Professional Documents
Culture Documents
HUANG
(G.R. No. 137290, July 31, 2000)
Facts:
Petitioner San Miguel Properties owns two parcels of land
which were offered to Atty Dauz who was acting in behalf of
respondent spouses Huang. The subject properties were
offered for sale in cash; however, Atty. Dauz gave a counteroffer to pay the purchase price in 8 monthly installments
instead, which San Miguel refused.
So on March 29, 1994, Atty. Dauz sent another proposal and
gave P1,000,000.00 representing earnest-deposit money, so
that his clients may be given the exclusive option to purchase
the property within the 30 days from date of the acceptance of
the said proposal.
San Miguel manifested their acceptance and negotiations
commenced afterwards. However, the parties were not able to
agree on the terms of the payment. And so on July 7, 1994, the
petitioner informed the respondents that they are returning the
earnest-deposit as they failed to come into an agreement.
Issue/s:
Whether or not the acceptance of the proposal dated March 29
merely resulted in an option contract. Yes.
WON the failure to come into an agreement as to the mode of
payment was fatal to the perfection of the contract of sale.
Ruling:
1. With regard to the alleged payment and acceptance of
earnest money, the Court holds that respondents did not give
the P1 million as "earnest money" as provided by Art. 1482 of
the Civil Code. They presented the amount merely as a deposit
of what would eventually become the earnest money or
downpayment should a contract of sale be made by them. The
amount was thus given not as a part of the purchase price and
as proof of the perfection of the contract of sale but only as a
guarantee that respondents would not back out of the sale.
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 respondents offer
of March 29, 1994, their contract had not yet been perfected.
Equally compelling as proof of the absence of a perfected sale
is the second condition that, during the option period, the
parties would negotiate the terms and conditions of the
purchase. The stages of a contract of sale are as follows: (1)
negotiation, covering the period from the time the prospective
contracting parties indicate interest in the contract to the time
the contract is perfected; (2) perfection, which takes place
upon the concurrence of the essential elements of the sale
which are the meeting of the minds of the parties as to the
object of the contract and upon the price; and (3)
consummation, which begins when the parties perform their
respective undertakings under the contract of sale, culminating
in the extinguishment thereof.[12] In the present case, the
parties never got past the negotiation stage.
2. In Navarro v. Sugar Producers Cooperative Marketing
Association, Inc.,[14] we laid down the rule that the manner of
payment of the purchase price is an essential element before a
valid and binding contract of sale can exist. Although the Civil
Code does not expressly state that the minds of the parties
must also meet on the terms or manner of payment of the
price, the same is needed, otherwise there is no sale.
Notes:
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
essential elements thereof, viz:
(a) The vinculum juris or juridical tiewhich is the efficient cause
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 is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give
something or to render some service (Art. 1305, Civil Code).
A contract undergoes various stages that include its
negotiation or preparation, its perfection and, finally, its
consummation.
1. Negotiation covers the period from the time the prospective
contracting parties indicate interest in the contract to the time
the contract is concluded (perfected).
2. The perfection of the contract takes place upon the
concurrence of the essential elements thereof. A contract
which is consensual as to perfection is so established upon a
mere meeting of minds, i.e., the concurrence of offer and
acceptance, on the object and on the cause thereof. A contract
which requires, in addition to the above, the delivery of the
object of the agreement, as in a pledge or commodatum, is
commonly referred to as a realcontract. In a solemn contract,
compliance with certain formalities prescribed by law, such as
in a donation of real property, is essential in order to make the
act valid, the prescribed form being thereby an essential
element thereof.
3. The stage of consummation begins when the parties
perform their respective undertakings under the contract
culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent
source of obligation, serve as a binding juridical relation.
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain
in money or its equivalent.
A contract of sale (absolute or conditional) vs. Perfected
Contract of Option:
a. Conditional sale - in a "Contract to Sell" the ownership of the
thing sold is retained until the fulfillment of a positive
suspensive condition (normally, the full payment of the
purchase price), the breach of the condition will prevent the
obligation to convey title from acquiring an obligatory force. 2
b. Absolute sale - where the contract is devoid of any proviso
that title is reserved or the right to unilaterally rescind is
stipulated, e.g., until or unless the price is paid. Ownership will
then be transferred to the buyer upon actual or constructive
delivery (e.g., by the execution of a public document) of the
property sold.
c. Perfected contract of Option - An accepted unilateral
promise which specifies the thing to be sold and the price to be
paid, coupled with a valuable consideration distinct and
separate from the price (Art. 1479)
Observe that the option is not the contract of sale itself. The
optionee has the right, but not the obligation, to buy. Once the
option is exercised timely, i.e., the offer is accepted before a
breach of the option, a bilateral promise to sell and to buy
ensues and both parties are then reciprocally bound to comply
with their respective undertakings.
Policitation - An imperfect promise which is merely an offer.
Public advertisements or solicitations and the like are ordinarily
construed as mere invitations to make offers or only as
proposals. These relations, until a contract is perfected, are not
considered binding commitments. Thus, at any time prior to the
perfection of the contract, either negotiating party may stop the
negotiation. The offer, at this stage, may be withdrawn; the
withdrawal is effective immediately after its manifestation, such
as by its mailing and not necessarily when the offeree learns of
the withdrawal Where a period is given to the offeree within
which to accept the offer, the following rules generally govern:
(1) If the period is not itself founded upon or supported by a
consideration, the offeror is still free and has the right to
withdraw the offer before its acceptance, or, if an acceptance
has been made, before the offeror's coming to know of such
fact, by communicating that withdrawal to the offeree (see Art.
1324).
The right to withdraw, however, must not be exercised
whimsically or arbitrarily; otherwise, it could give rise to a
damage claim under Article 19 of the Civil Code which ordains
that "every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith."
(2) If the period has a separate consideration, a contract of
"option" is deemed perfected, and it would be a breach of that
contract to withdraw the offer during the agreed period. The
option, however, is an independent contract by itself, and it is
to be distinguished from the projected main agreement (subject
matter of the option) which is obviously yet to be concluded. If,
in fact, the optioner-offeror withdraws the offer before its
acceptance(exercise of the option) by the optionee-offeree, the
latter may not sue for specific performance on the proposed
contract ("object" of the option) since it has failed to reach its
own stage of perfection. The optioner-offeror, however, renders
himself liable for damages for breach of the option. In these
cases, care should be taken of the real nature of the
consideration given, for if, in fact, it has been intended to be
part of the consideration for the main contract with a right of
withdrawal on the part of the optionee, the main contract could
be deemed perfected; a similar instance would be an "earnest
money" in a contract of sale that can evidence its perfection
(Art. 1482, Civil Code).
Option vs. Right of First Refusal
a.) An option (1479 par. 2) or an offer (Art. 1319) would require,
among other things, a clear certainty on both the object and
the cause or consideration of the envisioned contract.
Governed by laws on contracts.
b.) In a right of first refusal, while the object might be made
determinate, the exercise of the right, however, would be
dependent not only on the grantor's eventual intention to enter
into a binding juridical relation with another but also on terms,
including the price, that obviously are yet to be later firmed up.
Governed not by laws of contract but of other general laws and
those governing human conduct.
LIMSON vs. CA
(G.R. No. 135929. April 20, 2001)
Facts:
Petitioner Limson alleged that respondent spouses de Vera
offered to sell to petitioner a specific parcel of land and that on
31 July 1978 she agreed to buy it at P34.00 per square meter
and gave P20, 000.00 to respondent spouses as "earnest
money;" for which, the respondent spouses gave her a 10-day
option period to purchase the property.
On 5 September 1978 petitioner learned that the property was
already being sold to SUNVAR Corp and ultimately on
September 15, 1978, a deed of sale between respondent
spouses and SUNVAR was executed. Petitioner now claim that
when respondent spouses sold the property in dispute to
SUNVAR, her valid and legal right to purchase it was violated.
Issue:
At issue is the nature of the contract entered into between
petitioner Limson and respondent spouses de Vera. And WON
there was a perfected contract to sell between her and
respondent spouses.
Ruling:
A scrutiny of the facts as well as the evidence of the parties
overwhelmingly leads to the conclusion that the agreement
between the parties was a contract of option and not a contract
to sell.
The consideration of P20,000.00 paid by petitioner was
designated as an earnest money, however a careful
examination of the words indicate that it is really an option
money.
In the interpretation of contracts, the ascertainment of the
intention of the contracting parties is to be discharged by
looking to the words they used to project that intention in their
contracts. The Receipt readily shows that respondent spouses
and petitioner only entered into a contract of option; a contract
by which respondent spouses agreed with petitioner that the
latter shall have 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.
Also, there is nothing in the Receipt which indicates that the
P20,000.00 was part of the purchase price. And when
petitioner gave the "earnest money" the Receipt did not reveal
that she was bound to pay the balance of the purchase price.
On or before 10 August 1978, the last day of the option period,
no affirmative or clear manifestation was made by petitioner to
accept the offer. Certainly, there was no concurrence of private
respondent spouses offer and petitioners 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 the property of respondent spouses
ceased.
Notes:
Option - 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 price within a time certain, or under, or in
compliance with, certain terms and conditions, or which gives
to the owner of the property the right to sell or demand a sale.
It is also sometimes called an "unaccepted offer." An option is
not itself a purchase, but merely secures the privilege to buy. It
is not a sale of property but a sale of right to purchase.
Petitioners contentions:
1.
2.
ISSUE:
Whether petitioner may be compelled to convey the property to
respondent under the terms of the RMOA and the Contract to
Sell
RULING:
Contracts, in general, require the presence of three essential
elements: (1) consent of the contracting parties; (2) object