Southwestern Sugar v. Atlantic Gulf
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Acceptance – Option Contract Southwestern Sugar and Molasses Co. vs Atlantic Gulf and Pacific Co. G.R. No. L-7382 June 29, 1955 Facts: On March 23, 1953, respondent granted an option to petitioner to buy its barge no. 10 for the sum of PhP 30,000.00 to be exercised within a period of 90 days. On May 11, 1953, petitioner advised respondent that the former wanted to exercise their option. On May 12, 1953 and June 25, 1953 respondent replied reiterating the unavailability of the barge. Due to the continued refusal of respondent to exercise the option it granted to petitioner, the latter instituted an action to compel the former to sell the barge in question. On June 29, 1953, the respondent withdraw its offer of option with due notices to petitioner. Respondent argues that the option it granted to petitioner was merely a favor and it is void due to lack of a separate consideration in accordance with Art. 1479. Petitioner on the other hand argues that although the option was not supported by an independent consideration respondent can only withdraw such option before the acceptance of the offer as provided for by Art. 1324. Since the offer was accepted within the period of option, the respondent could no longer withdraw the offer. Issue: whether an option not supported by a separate consideration is void and can be withdrawn notwithstanding the acceptance made previously. Held: To be valid, an option to sell or a promise to buy or sell within the context of Art. 1479 must be supported by an independent consideration. Since the option can only be binding when it is supported by a separate consideration, it follows that it can be withdrawn if it is not supported by an independent consideration even if acceptance has already been made. There is no inconsistency between Art. 1324 and 1479. Art. 1324 is the general rule, while Art. 1479 is the exception to such rule. Note: The ruling in Atkins abandoned the ruling in this case.
Transcript of Southwestern Sugar v. Atlantic Gulf
Acceptance – Option Contract
Southwestern Sugar and Molasses Co. vs Atlantic Gulf and Pacific Co.G.R. No. L-7382 June 29, 1955
Facts: On March 23, 1953, respondent granted an option to petitioner to buy its barge no. 10 for the sum of PhP 30,000.00 to be exercised within a period of 90 days. On May 11, 1953, petitioner advised respondent that the former wanted to exercise their option. On May 12, 1953 and June 25, 1953 respondent replied reiterating the unavailability of the barge. Due to the continued refusal of respondent to exercise the option it granted to petitioner, the latter instituted an action to compel the former to sell the barge in question. On June 29, 1953, the respondent withdraw its offer of option with due notices to petitioner. Respondent argues that the option it granted to petitioner was merely a favor and it is void due to lack of a separate consideration in accordance with Art. 1479. Petitioner on the other hand argues that although the option was not supported by an independent consideration respondent can only withdraw such option before the acceptance of the offer as provided for by Art. 1324. Since the offer was accepted within the period of option, the respondent could no longer withdraw the offer.
Issue: whether an option not supported by a separate consideration is void and can be withdrawn notwithstanding the acceptance made previously.
Held: To be valid, an option to sell or a promise to buy or sell within the context of Art. 1479 must be supported by an independent consideration. Since the option can only be binding when it is supported by a separate consideration, it follows that it can be withdrawn if it is not supported by an independent consideration even if acceptance has already been made. There is no inconsistency between Art. 1324 and 1479. Art. 1324 is the general rule, while Art. 1479 is the exception to such rule.
Note: The ruling in Atkins abandoned the ruling in this case.
