Option Contract; Liquor & “Pulutan” as Consideration (2013)

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 June30, 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%)

SUGGESTED ANSWER: Yes. Marcelo has a cause of action against Sergio. Under Art. 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the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any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 consideration, as something paid or promised. An accepted unilateral promise to buy or sell
a determinate thing for a price certain is binding upon him 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, G.R. No. 137290, July 31, 2000). Here, the case of Jack
Daniels Black and the P5,000.00 “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 consideration will be considered part of the purchase price. Thus, Sergio’s
unilateral withdrawal of the offer violated the Option Contract between him and Marcelo.

(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: No. Sergio’s claim has no legal basis. The contract at issue in the present
case is the option contract, not the contract of sale for the real property. Therefore, Art. 1403
does not apply. The Statute of Frauds covers an agreement for the sale of real property or of an
interest therein. Such agreement is unenforceable by action, unless the same, or some note or
memorandum, thereof, be in writing, (Art. 1403 (e), Civil Code). Here, Marcelo and Sergio merely
entered into an Option Contract, which refers to a unilateral promise to buy or sell, which need
not be in writing to be enforceable (Sanchez v. Rigos, G.R. No. L-25494, June 14, 1972, citing
Atkins, Kroll and Co. Inc. v. Cua Hian Tek and Southwestern Sugar & Molasses Co. v. Atlantic Gulf
& Pacific Co.).

ALTERNATIVE ANSWER: No. Sergio’s claim has no legal basis. The contract of sale has already been
partially executed which takes it outside the ambit of the Statute of Frauds is applicable only to
executory contracts, not to contracts that are totally or partially performed (Carbonnel v. Poncio,
G.R. No. L-11231, May 12, 1958).