SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.


ATLANTIC GULF & PACIFIC COMPANY

G.R. No. L-7382, June 29, 1955

Facts:

1. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

2. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

3. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

4. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

5. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

6. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
 ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is
not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser
SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:

7. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

8. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

9. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

10. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

11. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

12. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is

not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser

SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:
13. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

14. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

15. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

16. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

17. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

18. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is
not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser
SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:

19. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

20. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

21. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

22. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

23. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

24. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is

not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser

SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:
25. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

26. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

27. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

28. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

29. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

30. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is
not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser
SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:

31. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

32. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

33. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

34. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

35. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

36. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is

not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser

SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:
37. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

38. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

39. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

40. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

41. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

42. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is
not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser
SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs.
ATLANTIC GULF & PACIFIC COMPANY
G.R. No. L-7382, June 29, 1955

Facts:

43. On March 24, 1953, the Atlantic granted an option to Southwestern to buy its barge No. 10 for the sum of
P30,000 to be exercised within a period of ninety days.

44. On May 11, 1953, the Southwestern advised Atlantic that it wanted to exercise the option and requested that it
be notified as soon as the barge was available.

45. On June 25, 1953, citing the unavailability of the barge, Atlantic advised Southwestern that there is still further
work for it, and the barge could not be turned over to Southwestern.

46. On June 27, 1953, in view of the delay in the transaction, the Southwestern Company instituted a court action to
compel the Atlantic Gulf to sell the barge in accordance with the option, depositing with the court a check
covering the sum of P30,000.

47. On June 29, 1953, the Atlantic withdrew its offer of option with due notices to the Southwestern Company,
stating as reason therefor that the option was granted merely as a favor. Atlantic set up as a defense that the
option to sell made by it to the Southwestern Company is null and void because it is not supported by any
consideration.

48. The lower court ruled in favor of Southwestern and declared the sale valid.

Argument of Atlantic:

The option granted to Southwestern has no legal effect because it is not supported by any consideration and in
support Atlantic it invokes article 1479 of the Civil Code. This article provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

Argument of Southwestern:

Even granting that the "offer of option” is not supported by any consideration, that option became binding on Atlantic
Gulf when the Southwestern gave notice to its acceptance, and that having accepted it within the period of option, the
offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support, Atlantic Gulf invokes
article 1324 of the Civil Code which provides:

ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised.

Ruling:

The Court ruled in favor of Atlantic, reversed the lower court’s decision, and declared the sale invalid because the
option is without consideration.

There is no question that under article 1479 of the new Civil Code "an option to sell", or a "promise to buy or to sell",
as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly
inferred from the context of said article that a unilateral promise to buy or sell, even if accepted, is only binding if
supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding
effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted,
if the same is not supported by any consideration.

Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the
acceptance made of it by Southwestern.

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.
ATKINS, KROLL and CO., INC.,
vs.
B. CUA HIAN TEK
FACTS:

Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta
brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer
through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option to buy, which was not
enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of
the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer"
was a continuing offer to sell until September 23.

ISSUE:
Whether a contract of sale was constituted between the parties or only a unilateral promise to buy.

COURT RULING:

SC held that there was a contract of sale between the parties. ATKIN’s argument assumed that only a
unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to
sell and to buy was created upon HIAN TEK’s acceptance.
B. CuaHianTek’s letter-reply to Atkins indicated that he accepted "the firm offer for the sale. After
accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In
this case at bar, however, upon TEK’s acceptance of herein ATKIN's offer, a bilateral promise to sell and
to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

AtKins Kroll & Co. vs. Cu Hian Tek

102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is

not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser