Sanchez v. RigosNo. L-25494, June 14, 1972C.J. Concepcion Nicolas Sanchez, plaintiff-appelleevs.Severina Rigos, defendant-appelland.

Facts: Nicolas Sanchez and Severina Rigos executed an instrument entitled Option toPurchase wherein Mrs. Rigos agreed, promised and committed to sell to Mr. Sancheza parcel of land for the amount of P1,510 within two years from the date of theinstrument, with the understanding that the said option shall be deemed terminatedand elapsed if Mr. Sanchez shall fail to exercise his right to buy the property withinthe stipulated period.Mrs. Rigos agreed and committed to sell and Mr. Sanchez agreed and committed tobuy. But there is nothing in the contract to indicate that her agreement, promise andundertaking is supported by a consideration distinct from the price stipulated for thesale of the land.Mr. Sanchez has made several tenders of payment in the said amount within theperiod before any withdrawal from the contract has been made by Mrs. Rigos, butwere rejected nevertheless. Issue: Can an accepted unilateral promise to sell without consideration distinct from theprice be withdrawn arbitrarily? Held: No. An accepted promise to sell is an offer to sell when accepted becomes a contractof sale. Rationale: Since there may be no valid contract without a cause or consideration, the promisor isnot 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 sellwhich, if accepted, results in a perfected contract of sale.This view has the advantage of avoiding a conflict between Articles 1324 on thegeneral principles on contracts and 1479 on sales of the Civil Code.Article 1324. When the offeror has allowed the offeree a certain period toaccept, the offer may be withdrawn at any time before acceptance bycommunicating such withdrawal, except when the option is founded uponconsideration, as something paid or promised. Article 1479. A promise to buy and sell a determinate thing for a price certainis reciprocally demandable.An accepted unilateral promise to buy or to sell a determinate thing for a pricecertain is binding upon the promissory if the promise is supported by aconsideration distinct from the price.The Court is of the considered opinion that it should, as it hereby reiterates thedoctrine laid down in the Atkins, Kroll and Co. case, and that, insofar as inconsistenttherewith, the view adhered to in the Southwestern Sugar & Molasses Co. case shouldbe deemed abandoned or modified. J. Antonio concurring I fully agree with the abandonment of the view previously adhered to in SouthwesternSugar & Molasses Co. vs. Atlantic Gulf and Pacific Co. (97 Phil 249) which hold thatan option to sell can still be withdrawn, even if accepted, if the same is not supportedby any consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co., Inc.v. Cua Hian Tek (102 Phil 948), holding that an option implies xxx the legalobligation to keep the offer (to sell) open for the time specified; that it could bewithdrawn 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 theoffereeipso factoassumes the obligations of a purchaser. In other words, if the optionis given without a consideration, it is a mere offer to sell, which is not binding untilaccepted. If, however, acceptance is made before a withdrawal, it constitutes abinding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate a contract.While the law permits the offerror to withdraw the offer at any time before acceptanceeven before the period has expired, some writers hold the view, that the offeror cannotexercise this right in an arbitrary or capricious manner. This is upon the principle thatan offer implies an obligation on the part of the offeror to maintain it for such lengthof 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 offereemay suffer. A contrary view would remove the stability and security of businesstransactions. Sanchez v. Rigos Ang Yu Asuncion vs. CAG.R. No. 109125December 2, 1994VITUG, J.: FACTS: On July 29, 1987 a Second Amended Complaint for SpecificPerformance was filed by Ang Yu Asuncion and Keh Tiong, et al., against BobbyCu Unjieng, Rose Cu Unjieng and Jose Tan before the Regional Trial Court,alleging, among others, that plaintiffs are tenants or lessees of residential andcommercial spaces owned by defendants; that they have occupied said spacessince 1935 and have been religiously paying the rental and complying with all theconditions of the lease contract; that on several occasions before October 9,1986, defendants informed plaintiffs that they are offering to sell the premisesand are giving them priority to acquire the same; that during the negotiations,Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked the defendants to put their offer in writing to which request defendants acceded; that in reply to defendant's letter,plaintiffs wrote them on October 24, 1986 asking that they specify the terms andconditions of the offer to sell; that when plaintiffs did not receive any reply, theysent another letter dated January 28, 1987 with the same request; that sincedefendants failed to specify the terms and conditions of the offer to sell andbecause of information received that defendants were about to sell the property,plaintiffs were compelled to file the complaint to compel defendants to sell theproperty to them.ISSUE: Whether or not defendants have the obligation to sell the property to theplaintiffs.HELD: An obligation is a juridical necessity to give, to do or not to do ( Art. 1156,Civil Code ). The obligation is constituted upon the concurrence of the essentialelements thereof, viz : (a) The vinculum juris or juridical tie which is the efficientcause established by the various sources of obligations (law, contracts, quasi-contracts, delicts and quasi-delicts); (b) the object

which is the prestation or conduct; required to be observed (to give, to do or not to do); and (c) the subject-persons who, viewed from the demandability of the obligation, are the active(obligee) and the passive (obligor) subjects.Among the sources of an obligation is a contract (Art. 1157, Civil Code), which isa meeting of minds between two persons whereby one binds himself, withrespect to the other, to give something or to render some service (Art. 1305, CivilCode). A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its consummation. Negotiation covers theperiod from the time the prospective contracting parties indicate interest in thecontract to the time the contract is concluded (perfected). The perfection of the contract takes place upon the concurrence of the essential elements thereof. Acontract which is consensual as to perfection is so established upon a meremeeting of minds, i.e., the concurrence of offer and acceptance, on the objectand on the cause thereof. A contract which requires, in addition to the above, thedelivery of the object of the agreement, as in a pledge or commodatum , iscommonly referred to as a real contract. In a solemn contract, compliance withcertain formalities prescribed by law, such as in a donation of real property, isessential in order to make the act valid, the prescribed form being thereby anessential element thereof. The stage of consummation begins when the partiesperform their respective undertakings under the contract culminating in theextinguishment thereof.Until the contract is perfected, it cannot, as an independent source of obligation,serve as a binding juridical relation. In sales, particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected when aperson, called the seller, obligates himself, for a price certain, to deliver and totransfer ownership of a thing or right to another, called the buyer, over which thelatter agrees.WHEREFORE, the assailed decision is affirmed. G. R. No. 155043: Arturo Abalos vs Dr. Galicano Macatangay Jr 30 September 2004, 439 scra 649 Sales Option Earnest Money Arturo and Esther Abalos are husband and wife. They own a parcel of land in Makati. On June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and Memorandum of Agreement in favor of Galicano in which Arturo acknowledged he received a P5k check from Galicano as earnest money to be deducted from the purchase price and that Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase price agreed upon was P1.3 M. The P5k check was dishonored due to insufficiency. Apparently, Esther and Arturo have a rocky relationship. Esther executed a SPA in favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged that that the RMOA is not valid for Esthers signature was not affixed thereto. And that Esther never executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered to him. But the spouses failed to deliver the land. Galicano sued the spouses. ISSUE: Whether or not there was a contract of sale between Arturo and Galicano. Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured the defect of the earlier contract between Arturo and Galicano. HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that the parties considered the P5k as an earnest money to be deducted from the purchase price. Taking arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed to render a payment of legal tender. A check is not a legal tender. Taking arguendo that the P5k was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for Esthers signature was not affixed. The property is conjugal and under the Family Code, the spouses consents are required. Further, the earnest money here is not actually the earnest money contemplated under Article 1482 under the Civil Code.

The subsequent agreement between Esther and Galicano did not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified. San Miguel Properties vs. Sps. Huang Facts: San Miguel Properties is engaged in the purchase and sale of real properties, of which includetwo parcels of land. These properties were offered for sale at P52,140,000.00. Such offer was madeto Atty. Dauz on behalf of Sps. Huang. Atty. Dauz wrote San Miguel informing the respondentsinterest to buy the property and enclosed therein a check (P1,000,000.00) as earnest deposit subjectto certain conditions, to wit: (1) that they be given the exclusive option to purchase the propertywithin 30 days from acceptance of the offer; (2) that during the option period, the parties wouldnegotiate the terms and conditions of the purchase; and (3) petitioner would secure the necessaryapprovals while respondents would handle the documentation. Sobrecarey, San Miguel Properties VPindicated his conformity to the offer; signed the letter; and accepted the earnest deposit. Byagreement of the parties, they agreed that respondents will be given 6 months within which to pay.Upon failure of respondents to pay despite the extension of time given, petitioner through its Pres &CEO Gonzales, wrote Atty. Dauz, that they are returning the earnest deposit. Respondent spousesthrough counsel, wrote petitioner demanding the execution of a deed of conveyance in their favor.They attempted to return the earnest deposit but was refused by San Miguel. Respondent spousesfiled a complaint for specific performance. Trial court, upon motion, dismissed the complaint, whichwas reversed by the CA.Arguments: San Miguel : the Court of Appeals erred in finding that there was a perfected contract of salebetween the parties because the letter of respondents, which petitioner accepted, merely resulted inan option contract, albeit it was unenforceable for lack of a distinct consideration. Petitioner arguesthat the absence of agreement as to the mode of payment was fatal to the perfection of the contractof sale. Petitioner also disputes the appellate courts ruling that Isidro A. Sobrecarey had authority tosell the subject real properties. Sps. Huang : As held by CA, there is a perfected contract of sale since the earnest money wasallegedly given by respondents and accepted by petitioner through its vice-president and operationsmanager, Sobrecarey. The Court holds that respondents did not give the P1 million as "earnestmoney" as provided by Art. 1482 of the Civil Code. They presented the amount merely as a depositof what would eventually become the earnest money or downpayment should a contract of sale bemade by them. The amount was thus given not as a part of the purchase price and as proof of theperfection of the contract of sale but only as a guarantee that respondents would not back out of thesale. Respondents in fact described the amount as an "earnest-deposit.Issue:WON the earnest deposit could have been given as earnest money contemplated in Art. 1482, andthus there was a perfected contract of sale.Held: No, hence, there was no perfected contract of sale.In the present case, the P1 million "earnest-deposit" could not have been given as earnest money as contemplated in Art. 1482 because, at the time when petitioner accepted the terms of respondentsoffer, their contract had not yet been perfected. The first condition for an option period of 30 days

CORNELIA MATABUENA vs. PETRONILA CERVANTES L-2877 (38 SCRA 284) March 31, 1971 FACTS: In 1956, herein appellants brother Felix Matabuena donated a piece of lot to his common-law spouse, herein appellee Petronila Cervantes. Felix and Petronila got married only in 1962 or six years after the deed of donation was executed. Five months later, or September 13, 1962, Felix died. Thereafter, appellant Cornelia Matabuena, by reason of being the only sister and nearest collateral relative of the deceased, filed a claim over the property, by virtue of a an affidavit of self-adjudication executed by her in 1962, had the land declared in her name and paid the estate and inheritance taxes thereon. The lower court of Sorsogon declared that the donation was valid inasmuch as it was made at the time when Felix and Petronila were not yet spouses, rendering Article 133 of the Civil Code inapplicable. ISSUE: Whether or not the ban on donation between spouses during a marriage applies to a common-law relationship. HELD:

While Article 133 of the Civil Code considers as void a donation between the spouses during marriage, policy consideration of the most exigent character as well as the dictates of morality requires that the same prohibition should apply to a common-law relationship. As stated in Buenaventura vs. Bautista (50 OG 3679, 1954), if the policy of the law is to prohibit donations in favor of the other consort and his descendants because of fear of undue and improper pressure and influence upon the donor, then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without the benefit of nuptials. The lack of validity of the donation by the deceased to appellee does not necessarily result in appellant having exclusive right to the disputed property. As a widow, Cervantes is entitled to one-half of the inheritance, and the surviving sister to the other half. Article 1001, Civil Code: Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half.

Rubias v. Batiller
Facts: Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land to petitioner, his sonin-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question. Issue: Whether or not the contract of sale between appellant and his father-in-law was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute Held: The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale

thereof made by his father-in- law in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals. Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law. Fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract."