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G.R. L-25494 June 14, 1972 NICOLAS SANCHEZ vs.

SEVERINA-RIGOS Doctrine: If the option is given without a consideration, it is a mere offer to sell, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate a contract. CONCEPCION, C.J.: On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an instrument entitled, Option to Purchase whereby Mrs. Rigos agreed, promised and committedto sell to Sanchez a parcel of land situated in the barrios of Abar and Sibot, Municipality of San Jose, Nueva Ecija for P1,510.00. Stipulated in the contract is that the said option would be deemed terminated and elapsed if Sanchez shall fail to exercise his right to buy the property within 2 years. Several tenders of payment in the amount of P1510 were made by Sanchez within the said period but were rejected by Mrs. Rigos. On March 12, 1963, Sanchez deposited the said amount with the Court of First Instance, Nueva Ecija and commenced against Rigos a suit for specific performance and damages. Defendant Rigos admitted some of the allegations of the complaint but also added as a special defense, that, since the contract between the parties is a unilateral promise to sell, the same being unsupported by any valuable consideration, by force of the CC is null and void.

NCC 1479: A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. The lower court rendered a decision in favour of Sanchez and ordered, in its decision on February 28, 1964, Mrs. Rigos to accept the sum judicially consigned by him and to execute, in his favour, the requisite deed of conveyance. Mrs. Rigos, was likewise sentenced to pay P200.00 as attorneys fees and other costs. Hence, this appeal by Mrs. Rigos. ISSUE: Whether or not NCC 1479 was correctly applied and therefore the TC was correct in compelling Mrs. Rigos to execute the deed of conveyance + pay damages HELD: YES. Decision appealed from is affirmed with costs against appellant. RATIO: 1. In the decision, the Court weighed Sanchezs arguments and applied two cases, Southwestern Sugar Molasses Co. vs. Atlantic Gulf and Pacific Co. & Atkins, Kroll and Co. vs. Cua Hian Tek.

2. The Court said that the plaintiff (Sanchez) is his complaint alleges that under the Annex A (copy of the contract), the defendant agreed and committed to sell and the plaintiff agreed and committed to buy said property making it reciprocally demandable pursuant to the first paragraph of Art. 1479. 3. The Court debunked this theory by saying that the option did not impose upon the plaintiff the obligation to purchase the property. It was not a contract to buy and sell, it clearly states that there is a commitment to sell the land for P1510.00 but no indication of a consideration distinct from the price stipulated for the sale of the land. 4. The Court said that the LC presumed the existence of this consideration using NCC 1354: NCC 1354: Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary. (1277) However the Court said that, 1354 pertains to contracts in general, while 1479 refer to sales, or more specifically, to an accepted unilateral promise to buy or to sell. 1479 controlling case at bar In order that said unilateral promise be binding upon the promisor, Art. 1479 requires the concurrence of a condition and

that the promise be supported by a consideration distinct from the price, which is absent in this case Defendant has explicitly pleaded the absence of this consideration and the plaintiff (Sanchez), by joining in the petition for the judgment of the pleadings, has impliedly admitted the truth of her defense, as held in Bauermann vs. Casas: One who prays for judgment on the pleadings without offering proof as to the truth of his own allegations, and without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant allegations of the opposing party, and to rest his motion for judgment on those allegations taken together with such of his own as are admitted in the pleadings. 5. The decision cited a case: Southwestern Sugar Molasses Co. vs. Atlantic Gulf and Pacific Co. : In this case, the appellants main contention is that the option granted to the appellee to sell to him/her Barge no. 10 has no legal effect bec. it is not supported by any consideration and invokes NCC 1479. On the other hand, appellee maintains and invokes NCC 1324: When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn any time before acceptance by

communicating such withdrawal, except when the option is founded upon consideration as something paid or promised. Decision: SC said that while it is true that under article 1324 of the new Civil Code, the general rule regarding offer and acceptance is that, when the offerer gives to the offeree a certain period to accept, "the offer may be withdrawn at any time before acceptance" except when the option is founded upon consideration, but this general rule must be interpreted as modified by the provision of article 1479 above referred to, which applies to "a promise to buy and sell" specifically. As already stated, this rule requires that a promise to sell to be valid must be supported by a consideration distinct from the price. 6. The Court cited another case, however, which is the justification for their ruling in favour of Sanchez and said that there is no distinction between 1324 and 1479. Atkins, Kroll and Co., Inc. v. Cua Hian Tek: Summary of Decision: An option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option

is not bound to buy. He is free either to buy or not to buy later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale. IN OTHER WORDS, since no valid consideration=offerer not bound to promise and may widthraw it. However, pending notice of his withdrawal, if his offer is ACCEPTED, the contract of sale has been PERFECTED. Moreover, the decision in Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., holding that Art. 1324 is modified by Art. 1479 of the Civil Code, in effect, considers the latter as an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2) articles are concerned. What is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or promise supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to enforce or implement the same principle.

Decision in Southwestern is abandoned, Atkins is applied.