Академический Документы
Профессиональный Документы
Культура Документы
1318];
Consent [Art. 1319-1346]) April 16, 2018 (Monday)
Offer was withdrawn after letter containing the acceptance was sent but
before it was received by the offerer.
Facts: X, on his behalf and that of his co-owners, wrote a letter to Y, giving him
an option to lease their building to Z. After some negotiation, no definite
agreement was arrived at. Y finally wrote a letter to X advising the latter that
all his propositions, as amended and supplemented were accepted.
This letter was received by X at 2:53 P.M. of March 6. On that same day, at
11:25 A.M., X had, in turn, written a letter to Y withdrawing the offer to lease
the building. Y brought action to compel the execution of the contract of
lease. Issue: Under the facts was a contract perfected between X and Y?
Held: No. When X sent his letter of withdrawal to Y, X had not yet received the
letter of acceptance, and when it reached him, he had already sent his letter
of withdrawal. Before X received notice of the acceptance, X was not yet
bound by it and consequently, he had the right to withdraw the offer. There
was no meeting of the minds through offer and acceptance, which is the
essence of the contract. While there was an offer, there was no acceptance,
and when the latter was made and could have binding effect, the offer was
then lacking. Though both the offer and acceptance existed, they did not
meet to give birth to a contract. (Landicho and Harden vs. Arias, supra; see
Francisco vs. GSIS, 7 SCRA 577 [1963]; Enriquez vs. Sun Life Assurance Co., 41
Phil. 269 [1920]; Sambrano vs. Court of Tax Appeals, 101 Phil. 1 [1957].)
The records show that on September 24, 1917, Joaquin Herrer applied to the
defendant company through its local office in Manila for a life annuity. He
paid the sum of P6,000 and was issued a provisional receipt. The application
was immediately forwarded to the head office of the company in Montreal,
Canada. On November 26, 1917, the head office gave notice of acceptance
by cable to Manila. Whether notice of this acceptance was sent to Herrer by
the Manila office is a disputed question. On December 4, 1917, the policy was
issued at Montreal. On December 18, 1917, the lawyer of Herrer wrote to the
Manila office that Herrer desired to withdraw his application. The following day
the local office replied to the lawyer stating that the policy had been issued
and called attention to the notification of November 26, 1917. This letter was
received by the lawyer on December 21, 1917. Herrer, however, died on
December 20, 1917. This action was subsequently commenced by the
administrator of the estate of Herrer to recover the sum of P6,000 from the
defendant company. The defendant company, however, contended that
the plaintiff cannot recover the amount on the ground that the contract of
life annuity had already been perfected. Holding that it is the provision of the
second paragraph of Art. 1262 (now Art. 1319) of the Civil Code and not Art.
54 of the Code of Commerce that will apply, and that the letter of November
26, 1917, was never actually mailed, and thus, was never received by the
applicant,
the Supreme Court, speaking through Justice Malcolm, ruled that the contract
was not perfected because it has not been proved satisfactorily that the
acceptance of the application ever came to the knowledge of the applicant.
Albano
There was a proposed building of Insular Life in Lucena City. There were
bidders, among which was Asset Builders which submitted a proposal to
contract the same. A conference was held between the representatives of
both parties. Insular proposed the adjustment of the bid to accommodate the
wage increase but the representatives of Asset were non-committal.
Subsequently it agreed to readjust the amount of bid. Finally, Insular awarded
the contract to Asset and issued a memorandum to commence with the
construction and sent a copy to Asset with a Notice of Award and to Proceed.
Asset did not affix its signature to the Notice of Award. There was likewise no
Construction Agreement. Then, it sent a letter to Insular that it cannot
undertake the construction because of the escalation of the prices of
materials. Was there a perfected contract?
ANS. None, because there was no meeting of the minds. It is axiomatic that
where the parties merely exchange offers and counter-offers, no agreement
or contract is perfected. A party may withdraw its offer or counter-offer prior to
its receipt of the other party’s acceptance thereof. To produce an agreement,
the offer must be certain and the acceptance timely and absolute. The rule on
the concurrence of the offer and its acceptance did not apply, because other
matters or details — in addition to the subject matter and the consideration —
would still be stipulated and agreed upon by the parties.
While there was an initial offer made, there was no acceptance; but when
there allegedly came an acceptance that could have had a binding effect,
the offer was already lacking. The offer and its acceptance “did not meet to
give birth to a contract.” (citing Laudico vs. Arias Rodriguez, 43 Phil. 270 [1922];
Insular Life Assurance Co., Ltd. vs. Asset Builders Corp., G.R. No. 147410,
February 05, 2005).
FACTS: On Feb. 5, 1919, Arias wrote Laudico a letter, offering a lease contract.
On Mar. 6, 1919, Laudico wrote a letter of complete acceptance, which was
received by Arias that same afternoon. But that same morning Arias had
already written Laudico a letter withdrawing the offer. Issue: Was there a
contract here?
HELD: No, because prior to receipt of the letter of acceptance, the offer had
already been withdrawn. In other words, it does not matter that the letter of
withdrawal may have been received later by the offeree than receipt of the
letter of acceptance by the offerer. What is important is that the letter of
withdrawal was MADE prior to the knowledge of acceptance.
(2) Revocation of offer. — Before the acceptance is known, the offer can be
revoked, it not being necessary, in order for the revocation to have the effect
of preventing the perfection of the contract, that it be known by the
acceptant. (see Laudico and Harden vs. Arias, 43 Phil. 270 [1922].)
Jurado (Art. 1319)
“Under Article 1262, paragraph 2 (now Art. 1319, par. 2) of the Civil Code, an
acceptance by the latter does not have any effect until it comes to the
knowledge of the offeror. Therefore, before he learns of the acceptance, the
latter is not yet bound by it and can still withdraw the offer. Consequently, when
Mr. Arias wrote Mr. Laudico, withdrawing the offer, he had the right to do so,
inasmuch as he had not yet received notice of the acceptance. And when
the notice of the acceptance was received by Mr. Arias, it no longer had any
effect, as the offer was not then in existence, the same having already been
withdrawn. There was no meeting of the minds through offer and acceptance,
which is the essence of the contract. While there was an offer, there was no
acceptance, and when the latter was made and could have binding effect,
the offer was then lacking. Though both the offer and the acceptance existed,
they did not meet to give birth to a contract.’’
Can Sergio claim that whatever they might have agreed upon cannot be
enforced because any agreement relating to the sale of real property must
be supported by evidence in writing and they never reduced their agreement
to writing?
SUGGESTED ANSWER:
No, Sergio’s claim has no legal basis.
The contract at issue in the present case is the option con tract, not the
contract of sale for the real property. Therefore, Article 1403 does not apply.
The Statute of Frauds covers an agreement for the sale of real property or of
an interest therein. Such agreement is unenforceable by action, unless the
same, or some note or memorandum, thereof, be in writing (Art. 1403(e), Civil
Code). Here, Marcelo and Sergio merely entered into an option contract,
which refers to a unilateral promise to buy or sell, which need not be in writing
to be enforceable (Sanchez v. Rigos, G.R. No. L 25494,June 14,1972, citing
Atkins, Kroll and Co., Inc.v. Cua HianTek and Southwestern Sugar dr Molasses
Co.v. AtlanticGulf & Pacific Co.)
“A’’ agreed to sell to “B’’ a parcel of land for P5,000.00. “B’’ was given up to
May 6, 1975 within which to raise the necessary funds. It was further agreed
that if “B’’ could not produce the money on or before said date, no liability
would attach to him. Before May 6, 1975, “A’’ backed out of the agreement.
Is “A’’ obliged to sell the property to “B’’? Explain. (1975 Bar Problem)
Answer — Assuming that the offer of “A’’ to sell the land to “B’’ is merely a
unilateral offer to sell, and that there is still no bilateral agreement in the sense
that “B’’ had already agreed to buy the land, “A’’ is not obliged to sell the
property to “B.’’ In such case, it is clear that the general rule stated in Art. 1324
and the particular rule stated in Art. 1479, par. 2, of the Civil Code are
applicable. As a matter of fact, even if “B’’ has formally accepted the option
given to him by “A,’’ such acceptance would be of no moment since the
option is not supported by any consideration distinct from the purchase price.
“A’’ can always change his mind at any time. The option does not bind him for
lack of a cause or consideration. It would have been different if “B’’ had
accepted the offer to sell within the period of the option before said offer was
withdrawn by “A.’’ In such a case, a contract of sale would have been
generated right then and there. As it turned out, “A’’ withdrew his offer in time.
(See Sanchez vs. Rigor, 45 SCRA 368)
(Note: In Sanchez vs. Rigos, supra, the Supreme Court finally resolved a
question which arose out of the use of the word “accepted’’ in modifying the
phrase “unilateral promise to buy or to sell’’ in Art. 1479, par. 2, of the Civil
Code. “Accepted’’ refers to the option, not to the offer, to buy or to sell; in
other words, it refers to the acceptance by either prospective vendee or
vendor of the option of, let us say, ninety days within which he shall decide
whether or not he shall buy or sell the thing. Thus, if “A’’ offers to sell a lot to
“B’’ for P200,000, and gives the latter an option of ninety days within which to
decide whether or not he shall buy the property, and the latter accepts the
option, two possible situations may arise: (1) In accepting the option, “B’’ pays
to “A’’ an “option money’’ of, let us say, P5,000 which is distinct from the
purchase price. In such case, there is already a perfected preparatory
contract of option. “A’’ is bound by his offer. “B’’ shall now decide within the
period of the option whether or not he shall buy the property. If he decides to
buy, he shall then pay to “B’’ the price of P200,000; if he decides otherwise, no
contract of sale will ever be perfected.
(2) In accepting the option, “B’’ does not pay any “option money’’ to “A’’. In
such case, there is no perfected preparatory contract of option for lack of a
consideration. The result is a mere offer to sell, acceptance or which will be
suffcient to generate a perfected contract of sale. But suppose that
meanwhile, “A’’ has changed his mind? The lot is no longer for sale. “B’’, on
the other hand, has decided to buy the property. What will now happen?
Under this situation, the one who is first to notify the other of his decision
emerges the victor. If “A’’ is the first to notify “B’’ of his change of mind, no
contract of sale will ever be perfected; if “B’’ is the first to notify “A’’ of his
acceptance of the offer, a contract of sale has already been perfected.)
See Rural Bank of Caloocan City vs. CA, 104 SCRA 151
we cannot declare the promissory note (Exhibit 2) valid between the bank
and Castro and the mortgage contract (Exhibit 6) binding on Castro beyond
the amount of P3,000.00 for while the contracts may not be invalidated insofar
as they affect the bank and Castro on the ground of fraud because the bank
was not a participant thereto, such may however be invalidated on the
ground of substantial mistake mutually committed by them as a consequence
of the fraud and misrepresentation inflicted by the Valencias. Thus, in the case
of Hill vs. Velosos (31 Phil. 160), this Court declared that a contract may be
annulled on the ground of vitiated consent if deceit by a third person, even
without connivance or complicity with one of the contracting parties, resulted
in mutual error on the part of the parties to the contract.
FACTS: Thru alleged fraud committed by a third party (the Valencia spouses),
Maxima Castro found herself indebted to a Rural Bank for a total debt of
P6,000 (P3,000.00 was what
she intended to borrow; the Valencias added another P3,000.00 for
themselves, with Castro signing the promissory note as comaker). Issue: For
how much is Castro liable?
HELD: Only for P3,000. The contract can be partially annulled insofar as Castro
is concerned, not because of fraud (neither party — the Bank nor Castro had
committed fraud), but because of mutual error caused by the fraud
attributable to the Valencias. The mortgage over Castro’s lot is reduced insofar
as it exceeds Castro’s personal loan.
Answer — (a) C cannot be held liable for the obligation of V. It is crystal clear
that C’s participation in V’s obligation both as co-maker and as mortgagor is
voidable not on the ground of fraud because the Bank was not a participant
in the fraud committed by V, but on the ground of mistake. There was
substantial mistake on the part of both C and the Bank mutually committed by
them as a consequence of the fraud employed by V. (See Rural Bank of
Caloocan City vs. CA, 104 SCRA 151.)
(b) Despite the fact that there was no previous tender of payment made
directly to the Bank, nevertheless, the consignation was valid and effective.
The deposit was attached to the record of the case and the Bank had not
made any claim thereto. Therefore, C was right in thinking that it was useless
and futile for her to make a previous offer and tender of payment directly to
the Bank. Under the foregoing circumstances, the consignation was valid, if
not under the strict provisions of the law, under the more liberal consideration
of equity. (Ibid.)
Blas vs. Santos, 111 Phil. 503
Simeon Blas married Marta Cruz in 1898. Out of this marriage there were three
children. The following year after Marta’s death, Simeon contracted a second
marriage with Maxima Santos. There were no children out of this marriage. At
the time of the second marriage, no liquidation of the properties of the first
marriage was made. On Dec. 26, 1936, only over a week before his death on
Jan. 9, 1937, Simeon executed a will declaring all of his properties as conjugal
and giving one-half thereof to Maxima as her share. On the same date,
Maxima signed a notarized document, stating that she had read the will of
her husband and that she promises to convey by will one half of the share
given to her to the children of her husband by his previous marriage. As a
result, the children of Simeon by his first marriage brought this action against
the estate of Maxima asking for the enforcement of the promise contained in
the document. It is now contended that the promise is not enforceable
because it lacks a sufficient cause or consideration and that, being a contract
with respect to future inheritance, it falls within the purview of the prohibition
enunciated in Art. 1271 (now Art. 1347) of the Civil Code.
Held: Considering that the properties of the first marriage had not been
liquidated, and the further fact that such properties were actually included as
conjugal properties of the second marriage, it is clear that the document
signed by Maxima is the compromise defined in Art. 1809 ( now Art. 2128) of
the Civil Code. Its execution was ordered by the testator evidently to prevent
his heirs by his first marriage from contesting his will and demanding liquidation
of the conjugal properties acquired during his first marriage. It is, therefore, a
contract with a sufficient cause or consideration. Neither does the prohibition
enunciated in Art. 1271 (now Art. 1347) of the Civil Code apply. What is
prohibited under this article is a contract which deals with any property or right
not in existence or capable of determination at the time of the contract, that
a person may in the future acquire by succession. Here, the subject matters of
the contract signed by Maxima are well-defined properties, existing at the
time of the agreement.
Sta. Maria (Art. 1347)
In Blas vs. Santos where the wife agreed to give whatever her share in the
conjugal partnership property to her heirs once the husband dies, the
Supreme Court said that such agreement does not involve future inheritance,
to wit:
Ramon Magsaysay Award Foundation vs. CA, G.R. No. 55998, Jan. 17, 1985)
ANS. Yes, because the consent can be derived from the communications
between A and B. Consent can be manifested in any form, like a series of
communications (Ramon Magsaysay Award Foundation vs. CA, G.R. No.
55998, January 17,1985), or through a marginal note (NGA vs. IAC, G.R. No.
74470, March 8, 1989), or through the acceptance of a down payment.
(Topacio vs. CA, et al., G.R. No. 102606, July 3, 1992).
Even if the draft renewal contract had not been signed by the lessor, the
parties may be deemed to have agreed to renew their lease contract
considering the exchanges of letters between, and the implementing acts of,
the parties.
Jurado (Art. 1319)
When Contracts are Perfected — In general, contracts are perfected from the
moment that there is a manifestation of the concurrence between the offer
and the acceptance with respect to the object and the cause which shall
constitute the contract. (Art. 1319, par. 1, New Civil Code.)
Thus, it was held, that even if the draft renewal contract had not been signed
by the lessor, the parties may be deemed to have agreed to review their lease
contract considering the exchanges of letters between, and the
implementing acts of the parties. (Ramon Magsaysay Award Foundation vs.
CA, G.R. No. 55998, Jan. 17, 1985.)
Topacio vs. CA, et. al., G.R. No. 102606, July 3, 1992
ANS. Yes, because the consent can be derived from the communications
between A and B. Consent can be manifested in any form, like a series of
communications (Ramon Magsaysay Award Foundation vs. CA, G.R. No.
55998, January 17,1985), or through a marginal note (NGA vs. IAC, G.R. No.
74470, March 8, 1989), or through the acceptance of a down payment.
(Topacio vs. CA, et al., G.R. No. 102606, July 3, 1992).
Ulep
Bert offers to buy Simeon’s property under the following terms and conditions:
PI million purchase price, 10% option money, the balance payable in cash
upon the clearance of the property of all illegal occupants. The option money
is promptly paid and Simeon clears the property of all illegal occupants in no
time at all. However, when Bert tenders payment of the balance and asks
Simeon for the deed of absolute sale, Simeon suddenly has a change of heart,
claiming that the deal is disadvantageous to him as he had found out that the
property can fetch three times the agreed purchase price. Bert seeks specific
performance but Simeon contends that he has merely given Bert an option to
buy and nothing more, and offers to return the option money which Bert
refuses to accept.
A. Explain the nature of an option contract. (2%)
B. Will Bert's action for specific performance prosper? Explain. (4%)
C. May Simeon justly refusal to proceed with the sale by the fact that the deal
is financially disadvantageous to him? Explain. (4%)
SUGGESTED ANSWERS:
B. Bert's action for specific performance will prosper because there was a
binding agreement of sale, nor just an option contract. The sale was perfected
upon acceptance by Simeon of 10% of the agreed price. This amount is in
reality earnest money which, under Art. 1482, “shall be considered as part of
the price and as proof of the perfection of the contract.” (Topacio v. CA, 211
SCRA 291 [1992]; Villongco Realty v. Bormahcco, 65 SCRA 352 [1975]).
C. Simeon cannot justify his refusal to proceed with the sale by the fact that
the deal is financially disadvantageous to him. Having made a bad bargain is
not a legal ground for pulling out a binding contract of sale. In the absence
of some actionable wrong by the other party (Vales v. Villa, 35 Phil. 769 [1916],
and no such wrong has been committed by Bert. (Answer by UP Law Center)
General Provisions
SECTION 1
Consent
Article 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except
from the time it came to his knowledge. The contract, in such a case, is
presumed to have been entered into in the place where the offer was made.
(1262a)
Article 1321. The person making the offer may fix the time, place, and manner
of acceptance, all of which must be complied with. (n)
Article 1322. An offer made through an agent is accepted from the time
acceptance is communicated to him. (n)
Article 1323. An offer becomes ineffective upon the death, civil interdiction,
insanity, or insolvency of either party before acceptance is conveyed. (n)
Article 1324. When the offerer has allowed the offeree a certain period to
accept, the offer may be withdrawn at any time before acceptance by
communicating such withdrawal, except when the option is founded upon a
consideration, as something paid or promised. (n)
Article 1325. Unless it appears otherwise, business advertisements of things for
sale are not definite offers, but mere invitations to make an offer. (n)
(2) Insane or demented persons, and deaf-mutes who do not know how to
write. (1263a)
Article 1328. Contracts entered into during a lucid interval are valid. Contracts
agreed to in a state of drunkenness or during a hypnotic spell are voidable.
(n)
Article 1331. In order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract, or to those
conditions which have principally moved one or both parties to enter into the
contract.
Article 1332. When one of the parties is unable to read, or if the contract is in
a language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully
explained to the former. (n)
Article 1333. There is no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the contract. (n)
Article 1334. Mutual error as to the legal effect of an agreement when the real
purpose of the parties is frustrated, may vitiate consent. (n)
To determine the degree of intimidation, the age, sex and condition of the
person shall be borne in mind.
A threat to enforce one's claim through competent authority, if the claim is just
or legal, does not vitiate consent. (1267a)
Article 1339. Failure to disclose facts, when there is a duty to reveal them, as
when the parties are bound by confidential relations, constitutes fraud. (n)
Article 1340. The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent. (n)
Article 1341. A mere expression of an opinion does not signify fraud, unless
made by an expert and the other party has relied on the former's special
knowledge. (n)
Article 1342. Misrepresentation by a third person does not vitiate consent,
unless such misrepresentation has created substantial mistake and the same
is mutual. (n)
Article 1343. Misrepresentation made in good faith is not fraudulent but may
constitute error. (n)
Article 1344. In order that fraud may make a contract voidable, it should be
serious and should not have been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages. (1270)