G.R. No. 18335 ; January 10, 1923
LORENZO ZAYCO, DIONISIO INZA, and SEVERINO LIZARRAGA, plaintiffs-appellants, vs. SALVADOR SERRA, VENANCIO CONCEPCION, and PHIL. C. WHITAKER, defendants-appellees.

FACTS

On November 7, 1918, Salvador Serra granted Lorenzo Zayco an option to purchase the Palma Central for P1,000,000, expiring on June 30, 1919. The contract provided that if Zayco could not pay the full price in cash, he would be given up to three years to pay the balance, upon posting a satisfactory bond, but it did not specify the amount of the initial cash payment. On June 28, 1919, Zayco, through counsel, sent a letter to Serra accepting the option, tendering P100,000 as an initial cash payment, and offering to assume Serra’s P600,000 loan from the Philippine National Bank as part of the arrangement. Serra received the letter on June 30, 1919, and on July 15, 1919, he informed Zayco that the option contract was cancelled. Zayco filed a complaint for specific performance. During the proceedings, Zayco alleged that a subsequent oral agreement fixed the initial cash payment at P100,000, but the trial court found this unproven. Meanwhile, Serra sold the property to Venancio Concepcion and Phil. C. Whitaker on January 29, 1920, for P1,500,000. The trial court ruled in favor of the defendants, declaring the option contract void for lack of consideration and finding no perfected contract of sale.

ISSUE

1. Whether the option contract dated November 7, 1918, is valid and supported by consideration.
2. Whether Zayco’s acceptance on June 28, 1919, perfected a contract of sale.
3. Whether Zayco (and his assignees) are entitled to a right of first refusal or preference to purchase the property on the same terms as the sale to Concepcion and Whitaker.

RULING

1. *Yes, the option contract was supported by consideration and was valid. The Supreme Court reversed the trial court’s finding that the contract lacked consideration. While the contract itself did not expressly state the consideration, the law presumes consideration in contracts. The evidence showed that the consideration for the option was Zayco’s agreement to become a supporter of the Palma Central (supplying sugarcane) and his forbearance from accepting more favorable offers from a competing central, which constituted a legal detriment to Zayco and a benefit to Serra.

2. No, Zayco’s acceptance did not perfect a contract of sale. The offer (the option contract) was incomplete because it did not specify the amount of the initial cash payment, a material term. Zayco’s acceptance letter, which specified P100,000 as the cash payment, constituted a counter-offer or a new proposal that varied the terms of the original offer. This counter-offer required acceptance by Serra to perfect the contract. Serra did not accept it; instead, he cancelled the offer. Therefore, no binding contract of sale was created. The Court also found Zayco’s evidence of a subsequent oral agreement fixing the cash amount insufficient and unreliable.

3. No, the plaintiffs are not entitled to enforce the right of first refusal or preference.* The contract granted Zayco a preference to purchase “over any other persons” after June 30, 1919, if Serra decided to sell. However, the majority of the Court held that the plaintiffs could not enforce this preference because they failed to make a formal offer to reimburse Concepcion and Whitaker for the expenses they had incurred under their contract with Serra, which was a necessary condition for substituting themselves as purchasers.

The judgment of the trial court absolving the defendants was affirmed.