The Phillies counter offer was Happ, Carlos Carrasco, Michael Taylor, and Jason Donald. The Jays declined the offer according to Jayson Stark of ESPN.
Stark reported the the Jays need to be "wowed" by an offer for Halladay. Now, most of this is just posturing. The Phillies may eventually include Drabek and Happ in a deal for Halladay, but the deadline is still five days away and both the Phillies and the Jays are looking for the best for their team.
In Stark's report he writes that a source told him that Blue Jays GM J.P. Riccardi told Phillies GM Rueben Amaro Jr. that the Jays are "very comfortable" keeping Halladay. This does not mean the Phils have given up on getting Halladay.
Stark writes that sources tell him the the Phillies front office "still wants to make this deal." They just "want to [the Blue Jays] to consider other options."
The Phillies are looking at Cliff Lee of the Indians as a Plan B to Halladay. Lee won the AL CY Young last year, but he is just 6-9 this year. He has pitched better than that, as his 3.17 ERA would indicate.