Requisites of article to apply the second paragraph

Requisites of Article: To apply the second paragraph, the following are necessary:
(a) stipulation in favor of a third persons;
(b) stipulation in favor of a third persons should be a part, not the whole, of the contract;
(c) clear and deliberate conferment of favor upon a third person by the contracting
parties and not a mere incidental benefit or interest
(d) stipulation should not be conditioned or compensated by any kind of obligation
whatever
(e) that the third person must have communicated his acceptance to the obligor
before its revocation
f) neither of the contracting parties bears the legal representation or authorization
of the third party

Beneficiaries : A stipulation may validly be made in favor of indeterminate persons,
provided that they can be determined in some manner at the time when the prestation
from the stipulation has to be performed. Examples donee-beneficiaries; creditor-
beneficiaries, incidental beneficiaries
* Test of Beneficial Stipulation:
1. To constitute a valid stipulation pour autrui, it must be the purpose and intent of the
stipulating parties to benefit the third person, and it is not sufficient that the third person
may be incidentally benefited by the stipulation.
2. Test of Beneficial Stipulation: intention of the parties as disclosed by their contract.
To apply this, it matters not whether the stipulation is in the nature of a gift or whether
there is an obligation owing from the promisee to the third person.
* Acceptance of Third Party:
1. Stipulation pour autrui has no binding effect unless it is accepted by the third party.
2. Acceptance is optional to the third person: he is not obliged to accept it.
3. It may be in any form, express or implied, written or oral
4. There is no time limit to acceptance until the stipulation is revoked before the third
person’s acceptance.
* Rights of Parties: The original parties, before acceptance of the third persons, still have
the right to revoke or modify the contract.

• Dependence on Contract : Right of the third person emanates from the contract;
defenses are also available against the contract. If after the third person has accepted
the stipulation and the parties failed to perform or defaulted, he can sue whether for
specific performance or resolution, with indemnity for damages, as authorized by article
1191.
* Who may revoke:
(a) General Rule: it pertains to the other contracting party or promisee, who may exercise it
without the consent of the promisor. But it may be agreed that the revocation should have
the consent of the promisor.
(b) The right of revocation cannot be exercised by the heirs or assignees of the promisee;
they might not want to honor the decedent’s promise.
* Collective contracts: Definition: contracts where the law authorizes the will of the
majority to bind a minority to an agreement notwithstanding the opposition of the latter,
when all have a common interest in the juridical act.