ARTCILE 1319 The acceptance of an offer must be made known to the offeror.

Unless
Malbarosa v. CA & S.E.A. Dev't Corp. (SEADC)
Facts: the offeror knows of the acceptance, there is no meeting of the minds

Philtectic Corporation and Commonwealth Insurance Co., Inc. of the parties, no real concurrence of offer and acceptance. The offeror
were only two of the group of companies wholly-owned and
controlled by SEADC. may withdraw its offer and revoke the same before acceptance thereof
Petitioner Malbarosa was the president and general manager
of Philtectic Corporation. by the offeree. The contract is perfected only from the time an
SEADC assigned to the petitioner one of its vehicles.
acceptance of an offer is made known to the offeror. If an offeror
January 1990: Malbarosa intimated to Senen Valero (Vice-
Chairman of the Board of Directors of SEADC and Philtectic
prescribes the exclusive manner in which acceptance of his offer shall
Corporation). His desire to retire from the SEADC group of
companies and requested that his 1989 incentive
be indicated by the offeree, an acceptance of the offer in the manner
compensation as president of Philtectic Corporation be paid to
him.
prescribed will bind the offeror. On the other hand, an attempt on the
Louis Da Costa (President of SEADC and Commonwealth
Insurance Co., Inc.) met with the petitioner on two occasions to part of the offeree to accept the offer in a different manner does not
discuss the amount of the 1989 incentive compensation
petitioner was entitled to, and the mode of payment thereof. Da bind the offeror as the absence of the meeting of the minds on the
Costa ventured that the petitioner would be entitled to an
incentive compensation in the amount of P395,000. altered type of acceptance. An offer made inter praesentes must be
March 14, 1990: SEADC through Senen Valero, signed a letter-
offer addressed to Malbarosa stating therein that Malbarosa's accepted immediately. If the parties intended that there should be an
resignation from all the positions in the SEADC group of
companies had been accepted, and that he was entitled to an express acceptance, the contract will be perfected only upon
incentive compensation in the amount of P251,057.67.
SEADC required that if the petitioner agreed to the offer, he knowledge by the offeror of the express acceptance by the offeree of
had to affix his conformity on the space provided therefor and
the date thereof on the right bottom portion of the letter. the offer. An acceptance which is not made in the manner prescribed
Dismayed when he learned that he was being offered an
incentive compensation of only P251,057.67, Malbarosa by the offeror is not effective but constitutes a counter-offer which the
refused to sign the letter-offer. He received the original of the
letter and wrote on the duplicate copy of the letter-offer retained offeror may accept or reject. The contract is not perfected if the offeror
by Da Costa, the words: "Rec'd original for review purposes."
Despite the lapse of more than two weeks, SEADC had not revokes or withdraws its offer and the revocation or withdrawal of the
received the original copy of the March 14, 1990 Letter-offer
with the conformity of the Malbarosa. SEADC decided to offeror is the first to reach the offeree. The acceptance by the offeree
withdraw its March 14, 1990 Offer.
Philtectic Corporation, through its counsel, informed Malbarosa of the offer after knowledge of the revocation or withdrawal of the offer
through a letter, withdrawing the March 14, 1990 Letter-offer of
SEADC and demanded Malbarosa to return the car and his is inefficacious. The termination of the contract when the negotiations
membership certificate in the Architectural Center, Inc. within
24 hours from his receipt thereof. Malbarosa received the of the parties terminate and the offer and acceptance concur, is largely
original copy of the letter on the same day.
Malbarosa refused to return the vehicle saying that he already a question of fact to be determined by the trial court.
accepted the March 14, 1990 Letter-offer of SEADC when he
affixed on March 28, 1990 his signature on the original copy of
the letter-offer. The petitioner enclosed a xerox copy of the In this case, the respondent made its offer through its Vice-Chairman
original copy of the March 14, 1990 Letter-offer of SEADC,
bearing his signature on the space provided therefore dated of the Board of Directors, Senen Valero. On March 16, 1990, Da Costa
March 28, 1990.
SEADC filed a complaint for recovery of personal property with handed over the original of the March 14, 1990 Letter-offer of the
replevin with damages and attorney's fees.
RTC: Issued an order for the issuance of a writ of replevin. respondent to the petitioner. The respondent required the petitioner to
There existed no perfected contract between
Malbarosa and SEADC on the latter's March 14, accept the offer by affixing his signature on the space provided in said
1990 Letter-offer for failure of Malbarosa to
effectively notify SEADC of his acceptance of said letter-offer and writing the date of said acceptance, thus foreclosing an
letter-offer before the SEADC withdrew the same.
CA: Malbarosa had not accepted the SEADC's March 14, 1990 implied acceptance or any other mode of acceptance by the petitioner.
Letter-offer before the SEADC withdrew said offer on April 4,
However, when the letter-offer of the respondent was delivered to the
1990.
Issue:
petitioner on March 16, 1990, he did not accept or reject the same for
WON Malbarosa validly accepted the March 14, 1990 Letter-
offer of SEADC. the reason that he needed time to decide whether to reject or accept
Ruling:
Under Article 1319 of the New Civil Code, the consent by a party is the same. There was no contract perfected between the petitioner and
manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. An offer may the respondent corporation. Although the petitioner claims that he had
be reached at any time until it is accepted. An offer that is not accepted
does not give rise to a consent. The contract does not come into affixed his conformity to the letter-offer on March 28, 1990, the
existence. To produce a contract, there must be acceptance of the offer
which may be express or implied but must not qualify the terms of the petitioner failed to transmit the said copy to the respondent. It was only
offer. The acceptance must be absolute, unconditional and without
variance of any sort from the offer.
on April 7, 1990 when the petitioner appended to his letter to the Suarez was the owner of a parcel of land.

respondent a copy of the said March 14, 1990 Letter-offer bearing his

conformity that he notified the respondent of his acceptance to said Suarez and Tuazon executed a Contract of Lease for a period

offer. But then, the respondent, through Philtectic Corporation, had of three years (March 1994-February 1997).

already withdrawn its offer and had already notified the petitioner of
January 2, 1995: Suarez sent a letter to Roberto where she
said withdrawal via respondent's letter dated April 4, 1990 which was

delivered to the petitioner on the same day. Indubitably, there was no offered to sell the subject parcel of land. She pegged the price

contract perfected by the parties on the March 14, 1990 Letter-offer of at P37,541,000.00 and gave him two years from January 2,

the respondent. 1995 to decide on the said offer.

The petitioner's plaint that he was not accorded by the respondent June 19, 1997 (more than 4 months after the expiration of the

reasonable time to accept or reject its offer does not persuade. It must Contract of Lease) Suarez sold subject parcel of land to her

be underscored that there was no time frame fixed by the respondent only child, Catalina Suarez-De Leon, her son-in-law Wilfredo

for the petitioner to accept or reject its offer. When the offeror has not De Leon, and her two grandsons, Miguel Luis S. De Leon and

fixed a period for the offeree to accept the offer, and the offer is made Rommel S. De Leon (the De Leons), for a total consideration of

to a person present, the acceptance must be made immediately. In this only P2,750,000.00 as evidenced by a Deed of Absolute Sale.

case, the respondent made its offer to the petitioner when Da Costa
The new owners through their attorney-in-fact, Guillerma S.
handed over on March 16, 1990 to the petitioner its March 14, 1990
Silva, notified Tuazon to vacate the premises. Roberto refused
Letter-offer but that the petitioner did not accept the offer. The
hence, the De Leons filed a complaint for Unlawful Detainer
respondent, thus, had the option to withdraw or revoke the offer, which
before the Metropolitan Trial Court (MeTC) against him.
the respondent did on April 4, 1990.

MeTC: Ordered Tuazon to vacate the property for non-payment

Even if it is assumed that the petitioner was given a reasonable period
of rentals and expiration of the contract.
to accept or reject the offer of the respondent, the evidence on record

shows that from March 16, 1990 to April 3, 1990, the petitioner had
RTC: Deed of Absolute Sale made by Suarez in favor of the De
more than two weeks which was more than sufficient for the petitioner
Leons as valid and binding.
to accept the offer of the respondent. Although the petitioner avers that

he had accepted the offer of the respondent on March 28, 1990,

The offer made by Suarez to Tuazon did not ripen into a
however, he failed to transmit to the respondent the copy of the March
contract to sell because the price offered by the former
14, 1990 Letter-offer bearing his conformity thereto. Unless and until
was not acceptable to the latter. The offer made by
the respondent received said copy of the letter-offer, it cannot be
Suarez is no longer binding and effective at the time
argued that a contract had already been perfected between the
she decided to sell the subject lot to the De Leons
petitioner and the respondent.
because the same was not accepted by Tuazon.

ARTICLE 1324
CA: Affirmed the decision of the RTC.

Tuazon v. Suarez & the De Leons

Tuazon claims that Suarez violated his right to buy subject

Facts: property under the principle of "right of first refusal" by not

giving him "notice" and the opportunity to buy the property

 under the same terms and conditions or specifically based on It is true that under Article 1324 of the new Civil Code, the

the much lower price paid by the De Leons. general rule regarding offer and acceptance is that, when the

offerer gives to the offeree a certain period to accept, "the offer

Issue:
may be withdrawn at any time before acceptance" except when

the option is founded upon consideration, but this general rule

WON Tuazon was right in asserting that the contract they
must be interpreted as modified by the provision of Article 1479
entered into was a contract of a right of first refusal.
above referred to, which applies to "a promise to buy and

sell" specifically. As already stated, this rule requires that a

Ruling:
promise to sell to be valid must be supported by a

No, this case involves an option contract and not a contract of consideration distinct from the price.

a right of first refusal.

It is clear that the above letter embodies an option contract as it

grants Roberto a fixed period of only two years to buy the

subject property at a price certain of P37,541,000.00. It being

an option contract, the rules applicable are found in Articles

1324 and 1479 of the Civil Code.

Art. 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.

Diamante v. Court of Appeals

A unilateral promise to buy or sell is a mere offer, which is not

converted into a contract except at the moment it is

accepted. Acceptance is the act that gives life to a juridical

obligation, because, before the promise is accepted, the

It is clear from the provision of Article 1324 that there is a great

difference between the effect of an option which is without a

consideration from one which is founded upon a consideration.

If the option is without any consideration, the offeror may

withdraw his offer by communicating such withdrawal to the

offeree at anytime before acceptance; if it is founded upon a

,,,,
consideration, the offeror cannot withdraw his offer before the

lapse of the period agreed upon.


In this case, it is undisputed that Roberto did not accept the
terms stated in the letter of Lourdes as he negotiated for a
much lower price. Robertos act of negotiating for a much lower
price was a counter-offer and is therefore not an acceptance of
the offer of Lourdes.
The counter-offer of Roberto for a much lower price was not
accepted by Lourdes. There is therefore no contract that was
perfected between them with regard to the sale of subject
property. Roberto, thus, does not have any right to demand that
the property be sold to him at the price for which it was sold to
the De Leons neither does he have the right to demand that
said sale to the De Leons be annulled.
and the cause which constitute the contract. To create a
valid contract, the meeting of the minds must be free,
voluntary, willful and with a reasonable understanding of the
various obligations the parties assumed for
themselves. Where consent, however, is given through
mistake, violence, intimidation, undue influence, or fraud, the
contract is deemed voidable. However, not every mistake
renders a contract voidable. The Civil Code clarifies the
nature of mistake that vitiates consent:
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 1331.
Roman Catholic Church v. Pante
Facts:
Church owned a lot in Camarines Sur. For mistake as to the qualification of one of the parties to vitiate
September 25, 1992: Church contracted with Pante for the sale
of the lot (thru a Contract to Sell and to Buy) on the belief that consent, two requisites must concur:
the latter was an actual occupant of the lot. The contract
between them fixed the purchase price at P11,200.00, with the
initial P1,120.00 payable as down payment, and the remaining
balance payable in three years or until September 25, 1995. 1. the mistake must be either with regard to the
June 28, 1994: Church sold in favor of the spouses Nestor and
identity or with regard to the qualification of one of
Fidela Rubi (spouses Rubi) a 215-square meter lot that
included the lot previously sold to Pante. Spouses Rubi
the contracting parties; and
asserted their ownership by erecting a concrete fence over the
lot sold to Pante, effectively blocking Pante and his familys
access from their family home to the municipal road. As no
settlement could be reached between the parties, Pante 2. the identity or qualification must have been the
instituted with the RTC an action to annul the sale between the
Church and the spouses Rubi, insofar as it included the lot principal consideration for the celebration of the
previously sold to him.
Church sought for the annulment of its contract with Pante. contract.
It alleged that its consent to the contract was obtained
by fraud when Pante, in bad faith, misrepresented that
he had been an actual occupant of the lot sold to him, In the present case, the Church contends that its consent to
when in truth, he was merely using the 32-square meter
lot as a passageway from his house to the town proper.
sell the lot was given on the mistaken impression arising from
It contended that it was its policy to sell its lots only to
actual occupants. Since the spouses Rubi and their
Pantes fraudulent misrepresentation that he had been the
predecessors-in-interest have long been occupying the
215-square meter lot that included the 32-square meter
actual occupant of the lot. Willful misrepresentation existed
lot sold to Pante, the Church claimed that the spouses
Rubi were the rightful buyers.
because of its policy to sell its lands only to their actual
RTC: Ruled in favor of the Church, finding that the Churchs
consent to the sale was secured through Pantes occupants or residents. Thus, it considers the buyers actual
misrepresentation that he was an occupant of the 32-square
meter lot. Contrary to his claim, Pante was only using the lot as occupancy or residence over the subject lot a qualification
a passageway; the Churchs policy, however, was to sell its lots
only to those who actually occupy and reside thereon. As the necessary to induce it to sell the lot.
Churchs consent was secured through its mistaken belief that
Pante was a qualified "occupant," the RTC annulled the
contract between the Church and Pante.
: It ruled that if Pante had been prompt in paying the price, Contrary to the Churchs contention, the actual occupancy or
then the Church would have been estopped from selling the lot residency of a buyer over the land does not appear to be a
to the spouses Rubi. In light of Pantes delay and his admission necessary qualification that the Church requires before it could
that the subject lot had been actually occupied by the spouses sell its land. Had this been indeed its policy, then neither Pante
Rubis predecessors, the RTC upheld the sale in favor of the nor the spouses Rubi would qualify as buyers of the 32-square
spouses Rubi. meter lot, as none of them actually occupied or resided on the
CA: granted Pantes appeal and reversed the RTCs ruling. lot. We note in this regard that the lot was only a 2x16-meter
Church filed the present petition for review on certiorari to strip of rural land used as a passageway from Pantes house to
contest CA's ruling. the municipal road.
Issue: We find well-taken Pantes argument that, given the size of the
WON there is misrepresentation on the part of Pante.
lot, it could serve no other purpose than as a mere
Ruling:
No misrepresentation existed vitiating the sellers consent
passageway; it is unthinkable to consider that a 2x16-meter
and invalidating the contract.
Consent is an essential requisite of contracts as it pertains to strip of land could be mistaken as anyones residence. In fact,
the meeting of the offer and the acceptance upon the thing
 the spouses Rubi were in possession of the adjacent lot, but
Facts:
they never asserted possession over the 2x16-meter lot when
the 1994 sale was made in their favor; it was only then that
they constructed the concrete fence blocking the passageway.
We find it unlikely that Pante could successfully misrepresent
himself as the actual occupant of the lot; this was a fact that the
Church (which has a parish chapel in the same barangay
where the lot was located) could easily verify had it conducted
an ocular inspection of its own property. The surrounding
circumstances actually indicate that the Church was aware that
Pante was using the lot merely as a passageway.
The above view is supported by the sketch plan, attached to
the contract executed by the Church and Pante, which clearly
labeled the 2x16-meter lot as a "RIGHT OF WAY"; below these
words was written the name of "Mr. Regino Pante." Asked
during cross-examination where the sketch plan came from,
Pante answered that it was from the Archbishops Palace;
neither the Church nor the spouses Rubi contradicted this
statement.
The then parish priest of Canaman, Fr. Marcaida, was
apparently aware that Pante was not an actual occupant, but
nonetheless, he allowed the sale of the lot to Pante, subject to
the approval of the Archdioceses Oeconomous. Relying on Fr.
Issue:
Marcaidas recommendation and finding nothing objectionable,
Fr. Ragay (the Archdioceses Oeconomous) approved the sale
to Pante.
Ruling:
The above facts, in our view, establish that there could not
have been a deliberate, willful, or fraudulent act committed by
Pante that misled the Church into giving its consent to the sale
of the subject lot in his favor. That Pante was not an actual
occupant of the lot he purchased was a fact that the Church
either ignored or waived as a requirement. In any case, the
Church was by no means led to believe or do so by Pantes
act; there had been no vitiation of the Churchs consent to the
sale of the lot to Pante.
Dandan v. Arfel Realty
March 7, 1992: Arfel Realty, represented by its president and
general manager Rafael Felix, sold to Dandan a parcel of
land for the price of P320,000.00.
The lot was previously the subject of a Contract to Sell
executed between Arfel Realty and the spouses Emerita and
Carlito Sauro (the Sauros). Under this contract, the Sauros
undertook to pay the purchase price of P690,000.00, with a
50% down payment of P345,000.00 and the balance payable in
sixty (60) equal installments of P9,528.52 including interest of
22% per annum. While the Sauros claimed to have fully paid
for the subject lot in the total amount of P799,601.59 and
demanded the delivery of title, Arfel Realty asserted that the
several checks drawn by the Sauros to effect payment were
either dishonored by the bank due to insufficiency of funds or
were drawn against a closed account. Thus, the Sauros
allegedly still had an unpaid balance of P299,614.23.
According to Arfel Realty, Dandan was made aware of its
previous transaction with the Sauros.
On 2 June 1992, the Sauros filed a complaint for specific
performance against Arfel Realty before the Housing and Land
Use Regulatory Board (HLURB).
Arfel Realty filed a third-party complaint against Dandan.
Dandan filed his Position Paper, contending that the HLURB
had no jurisdiction over the third-party complaint as the case
did not involve the sale of a house and lot but rather a personal
action for indemnification and payment of attorneys fees. He
also questioned the validity of the Agreement in that it was not
supported by any valuable consideration. He argued that he
affixed his signature to the Agreement unaware of its legal
import and without any intention to be bound by it.
HLURB Board of Commissioners: Declared that the sale of
the property to Dandan during the subsistence of the Contract
to Sell was fraudulent. Thus, Arfel Realty is obligated to refund
the payments made by the Sauros. Furthermore, it ruled that
Dandan liable under the Agreement.
Office of the President (OP): Reversed the HLURBs decision
and maintained the liability of Arfel Realty in favor of the
Sauros.
During the pendency of the appeal seeking the reversal of the
OP's decision, Arfel Realty and the Sauros entered into a
compromise settlement whereby the former acknowledged its
liability to the latter and committed to pay them the amount
of P966,515.76. Consequently, Arfel Realty filed a
manifestation waiving its right to proceed against the Sauros
but maintaining its suit against Dandan.
With the case reduced to a controversy between Dandan and
Arfel Realty, the CA ruled in favor of Arfel Realty.
WON Dandan is bound by the Agreement.
Yes.
The determination of the existence of a valid consent
principally rests on the provisions of the Agreement itself. Of
course, the finding that Dandan was made aware of the
previous transaction between Arfel Realty and the Sauros
prior to the signing of the Agreement is a great boost. Arfel
Realtys assertion that Dandan knew of the previous contract
between it and the Sauros was not rebutted by the latter.
In upholding the existence of consent, both the HLURB and
the Court of Appeals relied on the clear and plain language
of the Agreement which expressly mentions that Dandan
was aware of the transaction between Arfel Realty and the
Sauros when he bought the subject property.
The naked claim that Dandan signed the Agreement without
understanding its legal import will not exculpate him from its
legal ramifications. Mistake may invalidate consent when it
refers 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. Mistake of law
as a rule will not vitiate consent. (Article 1331)
 Without doubt, Dandan is bound by the terms of the the contractual stipulations may turn out to be financially
Agreement, as well as by all the necessary consequences disadvantageous will not relieve parties thereto of their
thereof. Courts are not authorized to extricate parties from obligations.
the necessary consequences of their acts, and the fact that