jose ramon carceller

7/27/2019 Jose Ramon Carceller

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In a letter dated January 15, 1986, which was received by SIHI on January 29, 1986, petitionerrequested for a six-month extension of the lease contract, alleging that he needs ample time toraise sufficient funds in order to exercise the option. To support his request, petitioner averredthat he had already made a substantial investment on the property, and had been punctual inpaying his monthly rentals.8On February 14, 1986, SIHI notified petitioner that his request was disapproved. Nevertheless, itoffered to lease the same property to petitioner at the rate of Thirty Thousand (P30,000.00)pesos a month, for a period of one (1) year. It further informed the petitioner of its decision tooffer for sale said leased property to the general public. 9On February 18, 1986, petitioner notified SIHI of his decision to exercise the option to purchasethe property and at the same time he made arrangements for the payment of the downpayment

thereon in the amount of Three Hundred Sixty Thousand (P360,000.00) pesos. 10

On February 20, 1986, SIHI sent another letter to petitioner, reiterating its previous stand on thelatter's offer, stressing that the period within which the option should have been exercised hadalready lapsed. SIHI asked petitioner to vacate the property within ten (10) days from notice, andto pay rental and penalty due.11Hence, on February 28, 1986, a complaint for specific performance and damages12 was filedby petitioner against SIHI before the Regional Trial Court of Cebu City, to compel the latter tohonor its commitment and execute the corresponding deed of sale.

After trial, the court a quo promulgated its decision dated April 1, 1991, the dispositive portion ofwhich reads:

"In the light of the foregoing considerations, the Court hereby rendersjudgment in Civil Case No. CEB 4700, ordering the defendant to executea deed of sale in favor of the plaintiff, covering the parcels of landtogether with all the improvements thereon, covered by Transfer

Certificates of Title Nos. 89152 and 89153 of the Registry of Deeds ofCebu City, in accordance with the lease contract executed on January10, 1984 between the plaintiff and the defendant, but the purchase pricemay be by "one shot payment" of P1,800,000.00; and the defendant topay attorney's fee of P20,000.00.No damages awarded."13

Not satisfied with the judgment, SIHI elevated the case to the Court of Appeals by way of apetition for review.On September 21, 1995, respondent court rendered its decision, affirming the trial court's

judgment, but modified the basis for assessing the purchase price. While respondent courtaffirmed appellee's option to buy the property, it added that, "the purchase price must be basedon the prevailing market price of real property in Bulacao, Cebu City."14Baffled by the modification made by respondent court, both parties filed a motion forreconsideration and/or clarification, with petitioner, on one hand, praying that the prevailingmarket price be the value of the property in February 1986, the time when the sale would have

been consummated. SIHI, on the other hand, prayed that the market price of the property bebased on the prevailing price index at least 10 years later, that is, 1996.Respondent court conducted further hearings to clarify the matter, but no agreement wasreached by the parties. Thus, on April 25, 1996, respondent court promulgated the assailedresolution, which denied both parties' motions, and directed the trial court to conduct furtherhearings to ascertain the prevailing market value of real properties in Bulacao, Cebu City and fixthe value of the property subject of the controversy. 14aHence, the instant petition for review. The fundamental issue to be resolved is, should petitioner be allowed to exercise the option topurchase the leased property, despite the alleged delay in giving the required notice to privaterespondent?

An option is a preparatory contract in which one party grants to the other, for a fixed period andunder 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 otherperson 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.15 It is a

separate agreement distinct from the contract which the parties may enter into upon theconsummation of the option.16Considering the circumstances in this case, we find no reason to disturb the findings ofrespondent court, that petitioner's letter to SIHI, dated January 15, 1986, was fair notice to thelatter of the former's intent to exercise the option, despite the request for the extension of thelease contract. As stated in said letter to SIHI, petitioner was requesting for an extension (of thecontract) for six months "to allow us to generate sufficient funds in order to exercise our option tobuy the subject property".17 The analysis by the Court of Appeals of the evidence on recordand the process by which it arrived at its findings on the basis thereof, impel this Court's assentto said findings. They are consistent with the parties' primary intent, as hereafter discussed,when they executed the lease contract. As respondent court ruled:

"We hold that the appellee [herein petitioner] acted with honesty andgood faith. Verily, We are in accord with the trial court that he should beallowed to exercise his option to purchase the lease property. In fact,SIHI will not be prejudiced. A contrary ruling, however, will definitelycause damage to the appellee, it appearing that he has introducedconsiderable improvements on the property and has borrowed huge loanfrom the Technology Resources Center." 17a

The contracting parties' primary intent in entering into said lease contract with option to purchaseconfirms, in our view, the correctness of respondent court's ruling. Analysis and construction,however, should not be limited to the words used in the contract, as they may not accuratelyreflect the parties' true intent. The reasonableness of the result obtained, after said analysis,ought likewise to be carefully considered.It is well-settled in both law and jurisprudence, that contracts are the law between the contractingparties and should be fulfilled, if their terms are clear and leave no room for doubt as to theintention of the contracting parties.18Further, it is well-settled that in construing a writtenagreement, the reason behind and the circumstances surrounding its execution are ofparamount importance. Sound construction requires one to be placed mentally in the situationoccupied by the parties concerned at the time the writing was executed. Thereby, the intention ofthe contracting parties could be made to prevail, because their agreement has the force of lawbetween them.19Moreover, to ascertain the intent of the parties in a contractual relationship, it is imperative thatthe various stipulations provided for in the contract be construed together, consistent with theparties' contemporaneous and subsequent acts as regards the execution of the contract. 20Andonce the intention of the parties has been ascertained, that element is deemed as an integralpart of the contract as though it has been originally expressed in unequivocal terms.

As sufficiently established during the trial, SIHI, prior to its negotiation with petitioner, wasalready beset with financial problems. SIHI was experiencing difficulty in meeting the claims ofits creditors. Thus, in order to reprogram the company's financial investment plan and facilitateits rehabilitation and viability, SIHI, being a quasi-banking financial institution, had been placedunder 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 leasedproperty, to generate sufficient funds to augment its badly-depleted financial resources. Thisthen brought about the execution of the lease contract with option to purchase between SIHI andthe petitioner.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 ofthe lease contract, for the alleged purpose of raising funds intended to purchase the propertysubject of the option. It was only after the request was denied on February 14, 1986, thatpetitioner notified SIHI of his desire to exercise the option formally. This was by letter datedFebruary 18, 1986. In private respondent's view, there was already a delay of 18 days, fatal topetitioner's 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 executedthe lease contract with option to purchase. 20a

In allowing petitioner to exercise the option, however, both lower courts are in accord in theirdecision, rationalizing that a contrary ruling would definitely cause damage to the petitioner, as
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he had the whole place renovated to make the same suitable and conducive for the business heestablished there. Moreover, judging from the subsequent acts of the parties, it is undeniablethat SIHI really intended to dispose of said leased property, which petitioner indubitably intendedto buy.SIHI's agreement to enter first into a lease contract with option to purchase with hereinpetitioner, is a clear proof of its intent to promptly dispose said property although the full financialreturns may materialize only in a year's time. Furthermore, its letter dated January 7, 1986,reminding the petitioner of the short period of time left within which to consummate theiragreement, clearly showed its desire to sell that property. Also, SIHI's letter dated February 14,1986 supported the conclusion that it was bent on disposing said property. For this letter mademention of the fact that, "said property is now for sale to the general public".

Petitioner's determination to purchase said property is equally indubitable. He introducedpermanent improvements on the leased property, demonstrating his intent to acquire dominionin a year's time. To increase his chances of acquiring the property, he secured an P8 Millionloan from the Technology Resources Center (TRC), thereby augmenting his capital. He averredthat 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 rateof 24% per annum, compared to 7 3/4% per annum interest for the TRC loan. His letter earlierrequesting extension was premised, in fact, on his need for time to secure the needed financingthrough a TRC loan.

In contractual relations, the law allows the parties reasonable leeway on the terms of theiragreement, which is the law between them.21Note that by contract SIHI had given petitioner 4periods: (a) the option to purchase the property for P1,800,000.00 within the lease period, thatis, until January 30, 1986; (b) the option to be exercised within the option period by written noticeat 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 equalinstallments of the purchase price over a period of 60 months. In our view, petitioner's letter ofJanuary 15, 1986 and his formal exercise of the option on February 18, 1986 were within areasonable time-frame consistent with periods given and the known intent of the parties to theagreement dated January 10, 1985. A contrary view would be harsh and inequituous indeed. In Tuason, Jr., etc. vs. De Asis,22this Court opined that "in a contract of lease, if the lessormakes an offer to the lessee to purchase the property on or before the termination of the lease,and the lessee fails to accept or make the purchase on time, the lessee losses the right to buythe property later on the terms and conditions set in the offer." Thus, on one hand, petitionerherein could not insist on buying the said property based on the price agreed upon in the leaseagreement, even if his option to purchase it is recognized. On the other hand, SIHI could nottake advantage of the situation to increase the selling price of said property by nearly 90% of theoriginal price. Such leap in the price quoted would show an opportunistic intent to exploit thesituation as SIHI knew for a fact that petitioner badly needed the property for his business andthat he could afford to pay such higher amount after having secured an P8 Million loan from the

TRC. If the courts were to allow SIHI to take advantage of the situation, the result would havebeen an injustice to petitioner, because SIHI would be unjustly enriched at his expense. Courtsof law, being also courts of equity, may not countenance such grossly unfair results withoutdoing violence to its solemn obligation to administer fair and equal justice for all. WHEREFORE, the appealed decision of respondent court, insofar as it affirms the judgment ofthe trial court in granting petitioner the opportunity to exercise the option to purchase the subjectproperty, is hereby AFFIRMED. However the purchase price should be based on the fair marketvalue of real property in Bulacao, Cebu City, as of February 1986, when the contract would havebeen consummated. Further, petitioner is hereby ordered to pay private respondent SIHI legalinterest on the said purchase price beginning February 1986 up to the time it is actually paid, aswell as the taxes due on said property, considering that petitioner has enjoyed the beneficial useof said property. The case is hereby remanded to Regional Trial Court of Cebu, Branch 5, forfurther proceedings to determine promptly the fair market value of said real property as ofFebruary 1986, in Bulacao, Cebu City.Costs against private respondent.

SO ORDERED.

RUPERTO SORIANO, ET AL., plaintiffs-appellees,vs . BASILIOBAUTISTA, ET AL., defendants. BASILIO BAUTISTA and SOFIA DEROSAS, defendants-appellants .

[G.R. No. L-17457. December 29, 1962.]BASILIO BAUTISTA, ET AL., plaintiffs. BASILIO BAUTISTA andSOFIA DE ROSAS, plaintiffs-appellants,vs . RUPERTO SORIANO, ETAL., defendants-appellees .

Amado T. Garrovillas and Ananias C. Ona, Norberto A. Ferrera and Pedro N. Belmiforappellants Basillo Bautista and Sofia de Rosas.Javier & Javierfor appellees Ruperto Soriano, et al.

SYLLABUS1.MORTGAGES; STIPULATION WHICH RENDERS MORTGAGOR'S RIGHT TO REDEEMDEFEASIBLE AT MORTGAGEE'S ELECTION; STIPULATION MERELY AN OPTION TO BUYSANCTIONED BY LAW. The stipulation in a deed of mortgage which renders the mortgagor'sright to redeem defeasible at the election of the mortgagee is not illegal or immoral, being merelyan option to buy sanctioned by Article 1479 of the Civil Code, when supported by aconsideration distinct from the purchase price.D E C I S I O NMAKALINTAL, Jp:The judgment appealed from, rendered on March 10, 1959 by the Court of First Instance of Rizalafter a joint trial of both cases mentioned in the caption, orders "the spouses Basilio Bautista andSofia de Rosas to execute a deed of sale covering the property in question in favor of RupertoSoriano and Olimpia de Jesus upon payment by the latter of P1,650.00 which is the balance ofthe price agreed upon, that is P3,900.00, and the amount previously received by way of loan bythe said spouses from the said Ruperto Soriano and Olimpia de Jesus, to pay the sum of

P500.00 by way of attorney's fees, and to pay the costs." Appellants Basilio Bautista and Sofia de Rosas have adopted in their appeal brief the followingfactual findings of the trial court:

"Spouses Basilio Bautista and Sofia de Rosas are the absolute andregistered owners of a parcel of land, situated in the municipality ofTeresa, province of Rizal, covered by Original Certificate of Title No.3905, of the Register of Deeds of Rizal and particularly described asfollows:"A parcel of land (Lot No. 4980 of the Cadastral Survey of Teresa;situated in the municipality of Teresa; bounded on the NE. by Lot No.5004; on the SE. by Lots Nos. 5003 and 4958; on the SW. by Lot 4949;and on the W. and NW. by a creek . . . Containing the area ofThirtyThousand Two Hundred Twenty-Two(30,222) square meters, more orless. Date of Survey, December 1913-June, 1914. (Full technicaldescription appears on Original Certificate of Title No. 3905).

"That, on May 30, 1956, the said spouses for and in consideration on thesum of P1,800, signed a document entitled "Kasulatan Ng Sanglaan" infavor of Ruperto Soriano and Olimpia de Jesus, under the following termsand conditions:

"1.Na ang Sanglaang ito ay magpapatuloy lamanghanggang dalawang (2) taon pasimula sa araw na lagdaan angkasunduang ito, at magpapalampas ng dalawang panahon anio ani agricola.

"2.Na, ang aanihin ng bukid na isinangla aymapupunta sa pinagsanglaan bilang pakinabang ng nabanggitna halagang inutang.

"3.Na, ang buwis sa pamahalaan ng lupang ito ayang magbabayad ay ang nagsangla o may-ari.

"4.Na, ang lupang nasanglang ito ay hindi namaaaring isangla pang muli sa ibang tao ng walang pahintulot

ang Unang Pinagsanglaan.
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Petitioner also averred that she agreed to meet respondent spouses and the Ramoses on 5August 1978 at the Office of the Registry of Deeds of Makati, Metro Manila, to consummate thetransaction but due to the failure of respondent Asuncion Santos-de Vera and the Ramoses toappear, no transaction was formalized. In a second meeting scheduled on 11 August 1978 sheclaimed that she was willing and ready to pay the balance of the purchase price but thetransaction again did not materialize as respondent spouses failed to pay the back taxes ofsubject property. Subsequently, on 23 August 1978 petitioner allegedly gave respondentLorenzo de Vera three (3) checks in the total amount of P36,170.00 for the settlement of theback taxes of the property and for the payment of the quitclaims of the three (3) tenants ofsubject land. The amount was purportedly considered part of the purchase price and respondentLorenzo de Vera signed the receipts therefor.

Petitioner alleged that on 5 September 1978 she was surprised to learn from the agent ofrespondent spouses that the property was the subject of a negotiation for the sale to respondentSunvar Realty Development Corporation (SUNVAR) represented by respondent Tomas Cuenca,Jr. On 15 September 1978 petitioner discovered that although respondent spouses purchasedthe property from the Ramoses on 20 March 1970 it was only on 15 September 1978 that TCTNo. S-72946 covering the property was issued to respondent spouses. As a consequence, shefiled on the same day anAffidavit of Adverse Claim with the Office of the Registry of Deeds ofMakati, Metro Manila, which was annotated on TCT No. S-72946. She also claimed that on thesame day she informed respondent Cuenca of her "contract" to purchase the property. ESDcIAThe Deed of Sale between respondent spouses and respondent SUNVAR was executed on 15September 1978 and TCT No. S-72377 was issued in favor of the latter on 26 September 1978with theAdverse Claim of petitioner annotated thereon. Petitioner claimed that when respondentspouses sold the property in dispute to SUNVAR, her valid and legal right to purchase it wasignored if not violated. Moreover, she maintained that SUNVAR was in bad faith as it knew ofher "contract" to purchase the subject property from respondent spouses.

Finally, for the alleged unlawful and unjust acts of respondent spouses, which caused herdamage, prejudice and injury, petitioner claimed that the Deed of Sale, should be annulled andTCT No. S-72377 in the name of respondent SUNVAR canceled and TCT No. S-72946 restored.She also insisted that a Deed of Sale between her and respondent spouses be now executedupon her payment of the balance of the purchase price agreed upon, plus damages andattorney's fees.In theirAnswer4 respondent spouses maintained that petitioner had no sufficient cause ofaction against them; that she was not the real party in interest; that the option to buy the propertyhad long expired; that there was no perfected contract to sell between them; and, that petitionerhad no legal capacity to sue. Additionally, respondent spouses claimed actual, moral andexemplary damages, and attorney's fees against petitioner.On the other hand, respondents SUNVAR and Cuenca, in theirAnswer,5 alleged that petitionerwas not the proper party in interest and/or had no cause of action against them. But, evenassuming that petitioner was the proper party in interest, they claimed that she could only beentitled to the return of any amount received by respondent spouses. In the alternative, they

argued that petitioner had lost her option to buy the property for failure to comply with the termsand conditions of the agreement as embodied in the receipt issued therefor. Moreover, theycontended that at the time of the execution of the Deed of Sale and the payment ofconsideration to respondent spouses, they "did not know nor was informed" of petitioner'sinterest or claim over the subject property. They claimed furthermore that it was only after thesigning of the Deed of Sale and the payment of the corresponding amounts to respondentspouses that they came to know of the claim of petitioner as it was only then that they werefurnished copy of the title to the property where theAdverse Claim of petitioner was annotated.Consequently, they also instituted a Cross-Claim against respondent spouses for bad faith inencouraging the negotiations between them without telling them of the claim of petitioner. Thesame respondents maintained that had they known of the claim of petitioner, they would nothave initiated negotiations with respondent spouses for the purchase of the property. Thus, theyprayed for reimbursement of all amounts and monies received from them by respondentspouses, attorney's fees and expenses for litigation in the event that the trial court should annulthe Deed of Sale and deprive them of their ownership and possession of the subject land.

In theirAnswer to the Cross-Claim6 of respondents SUNVAR and Cuenca, respondent spousesinsisted that they negotiated with the former only after the expiration of the option period given to

petitioner and her failure to comply with her commitments thereunder. Respondent spousescontended that they acted legally and validly, in all honesty and good faith. According to them,respondent SUNVAR made a verification of the title with the Office of the Register of Deeds ofMetro Manila District IV before the execution of the Deed of Absolute Sale. Also, they claimedthat the Cross-Claim was barred by a written waiver executed by respondent SUNVAR in theirfavor. Thus, respondent spouses prayed for actual damages for the unjustified filing ofthe Cross-Claim, moral damages for the mental anguish and similar injuries they suffered byreason thereof, exemplary damages "to prevent others from emulating the bad example" ofrespondents SUNVAR and Cuenca, plus attorney's fees.

After a protracted trial and reconstitution of the court records due to the fire that razed the PasayCity Hall on 18 January 1992, the Regional Trial Court rendered its 30 June 1993 Decision7 infavor of petitioner. It ordered (a) the annulment and rescission of the Deed of AbsoluteSale executed on 15 September 1978 by respondent spouses in favor of respondent SUNVAR;(b) the cancellation and revocation of TCT No. S-75377 of the Registry of Deeds, Makati, MetroManila, issued in the name of respondent Sunvar Realty Development Corporation, and therestoration or reinstatement of TCT No. S-72946 of the same Registry issued in the name ofrespondent spouses; (c) respondent spouses to execute a deed of sale conveying ownership ofthe property covered by TCT No. S-72946 in favor of petitioner upon her payment of the balanceof the purchase price agreed upon; and, (d) respondent spouses to pay petitioner P50,000.00 asand for attorney's fees, and to pay the costs. HTSaECOn appeal, the Court of Appeals completely reversed the decision of the trial court. It ordered (a)the Register of Deeds of Makati City to lift theAdverse Claim and such other encumbrancespetitioner might have filed or caused to be annotated on TCT No. S-75377; and, (b) petitioner topay (1) respondent SUNVAR P50,000.00 as nominal damages, P30,000.00 as exemplarydamages and P20,000 as attorney's fees; (2) respondent spouses, P15,000.00 as nominaldamages, P10,000.00 as exemplary damages and P10,000.00 as attorney's fees; and, (3) the

costs.Petitioner timely filed a Motion for Reconsideration which was denied by the Court of Appeals on19 October 1998. Hence, this petition.

At issue for resolution by the Court is the nature of the contract entered in to between petitionerLourdes Ong Limson on one hand, and respondent spouses Lorenzo de Vera and AsuncionSantos-de Vera on the other.The main argument of petitioner is that there was a perfected contract to sell between her andrespondent spouses. On the other hand, respondent spouses and respondents SUNVAR andCuenca argue that what was perfected between petitioner and respondent spouses was a mereoption.

A scrutiny of the facts as well as the evidence of the parties overwhelmingly leads to theconclusion that the agreement between the parties was a contract of option and not a contract tosell.

An option, as used in the law of sales, is a continuing offer or contract by which the owner

stipulates with another that the latter shall have the right to buy the property at a fixed pricewithin a time certain, or under, or in compliance with, certain terms and conditions, or whichgives to the owner of the property the right to sell or demand a sale. It is also sometimes calledan "unaccepted offer." An option is not of itself a purchase, but merely secures the privilege tobuy.8It is not a sale of property but a sale of the right to purchase. 9 It is simply a contract bywhich the owner of property agrees with another person that he shall have the right to buy hisproperty at a fixed price within a certain time. He does not sell his land; he does not then agreeto sell it; but he does sell something, i.e., the right or privilege to buy at the election or option ofthe other party.10 Its distinguishing characteristic is that it imposes no binding obligation on theperson holding the option, aside from the consideration for the offer. Until acceptance it is not,properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or anyinterest or right in the subject matter, but is merely a contract by which the owner of the propertygives the optionee the right or privilege of accepting the offer and buying the property on certainterms.11On the other hand, a contract, like a contract to sell, involves the meeting of minds between two

persons whereby one binds himself, with respect to the other, to give something or to rendersome service.12Contracts, in general, are perfected by mere consent,13which is manifested
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by the meeting of the offer and the acceptance upon the thing and the cause which are toconstitute the contract. The offer must be certain and the acceptance absolute.14The Receipt15 that contains the contract between petitioner and respondent spouses provides

Received from Lourdes Limson the sum of Twenty Thousand Pesos(P20,000.00) under Check No. 22391 dated July 31, 1978 as earnestmoney with option to purchase a parcel of land owned by Lorenzo deVera located at Barrio San Dionisio, Municipality of Paraaque, Provinceof Rizal with an area of forty eight thousand two hundred sixty squaremeters more or less at the price of Thirty Four Pesos (P34.00) 16 cashsubject to the condition and stipulation that have been agreed upon by

the buyer and me which will form part of the receipt. Should thetransaction of the property not materialize not on the fault of the buyer, Iobligate myself to return the full amount of P20,000.00 earnest moneywith option to buy or forfeit on the fault of the buyer. I guarantee to notifythe buyer Lourdes Limson or her representative and get her conformityshould I sell or encumber this property to a third person. This option tobuy is good within ten (10) days until the absolute deed of sale is finallysigned by the parties or the failure of the buyer to comply with the termsof the option to buy as herein attached.

In the interpretation of contracts, the ascertainment of the intention of the contracting parties is tobe discharged by looking to the words they used to project that intention in their contract, all thewords, not just a particular word or two, and words in context, not words standing alone. 17 Theabove Receiptreadily shows that respondent spouses and petitioner only entered into a contractof option; a contract by which respondent spouses agreed with petitioner that the latter shallhave the right to buy the former's property at a fixed price of P34.00 per square meter within ten

(10) days from 31 July 1978. Respondent spouses did not sell their property; they did not alsoagree to sell it; but they sold something, i.e., the privilege to buy at the election or option ofpetitioner. The agreement imposed no binding obligation on petitioner, aside from theconsideration for the offer.The consideration of P20,000.00 paid by petitioner to respondent spouses was referred to as"earnest money." However, a careful examination of the words used indicates that the moneyis not earnest moneybut option money. "Earnest money" and "option money" are not the samebut distinguished thus: (a) earnest money is part of the purchase price, while option money is themoney given as a distinct consideration for an option contract; (b) earnest money is given onlywhere there is already a sale, while option money applies to a sale not yet perfected; and, (c)when earnest money is given, the buyer is bound to pay the balance, while when the would-bebuyer gives option money, he is not required to buy, 18 but may even forfeit it depending on theterms of the option.There is nothing in the Receiptwhich indicates that the P20,000.00 was part of the purchaseprice. Moreover, it was not shown that there was a perfected sale between the parties where

earnest money was given. Finally, when petitioner gave the "earnest money," the Receiptdid notreveal that she was bound to pay the balance of the purchase price. In fact, she could evenforfeit the money given if the terms of the option were not met. Thus, the P20,000.00 could onlybe money given as consideration for the option contract. That the contract between the parties isone of option is buttressed by the provision therein that should the transaction of the property notmaterialize without fault of petitioner as buyer, respondent Lorenzo de Vera obligates himself toreturn the full amount of P20,000.00 "earnest money" with option to buy or forfeitthe same onthe fault of petitioner. It is further bolstered by the provision therein that guarantees petitionerthat she or her representative would be notified in case the subject property was sold orencumbered to a third person. Finally, the Receiptprovided for a period within which the optionto buy was to be exercised, i.e., "within ten (10) days" from 31 July 1978. aSIETHDoubtless, the agreement between respondent spouses and petitioner was an "option contract"or what is sometimes called an "unaccepted offer." During the option period the agreement wasnot converted into a bilateral promise to sell and to buy where both respondent spouses andpetitioner were then reciprocally bound to comply with their respective undertakings as petitioner

did not timely, affirmatively and clearly accept the offer of respondent spouses.

The rule is that except where a formal acceptance is not required, although the acceptance mustbe affirmatively and clearly made and evidenced by some acts or conduct communicated to theofferor, it may be made either in a formal or an informal manner, and may be shown by acts,conduct or words by the accepting party that clearly manifest a present intention ordetermination to accept the offer to buy or sell. But there is nothing in the acts, conduct or wordsof petitioner that clearly manifest a present intention or determination to accept the offer to buythe property of respondent spouses within the 10-day option period. The only occasion within theoption period when petitioner could have demonstrated her acceptance was on 5 August 1978when, according to her, she agreed to meetrespondent spouses and the Ramoses at the Officeof the Register of Deeds of Makati. Petitioner's agreement to meet with respondent spousespresupposes an invitation from the latter, which only emphasizes their persistence in offering the

property to the former. But whether that showed acceptance by petitioner of the offer is hazy anddubious.On or before 10 August 1978, the last day of the option period, no affirmative or clearmanifestation was made by petitioner to accept the offer. Certainly, there was no concurrence ofprivate respondent spouses' offer and petitioner's acceptance thereof within the option period.Consequently, there was no perfected contract to sell between the parties.On 11 August 1978 the option period expired and the exclusive right of petitioner to buy theproperty of respondent spouses ceased. The subsequent meetings and negotiations, specificallyon 11 and 23 August 1978, between the parties only showed the desire of respondent spousesto sell their property to petitioner. Also, on 14 September 1978 when respondent spouses sent atelegram to petitioner demanding full payment of the purchase price on even date simplydemonstrated an inclination to give her preference to buy subject property. Collectively, theseinstances did not indicate that petitioner still had the exclusive right to purchase subject property.Verily, the commencement of negotiations between respondent spouses and respondentSUNVAR clearly manifested that their offer to sell subject property to petitioner was no longer

exclusive to her.We cannot subscribe to the argument of petitioner that respondent spouses extended the optionperiod when they extended the authority of their agent until 31 August 1978. The extension ofthe contract of agency could not operate to extend the option period between the parties in theinstant case. The extension must not be implied but categorical and must show the clearintention of the parties.

As to whether respondent spouses were at fault for the non -consummation of their contract withpetitioner, we agree with the appellate court that they were not to be blamed. First, within theoption period, or on 4 August 1978, it was respondent spouses and not petitioner who initiatedthe meeting at the Office of the Register of Deeds of Makati. Second, that the Ramoses failed toappear on 4 August 1978 was beyond the control of respondent spouses. Third, the succeedingmeetings that transpired to consummate the contract were all beyond the option period and, asdeclared by the Court of Appeals, the question of who was at fault was alreadyimmaterial. Fourth, even assuming that the meetings were within the option period, the presenceof petitioner was not enough as she was not even prepared to pay the purchase price in cash as

agreed upon. Finally, even without the presence of the Ramoses, petitioner could have easilymade the necessary payment in cash as the price of the property was already set at P34.00 persquare meter and payment of the mortgage could very well be left to respondent spouses.

Petitioner further claims that when respondent spouses sent her a telegram demanding fullpayment of the purchase price on 14 September 1978 it was an acknowledgment of theircontract to sell, thus denying them the right to claim otherwise.We do not agree. As explained above, there was no contract to sell between petitioner andrespondent spouses to speak of. Verily, the telegram could not operate to estop them fromclaiming that there was such contract between them and petitioner. Neither could it mean thatrespondent spouses extended the option period. The telegram only showed that respondentspouses were willing to give petitioner a chance to buy subject property even if it was no longerexclusive.The option period having expired and acceptance was not effectively made by petitioner, thepurchase of subject property by respondent SUNVAR was perfectly valid and entered into in

good faith. Petitioner claims that in August 1978 Hermigildo Sanchez, the son of respondentspouses' agent, Marcosa Sanchez, informed Marixi Prieto, a member of the Board of Directors
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of respondent SUNVAR, that the property was already sold to petitioner. Also, petitionermaintains that on 5 September 1978 respondent Cuenca met with her and offered to buy theproperty from her at P45.00 per square meter. Petitioner contends that these incidents, includingthe annotation of herAdverse Claim on the title of subject property on 15 September 1978 showthat respondent SUNVAR was aware of the perfected sale between her and respondentspouses, thus making respondent SUNVAR a buyer in bad faith.Petitioner is not correct. The dates mentioned, at least 5 and 15 September 1978, are immaterialas they were beyond the option period given to petitioner. On the other hand, the referralto sometime in August 1978in the testimony of Hermigildo Sanchez as emphasized by petitionerin her petition is very vague. It could be within or beyond the option period. Clearly then, evenassuming that the meeting with Marixi Prieto actually transpired, it could not necessarily mean

that she knew of the agreement between petitioner and respondent spouses for the purchase ofsubject property as the meeting could have occurred beyond the option period. In which case,no bad faith could be attributed to respondent SUNVAR. If, on the other hand, the meeting waswithin the option period, petitioner was remiss in her duty to prove so. Necessarily, we are leftwith the conclusion that respondent SUNVAR bought subject property from respondent spousesin good faith, for value and without knowledge of any flaw or defect in its title.The appellate court awarded nominal and exemplary damages plus attorney's fees torespondent spouses and respondent SUNVAR. But nominal damages are adjudica ted tovindicate or recognize the right of the plaintiff that has been violated or invaded by thedefendant.19In the instant case, the Court recognizes the rights of all the parties and finds noviolation or invasion of the rights of respondents by petitioner. Petitioner, in filing her complaint,only seeks relief, in good faith, for what she believes she was entitled to and should not be madeto suffer therefor. Neither should exemplary damages be awarded to respondents as they areimposed only by way of example or correction for the public good and only in addition to themoral, temperate, liquidated or compensatory damages.20No such kinds of damages were

awarded by the Court of Appeals, only nominal, which was not justified in this case. Finally,attorney's fees could not also be recovered as the Court does not deem it just and equitableunder the circumstances. DHcESIWHEREFORE, the petition is DENIED. The Decision of the Court of Appeals ordering theRegister of Deeds of Makati City to lift the adverse claim and such other encumbrancespetitioner Lourdes Ong Limson may have filed or caused to be annotated on TCT No. S-75377is AFFIRMED, with the MODIFICATION that the award of nominal and exemplary damages aswell as attorney's fees is DELETED. IHcTDASO ORDERED.

NICOLAS SANCHEZ, plaintiff-appellee, vs . SEVERINA RIGOS,defendant-appellant.

Santiago F. Bautista for plaintiff-appellee.Jesus G. Villamarfor defendant-appellee.SYLLABUS1.CIVIL LAW; CONTRACTS; CONTRACT TO BUY AND SELL; OPTION WITHOUT

CONSIDERATION; CASE AT BAR. Where both parties indicated in the instrument in thecaption, as an "Option to Purchase," and 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 aforementioned agreement, promise andundertaking is supported by a consideration "distinct from the price" stipulated for the sale of theland, it is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy.2.ID.; ID.; ID.; ID.; ARTICLES 1354 AND 1479, NEW CIVIL CODE; APPLICABILITY. It shouldbe noted that: Article 1354 applies to contracts in general, whereas the second paragraph of

Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted unilateralpromise to buy or to sell."3.ID.; ID.; REQUISITE OF A UNILATERAL PROMISE IN ORDER TO BIND PROMISOR;BURDEN OF PROOF REST UPON PROMISEE. In order that a unilateral promise may be"binding" upon the promisor, Article 1479 requires the concurrence of a condition namely, thatthe promise be "supported by a consideration distinct from the price." Accordingly, the promiseecan not compel the promisor to comply with the promise, unless the former establishes the

existence of said distinct consideration. In other words, the promisee has the burden of provingsuch consideration.

4.ID.; ID.; WHERE A UNILATERAL PROMISE TO SELL GENERATED TO A BILATERALCONTRACT OF PURCHASE AND SALE; ARTICLES 1324 AND 1479, NCC., NODISTINCTION. This Court itself, in the case of Atkins, Kroll & Co., Inc. vs. Cua Hian Tek (102Phil., 948), decided later than Southwestern Sugar & Molasses Co. vs. Atlantic & Pacific Co., 97Phil., 249, saw no distinction between Articles 1324 and 1479 of the Civil Code and applied theformer where a unilateral promise to sell similar to the one sued upon was involved, treatingsuch promise as an option which, although not binding as a contract in itself for lack of aseparate consideration, nevertheless generated a bilateral contract of purchase and sale uponacceptance. In other words, since there may be no valid contract without a cause orconsideration promisor is not bound by his promise and may, accordingly withdraw it. Pendingnotice 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. 5.REMEDIAL LAW; PLEADINGS AND PRACTICE; JUDGMENT ON THE PLEADINGS;IMPLIED ADMISSION. Defendant explicitly averred in her answer, and pleaded as a specialdefense, the absence of said consideration for her promise to sell and, by joining in the petitionfor a judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment indefendant's answer.6.STATUTORY CONSTRUCTION; INTERPRETATION OF PROVISIONS OF SAME LAW;CARDINAL RULE. The view that an option to sell can still be withdrawn, even if accepted, ifthe same is not supported by any consideration, has the advantage of avoiding a conflictbetween Article 1324 on the general principles on contracts and 1479 on sales of theCivil Code, in line with the cardinal rule of statutory construction that, in construing differentprovisions of one and the same law or code, such interpretation should be favored as willreconcile or harmonize said provisions and avoid a conflict between the same. Indeed, thepresumption is that, in the process of drafting the Code, its author has maintained a consistentphilosophy or position. Moreover, the decision in Southwestern Sugar & Molasses Co. vs.

Atlantic Gulf & Pacific Co., supra, holding that Article 1324 is modified by Article 1479 of the CivilCode, in effect, considers the latter as an exception to the former, and exceptions are notfavored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2)articles are concerned. What is more, the reference, in both the second paragraph of Article1479 and Article 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 sameprinciple.

ANTONIO, J., concurring opinion:1.CIVIL LAW; CONTRACTS; OPTION TO SELL; EFFECT OF ACCEPTANCE. I fully agreewith the abandonment of the view previously adhered to in Southwestern Sugar & MolassesCo. vs. Atlantic Gulf and Pacific Co. (97 Phil., 249), which holds that an option to sell can still bewithdrawn, even if accepted if the same is not supported by any consideration, and thereaffirmance of the doctrine in Atkins, Kroll & Co. Inc. vs. Cua Hian Tech (102 Phil., 948),holding that "an option implies . . . the legal obligation to keep the offer (to sell) open for the timespecified"; that it could be withdrawn before acceptance, if there was no consideration for the

option, but once the "offer to sell" is accepted, a bilateral promise to sell and to buy ensues, andthe offeree ipso facto assumes the obligations of a purchaser.2.ID.; ID.; ID.; OPTION WITHOUT CONSIDERATION IS A MERE OFFER TO SELL, NOTBINDING UNTIL ACCEPTED. If the option to sell is given without a consideration, it is a mereoffer to sell, which is not binding until accepted. If, however, acceptance is made before awithdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offerand the acceptance could in such event generate a contract.3.ID.; ID.; ID.; WITHDRAWAL OF OFFER BEFORE ACCEPTANCE, OFFER IMPLIES ANOBLIGATION ON THE PART OF OFFEROR. While the law permits the offeror to withdrawthe offer at any time before acceptance even before the period has expired, some writers holdthe view, that the offeror can not exercise this right in an arbitrary or capricious manner. This isupon the principle that an offer implies an obligation on the part of the offeror to maintain it forsuch length of time as to permit the offeree to decide whether to accept or not, and thereforecannot 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.

4.ID.; ID.; ID.; A BILATERAL RECIPROCAL CONTRACT; CASE AT BAR. Where, as in thepresent case, the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of
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P1,510.00 before any withdrawal from the contract has been made by the Defendant (SeverinaRigos)," and 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.D E C I S I O NCONCEPCION, Jp:

Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of Ap peals,which certified the case to Us, upon the ground that it involves a question purely of law.The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigosexecuted an instrument, entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promisedand committed . . . to sell" to Sanchez, for the sum of P1,510.00, a parcel of land situated in thebarrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more

particularly described in Transfer Certificate of Title No. NT-12528 of said province, within two(2) years from said date with the understanding that said option shall be deemed "terminatedand elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulatedperiod. Inasmuch as several tenders of payment of the sum of P1,510.00, made by Sanchezwithin said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited saidamount with the Court of First Instance of Nueva Ecija and commenced against the latter thepresent action, for specific performance and damages.

After the filing of defendant's answer admitting some allegations of the complaint, denyingother allegations thereof, and alleging, as special defense, that the contract between the parties"is a unilateral promise to sell, and the same being unsupported by any valuable consideration,by force of the New Civil Code, is null and void" on February 11, 1964, both parties, assistedby their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, onFebruary 28, 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos toaccept the sum judicially consigned by him and to execute, in his favor, the requisite deed ofconveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and the

costs. Hence, this appeal by Mrs. Rigos. This case admittedly hinges on the proper application of Article 1479 of our Civil Code, whichprovides:

"ART. 1479.A promise to buy and sell a determinate thing for a pricecertain is reciprocally demandable."An accepted unilateral promise to buy or to sell a determinate thing for aprice certain is binding upon the promissor if the promise is supported bya consideration distinct from the price."

In his complaint plaintiff alleges that, by virtue of the option under consideration, "defendantagreed and committed to sell" and "the plaintiff agreed and committed to buy" the land describedin the option, copy of which was annexed to said pleading as Annex A thereof and is quoted onthe margin.1Hence, plaintiff maintains that the promise contained in the contract is "reciprocallydemandable," pursuant to the first paragraph of said Article 1479. Although defendant had really"agreed, promised and committed" herself to sell the land to the plaintiff, it is not true that thelatter had, in turn, "agreed and committed himself" to buy said property Said Annex A does not

bear out plaintiff's allegation to this effect. What is more, since Annex A has bean made "anintegral part" of his complaint, the provisions of said instrument form part "and parcel" 2of saidpleading.

The option did not impose upon plaintiff the obligation to purchase defendant's property. AnnexA is nota "contract to buy and sell." It merely granted plaintiff an "option" to buy. And bothparties so understood it, as indicated by the caption, "Option to Purchase," given by them to saidinstrument. 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 thecontract to indicate that her aforementioned agreement, promise and undertaking is supportedby a consideration "distinct from the price" stipulated for the sale of the land.Relying upon Article 1354 of our Civil Code, the lower court presumedthe existence of saidconsideration, and this would seem to be the main factor that influenced its decision in plaintiff'sfavor. It should be noted, however, that:(1)Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479

refers to "sales" in particular, and, more specifically, to "an accepted unilateral promise to buy orto sell." In other words, Article 1479 is controlling in the case at bar.

(2)In order that said unilateral promise may be "binding" upon the promisor, Article 1479 requiresthe concurrence of a condition, namely, that the promise be "supported by a considerationdistinct from the price." Accordingly, the promisee can notcompel the promisor to comply withthe promise, unless the former establishes the existence of said distinct consideration. In otherwords, thepromisee has the burden of provingsuch consideration. Plaintiff herein hasnot evenallegedthe existence thereof in his complaint.(3)Upon the other hand, defendant explicitly averred in her answer, and pleaded as a specialdefense, the absence of said consideration for her promise to sell and, by joining in the petitionfor a judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment indefendant's answer. Indeed, as early as March 14, 1908, it had been held, in Bauermann v.Casas,3that:

"One who prays for judgment on the pleadings without offering proof as tothe truth of hie own allegations, and without giving the opposing party anopportunity to introduce evidence, must be understood to admit the truthof all the material and relevant allegations of the opposing party, and torest his motion for judgment on those allegations taken together withsuch of his own as are admitted in the pleading. (La Yebana Companyvs. Sevilla, 9 Phil. 210)." (Emphasis supplied.).

This view was reiterated in Evangelista V. De la Rosa 4and Mercy's Incorporated v. HerminiaVerde.5Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 6fromwhich We quote:

"The main contention of appellant is that the option granted to appellee tosell to it barge No. 10 for the sum of P30,000 under the terms statedabove has no legal effect because it is not supported by anyconsideration and in support thereof it invokes article 1479 of the new

Civil Code, The 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 thepromisor if the promise is supported by a consideration distinctfrom the price.'

"On the other hand, appellee contends that, even granting that the 'offerof option' is not supported by any consideration, that option becamebinding on appellant when the appellee gave notice to it of itsacceptance, and that having accepted it within the period of option, theoffer can no longer be withdrawn and in any event such withdrawal isineffective. In support of this contention, appellee invokes article 1324 ofthe Civil Code which provides:

'ART. 1324.When the offerer has allowed the offeree

a certain period to accept, the offer may be withdrawn at anytime before acceptance by communicating such withdrawal,except when the option is founded upon consideration, assomething paid or promised.'

"There is no question that under article 1479 of the new Civil Code 'anoption to sell,' or 'a promise to buy or to sell,' as used in said article, to bevalid must be 'supported by a consideration distinct from the price.' This isclearly inferred from the context of said article that a unilateral promise tobuy or to sell, even if accepted, is only binding if supported by aconsideration. In other words, 'an accepted unilateral promise' can onlyhave a binding effect if supported by a consideration, which means thatthe option can still be withdrawn, even if accepted, if the same is notsupported by any consideration. Here it is not disputed that the option iswithout consideration. It can therefore be withdrawn notwithstanding theacceptance made of it by appellee.

"It is true that under article 1324 of the new Civil Code, the general ruleregarding offer and acceptance is that, when the offerer gives to the
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offeree a certain period to accept, 'the offer may be withdrawn at any timebefore acceptance' except when the option is founded uponconsideration, but this general rule must be interpreted asmodifiedby theprovision of article 1479 above referred to, which applies to 'a promise tobuy and sell'specifically. As already stated, this rule requires that apromise to sell to be valid must be supported by a consideration distinctfrom the price."We are net oblivious of the existence of American authorities which holdthat an offer, once accepted, cannot be withdrawn, regardless of whetherit is supported or not by a consideration (12 Am. Jur. 528). Theseauthorities, we note, uphold the general rule applicable to offer and

acceptance as contained in our new Civil Code. But we are preventedfrom applying them in view of the specific provision embodied in article1479. While under the 'offer of option' in question appellant has assumeda clear obligation to sell its barge to appellee and the option has beenexercised in accordance with its terms, and there appears to be no validor justifiable reason for appellant to withdraw its offer, this Court cannotadopt a different attitude because the law on the matter is clear. Ourimperative duty is to apply it unless modified by Congress."7

However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, 8decidedlater than Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 9saw nodistinction between Articles 1324 and 1479 of the Civil Code and applied the former where aunilateral promise to sell similar to the one sued upon here was involved, treating such promiseas an option which, although not binding as a contract in itself for lack of a separateconsideration, nevertheless generated a bilateral contract of purchase and sale uponacceptance. Speaking through Associate Justice, later Chief Justice, Cesar Bengzon, this Court

said:"Furthermore, an option is unilateral: a promise to sell at the price fixedwhenever the offeree should decide to exercise his option within thespecified time. After accepting the promise and before he exerciseshis option, the holder of the option is not bound to buy. He is free either tobuy or not to buy later. In this case however, upon accepting hereinpetitioner's offer a bilateral promise to sell and to buy ensued, and therespondent ipso facto assumed the obligation of a purchaser. He did not

just get the right subsequently to buy or not to buy. It was not a mereoption then; it was bilateral contract of sale."Lastly, even supposing that Exh. A granted an option which is notbinding for lack of consideration, the authorities hold that.

'If the option is given without a consideration, it is amere offer of a contract of sale, which is not binding untilaccepted. If, however, acceptance is made before a

withdrawal, it constitutes a binding contract of sale, eventhough the option was not supported by a sufficientconsideration. . . . ' (77 Corpus Juris Secundum p. 652. Seealso 27 Ruling Case Law 339 and cases cited.')

'It can be taken for granted, as contended by the defendant, that theoption contract was not valid for lack of consideration. But it was, at least,an offer to sell, which was accepted by latter, and of the acceptance theofferer had knowledge before said offer was withdrawn. The concurrenceof both acts the offer and the acceptance could at all events havegenerated a contract, if none there was before (arts. 1254 and 1262 ofthe Civil Code).' (Zayco vs. Serra, 44 Phil. 331.)"

In other words, since there may be no valid contract without a cause or consideration, thepromisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of itswithdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, ifaccepted, results in a perfected contract of sale.

This view has the advantage of avoiding a conflict between Articles 1324 on the generalprinciples 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 aconflict between the same. Indeed, the presumption is that, in the process of drafting the Code,its author has maintained a consistent philosophy or position. Moreover, the decision inSouthwestern Sugar & Molasses Co. v. Atlantic Gulf & pacific Co., 10holding that Art. 1324is modifiedby Art. 1479 of the Civil Code, in effect, considers the latter as an exception to theformer, and exceptions are not favored, unless the intention to the contrary is clear, and it is notso, insofar as said two (2) articles are concerned. What is more, the reference, in both thesecond paragraph of Art. 1479 and Art. 1324, to an option or promise supported by or foundedupon a consideration, strongly suggests that the two (2) provisions intended to enforce orimplement the same principle.

Upon mature deliberation, the Court is of the considered opinion that it should, as it herebyreiterates the doctrine laid down in the Atkins, Kroll & Co. case, and that, insofar all inconsistenttherewith, the view adhered to in the South western Sugar & Molasses Co. case should bedeemed abandoned or modified.WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendant-appellant Severina Rigos. It is so ordered.Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Teehankee, Barredo and Makasiar, JJ., concur.Castro, J., did not take part.Separate OpinionsANTONIO, J., concurring:I concur in the opinion of the Chief Justice.I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar &Molasses Co. vs. Atlantic Gulf and Pacific Co. 1which holds that an option to sell can still bewithdrawn, even if accepted, if the same is not supported by any consideration, and the

reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, 2holding that "an optionimplies . . . the legal obligation to keep the offer (to sell) open for the time specified;" thatitcouldbe withdrawn before acceptance, if there was no consideration for the option, but oncethe "offer to sell" is accepted, a bilateral promise to sell and to buy ensues, and the offeree ipsofacto assumes the obligations of a purchaser In other words, if the option is given without aconsideration, it is a mere offer to sell, which is not binding until accepted. If, however,acceptance is made before a withdrawal, it constitutes a binding contract of sale. Theconcurrence of both acts the offer and the acceptance could in such event generate acontract.While the law permits the offeror to withdraw the offer at any time before acceptance evenbefore the period has expired, some writers hold the view, that the offeror can not exercise thisright in an arbitrary or capricious manner. This is upon the principle that an offer implies anobligation on the part of the offeror to maintain it for such length of time as to permit the offereeto decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without beingliable for damages which the offeree may suffer. A contrary view would remove the stability and

security of business transactions.3In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sumof P1,510.00 before any withdrawalfrom the contract has been made by the Defendant(Severina Rigos)." Since Rigos' offer to sell was accepted by Sanchez, before she couldwithdraw her offer, a bilateral reciprocal contract to sell and to buy was generated.

SPOUSES CIPRIANO VASQUEZ and VALERIANAGAYANELO, petitioners,vs . HONORABLE COURT OF APPEALS andSPOUSES MARTIN VALLEJERA and APOLONIA OLEA, respondents.

Dionisio C. Isidto for petitioners.Raymundo Lozada, Jr. for private respondents.SYLLABUS1.CIVIL LAW; SPECIAL CONTRACTS; SALE; RIGHT TO REPURCHASE, MUST BE

ACCEPTED BY THE BUYER; NOT PRESENT IN CASE AT BAR. The record does not showthat the private respondents accepted the "Right to Repurchase" the land in question. Wedisagree with the appellate court's finding that the private respondents accepted the "right to

repurchase" under the following circumstances: ". . . as evidenced by the annotation andregistration of the same on the back of the transfer of certificate of title in the name of appellants.
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As vividly appearing therein, it was signed by appellant himself and witnessed by his wife so thatfor all intents and purposes the Vasquez spouses are estopped from disregarding its obviouspurpose and intention."2.ID.; ID.; ID.; ID.; NOT VALIDATED BY ANNOTATION AND REGISTRATION OF THE RIGHT

AT THE BACK OF THE CERTIFICATE OF TITLE. The annotation and registration of the rightto repurchase at the back of the certificate of title of the petitioners can not be considered asacceptance of the right to repurchase. Annotation at the back of the certificate of title ofregistered land is for the purpose ofbindingpurchasers of such registered land. Thus, we ruledin the case ofBel Air Village Association, Inc. vs. Dionisio (174 SCRA 589 [1989]),citing Tanchoco vs. Aquino (154 SCRA 1 [1987]), and Constantino vs. Espiritu (45 SCRA 557[1972]) that purchasers of a registered land are bound by the annotation found at the back of the

certificate of title covering the subject parcel of land. In effect, the annotation of the right torepurchase found at the back of the certificate of title over the subject parcel of land of theprivate respondents only served as notice of the existence of such unilateral promise of thepetitioners to resell the same to the private respondents. This, however, can not be equated withacceptance of such right to repurchase by the private respondent. Neither can the signature ofthe petitioners in the document called "right to repurchase" signify acceptance of the right torepurchase. The respondents did not sign the offer. Acceptance should be made by thepromisee, in this case, the private respondents and not the promisors, the petitioners herein. Itwould be absurd to require the promisor of an option to buy to accept his own offer instead of thepromisee to whom the option to buy is given.D E C I S I O NGUTIERREZ, JR., Jp:This petition seeks to reverse the decision of the Court of Appeals which affirmed the earlierdecision of the Regional Trial Court, 6th Judicial Region, Branch 56, Himamaylan, NegrosOccidental in Civil Case No. 839 (for specific performance and damages) ordering the

petitioners (defendants in the civil case) to resell Lot No. 1860 of the Cadastral Survey ofHimamaylan, Negros Occidental to the respondents (plaintiffs in the civil case) upon payment bythe latter of the amount of P24,000.00 as well as the appellate court's resolution denying amotion for reconsideration. In addition, the appellate court ordered the petitioners to pay theamount of P5,000.00 as necessary and useful expenses in accordance with Article 1616 of theCivil Code.The facts of the case are not in dispute. They are summarized by the appellate court as follows:

"On January 15, 1975, the plaintiffs-spouses (respondents herein) filedthis action against the defendants-spouses (petitioners herein) seeking toredeem Lot No. 1860 of the Himamaylan Cadastre which was previouslysold by plaintiffs to defendants on September 21, 1964."The said lot was registered in the name of plaintiffs. On October 1959,the same was leased by plaintiffs to the defendants up to crop year 1966-67, which was extended to crop year 1968-69. After the execution of thelease, defendants took possession of the lot, up to now and devoted the

same to the cultivation of sugar.On September 21, 1964, the plaintiffs sold the lot to the defendants undera Deed of Sale for the amount of P9,000.00. The Deed of Sale was dulyratified and notarized. On the same day and along with the execution ofthe Deed of Sale, a separate instrument, denominated as Right toRepurchase (Exh. E), was executed by the parties granting plaintiffs theright to repurchase the lot for P12,000.00, said Exh. E likewise dulyratified and notarized. By virtue of the sale, defendants secured TCT No.T-58898 in their name. On January 2, 1969, plaintiffs sold the same lot toBenito Derrama, Jr., after securing the defendants' title, for the sum ofP12,000.00. Upon the protestations of defendant, assisted by counsel,the said second sale was cancelled after the payment of P12,000.00 bythe defendants to Derrama.Defendants resisted this action for redemption on the premise that Exh. Eis just an option to buy since it is not embodied in the same document of

sale but in a separate document, and since such option is not supported

by a consideration distinct from the price, said deed for right torepurchase is not binding upon them.

After trial, the court below rendered judgment against

jose ramon carceller

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