A stipulation pour autrui (in favor of third persons) is an exception to relativity of

contracts (contracts are binding only to the parties, its heirs, and assigns). Since third
persons do not participate in the negotiation or preparation of contracts, they cannot be
bound by any agreement entered into such contracts, unless the third persons give their
consent or accept any benefit accruing from such contracts.
Example: Phoebe contracted Monica to cook for her when she hosts a dinner date with
Mike. Phoebe and Monica agreed that Phoebe shall deliver the payment for Monica's
services to Rachel (Let's just say Monica owes Rachel money.)
1. After Monica renders her services, Phoebe is not yet obligated to deliver the payment
to Rachel until Rachel signifies her consent to Phoebe and Monica's agreement.
2. Even if Rachel has not signified her consent to receive the payment from Phoebe, if
Phoebe tenders payment to Rachel and Rachel accepts, Rachel shall be bound by the
contract between Phoebe and Monica.
3. Before Rachel gives her consent or accepts any payment, Phoebe and Monica can
change their agreement as to delivering the payment to Rachel.
4. Once Rachel gives her consent or accepts payment, Phoebe and Monica can no
longer change their agreement as to delivering the payment to Rachel. And if payment
has been made to Rachel, Phoebe or Monica cannot recover it from Rachel.
5. If Rachel gives her consent and Phoebe delivers the payment to Monica, there is no
extinguishment of the obligation to pay since payment was made to the wrong person
(even though Monica was the one who rendered the services), since it is contractually
agreed upon that payment must be made to Rachel. Hence, despite delivering the
payment to Monica, Phoebe is still obligated to pay Rachel. Phoebe's remedy to avoid
being made to pay twice is to recover the wrongful payment from Monica who is
obligated to return the money to avoid unjust enrichment of Monica to the prejudice of
Phoebe (under the principle of solutio indebiti).

Rights may be classified as real or personal.

Real rights (also known as jus in re or jus in rem) are those enforceable against the
whole world. Personal rights (also referred to as jus in personam or jus ad rem) are
those enforceable against a specific person or persons.
Example: Juan buys from Maria a parcel of land. Upon delivery, Juan has the right to
possess such property. Such right of possession is a real right; all persons in the world
are bound to respect Juan’s right of possession.
Meanwhile, Juan only paid partially for the sale of land, Maria is entitled receive
the rest of the purchase price. The right to payment is a personal right of Maria
against Juan; Maria may only go against Juan and nobody else for the payment
of purchase price for the parcel of land.