SALES | B2015

CASES

Limson vs. CA
April 20, 2011
Bellosillo, J.
Ramirez, J.

SUMMARY: Spouses de Vera offered to sell the property to Limson. She agreed to
buy and paid 20k earnest money, the receipt issued for the said payment states that
she has the option to buy within 10 days. The spouses executed a Deed of Sale over
said property to SUNVAR. Limson assails the sale as violative of her right to purchase.
Court said that there was only a option contract and not contract to sell bet. Limson
and spouses. 20k was not earnest money but option money.

DOCTRINE: "Earnest money" and "option money" are not the same but distinguished
thus: (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.

SELLER Spouses de Vera (Lorenzo
and Asuncion)
SUBJECT
PROPERTY:
Parcel of Land in
Paranaque
BUYER
Option contract Limson
Deed of Sale - SUNVAR
DOCUMENT: Option contract
embodied in the receipt
for payment.

FACTS:
Spouses offered to sell to Lourdes Limson the subject land through their
agent Marcosa Sanchez
July 31, 1978 she agreed to buy the property and gave them 20K
as earnest money, respondent signed a receipt and gave her 10-day option
period to buy the property
Lorenzo de Vera informed her tha the property was mortgaged to the
Ramoses and asked her to pay the balance of the purchase price to settle
the obligation with the latter
August 5,1978 she agreed to meet with respondents and Ramoses to
consummate transaction but Asuncion and the Ramoses did not appear
Aug. 11 she claimed that she was willing to pay but transaction did not
materialize because of unpaid back taxes on the property
Aug. 23- she gave respondents checks to pay the said taxes which was
considered as part of the purchase price.
Sept. 5. 1978 she learned that the property is subject to negotiation
between the spouses and SUNVAR Realty Development Corp.
Filed an Affidavit of Adverse Clain which was annotated to the title
Sept. 15 Deed of Sale executed between spouses and SUNVAR
Sept. 26- title issued to SUNVAR with the annotation of adverse claim

ACTION AND PRAYER:
Annulment of Deed of Sale in favor of SANVAR and cancellation of title
Execution of Deed of Sale between her and respondents
Allegations
Petitioner Respondents
Answer


SUNVARs answer

Respondents answer to
SUNVAR
Property sold
in violation of
her legal right
to purchase.
SUNVAR
buyer in bad
faith.
No cause of
action because
option to buy
had long
expired
Did not know of the
adverse claim.
Cross-claim against
respondents for bad
faith







When they negotiated w/
SUNVAR, option period of
petitioner expired.
SUNVAR checked the title
before the sale

RTC RULING: Favored the Petitioner
1) Annulment and cancellation of the deed of sale and title in favor of SUNVAR
2) Respondent spouses to execute deed of sale in favor of petitioner upon
payment of the balance

CA RULING: Completely reversed RTC
1) Ordered Register of Deeds to lift Adverse Claim annotation on the title
2) Petitioner to pay damages to SUNVAR and respondent spouses

PETITION:
Motion for Reco in CA denied
Petition for Review on Certiorari seeking to reverse CA decision

ARGUMENTS OF BUYER: Perfected contract to sell bet. Her and respondents

ARGUMENTS OF SELLER: What was perfected was mere option

ISSUE: WON there was a perfected contract to sell between petitioner and
respondents
SALES | B2015
CASES


HELD: The agreement was a contract of option not a contract to sell

RATIO:
1.) Contract option v. Contract to sell
Contract Option
- A continuing offer or contract by which the owner stipulates with another
that the latter shall have the right to buy the property at a fixed price within
a time certain, or under, or in compliance with, certain terms and
conditions, or which gives to the owner of the property the right to sell or
demand a sale.
- Also sometimes called an "unaccepted offer."
- Not a sale of property but a sale of the right to purchase.
-Until acceptance, it is not, properly speaking, a contract, and does not vest,
transfer, or agree to transfer, any title to, or any interest or right in the
subject matter, but is merely a contract by which the owner of the property
gives the optionee the right or privilege of accepting the offer and buying
the property on certain terms.
Contract to sell
- Involves the meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some
service.
- Perfected by mere consent which is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute.
2.) The Receipt given by the spouses to the petitioner embodies the agreement
between them and it shows that the agreement was a mere option, based on the ff.:
The consideration of 20k paid being referred to as earnest money is
not an earnest money but an option money.
- "Earnest money" and "option money" are not the same but distinguished
thus: (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.
-Applying the said criteria to the 20k shows that it was not an earnest
money.
-Nothing in the Receipt which indicates that the P20,000.00 was part of the
purchase price.
- It was not shown that there was a perfected sale between the parties
where earnest money was given.
- When petitioner gave the "earnest money," the Receipt did not reveal that
she was bound to pay the balance of the purchase price.
The provision therein that if the transaction did not materialize, the 20k
will be returned to the petitioner w/ option to buy or forfeit the same.
The provision that she will be notified in case the property is sold to a third
person.
The receipt provided a period (10 days) within which the option to buy was
to be exercised.
3.) The rule is that except where a formal acceptance is not required, it may be made
either in a formal or an informal manner, and may be shown by acts, conduct or
words by the accepting party that clearly manifest a present intention or
determination to accept the offer to buy or sell.
Petitioner failed to do this within the 10-day period which expired on Aug.
10, 1978.
The Aug. 5 meeting (which was within the period) does not clearly show
acceptance (see facts).
4.) The option was not extended when the respondents extended the contract of their
agent. Extension must not be implied but categorical.
5.) Respondents were not at fault for the non-consummation of the contract within
the period.
they were the ones who set the aug.5 meeting
non-appearance of ramoson the meeting was beyond their control
petitioner, even without ramos, could just have made the payment; no
showing that she was already ready to pay at that time
succeeding meetings are beyond the period
-

DISPOSITIVE: Petition DENIED