FACTS:
Philtectic Corporation, owned by S.E.A. Development Corporation, assigned a vehicle to Salvador P. Malbarosa, the president and general manager of Philtectic Corporation. In January 1990, Malbarosa expressed his desire to retire and requested payment of his 1989 incentive compensation. The respondent, Commonwealth Insurance Co., Inc., sent a letter-offer to Malbarosa on March 14, 1990, accepting his resignation and offering an incentive compensation of P251,057.67, which would be satisfied through the transfer of the assigned vehicle and membership certificates. However, on April 4, 1990, Philtectic Corporation demanded the return of the vehicle and membership certificates. Malbarosa refused, claiming that he had accepted the March 14, 1990 letter-offer by signing it on March 28, 1990. As a result, the respondent filed a complaint for the recovery of the vehicle against Malbarosa.
SEADC, the plaintiff, filed a complaint against Malbarosa seeking the delivery of a motor vehicle or the payment of its value, alleging that Malbarosa had agreed to transfer the vehicle as part of an incentive compensation arrangement but failed to deliver it. The trial court issued an order for the issuance of a writ of replevin on April 30, 1990, and the writ was served on Malbarosa on May 11, 1990. However, Malbarosa was able to recover possession of the vehicle by posting a counter-bond on May 15, 1990.
In his answer, Malbarosa claimed that he had accepted SEADC's letter-offer on March 28, 1990, and asserted his right to the possession of the vehicle, arguing that SEADC had no right to withdraw the offer. After trial, the court ruled in favor of SEADC, ordering Malbarosa to deliver the motor vehicle or pay its value, as well as awarding attorney's fees and costs of litigation to SEADC. SEADC filed a motion to amend the decision, requesting that Malbarosa be ordered to pay reasonable rentals for the use of the car, which the court granted. Malbarosa appealed the decision and the amended order to the Court of Appeals, but the appellate court affirmed the decision of the trial court.
ISSUES:
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Whether or not there was a valid acceptance on the part of the petitioner of the respondent's letter-offer.
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Whether or not there was an effective withdrawal by the respondent of said letter-offer.
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Whether there was a contract perfected between the petitioner and the respondent on the basis of the respondent's offer.
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Whether Philtectic Corporation had the authority to withdraw the offer of the respondent.
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- Whether or not the demand letter presented in court is the same as the one referred to by the witness.
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- Whether or not the second paragraph of the demand letter is related to the letter-offer mentioned by the witness.
RULING:
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The Court dismissed the petition, affirming the decision of the Court of Appeals. The Court held that there was no valid acceptance of the respondent's letter-offer by the petitioner. The receipt by the petitioner of the original letter-offer for review purposes amounted to a counter-offer, and not a valid acceptance. The findings of the Court of Appeals, which stated that there had been no acceptance by the petitioner, are binding on the petitioner. The Court further held that for a contract to come into existence, there must be an acceptance of the offer, which must be absolute, unconditional, and without variance of any sort from the offer. The contract is perfected only from the time the acceptance is made known to the offeror. If the offeree attempts to accept the offer in a different manner than prescribed by the offeror, it constitutes a counter-offer, which the offeror may accept or reject. In this case, the petitioner's acceptance was not made in the manner prescribed by the respondent, thus it constituted a counter-offer.
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There was no contract perfected between the petitioner and the respondent on the basis of the respondent's offer. The petitioner did not accept or reject the offer within a reasonable time and failed to transmit a copy of the letter-offer with his conformity, thus the offer was effectively withdrawn by the respondent.
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Philtectic Corporation had the authority to withdraw the offer of the respondent. The authority given to Philtectic Corporation to demand and recover the subject car and to institute an action against the petitioner necessarily included the authority to withdraw the respondent's letter-offer.
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- The demand letter presented in court is the same as the one referred to by the witness.
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- The second paragraph of the demand letter is related to the letter-offer mentioned by the witness.
PRINCIPLES:
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The essential requisites of a contract are consent of the contracting parties, object certain, and cause of the obligation.
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The consent by a party is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.
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An offer may be reached at any time until it is accepted. An offer that is not accepted does not give rise to a consent, and the contract does not come into existence.
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The acceptance of an offer must be made known to the offeror. Unless the offeror knows of the acceptance, there is no meeting of the minds of the parties.
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An offeror may withdraw its offer and revoke the same before acceptance by the offeree.
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If an offeror prescribes the exclusive manner of acceptance, an acceptance in the prescribed manner will bind the offeror. Any attempt by the offeree to accept the offer in a different manner constitutes a counter-offer.
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A contract is not perfected if the offeror revokes or withdraws its offer and the revocation or withdrawal is the first to reach the offeree.
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The acceptance of an offer after knowledge of its revocation or withdrawal is inefficacious.
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The termination of a contract when the negotiations of the parties terminate and the offer and acceptance concur is largely a question of fact to be determined by the trial court.
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When an offeror has not fixed a period for the offeree to accept the offer, and the offer is made to a person present, the acceptance must be made immediately.
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The authority given to a subsidiary company to demand and sue for the recovery of property includes the authority to withdraw the offer made by the parent company.
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The identification of a document can be established through the testimony of a witness who has personal knowledge of the document.
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A demand letter can be written on behalf of another party who is the agent of the sender for the purpose of settlement.
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Allusions made in a demand letter can be related to a previous letter-offer if the same subject matter or terms are mentioned.