Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Company
97 Phil 247
June 1955
FACTS:
On March 24, 1953, defendant-appellant Atlantic granted plaintiff-appellee Southwestern an option period of ninety days to buy the formers barge No. 10 for the sum of P30,000. On May 11 of the same year, Southwestern Company communicated its acceptance of the option to Atlantic through a letter, to which the latter replied that their understanding was that the "offer of option" is to be a cash transaction and to be effected "at the time the lighter is available." On June 25, Atlantic advised the Southwestern Company that since there is still further work for it, the barge could not be turned over to the latter company.
On June 27, 1953, the Southwestern Company filed this action to compel Atlantic to sell the barge in line with the option, depositing with the court a check covering the sum of P30,000, but said check was later withdrawn with the approval of the court. On June 29, the Atlantic withdrew its "offer of option" with due notices to Southwestern Company stating that the option was granted merely as a favor. The Atlantic contended that the option to sell it made to Southwestern Company is null and void because said option to sell is not supported by any consideration.
The trial court granted herein plaintiff-appellee Southwestern Company’s action for specific performance and ordered herein defendant-appellant Atlantic to pay damages equivalent to 6 per centum per annum on the sum of P30,000 from the date of the filing of the complaint.
ISSUE:
Is Atlantic liable for specific performance and to pay damages in favor of Southwestern Company?
COURT RULING:
The Supreme Court reversed the trial court’s decision applying Article 1479 of the new Civil Code. The Court reiterated that "an accepted unilateral promise" can only have a binding effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted, if said option is not supported by any consideration. The option that Atlantic had provided was without consideration, hence, can be withdrawn notwithstanding Southwestern Company’s acceptance of said option.
American jurisprudence hold that an offer, once accepted, cannot be withdrawn, regardless of whether it is supported or not by a consideration, but the specific provisions of Article 1479 commands otherwise. While under the "offer of option" in question appellant Atlantic has assumed a clear obligation to sell its barge to appellee Southwestern Company and the option has been exercised in accordance with its terms, and there appears to be no valid or justifiable reason for the former to withdraw its offer, the Court cannot adopt a different attitude because the law on the matter is clear.
