Laudico v Rodriguez; G.R. No. L-16530; March 31, 1992; Avanceña, J.

FACTS:

Vicente Arias owned a building. He wrote a letter to Mamerto Laudico allowing him to lease the said building to a third person, Fred Harrden. Laudico wrote to Arias that he had accepted the terms of the tentative contract. The letter was received by Arias through a special delivery. In return, Arias wrote a letter to Laudico withdrawing the offer to lease the building. Petitioner asserts that when Arias sent his letter of withdrawal to Laudico, he had not yet received the letter of acceptance, and when it reached him, he had already sent his letter of withdrawal. Under these facts we believe that no contract was perfected between the plaintiffs and the defendants.

ISSUE:

Whether or not the withdrawal was valid since there were no acceptance at that moment.

RULING:

Yes.

Under article 1262, paragraph 2, of the civil Code, an acceptance by letter does not have any effect until it comes to the knowledge of the offerer. Therefore, before he learns of the acceptance, the latter is not yet bound by it and can still withdraw the offer. Consequently, when Mr. Arias wrote Mr. Laudico, withdrawing the offer, he had the right to do so, inasmuch as he had not yet received notice of the acceptance. And when the notice of the acceptance was received by Mr. Arias, it no longer had any effect, as the offer was not then in existence, the same having already been withdrawn. There was No meeting of the minds, through offer and acceptance, which is the essence of the contract. While there was an offer, there was no acceptance, and when the latter was made and could have a binding effect, the offer was then lacking. Though both the offer and the acceptance existed, they did not meet to give birth to a contract

The Civil Code, in paragraph 2 article 1262, has adopted the first theory and, according to its most eminent commentators, it means that, before the acceptance is known, the offer can be revoked, it not being necessary, in order for the revocation to have the effect of impeding the perfection of the contract, that it be known by the acceptant Q. Mucius Scaevola says apropos: "To our mind, the power to revoke is implied in the criterion that no contract exists until the acceptance is known. As the tie or bond springs form the meeting or concurrence of the minds, since up to that moment there exists only a unilateral act, it is evident that he who makes it must have the power to revoke it by withdrawing his proposition, although with the obligation to pay such damages as may have been sustained by the person or persons to whom the offer was made and by whom it was accepted, if he in turn failed to give them notice of the withdrawal of the offer. This view is confirmed by the provision of article 1257, paragraph 2 concerning the case where a stipulation is made in favor of a third person, which provision, which provision authorizes the contracting parties to revoke the stipulation before the notice of its acceptance. That case is quite similar to that under comment, as said stipulation in favor of a third person (who, for the very reason of being a third person, is not a contracting party) is tantamount to an offer made by the makers of the contract which may or may not be accepted by him, and which does not have any effect until the obligator is notified, and may, before it is accepted, be revoked by those who have made it; therefore, the case being similar, the same rule applies."