Sergio Sale Agreement Contract June Price Marcelo Option

III.

Sergio is the registered owner of a 500-square meter land. His friend, Marcelo, who has long been interested in the property, succeeded in persuading Sergio to sell it to him. On June 2, 2012, they agreed on the purchase price of P600,000 and that Sergio would give Marcelo up to June 30, 2012 within which to raise the amount. Marcelo, in a light tone usual between them, said that they should seal their agreement through a case of Jack Daniels Black and P5,000 "pulutan" money which he immediately handed to Sergio and which the latter accepted. The friends then sat down and drank the first bottle from the case of bourbon.

On June 15, 2013, Sergio learned of another buyer, Roberto, who was offering P800,000 in ready cash for the land. When Roberto confirmed that he could pay in cash as soon as Sergio could get the documentation ready, Sergio decided to withdraw his offer to Marcelo, hoping to just explain matters to his friend. Marcelo, however, objected when the withdrawal was communicated to him, taking the position that they have a firm and binding agreement that Sergio cannot simply walk away from because he has an option to buy that is duly supported by a duly accepted valuable consideration.

(A) Does Marcelo have a cause of action against Sergio? (5%)

(B) Can Sergio claim that whatever they might have agreed upon cannot be enforced because any agreement relating to the sale of real property must be supported by evidence in writing and they never reduced their agreement to writing? (3%)

SUGGESTED ANSWER:

Yes.  Marcelo has a cause of action against Sergio.

Under Article 1324, when the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price (Art. 1479).  Consideration in an option contract may be anything of value, unlike in sale where it must be the price certain in money or its equivalent (san Miguel Properties Inc. v. Spouses Huang, GR. No. 137290, July 31, 2000).

Here, the case of Jack Daniels Black and the P5,000 "pulutan" money was a consideration to "seal their agreement,"  an agreement that Marcelo is given until June 30, 2012 to buy the parcel of land.  There is also no showing that such consideratio will be considered part of the purchase price.  Thus, Sergio's unilateral withdrawal of the offer violated the Option Contract between him and Marcelo.

ALTERNATIVE ANSWER:

Yes.  Marcelo has a cause of action against Sergio.

There is a perfected contract of sale of between Sergio and Marcelo.  Sergio agreed to sell the 500 sq.m. parcel of land to Marcelo for a valuable consideration of P600,000.  Being a consensual contract, a sale is perfected by both parties giving their consent to the thing to be sold and the price to be paid therefor.  By giving MArcelo time to raise the money, Sergio had agreed to consummate the sale on June 30, 2012.  The value of the case of Jack Daniel's Black and the P5,000 "pulutan" money, is considered the earnest money to seal the bargain which shall form part of the purchase price, and shall be deductible from the price of P600,000.  Sergio has breached the obligation arising from the contract and is liable for damages under Article 1170 of the Civil Code of the Philippines.