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

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 Respondents Answer No cause of action because option to buy had long expired SUNVARs answer Respondents answer to SUNVAR When they negotiated w/ SUNVAR, option period of petitioner expired. SUNVAR checked the title before the sale

Petitioner

Property sold in violation of her legal right to purchase. SUNVAR buyer in bad faith.

Did not know of the adverse claim. Cross-claim against respondents for bad faith

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.

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 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 ramos on 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

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.