Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 156841 June 30, 2005GF EQUITY, INC.,petitioner,vs.ARTURO VALENZONA,respondent.D E C I S I O NCARPIO-MORALES,J.:On challenge via Petition for Review onCertiorariis the Court of Appeals October 14, 2002 Decision1reversing that of the Regional Trial Court (RTC) of Manila dated June 28, 19972which dismissed the complaint of herein respondent Arturo Valenzona (Valenzona) for breach of contract with damages against herein petitioner GF Equity, Inc. (GF Equity).The factual antecedents of the case are as follows:GF Equity, represented by its Chief Financial Officer W. Steven Uytengsu (Uytengsu), hired Valenzona as Head Coach of the Alaska basketball team in the Philippine Basketball Association (PBA) under a Contract of Employment.3As head coach, the duties of Valenzona were described in the contract to include the following:x x x1. . . .coaching at all practices and gamesscheduled for the CORPORATIONs TEAM during the scheduled season of the ASSOCIATION . . .,coaching all exhibition gamesscheduled by the corporation as approved by the PBA during and prior to the scheduled season, coaching (if invited to participate) in the ASSOCIATIONs All Star Game andattending every event conducted in association with the All Star Game,andcoaching the play-off games subsequent to the scheduled seasonbased on the athletic program of the PBA.x x x3. The COACH agreesto observe and comply with all requirements of the CORPORATION respecting conduct of its TEAM and its players, at all times whether on or off the playing floor. The CORPORATION may, from time to time during the continuance of this contract, establish reasonable rules for the government of its players "at home" and "on the road"; andsuch rules shall be part of this contract as fully is (sic) if herein written and shall be the responsibility of the COACH to implement; x x x4. The COACH agrees (a) toreport at the time and place fixed by the CORPORATION in good physical condition; (b) tokeep himself throughout the entire season in good physical condition; (c) to give his best services, as well as his loyalty to the CORPORATION, and to serve as basketball coach for the CORPORATION and its assignees; (d) tobe neatly and fully attired in public and always to conduct himself on and off the courtaccording to the highest standards of honesty, morality, fair play and sportsmanship; (e)not to do anything which is detrimental to the best interests of the CORPORATION.x x x7. The COACH agrees that if so requested by the CORPORATION, he willendorse the CORPORATIONs products in commercial advertising, promotions and the like. The COACH further agrees toallow the CORPORATIONor the ASSOCIATION to take pictures of the COACHalone or together with others, for still photographs, motion pictures or television, at such times as the CORPORATION or the ASSOCIATION may designate, and no matter by whom taken may be used in any manner desired by either of them for publicity or promotional purposes. (Underscoring supplied).x x xEven before the conclusion of the contract, Valenzona had already served GF Equity under a verbal contract by coaching its team, Hills Brothers, in the 3rd PBA Conference of 1987 where the team was runner-up.Under the contract, GF Equity would pay Valenzona the sum of Thirty Five Thousand Pesos (P35,000.00) monthly, net of taxes, and provide him with a service vehicle and gasoline allowance.While the employment period agreed upon was for two years commencing on January 1, 1988 and ending on December 31, 1989, the last sentence of paragraph 3 of the contract carried the following condition:3. x x x If at any time during the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or competitive ability to coach the team, the CORPORATION may terminate this contract. (Emphasis supplied)Before affixing his signature on the contract, Valenzona consulted his lawyer who pointed out the one-sidedness of the above-quoted last sentence of paragraph 3 thereof. Thecaveatnotwithstanding, Valenzona still acceded to the terms of the contract because he had trust and confidence in Uytengsu who had recommended him to the management of GF Equity.During his stint as Alaskas head coach, the team placed third both in the Open and All-Filipino PBA Conferences in 1988.Valenzona was later advised by the management of GF Equity by letter of September 26, 1988 of the termination of his services in this wise:We regret to inform you that under the contract of employment dated January 1, 1988 we are invoking our rights specified in paragraph 3.You will continue to be paid until your outstanding balance which, as of September 25, 1988, isP75,868.38 has been fully paid.Please return the service vehicle to my office no later than September 30, 1988.4(Emphasis supplied)Close to six years after the termination of his services, Valenzonas counsel, by letter of July 30, 1994,5demanded from GF Equity payment of compensation arising from the arbitrary and unilateral termination of his employment. GF Equity, however, refused the claim.Valenzona thus filed on September 26, 1994 before the Regional Trial Court of Manila a complaint6against GF Equity for breach of contract with damages, ascribing bad faith, malice and "disregard to fairness and to the rights of the plaintiff" by unilaterally and arbitrarily pre-terminating the contract without just cause and legal and factual basis. He prayed for the award of actual damages in the amount ofP560,000.00 representing his unpaid compensation from September 26, 1988 up to December 31, 1989, at the rate ofP35,000.00 a month; moral damages in the amount ofP100,000.00; exemplary damages in the amount ofP50,000.00; attorneys fees in the amount ofP100,000.00; and costs of suit.Before the trial court, Valenzona challenged the condition in paragraph 3 of the contract as lacking the element of mutuality of contract, a clear transgression of Article 1308 of the New Civil Code, and reliance thereon, he contended, did not warrant his unjustified and arbitrary dismissal.GF Equity maintained, on the other hand, that it merely exercised its right under the contract to pre-terminate Valenzonas employment due to incompetence. And it posited that he was guilty of laches and, in any event, his complaint should have been instituted before a labor arbiter.The trial court, upholding the validity of the assailed provision of the contract, dismissed, by decision of June 28, 1997,7the complaint of Valenzona who, it held, was fully aware of entering into a bad bargain.The Court of Appeals, before which Valenzona appealed, reversed the trial courts decision, by decision of October 14, 2002,8and accordingly ordered GF Equity to pay him damages.In its decision, the appellate court held that the questioned provision in the contract "merely confers upon GF Equity the right to fire its coach upon a finding of inefficiency,a valid reason within the ambit of its management prerogatives,subject to limitations imposed by law, although not expressly stated in the clause"; and "therightgrantedinthecontractcanneitherbesaidtobeimmoral,unlawful,orcontrarytopublicpolicy." It concluded, however, that while "the mutuality of the clause" is evident, GF Equity "abused its right by arbitrarily terminating . . . Valenzonas employment and opened itself to a charge of bad faith." Hence, finding that Valenzonas claim for damages is "obviously . . . based on Art. 19 of the Civil Code" which provides:Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.,the appellate court awarded Valenzona the following damages, furnishing the justification therefor:. . . a)Compensatory damagesrepresenting his unearned income for 15 months. Actual and compensatory damages are those recoverable because of a pecuniary loss in business, trade, property, profession, job or occupation. As testified, his employment contract provided a monthly income of PhP35,000, which he lost from September 26, 1988 up to December 31, 1989 as a consequence of his arbitrary dismissal; b) Moral damages of PhP20,000. The act caused wounded feelings on the part of the plaintiff.Moral damagesis recoverable under Article 2220 and the chapter on Human Relations of the Civil Code (Articles 1936) when a contract is breached in bad faith; c)Exemplary damagesof PhP20,000, by way of example or correction for the public good; and d) When exemplary damages are awarded, attorneys fees can also be given. We deem it just to grant 10% of the actual damages asattorneys fees. (Underscoring supplied)Hence, this petition at bar, GF Equity faulting the appellate court in. . . CONCLUD[ING] WRONGLY FROM ESTABLISHED FACTS IN A MANNER VIOLATIVE OF APPLICABLE LAWS AND ESTABLISHED JURISPRUDENCE.9GF Equity argues that the appellate court committed anon-sequiturwhen it agreed with the findings of fact of the lower court but reached an opposite conclusion. It avers that the appellate court made itself a guardian of an otherwise intelligent individual well-versed in tactical maneuvers; that the freedom to enter into contracts is protected by law, and the courts will not interfere therewith unless the contract is contrary to law, morals, good customs, public policy or public order; that there was absolutely no reason for the appellate court to have found bad faith on its part; and that, at all events, Valenzona is guilty of laches for his unexplained inaction for six years.Central to the resolution of the instant controversy is the determination of whether the questioned last sentence of paragraph 3 is violative of the principle of mutuality of contracts.Mutuality is one of the characteristics of a contract, its validity or performance or compliance of which cannot be left to the will of only one of the parties.10This is enshrined inArticle 1308 of the New Civil Code,whose underlying principle is explained inGarcia v. Rita Legarda, Inc.,11viz:Article 1308 of the New Civil Code reads as follows:"The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them."The above legal provision is a virtual reproduction of Article 1256 of the old Civil Code but it was so phrased as to emphasize the principle that the contract must bindbothparties. This, of course is based firstly, on the principle that obligations arising from contracts have the force of law between the contracting parties and secondly,that there must be mutuality between the parties based on theiressential equalityto which is repugnant to have one party bound by the contract leaving the other free therefrom (8 Manresa 556). Its ultimate purpose isto render void a contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties.x x x (Emphasis, italics and underscoring supplied)The ultimate purpose of themutuality principleis thus to nullify a contract containing a condition which makes its fulfillment or pre-termination dependentexclusivelyupontheuncontrolledwillof one of the contracting parties.Not all contracts though which vest to one party their determination of validity or compliance or the right to terminate the same are void for being violative of the mutuality principle. Jurisprudence is replete with instances of cases12where this Court upheld the legality of contracts which left their fulfillment or implementation to the will of either of the parties. In these cases, however, there was a finding of the presence ofessential equalityof the parties to the contracts, thus preventing the perpetration of injustice on the weaker party.In the case at bar, the contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract that "if the coach,in the sole opinion of the corporation, fails to exhibit sufficient skill or competitive ability to coach the team, the corporation may terminate the contract."The assailed condition clearly transgresses the principle of mutuality of contracts. It leaves the determination of whether Valenzona failed to exhibit sufficient skill or competitive ability to coach Alaska teamsolely to the opinionof GF Equity. Whether Valenzona indeed failed to exhibit the required skill or competitive ability depended exclusively on the judgment of GF Equity. In other words, GF Equity was given an unbridled prerogative to pre-terminate the contract irrespective of the soundness, fairness or reasonableness, or even lack of basis of its opinion.To sustain the validity of the assailed paragraph would open the gate for arbitrary and illegal dismissals, for void contractual stipulations would be used as justification therefor.The assailed stipulation being violative of the mutuality principle underlying Article 1308 of the Civil Code, it is null and void.The nullity of the stipulation notwithstanding, GF Equity was not precluded from the right to pre-terminate the contract. The pre-termination must have legal basis, however, if it is to be declared justified.GF Equity failed, however, to advance any ground to justify the pre-termination. It simply invoked the assailed provision which is null and void.While GF Equitys act of pre-terminating Valenzonas services cannot be considered willful as it was based on a stipulation, albeit declared void, it, in doing so, failed to consider theabuse of rights principleenshrined in Art. 19 of the Civil Code which provides:Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.This provision of law sets standards which must be observedin the exercise of ones rightsas well as in the performance of its duties, to wit: toact with justice;give every one his due; andobserve honesty and good faith.Since the pre-termination of the contract was anchored on an illegal ground, hence, contrary to law, and GF Equity negligently failed to provide legal basis for such pre-termination,e.g.that Valenzona breached the contract by failing to discharge his duties thereunder, GF Equity failed to exercise in a legitimate manner its right to pre-terminate the contract, thereby abusing the right of Valenzona to thus entitle him to damages under Art. 19 in relation to Article 20 of the Civil Code the latter of which provides:Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.InDe Guzman v. NLRC,13this Court quoted the following explanation of Tolentino why it is impermissible to abuse our rights to prejudice others.The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justice which gives it life is repugnant to the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another or offends morals or good customs. Over and above the specific precepts of positive law are the supreme norms of justice which the law develops and which are expressed in three principles:honeste vivere,14alterum non laedere15andjus suum quique tribuere;16and he who violates them violates the law. For this reason, it is not permissible to abuse our rights to prejudice others.The disquisition inGlobe Mackay Cable and Radio Corporation v. Court of Appeals17is just as relevant as it is illuminating on the present case. In that case, this Court declared that even granting that the therein petitioners might have had the right to dismiss the therein respondent from work, the abusive manner in which that right was exercised amounted to a legal wrong for which the petitioners must be held liable.One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice"(Id.)Foremost among these principles is that pronounced in Article 19 which provides:Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.This article, known to contain what is commonly referred to as theprinciple of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rightsbut also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith.The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed.A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality.When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible.But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.18Emphasis and underscoring supplied).As for GF Equitys defense of laches on account of Valenzonas invocation of his right under the contract only after the lapse of six years, the same fails.Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it. It is not concerned with mere lapse of time; the fact of delay, standing alone, is insufficient to constitute laches.19Laches applies in equity, whereas prescription applies at law. Our courts are basically courts of law, not courts of equity. Laches cannot thus be invoked to evade the enforcement of an existing legal right. Equity, which has been aptly described as a "justice outside legality," is applied onlyin the absence of, and never against, statutory law.Aequetas nunquam contravenit legis.Thus, where the claim was filed within the statutory period of prescription, recovery therefor cannot be barred by laches. The doctrine of laches should never be applied earlier than the expiration of time limited for the commencement of actions at law,20unless, as a general rule, inexcusable delay in asserting a right and acquiescense in existing conditions are proven.21GF Equity has not proven, nay alleged, these.Under Article 114422of the New Civil Code, an action upon a written contract must be brought within 10 years from the time the right of action accrues. Since the action filed by Valenzona is an action for breach upon a written contract, his filing of the case 6 years from the date his cause of action arose was well within the prescriptive period, hence, the defense of laches would not, under the circumstances, lie.Consequently, Valenzona is entitled to recover actual damages his salary which he should have received from the time his services were terminated up to the time the employment contract expired.23As for moral damages which the appellate court awarded, Article 2220 of the New Civil Code allows such award to breaches of contract where the defendant acted fraudulently or in bad faith. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. It contemplates a state of mind affirmatively operating with furtive design or ill-will.24Bad faith means a breach of a known duty through some motive of interest or ill will. It must, however, be substantiated by evidence. Bad faith under the law cannot be presumed, it must be established by clear and convincing evidence.As earlier stated, however, the pre-termination of the contract was not willful as GF Equity based it on a provision therein which is void. Malice or bad faith cannot thus be ascribed to GF Equity.The unbroken jurisprudence is that in breach of contract cases where a party is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the obligation which the parties had foreseen or could reasonably have foreseen. The damages, however, do not include moral damages.25The award by the appellate court of moral damages must thus be set aside. And so must the award of exemplary damages, absent a showing that GF Equity acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.26The award to Valenzona of attorneys fees must remain, however, GF Equity having refused to pay the balance of Valenzonas salaries to which he was, under the facts and circumstances of the case, entitled under the contract, thus compelling him to litigate to protect his interest.27WHEREFORE, the decision of the Court of Appeals dated October 14, 2002 is hereby SET ASIDE and another rendered declaring the assailed provision of the contract NULL AND VOID and ORDERING petitioner, GF Equity, to pay private respondent, Arturo Valenzona, actual damages in the amount ofP525,000.00 and attorneys fees in the amount ofP60,000.00.Costs against petitioner.SO ORDERED.Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concur.

Footnotes1CA Rollo84-92.2Records at 211-213.3Id.at 7-10.4Id.at 86.5Id.at 11-12.6Id. at 1-6.7Videnote 2.8Videnote 1.9Rolloat 6.10Tolentino, Civil Code Of The Philippines, Vol. IV, 1990 ed., p. 410.1121 SCRA 555, 558-560 (1967).12E.g.,Jespajo Realtyv. Court of Appeals390 SCRA 27, 39 (2002).This Court in this case enunciated the rule that the express provision in the lease agreement of the parties that violation of any of the terms and conditions of the contract shall be sufficient ground for termination thereofby the lessor, removes the contract from the application of Article 1308.In Taylorv. Uy Tieng Piao, 43 Phil. 873 (1922), this Court ruled that Article 1256 (now Art. 1308) creates no impediment to the insertion in a contract for personal service of a resolutory condition permitting the cancellation of the contractby one of the parties. Such a stipulation, as can be readily seen, does not make either the validity of the fulfillment of the contract dependent upon the will of the party to whom is conceded the privilege of cancellation; for where the contracting parties have agreed that such option shall exist, the exercise of the option is as much in the fulfillment of the contract as any other act which may have been the subject of agreement. x x x.InAllied Banking Corporation v. Court of Appeals, 284 SCRA 357, 363-365 (1998), this Court held: "The fact that such option isbinding only on the lessor and can be exercised only by the lesseedoes not render it void for lack of mutuality. After all, the lessor is free to give or not to give the option to the lessee. And while the lessee has a right to elect whether to continue with the lease or not, once he exercises his option to continue and the lessor accepts, both parties are thereafter bound by the new lease agreement. Their rights and obligations become mutually fixed, and the lessee is entitled to retain possession of the property for the duration of the new lease, and the lessor may hold him liable for the rent therefore. The lessee cannot thereafter escape liability even if he should subsequently decide to abandon the premises. Mutuality obtains in such a contract and equality exists between the lessor and the lessee since they remain with the same faculties in respect to fulfillment." (Underscoring supplied)13211 SCRA 723, 730 (1992).14To live honorably, creditably, or virtuously.15Not to injure another.16To render to everyone his own.17176 SCRA 778, 790-791 (1989).18Id.at 783-784.19Chavezv. Bonto-Perez, 242 SCRA 73, 80 (1995).20Imperial Victory Shipping Agencyv. NLRC 200 SCRA 178, 184 (1991).21Z. E. Lotho, Inc.v. Ice & Cold Storage Industries of the Phils., Inc.3 SCRA 744, 750 (1961);Buenaventura v. David,37 Phil. 435 (1918).22Art. 1144. The following actions must be brought within 10 years from the time the right of action accrues.(1) Upon a written contract;(2) Upon an obligation created by law;(3) Upon a judgment.23In Teknika Skills and Trade Services, Inc.v. NLRC, 212 SCRA 132, 139-140 (1992), this Court held:"The principal cause of action in private respondents complaint is breach of contract of employment for a definite period. Having established her case, which public respondents correctly sustained, she is entitled to the salary corresponding to the unexpired portion of her contract. This is not a simple case of illegal dismissal of an employee whose employment is without a definite period."24Far East Bank and Trust Companyv. Court of Appeals, 241 SCRA 671, 675 (1995).25Philippine Air Linesv. Miano, 242 SCRA 235, 240 (1995) and Lufthansa German Airlinesv. Court of Appeals, 243 SCRA 600, 614-615 (1995). See also China Airlines, Ltd.v. Court of Appeals, 211 SCRA 897, 905-906 (1992); Saludo, Jr.v. Court of Appeals 207 SCRA 498, 535-536 (1992); China Airlines, Ltd.v. Intermediate Appellate Court, G.R. No. 73835, January 17, 1989; and Philippine Airlinesv. Court of Appeals, G.R. No. L-46558, July 31, 1981.26Article 2232 of the New Civil Code;Salvador v. Court of Appeals, G.R. No. 124899, March 30, 2004.27Article 2208 of the New Civil Code provides:Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except:(1) When exemplary damages are awarded:(2)When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;(3) In criminal cases of malicious prosecution against the plaintiff;(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim;(6) In actions for legal support;(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;(8) In actions for indemnity under workmens compensation and employers liability laws;(9) In a separate civil action to recover civil liability arising from a crime;(10) When at least double judicial costs are awarded;(11) In any other case where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered.In all cases, the attorneys fees and expenses of litigation must be reasonable. (Emphasis supplied)

SECOND DIVISION[G.R. No. 128066. June 19, 2000]JARDINE DAVIES INC., petitioner, vs. COURT OF APPEALS and FAR EAST MILLS SUPPLY CORPORATION,respondents.[G.R. No. 128069 June 19, 2000]PURE FOODS CORPORATION, petitioner, vs.COURT OF APPEALS and FAR EAST MILLS SUPPLY CORPORATION,respondents.D E C I S I O NBELLOSILLO,J.:This is rather a simple case for specific performance with damages which could have been resolved through mediation and conciliation during its infancy stage had the parties been earnest in expediting the disposal of this case. They opted however to resort to full court proceedings and denied themselves the benefits of alternative dispute resolution, thus making the process more arduous and long-drawn.The controversy started in 1992 at the height of the power crisis which the country was then experiencing. To remedy and curtail further losses due to the series of power failures, petitioner PURE FOODS CORPORATION (hereafter PUREFOODS) decided to install two (2) 1500 KW generators in its food processing plant in San Roque, Marikina City.Sometime in November 1992 a bidding for the supply and installation of the generators was held. Several suppliers and dealers were invited to attend a pre-bidding conference to discuss the conditions, propose scheme and specifications that would best suit the needs of PUREFOODS. Out of the eight (8) prospective bidders who attended the pre-bidding conference, only three (3) bidders, namely, respondent FAR EAST MILLS SUPPLY CORPORATION (hereafter FEMSCO), MONARK and ADVANCE POWER submitted bid proposals and gave bid bonds equivalent to 5% of their respective bids, as required.Thereafter, in a letter dated 12 December 1992 addressed to FEMSCO President Alfonso Po, PUREFOODS confirmed the award of the contract to FEMSCO -Gentlemen:This will confirm that Pure Foods Corporation has awarded to your firm the project: Supply and Installation of two (2) units of 1500 KW/unit Generator Sets at the Processed Meats Plant, Bo. San Roque, Marikina, based on your proposal number PC 28-92 dated November 20, 1992, subject to the following basic terms and conditions:1. Lump sum contract ofP6,137,293.00 (VAT included), for the supply of materials and labor for the local portion and the labor for the imported materials, payable by progress billing twice a month, with ten percent (10%) retention. The retained amount shall be released thirty (30) days after acceptance of the completed project and upon posting of Guarantee Bond in an amount equivalent to twenty percent (20%) of the contract price. The Guarantee Bond shall be valid for one (1) year from completion and acceptance of project. The contract price includes future increase/s in costs of materials and labor;2. The project shall be undertaken pursuant to the attached specifications. It is understood that any item required to complete the project, and those not included in the list of items shall be deemed included and covered and shall be performed;3. All materials shall be brand new;4. The project shall commence immediately and must be completed within twenty (20) working days after the delivery of Generator Set to Marikina Plant, penalty equivalent to 1/10 of 1% of the purchase price for every day of delay;5. The Contractor shall put up Performance Bond equivalent to thirty (30%) of the contract price, and shall procure All Risk Insurance equivalent to the contract price upon commencement of the project. The All Risk Insurance Policy shall be endorsed in favor of and shall be delivered to Pure Foods Corporation;6. Warranty of one (1) year against defective material and/or workmanship.Once finalized, we shall ask you to sign the formal contract embodying the foregoing terms and conditions.Immediately, FEMSCO submitted the required performance bond in the amount ofP1,841,187.90 and contractors all-risk insurance policy in the amount ofP6,137,293.00 which PUREFOODS through its Vice President Benedicto G. Tope acknowledged in a letter dated 18 December 1992. FEMSCO also made arrangements with its principal and started the PUREFOODS project by purchasing the necessary materials. PUREFOODS on the other hand returned FEMSCOs Bidders Bond in the amount ofP1,000,000.00, as requested.Later, however, in a letter dated 22 December 1992, PUREFOODS through its Senior Vice President Teodoro L. Dimayuga unilaterally canceled the award as "significant factors were uncovered and brought to (their) attention which dictate (the) cancellation and warrant a total review and re-bid of (the) project." Consequently, FEMSCO protested the cancellation of the award and sought a meeting with PUREFOODS. However, on 26 March 1993, before the matter could be resolved, PUREFOODS already awarded the project and entered into a contract with JARDINE NELL, a division of Jardine Davies, Inc. (hereafter JARDINE), which incidentally was not one of the bidders.FEMSCO thus wrote PUREFOODS to honor its contract with the former, and to JARDINE to cease and desist from delivering and installing the two (2) generators at PUREFOODS. Its demand letters unheeded, FEMSCO sued both PUREFOODS and JARDINE: PUREFOODS for reneging on its contract, and JARDINE for its unwarranted interference and inducement. Trial ensued. After FEMSCO presented its evidence, JARDINE filed aDemurrer to Evidence.On 27 June 1994 the Regional Trial Court of Pasig, Br. 68,[1]granted JARDINEsDemurrer to Evidence. The trial court concluded that "[w]hile it may seem to the plaintiff that by the actions of the two defendants there is something underhanded going on, this is all a matter of perception, and unsupported by hard evidence, mere suspicions and suppositions would not stand up very well in a court of law."[2]Meanwhile trial proceeded as regards the case against PUREFOODS.On 28 July 1994 the trial court rendered a decision ordering PUREFOODS: (a) to indemnify FEMSCO the sum ofP2,300,000.00 representing the value of engineering services it rendered; (b) to pay FEMSCO the sum of US$14,000.00 or its peso equivalent, andP900,000.00 representing contractor's mark-up on installation work, considering that it would be impossible to compel PUREFOODS to honor, perform and fulfill its contractual obligations in view of PUREFOOD's contract with JARDINE and noting that construction had already started thereon; (c) to pay attorneys fees in an amount equivalent to 20% of the total amount due; and, (d) to pay the costs. The trial court dismissed the counterclaim filed by PUREFOODS for lack of factual and legal basis.Both FEMSCO and PUREFOODS appealed to the Court of Appeals. FEMSCO appealed the 27 June 1994 Resolution of the trial court which granted theDemurrer to Evidencefiled by JARDINE resulting in the dismissal of the complaint against it, while PUREFOODS appealed the 28 July 1994 Decision of the same court which ordered it to pay FEMSCO.On 14 August 1996 the Court of Appeals affirmedin totothe 28 July 1994 Decision of the trial court.[3]It also reversed the 27 June 1994 Resolution of the lower court and ordered JARDINE to pay FEMSCO damages for inducing PUREFOODS to violate the latters contract with FEMSCO. As such, JARDINE was ordered to pay FEMSCOP2,000,000.00 for moral damages. In addition, PUREFOODS was also directed to pay FEMSCOP2,000,000.00 as moral damages andP1,000,000.00 as exemplary damages as well as 20% of the total amount due as attorney's fees.On 31 January 1997 the Court of Appeals denied for lack of merit the separate motions for reconsideration filed by PUREFOODS and JARDINE. Hence, these two (2) petitions for review filed by PUREFOODS and JARDINE which were subsequently consolidated.PUREFOODS maintains that the conclusions of both the trial court and the appellate court are premised on a misapprehension of facts. It argues that its 12 December 1992 letter to FEMSCO was not an acceptance of the latter's bid proposal and award of the project but more of a qualified acceptance constituting a counter-offer which required FEMSCO's expressconforme.Since PUREFOODS never received FEMSCOsconforme,PUREFOODS was very well within reason to revoke its qualified acceptance or counter-offer. Hence, no contract was perfected between PUREFOODS and FEMSCO. PUREFOODS also contends that it was never in bad faith when it dealt with FEMSCO. Hence moral and exemplary damages should not have been awarded.Corollarily, JARDINE asserts that the records are bereft of any showing that it had prior knowledge of the supposed contract between PUREFOODS and FEMSCO, and that it induced PUREFOODS to violate the latters alleged contract with FEMSCO. Moreover, JARDINE reasons that FEMSCO, an artificial person, is not entitled to moral damages. But grantingarguendothat the award of moral damages is proper,P2,000,000.00 is extremely excessive.In the main, these consolidated cases present two (2) issues: first, whether there existed a perfected contract between PUREFOODS and FEMSCO; and second, granting there existed a perfected contract, whether there is any showing that JARDINE induced or connived with PUREFOODS to violate the latter's contract with FEMSCO.A contract is defined as "a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do."[4]There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; and, (c) cause of the obligation which is established.[5]A contract binds both contracting parties and has the force of law between them.Contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror. From that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.[6]To produce a contract, the acceptance must not qualify the terms of the offer. However, the acceptance may be express or implied.[7]For a contract to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror.In the instant case, there is no issue as regards the subject matter of the contract and the cause of the obligation. The controversy lies in the consent - whether there was an acceptance of the offer, and if so, if it was communicated, thereby perfecting the contract.To resolve the dispute, there is a need to determine what constituted the offer and the acceptance. Since petitioner PUREFOODS started the process of entering into the contract by conducting a bidding, Art. 1326 of the Civil Code, which provides that "[a]dvertisements for bidders are simply invitations to make proposals," applies. Accordingly, theTerms and Conditions of the Biddingdisseminated by petitioner PUREFOODS constitutes the "advertisement" to bid on the project. The bid proposals or quotations submitted by the prospective suppliers including respondent FEMSCO, are the offers. And, the reply of petitioner PUREFOODS, the acceptance or rejection of the respective offers.Quite obviously, the 12 December 1992 letter of petitioner PUREFOODS to FEMSCO constituted acceptance of respondent FEMSCOs offer as contemplated by law. The tenor of the letter,i.e.,"This will confirm that Pure Foods has awarded to your firm (FEMSCO) the project," could not be more categorical. While the same letter enumerated certain "basic terms and conditions," these conditions were imposed on the performance of the obligation rather than on the perfection of the contract. Thus, the first "condition" was merely a reiteration of the contract price and billing scheme based on theTerms and Conditions of Biddingand the bid or previous offer of respondent FEMSCO. The second and third "conditions" were nothing more than general statements that all items and materials including those excluded in the list but necessary to complete the project shall be deemed included and should be brand new. The fourth "condition" concerned the completion of the work to be done,i.e., within twenty (20) days from the delivery of the generator set, the purchase of which was part of the contract. The fifth "condition" had to do with the putting up of a performance bond and an all-risk insurance, both of which should be given upon commencement of the project. The sixth "condition" related to the standard warranty of one (1) year. In fine, the enumerated "basic terms and conditions" were prescriptions on how the obligation was to be performed and implemented. They were far from being conditions imposed on the perfection of the contract.In Babasa v. Court of Appeals[8]we distinguished between a condition imposed on the perfection of a contract and a condition imposed merely on the performance of an obligation. While failure to comply with the first condition results in the failure of a contract, failure to comply with the second merely gives the other party options and/or remedies to protect his interests.We thus agree with the conclusion of respondent appellate court which affirmed the trial court -As can be inferred from the actual phrase used in the first portion of the letter, the decision to award the contract has already been made. The letter only serves as a confirmation of such decision. Hence, to the Courts mind, there is already an acceptance made of the offer received by Purefoods. Notwithstanding the terms and conditions enumerated therein, the offer has been accepted and/or amplified the details of the terms and conditions contained in the Terms and Conditions of Bidding given out by Purefoods to prospective bidders.[9]But even grantingarguendothat the 12 December 1992 letter of petitioner PUREFOODS constituted a "conditional counter-offer," respondent FEMCO's submission of the performance bond and contractor's all-risk insurance was an implied acceptance, if not a clear indication of its acquiescence to, the "conditional counter-offer," which expressly stated that the performance bond and the contractor's all-risk insurance should be given upon the commencement of the contract. Corollarily, the acknowledgment thereof by petitioner PUREFOODS, not to mention its return of FEMSCO's bidder's bond, was a concrete manifestation of its knowledge that respondent FEMSCO indeed consented to the "conditional counter-offer." After all, as earlier adverted to, an acceptance may either be express or implied,[10]and this can be inferred from the contemporaneous and subsequent acts of the contracting parties.Accordingly, for all intents and purposes, the contract at that point has been perfected, and respondent FEMSCO'sconformewould only be a mere surplusage. The discussion of the price of the project two (2) months after the 12 December 1992 letter can be deemed as nothing more than a pressure being exerted by petitioner PUREFOODS on respondent FEMSCO to lower the price even after the contract had been perfected. Indeed from the facts, it can easily be surmised that petitioner PUREFOODS was haggling for a lower price even after agreeing to the earlier quotation, and was threatening to unilaterally cancel the contract, which it eventually did. Petitioner PUREFOODS also makes an issue out of the absence of a purchase order (PO). Suffice it to say that purchase orders or POs do not make or break a contract. Thus, even the tenor of the subsequent letter of petitioner PUREFOODS,i.e.,"Pure Foods Corporation is hereby canceling the award to your company of the project," presupposes that the contract has been perfected. For, there can be no cancellation if the contract was not perfected in the first place.Petitioner PUREFOODS also argues that it was never in bad faith. On the contrary, it believed in good faith that no such contract was perfected. We are not convinced. We subscribe to the factual findings and conclusions of the trial court which were affirmed by the appellate court -Hence, by the unilateral cancellation of the contract, the defendant (petitioner PURE FOODS) has acted with bad faith and this was further aggravated by the subsequent inking of a contract between defendant Purefoods and erstwhile co-defendant Jardine. It is very evident that Purefoods thought that by the expedient means of merely writing a letter would automatically cancel or nullify the existing contract entered into by both parties after a process of bidding. This, to the Courts mind, is a flagrant violation of the express provisions of the law and is contrary to fair and just dealings to which every man is due.[11]This Court has awarded in the past moral damages to a corporation whose reputation has been besmirched.[12]In the instant case, respondent FEMSCO has sufficiently shown that its reputation was tarnished after it immediately ordered equipment from its suppliers on account of the urgency of the project, only to be canceled later. We thus sustain respondent appellate court's award of moral damages. We however reduce the award fromP2,000,000.00 toP1,000,000.00, as moral damages are never intended to enrich the recipient. Likewise, the award of exemplary damages by way of example for the public good is excessive and should be reduced toP100,000.00.Petitioner JARDINE maintains on the other hand that respondent appellate court erred in ordering it to pay moral damages to respondent FEMSCO as it supposedly induced PUREFOODS to violate the contract with FEMSCO. We agree. While it may seem that petitioners PUREFOODS and JARDINE connived to deceive respondent FEMSCO, we find no specific evidence on record to support such perception. Likewise, there is no showing whatsoever that petitioner JARDINE induced petitioner PUREFOODS. The similarity in the design submitted to petitioner PUREFOODS by both petitioner JARDINE and respondent FEMSCO, and the tender of a lower quotation by petitioner JARDINE are insufficient to show that petitioner JARDINE indeed induced petitioner PUREFOODS to violate its contract with respondent FEMSCO.WHEREFORE, judgment is hereby rendered as follows:(a) The petition in G.R. No. 128066 is GRANTED. The assailed Decision of the Court of Appeals reversing the 27 June 1994 resolution of the trial court and ordering petitioner JARDINE DAVIES, INC., to pay private respondent FAR EAST MILLS SUPPLY CORPORATIONP2,000,000.00 as moral damages is REVERSED and SET ASIDE for insufficiency of evidence; and(b) The petition in G.R. No. 128069 is DENIED. The assailed Decision of the Court of Appeals ordering petitioner PURE FOODS CORPORATION to pay private respondent FAR EAST MILLS SUPPLY CORPORATION the sum ofP2,300,000.00 representing the value of engineering services it rendered, US$14,000.00 or its peso equivalent, andP900,000.00 representing the contractor's mark-up on installation work, as well as attorney's fees equivalent to twenty percent (20%) of the total amount due, is AFFIRMED. In addtion, petitioner PURE FOODS CORPORATION is ordered to pay private respondent FAR EAST MILLS SUPPLY CORPORATION moral damages in the amount ofP1,000,000.00 and exemplary damages in the amount ofP1,000,000.00. Costs against petitioner.SO ORDERED.Mendoza, Quisumbing, Buena,andDe Leon, Jr., JJ.,concur.

[1]Judge Santiago G. Estrella, presiding.[2]Resolution of the trial court dated 27 June 1994; Rollo of G.R. No. 128066, p. 66.[3]Special Fifteenth Division; Decision penned by Associate Justice Maximiano C. Asuncion, concurred in by Associate Justices Godardo A. Jacinto, Chairman, and Celia Lipana-Reyes.[4]Sanchez Roman 148-149.[5]Art. 1318, Civil Code.[6]See Art. 1315,id.[7]Art. 1320,id.[8]G.R. No. 124045, 21 May 1998, 290 SCRA 532, citing Romerov.Court of Appeals, G.R. No. 107207, 23 November 1995, 250 SCRA 223, and Lim v. Court of Appeals, G.R. No. 118347, 24 October 1996, 263 SCRA 569.[9]Decision of the appellate court, pp. 7-8; Decision of the trial court, p. 5.[10]Art. 1320, Civil Code.[11]Decision of the appellate court, pp. 9-10; Decision of the trial court, pp. 5-6.[12]Asset Privatization Trust v. Court of Appeals, G.R. No. 121171, 29 December 1998, 300 SCRA 579; See also Mambulao Lumber Co.v.Philippine National Bank, No. L-22973, 30 January 1968, 22 SCRA 359.

THIRD DIVISION

[G.R. No. 116896.May 5, 1997]PHILIPPINE NATIONAL CONSTRUCTION CORPORATIONpetitioner, vs. COURT OF APPEALS, MA. TERESA S.RAYMUNDO-ABARRA, JOSE S. RAYMUNDO, ANTONIO S. RAYMUNDO, RENE S. RAYMUNDO, and AMADOR S. RAYMUNDO,respondents.D E C I S I O NDAVIDE, JR.,J.:This petition for review oncertiorarihas its roots in Civil Case No. 53444, which was sparked by the petitioner's refusal to pay the rentals as stipulated in the contract of lease[1]on an undivided portion of 30,000 square meters of a parcel of land owned by the private respondents.The lease contract, executed on 18 November 1985, reads in part as follows:1.TERM OF LEASE- This lease shall be for a period of five (5) years, commencing on the date of issuance of the industrial clearance by the Ministry of Human Settlements, renewable for a like or other period at the option of the LESSEE under the same terms and conditions.2.RATE OF RENT- LESSEE shall pay to the LESSOR rent at the monthly rate of TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, in the manner set forth in Paragraph 3 below.This rate shall be increased yearly by Five Percent (5%) based on the agreed monthly rate ofP20,000.00 as follows:Monthly RatePeriod ApplicableP21,000.00Starting on the 2nd yearP22,000.00Starting on the 3rd yearP23,000.00Starting on the 4th yearP24,000.00Starting on the 5th year3.TERMS OF PAYMENT- The rent stipulated in Paragraph 2 above shall be paid yearly in advance by the LESSEE.The first annual rent in the amount of TWO HUNDRED FORTY THOUSAND PESOS (P240,000.00), Philippine currency, shall be due and payable upon the execution of this Agreement and the succeeding annual rents shall be payable every twelve (12) months thereafter during the effectivity of this Agreement.4.USE OF LEASED PROPERTY- It is understood that the Property shall be used by the LESSEE as the site, grounds and premises of a rock crushing plant and field office, sleeping quarters and canteen/mess hall.The LESSORS hereby grant to the LESSEE the right to erect on the Leased Property such structure(s) and/or improvement(s) necessary for or incidental to the LESSEE's purposes.. . .11.TERMINATION OF LEASE- This Agreement may be terminated by mutual agreement of the parties.Upon the termination or expiration of the period of lease without the same being renewed, the LESSEE shall vacate the Leased Property at its expense.On 7 January 1986, petitioner obtained from the Ministry of Human Settlements a Temporary Use Permit[2]for the proposed rock crushing project.The permit was to be valid for two years unless sooner revoked by the Ministry.On 16 January 1986, private respondents wrote petitioner requesting payment of the first annual rental in the amount ofP240,000 which was due and payable upon the execution of the contract.They also assured the latter that they had already stopped considering the proposals of other aggregates plants to lease the property because of the existing contract with petitioner.[3]In its reply-letter, petitioner argued that under paragraph 1 of the lease contract, payment of rental would commence on the date of the issuance of an industrial clearance by the Ministry of Human Settlements, and not from the date of signing of the contract.It then expressed its intention to terminate the contract, as it had decided to cancel or discontinue with the rock crushing project "due to financial, as well as technical, difficulties."[4]The private respondents refused to accede to petitioner's request for the pretermination of the lease contract.They insisted on the performance of petitioner's obligation and reiterated their demand for the payment of the first annual rental.[5]Petitioner objected to the claim of the private respondents and argued that it was "only obligated to pay ... the amount ofP20,000.00 as rental payments for the one-month period of lease, counted from 07 January 1986 when the Industrial Permit was issued by the Ministry of Human Settlements up to 07 February 1986 when the Notice of Termination was served"[6]on private respondents.On 19 May 1986, the private respondents instituted with the Regional Trial Court of Pasig an action against petitioner for Specific Performance with Damages.[7]The case was docketed as Civil Case No. 53444 at Branch 160 of the said court.After the filing by petitioner of its Answer with Counterclaim, the case was set for trial on the merits.What transpired next was summarized by the trial court in this wise:Plaintiffs rested their case on September 7, 1987 (p. 87 rec.).Defendant asked for postponement of the reception of its evidence scheduled on August 10, 1988 and as prayed for, was reset to August 25, 1988 (p. 91 rec.)Counsel for defendant again asked for postponement, through representative, as he was presently indisposed.The case was reset, intransferable to September 15 and 26, 1988 (p. 94 rec.)On September 2, 1988, the office of the Government Corporate Counsel entered its appearance for defendant (p. 95, rec.) and the original counsel later withdrew his appearance.On September 15, 1988 the Government Corporate Counsel asked for postponement, represented by Atty. Elpidio de Vega, and with his conformity in open court, the hearing was reset, intransferable to September 26 and October 17, 1988.(p. 98, rec.)On September 26, 1988 during the hearing, defendant's counsel filed a motion for postponement (urgent) as he had "sore eyes", a medical certificate attached.Counsel for plaintiffs objected to the postponement and the court considered the evidence of the government terminated or waived.The case was deemed submitted for decision upon the filing of the memorandum.Plaintiffs filed their memorandum on October 26, 1988. (p. 111, rec.).On October 18, 1988 in the meantime, the defendant filed a motion for reconsideration of the order of the court on September 26, 1988 (p. 107, rec.)The motion was not asked to be set for hearing(p. 110 rec.)There was also no proof of notice and service to counsel for plaintiff.The court in the interest of justice set the hearing on the motion on November 29, 1988.(p. 120, rec.) but despite notice, again defendant's counsel was absent (p. 120-A, dorsal side, rec.)without reason.The court reset the motion to December 16, 1988, in the interest of justice.The motion for reconsideration was denied by the court.A second motion for reconsideration was filed and counsel set for hearing the motion on January 19, 1989.During the hearing, counsel for the government was absent.The motion was deemed abandoned but the court at any rate, after a review of the incidents and the grounds relied upon in the earlier motion of defendant, found no reason to disturb its previous order.[8]On 12 April 1989, the trial court rendered a decision ordering petitioner to pay the private respondents the amount ofP492,000 which represented the rentals for two years, with legal interest from 7 January 1986 until the amount was fully paid, plus attorney's fees in the amount ofP20,000 and costs.[9]Petitioner then appealed to the Court of Appeals alleging that the trial court erred in ordering it to pay the private respondent the amount ofP492,000 and in denying it the right to be heard.Upon the affirmance of the trial court's decision[10]and the denial of its motion for reconsideration, petitioner came to this Court ascribing to the respondent Court of Appeals the same alleged errors and reiterating their arguments.First.Petitioner invites the attention of this Court to paragraph 1 of the lease contract, which reads: "This lease shall be for a period of five (5) years, commencing on the date of issuance of the industrial clearance by the Ministry of Human Settlements...."It then submits that the issuance of an industrial clearance is a suspensive condition without which the rights under the contract would not be acquired.The Temporary Use Permit is not the industrial clearance referred to in the contract; for the said permit requires that a clearance from the National Production Control Commission be first secured, and besides, there is a finding in the permit that the proposedproject does not conform to the Zoning Ordinance of Rodriguez, (formerly Montalban), Rizal, where the leased property is located.Without the industrial clearance the lease contract could not become effective and petitioner could not be compelled to perform its obligation under the contract.Petitioner is now estopped from claiming that the Temporary Use Permit was not the industrial clearance contemplated in the contract.In its letter dated 24 April 1986, petitioner states:We wish to reiterate PNCC Management's previous stand that it is only obligated to pay your clients the amount ofP20,000.00 as rental payments for the one-month period of the lease, counted from07 January 1986 when the Industrial Permit was issued by the Ministry of Human Settlementsup to 07 February 1986 when the Notice of Termination was served on your clients.[11](Underscoring Supplied).The "Industrial Permit" mentioned in the said letter could only refer to the Temporary Use Permit issued by the Ministry of Human Settlements on 7 January 1986.And it can be gleaned from this letter that petitioner has considered the permit as industrial clearance; otherwise, petitioner could have simply told the private respondents that its obligation to pay rentals has not yet arisen because the Temporary Use Permit is not the industrial clearance contemplated by them.Instead, petitioner recognized its obligation to pay rental counted from the date the permit was issued.Also worth noting is the earlier letter of petitioner; thus:[P]lease be advised of PNCC Management's decision to cancel or discontinue with the rock crushing project due to financial as well as technical difficulties.In view thereof, we would like to terminate our Lease Contract dated 18 November, 1985.Should you agree to the mutual termination of our Lease Contract, kindly indicate your conformity hereto by affixing your signature on the space provided below.May we likewise request Messrs. Rene, Jose and Antonio, all surnamed Raymundo and Mrs. Socorro A. Raymundo as Attorney-in-Fact of Amador S. Raymundo to sign on the spaces indicated below.[12]It can be deduced from this letter that the suspensive condition - issuance of industrial clearance - has already been fulfilled and that the lease contract has become operative.Otherwise, petitioner did not have to solicit the conformity of the private respondents to the termination of the contract for the simple reason that no juridical relation was created because of the non-fulfillment of the condition.Moreover, the reason of petitioner in discontinuing with its project and in consequently cancelling the leasecontract was financial as well as technical difficulties, not the alleged insufficiency of the Temporary Use Permit.Second.Invoking Article 1266 and the principle ofrebus sic stantibus, petitioner asserts that it should be released from the obligatory force of the contract of lease because the purpose of the contract did not materialize due to unforeseen events and causes beyond its control,i.e., due to abrupt change in political climate after the EDSA Revolution andfinancial difficulties.It is a fundamental rule that contracts, once perfected,bind both contracting parties, and obligations arising therefrom have the force of law between the parties and should be complied with in good faith.[13]But the law recognizes exceptions to the principle of the obligatory force of contracts.One exception is laid down in Article 1266 of the Civil Code, which reads: "The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor."Petitioner cannot, however, successfully take refuge in the said article, since it is applicable only to obligations "to do", and not to obligations "to give".[14]An obligation "to do" includes all kinds of work or service; while an obligation "to give" is a prestation which consists in the delivery of a movable or an immovable thing in order to create a real right, or for the use of the recipient, or for its simple possession, or in order to return it to its owner.[15]The obligation to pay rentals[16]or deliver the thing in a contract of lease[17]falls within the prestation to give; hence, it is not covered within the scope of Article 1266.At any rate, the unforeseen event and causes mentioned by petitioner are not the legal or physical impossibilities contemplated in said article.Besides, petitioner failed to state specifically the circumstances brought about by the abrupt change in the political climate in the country except the alleged prevailing uncertainties in government policies on infrastructure projects.The principle ofrebus sic stantibus[18]neither fits in with the facts of the case.Under this theory, the parties stipulate in the light of certain prevailing conditions, and once these conditions cease to exist the contract also ceases to exist.[19]This theory is said to be the basis of Article 1267 of the Civil Code, which provides:ART. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part.This article, which enunciates the doctrine of unforeseen events, is not, however, an absolute application of the principle ofrebus sic stantibus, which would endanger the security of contractual relations.The parties to the contract must be presumed to have assumed the risks of unfavorable developments.It is therefore only in absolutely exceptional changes of circumstances that equity demands assistance for the debtor.[20]In this case, petitionerwants this Court to believe that the abrupt change in the political climate of the country after the EDSA Revolution and its poor financial condition rendered the performance of the lease contract impractical and inimical to the corporate survival of the petitioner.This Court cannot subscribe to this argument.As pointed out by private respondents:[21]It is a matter of record that petitioner PNCC entered into a contract with private respondents on November 18, 1985.Prior thereto, it is of judicial notice that after the assassination of Senator Aquino on August 21, 1983, the country has experienced political upheavals, turmoils, almost daily mass demonstrations, unprecedented, inflation, peace and order deterioration, the Aquino trial and many other things that brought about the hatred of people even against crony corporations.On November 3, 1985, Pres. Marcos, being interviewed live on U.S. television announced that there would be a snap election scheduled for February 7, 1986.On November 18, 1985, notwithstanding the above,petitioner PNCC entered into the contract of lease with private respondents with open eyes of the deteriorating conditions of the country.Anent petitioners alleged poor financial condition, the same will neither release petitioner from the binding effect of the contract of lease.As held in Central Bank v. Court of Appeals,[22]cited by the private respondents, mere pecuniary inability to fulfill an engagement does not discharge a contractual obligation, nor does it constitute a defense to an action for specific performance.With regard to the non-materialization of petitioners particularpurpose in entering into the contract of lease,i.e., to use the leased premises as a site of a rock crushing plant, the same will not invalidate the contract.The cause or essential purpose in a contract of lease is the use or enjoyment of a thing.[23]As a general principle, the motive or particular purpose of a party in entering into a contract does not affect the validity or existence of the contract; an exception is when the realization of such motive or particular purpose has been made a condition upon which the contract is made to depend.[24]The exception is not apply here.Third.According to petitioner, the award ofP492,000 representing the rent for two years is excessive, considering that it did not benefit from the property.Besides, the temporary permit, conformably with the express provision therein, was deemed automatically revoked for failure of petitioner to use the same within one year from the issuance thereof.Hence, the rent payable should only be for one year.Petitioner cannot be heard to complain that the award is excessive.The temporary permit was valid for two years but was automatically revoked because of its non-use within one year from its issuance.The non-use of the permit and the non-entry into the property subject of the lease contract were both imputable to petitioner and cannot, therefore, be taken advantage of in order to evade or lessen petitioners monetary obligation.The damage or prejudice to private respondents is beyond dispute.They unquestionably suffered pecuniary losses because of their inability to use the leased premises.Thus, in accordance with Article 1659 of the Civil Code,[25]they are entitled to indemnification for damages; and the award ofP492,000 is fair and just under the circumstances of the case.Finally, petitioner submits that the trial court gravely abused its discretion in denying petitioner the right to be heard.We disagree.The trial court was in fact liberal in granting several postponements[26]to petitioner before it deemed terminated and waived the presentation of evidence in petitioners behalf.It must be recalled that private respondents rested their case on 7 September 1987 yet.[27]Almost a year after, or on 10 August 1988 when it was petitioners turn to present evidence, petitioners counsel asked for postponement of the hearing to 25 August 1988 due to conflict of schedules,[28]and this was granted.[29]At the rescheduled hearing, petitioners counsel, through a representative, moved anew for postponement, as he was allegedly indisposed.[30]The case was then reset intransferable to September 15 and 26, 1988.[31]On 2 September 1988, the Office of the Government Corporate Counsel, through Atty. Elpidio J. Vega, entered its appearance for the petitioner,[32]and later the original counsel withdrew his appearance.[33]On 15 September 1988, Atty. Vega requested for postponement to enable him to go over the records of the case.[34]With his conformity, the hearing was reset intransferable to September 26 and October 17, 1988.[35]In the morning of 26 September 1988, the court received Atty. Vegas Urgent Motion for Postponement on the ground that he was afflicted with conjunctivitis or sore eyes.[36]This time, private respondents objected; and upon their motion, the court deemed terminated and waived the presentation of evidence for the petitioner.[37]Nevertheless, before the court considered the case submitted for decision, it required the parties to submit their respective memoranda within thirty days.[38]But petitioner failed to file one.Likewise, the court was liberal in respect to petitioners motion for reconsideration.Notwithstanding the lack of request for hearing and proof of notice and service to private respondents, the court set the hearing of the said motion on 29 November 1988.[39]Upon the denial of the said motion for lack of merit,[40]petitioner filed a second motion for reconsideration.But during the hearing of the motion on a date selected by him, Atty. Vega was absent for no reason at all, despite due notice.[41]From the foregoing narration of procedural antecedents, it cannot be said that the petitioner was deprived of its day in court.The essence of due process is simply an opportunity to be heard.[42]To be heard does not only mean oral arguments in court; one may be heard also through pleadings.Where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of procedural due process.[43]WHEREFORE, the instant petition is DENIED and the challenged decision of the Court of Appeals is AFFIRMEDin toto.No pronouncements as to costs.SO ORDERED.Narvasa, C.J., (Chairman), Melo, Francisco,andPanganiban, JJ.,concur.

[1]Exhibit "A," Original Record (OR), 68.[2]Exhibit "C," OR, 77;Rollo, 57.[3]Exhibit "B," OR, 76.[4]Exhibit "D," OR, 78.[5]Exhibit "E,"Id., 80.[6]Exhibit "F,"Id., 81-82.[7]Id., 1-7.[8]Order of 19 January 1989, OR, 129-130; Decision, 2-3.[9]OR 134-137;Rollo, 53-56.Per Judge Mariano M. Umali.[10]Rollo, 24-31.Per then Associate Justice Justo P. Torres, Jr. (now Associate Justice of the Supreme Court), with the concurrence of then Associate Justice Bernardo P. Pardo and Associate Justice Corona Ibay-Somera.[11]Exhibit "F-1," OR, 82.[12]Exhibit "D,"Id., 78-79.[13]Articles 1159, 1308, 1315, and 1356 of the Civil Code.[14]DESIDERIO P. JURADO,Comments and Jurisprudence on Obligations and Contracts292 (10th revised ed. 1993) (hereafter JURADO).[15]IV ARTURO M. TOLENTINO,Commentaries and Jurisprudence on the Civil Code of the Philippines57 (1991) (hereafter IV TOLENTINO).[16]JURADO, 283.[17]IV TOLENTINO 57.[18]At this point of affairs; in these circumstances.A name given to a tacit condition, said to attach to all treaties, that they shall cease to be obligatory so soon as the state of facts and conditions upon which they were founded has substantially changed. (Blacks Law Dictionary, 1139 [5th ed., 1979]).[19]Naga Telephone Co.v. Court of Appeals, 230 SCRA 351, 365 [1994] citing IV TOLENTINO 347.[20]IV TOLENTINO 347.[21]Memorandum for the Private Respondents, 17;Rollo, 160.[22]139 SCRA 46 [1985], citing Repidev. Afzelius, 39 Phil. 190 [1918].[23]V TOLENTINO 206 [1992]; V EDGARDO E. PARAS, Civil Code of the Philippines, 307 [1995].[24]V TOLENTINO 535[25]It provides:Art. 1659.If the lessor or the lessee should not comply with the obligations set forth in Articles 1654 and 1657, the aggrieved party may ask for rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force.[26]Ocampov. Arboleda, 153 SCRA 374, 381 [1987].[27]OR, 87.[28]OR, 89.[29]Id., 91.[30]Id., 94.[31]Id.[32]Id., 95.[33]Id., 99.[34]Id., 98.[35]Id.[36]Id., 101.[37]Id., 106.[38]Id.[39]Id., 120.[40]Id., 128.[41]Id., 127.[42]Rocesv. Aportadera, 243 SCRA 108, 114 [1995]; Vallendev.NLRC, 245 SCRA 662, 666-667 [1995]; Navarro IIIv. Damasco, 246 SCRA 260, 265 [1995].[43]Mutucv.Court of Appeals, 190 SCRA 43, 49 [1990].

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. 109125 December 2, 1994ANG YU ASUNCION, ARTHUR GO AND KEH TIONG,petitioners,vs.THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION,respondents.Antonio M. Albano for petitioners.Umali, Soriano & Associates for private respondent.VITUG,J.:Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 December 1991, in CA-G.R. SP No. 26345 setting aside and declaring without force and effect the orders of execution of the trial court, dated 30 August 1991 and 27 September 1991, in Civil Case No. 87-41058.The antecedents are recited in good detail by the appellate court thusly:On July 29, 1987 a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the Regional Trial Court, Branch 31, Manila in Civil Case No. 87-41058, alleging, among others, that plaintiffs are tenants or lessees of residential and commercial spaces owned by defendants described as Nos. 630-638 Ongpin Street, Binondo, Manila; that they have occupied said spaces since 1935 and have been religiously paying the rental and complying with all the conditions of the lease contract; that on several occasions before October 9, 1986, defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same; that during the negotiations, Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked the defendants to put their offer in writing to which request defendants acceded; that in reply to defendant's letter, plaintiffs wrote them on October 24, 1986 asking that they specify the terms and conditions of the offer to sell; that when plaintiffs did not receive any reply, they sent another letter dated January 28, 1987 with the same request; that since defendants failed to specify the terms and conditions of the offer to sell and because of information received that defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them.Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of lack of cause of action.After the issues were joined, defendants filed a motion for summary judgment which was granted by the lower court. The trial court found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. Nonetheless, the lower court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below, plaintiffs will have the right of first refusal. Thus the dispositive portion of the decision states:WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs summarily dismissing the complaint subject to the aforementioned condition that if the defendants subsequently decide to offer their property for sale for a purchase price of Eleven Million Pesos or lower, then the plaintiffs has the option to purchase the property or of first refusal, otherwise, defendants need not offer the property to the plaintiffs if the purchase price is higher than Eleven Million Pesos.SO ORDERED.Aggrieved by the decision, plaintiffs appealed to this Court inCA-G.R. CV No. 21123. In a decision promulgated on September 21, 1990 (penned by Justice Segundino G. Chua and concurred in by Justices Vicente V. Mendoza and Fernando A. Santiago), this Court affirmed with modification the lower court's judgment, holding:In resume, there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement, the claim for specific performance will not lie. Appellants' demand for actual, moral and exemplary damages will likewise fail as there exists no justifiable ground for its award. Summary judgment for defendants was properly granted. Courts may render summary judgment when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law (Garcia vs. Court of Appeals, 176 SCRA 815). All requisites obtaining, the decision of the courta quois legally justifiable.WHEREFORE, finding the appeal unmeritorious, the judgment appealed from is hereby AFFIRMED, but subject to the following modification: The courta quoin the aforestated decision gave the plaintiffs-appellants the right of first refusal only if the property is sold for a purchase price of Eleven Million pesos or lower; however, considering the mercurial and uncertain forces in our market economy today. We find no reason not to grant the same right of first refusal to herein appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos. No pronouncement as to costs.SO ORDERED.The decision of this Court was brought to the Supreme Court by petition for review oncertiorari. The Supreme Court denied the appeal on May 6, 1991 "for insufficiency in form and substances" (Annex H, Petition).On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by this Court, the Cu Unjieng spouses executed a Deed of Sale (Annex D, Petition) transferring the property in question to herein petitioner Buen Realty and Development Corporation, subject to the following terms and conditions:1. That for and in consideration of the sum of FIFTEEN MILLION PESOS (P15,000,000.00), receipt of which in full is hereby acknowledged, the VENDORS hereby sells, transfers and conveys for and in favor of the VENDEE, his heirs, executors, administrators or assigns, the above-described property with all the improvements found therein including all the rights and interest in the said property free from all liens and encumbrances of whatever nature, except the pending ejectment proceeding;2. That the VENDEE shall pay the Documentary Stamp Tax, registration fees for the transfer of title in his favor and other expenses incidental to the sale of above-described property including capital gains tax and accrued real estate taxes.As a consequence of the sale, TCT No. 105254/T-881 in the name of the Cu Unjieng spouses was cancelled and, in lieu thereof, TCT No. 195816 was issued in the name of petitioner on December 3, 1990.On July 1, 1991, petitioner as the new owner of the subject property wrote a letter to the lessees demanding that the latter vacate the premises.On July 16, 1991, the lessees wrote a reply to petitioner stating that petitioner brought the property subject to the notice oflis pendensregarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu Unjiengs.The lessees filed a Motion for Execution dated August 27, 1991 of the Decision in Civil Case No. 87-41058 as modified by the Court of Appeals in CA-G.R. CV No. 21123.On August 30, 1991, respondent Judge issued an order (Annex A, Petition) quoted as follows:Presented before the Court is a Motion for Execution filed by plaintiff represented by Atty. Antonio Albano. Both defendants Bobby Cu Unjieng and Rose Cu Unjieng represented by Atty. Vicente Sison and Atty. Anacleto Magno respectively were duly notified in today's consideration of the motion as evidenced by the rubber stamp and signatures upon the copy of the Motion for Execution.The gist of the motion is that the Decision of the Court dated September 21, 1990 as modified by the Court of Appeals in its decision in CA G.R. CV-21123, and elevated to the Supreme Court upon the petition for review and that the same was denied by the highest tribunal in its resolution dated May 6, 1991 in G.R. No.L-97276, had now become final and executory. As a consequence, there was an Entry of Judgment by the Supreme Court as of June 6, 1991, stating that the aforesaid modified decision had already become final and executory.It is the observation of the Court that this property in dispute was the subject of theNotice of Lis Pendensand that the modified decision of this Court promulgated by the Court of Appeals which had become final to the effect that should the defendants decide to offer the property for sale for a price of P11 Million or lower, and considering the mercurial and uncertain forces in our market economy today, the same right of first refusal to herein plaintiffs/appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos or more.WHEREFORE, defendants are hereby ordered to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer.All previous transactions involving the same property notwithstanding the issuance of another title to Buen Realty Corporation, is hereby set aside as having been executed in bad faith.SO ORDERED.On September 22, 1991 respondent Judge issued another order, the dispositive portion of which reads:WHEREFORE, let there be Writ of Execution issue in the above-entitled case directing the Deputy Sheriff Ramon Enriquez of this Court to implement said Writ of Execution ordering the defendants among others to comply with the aforesaid Order of this Court within a period of one (1) week from receipt of this Order and for defendants to execute the necessary Deed of Sale of the property in litigation in favor of the plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15,000,000.00 and ordering the Register of Deeds of the City of Manila, to cancel and set aside the title already issued in favor of Buen Realty Corporation which was previously executed between the latter and defendants and to register the new title in favor of the aforesaid plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go.SO ORDERED.On the same day, September 27, 1991 the corresponding writ of execution (Annex C, Petition) was issued.1On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside and declared without force and effect the above questioned orders of the courta quo.In this petition for review oncertiorari, petitioners contend that Buen Realty can be held bound by the writ of execution by virtue of the notice oflis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of the latter's purchase of the property on 15 November 1991 from the Cu Unjiengs.We affirm the decision of the appellate court.A not too recent development in real estate transactions is the adoption of such arrangements as the right of first refusal, a purchase option and a contract to sell. For ready reference, we might point out some fundamental precepts that may find some relevance to this discussion.An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation is constituted upon the concurrence of the essential elements thereof,viz: (a) Thevinculum jurisorjuridical tiewhich is the efficient cause established by the various sources of obligations (law, contracts, quasi-contracts, delicts and quasi-delicts); (b) theobjectwhich is the prestation or conduct; required to be observed (to give, to do or not to do); and (c) thesubject-personswho, viewed from the demandability of the obligation, are the active (obligee) and the passive (obligor) subjects.Among the sources of an obligation is a contract (Art. 1157, Civil Code), which is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code). A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its consummation.Negotiationcovers the periodfromthe time the prospective contracting parties indicate interest in the contracttothe time the contract is concluded (perfected). Theperfectionof the contract takes place upon the concurrence of the essential elements thereof. A contract which isconsensualas to perfection is so established upon a mere meeting of minds, i.e., the concurrence of offer and acceptance, on the object and on the cause thereof. A contract which requires, in addition to the above, the delivery of the object of the agreement, as in a pledge orcommodatum, is commonly referred to as arealcontract. In asolemncontract, compliance with certain formalities prescribed by law, such as in a donation of real property, is essential in order to make the act valid, the prescribed form being thereby an essential element thereof. The stage ofconsummationbegins when the parties perform their respective undertakings under the contract culminating in the extinguishment thereof.Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales, particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees. Article 1458 of the Civil Code provides:Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.A contract of sale may be absolute or conditional.When the sale isnot absolutebutconditional, such as in a "Contract to Sell" where invariably the ownership of the thing sold is retained until the fulfillment of a positive suspensive condition (normally, the full payment of the purchase price), the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force.2InDignos vs. Court of Appeals(158 SCRA 375), we have said that, although denominated a "Deed of Conditional Sale," a sale is still absolute where the contract is devoid of anyprovisothat title is reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon actual or constructive delivery (e.g., by the execution of a public document) of the property sold. Where the condition is imposed upon the perfection of the contract itself, the failure of the condition would prevent such perfection.3If the condition is imposed on the obligation of a party which is not fulfilled, the other party may either waive the condition or refuse to proceed with the sale (Art. 1545, Civil Code).4An unconditionalmutual promiseto buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be exacted.5Anaccepted unilateral promisewhichspecifiesthething to be sold and the price to bepaid,when coupled with a valuable consideration distinctandseparate from the price, is what may properly be termed a perfected contract ofoption. This contract is legally binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil Code, viz:Art. 1479. . . .An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a)6Observe, however, that the option isnotthe contract of sale itself.7The optionee has the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings.8Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise(policitacion)is merely an offer. Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. These relations, until a contract is perfected, are not considered binding commitments. Thus, at any time prior to the perfection of the contract, either negotiating party may stop the negotiation. The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil. 270). Where a period is given to the offeree within which to accept the offer, the following rules generally govern:(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free and has the right to withdraw the offer before its acceptance, or, if an acceptance has been made, before the offeror's coming to know of such fact, by communicating that withdrawal to the offeree (seeArt. 1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948, holding that this rule is applicable to a unilateral promise to sell under Art. 1479, modifying the previous decision inSouth Western Sugar vs. Atlantic Gulf, 97 Phil. 249;see alsoArt. 1319, Civil Code; Rural Bank of Paraaque, Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The right to withdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to a damage claim under Article 19 of the Civil Code which ordains that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith."(2) If the period has a separate consideration, a contract of "option" is deemedperfected, and it would be a breach of that contract to withdraw the offer during the agreed period. The option, however, is an independent contract by itself, and it is to be distinguished from the projected main agreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, the optioner-offerorwithdraws the offer before its acceptance(exercise of the option) by the optionee-offeree, the latter may not sue forspecific performanceon the proposed contract ("object" of the option) since it has failed to reach its own stage of perfection. The optioner-offeror, however, renders himself liable for damages for breach of the option. In these cases, care should be taken of the real nature of theconsiderationgiven, for if, in fact, it has been intended to be part of the consideration for the main contract with a right of withdrawal on the part of the optionee, the main contract could be deemed perfected; a similar instance would be an "earnest money" in a contract of sale that can evidence its perfection (Art. 1482, Civil Code).In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. Neither can the right of first refusal, understood in its normal concept,per sebe brought within the purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offer under Article 13199of the same Code. An option or an offer would require, among other things,10a clear certainty on both the object and the cause or consideration of the envisioned contract. In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grant