Civil Law

Arturo Abalos vs Galicano Macatangay, Jr.

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G.R. NO. 155043 – 439 SCRA 649 – Civil Law – Law on Sales – Option Money vs Earnest Money – Sale of Conjugal Property

Persons and Family Relations – Family Code – Sale of Conjugal Property

Arturo and Esther Abalos were husband and wife. They own a parcel of land in Makati. On June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt and Memorandum of Agreement in favor of Galicano Macatangay, Jr. in which Arturo acknowledged he received a P5k check from Galicano as earnest money to be deducted from the purchase price and that Arturo binds himself to sell the land to Galicano within 30 days from receipt of the P5k. The purchase price agreed upon was P1.3 M. However, the P5k check was dishonored due to insufficiency.

Apparently however, Esther and Arturo were having a rocky relationship. Esther executed a SPA in favor of her sister and that she is selling her share in the conjugal property to Galicano. It was alleged that that the RMOA is not valid for Esther’s signature was not affixed thereto. And that Esther never executed a SPA in favor of Arturo. Galicano informed the couple that he has prepared a check to cover the remainder of the amount that needs to be paid for the land. He demanded that the land be delivered to him. But the spouses failed to deliver the land. Galicano sued the spouses.

ISSUE: Whether or not there was a contract of sale between Arturo and Galicano. Whether or not the subsequent agreement between Galicano and Esther is binding and that it cured the defect of the earlier contract between Arturo and Galicano.

HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the agreement between Arturo and Galicano is a mere grant of privilege to purchase to Galicano. The promise to sell is not binding to Arturo for there was actually no consideration distinct from the price. Be it noted that the parties considered the P5k as an earnest money to be deducted from the purchase price.

Assuming arguendo that it was a bilateral promise to buy and sell, the same is still not binding for Galicano failed to render a payment of legal tender. A check is not a legal tender.

Still assuming arguendo, that the P5k was an earnest money which supposedly perfected a contract of sale, the RMOA is still not valid for Esther’s signature was not affixed. The property is conjugal and under the Family Code, the spouses’ consents are required. Further, the earnest money here is not actually the earnest money contemplated under Article 1482 under the Civil Code.

The subsequent agreement between Esther and Galicano did not ratify the earlier transaction between Arturo and Galicano. A void contract can never be ratified.

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