Take Note of the General Characteristics of a Contract, these will remind you what are the essential

features of a contract such as, if the contract binding a party.

ESSENTIAL REQUISITE OF A CONTRACT

Under ART.1318 Provides that no contract shall exist except when there is a concurrence of the three
important elements of a contract. These are called the common essential elements in a contract
meaning that requisites are essential in all kinds of contract because without these requisites contract
does not exist. They are common because regardless in the type of contract all these basic element must
exist in order that a contract might also exist.

ART 1318 There is no contract unless the following requisites concur:

1.) Consent of the contracting parties- meeting of the minds of the two parties ;

2) Object certain which is the subject matter of the contract- must be definite and certain (ex. Land, or
house etc);

3) Cause of the obligation which is established- compellin g reason in the performance of the
contract or why a party assumes an obligation.
CASE: Manzano vs Garcia

SC said that There are two types of void contracts: (1) those where one of the essential requisites of a
valid contract as provided for by Article 1318 of the Civil Code is totally wanting; and (2) those declared
to be so under Article 1409 of the Civil Code. [32]  "[C]onveyances by virtue of a forged signature x x x are
void ab initio.  The absence of the essential [requisites] of consent and cause or consideration in these
cases rendered the contract inexistent

1) those where one of the essential requisites of a valid contract as provided for by Article 1318 of the
Civil Code is totally wanting;

If any of the essential requisite of a contract under 1318 is absent since they are essential we cannot say
that a contact comes in existence, so what is the status of that contract if one of the requisite is absent?
That contract is void ab initio. Article 1318 is clear that no contract will come into existence when there
is a failure of all the three requisites concur.

The absence of the essential requisites of consent cause or consideration in effect it rendered the
contract inexistent. Void ab initio meaning void from the very beginning.

The second type of void contract are the type of contract that we will discussed when we reach In our
topic on DEFECTIVE CONTRACTS. These contract 2.) those declared to be so void under art. 1409 of the
new civil code

The following contracts are inexistent and void from the beginning:

1.) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy;

2.) Those which are absolutely simulated or fictitious;

3.) Those whose cause or object did not exist at the time of the transaction;

4.) Those whose object is outside the commerce of men;

5.) Those which contemplate an impossible service;

6.) Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;

7.) Those expressly prohibited or declared void by law.

These contracts cannot be ratified.  Neither can the right to set up the defense or illegality be waived.
(n)

So under Art. 1409 the contracts are void not because they lack in essential requisites because the law
specifically the new civil codes provides that they are void. We will discuss about that when we reach
defective contracts.

Take note even if you don’t look at Art. 1409, if any of the common essential requisite of a contract is
absent or is totally wanting then the status of that contract is void. (Manzano vs Garcia)

CASE: HERNANDEZ NIEVERA VS HERNANDEZ

In this case there was an allegation of an absent of CONSENT.

In a lot of cases in your oblicon we will encounter the special power of attorney, (SPA) effectively gives
out authority to a third person who is called an agent in order to give authority or vest power upon the
agent who enter into contracts or exercise a certain legal acts in favour of the principal, that agent or
the representative is an extension of the personality of the principal and the extension of personality by
the virtue of the special power of attorney now if the SPA is defective, take note that any transaction
entered into by the agent or by the representative in favour to principal as to the principal it is
considered UNENFORCEABLE not VOID because of the absence of the CONSENT of the party of that of
principal.

What is the difference between that absent of consent, consent given by an agent or representative not
by the principal versus a total absent of consent as of that Manzano vs Garcia. Take note if there is
consent but the consent is defective on account in fact that consent must not entered into by anyone
contracting parties a contract may be considered unenforceable such that there was consent given but it
was not consented by the principal or anyone of the contracting parties who should have given their
consent of a transaction, agreement or a contract. The Status of the contract is unenforceable.

In the case of Hernandez nievera vs Hernandez there was consent but because of the defect of consent
there was an allegation that contract is unenforceable as supposed to the case of manzano vs Garcia the
SC there was a total absence of CONSENT, consent was actually totally wanting in the case and therefore
the contract is void.

If the common essential requisites or elements of a contract is considered void if the requisite totally
absent meaning they fail to exist from the very start but if a assemblance of those requisites exist but
later on you will see that there is a defect in any one of those requisites the contract may be
automatically void it may be some other type of defective contract such as unenforceable or voidable.

We will be discussing the specific elements one by one.

Art. 1318 1.Consent 2. Object 3.Cause of the obligation

ART.1319 CONSENT

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.

Art. 1319 give us the essential concept or the important idea about on how consent is manifested.
Consent is a nature of the mind,so you cannot say automatically just because one way or another if they
do something or does not do something automatically there is consent or there is no consent.

We cannot say that we can extract a consent of some persons mind, so di mo automatic kabalo if ng
consent ba siya o wala. Just like criminal law INTENT is the creature of their mind so dili kabalo if ang
person gi intent nia ang krimen o wla. In criminal law you can know the intention by the virtue of overt
acts in doing overt acts that it will convey existence of that intention regardless kung ang crime is it mala
in se or mala prohibita.

CONSENT do not rely solely on overt acts. Di ka mkaingon just because wa nia gibuhat wala nay consent.
CONSENT is manifested. It gives up a view when there is a meeting of the offer and acceptance.

The very important first stage is not the perfection of the contract it is the negotiation or policitacion
when there is an offer, whether that offer will be accepted or not it will give rise to the perfection of the
contract. If wala pa contract, we are still under negotiation, preparation of a contract that is the stage
where you receive the offer, the moment that offer is accepted there is meeting of both of the offer and
acceptance by virtue of that consent we can say a contract is perfected, because of the meeting of the
offer and the acceptance.

What are the requisite that we can say there is a consent? ART. 1319-1326 gives you the important
element of a consent.

Let’s discuss requisite of consent one by one.

1. Consent must be manifested by the concurrence of the offer and the acceptance, that is where
the meeting of minds or meeting of wills.

How do we say that there is manifestation or the concurrence of a offer of a right for this you will resort
to this under Article 1319 to 1326

2. There is consent when the contracting parties possess the necessary legal capacities of a
consent now this necessary capacity of a consent are the provision 1327-1329.
 3. There is consent, the consent must be intelligent, free, spontaneous and real. How can u say
that the consent is intelligent, Free, spontaneous and real consent? We Rely on Art. 1330-1346

The first, Consent must be manifested by the concurrence offer and the acceptance, that is the first
requisite, the very important requisite now here we rely on the rules of the offer and the acceptance.

Consent must divide it according to requisites

First there must be a meeting of the offer and the acceptance.1319-1326

Next there must be a legal capacity to give consent. 1327-1329

Consent must be intelligent, free, spontaneous and real. 1330-46

First requisite under art.1319 tells us that there must be a concurrence of the offer and acceptance,
therefore as between this provision we must discuss what are the rules in order that there would be a
proper offer and what are the rules in order that we can say that there is proper acceptance.

Consent is manifested by the meeting of the offer and the acceptance.

Article 1319 is clear, the offer must be certain and the acceptance must be absolute. So the offer must
be certain and definite as to the object of that contracts and as to the cause and consideration of that
consenting party.

One object of a contract for one contracting party will be considered to a cause or consideration of that
matter and vice versa. When that one contracting party will give an offer, the offer as to the object and
the cause must be certain, must be definite, kabalo jud siya nga kana na bagay ang naka contract and
kana ang dahilan or kana iya apas in the contract.

Such as in a contract of sale, the seller is actually after the money, so the object of that sale, of course
the object, the subject matter of the prestation, example a CAR so the seller wants to sell off a car, the
object, in order that he will acquire the money of the buyer or the consideration that will be given by
the buyer.

So in that way, on the part of the seller, to say that the seller is giving consent when the offer is given by
the seller, it must be definite kani nga kotse ako gusto ibaligya sa ing ani na price so that must be the
offer that must be certain and definite.

On the part of the buyer para magkaroon ng contract, the acceptance on the part of the buyer must be
absolute wala na siyay lain dawaton sa contract kundi katong gi offe ,otherwise we cannot say that the
buyer is consenting or the buyer is accepting the offer of the seller, that is why acceptance on the other
contracting party must also be absolute because the acceptance of that contracting parties you also
constitute the object and consideration from his or her view point.

Example a buyer wants to buy a specific car, only that car, acceptance on the part of the buyer must be
absolute, certain and definite, para magtugma ila mga utak unsay ipanghatag ug unsay dawaton.

On the part of the buyer, ug ang tuyo nia or ang cause niya is ang kotse ang object na dapat niya ihatag
ug I offer pud the same of the cause or consideration of that, as to the seller so ug ibaligya sa iyaha ug 5
million dili dapat 4,999,000 dapat sakto jud na 5 million in order that we can say that when you make
the acceptance that acceptance on the part of the offer of the seller is absolute as to him, that would be
his object his cause for consideration. From the view point in that contract. Both the offer the
acceptance must be certain, definite and absolute.

What are the characteristic of the acceptance under Article 1319, it gives the rules, the acceptance must
be about the thing and the cause which constitute the contracts.

A qualified acceptance does not constitute an acceptance it constitute a tamper offer, so during the
negotiation states the like of a contract kung di nmu dawaton ang gi offer sa seller and you will like to
offer something else that is considered a qualified acceptance for example gihatagan ka house and lot
located sa buhangin by the seller, if you do not want to have a house and lot in buhangin, okay ka sa
house and lot but gusto ka duol duol sa downtown for example sa may el rio and not sa buhangin, that
does constitute an acceptance which is absolute? Of course not, gidawat nia gusto house and lot pero it
is qualified gusto nia house and lot kaso lang duol sa downtown so therefore it constitute as a counter
offer. You cannot say that there is manifestation of the meeting of the offer and consent, and the
making of a qualified acceptance constitute only a proper offer wala ngmeet ang offer ug acceptance
such that we cannot say that there is a perfected contract.

The very important provision under art. 1319 is this Acceptance made by letter or telegram does not
bind the offerer except from the time it came to his knowledge (knowledge in the part of the person
making the acceptance and knowledge on the part of the person making the offer na dapat nia
madawat ang acceptance na gikan sa contracting parties). The contract, in such a case, is presumed to
have been entered into in the place where the offer was made.

Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge, the offerer must have knowledge the fact that acceptance of the party, in order that we can
say na nagkatugma ang ila mga utak, there is a meeting of the offer and acceptance. So this theory
under the new civil code this is what we call the Theory of Cognition.

The cognition theory (cognición) — According to this

theory, the contract is perfected from the moment the acceptance
comes to the knowledge of the offeror. This is the theory which is
followed by the Spanish Civil Code.
In other laws, contract are perfected not from the time the offerer acquired knowledge acceptance of
the party, in some other laws, contracts are perfected by fact that an acceptance was made regardless
nadawat sa offerer ang acceptance sa pikas party. In the book of Jurado, he illustrates if the acceptance
was made by letter or telegram we must distinguish, according to article 1319 par, 2 of the new civil
code the contract is perfected from the moment that the offeror has knowledge of such acceptance,
whereas under art. 54 of the Code of Commerce, the contract is perfected from the moment an answer
is made accepting the offer, regardless if the knowledge of the acceptance came to the offeror or not.

Why is this important?

Under the new civil code it gives us the general rule, Contracts in general are perfected from the
moment that the offeror acquires the knowledge and acceptance on the part of the other contracting
party. This is the theory of cognition. But in commercial contracts, purely commercial contracts, that Art.
54 of the Code of Commerce can now be applied only to purely commercial contracts, such as joint
accounts,insurance contract, maritime contracts. Art. 54 of the Code of Commerce, the contract is
perfected from the moment an answer is made accepting the offer (the moment an acceptance is
made).

Those contract found under art.54 joint accounts, insurance contract, maritime contract are not
regulated in the provision of the new civil code. Meaning these contracts are perfected by the mere fact
that the other contracting party makes an acceptance, regardless if nakabalo ba ang offeror nga the
other contracting party made an acceptance or not. Again the GENERAL RULE is the NEW CIVIL CODE
that will be follow as to the perfection of a contract.

THE THEORY OF COGNITION WAS DISCUSSED IN THIS CASE: (LAGAZO VS CABANLIT)

Donation is an original mode of acquiring ownership you will learn that under the law on property but
under oblicon donation is a type of a contract. Why is it a contract? Contract is the meeting of mind
whereby one party binds himself with respect to another to give something or to render some service.
Kung naa kay I donate sa lain tawo then you are a DONOR and mudawat is called the DONEE and
therefore that donation is technically under the law on oblicon is considered as a contract. What type of
contract is this, it is considered as the unilateral contract because only one person in that contract is
oblige to carry out certain legal obligations as provided in the provision in the ncc.

LAGAZO VS CA CABANLIT

Under the law on property Donation is perfected the moment that the donor knows of the acceptance
of the donee, in part under art.1734 of the ncc a donation partakes of the cognitive theory or the theory
of cognition, that contract, that donation will only be perfected from the moment the offerer acquires
the knowledge of the acceptance on the part of the other contracting parties, when you apply it on
contract of donation the donation is perfected that the moment the donor knows or acquires
knowledge of the acceptance on the part of the donee. Acceptance on the part of the donee must be
made during the lifetime of the donor and the donee.

The SC said "Like any other contract, an agreement of the parties is essential. The donation,
following the theory of cognition (Article 1319, Civil Code), is perfected only upon the moment the
donor knows of the acceptance by the donee." Furthermore, "If the acceptance is made in a
separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be
noted in both instruments.
Acceptance of the donation by the donee is, therefore, indispensable; its absence makes the
donation null and void. Because the perfection of the validity of a donation are reckon from the
time the donor acquires knowledge of the acceptance of the donee.

Even if donation is a mode of acquiring ownership, donation it is derivative or a secondary mode

of acquiring ownership over property even if it is a secondary or derivative mode of acquiring
ownership take note under the law on contracts donation is still considered as a contract and
therefore there must be a manifestation or the meeting of the offer and the acceptance.
FACTS:

Catalina was the grantee of the Monserrat estate. She had to leave for Canada to become a permanent
resident therein and she appointed Espanol to be her attorney-in-fact to fix the requirements needed.
Failing to accomplish what he ought to do, Catalina appointed Lagazo as her new attorney-in-fact. The
grant was subsequently given and later, the land was donated to Lagazo. Lagazo then sought to remove
Cabanlit from the property. The latter claims ownership over the land by virtue of a deed of sale
executed in favor of him by Espanol.

HELD:

The donation is simple and pure. There is no showing of any acceptance from Lagazo and thus, there has
been no perfected donation.

What are the elements of consent?

1. Legal capacity of the contracting parties;

2. Manifestation of the conformity of the contracting parties;

3. Parties’ Conformity to the object, cause, terms and condition of the contract must be intelligent,
spontaneous and free from all vices of consent; and

4. The conformity must be Real.

Note: We follow the theory of cognition and not the theory of manifestation. Under our Civil Law, the
offer & acceptance concur only when the offeror comes to know, and not when the offeree merely
manifests his acceptance

ART.1320 Types of Acceptance.

An acceptance may be express or implied.

1. Forms of Acceptance

Acceptance may be:

1. Express (art.1320)
2. Implied (art. 1320) from conduct, or acceptance of unsolicited services.
3. 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
specific cases as would tend to mislead the other party, and thus place the silent person in
estoppel.
4. Examples of Implied Acceptance
5. An offer by the Army to reward persons giving information that would lead to the
apprehension of certain Huks may be considered implicitly accepted when the act
referred to it is performed by members of the public.
 6. In the same way, participation in a contest, with full compliance of its rules, is implied
acceptance of the offer. Thus, on one occasion, the Supreme Court 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 labor and expense, and took part in said contest,
the bank is bound to comply with its promise made in the rules and conditions prepared
and advertised by it.”

Take note if the acceptance is implied it does not mean that there is no acceptance made.

It is expressed if it manifestly made by the contracting parties or anything that communicates to the
offeror.

It is implied when by his actions pre-empting that the acceptance in the one of the contracting parties
the one who is conveying the acceptance it is not safe to say that the acceptance should only be
express. Acceptance is also valid, even if implied. What is required under 1319 is that, acceptance must
be absolute, certain and definite regardless that acceptance is made expressly or impliedly.

ART.1321 Gives you rules with respect to offer? How is offer to be made?

ARTICLE 1321 The person making the offer may fix the time, place, and manner of acceptance, all of
which must be complied with.

The one making the offer siya ang magbuot kung unsaon pagdawat sa pikas party because ma perfect
lang ang contract kung kabalo cia na gidawat na kato sa pikas party. It is only natural therefore ART.1321
As a rule ang place, time, and manner of acceptance would be fix by the offerer ky sa iyahang knowledge
nakasalalay kung naa contract na ma perfect o wala as a rule, if gi waive nia iyang right it is enough na
mu acquire sia ug knowledge time or place in whatever manner it was made okay on the part of the one
making the acceptance.

Article 1322

An offer made through an agent is accepted from the time acceptance is communicated to him.

Under this provision kinsa may agent? Ang nagbuhat sa offer or ang ngbuhat sa acceptance? Basin
malibog mo, its clear, the offeror who has and agent.

A---B negotiating into a contract

X is a passive agent (A as a busy businessman designates X na ikaw na bahala mg palakad sa ako mga
transactions, among the transaction na ako ginalakad it’s with B)

What if B will accept, the question is kay kinsa nia ihatag ang acceptance? As a rule if there is an agent
that acceptance should be communicated to the agent because of the principle that the agent or the
representative is an extension of the personality of the principal in this case the personality of the
offeror. So kung naa makadawat ang acceptance nga na knowledge of that acceptance dapat ang
makabalo is si Agent because the moment you communicate an agent acquires knowledge and the facts
of the acceptance of B, therefore maski knowledge lang sia ni X since X is considered as an extension of
the personality of A we can say that the moment that the acceptance was communicated with the
agent in this case X, there is already a perfected contract. (THIRD YEAR LAW)

Article 1323

An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party
before acceptance is conveyed.

Art. 1323 exist because as a rule and offer must be certain the acceptance is absolute. An offer becomes
ineffective on the part of both parties. Take note not only on the part of the offeror because the
provisions says either parties,so meaning the offer becomes ineffective upon the death, civil
interdiction, insanity of insolvency of either before acceptance is conveyed by the other party. Why?
Ang offer is certain not only as to the object, not only as to the cause but kung kinsa to dapat ang mag
accept. IF A ang ng offer and iya ka transaction si B, when A makes offer in order for it to be certain
kabalo sya na dapat dawaton ni B ang offer, wla na lain tao as a rule wla na lain dawat sa offer except ni
B what if c B mamatay of course walay acceptance na mahitabo and therefore the acceptance cannot be
made absolute. That is one in case of death,civil interdiction,insanity or insolvency, on the part of
anyone of the contracting parties it will render the offer in effective because the offer is not anymore
certain.

Example. A gi offeran si B na baligyaan nia house and lot, lets say c B namatay, c B succeeded by the heir,
for example si Z ang iya anak can you say that the offer made to B is the same with the offer to Z of
course not, offer ni A kay B because friends sila, pero d man sila friend sa anak ni B si Z the moment B
dies that offer will be already in effective Heirs of B cannot set up the right, that the right to make an
acceptance is not transmitted to them. So the right to an acceptance is personal only to B as a rule. Such
that if A or B will die, that offer is already in effective. So what is your remedy under Art.1323? the
offerer has to made a new offer or someone else dealing with the property has to make a new offer.
Because again the offer must be certain and the acceptance must be absolute.

ART. 1324 Deals about the requisite of an option contract.

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.

Here it talks about an option contract. When the offerer has allowed the offerree a certain period to
accept the offer may be withdrawn at any time before acceptance by communicating such withdrawal to
the offeror.

Preparatory Contract, a Contract to sell, it is a unilateral contract which is a preparorty contract to a

contract of sale.

A entered into a contract to Sell A would be giving his house and lot on the condition that B will pay the
full amount of the purchase price 10 million. In this contract A made an offer to B, in the amount of 10
million, A merely offer, A merely enter into a contract to sell such that B can produce the 10 million
then will render into a new contract what is that contract? A Contract of Sale.
A contract to sell is a preparatory contract. Under the law on contracts. We can say that in contract to
sell the offeror makes or gives an option to the other contracting parties. In this case its not only a
conditional obligation, its not only a positive suspension here A enter a contract with B. Where A is the
offeror and B is the offerree as a general rule, since this only a contract to sell, subject to a positive
suspensive condition, the moment wala pa nahitabo ang positive suspensive condition can you say si B
naa karapatan sa house and lot, B can only acquire a right to this house and lot the moment that the
positive suspensive condition already occurred which is the full payment of the purchase price 10
million,so before that condition happen, before the condition that B wala na produce ang 10 million we
can only say that there was just an offer, because the positive suspensive condition has not yet happen.
Bago mahatag ni B ang full amount sa purchase price 10 million, what A can do? A can withdraw the
offer entirely in the contract to sell. Say the period is up until Dec. 31 2018. So this is an obligation with a
period subject to positive suspensive condition, both should happen at the same time. That is a positive
conditional obligation. Up until Dec. 31 2018, what A actually extending to B is only an option, it is only
an offer. Its not an option contract. So before this time, On Nov. 30 2018 A enter into a contract to sell
involving the same house and lot in favour of C, c C nahatag dayun ang 10 million kay dato si C. So there
was full payment on the amount of the purchase price, since there was full payment we can say that the
parties can now enter into a contract of sale, because this positive suspensive condition already
occurred. In this situation can you say that when A contracted to C, does A violated the contract with B?
NO! because as a general rule, what A only extended to B is only an offer, and the offer may be
withdrawn at anytime, the moment that withdrawal made by A is communicated to the offeree on the
part of B, therefore if A enter into a contract to sell with C, that there is no violations as to the rights of B
because the offeror can withdraw it at anytime that is a general rule, because there is no contract as of
yet it is only an offer, and that offer is manifested in the contract to sell there is no perfected contract of
sale as of yet. As to A and C sila ang nay karapatan mas ok ang ila contract, and their contract to sale is
binding as indicated.

What if ikaw lawyer in the part of B? Does B has any cause of action against A? YES. Under Art. 1170
Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those
who in any manner contravene the tenor thereof, are liable for damages.

A contravene the tenor of obligation because the offer was good until dec. 31 2018. So can B cancel the
contract to C? No. If there is a meeting of the offer and acceptance this is the perfectly valid contract a
contract of sale. But what can B do as a remedy against A? File a case for damages, because A
contravenes in the tenor of the obligations under the contract to sell.

DON’T FORGET THE LESSON ON FIRST EXAM.

EXPCEPTION UNDER ART.1324 OPTION CONTRACT.

An OPTION CONTRACT is not a mere offer, an option contract is in on itself a contract that is founded
upon a consideration which is something paid or something promise, so if you break the condition of
that option contract that is considered of a breach of a contract because that option contract already
have a sufficient cause or consideration. What is an example, by a virtue of contract to sell, it only
express the offer on the part of A to enter into a contract of sale with B, such that it needed to produce
10 million then they will enter into contract of sale, so that is only an offer and we said that before the
acceptance on the part of B, B is communicated with A, A may withdraw the offer at anytime provided
he communicates the withdrawal of his offer to B. But what if we will change the situation. MAYFAIR
CASE. That case may enter a contract to sell but in that contract to sell the SC found that it was actually
an OPTION CONTRACT. Why is it an OPTION CONTRACT? And not a mere offer, its because as between
the parties this period para makadecide si B, this was supported by a consideration but the
consideration here is something paid or something promised so kintahay c B ng ingon kay A, tagae ko
panahon magdecide kutub dec.31 2018 para d nmu ihatag ang house and lot sa lain tao I will give you
money, 100k as option money para hatagan ko nmu period to decide so by giving money as an option
100k A must give B until the period of Dec.31 2018 to decide because B sufficient consideration for the
grace period. What is that consideration? Ngbayad siyag 100k. Option Contract, Ang offer na gihatag ni A
kay B is supported by a sufficient consideration such as that which is something paid. Even before
entering into a contract of sale the parties already entered into a contract, an Option Contract.

If the offer does not have a consideration it constitute as an offer it may be withdrawn by the offerer at
any time, if when the offerer did not withdraw the offer anytime, if that offer is what we call an option
contract it is an offer which is supported by a consideration such as that of something paid or something
promised so that offer ceases to be a mere offer at that moment kung naa consideration it is called an
OPTION. OPTION MONEY. OPTION CONTRACT.

CASE TUAZON VS DEL ROSARIO SUAREZ

What is the distinction of an option between the right of first refusal?

Tuazon gives us what is the distinction so here in relation to a concept of an option contract under
art.1324.

FACTS

 Respondent Lourdes Q. Del Rosario-Suarez was the owner of a parcel of land in Quezon City. Petitioner
Roberto D. Tuazon and Lourdes executed a Contract of Lease over the land for a period of three years.
During the effectivity of the lease,Lourdes sent a letter to Roberto where she offered to sell to the latter
subject parcel of land. She pegged the price at P37,541,000.00 and gave him two years to decide on the
offer.

 More than four months after the expiration of the Contract of Lease, Lourdes sold subject parcel of land
to the De Leons. The new owners notified Roberto to vacate the premises. Roberto refused hence, the
De Leons filed a complaint for Unlawful Detainer against him. The MeTC rendered a Decision ordering
Roberto to vacate the property for non-payment of rentals and expiration of the contract. While the
ejectment case was on appeal, Roberto filed with the RTC of Quezon City a Complaint for Annulment of
Deed of Absolute Sale, Reconveyance, Damages and Application for Preliminary Injunction against
Lourdes and the De Leons. The court declared the Deed of Absolute Sale made by Lourdes in favor of the
De Leons as valid and binding. The offer made by Lourdes to Roberto did not ripen into a contract to sell
because the price offered by the former was not acceptable to the latter.The offer made by Lourdes is
no longer binding and effective at the time she decided to sell the subject lot to the De Leons because
the same was not accepted by Roberto.The CA affirmed.

 
ISSUE:

 Whether or not Del Rosario-Suarez violated Robert Tuazon the right to buy subject 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 the much lower price paid by the De
Leons.

Was the offer made by Lourdes a mere offer or did Lourdes entered option contracts with the de leon?

Focus was it a mere offer or was it an option contract?

An option contract is entirely different and distinct from a right of first refusal in that in the former, the
option granted to the offeree is for a fixed period and at a determined price. Lacking these two essential
requisites, what is involved is only a right of first refusal.
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. Roberto’s 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.

Ang na extend kay Tuazon was only an option contract and from the expiration of the option contract
Tuazon never accepted the offer of Lourdes, they constituted a counter offer so even after the
expiration of the option contract we cannot say that Robert Tuazon in this case effectively accepted the
offer of Lourdes there can be no contract in this case.

The SC discuss the right of refusal of Lourdes.

On the other hand, in Ang Yu Asuncion v. Court of Appeals, 20 an elucidation on the "right of first
refusal" was made thus:
In the law on sales, the so-called ‘right of first refusal’ is an innovative juridical relation. Needless to
point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.
Neither can the right of first refusal, understood in its normal concept, per se be brought within the
purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an
offer under Article 1319 of the same Code. An option or an offer would require, among other
things, a clear certainty on both the object and the cause or consideration of the envisioned
contract. In a right of first refusal, while the object might be made determinate, the exercise
of the right, however, would be dependent not only on the grantor's eventual intention to
enter into a binding juridical relation with another but also on terms, including the price, that
obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely
belonging to a class of preparatory juridical relations governed not by contracts (since the essential
elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among
other laws of general application, the pertinent scattered provisions of the Civil Code on human
conduct

Take Note: If there is a breach of a right first refusal, the basis for a case for damages for violation of
those provisions on the NCC on human conducts art.19, 20,21,22 etc.

A breach of a right of first refusal since it is only a part of an offer a part thereof we cannot say that a
breach of first refusal is a breach of contract because in a breach of a right of first refusal is only
included as a part of an offer, there is no contract as of yet. So when you breach that right of first
refusal there is no breach of a contract, because a contract has not yet happen. Unlike that of an
OPTION CONTRACT, if you do not follow the provision in an option contract the SC said that
constitutes a breach of contract because that option is not a mere offer, it is an offer founded upon a
sufficient consideration as that of a thing, here the SC found there was an option contract on the part
of TUAZON but after the expiration of the exercise of that option, he never really accepted that
contract so we cannot say that there was a perfected contract.