CONTRACTS
DEFINITION: OFFER
CHAPTER 2 Essential Requisites of
Contracts
SECTION 1 Consent
A. GENERAL PRINCIPLES
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)
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CONSENT
ACCEPTANCE AND OFFER
DEFINITION: CONSENT [Castan, 7th Ed., pp. 326-327; 8 Manresa,
5th Ed., Bk. 2, p. 365; 4 Sanchez Roman 191]
- the (concurrence) of the wills of the contracting parties
- with respect to the (object) and the cause
- which shall constitute the contract.
DEFINITION: CONSENT
- is manifested by the meeting(concurrence) of
- the offer and
- (must be certain)
- the acceptance
- (must be) (absolute) AND
- UN(qualified)
- upon the thing(object) and
- the cause
- which are to constitute the contract
- the offer and
- (must be certain) [definite? (Jurado)]
- a proposal to make a contract.9 [Bouvier’s Law
Dictionary, 2399]
RULE [certain] [definite]: Thus, where the defendant wrote a
letter to the plaintiff stating that he is “in a position” and is
“willing to entertain” the purchase of a yacht belonging to
the plaintiff under certain terms, and the plaintiff accepted all
of such terms, it was held that there was no perfected
contract, since the word “entertain” applied to an act does
not mean the resolution to perform said act, but simply a
position to deliberate whether to perform or not to perform
said act; consequently, the letter of the defendant cannot be
interpreted as a defi nite offer to purchase the yacht but
simply to deliberate whether or not he would purchase the
yacht.10
RULE: In order that an offer can be considered certain,
- it must not be vague, misleading, or made as a joke.
RULE: Therefore, a declaration of a person of “his intention to
enter into a contract” is not an offer that is certain.
(Rosenstock v. Burke, 46 Phil. 217)
RULE: If the offer is withdrawn before it is accepted, there is
no meeting of the minds. (Jose Benares, et al. v. Capitol
Subdivision, Inc., L-7330, Nov. 29, 1960).
DEFINITION: ACCEPTANCE
- the acceptance
- (must be) (absolute)
- that is, UN(qualified)
RULE [must also be certain and definite]: Thus, where the
plaintiff offered to the defendant certain machineries in
exchange for tractors and the latter answered stating “we
are willing to accept the proposition,’’ it was held that there
was no perfected contract of barter, since the phrase “willing
to accept’’ does not mean acceptance, but simply a
disposition to accept the offer in principle.11
RULE [(must be) (absolute)]:
- In other words, it must be plain and unconditional;
RULE: If the acceptance is qualified, let us say by a
condition,
- this merely constitutes a counter-offer.
- in which case it is essential before there can be a
perfected contract that there must be a definite
and absolute acceptance by the original offeror of
such counter-offer.13
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EXAMPLE Thus, where the defendant offered to the plaintiff an
option for three months to buy a certain land for the price of
its assessed government valuation and the latter answered by
accepting the offer, but subject to certain modifi cations with
regard to the terms of payment specifi ed in the proposal, it is
clear that there is no perfected contract because there is no
concurrence between the offer and the acceptance.14 The
same can also be said with regard to a case where the
defendant gave an option to the plaintiff to buy a certain
sugar central for P1,000,000, payable within three years and
properly secured, and the latter accepted the offer, placing
at the defendant’s disposal the sum of P100,000 as part
payment, and at the same time, notifying him that the
Philippine National Bank had agreed to transfer the
defendant’s long term loan of P600,000 to the account of the
plaintiff who will thus assume the defendant’s liability to the
said Bank for the said amount.15
DEFINITION: qualified acceptance,
- A qualified acceptance, or one that involves a new
proposal, constitutes a counter-offer.
- and is a rejection of the original offer.
- Consequently, when something is desired which is
not exactly what is proposed in the offer, such
acceptance is not suffi cient to generate consent
because any modifi cation or variation from the
terms of the offer annuls the offer.’’ (ABS-CBN
Broadcasting Corp. vs. Court of Appeals, G.R. No.
128690, January 21, 1999.)
TIME OF ACCEPTANCE
MOMENT OF PERFECTION
WHEN THE OFFEREE ACCEPTED BY:
Acceptance made by letter or telegram
four different theories which have been advanced in order to
pin-point the exact moment of perfection
(4) The cognition theory (cognición) — According to this
theory, the contract is perfected from the moment the
acceptance comes to the knowledge of the offeror [ from
the time it came to his knowledge ]. This is the theory
which is followed by the Spanish Civil Code.
RULE: Although the Code seems to limit the rule to
Acceptance made by letter or telegram only, the
weight of authority is to the effect that such rule is applicable
to all cases in which the acceptance is made by a person
who is not in the presence of the offeror, (contratación entre
ausentes.)20
- This is, of course, premised upon the fact that he is
not acting through an agent.21
RULE:from the time it came to his[OFFERROR]
knowledge
DEFINITION: knowledge
RULE: The knowledge may be
- actual or
- If actual knowledge be required, proof of
this would be almost impossible, for even
when the letter containing the answer has
been opened and read, the offerer can
always claim, in some cases truthfully, that
while he was reading the same, his mind
was elsewhere, and he did not actually
know the contents of said answer
- constructive
- (as when the letter of acceptance has
been received in the house of the offerer
by a person possessed of reasonable
discernment).
RULE: The better rule would be to say that since the offeror
has already a constructive knowledge of the contents of the
letter or telegram, it is but logical that he shall be bound by
the acceptance made by the offeree.24
PRESUMPTION: The contract, in such a case,
[acceptance letter coming into his[offerror]
knowledge]
- is presumed to have been entered into in
the place where the offer was made.
- RULE: Of course, ordinarily, once it is established that
the offeror has received the letter or telegram, there
arises a presumption that he has read the contents
thereof
RULE [offer withdrawal deadline OFFERROR]: Undoubtedly, the
rule in this jurisdiction is that he may still withdraw his offer or
proposal so long as he still has no knowledge of the
acceptance by the offeree.[8 Manresa, 5th Ed., Bk. 2, p. 373]
RULE [acceptance withdrawal deadline OFFERREE]: Dr.
Tolentino, however, maintains that the acceptance may be
revoked before it comes to the knowledge of the offeror
because in such case there is still no meeting of the minds,
since the revocation has cancelled or nullifi ed the
acceptance which thereby ceased to have any legal
effect.28 We believe that this opinion is more logical.
[JURADO]
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Article 1320. An acceptance may be express or
implied. (n)
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CONSENT
EXPRESS/IMPLIED ACCEPTANCE
RULE: IMPLIED ACCEPTANCE
(a) express (Art. 1320);
(b) implied (Art. 1320) from conduct, or acceptance of
unsolicited services (Perez v. Pomar, 2 Phil. 682);
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EXAMPLE: Thus, in the case of Perez vs. Pomar,30 where the

defendant contended that there was no perfected contract
entered into between him and the plaintiff, because there
was no proof that he had accepted the services of the latter ---------------------------------------------------------
as interpreter, the Supreme Court held: Article 1321. The person making the offer may fix the
- “Not only is there an express and tacit consent time, place, and manner of acceptance, all of which
which produces true contracts, but there is also a
must be complied with. (n)
presumptive consent which is the basis of quasi-
contracts, thus giving rise to the multiple juridical ---------------------------------------------------------
relations which result in obligations for the delivery of CONSENT
a thing or the rendition of a service. Notwithstanding
the denial of the defendant, it is unquestionable that
it was with his consent that the plaintiff rendered him RIGHTS OF THE OFFERER
services as interpreter, thus aiding him at a time RULE: Things that May Be Fixed by the Offerer
when, owing to the existence of an insurrection in - (a) the time
the province, the most disturbed conditions - (b) the place
prevailed. It follows, hence, that there was consent - (c) the manner of acceptance
on the part of both in the rendition of such service as
interpreter. Such services not being contrary to law RULE: all of which must be complied with
or to good customs, it was a perfectly licit object of
a contract and such a contract must necessarily RULE: Any act contrary to the prescribed terms really constitutes
have existed between the parties, as alleged by the a counter-offer or counter-proposal.
plaintiff.’’ ---------------------------------------------------------
Examples of Implied Acceptance
- (a) An offer by the Army to reward persons giving
information that would lead to the apprehension of
certain Huks may be considered implicitly accepted Article 1322. An offer made through an agent is
when the act referred to it is performed by members
accepted from the time acceptance is communicated
of the public.
- (b) In the same way, participation in a contest, with to him. (n)
full compliance of its rules, is implied acceptance of ---------------------------------------------------------
the offer. Thus, on one occasion, the Supreme Court
CONSENT
has said that “due to the fact that the bank started,
and advertised the contest offering prizes, under
certain conditions and the plaintiff prepared, by OFFER and ACCEPTANCE THROUGH AN AGENT
labor and expense, and took part in said contest,
the bank is bound to comply with its promise made
RULE: (PARAS) The Article applies when BOTH the offer and the
in the rules and conditions prepared and advertised
acceptance
by it.” (De la Rosa v. Bank of the Phil. Islands, 51 Phil.
- are made thru an AGENT
926).

RULE: (DE LEON) Article 1322 applies only if

Implied Rejection
- Upon the other hand, refusal or rejection of an offer
may also be inferred from acts and circumstances,
like the failure to act on an offer of compromise
before the court enters fi nal judgment on a case.
(Batangan v. Cojuangco, 78 Phil. 481). Similarly, an
offer to remit interest, provided the principal is paid,
is deemed rejected when the debtor fails to pay the
debt, and the creditor was constrained to sue for
collection thereof. (Gamboa v. Gonzales, 17 Phil.
381).
(c) presumed (by law)
- as when there is failure to repudiate hereditary rights
within the period fixed by law (See Art. 1057, Civil
Code); or when there is SILENCE in certain specifi c
cases as would tend to mislead the other party, and
thus place the silent person in estoppel. (See Arts.
1670, 1870, 1871, 1872 and 1873, Civil Code).
- the offer made through an agent
- and the acceptance is is communicated to
him.
RULE: (DE LEON) Hence, there would be no meeting of the
minds if
- the principal himself made the offer
- and the acceptance is communicated to the agent
- QUESTION: agent of the offerrer?
EXCEPTION:
- unless, of course, the latter (agent) is
- authorized to receive the acceptance.
RULE (PARAS) Suppose the principal himself made the offer,
and acceptance is communicated to the agent, would the
Article apply? In other words, would there already be a
meeting of the minds?
- ANS.: It is submitted that as a general rule, there

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would as yet be no meeting of the minds, for the
agent may be an ordinary one, not authorized to
receive the acceptance for the PARTICULAR
transaction.
- (1) However, if the agent was expressly
authorized to receive the acceptance,
- (2) or if the offeree had been told that
acceptance could be made direct with the
agent, who would then be given freedom
to act or to proceed,
- RULE: there can be a meeting of the minds and a
perfection of the contract.
DEFINITION: AGENT
- (an extension of the personality of the principal. (Art.
1910, par. 4, Civil Code).
RULE: Any other intermediary (who is not an agent, with power to
bind) is merely a sort of messenger, who must communicate to
the person who sends him; otherwise, there is as yet no meeting
of the minds.
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Article 1323. An offer becomes ineffective upon the
death, civil interdiction, insanity, or insolvency of
either party before acceptance is conveyed. (n)
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CONSENT
OFFER BECOMES INEFFECTIVE UPON
RULE: The above grounds are not exclusive.
- Thus, failure to comply with the condition of the offer as
to the time, place, and the manner of payment (Art.
1321.),
- the expiration of the period fixed in the offer for
acceptance (Art. 1324.),
- the destruction of the thing due before acceptance
(Art. 1262.),
- rejection of the offer,
- etc.
- will also render the offer ineffective and prevent the
juridical tie from being formed
RULE: It must be observed that the law refers to “either party.”
This means that at the time the acceptance is communicated,
both parties, offerer and offeree, must be living and
capacitated. (see Art. 1327.) The death of either party or his loss
of capacity before perfection precludes the formation of a
contract.
RULE: before acceptance
- An offer may be withdrawn before it is accepted. After
acceptance, the contract is already perfected. (Art.
1319.)
- Under Article 1323, even if the offer is not withdrawn,
- its acceptance will not produce a meeting of
the minds in case the offer has already
become ineffective because of the death,
civil interdiction, insanity, or insolvency of
either party
- before the conveyance of the acceptance
to the offeror
DEATH
- of either party
- before acceptance is conveyed
EXAMPLE:
- A makes an offer to B on Jan. 1.
- B makes known his acceptance in a letter received
at the house of A on Jan. 5.
- However, on Jan. 4, A had died.
- Here, the offer is ineffective
- because there was no meeting of the
minds.
EXAMPLE: The date the letter is received PREVAILS.
- A makes an offer to B on Jan. 1.
- B writes a letter on Jan. 3, accepting the offer.
- This letter is received by A on Jan. 5.
- But on Jan. 4, B had died.
- Here the offer is also ineffective,
- because there was no meeting of the
minds.
CIVIL INTERDICTION
- of either party
- before acceptance is conveyed
INSANITY
- of either party
- before acceptance is conveyed
RULE: (NOTE: If one of the parties at the time of making the
offer OR the acceptance was already insane, it may be said
that there is a meeting of the minds, in a sense, because the
contract is not void, but merely VOIDABLE, that is, it is valid
until annulled.)
INSOLVENCY
- of either party
- before acceptance is conveyed
Other Instances There are other instances when the offer
becomes ineffective, namely:
- (a) When the offeree expressly or impliedly rejects
the offer.
- (b) When the offer is accepted with a qualifi cation
or condition (for here, there would merely arise a
counter-offer).
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- (c) When before acceptance is communicated, the
subject matter has become illegal or impossible.
- (d) When the period of time given to the offeree
within which he must signify his acceptance has
already lapsed.
- (e) When the offer is revoked in due time (that is,
before the offeror has learned of its acceptance by
the offeree). (See Laudico v. Arias, 43 Phil. 270).
before acceptance is conveyed
ELECTRONIC ACCEPTANCE
(Sec. 16[1], R.A. No. 8792.)
DEFINITION: “Addressee’’
- refers to a person who is intended by the originator
to receive the electronic data message or
electronic document, but does not include a person
acting as an intermediary with respect to that
electronic data message or electronic document.
(Sec. 5[a], Ibid.)
DEFINITION: “Originator’’
- refers to a person by whom, or on whose behalf, the
electronic document purports to have been
created, generated and/or sent. The term does not
include a person acting as an intermediary with
respect to that electronic document. (Sec. 5[i], Ibid.)
RULE: An electronic data message or electronic document is
that of the originator if it was sent by the originator himself.
RULE: As between the originator and the addressee, an
electronic data message or electronic document is deemed
to be that of the originator if it was sent:
- (a) by a person who had the authority to act on
behalf of the originator with respect to that
electronic data message or electronic document; or
- (b) by an information system programmed by, or on
behalf of the originator to operate automatically.
RULE: Time of receipt of electronic data message or electronic
documents. — Unless otherwise agreed between the
originator and the addressee, the time of receipt of an
electronic data message or electronic document is as follows:
- a) If the addressee has designated an information
system for the purpose of receiving electronic data
messages or electronic documents, receipt occurs
at the time when the electronic data message or
electronic document enters the designated
information system. If the originator and the
addressee are both participants in the designated
information system, receipt occurs at the time when
the electronic data message or electronic
document is retrieved by the addressee.
- (b) If the electronic data message or electronic
document is sent to an information system of the
addressee that is not the designated information
system, receipt occurs at the time when the
electronic document is retrieved by the addressee.
- (c) If the addressee has not designated an
information system, receipt occurs when the
electronic data message or electronic document
enters an information system of the addressee.
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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)
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CONSENT
RIGHT OF THE OFFEROR
TO WITHDRAW HIS OFFER OR PROPOSAL
(2005) Marvin offered to construct the house of Carlos for a very
reasonable price of P900,000.00, giving the latter 10 days within
which to accept or reject the offer. On the fifth day, before
Carlos could make up his mind, Marvin withdrew his offer.
a) What is the effect of the withdrawal of Marvin's offer? me:
Can he be held for damages? (2%)
The withdrawal of Marvin's offer will cause the offer to cease in
law. Hence, even if subsequently accepted, there could be no
concurrence of the offer and the acceptance. In the absence
of concurrence of offer and acceptance, there can be no
consent. (Laudico v. Arias Rodriguez, G.R. No. 16530, March 31,
1922) Without consent, there is no perfected contract for the
construction of the house of Carlos. (Salonga v. Farrales, G.R.
No. L-47088, July 10, 1981) Article 1318 of the Civil Code provides
that there can be no contract unless the following requisites
concur: (1) consent of the parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the obligation.
Marvin will not be liable to pay Carlos any damages for
withdrawing the offer before the lapse of the period granted. In
this case, no consideration was given by Carlos for the option
given, thus there is no perfected contract of option for lack of
cause of obligation. Marvin cannot be held to have breached
the contract. Thus, he cannot be held liable for damages.
b) Will your answer be the same if Carlos paid Marvin P10,000.00
as consideration for that option? Explain. (2%)
My answer will not be the same if Carlos paid Marvin P10,000.00
for the option is founded upon a consideration.
Under Article 1324 of the New Civil Code, they offer may not be
withdrawn when the option is founded upon a consideration, as
something said or promised.
Here, the Mark founded his option by giving 10,000 as
consideration. Hence, he cannot withdraw the offer.
c) Supposing that Carlos accepted the offer before Marvin
could communicate his withdrawal thereof? Discuss the legal
consequences. (2%)
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A contract to construct the house of Carlos is perfected.
Contracts are perfected by mere consent manifested by the
meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract.
Under Article 1315 of the Civil Code, Carlos and Marvin are
bound to fulfill what has been expressly stipulated and all
consequences thereof. Under Article 1167, if Marvin would refuse
to construct the house, Carlos is entitled to have the
construction be done by a third person at the expense of
Marvin. Marvin in that case will be liable for damages under
Article 1170.
when the option is founded upon a consideration,
as something paid or promised.
RESULT: the offeror cannot withdraw his offer.
when the option is NOT founded upon a
consideration, as something paid or promised.
RESULT: the offeror’s offer
may be withdrawn
- by communicating such withdrawal
- to the offeree
- at any time before acceptance
EXCEPTION TO THE GENERAL RULE OF RIGHT TO
WITHDRAW STATED IN ART. 1324
Art. 1479 of the Civil Code under the law on sales declares
that “an accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct
from the price.”
- If the option is not supported by a consideration
which is distinct from the purchase price, the offer
may still be withdrawn even if the offeree has
already accepted it.
BUT SC ABANDONED THIS EXCEPTION:
RULE: The above interpretation, however, was fi nally
abandoned in Sanchez vs. Rigos (G.R. No. L-25494, June 14,
1972, 45 SCRA 368).
Stated in another way, if the option is without a consideration,
it is a mere offer to sell which is not binding until accepted.
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Article 1325. Unless it appears otherwise, business
advertisements of things for sale are not definite
offers, but mere invitations to make an offer. (n)
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CONSENT
ADVERTISEMENT OF THINGS FOR SALE
PUBLIC OFFER / GENERAL OFFER
GENERAL RULE: Business advertisements of things for sale
- are not definite offers,
- acceptance of which will perfect a contract
- but are merely invitations to the reader to make an
offer or only as proposals.
EXAMPLE:
“For sale: 1,000 square meters lot at Green Plains Village,
Quezon City for P5,000,000.00 — Tel. No. 817-12-84.”
- This is not a definite offer.
EXCEPTION RULE: However, IF
- the advertisement is complete in all the particulars
necessary in a contract,
- it may amount to a definite offer
- which, if accepted, will produce a perfected
contract.
EXAMPLE: “For sale: 1,000 square meters lot at Green Plains
Village, Quezon City located at the corner of Geronimo and
Magallanes Streets for P5,000,000.00 cash. — Tel. No. 817-12-
84.”
- This is a definite offer.
ACCEPTANCE OF PUBLIC OFFER / GENERAL OFFER
GENERAL RULE: As a general rule, an offer is made to a
particular person.
- Consequently, only such person, and no other, can
accept the offer.
REASON: This is because “a party has a right to select and
determine with whom he will contract, and cannot have
another person thrust upon him without his consent.” (Boston
& Co. vs. Potter, 123 Mass. 28.)
EXCEPTION RULE: The principle is that a general offer made to
the public, or to a particular class of persons, may be
accepted by any one or by any one coming within the
description of the class
EXAMPLE: for example, an offer of a prize for a design for a
public building or a bonus to any one who will make a certain
improvement, or of a reward, and other like cases.
- Such offers, although made to an unascertained
person or persons, cannot, of course, be turned into
an agreement until they have been accepted by
an ascertained person
- As soon as there is an acceptance by a person
falling within the class to whom the offer is made,
there is a binding contract. (see 13 C.J. 273-274.)
RULE: It is an elementary principle that where a party publishes
an offer to the world, and before it is withdrawn another acts
upon it,
- the party making the offer is bound to perform his
promise.
- This principle is frequently applied in cases of the
offer of rewards.” (6 R.C.L. 607, cited in De la Rosa vs.
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Bank of the Phil. Islands, 51 Phil. 926 [1928].)
- REQUISITE: But the acceptance must be in strict
conformity with the offer
- a qualified acceptance does not create a
contract. (Montinola vs. Victoria Milling Co.
and Copper, 54 Phil. 782 [1930].)
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Article 1326. Advertisements for bidders are simply
invitations to make proposals, and the advertiser is
not bound to accept the highest or lowest bidder,
unless the contrary appears. (n)
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executive department, unless it is apparent that such exercise
of discretion is used to shield unfairness or unjustice.’’
(Hutchison Ports Philippines Limited vs. Subic Bay Metropolitan
Authority, 339 SCRA 434 [2000]; see Desierto vs. Ocampo, 452
SCRA 789 [2005].)
EXCEPTION RULE: In judicial sales, however, the sheriff or
auctioneer is bound to accept the highest bid. (see Rule 39,
Sec. 19, Rules of Court.)
RESERVATION OF RIGHT TO REJECT ANY OR ALL BID IN PUBLIC
BIDDINGS.

CONSENT
ADVERTISEMENT FOR BIDDERS
RULE: Advertisements for bidders
- are simply invitations to make proposals
GENERAL RULE: the advertiser is not bound to accept
the highest or lowest bidder
- the advertiser is not the one making the offer.
- In reality, the bidder is the one making the offer
which the advertiser is free to accept or reject.
RULE: A reservation in the advertisement for bids
- of the right of the government
- to reject any bid,
- generally vests in the authorities a wide discretion as
to who is the best and most advantageous bidder.
- This involves inquiry, investigation, comparison,
deliberation and decision, which are quasi-judicial
functions and, when honestly exercised,
- may not be reviewed by the courts
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RULE: Acceptance by the advertiser of a given bid is

necessary
- for a contract to exist
- between the advertiser and the bidder,
regardless of the terms and conditions of
his bid. (Surigao Mineral Reservation Board
vs. Cloribel, 24 SCRA 898 [1968].)

RULE: Where a seller reserved the right to refuse to accept the

bid made, a binding sale is not perfected until the seller
accepts the bid. The seller may exercise his right to reject any
bid after the auctioneer has accepted a bid. (Caugma vs.
People, 486 SCRA 611 [2006].)

RULE: The owner of the property( advertiser) which is

advertised for sale, either at public or private auction,
- has the right to prescribe the manner, conditions
and terms of the sale
- and anybody participating in such sale is bound by
all the conditions,
- whether he knew them or not.
- (Leoquinco vs. Postal Savings Bank, 47 Phil. 772
[1925]; Borromeo Art. 1326 541 vs. City of Manila, 62
Phil. 512 [1935].)

EXCEPTION RULE: unless the contrary appears

EXCEPTION TO EXCEPTION RULE: “The President may, within his

authority, overturn or reverse any award made by the SBMA
Board of Directors for justifi able reasons. It is well-established
that the discretion to accept or reject any bid, or even recall
the award thereof, is of such wide latitude that the courts will
not generally interfere with the exercise thereof by the