Manila Metal v.

PNB
QUICK DIGEST: Petitioner executed a mortgage to secure a P900k loan. Having failed to pay (pet.),
PNB foreclosed the mortgage, and the period to redeem was to expire on Feb 17, 1983. Petitioner
asked for an extension. The Special Assets Management Dept. recommended allowing repurchase
for P1.5M. However, the management rejected the reco. stating that petitioner may repurchase the
prop for P2.6M. W/N there was a perfected contract of sale? No. SAMD rendering statement of
balance not binding nor constitute unqualified acceptance. The management made a counter-offer
rejecting the pets proposal.
FACTS: Petitioner was the owner of a 8,015 square meter parcel of land located in Mandaluyong. To
secure a P900,000.00 loan it had obtained from respondent Philippine National Bank (PNB),
petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a
new credit accommodation of P1,000,000.00; petitioner executed an Amendment of Real Estate
Mortgage over its property. On March 31, 1981, petitioner secured another loan of P653,000.00 from
respondent PNB.
Petitioner failing to pay, PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and
sought to have the property sold at public auction for P911,532.21, petitioners outstanding obligation to
respondent PNB as of June 30, 1982 with interest and fees. An auction sale was held where PNB was
declared the winning bidder for P1,000,000.00. The Certificate of Sale was issued in its favor and was
annotated at the dorsal portion of the title on February 17, 1983. Thus, the period to redeem the property
was to expire on February 17, 1984.
On February 10, 1984, petitioner reiterated its request for a one year extension from February 17, 1984
within which to redeem/repurchase the property on installment basis. It reiterated its request to
repurchase the property on installment. Meanwhile, petitioner was informed that as a matter of policy, the
bank does not accept partial redemption. Since petitioner failed to redeem the property, the Register of
Deeds, a new title was issued in favor of PNB.
PNB Special Assets Management Department prepared a statement of account, and as of June 25,
1984 petitioners obligation amounted to P1,574,560.47. When apprised of the statement of
account, petitioner remitted P725,000.00 to respondent PNB as deposit to repurchase. the SAMD
recommended to the management of PNB to allow petitioner to repurchase the property for
P1,574,560.47. However, the management rejected the recommendation and suggested that
petitioner purchase the property for P2,660,000.00, its market value.
Petitioner, however, did not agree to respondent PNBs proposal. PNB reiterated its P2.6M offer, stating
petioner could pay the P1.9M balance, the P725k as deposit. Petitioner asked PNB to reconsider and
declared that it had already agreed to the SAMDs offer to purchase the property for P1,574,560.47,
and that was why it had paid P725,000.00.
Petitioner filed a complaint against respondent PNB for Annulment of Mortgage and Mortgage
Foreclosure, Delivery of Title, or Specific Performance with Damages.
On March 18, 1993, petitioner offered to repurchase the property for P3,500,000.00. PNB declined since
the prevailing market value of the property was approximately P30M, and as a matter of policy, it could
not sell the property for less than its market value. Petitioner raised its offer to P4.25M but this was still
rejected.
The trial court ruled that there was no perfected contract of sale between the parties; hence, petitioner
had no cause of action for specific performance against respondent.
While pending in the CA, PNB waived, assigned and transferred its rights over the property in favor of
Bayani Gabriel, one of its Directors. Thereafter, Bayani Gabriel executed a Deed of Assignment over 51%
of the ownership and management of the property in favor of Reynaldo Tolentino, who later moved for
leave to intervene as plaintiff- appellant, which was granted.

The CA affirmed the RTC decision. The CA ratiocinated that petitioners original offer to purchase the
subject property had not been accepted by respondent PNB. In fact, it made a counter-offer through its
June 4, 1985 letter (P2.6 M) specifically on the selling price; petitioner did not agree to the counter-offer;
and the negotiations did not prosper.
ISSUE: W/N petitioner and respondent PNB had entered into a perfected contract for petitioner to
repurchase the property from respondent.
HELD: By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of
and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
The absence of any of the essential elements will negate the existence of a perfected contract of sale.
A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there
is merely an offer by one party without acceptance of the other, there is no contract.
A negotiation is formally initiated by an offer, which, however, must be certain. At any time prior to the
perfection of the contract, either negotiating party may stop the negotiation. At this stage, the offer
may be withdrawn; the withdrawal is effective immediately after its manifestation. To convert the offer into
a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be
plain, unequivocal, unconditional and without variance of any sort from the proposal.
A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a
rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and an
attempt to end the negotiation between the parties on a different basis. The acceptance must be identical
in all respects with that of the offer so as to produce consent or meeting of the minds.
In this case, petitioner had until February 17, 1984 within which to redeem the property. However, since it
lacked the resources, it requested for more time to redeem/repurchase the property under such terms and
conditions agreed upon by the parties. Before respondent could act on the request, petitioner again wrote
respondent requesting a partial redemption scheme.
The statement of account prepared by the SAMD stating that the net claim of respondent as of June 25,
1984 was P1,574,560.47 cannot be considered an unqualified acceptance to petitioners offer to purchase
the property. The statement is but a computation of the amount which petitioner was obliged to pay in
case respondent would later agree to sell the property, including interests, advances on insurance
premium, advances on realty taxes, publication cost, registration expenses and miscellaneous expenses.
There is no evidence that the SAMD was authorized by respondents Board of Directors to accept
petitioners offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of petitioners offer
would not bind respondent. A corporation can only execute its powers and transact its business
through its Board of Directors and through its officers and agents when authorized by a board
resolution or its by-laws. Respondent later approved the recommendation that the property be sold to
petitioner. But instead of the P1,574,560.47 recommended by the SAMD and to which petitioner had
previously conformed, respondent set the purchase price at P2,660,000.00. In fine, respondents
acceptance of petitioners offer was qualified, hence can be at most considered as a counter-offer.
We do not agree with petitioners contention that the P725,000.00 it had remitted to respondent was
earnest money which could be considered as proof of the perfection of a contract of sale under Article
1482 of the New Civil Code: Whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and as proof of the perfection of the contract.
As the stipulation of facts show The deposit of P725,000 was accepted by PNB on the condition that
the purchase price is still subject to the approval of the PNB Board. Thus, the P725,000.00 was
merely a deposit to be applied as part of the purchase price of the property, in the event that respondent
would approve the recommendation of SAMD.

Carceller v. CA
QUICK DIGEST: Petitioner and SIHI entered into a lease contract with an option for petitioner to
purchase. Before the expiration of the lease on Jan 15 1986, petitioner requested for a 6-month
extension to raise funds. When this was rejected, petitioner notified its decision to exercise the
offer, 18 days after the lease period had lapsed. W/N petitioner should be allowed to exercise
option? Yes. Delay was not substantial. Plus, the intent of the parties to buy and sell were
clearly shown (SIHI needing to liquidate assets, Petitioner building permanent improvements on
the land.)
***Note: Medyo sabog but I tried. hahah
FACTS: Private respondent State Investment Houses, Inc. (SIHI) is the registered owner of two (2)
parcels of land in Bulacao, Cebu. Petitioner and SIHI entered into a lease contract with option to purchase
over the 2 parcels at a monthly rental of P10,000.00 for a period of 18 months, beginning on August 1,
1984 until January 30, 1986. The pertinent portion states:
The LESSOR hereby grants unto the LESSEE the exclusive right, option and privilege to purchase, within
the lease period, the leased premises thereon for the aggregate amount of P1,800,000.00 payable
Approximately 3 weeks before the expiration of the lease contract, SIHI notified petitioner of the
impending termination of the lease agreement, and of the short period of time left within which he could
still validly exercise the option. It likewise requested petitioner to advise them of his decision on the
option, on or before January 20, 1986. On January 15, Petitioner requested for a six-month extension of
the lease contract, alleging that he needs ample time to raise sufficient funds in order to exercise the
option. SIHI notified petitioner that his request was disapproved. Nevertheless, it offered to lease the
same property to petitioner at the rate of P30,000.00 a month, for a period of one (1) year. It further
informed the petitioner of its decision to offer for sale said leased property to the general public.
On February 18, 1986, petitioner notified SIHI of his decision to exercise the option to purchase the
property and at the same time he made arrangements for the payment of the downpayment of
P360,000.00. On February 20, 1986, SIHI sent another letter to petitioner, reiterating its previous stand on
the latters offer, stressing that the period within which the option should have been exercised had already
lapsed. SIHI asked petitioner to vacate the property within ten (10) days from notice, and to pay rental
and penalty due.
Petitioner filed a complaint for specific performance and damages with the RTC, which ruled in favor of
petitioner, which was affirmed by the CA. While respondent court affirmed appellees option to buy the
property, it added that, the purchase price must be based on the prevailing market price of real property in
Bulacao, Cebu City.
ISSUE: Should petitioner be allowed to exercise the option to purchase the leased property, despite the
alleged delay in giving the required notice to private respondent? Yes.
HELD: An option is a preparatory contract in which one party grants to the other, for a fixed period and
under specified conditions, the power to decide, whether or not to enter into a principal contract. It binds
the party who has given the option, not to enter into the principal contract with any other person during the
period designated, and, within that period, to enter into such contract with the one to whom the option was
granted, if the latter should decide to use the option. It is a separate agreement distinct from the contract
which the parties may enter into upon the consummation of the option.
Petitioners letter to SIHI, dated January 15, 1986, was fair notice to the latter of the formers intent
to exercise the option, despite the request for the extension of the lease contract. As stated in said letter
to SIHI, petitioner was requesting for an extension (of the contract) for six months to allow us to generate
sufficient funds in order to exercise our option to buy the subject property.

As sufficiently established during the trial, SIHI, prior to its negotiation with petitioner, was already beset
with financial problems. SIHI was experiencing difficulty in meeting the claims of its creditors. Thus,
in order to reprogram the companys financial investment plan and facilitate its rehabilitation and viability,
SIHI, being a quasi-banking financial institution, had been placed under the supervision and control of the
Central Bank (CB). It was in dire need of liquidating its assets, so to speak, in order to stay afloat
financially.
Thus, SIHI was compelled to dispose some of its assets, among which is the subject leased
property, to generate funds to augment its badly-depleted financial resources. This then brought about
the execution of the lease contract with option to purchase between SIHI and the petitioner. This is clear
proof of its intent to promptly dispose said property although the full financial returns may materialize only
in a years time.
The lease contract provided that to exercise the option, petitioner had to send a letter to SIHI, manifesting
his intent to exercise said option within the lease period ending January 30, 1986. However, what
petitioner did was to request on January 15, 1986, for a six-month extension of the lease contract, for the
alleged purpose of raising funds intended to purchase the property subject of the option. It was only after
the request was denied on February 14, 1986, that petitioner notified SIHI of his desire to exercise
the option formally. This was by letter dated February 18, 1986. In private respondents view, there was
already a delay of 18 days, fatal to petitioners cause. But respondent court found the delay neither
substantial nor fundamental and did not amount to a breach that would defeat the intention of the
parties when they executed the lease contract with option to purchase.
Petitioners determination to purchase said property is equally indubitable. He introduced permanent
improvements on the leased property, demonstrating his intent to acquire dominion in a years time. To
increase his chances of acquiring the property, he secured an P8 Million loan from the Technology
Resources Center (TRC), thereby augmenting his capital. He averred that he applied for a loan since he
planned to pay the purchase price in one single payment, instead of paying in installment, which would
entail the payment of additional interest at the rate of 24% per annum, compared to 7% per annum
interest for the TRC loan. His letter earlier requesting extension was premised, in fact, on his need for
time to secure the needed financing through a TRC loan.
In contractual relations, the law allows the parties reasonable leeway on the terms of their agreement,
which is the law between them. By contract SIHI had given petitioner 4 periods: (a) the option to purchase
the property for P1,800,000.00 within the lease period, that is, until January 30, 1986; (b) the option to be
exercised within the option period by written notice at anytime; (c) the document of sale...to be
consummated within the month immediately following the month when petitioner exercises the option; and
(d) the payment in equal installments of the purchase price over a period of 60 months. Petitioners letter
of January 15, 1986 and his formal exercise of the option on February 18, 1986 were within a reasonable
time-frame consistent with periods given and the known intent of the parties to the agreement dated
January 10, 1985
*** CA affirmed. However, the purchase price should be based on the fair market value of real property in
Bulacao, Cebu City, as of February 1986, when the contract would have been consummated.

Tayag v. Lacson
QUICK DIGEST: Lacsons owner of lands. Defendant-tillers signed deeds of assignments to petitioner
their rights as tillers in consideration of P50 per square meter. They also granted petitioner the right to sell
the property should respondents Lacsons agree to sell the property -- W/N the deeds of assignment were
perfected option contracts? No. Defendants granted to the petitioner not only an option but the
exclusive right to buy the landholding. But the grantors were merely the defendants-tenants, and not
the respondents, the registered owners of the property. Not being the registered owners of the
property, the defendants-tenants could not legally grant to the petitioner the option, much less the
"exclusive right" to buy the property.
FACTS: Respondents Angelica Tiotuyco Vda. de Lacson, and her children Amancia, Antonio, Juan, and
Teodosia, all surnamed Lacson, were the registered owners of three parcels of land located in Mabalacat,
Pampanga. The properties, which were tenanted agricultural lands, were administered by Renato
Espinosa for the owner.
On March 17, 1996, a group of original farmers/tillers (madami sila Tiamson et. al) individually executed
in favor of the petitioner Tayag separate Deeds of Assignment in which the assignees assigned to the
petitioner their respective rights as tenants/tillers of the landholdings possessed and tilled by
them for and in consideration of P50.00 per square meter. The said amount was made payable "when
the legal impediments to the sale of the property to the petitioner no longer existed." The petitioner was
also granted the exclusive right to buy the property if and when the respondents, with the
concurrence of the defendants-tenants, agreed to sell the property. In the interim, the petitioner gave
varied sums of money to the tenants as partial payments, and the latter issued receipts for the said
amounts.
Petitioner called a meeting, to which the defendant-tenants stated that they were not attending the
meeting and instead gave notice of their collective decision to sell all their rights and interests, as
tenants/lessees, over the landholding to the respondents Lacson.
Petitioner filed a complaint with the RTC for the court to fix a period within which to pay the agreed
purchase price of P50.00 per square meter to the defendants, as provided for in the Deeds of
Assignment. The court ruled that the petitioner, on the basis of the material allegations of the complaint,
was entitled to injunctive relief to prevent the defendant-tillers from rescinding their contracts with plaintiff
and alienating their properties in favor of the Lacsons. The CA reversed.
Not pertinent ISSUE: W/N the writ of injunction should be issued against respondents? No.
HELD: First, The respondents cannot be enjoined from selling or encumbering their property simply and
merely because they had executed Deeds of Assignment in favor of the petitioner, obliging themselves to
assign and transfer their rights or interests as agricultural farmers/laborers/sub-tenants over the
landholding, and granting the petitioner the exclusive right to buy the property subject to the occurrence of
certain conditions. The respondents were not parties to the said deeds. There is no evidence that the
respondents agreed, expressly or impliedly, to the said deeds or to the terms and conditions set forth
therein. Indeed, they assailed the validity of the said deeds on their claim that the same were contrary to
the letter and spirit of P.D. No. 27 and Rep. Act No. 6657. The petitioner even admitted when he testified
that he did not know any of the respondents, and that he had not met any of them before he filed his
complaint in the RTC. He did not even know that one of those whom he had impleaded as defendant,
Angelica Vda. De Lacson was dead.
As owners of the lands being tilled by TIAMSON, et al., defendants, under the law, have the right to enjoy
and dispose of the same. Thus, they have the right to possess the lands, as well as the right to encumber
or alienate them.
Second, The petitioner clearly has no cause of action against the respondents for the principal relief

prayed for therein, for the trial court to fix a period within which to pay to each of the defendants-tenants
the balance of the P50.00 per square meter, the consideration under the Deeds of Assignment executed
by the defendants-tenants. The respondents are not parties or privies to the deeds of assignment.
The matter of the period for the petitioner to pay the balance of the said amount to each of the
defendants-tenants is an issue between them, the parties to the deed.
Third, On the face of the complaint, the action of the petitioner has no legal basis. Under the Deeds
of Assignment, the obligation of the petitioner to pay to each of the defendants- tenants the
balance of the purchase price was conditioned on the occurrence of the following events: (a) the
respondents agree to sell their property to the petitioner; (b) the legal impediments to the sale of
the landholding to the petitioner no longer exist; and, (c) the petitioner decides to buy the
property. When he testified, the petitioner admitted that the legal impediments referred to in the
deeds were (a) the respondents refusal to sell their property; and, (b) the lack of approval of the
Department of Agrarian Reform. It is only upon the occurrence of the foregoing conditions that the
petitioner would be obliged to pay to the defendants-tenants the balance of the P50.00 per square
meter under the deeds of assignment. There is no showing in the petitioners complaint that the
respondents had agreed to sell their property, and that the legal impediments to the agreement no
longer existed.
Fourth, (in my words), there was no malice on the part of respondent Lacsons. They had the right to
negotiate with the defendant-tillers if they wished. Also, Tayag forced them to assign their rights in a
scheme to ensure that should the Lacsons sell the land to him, the defendant tillers would not have the
preferential right provided by law if the land is sold without the knowledge of the defendants.
ISSUE: W/N the deeds of assignment were perfected option contracts? No.
We do not agree with the contention of the petitioner that the deeds of assignment executed by the
defendants- tenants are perfected option contracts. An option is a contract by which the owner of the
property agrees with another person that he shall have the right to buy his property at a fixed
price within a certain time. It is a condition offered or contract by which the owner stipulates with
another that the latter shall have the right to buy the property at a fixed price within a certain time,
or under, or in compliance with certain terms and conditions, or which gives to the owner of the property
the right to sell or demand a sale. It imposes no binding obligation on the person holding the option,
aside from the consideration for the offer. Until accepted, it is not, properly speaking, treated as a
contract.The second party gets in praesenti, not lands, not an agreement that he shall have the lands, but
the right to call for and receive lands if he elects. An option contract is a separate and distinct
contract from which the parties may enter into upon the conjunction of the option.
In this case, the defendants-tenants-subtenants, under the deeds of assignment, granted to the petitioner
not only an option but the exclusive right to buy the landholding. But the grantors were merely the
defendants-tenants, and not the respondents, the registered owners of the property. Not being the
registered owners of the property, the defendants-tenants could not legally grant to the petitioner
the option, much less the "exclusive right" to buy the property.

Villamor v. CA
QUICK DIGEST: Macaria Reyes sold 300 sq m of her 600 sq m lot to Sps Villamor, executing a
deed of option in the Villamors favor. In 1984, the Reyeses offered to repurchase the lot. The
Villamors claimed they had expressed their desire to purchase the remaining 300 sq m. W/N
Deed of Option was void for the lack of consideration? No. Villamors bought the first half at P70/
sq m which was way above market rates. This was considered as the consideration. W/N the
Villamors validly exercised the option? Though accepted before withdrawal, the Deed of Option
did not provide for the period within which the parties may demand the performance of their
respective undertakings in the instrument. Actions upon written contract must be brought within
ten (10) years. The complaint in this case was filed seventeen (17) years from the time of the
execution of the contract. Hence, the right of action had prescribed. Note: It appears that while
the option to buy was granted to the Villamors, the Reyeses were likewise granted an option to
sell.
FACTS: Macaria Labingisa Reyes was the owner of a 600-square meter lot located at Baesa, Caloocan
City. In July 1971, Macaria sold a portion of 300 square meters of the lot to the Spouses Julio and Marina
and Villamor for the total amount of P21,000.00. Earlier, Macaria borrowed P2,000.00 from the spouses
which amount was deducted from the total purchase price of the lot sold. On November 11, 1971, Macaria
executed a "Deed of Option" in favor of Villamor in which the remaining 300 square meter portion (TCT
No. 39934) of the lot would be sold to Villamor under the conditions stated therein.
According to Macaria, when her husband, Roberto Reyes, retired in 1984, they offered to repurchase the
lot sold by them to the Villamor spouses but Marina Villamor refused and reminded them instead that the
Deed of Option in fact gave them the option to purchase the remaining portion of the lot.
The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining
300 square meter portion of the lot but the Reyeses had been ignoring them. Thus, on July 13, 1987, after
conciliation proceedings in the barangay level failed, they filed a complaint for specific performance
against the Reyeses.
The trial court ruled in favor of the Villamor spouses. The CA reversed, because Deed of Option is void for
lack of consideration.
ISSUE: The pivotal issue to be resolved in this case is the validity of the Deed of Option whereby the
private respondents agreed to sell their lot to petitioners "whenever the need of such sale arises, either on
our part (private respondents) or on the part of Julio Villamor and Marina Villamor (petitioners)."
HELD: As expressed in Gonzales v. Trinidad, 67 Phil. 682, consideration is "the why of the contracts, the
essential reason which moves the contracting parties to enter into the contract." The cause or the
impelling reason on the part of private respondent executing the deed of option as appearing in the deed
itself is the petitioner's having agreed to buy the 300 square meter portion of private respondents' land at
P70.00 per square meter "which was greatly higher than the actual reasonable prevailing price." This
cause or consideration is clear from the deed which stated:
That the only reason why the spouses-vendees Julio Villamor and Marina V. Villamor agreed to buy the
said one-half portion at the above stated price of about P70.00 per square meter, is because I, and my
husband Roberto Reyes, have agreed to sell and convey to them the remaining one-half portion still
owned by me ...
The respondent appellate court failed to give due consideration to petitioners' evidence which shows that
in 1969 the Villamor spouses bough an adjacent lot from the brother of Macaria Labing-isa for only
P18.00 per square meter which the private respondents did not rebut. Thus, expressed in terms of money,
the consideration for the deed of option is the difference between the purchase price of the 300 square
meter portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing reasonable price of the same lot in

1971. Whatever it is, (P25.00 or P18.00) though not specifically stated in the deed of option, was
ascertainable. Petitioner's allegedly paying P52.00 per square meter for the option may, as opined by the
appellate court, be improbable but improbabilities does not invalidate a contract freely entered into by the
parties.
Ordinarily, an optional contract is a privilege existing in one person, for which he had paid a consideration
and which gives him the right to buy, for example, certain merchandise or certain specified property, from
another person, if he chooses, at any time within the agreed period at a fixed price. But, the "deed of
option" in this case went on and stated that the sale of the other half would be made "whenever the need
of such sale arises, either on our (Reyeses) part or on the part of the Spouses Julio Villamor and Marina
V. Villamor. It appears that while the option to buy was granted to the Villamors, the Reyeses were
likewise granted an option to sell. In other words, it was not only the Villamors who were granted an
option to buy for which they paid a consideration. The Reyeses as well were granted an option to sell
should the need for such sale on their part arise.
In the instant case, the option offered by private respondents had been accepted by the petitioner, the
promise, in the same document. The acceptance of an offer to sell for a price certain created a bilateral
contract to sell and buy and upon acceptance, the offer, ipso facto assumes obligations of a vendee. In
other words, since there may be no valid contract without a cause of consideration, the promisory is not
bound by his promise and may, accordingly withdraw it. Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an offer to sell which, if accepted, results in a
perfected contract of sale.
Since there was, between the parties, a meeting of minds upon the object and the price, there was
already a perfected contract of sale. What was, however, left to be done was for either party to demand
from the other their respective undertakings under the contract. It may be demanded at any time either by
the private respondents, who may compel the petitioners to pay for the property or the petitioners, who
may compel the private respondents to deliver the property.
However, the Deed of Option did not provide for the period within which the parties may demand
the performance of their respective undertakings in the instrument. The parties could not have
contemplated that the delivery of the property and the payment thereof could be made indefinitely and
render uncertain the status of the land. The failure of either parties to demand performance of the
obligation of the other for an unreasonable length of time renders the contract ineffective.
Under Article 1144 (1) of the Civil Code, actions upon written contract must be brought within ten
(10) years. The Deed of Option was executed on November 11, 1971. The acceptance, as already
mentioned, was also accepted in the same instrument. The complaint in this case was filed by the
petitioners on July 13, 1987, seventeen (17) years from the time of the execution of the contract.
Hence, the right of action had prescribed. To allow the petitioner to demand the delivery of the property
subject of this case thirteen (13) years or seventeen (17) years after the execution of the deed at the price
of only P70.00 per square meter is inequitous.

Sanchez v. Rigos
FACTS: On April 3, 1961, Plaintiff Nicolas Sanchez and defendant Severina Rigos executed an
instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell"
to Sanchez the sum of P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality
of San Jose, province of Nueva Ecija within two (2) years from said date with the understanding that said
option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the
property" within the stipulated period.
Inasmuch as several tenders of payment of the sum of Pl,510.00, made by Sanchez within said period,
were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with CFI and
commenced against the latter the present action, for specific performance and damages. The lower court
rendered judgment for Sanchez.
ISSUE: W/N Mrs. Rigos may be compelled to convey the property and accept the sum.
HELD:
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 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.
Hence, plaintiff maintains that the promise contained in the contract is "reciprocally demandable.
Although defendant had really "agreed, promised and committed" herself to sell the land to the
plaintiff, it is not true that the latter had, in turn, "agreed and committed himself " to buy said
property.
The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A
is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy. And both parties so
understood it, as indicated by the caption, "Option to Purchase," given by them to said instrument. Under
the provisions thereof, the defendant "agreed, promised and committed" herself to sell the land therein
described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her
agreement, promise and undertaking is supported by a consideration "distinct from the price"
stipulated for the sale of the land.
Relying upon Article 1354 of our Civil Code, the lower court presumed the existence of said consideration,
and this would seem to be the main factor that influenced its decision in plaintiff's favor. It should be
noted, however, that:
(1) Article 1354 applies to contracts in general, whereas in Article 1479 refers to "sales" in particular,
and, more specifically, to "an accepted unilateral promise to buy or to sell."
(2) In order that said unilateral promise may be "binding upon the promisor, Article 1479 requires that the
promise be "supported by a consideration distinct from the price.". In other words, the promisee
has the burden of proving such consideration. Plaintiff herein has not even alleged the existence
thereof in his complaint.
(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a special defense,
the absence of said consideration for her promise to sell and, by joining in the petition for a judgment on
the pleadings, plaintiff has impliedly admitted the truth of said averment in defendant's answer.
However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, stated that

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.
If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding
until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of
sale, even though the option was not supported by a sufficient consideration. In other words, since there
may be no valid contract without a cause or consideration, the promisor is not bound by his
promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected
contract of sale.
This view has the advantage of avoiding a conflict between Articles 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.") on the general principles on contracts and 1479 on sales of the Civil Code,
in line with the cardinal rule of statutory construction that, in construing different provisions of one and the
same law or code, such interpretation should be favored as will reconcile or harmonize said provisions
and avoid a conflict between the same. Indeed, the presumption is that, in the process of drafting the
Code, its author has maintained a consistent philosophy or position.
The court in this case abandoned the Southwestern ruling which held 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. 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.

Tuazon v. Del Rosario-Suarez

QUICK DIGEST: Lourdes leased a lot to Tuazon for 3 years. During the effectivity of the lease,
Lourdes offered to sell to Tuazon the land for P37.5M, giving him 2 years to decide. 4 months after
the lease, Lourdes sold the lands to the De Leons. Roberto filed for the annulment of the sale?
Whether it was an option contract or a right of first refusal? Option Contact. there is a fixed
period and priced stipulated as opposed to a right of first refusal. The period of exercising the
option had already lapsed. If the option is without any consideration, the offeror may withdraw
his offer by communicating such withdrawal to the offeree at anytime before acceptance; if it is
founded upon a consideration, the offeror cannot withdraw his offer before the lapse of the period
agreed upon. Even if the offer of Lourdes was accepted by Roberto, still the former is not bound
thereby because of the absence of a consideration distinct and separate from the price.
FACTS: Respondent Lourdes Q. Del Rosario-Suarez (Lourdes) was the owner of a parcel of land in
Tandang Sora, Quezon City. Petitioner Roberto D. Tuazon (Roberto) and Lourdes executed a Contract of
Lease for the land for a period of 3 years. The lease commenced in March 1994 and ended in February
1997. During the effectivity of the lease, Lourdes offered to sell to Tuazon the subject parcel of land. She
pegged the price at P37,541,000.00 and gave him two years from January 2, 1995 to decide on the said
offer.
On June 19, 1997, or more than four months after the expiration of the Contract of Lease, Lourdes sold
subject parcel of land to her only child, Catalina Suarez-De Leon, her son-in-law Wilfredo De Leon, and
her two grandsons, Miguel Luis S. De Leon and Rommel S. De Leon (the De Leons), for a total
consideration of only P2,750,000.00.
The new owners notified Tuazon to vacate the premises. Tuazon refused hence, the De Leons filed a
complaint for Unlawful Detainer before the MeTC against him. The MeTC rendered a Decision ordering
Roberto to vacate the property for non-payment of rentals and expiration of the contract.
While the ejectment case was on appeal, Roberto filed with the RTC a Complaint for Annulment of Deed
of Absolute Sale, Reconveyance, Damages and Application for Preliminary Injunction against Lourdes
and the De Leons. The RTC declared that the Deed of Absolute Sale made by Lourdes in favor of the De
Leons as valid and binding. The CA affirmed.
ISSUE: W/N the case involves an option contract and not a right of first refusal? Option Contract.
HELD:An option contract is defined as An agreement in writing to give a person the option to purchase
lands within a given time at a named price is neither a sale nor an agreement to sell. It is simply a
contract by which the owner of property agrees with another person that he shall have the right to
buy his property at a fixed price within a certain time.
In Ang Yu Asuncion v. Court of Appeals, an elucidation on the "right of first refusal" was made thus: In a
right of first refusal, while the object might be made determinate, the exercise of the right,
however, would be dependent not only on the grantor's eventual intention to enter into a binding
juridical relation with another but also on terms, including the price, that obviously are yet to be
later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory
juridical relations governed not by contracts (since the essential elements to establish the vinculum juris
would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent
scattered provisions of the Civil Code on human conduct.
From the foregoing, it is thus clear that an option contract is entirely different and distinct from a right of
first refusal in that in the former, the option granted to the offeree is for a fixed period and at a
determined price. Lacking these two essential requisites, what is involved is only a right of first refusal.
In the letter of Lourdes to Tuazon offering the land: I am offering you to buy my 1211 square meter at

P37,541,000.00 you can pay me in dollars in the name of my daughter. I never offered it to anyone.
Please shoulder the expenses for the transfer. I wish the Lord God will help you buy my lot easily and you
will be very lucky forever in this place. You have all the time to decide when you can, but not for 2
years or more.
It is clear that letter embodies an option contract as it grants Roberto a fixed period of only two years to
buy the subject property at a price certain of P37,541,000.00. It being an option contract, the rules
applicable are found in Articles 1324 and 1479 of the Civil Code which provide:
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 a consideration, as something paid or promised.
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 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.
It is clear from the provision of Article 1324 that there is a great difference between the effect of an option
which is without a consideration from one which is founded upon a consideration. If the option is without
any consideration, the offeror may withdraw his offer by communicating such withdrawal to the
offeree at anytime before acceptance; if it is founded upon a consideration, the offeror cannot
withdraw his offer before the lapse of the period agreed upon.
In Sanchez v. Rigos, (***parang minisquote ni SC yung ruling, but thats just me) the Court held 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.
A unilateral promise to buy or sell is a mere offer, which is not converted into a contract except at the
moment it is accepted. Acceptance is the act that gives life to a juridical obligation, because, before
the promise is accepted, the promissor may withdraw it at any time. Upon acceptance, however, a
bilateral contract to sell and to buy is created, and the offeree ipso facto assumes the obligations of a
purchaser; the offeror, on the other hand, would be liable for damages if he fails to deliver the thing he
had offered for sale. Even if the promise was accepted, private respondent was not bound thereby
in the absence of a distinct consideration.
In this case, it is undisputed that Roberto did not accept the terms stated in the letter of Lourdes as he
negotiated for a much lower price. Robertos act of negotiating for a much lower price was a counter-offer
and is therefore not an acceptance of the offer of Lourdes. Article 1319 of the Civil Code provides:
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer. (Emphasis supplied.)
The counter-offer of Roberto for a much lower price was not accepted by Lourdes. There is
therefore no contract that was perfected between them with regard to the sale of subject property.
Roberto, thus, does not have any right to demand that the property be sold to him at the price for
which it was sold to the De Leons neither does he have the right to demand that said sale to the De
Leons be annulled.
What is involved here is a separate and distinct offer made by Lourdes through a letter dated January 2,

1995 wherein she is selling the leased property to Roberto for a definite price and which gave the latter a
definite period for acceptance. Roberto was not given a right of first refusal. The letter-offer of Lourdes did
not form part of the Lease Contract because it was made more than six months after the commencement
of the lease. In this case, the subject property was sold not only after the expiration of the period provided
in the letter-offer of Lourdes but also after the effectivity of the Contract of Lease.
Moreover, even if the offer of Lourdes was accepted by Roberto, still the former is not bound thereby
because of the absence of a consideration distinct and separate from the price. The argument of Roberto
that the separate consideration was the liberality on the part of Lourdes cannot stand. A perusal of the
letter-offer of Lourdes would show that what drove her to offer the property to Roberto was her immediate
need for funds as she was already very old. Offering the property to Roberto was not an act of liberality
on the part of Lourdes but was a simple matter of convenience and practicality as he was the one most
likely to buy the property at that time as he was then leasing the same.