MALBAROSA V.

CA
G.R. 125761 – April 30, 2003
J. Callejo Sr.

Topic: Contracts – Essential Requisites

Petitioners: Salvador P. Malbarosa

Respondents: Hon. Court of Appeals and S.E.A. Development Corporation (SEADC)

Summary:
This case is about a letter-offer made by S.E.A. for Malbarosa regarding his incentive compensation after
his retirement from the corporation. The case discusses the important requisites on how a contract is
perfected, and understood to be effective.

FACTS:
 Philtectic Corp and Commonwealth Insurance Co., Inc was wholly-owned and controlled by
SEADC – Malbarosa was the president and general manager of Philtectic
o While Malbarosa was working for the company, he was assigned a vehicle, a 1982 model
Mitsubishi Galllant Super Saloon
o He was also issued membership certificates in the Architectural Center
 January 1990: Petitioner told Senen Valero, the Vice Chairman of the Board of Directors of
Philtectic that he desired to retire from the company and that he wanted to request for the 1989
incentive compensation as President of the Corporation to be paid to him
o By January 8, Petitioner tendered his resignation, effective February 28 – he also
reiterated his request for the payment of his incentive compensation for 1989
 Louis Da Costa, the President of the Corporation met with the Petitioner on two occasions to
discuss the amount of the incentive compensation and the mode of payment – Da Costa ventured
that the amount would probably be about P395,000
 March 14, 1990: SEADC through Valero signed a letter-offer to the petitioner stating the
petitioner’s resignation from the group of companies had been accepted and that he was entitled
to an incentive compensation package. The offer stated the ff.:
o Letter-offer Stipulations:
 The incentive compensation was in the amount of P251,057.67
 The 1982 Gallant is to be transferred to Petitioner at a value of P220,000
 The membership shares will be transferred to Petitioner, and though value is not
definite yet, the company has been informed that it is pegged at the vicinity of
P60,000
 The petitioner was dismayed with this offer since he said that he was entitled to no less than
P395,000 – he refused to sign the letter
 During the lapse of more than two weeks, Respondent did not receive the letter-offer signed by
the Petitioner
 April 4, 1990: SEADC through its counsel, withdrew the offer and demanded that the Petitioner
returned the car and membership certificates within 24 hours from his receipt of the demand
 April 7, 1990: Petitioner wrote back and said that he cannot comply with the demand as he had
already accepted the March 14 offer. He stated that he bore his signature on the space provided on
March 28, 1990
o Because of this refusal, SEADC made the initial petition for the recovery of personal
property

Initial Petition to the MTC/RTC

 Arguments by the petitioner (respondent in the case to the SC): that the vehicle be seized
immediately, that Malbarosa pay P1,000 per day from the date of demand until delivery, for attorney’s
fees and costs of litigation

Arguments by respondent (Petitioner in case to the SC): alleged that he had already signed and
agreed to the March 14 offer on March 28. He stated that he had already notified the plaintiff. He added
that he made a call to Da Costa’s office wherein his telephone receptionist received the message of his
acceptance to the letter-offer. The receptionist testified that she told Da Costa about the call, and that he
simply nodded his head.

Ruling: In favor of SEADC; the TC stated that there existed no perfected contract between the
parties and that Malbarosa failed to effectively notify SEADC of his acceptance of the letter-offer
- Malbarosa was ordered to return the vehicle and the shares. In addition, after a motion for the
amendment of the decision, the TC granted SEADC’s petition that Malbarosa be ordered to
pay the P1,000 payments for the days he used the vehicle since the day of demand

Petition to CA

Arguments by the petitioner (Malbarosa): Same arguments

Arguments by respondent (SEADC): Same Arguments

Ruling: Affirmed the Ruling of the Trial Court

Petition to SC

Arguments by the petitioner (Malbarosa): Petitioner posits that the Respondent had given him a
reasonable time to accept or reject the offer made in March 14. He stated that he affixed his signature on
March 28, 1990 and sent the copy to SEADC on April 7, 1990. He further avers that he had impliedly
accepted the offer when after said respondent’s offer, he retained the possession of the car.

Arguments by respondent (SEADC): Respondent contends that the issues raised by the Petitioner
are factual and that the jurisdiction of the SC under Rule 45 of the ROC are limited to revising and
correcting errors of law by the CA.

Ruling: Affirmed the Ruling of the Court of Appeals

ISSUES + HELD:

1. W/N there was a valid acceptance of the letter-offer made on March 14, 1990 – NO
o Under Art. 1318 of the Civil Code: There is no contract unless the following requisites
concur:
 Consent of the contracting parties;
 Object certain which is the subject matter of the contract;
 Cause of the obligation which is established
o Under Art. 1319, the consent by a party is manifested by the meeting of the offer and the
acceptance upon the ting and the cause which are to constitute the contract – an offer that
is not accepted does not give rise to a consent.
 o To produce a contract, there must be acceptance of the offer – express or implied. The
acceptance must be absolute and unconditional
o The acceptance must be made known to the offeror, because the contract is perfected only
from the time an acceptance of an offer is made known to the offeror.
 If the offeror prescribes an exclusive manner in how the acceptance by the
offeree should be, then acceptance of the offer in the manner prescribed will bind
the offeror
 On the other hand, an attempt on the part of the offeree to accept the offer in a
different manner than prescribed and accepted by the offeror, may also be valid
o In the case at bar, the Respondent, SEADC, required the petitioner to accept the offer by
affixing his signature on the space provided and writing the date of said acceptance
 Because Petitioner did not sign when he was asked to, as he needed more time to
think things over, there was no contracted perfected by him and the corporation
on March 16.
 Although Pet claims that he affixed his signature on March 28, he failed to
transmit the copy to Respondent – he only did so on April 7  BUT THEN, the
company had already withdrew the offer on April 4
o The Petitioner’s complaint that he was not given reasonable time to accept the offer does
not persuade – no time frame was fixed by the Respondent as when Petitioner could
accept or reject his offer
 When the offeror has not fixed a period, and the offer is made to a person
present, the acceptance must be made immediately
 The Respondent, thus, had the option to withdraw or revoke the offer, which the
Respondent did on April 4
 In addition, if it is assumed that the Petitioner was given time to accept or reject
the offer, the evidence on record shows that he had from March 16, 1990 to April
3, 1990 to accept or reject the offer

2. W/N there was an effective withdrawal by the Respondent of said letter-offer – YES
o Although Petitioner avers that Philtectic Corporation, although a wholly-owned and
controlled subsidiary by SEADC, had no authority to withdraw the offer, the SC
disagreed with his contention
 Implicit in the authority given to Philtectic to demand for and recover from the
Petitioner the subject car and to institute the appropriate action against him to
recover possession of the car is the authority to withdraw the Respondents March
14, 1990 Letter-offer

RULING: IN LIGHT OF ALL THE FOREGOING, the petition is dismissed. The Decision of the Court
of Appeals is AFFIRMED.