SALES | B2015

CASES

Limson vs. CA Aug. 11 she claimed that she was willing to pay but
transaction did not materialize because of unpaid back taxes on
April 20, 2011
Bellosillo, J. the property
Ramirez, J.
Aug. 23- she gave respondents checks to pay the said taxes
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 whichofwas
Saleconsidered as part oftothe
over said property purchase
SUNVAR. price.assails
Limson
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.
Sept. 5. 1978 she learned that the property is subject to
DOCTRINE: "Earnest money" and "option money" are not the same but distinguished thus: negotiation between the spouses and SUNVAR Realty
option money is the money given as a distinct consideration for an option contract; (b) earnest money Corp.
Development 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.
Filed an Affidavit of Adverse Clain which was annotated
SELLER Spouses de Vera (Lorenzo and Asuncion) SUBJECT PROPERTY: to the title
BUYER Option contract Limson DOCUMENT:

Deed of Sale - SUNVAR

Sept. 15 Deed of Sale executed between spouses and SUNVAR

Sept. 26- title issued to SUNVAR with the annotation of adverse

FACTS: claim

ACTION AND PRAYER:

Spouses offered to sell to Lourdes Limson the subject land
through their agent Marcosa Sanchez
Annulment of Deed of Sale in favor of SANVAR and cancellation
of title
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 Execution of Deed of Sale between her and respondents

Lorenzo de Vera informed her tha the property was mortgaged Allegations
to the Ramoses and asked her to pay the balance of the
purchase price to settle the obligation with the latter Petitioner Respondent SUNVARs answer Respondents answer to
s Answer SUNVAR

August 5,1978 she agreed to meet with respondents and

Ramoses to consummate transaction but Asuncion and the Property No cause of Did not know of When they negotiated w/
Ramoses did not appear sold in action the adverse claim. SUNVAR, option period of
violation of because petitioner expired.
her legal option to Cross-claim against
right to buy had respondents for SUNVAR checked the title
purchase. long expired bad faith before the sale

SUNVAR
buyer in
bad faith.
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
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
SALES | B2015
CASES
- 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).
 SALES | B2015
CASES

4.) The option was not extended when the respondents extended the petitioner, even without ramos, could just have made the
contract of their agent. Extension must not be implied but categorical. payment; no showing that she was already ready to pay at that
5.) Respondents were not at fault for the non-consummation of the time
contract within the period. succeeding meetings are beyond the period
they were the ones who set the aug.5 meeting
non-appearance of ramos on the meeting was beyond their -
control
DISPOSITIVE: Petition DENIED