G.R. No. 165907; July 27, 2009
SPS. DOMINADOR R. NARVAEZ and LILIA W. NARVAEZ, Petitioners, vs. SPS. ROSE OGAS ALCISO and ANTONIO ALCISO, Respondents.

FACTS

Respondent Rose O. Alciso owned a parcel of land. She sold it to Celso Bate via a Deed of Absolute Sale. Bate subsequently sold the property to petitioners Spouses Narvaez through a Deed of Sale of Realty dated August 14, 1981. This deed contained a stipulation that “The SELLER (Bate) carries over the manifested intent of the original SELLER of the property (Alciso) to buy back the same at a price under such conditions as the present BUYERS (Spouses Narvaez) may impose.” Alciso was furnished a copy. Alciso later informed the Spouses Narvaez of her desire to repurchase, but they failed to agree on a price. Alciso filed a complaint seeking annulment of the various deeds, claiming the original transactions were intended as equitable mortgages, not sales.
The Regional Trial Court (RTC) ruled that the 1981 Deed contained a valid stipulation pour autrui (a stipulation in favor of a third party) in favor of Alciso, giving her the right to repurchase the property for ₱80,000. The Court of Appeals affirmed the existence of the stipulation pour autrui but remanded the case to the RTC to determine a reasonable repurchase price, finding the RTC’s fixed price erroneous.

ISSUE

Whether the stipulation in the 1981 Deed of Sale in favor of Alciso constitutes a valid stipulation pour autrui that grants her a right to repurchase the property.

RULING

Yes. The Supreme Court affirmed the appellate court’s finding that the stipulation was a valid stipulation pour autrui under Article 1311 of the Civil Code. For such a stipulation to be effective, it must confer a clear and deliberate favor upon a third person, who is not a party to the contract. The clause in the deed expressly named Alciso as the “original SELLER” and carried over her “manifested intent to buy back” the property. This clearly and deliberately conferred a benefit upon her. The Court rejected the petitioners’ argument that Alciso’s acceptance was not properly communicated, noting that her demand to repurchase and the subsequent negotiations constituted a sufficient communication of acceptance.
Consequently, Alciso, as the beneficiary of the stipulation, acquired a vested right to repurchase. The Court modified the ruling regarding the repurchase price. Applying Article 1616 of the Civil Code, the right of repurchase includes the price of the sale, the expenses of the contract, any legitimate payments made by reason of the sale, and the necessary and useful expenses made on the property. Since the Spouses Narvaez were builders in good faith, their useful improvements (the commercial building) must be indemnified. The case was remanded to the RTC to determine the specific amounts for these expenses, after which Alciso would have 30 days to effect the repurchase.