by Nil Jay Perolina
CHAPTER 2 - ESSENTIAL REQUISITES OF CONTRACTS
Art. 1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers, but mere invitations to make an offer. (n)
What is the meaning of Article 1325?
A business advertisement of things for sale may or may not constitute a definite offer. It is not a definite offer when the object is not determinate
What is the reason behind the article?
It is not a definite offer when the object is not determinate.
When is an advertisement to constitute an offer?
As a general rule advertisement of things are mere invitations to make an offer.
When the advertisement does not have the necessaryspecification of essential elements of the future contract, it cannot constitute an offer.
Thus, an advertisement of things for sale, specifying prices but without stating the quantity of things to be sold, is not an offer but a mere invitation to make an offer. The advertiser is free to reject any offer that may be made.
What is the exception to the general rule?
When it appears otherwise or where advertisement may constitute a certain offer.
What is the general rule on offers?
As a general rule, an offer is made to a particular person. Consequently, only such person, and no other, can accept the offer. 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.)
It is not necessary, however, that the offeror should know the person who receives his offer.
What is considered as general offer to the public?
A valid offer to the public can be made. 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, as 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.
Thus, one who installs a slot machine makes an offer to the public, and the offer becomes a contract with any person who puts in the necessary coin. A merchant who places articles for sale in his store, with a price tag on each, makes an offer to the public, and anyone can accept the offer by paying the priced fixed.
What is the effect when a party withdraw his offer but before withdrawal a party acts upon it?
“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. Bank of the Phil. Islands, 51 Phil. 926 [1928].) But the acceptance must be in strict conformity with the offer and a qualified acceptance does not create a contract. (Montinola vs. Victoria Milling Co. and Copper, 54 Phil. 782 [1930].)
Illustration/Example:
Illustration 1:
JP puts up for sale the basketball Kobe Bryant used in his last ever game before retiring for Php 5,000,000. Gusty calls him up and says that he accepts it. There is a certain offer.
Illustration 2:
Ced advertises his yacht in the classified ads without stating a price or specifications. Geb calls up Ced and offers to buy it for P70,000,000. This is proper
Illustration 3:
“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.
Illustration 4:
“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.
Art. 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)
What is Article 1326 all about?
It is all about the purpose of advertisement for bidders.
What is the reason behind the article?
Once the bidder makes a bid, he makes an offer which is only binding when accepted.
In an advertisement for bidders, 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.
What is the general rule on advertisement for bidders?
As a general rule, the advertiser is not bound to accept the highest bidder (as when the offer is to buy) or the lowest bidder (as when the offer is to construct a building) unless the contrary appears.
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].)
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].) Where under the rules of the bidding it is only upon receipt of the notice of acceptance of the bid that the formal contract shall be executed, in the absence of such notice and execution of the contract, there is no meeting of the minds. (Santamaria vs. Court of Appeals, 187 SCRA 186 [1990].)
What is the exemption to the general rule?
Unless the contrary appears, meaning it is specifically stated.
When in the advertisement it can be inferred with certainty that the best bid (highest or lowest, as the case may be) will be considered as giving rise to a binding contract, each bid will imply the perfection of a contract, although subject to the condition that no better bid is made.
Illustration/Example
In an execution sale of properties attached for the payment of debts, it is generally understood that the property should be given to the highest bidder. In the case of the execution sale of the extrajudicial family home whose value is believed to be more than the P30,000 or P20,000 fi xed by law, the lowest bid that can be accepted is one that exceeds such values; therefore, the highest bid thereon must necessarily be higher than said values.
Art. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write.
What is the article all about?
This article is about persons incapacitated to consent.
What is the reason behind the article?
The reason behind Article 1327 is that those persons mentioned can easily be the victims of fraud as they are not capable of understanding or knowing the nature or importance of their actions. They can enter into a contract only through a parent or guardian
What is the general rule on capacity to give consent?
Capacity to give consent presumed.
There is no effective consent in law without the capacity to give such capacity. (Felix Gochan vs. Heirs of R. Baba, 409 SCRA 306 [2003].)
A contract entered into where one of the parties is incapable of giving consent to a contract is voidable. A voidable contract is valid and binding until it is annulled by a proper action in court. It is susceptible of ratification. (Art. 1390.) If both parties are incapable of giving consent, the contract is unenforceable unless they are ratified. (Art. 1403[3].)
What is the exemption to the general rule?
To form a valid and legal agreement, it is necessary that there be a party capable of contracting and a party capable of being contracted with.
What is the general rule on contracts entered into by unemancipated minors?
Any contract entered into by an unemancipated person is annullable or voidable.
The mere fact that one of the parties to the contract was a minor does not necessarily render it void ab initio, but merely voidable.
What are the exceptions?
• Ratification at the age of minority.
• The contract has been entered into through a guardian and approved by the guardianship court.
Who can only invoke minority and how can he do it? What is the effect of invoking minority?
Only the minor can invoke minority. Capable persons cannot allege the incapacity of those with those whom they contracted to annul the contract.
Minor must file a case to annul the contract upon coming of age. As a rule, incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him.
Illustration/Example
In Braganza v. De Villa Abrille, two minors signed a promissory note without telling the creditor their ages and where the debtor sought to enforce the promissory note against them. They can set up the defense of minority to resist the claim.
o Minors have no juridical duty to disclose their inability.
o The fraud must be actual and not constructive. Mere silence does not make him liable
o Minors not absolved from monetary responsibility. They are subject to beneficial reimbursement.
What is the general rule on contracts entered into by insane or demented persons?
Contracts entered into by such people are annullable, not void ab initio. Law presumes that the contract has been entered into by competent persons. Insanity at the time of the perfection of the contract must always be proven.
It is not necessary that there be a previous judicial declaration of mental incapacity in order that a contract entered into by a mentally defective person may be annulled; it is enough that the insanity existed at the time the contract was made.
Privilege of insanity is personal. When the insane person is not under a guardian and the other party has no reasonable cause to believe him otherwise insane, the agreement is valid if equitable and beneficial to such insane person.
In case of lunatics, it is possible that there are lucid intervals, and a contract executed during such interval will be valid.
Insanity must have direct bearing on the agreement.
Classes of mental incapacity:
Idiot – insane since birth
Lunatic – insane at one time, but has lost his reason
Mentally Weak – does not render the person affected totally incapable of transacting business or managing his affairs
Illustration/Example
In Carilllo v Jaojoco, the vendor was judicially declared mentally incapacitated 9 days after the execution of deed of sale.
The Court ruled, however, that the mere fact that the vendor was judicially declared mentally incapacitated nine (9) days after the execution of the deed of sale does not prove conclusively that he was incapacitated when the contract was executed, and in the absence of sufficient proof that he was suffering from mental alienation at the specified time, the declaration does not warrant the annulment of said contract.
What is the general rule on contracts entered into by deaf mutes?
The mere condition of being deaf-mute does not render the contract voidable.
What is the exception?
Unless the deaf mute does not know how to write.
Illustration/Example
A, a deaf mute, entered into a contract with B. The contract will be valid if A was shown to have sufficient mental capacity and knows how to write.
Case Digest from Original Case
Citation:
Nicolas sanchez v severina rigos 45 scra 368 1972
Case Docket:
G.R. No. L-25494
Date:
June 14, 1972
Plaintiff-Appellee:
NICOLAS SANCHEZ
Defendant-Appellant:
Severina Rigos
Counsel for Plaintiff-Appellee:
Santiago F. Bautista
Counsel for Defendant-Appellant:
Jesus G. Villamar
Ponente:
Concepcion, C.J.
FACTS:
On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija and more particularly described in Transfer Certificate of Title No. NT-12528 of said province, within two (2) years from said date with the understanding that said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages.
After the filing of defendant's answer - admitting some allegations of the complaint, denying other allegations thereof, and alleging, as special defense, that the contract between the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void" - on February 11, 1964, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings.
Accordingly, on February 28, 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Rigos.
ISSUE:
Whether or not an offer, once accepted, cannot be withdrawn, regardless of whether it is supported or not by a consideration.
RULING:
SC ruled that the decision appealed from is hereby affirmed, with costs against defendant-appellant Severina Rigos.
In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.
Relying upon Article 1354 of our Civil Code, the lower court presumed the existence of said consideration, and this would seem to be the main factor that influenced its decision in plaintiff's favor. It should be noted, however, that:
(1) Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted unilateral promise to buy or to sell." In other words, Article 1479 is controlling in the case at bar.
(2) In order that said unilateral promise may be "binding upon the promisor, Article 1479 requires the concurrence of a condition, namely, that the promise be "supported by a consideration distinct from the price." Accordingly, the promisee cannot compel the promisor to comply with the promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such consideration. Plaintiff herein has not even alleged the existence thereof in his complaint.
(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a special defense, the absence of said consideration for her promise to sell and, by joining in the petition for a judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment in defendant's answer. Indeed as early as March 14, 1908, it had been held, in Bauermann v. Casas, that:
One who prays for judgment on the pleadings without offering proof as to the truth of his own allegations, and without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant allegations of the opposing party, and to rest his motion for judgment on those allegations taken together with such of his own as are admitted in the pleadings. (La Yebana Company vs. Sevilla, 9 Phil. 210). (Emphasis supplied.)
This view was reiterated in Evangelista v. De la Rosa and Mercy's Incorporated v. Herminia Verde.
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