Beaumont vs. Prieto

An acceptance that varies or modifies the terms of an offer does not create a binding contract; it constitutes a counter-offer, which the original offeror is not bound to accept. For a contract to be perfected by consent, the acceptance must be absolute and unequivocal, conforming strictly to the terms of the offer.

Benito Legarda owned the Nagtajan Hacienda in Manila. His attorney-in-fact, Benito Valdes, negotiated with real estate agent W. Borck regarding its sale. On December 4, 1911, Valdes sent Borck a letter (Exhibit E) giving him "an option for three months to buy the property... for the price of its assessed government valuation." Borck later claimed he accepted this offer, but the defendants refused to convey the property, leading to a suit for specific performance or damages.

• Filed in the Court of First Instance of Manila (RTC equivalent).
• The RTC rendered judgment in favor of the plaintiff, ordering specific performance upon payment of P307,000, or alternative damages if conveyance was impossible.
• Defendants appealed to the Supreme Court via a bill of exceptions.

• Benito Legarda owned the Nagtajan Hacienda. Benito Valdes held his power of attorney (Exhibit A), which included authority to sell real estate.
• On Dec. 4, 1911, Valdes wrote to Borck (Exhibit E), granting a 3-month option to buy the hacienda at its assessed valuation.
• On Jan. 17, 1912, Borck wrote to Valdes (Exhibit F), offering to purchase for P307,000, "cash, net to you, payable the first day of May 1912 or before."
• On Jan. 19, 1912, Borck wrote again (Exhibit G), stating he was ready to purchase and that "full payment will be made on or before the third day of March 1912" provided documents were immediately made available for inspection and found in order.
• Subsequent letters (Exhibits J & K) from Borck further refined payment terms, making payment contingent on document inspection and satisfactory findings, with a 10-day payment window thereafter.
• Borck filed suit for specific performance after defendants refused to convey the property. He was later substituted by his assignee in insolvency, Hartford Beaumont.

• The letter of Dec. 4, 1911 (Exhibit E), supported by the power of attorney (Exhibit A), constituted a binding option contract or a continuing offer.
• Borck validly accepted the offer within the three-month period via his letters (Exhibits F, G, J, K).
• The tender of payment was sufficient and in accordance with the offer's terms.
• Both the principal (Legarda) and the agent (Valdes) were properly joined as defendants and liable.

• The option (Exhibit E) was without consideration and subject to Legarda's approval, which was never given.
• Borck's acceptance was not made within a reasonable time or during the option period.
• The acceptance letters (Exhibits F, G, J, K) modified the essential term of "cash" payment, thus constituting a counter-offer, not a valid acceptance.
• Borck was insolvent and never made a valid tender of immediate cash payment.
• Valdes was merely an agent and had no personal interest; Legarda had not authorized the specific option.

• Procedural Issues: N/A (The SC noted exceptions to demurrers were not properly recorded, barring review).
• Substantive Issues:
  1. Whether the letter of Dec. 4, 1911 (Exhibit E) constituted a binding option contract or merely an offer.
  2. Whether Borck's letters constituted a valid and absolute acceptance of the offer, thereby perfecting a contract of sale.
  3. Whether the plaintiff was entitled to specific performance or damages.

• Procedural: N/A.
• Substantive:
  1. On the nature of Exhibit E: The SC held it was an offer to sell, not a perfected option contract, as it lacked any stated consideration (a requisite for a contract under Art. 1261, Civil Code). However, it was a firm offer for a fixed period of three months.
  2. On the validity of acceptance: The SC ruled that Borck's acceptance was not absolute and unequivocal. The original offer required payment "in cash" (implied by law and the parties' understanding upon delivery). Borck's acceptance letters (Exhibits F, G, J, K) proposed deferred payment (e.g., on May 1, 1912, or within 10 days after document inspection), which materially altered the payment term. This constituted a counter-offer, not a valid acceptance, and thus no contract was perfected. The offer lapsed without a binding agreement.
  3. On the remedy: Since no contract was perfected, the action for specific performance or damages must fail. The SC reversed the RTC judgment and absolved the defendants.

• Perfection of Contracts by Consent (Art. 1258, Civil Code): Contracts are perfected by mere consent. From that moment, the parties are bound not only to the express stipulations but also to all consequences according to good faith, use, and law.
• Requisites of a Contract (Art. 1261, Civil Code): There can be no contract without: (1) consent of the contracting parties; (2) object certain; (3) cause of the obligation.
• Offer and Acceptance: An offer becomes a binding contract only upon its unqualified and absolute acceptance. An acceptance that modifies, varies, or departs from the terms of the offer is not an acceptance but a counter-offer, which the original offeror is not bound to accept.
• Agency (Art. 1717, Civil Code): When an agent acts in his own name but the principal's property is involved, the third person may hold both the agent and the principal liable. The power of attorney (Exhibit A) was valid and gave Valdes authority to sell.
• Cash Payment in Sales (Arts. 1462 & 1500, Civil Code): Where the contract does not fix the time for payment, the price must be paid at the time and place of delivery. The execution of a public instrument is equivalent to delivery. Therefore, payment is due concurrently with the execution of the deed.

• "Promises are binding in just so far as they are accepted in the explicit terms in which they are made; it not being lawful to alter, against the will of the promisor, the conditions imposed by him."
• "An absolute acceptance of a proposal, coupled with any qualification or condition, will not be regarded as a complete contract, because there at no time exists the requisite mutual assent to the same thing in the same sense."
• "In order that an acceptance of a proposition may be operative it must be unequivocal, unconditional, and without variance of any sort between it and the proposal."

• Merchant vs. International Banking Corporation (6 Phil., 314) — Cited for the rule that a document's genuineness and due execution are deemed admitted if not denied under oath.
• Ide vs. Leiser (24 Pac., 695; 10 Mont., 5) — Cited to define an option as a contract granting the right to buy at a fixed price within a certain time.
• Eliason et al. vs. Henshaw (4 Wheaton, 225) — Cited for the principle that any qualification or departure from the terms of an offer invalidates it unless agreed to by the offeror.
• Bruner et al. vs. Wheaton (46 Mo., 363) — Cited for the rule that an acceptance must be unequivocal and without variance from the proposal.

• Civil Code, Art. 1258 — On the perfection and binding effect of consensual contracts.
• Civil Code, Art. 1261 — On the essential requisites of a contract (consent, object, cause).
• Civil Code, Art. 1262 — On how consent is manifested (meeting of offer and acceptance).
• Civil Code, Art. 1717 — On the liability of a principal when an agent contracts in his own name but concerning the principal's property.
• Civil Code, Arts. 1462 & 1500 — On delivery and payment in contracts of sale.
• Code of Civil Procedure, Sec. 103 — On the effect of failing to deny under oath the genuineness of a document.
• Code of Civil Procedure, Sec. 114 — On necessary parties defendant.

• Moreland and Trent, JJ. — Concurred only in the result. No separate opinion detailed in the text.

• N/A. The decision was unanimous in result, with two justices concurring only in the result.