Earnest Money Option Money
Earnest Money Option Money
Earnest Money Option Money
Was there a contract of sale between the parties or only a unilateral promise to buy?
The Supreme Court held that there was a contract of sale between the parties.
Petitioner’s argument assumed that only a unilateral promise arose when the
respondent accepted the offer, which is incorrect because a bilateral contract to sell and
to buy was created upon respondent’s acceptance.
Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or
to pay for their price, he could also be sued. But his letter-reply to Atkins indicated that
he accepted "the firm offer for the sale" and that "the undersigned buyer has
immediately filed an application for import license.” After accepting the promise and
before he exercises his option, the holder of the option is not bound to buy. In this case
at bar, however, upon respondent’s acceptance of herein petitioner's offer, a bilateral
promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser.
In the meantime, in 1990, the property was sold to De Buen Realty, Private
Respondent in this case. The title to the property was transferred into the name
of De Buen and demanded that the Petitioners vacate the premises.
W/N the Contract of Sale is perfected by the grant of a Right of First Refusal. No. A Right
of First Refusal is not a Perfected Contract of Sale under Art. 1458 or an option under
Par. 2 Art 1479 or an offer under Art. 1319. In a Right of First Refusal, only the object of
the contract is determinate. This means that no obligation is created between the seller-
offeror and the buyer-offeree.
W/N a Right of First Refusal may be enforced in an action for Specific Performance. No.
Since a contractual relationship does not exist between the parties, a Right of First
Refusal may not be enforced through an action for specific performance. Its conduct is
governed by the law on human relations under Art. 19-21 of the Civil Code and not by
contract law.
The contract is perfected when the seller, obligates himself, for a price certain, to
deliver and to transfer ownership of a thing or right to another, called the buyer, over
which the latter agrees. Read Art. 1458.
W/N there is a separate consideration that would render the option contract valid and
binding.
An option contract, to be valid and binding, needs to be supported by a separate
consideration. The consideration need not be monetary but could consist of other things
or undertakings. However, if the consideration is not monetary, these must be things or
undertakings of value.
Petitioners cannot insist that the P84,000 they paid in order to release the
Villanuevas property from the mortgage should be deemed the separate
consideration to support the contract of option.
It must be pointed out that said amount was in fact apportioned into monthly
rentals spread over a period of one year, at P7,000 per month. Thus, for the
entire period of June 1985 to May 1986, petitioner Baptist Churchs monthly rent
had already been paid for, such that it only again commenced paying the rentals
in June 1986. This is shown by the testimony of petitioner Pastor Belmonte
where he states that the P84,000 was advance rental equivalent to monthly rent
of P7,000 for one year, such that for the entire year from 1985 to 1986 the
Baptist Church did not pay monthly rent.