a 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.
In the case at bar, the determining point is whether the co-owners intended to
benefit the Church when in their extrajudicial partition of several parcels of
land inherited by them from Doa Encarnacion Florendo they agreed that
with respect to the land, the fruits thereof shall serve to defray the religious
expenses. The evidence on record shows that the true intent of the parties is to
confer a direct and material benefit upon the Church. The fruits of the
aforesaid land were used thenceforth to defray the expenses of the Church in
the preparation and celebration of the Holy Week.
We find that the trial court erred in holding that the stipulation, arrangement
or grant is revocable at the option of the co-owners. While a stipulation in
favor of a third person has no binding effect in itself before its acceptance by
the party favored, the law does not provide when the third person must make
his acceptance. As a rule, there is no time at such third person has after the
time until the stipulation is revoked. Here, We find that the Church accepted
the stipulation in its favor before it is sought to be revoked by some of the co-
owners, namely the petitioners-appellants herein. It is not disputed that from
the time of the will of Doa Encarnacion Florentino in 1941, as had always
been the case since time immemorial up to a year before the filing of their
application in May 1964, the Church had been enjoying the benefits of the
stipulation. The enjoyment of benefits flowing therefrom for almost seventeen
years without question from any quarters can only be construed as an implied
acceptance by the Church of the stipulation pour autrui before its revocation.
The acceptance does not have to be in any particular form, even when the
stipulation is for the third person an act of liberality or generosity on the part
of the promisor or promise.
It need not be made expressly and formally. Notification of acceptance, other
than such as is involved in the making of demand, is unnecessary.
A trust constituted between two contracting parties for the benefit of a third
person is not subject to the rules governing donation of real property. The
beneficiary of a trust may demand performance of the obligation without
having formally accepted the benefit of the this in a public document, upon
mere acquiescence in the formation of the trust and acceptance under the
second paragraph of Art. 1257 of the Civil Code.