Case Digest: Atkins, Kroll and Co. vs. B. Cua Hian Tek, G.R. No. L-9871

Atkins, Kroll and Co. vs. B. Cua Hian Tek, G.R. No. L-9871, January 31, 1958

Subject: Obligations and Contracts

FACTS

Atkins, Kroll and Co., petitioner, was sued for its failure to deliver one thousand cartons of sardines, which it had sold to B. Cua Hian Tek, respondent.

Enclosed in a letter, Atkins Kroll sent a “firm offer” of the said goods to B. Cua Tek dated September 13, 1951 with subject to reply by September 23, 1951. It was found that B. Cua Hian Tek accepted the offer unconditionally and delivered his letter of acceptance on September 21, 1951. However, due to shortage of catch of sardines by the packers in California, Atkins Kroll & Co., failed to deliver the commodities it had offered for sale.

Petitioner does not dispute such timely acceptance. It merely raises the point that the acceptance only created an option, which, lacking consideration, had no obligatory force.

Petitioner contends that the offer was a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23, "an option is nothing more than a continuing offer" for a specified time. Thus, there was no such contract of sale but only an option to buy, which was not enforceable for lack of consideration because in accordance with Art. 1479 of the New Civil Code.

ISSUE

Whether or not there was a contract of sale that binding between the respondent and petitioner.  

RULING

Yes.

Under the law (Art 1324, NCC), when the offerer has allowed the offeree certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised. 

SC held that petitioner’s argument manifestly assumes that only a unilateral promise arose when the offeree accepted. This assumption is a mistake, because a bilateral contract to sell and to buy was created upon acceptance. Furthermore, an option is unilateral, that is, a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to later.

In this case, however, upon accepting petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligations of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilateral contract of sale.