[ANTHONY ANGEL TEJARES SALES REVIEWER] 1
Advertisement- Not definite offer, but mere An accepted unilateral promise to buy or to sell a
FORMATION OF SALE
o Policitacion -period of negotiation and
bargaining stage.
Contracting parties indicates
interest in the contract
o Perfection- birth of the contract
-point in time when the parties agree on the
terms of the sales
Takes places on the concurrence of
the essential elements of the
contract
o Consumation- death of the contract
-which is the process of fulfillment or
performance of the terms agreed upon in
the contract.
Performs their respective
undertaking under the contact
culminating in the extinguishment
thereof
POLICITATION STAGE-
o Deals with legal matters arising from
perfection of the contract
o Normally, negotiation is formally initiated by
an offer, which however must be CERTAIN.
o Unaccepted unilateral promise to buy or to
sell, prior to acceptance, does not give rise
to ANY OBLIGATION or RIGHT
Not considered binding
commitments, may walk away
from situation, generally without
adverse legal consequences.
o There is FREEDOM TO CONTRACT- which
signifies the right to choose whom to
contract and what to contract.
Not contract of sales
It would be perilous a journey, first of all, to
try to seek out a common path for such
judicial relation as contract, option, and right
of first refusal since they differ, substantially
enough, in their concept, consequences and
legal implication
Dealing with legal matters, legal concepts like:
1. ADVETISEMENT AND INVITATION
o
invitation to make an offer.
o Advertisement for bidders- are simply an
invitation to make proposal, and advertiser
is not BOUND to accept the highest or
lowest bidder, unless the contrary is
provided.
GENERAL RULE- they are less that offer, and
constitute merely invitations to make an offer, or
mere proposals: the direct acceptance of such
advertisement do not give rise to a valid and binding
sale.
EXCEPTION: when it appears otherwise.
(it specifies a determinate subject matter,
price certain or ascertainable, the price and
terms of payment..(manner of payment), as
to be equivalent to an offer certain)
2. OFFER
o Subject to the will of the offeror (it may be
withdrawn or destroyed by the offeror prior
to its acceptance and not necessary that the
offeree learns the withdrawal).
o Offeror has the right to attach to an offer
ANY TERMS OR CONDITION he desires and
MAY FIX THE TIME, PLACE AND MANNER OF
ACCEPTANCE and the offeree has no
authority to treat a separate and distinct
parts, since he must accept and comply
with the requirements provided in the offer.
o Offeree has only choice to ACCEPT or
REJECT the offer on its entirely.
o Offeree may counter-offer(conditional
accepltance), which would then replace and
repeal the original offer, and has an effect
in the extinguishment of the original offer.
o INEFFECTIVE UPON: Before the acceptance
is conveyed an received by an offeror.
Death
Civil interdiction
Insanity
Insolvency of either offeror or
offeree.
3.OPTION CONTRACT
3a. Determining the Location of the Options
ART 1479 second par
determinate thing for a price certain is binding upon
the promissor if the promise is supported by a
consideration distinct from the price.
ART 1324
When an offeror has allowed the offeree a certain
period to accept, the offer mat be withdrawing at
any time before the acceptance by communicating
such withdrawal, expect when the option is founded
upon a consideration, as something paid or
promised
3b. Definition and Essence of Option Contract
An offer may not be withdrawn at any time
during the option period.
Become a contracted offer bounded by
principles of mutuality and obligatory force.
Option contract as a privilege existing in one person,
for which he had paid a consideration and which
gives him the right to buy certain merchandise or
certain specified property, from another person, if he
chooses, at any time within the agreed period at a
fixed price. (Cavada vs Diaz)
Unaccepted offer
Not itself a purchase, but merely secures
the privilege to buy: it is not a sale of
property, but a sale of the right to
purchase. Right to buy his property at a
fixed prize price within a certain time. No
binding obligation on the person holding the
option, aside from the consideration for the
offer. The owner of the property gives the
optionee the right or privilege of accepting
the offer and buying the property on certain
terms. (Adelfa vs CA)
Option contract is one necessarily
involving the choice granted to another for
a distinct and separate consideration as to
whether or not to purchase a determinate
thing at a predetermined fixed price. An
option is a contract granting a privilege
to buy or sell within an agreed time and
at a determined price. It must be
supported with consideration. (Equatorial
Realty Inc. vs Mayfair Theater, Inc. )
An option contract is a preparatory contract
in which on party grants to the other, for a
fixed period and under specified condition,
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the power to decide, whether or not to
enter into principal contract. It binds the
party who has given the option, not to enter
into the principal contract with any other
person during the period designated, and
within that period, to enter into such
contract with the one to whom the action
was granted, if the latter should decide to
use the option. It is a separate agreement
distinct from the contract with the parties
may enter into upon the consummation of
the option.(Carceller vs CA)
3c. Characteristics and Obligations Constituted in
an Option Contract; Compared to Sale.
Option contract is an onerous contract like
sale, for it must have a separate
consideration from the purchase price, to be
valid.
An option without separate consideration
from the offered purchase price is void as
a contract. 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, or essentially a
valuable consideration.
An option contract is also a consensual
contract, since the meeting of the minds as
to the subject matter and the price would
also give rise to the option contract, even
when the separate consideration for
the option itself has not been paid.
Article 1324 describes the separate
consideration of an option as something
paid or promised. More importantly, there
can be a valid option contract even when no
separate consideration is paid by the
optionee, as in the case when the option if
included within another valid contract, such
a lease or a mortgage.
The most important distinction with sale, is
that the subject matter of an option
contract is actually not the subject matter of
the sought sale, but rather the option to
purchase such subject matter, essentially
an intangible subject matter or a right.
More pointedly, the subject matter of an
option contract is the accepted promise to
sell or accepted promise to buy.
Although a valid option contract has for its subject
matter an option in favor of the offeree, it is also
constituted of the following obligations on the part of
the offeror:
(a) personal obligation not to offer to any third
party the sale of the object of the option during the
option period;
(b) personal obligation not to withdraw the offer
or option during option period; and
(c) obligation to hold the subject matter for sale to
the offeree in the event that offeree exercises his
option during the option period.
3d. Elements of a Valid Option Contract
(a)CONSENT or the meeting of the minds
upon: (the price and manner of payment
thereof)
(b) SUBJECT MATTER: an option right to
an unaccepted unilateral offer to
sell/accepted promise to sell, or unaccepted
unilateral offer to buy/accepted promise to
buy:
(i) a determinate or determinable object;
(ii) for a price certain, including the manner of
payment thereof;
(c) PRESTATION: A consideration separate
and distinct from the purchase price for the
option given.
o Contracted Certain Offer
3e. Meaning of Separate Consideration
o Option contract the consideration may be
anything or undertaking of value.
o The more controlling concept is the
separateness of such consideration from
the purchase price agreed upon.
although no consideration is expressly
mentioned in an option contract, it is
presumed that it exists and may be proved,
and once proven, the contract is binding.
3f. When option is without separated consideration
Option contract would be VOID, as a as a contract,
but would still constitute a valid offer; so that if the
option is exercised prior to its withdrawal, that is
equivalent to an offer being accepted prior to
withdrawal and would give rise to a valid and binding
sale
In an accepted unilateral promise to sell,
since there may be no valid contract without
a cause or consideration, the promissor 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.
Sanchez also held that the burden of proof to show
that the option contract was supported by a separate
consideration is with the party seeking to show
it.
Montilla v. CA, despite allegations of having
accepted and demanded the option, ruled
that the oral promise to sell was not binding
upon the offeror in view of the absence of
any consideration distinct from the
3g. Acceptance of Offer to create Option.
stipulated price, quoting Article 1479.
The offeree has the burden of proving that
the option is supported by a separate
consideration
that the Sanchez doctrine (i.e., that the
option contract not supported by a separate
consideration; is void as a contract, but
valid as an offer), can only apply if the
option has been accepted and such
acceptance is communicated to the offeror.
3h. Option not deem part of Renewal of Lease
An option to purchase attached to a
contract of lease when not exercised within
the original period is extinguished and
cannot be deemed to have been included in
the implied renewal of the lease even under
the principle of tacita reconduccion.

3i Period of Exercise of Option
when the option contract does not contain a
period when the option can be exercised, it
cannot be presumed that the exercise
thereof can be made indefinitely, and even
render uncertain the status of the subject
matter.
Under Article 1144(1) of the Civil Code,
actions upon written contract must be
brought within ten (10) years, and
thereafter, the right of option would
prescribe.
action for specific performance to enforce
the option to purchase must be filed within
ten (10) year after the accrual of the
cause of action as provided under Article
1144 of the New Civil Code
j. Proper Exercise of Option.
Nietes v. Court of Appeals, held that in an option to
buy, the party in whose favor the option contract
exist may validly and effectively exercise his right by
merely advising the offeror of the decision to buy
and expressing his readiness to pay the stipulated
price, provided that the same is available and
actually delivered to the offeror upon execution and
delivery by him of the corresponding deed of sale. In
other words, notice of the exercise of the option
need not be coupled with actual payment of the
price, so long as this is delivered to the owner of the
property upon performance of his part of the
agreement.
Substantial compliance
o the acceptance or exercise of the option
must still be made within the option period
to give rise to a valid and binding sale, and
it is only then that the principle of
substantial compliance would have
relevance. Canceller vs CA.
In a valid option contract, the refusal of the offeror
to comply with the demand by the offeree to comply
with the exercise of his option may be enforced by
an action for specific performance
[ANTHONY ANGEL TEJARES SALES REVIEWER] 3
3k Effects of Exercise of Option.
Once option is Exercised the obligation is
Reciprocal (bound to comply with their respective
undertaking)
o The performance of one obligation is
conditional on the simultaneous fulfillment
of the other obligation ... when private
respondent opted to buy the property, their
obligation was to advise petitions of their
decision and their readiness to pay the
price. They were not obliged to make actual
payment. Only upon petitioners actual
execution and delivery of the deed of sale
were they required to pay. The Court was
actually describing the principles that apply
to a sale that had arisen by the proper
exercise of the option. In essence, it held
that when an option is properly exercised,
then there is already a sale contract
existing, and the laws applicable to sales
shall then apply.
3.l Summary Rules when period is granted to
promise
. a) If the period itself is not founded upon or
supported by a separate 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
offerors coming to know of such fact, by
communicating that withdrawal to the
offeree.
. (b) The right to withdraw, however, must not be
exercised whimsically or arbitrarily; other-
wise, it could give rise to a damage claim
under Article 19 of the Civil Code which
ordains that every person must, in the
exer- cise of his right and in the
performance of his duties, act with justice,
give everyone his due, and observe honesty
and good faith.
. (c) 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.
. (d) The option, however, is an independent
contract by itself, and it is to be
distinguished from the projected main
agreement which is obviously yet to be
concluded. If, in fact, the optioner-offeror
withdraws the offer before its acceptance by
the optionee-offeree, the latter may not sue
for specific performance on the proposed
contract 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.
. (e) In these cases, care should be taken of the
real nature of the consideration given, for if
. 4. RIGHT TO FIRST REFUSAL
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 sale that can
evidence its perfection.
A promise on the part of the owner that if
he decides to sell the property in the future,
he would first negotiate its sale to the
promissee.
The provisions on right of first refusal so
commonly inserted in contracts such as
lease contracts. It held that there need not
be a separate consideration in a right of first
refusal since such stipulation is part and
parcel of the entire contract of lease to
which it may be attached to; the
consideration for the lease includes the
consideration for the right of first refusal.
In a situation where the right of first refusal
clause found in a valid lease contract was
violated and the property was sold to a
buyer who was aware of the existence of
such right, the resulting contract is
rescissible by the person in whose favor the
right of first refusal was given, and although
no particular price was stated in the
covenant granting the right of first refusal,
the same price by which the third-party
buyer bought the property shall be
deemed to be the price by which the
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right of first refusal shall therefore be
exercisable. In essence, the Equatorial
Realty ruling pins the enforce- ability of a
right of first refusal on the obligatory force
of the main contract of lease to which it is
attached to.
Ang Yu Asuncion held that if only a right of
first refusal is constituted over a subject
parcel of land, even if that right is
supported by a separate consideration, its
breach cannot justify correspondingly an
issuance of a writ of execution under
judgment recognizing the mere existence of
such right of first refusal, nor would it
sanction an action for specific performance
without thereby negating the indispensable
consensual element in the perfection of
contracts. At most, it would authorize the
grantee to sue for recovery of damages
under Article 19 of the Civil Code on abuse
of right.
It is clear from the decision in Equatorial
Realty that the ruling applies only to rights
of first refusal attached to a valid principal
contract, like a contract of lease; that the
ruling has no application, and that the Ang
Yu Asuncion ruling would still apply, to
rights of first refusal constituted as separate
contracts, which anyway would be
considered under the doctrines applicable to
option contracts.
The principle was affirmed in Sen Po Ek
Marketing Corp. v. Martinez, which held that
the right of first refusal may be provided for
in a lease contract; however, when such
right is not stipulated in the lease contract,
it cannot be exercised, and verbal grants of
such right cannot be enforceable since the
right of first refusal must be clearly
embodied in a written contract.
Paraaque Kings Enterprises, Inc. v. Court
of Appeals, held that in order to have full
compliance with the contractual right
granting a lessee the first option to
purchase the property leased, the price for
which it was sold to a third party should
have likewise been first offered to the party
entitled to the option, thus
o Therefore, if the exercise of the
option was offered at 55 Million
which was refused, but
subsequently the property was sold
at sale of the property 59 Million to
a third party, it became necessary
for the seller to have gone back to
the party with the right of first
option at that higher price. Only if
the person with such right of first
option fails to exercise his right of
first priority could the seller
thereafter lawfully sell the subject
property to others, and only under
the same terms and conditions
previously offered to the party with
the right of first option, even when
nothing of such requirement is
provided for in their agreement.
Villegas v. Court of Appeals, held that a right of first
refusal is a contractual grant not of the sale of a
property, but of the first privity to buy the
property in the event that the owner sells the
same in a situation where the right of first refusal
was contained in a contract of lease. It recognized
that when a lease contains right of first refusal the
lessor has the legal duty to the lessee not to sell the
lease property to any one at any price until after the
lessor has made an offer to sell the property to the
lessee and the lessee has failed to accept it.
Rentals Deemed to Be Consideration to Support Right
an enforceable right of first refusal does not
need consideration for its validity and
effectivity, since it is merely a stipulation in
a valid principal contract.
Sublessee May Not Take Advantage of Right of First
Refusal of Sublessor
A right of first refusal granted in the
contract of lease in favor of the lessee
cannot be availed of by the sublessee
because such sublessee is a stranger to
the lessor who is bound to respect the right
of first refusal in favor of the lessee only;
and had the contract of lease granted the
lessee the right to assign the lease, then
the assignee would be entitled to exercise
such right as he steps into the shoes of the
assignor-lessee.
Right Does Not Extend with the Extension of the Lease
A provision entitling the lessee the option to
purchase the leased premises is not deemed
incorporated in the impliedly renewed
contract because it is alien to the
possession of the lessee. The right to
exercise the option to purchase expired with
the termination of the original contract of
lease.
5. Proposed Doctrine on Option Contracts Vis--
Vis Right of First Refusal Rulings
a. Alternative Doctrine of Enforceability of Rights of First
Refusal
In the law on sales, the so-called right of first
refusal is an innovative juridical relation. Needless
to point out, it cannot be deemed a perfected
contract of sale under Article 1458 of the Civil
Code. Neither can the right of first refusal,
understood in its normal concept, per se be
brought within the purview of an option under . . .
Article 1479 . . . or possibly an offer under Article
1319 of the same Code . . . [as both of them]
require, among other things, a clear certainly on
both the object and the cause or consideration of the
envisioned contract. In a right of first refusal, while
the object might be made determinate the exercise
of the right, however, would be depended not only
on the grantors 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. Prior thereto, it can at best be so
described as merely belonging to class of
preparatory juridical relations governed not by
contracts (since the essential elements to establish
the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general
application, the pertinent scattered provisions of the
Civil Code on human conduct
However, since the underlying obligation in
a right of first refusal contract is a
personal obligation to do, its breach can
never be remedied by an action for specific
performance, because of the underlying
public policy against involuntary servitude.
Right of first refusal contract being valid

and binding, the remedy of specific
performance is unavailable by reason of the
nature of the underlying obligation, but that
the remedy of rescission for breach of
contract would be available which would
allow recovery of damages under Contract
Law, rather than the difficult cause of action
for recovery of damages based on abuse of
right under Article 19 of the Civil Code on
Human Relations.
b. Enforceability of Option Rights Should Be at Par With,
If Not at a Higher Level Than, Rights of First Refusal
An option is a preparatory contract in
which one party grants to another, for a
fixed period and at a determined price, the
privilege to buy or sell, or to decide whether
or not to enter into a principal contract. ...
In a right of first refusal, . . . while the
object might be made determinate, the
exercise of the right would be dependent
not only on the grantors eventual intention
to enter into a binding juridical relation with
another but also on terms, including the
price, that are yet to be firmed up. ...
Consequently, the offer may be withdrawn
anytime by communicating the withdrawal
to the other party.
Vazquez therefore emphasizes the rather
obvious point: if an option, constituted of
determinate subject matter, certain price,
with separate consideration, can be
withdrawn within the option period to
remove any hope of an action to enforce a
sale, then more so can the offeror withdraw
a right of first refusal and destroy any
chance of there ever coming into being a
sale upon which an action for specific
performance could be achieved.
The rulings of the Court in Equatorial Realty
and Paraaque Kings would have the legal
effect of placing rights of first refusal
attached to principal contracts like lease, of
having greater legal enforceability than
option contracts which are supported by
separate consideration. The Court should
therefore revisit its ruling in Ang Yu
Asuncion on option contracts.
The better rule would be that in case an
option is supported by a separate
consideration, the optionee shall have the
[ANTHONY ANGEL TEJARES SALES REVIEWER] 5
right to exercise the option or accept the contract by forfeiting the earnest money.
offer at anytime during the option period This arrangement is recognized in one case
and the same would give rise to a valid and by the Supreme Court.
binding contract of sale. In the same
manner, if separate consideration has been 6. Mutual Promises to Buy and Sell
received by the optioner for the grant of the
option, he cannot withdraw the offer during
Executory agreement.
the option period, and any attempt to so
Such an arrangement would be the true
withdraw the offer during the option period
contract to sell, which embodies the main
shall be void. This position seems to be
obligation of the seller to enter into a
affirmed in the recent ruling in Carceller,
contract of sale upon full compliance with
and would validate the rationale of Article
the condition of the buyer fully paying the
1324 of the Civil Code on why a separate
purchase price, wherein the main obligation
consideration is required for a valid option
is a person obligation to do. Such
contract.
contracts to sell are really within the
It may happen that the optioner does not
policitacion stage for they do not represent
only withdraw the offer during the option
a species of a sale defined under Article
period but also sells the property to a third
1458 of the Civil Code.
party during that period. Such a situation
unconditional mutual promise to buy and
does not affect the above proposed rule
sell, as long as the object is made
since the acceptance of the offer (i.e., the
determinate and the price is fixed, can be
exercise of the option) by the optionee
obligatory on the parties, and compliance
during the option period would still give rise
therewith may accordingly be exacted,
to a valid sale over the subject property,
which means that an action for specific
but that the rules on third party buyer in
performance is available. The ruling covers
good faith should prevail. If the third party
a form of contract to sell that are within
buyer bought the property from the
the perfection stage of sales defined by
optioner knowing of the existence of the
Article 1458 for they embody the main
option in favor of the optionee, he would be
obligation of the seller to transfer
a proper party to the action for specific
ownership and delivery possession of the
performance that the optionee can bring
subject matter upon fulfillment of the
against the optioner once he has exercised
condition that buyer pays the purchase
his option. On the other hand, if the third
price
party buyer bought the property in good
This doctrine is in stark contrast to another
faith and for value, then he is protected by
line of decisions that hold that a contract to
law, and the remedy of the optionee (who
sell merely contains obligations to agree
has become the buyer in a valid and binding
to enter into contracts of sale, and being
sale) is to sue the optioner (who has
personal obligations may not be enforced by
become the seller) for recovery of damages
specific performance.
for breach of contract of sale, rather than to
The Court of Appeals in Gan v. Reforma,
sue for damages for breach of the option
held that in an agreement to buy and sell,
contract as held in Ang Yu Asuncion.
which is an executory contract, title to the
In any event the ruling in Ang Yu Asuncion
property does not pass to the promissee
would suggest that the best scheme for a
and the contracting parties are merely given
prospective buyer to take if he is interested
the right to demand fulfillment of the
in a specific property, but wants to maintain
contract in the proper cases, or damages for
an option to be able to get out of it later on,
breach thereof where it is not possible to
would be the earnest money scheme,
carry out its terms.
whereby a sale is perfect upon the granting
This doctrine which looks at the contract to
of the earnest money, with clear option on
sell or mutual promises to buy and sell as
the part of the buyer to withdraw from the
constituting merely personal obligation
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to enter into a sale, and breach of which
does not authorize an action for specific
performance but recovery of damages
seems to have been affirmed by the Court
in Coronel v. Court of Appeals, where it held
that: In a contract to sell, upon the
fulfillment of the suspensive condition which
is the full payment
PERFECTION STAGE : OFFER AND ACCEPTANCE.
A contract of sale is born from the
moment there is a meeting of minds upon
the thing which is the object of the contract
and upon the price and the manner of its
payment. This meeting of the minds speaks
of the intent of the parties entering into the
contract respecting the subject matter and
the consideration thereof
sale is at once perfected when a person
(the seller) obligates himself for a price
certain, to deliver and to transfer ownership
of a specified thing or right to another (the
buyer) over which the latter agrees.
Vitiation of Consent through mistakes, violence,
1. Consent that Perfects a Sale.
intimidation, undue influence, and fraud is voidable,
and the contract is binding upon the parties unless
annulled by the proper court action, which when
obtained would restore the parties to the status quo
ante insofar as legally and equitably possible
Perfected at the moment there is meeting of minds
upon the thing which is the object of the contract
and upon the price. Article 1319 defines consent or
meeting of minds as manifested by the meeting of
the offer and the acceptance upon the thing and the
cause which are to constitute the contract. It
stresses that the offer must be certain, and the
acceptance absolute it must be plain, unequivocal,
unconditional and without variance of any sort from
the proposal; and that a qualified acceptance
constitutes merely a counter-offer which must in turn
be absolutely accepted to give rise to a valid and
binding contract.
2. Offer must be CERTAIN
The offer must be CERTAIN and the acceptance is
ABSOLUTE to give rise to a valid sale.
In the Law on Sales, what makes an offer certain is
when it is floated by the offeror having within its
terms the description of the subject matter that has
all three requisites of possible thing, licit, and
determinate or at least determinable; and with a
price that has the requisites of being real, money or
its equivalent (i.e., constitute valuable
consideration), and must be certain or at least
ascertainable, including on the terms of payment
thereof.
3. Acceptance must be ABSOLUTE
t Acceptance Subject to Suspensive Condition
must be plain, without qualification and
unconditional, and it will not be so, if it
involves any new proposition, for in that
case, it will not be in conformity with the
offer, which is what gives rise to the birth of
the contract.
Accepted in exact term in which they are
made.
To negotiate is not absolute acceptance.
Word NOTED and signing at the bottom
cannot be considered as an acceptance that
would give rise to a Valid Sale. Noted by
Branch Manager and not approved is a clear
indication that there is no perfected contract
of sale to speak of.
Sale of Land is Valid regardless of the form
it may have been entered into.
Acceptance may be express or implied
Acceptance may be evidenced by some act, or
conduct, communicated to the offeror, either in a
formal or an informal manner, that clearly manifest
the intention or determination to accept the offer to
buy or sell.
In Gomez v. Court of Appeals, the acceptance on the
part of the buyer was manifested through a plethora
of acts, such as payment of the purchase price,
declaration of the property for taxation purposes,
and payment of real estate taxes thereon, and
similar acts showing buyers assent to the contract.
In Oesmer v. Paraiso Dev. Corp.,acceptance of the
terms of the sale of co-ownership rights through an
agent was expressed by the co-owners signing as
Acceptance by Letter or Telegram
witnesses to the covering deed of sale.
Acceptance made by letter or telegram does not bind
the offeror except from the time it came to his
knowledge. Therefore, even if an acceptance has
been mailed or sent to the offeror, the offeror may
still withdraw his offer anytime before he has
knowledge of the acceptance.
I
No perfected Sale of the sale is subject to SC.
Condition has not happened, the contract itself and
Acceptance in Auction Sales
its underlying obligations are not yet demandable,
contract is extinguished as though the contract has
never been entered into, as the consequences of the
retroactive effect of the non-happening of a
suspensive condition.
A sale by auction is perfected when the auctioneer
announces its perfection by the fall of the hammer,
or in other customary manner.
Until such announcement is made, any bidder may
retract his bid, and the auctioneer may withdraw the
4. EARNEST MONEY goods from the
sale, unless the
auction has been announced to be without reserve.
Under Article 1482 of the Civil Code,
whenever earnest money is given in a sale,
it shall be considered as part of the price
and as proof of the perfection of the
contract.The rule is no more than a
disputable presumption and prevails only
in the absence of contrary or rebuttal
evidence.
Also, the presumption is founded upon the
 [ANTHONY ANGEL TEJARES SALES REVIEWER] 7

fact that there must first be a valid sale.

Thus, in San Miguel Properties Philippines v.
Huang, it was held that it is not the giving
of earnest money, but the proof of the
concurrence of all the essential elements of
the sale which establishes the existence of a
perfected sale. In Serrano v. Caguiat, it was
held that the presumption under Article
1482 does not apply when earnest money is
given in a contract to sell.

Villonco v. Bormaheco,148 held that even when

the sale is subject to a condition, the acceptance
of the earnest money would prove that the sale
is conditionally consummated or partly executed
subject to the fulfillment of the condition, the
non- fulfillment of which would be a negative
resolutory condition.
Distinguishing Earnest Money and Option Money
. (a) Earnest money is part of the purchase price,
while option money is the money given as a
distinct consideration for an option contract;
. (b) Earnest money is given only where there is
already a sale, while option money applies
to a sale not yet perfected; and
. (c) When earnest money is given, the buyer is
bound to pay the balance, while when the
would-be buyer gives option money, he is
not required to buy, but may even forfeit it
depending on the terms of the option.154
5. PLACE OF PERFECTION

Generally, the sales place of perfection is where there is a

meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. In case of
acceptance through letter or telegram, it is presumed that
the contract was entered into in the place where the offer
was made.
6. EXPENSES OF EXECUTION AND
InREGISTRATION
general, the expenses for the execution and
registration of the sale shall be borne by the seller,
unless there is a stipulation to the contrary. In the
case of goods, unless otherwise agreed, the
expenses of, and incidental to, putting the goods into
a deliverable state must be borne by the seller.
The duty to withhold taxes due on the sale is
imposed on the seller