Sanchez vs. Rigos

An accepted unilateral promise to sell, even if unsupported by a consideration distinct from the price, generates a perfected bilateral contract of sale if the acceptance occurs before the promise is withdrawn. Article 1479, second paragraph, requires a separate consideration to make the promise itself binding as a contract prior to acceptance; where such consideration is absent, the promise operates as a revocable offer, but its acceptance before withdrawal consummates a valid sale under the general principles of offer and acceptance in Article 1324.

Severina Rigos owned a parcel of land in Nueva Ecija covered by TCT No. NT-12528. On April 3, 1961, she executed an instrument captioned “Option to Purchase” in favor of Nicolas Sanchez. By its terms, Rigos “agreed, promised and committed” to sell the land to Sanchez for P1,510 within two years; Sanchez’s right to purchase would lapse if not exercised within that period. No independent consideration was paid or promised in exchange for the option. Sanchez attempted to pay the price within the two-year window, but Rigos refused to accept his tenders. Faced with refusal, Sanchez consigned the purchase price in court and sued for specific performance. The central legal question was whether the undertaking was enforceable despite the lack of a consideration distinct from the price, given the apparent conflict between the general rule on offers with a period (Article 1324) and the specific rule on unilateral promises to sell (Article 1479).

• The Option Instrument: On April 3, 1961, Severina Rigos and Nicolas Sanchez signed a document entitled “Option to Purchase.” Rigos declared that she “agreed, promised and committed” to sell her land covered by TCT No. NT-12528 to Sanchez within two years for P1,510. The instrument stated that if Sanchez failed to exercise his right to buy within that period, “his right is deemed terminated and elapsed” and Rigos would no longer be compelled to sell. Sanchez’s conformity clause merely expressed that he “agree[d] and conform[ed] with all the conditions set forth in this option to purchase … and bind[s] [him]self with all the terms and conditions.” The instrument did not impose any explicit obligation upon Sanchez to purchase, nor did it stipulate any consideration given by him solely for the option.

• Tender and Refusal: Within the two-year period, Sanchez made several tenders of the P1,510 purchase price to Rigos, all of which she rejected.

• Commencement of Suit and Consignation: On March 12, 1963, Sanchez deposited the sum of P1,510 with the Court of First Instance of Nueva Ecija and filed a complaint for specific performance and damages.

• Answer and Motion for Judgment on the Pleadings: Rigos’s answer admitted the existence of the instrument but denied that it embodied a binding bilateral contract. As a special defense, she asserted that the agreement was a unilateral promise to sell unsupported by any valuable consideration distinct from the price and was therefore null and void under the New Civil Code. Subsequently, both parties jointly moved for a judgment on the pleadings. By joining in that motion, Sanchez impliedly admitted the truth of the material allegations in Rigos’s answer, including the absence of a separate consideration for the promise.

• Nature of the Instrument: Whether the “Option to Purchase” created a bilateral reciprocal contract to buy and sell under the first paragraph of Article 1479, or a unilateral promise to sell under the second paragraph thereof.

• Effect of Acceptance of an Unsupported Unilateral Promise: Whether an accepted unilateral promise to sell, unsupported by a consideration distinct from the price, could give rise to a binding and enforceable contract of sale where the acceptance occurred before the offer was withdrawn.

• Nature of the Instrument: The instrument was held to be a unilateral promise to sell, not a bilateral contract to buy and sell. Although appellee alleged in his complaint that he had “agreed and committed to buy,” the text of the option itself—annexed to and made an integral part of the complaint—did not support that allegation. The title “Option to Purchase” and the substantive terms merely bound Rigos to sell; no correlative obligation to purchase was imposed upon Sanchez. Accordingly, the first paragraph of Article 1479 was inapplicable.

• Effect of Acceptance of an Unsupported Unilateral Promise: The prior view in Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co.—that an option without consideration could be withdrawn even after acceptance—was expressly abandoned in favor of the doctrine enunciated in Atkins, Kroll & Co., Inc. v. Cua Hian Tek. Under Article 1479, second paragraph, a unilateral promise to sell supported by a consideration distinct from the price is binding as a contract in itself; without such consideration, the promise amounts to a revocable offer. Article 1324 permits the offeror to withdraw the offer before acceptance, save when the option is founded upon consideration. Here, no separate consideration existed, so the promise was an offer that could be withdrawn. However, the trial court found that Sanchez had tendered payment “before any withdrawal from the contract has been made by the Defendant.” His acceptance thus preceded withdrawal. The concurrence of offer and acceptance before revocation generated a perfected bilateral contract of sale, even in the absence of distinct consideration. This interpretation harmonized Articles 1324 and 1479, avoiding internal conflict and treating them as implementing the same principle. Because a valid sale had been perfected, specific performance was the proper remedy.

• Unilateral Promise as Offer and Acceptance Rule — A unilateral promise to sell that is unsupported by a consideration distinct from the price is not void. It constitutes a revocable offer that may be withdrawn before acceptance. However, if the offeree accepts the offer before its withdrawal, a bilateral contract of sale is perfected, and the absence of separate consideration does not defeat the sale. This reconciles Article 1324 (on offer and acceptance) with Article 1479 (on unilateral promises to sell), and abandons the view that such an offer may be withdrawn even after acceptance.

• Admission by Motion for Judgment on the Pleadings — A party who prays for a judgment on the pleadings without offering proof and without affording the adverse party an opportunity to present evidence is deemed to admit all material and relevant allegations of the opposing party, and rests the motion on those allegations together with such of his own as are admitted in the pleadings (citing Bauermann v. Casas, 10 Phil. 386). In the present case, appellee’s joinder in the motion constituted an implied admission of the appellant’s allegation that no distinct consideration supported her promise.

• “Since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.”

• “This view has the advantage of avoiding a conflict between Articles 1324—on the general principles 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 a conflict between the same.”

• Atkins, Kroll & Co., Inc. v. Cua Hian Tek, 102 Phil. 948 — Followed and reaffirmed. Established that an unsupported option, when accepted before withdrawal, gives rise to a bilateral contract of sale; this doctrine was adopted as the controlling rule.

• Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 97 Phil. 249 — Abandoned/Modified. Previously held that an option without consideration could be withdrawn even after acceptance; the present ruling expressly departed from that position to the extent of inconsistency.

• Zayco v. Serra, 44 Phil. 331 — Cited with approval. Supported the proposition that an offer to sell, once accepted before withdrawal, generates a contract even if the original option lacked consideration.

• Bauermann v. Casas, 10 Phil. 386 — Applied. Defined the effect of a motion for judgment on the pleadings as tantamount to admitting the material allegations of the adverse party.

• Article 1479, Civil Code — Provides that a promise to buy and sell a determinate thing for a price certain is reciprocally demandable, and that an accepted unilateral promise to buy or to sell is binding upon the promisor if supported by a consideration distinct from the price. The Court interpreted the second paragraph as requiring distinct consideration to make the promise binding as a contract prior to acceptance; without such consideration, the promise operates merely as an offer.

• Article 1324, Civil Code — States that when the offeror allows the offeree a period to accept, the offer may be withdrawn at any time before acceptance, except when the option is founded upon consideration. Applied to hold that an unsupported offer is revocable but, once accepted prior to withdrawal, generates a perfected sale.

• Article 1354, Civil Code — General rule presuming the existence of consideration in contracts. Held inapplicable to unilateral promises to sell because Article 1479 specifically governs and requires proof of a consideration distinct from the price.

Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo, and Makasiar, JJ., concurred. Justice Antonio filed a separate concurrence emphasizing full agreement with the abandonment of the Southwestern Sugar doctrine and the reaffirmance of Atkins, Kroll, and noting the trial court’s finding that Sanchez had offered payment before Rigos withdrew her promise, thereby generating a bilateral reciprocal contract. Justice Castro took no part.