3. Sanchez Vs. Rigos.docx

3. NICOLAS SANCHEZ, Petitioner-Appellee, vs. SEVERINA RIGOS, Defendant-Appellant (1972) Topic: Period of acceptance – Art. 1324 FACTS: Sanchez and Rigos executed an instrument entitled “Option to Purchase” wherein Mrs. Rigos agreed, promised and committed to sell to Mr. Sanchez a parcel of land for the amount of P1,510 within two years from the date of the instrument, with the understanding that the said option shall be deemed “terminated and elapsed” if Mr. Sanchez shall fail to exercise his right to buy the property within the stipulated period. Mr. Sanchez made several tenders of payment within said period but were rejected by Mrs. Rigos. Thus, Sanchez deposited said amount to the Court and commenced the present action for specific performance and damages. Rigos alleged, as a special defense, that the contract between them “is a unilateral promise to sell, and the same being unsupported by any valuable consideration is null and void.” Sanchez, on the other hand, alleged that by virtue of the option under consideration, “Rigos agreed and committed to sell” and “he agreed and committed to buy” the property. Thus, he maintained that such promise is reciprocally demandable. The lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchez judicially consigned, and to execute in his favor the requisite deed of conveyance. ISSUE W/N Rigos is bound by Sanchez’ acceptance even though the option is not supported by a separate consideration. RULING: Yes. Ruling in Southwestern abandoned; acceptance of option before withdrawal creates a binding obligation to buy and sell even if not supported by consideration Even if the "offer of option" is not supported by any consideration, the option became binding on the promissor when the promisee gave notice to it of its acceptance, and that having accepted it within the period of option, the offer can no longer be withdrawn and in any event such withdrawal is ineffective. Article 1479 must be read in relation to Article 1324 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. ART. 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 When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration as something paid or promised. In Southwestern, the Court said while 1324 was applicable to contracts in general, Article 1479 specifically states that in unilateral contracts to sell, there is a need for the separate consideration before the obligation to buy and sell arises.

However, this ruling was abandoned in the case of Atkins v Cua Hian Tek, where the Court decided there was no distinction between the two articles. Both articles produced the same effect: the promise is treated as an option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. 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. SEPARATE OPINION (concurring) I fully agree with the abandonment of the ruling in Southwestern Company. While the law permits the offeror to withdraw the offer at any time before acceptance even before the period has expired, some writers hold the view, that the offeror cannot exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the part of the offeror to maintain it for such length of time as to permit the offeree to decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without being liable for damages which the offeree may suffer. A contrary view would remove the stability and security of business transactions. In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of P1510 before any withdrawal from the contract has been made by the Defendant (Severina Rigos)." Since Rigos' offer to sell was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal contract — to sell and to buy was generated.