CHAPTER 2: PARTIES TO THE CONTRACT OF SALE

What is the general rule on the capacity of parties to enter into a contract of sale?

Those who have juridical capacity to act/power to do acts with legal effects may enter into a contract of sale as seller or buyer.

At what age does a natural person acquire capacity to enter into a contract of sale?

Upon reaching the age of majority at 18 years old.

Can a minor validly enter into a contract of sale?

No, because a minor lacks juridical capacity to act.

Who determines the capacity of a juridical person to enter into a contract of sale?

The juridical person itself as a separate entity from its shareholders.

Are juridical persons considered the same as their shareholders for purposes of capacity?

No, juridical persons have a separate juridical personality.

Can a juridical person enter into a contract of sale?

Yes, as long as it has the power to do acts with legal effects.

Who are generally incapacitated to enter into contracts of sale?

Minors, insane or demented persons, and deaf-mutes who cannot read and write

What is the exception allowing incapacitated persons to be bound by a contract of sale?

When the contract involves necessaries.

What are necessaries under Article 194 of the Family Code?

Everything indispensable for:

1. sustenance,

2. dwelling,

3. clothing,

4. medical attendance,

5. education, and

6. transportation.

What does sustenance include as necessaries?

Food and drinks.

What is included under dwelling as necessaries?

A house, rented apartment, or boarding house room.

What is included under clothing as necessaries?

Uniforms, clothes, and shoes.

What is included under medical attendance as necessaries?

Doctor’s consultation, medicines, and hospitalization.

What is included under education as necessaries?

Tuition, school books, and online classes.

What is included under transportation as necessaries?

Bus fare, jeepney rides, and train tickets.

Why are incapacitated persons liable for necessaries?

Because necessaries are essential for living and basic functioning.

What are the elements of a valid sale of necessaries?

1. Perfection of the sale

2. Delivery of the subject of necessaries

What happens if there was only perfection of the sale of necessaries at the time the case reaches litigation?

The sale shall be rendered voidable for vice in consent.

What is the general effect of senility or serious illness on a contract of sale?

They generally render the contract voidable due to defect in consent.

Do senility or serious illness automatically void a contract of sale?

No, they usually make the contract voidable, not void.

When can senility or serious illness render a contract of sale void ab initio?

When they result in total absence of real consent.

What was the main issue in Domingo v. CA?

Whether a valid deed of sale was proven using only a carbon copy with a thumbmark signature made while the seller was hospitalized.

If a seller is extremely senile, seriously ill, confined in a hospital, and allegedly signs a deed of sale only by thumbmark with no proof of payment, is the contract of sale valid?

No, the contract of sale is void ab initio for total absence of consent.

If a deed of sale is proven only by a carbon copy and there is no evidence that the seller understood the transaction, what is the effect on the sale?

The sale is void ab initio due to lack of genuine consent.

If a person signs a contract of sale while hospitalized, physically weak, and unable to intelligently understand the transaction, is the sale void or voidable?

The sale is void ab initio because there is no real meeting of minds.

If senility and illness are so severe that the seller cannot freely and intelligently consent, what is the legal effect on the contract of sale?

The contract is void ab initio.

If surrounding circumstances show that the seller never truly agreed to the sale, despite the presence of a written deed, what is the effect on the contract?

The contract is void for total absence of consent.

If there is no independent proof that the price was paid and the seller was incapable of understanding the transaction, what happens to the sale?

The sale is void ab initio.

Under Article 73 of the Family Code, may either spouse engage in business or sell property without the consent of the other?

Yes, either spouse may exercise any legitimate profession, business, or activity without the other’s consent in the ordinary course of work or trade.

On what grounds may the other spouse object under Article 73?

Only on valid, serious, and moral grounds.

If spouses disagree under Article 73, what questions will the court resolve?

Whether the objection is proper and whether the activity benefited the family.

If the activity benefited the family before or after the objection, against whose property is the obligation enforced?

Against the separate property of the spouse who engaged in the activity without consent.

Are creditors in good faith affected by objections under Article 73?

No, their rights are not prejudiced.

Under Articles 96 and 124 of the Family Code, who owns and manages community or conjugal property?

Both spouses jointly.

What consent is required to sell conjugal or community property?

The written consent of both spouses.

What is the effect of selling conjugal property without the consent of one spouse?

The sale is void.

Why is a sale without spousal consent void under Articles 96 and 124?

Because lack of consent means an essential element of a contract of sale is missing.

What is the general rule under Article 1490 regarding sales between spouses?

Sales between husband and wife are prohibited.

Why are sales between spouses generally prohibited?

To prevent fraud against creditors, undue influence between spouses, and simulated transfers to avoid taxes or obligations.

When are sales between spouses allowed?

When there is a separation of property agreed upon in the marriage settlements or a judicial separation of property.

Is a sale between spouses allowed if there is no separation of property?

No, without separation of property, sales between spouses are void.

How may separation of property allowing sale between spouses arise?

Either by agreement in the marriage settlements or by judicial decree.

Why does the law still strictly regulate sales between spouses even with separation of property?

Because the risk of undue influence, manipulation, and simulated sales may still exist.

If two persons live together as common-law spouses and one donates property to the other, is the donation valid?

No, the donation is void because public policy prohibits gratuitous transfers between common-law spouses due to undue influence and immorality concerns.

If two persons are not married but live together as husband and wife, may they validly sell property to each other?

No, sales between common-law spouses are void as a matter of public policy.

Why does the law apply the prohibition on donations and sales to common-law spouses?

Because the dangers of undue influence and asset manipulation are greater, and allowing them would place illicit unions in a better position than lawful marriages.

If transfers between common-law spouses were allowed, what harmful effect would arise?

It would undermine marriage, encourage avoidance of lawful unions, and defeat the conjugal partnership system.

If a common-law spouse sells property to the other and the buyer later sells it to a third person in good faith, can the original owner recover the property?

No, the rights of an innocent third-party buyer in good faith are protected.

Why are innocent third-party buyers protected despite the void sale between common-law spouses?

Because under the Torrens system, buyers may rely on the title of the registered owner.

What is the governing basis for voiding transfers between common-law spouses?

Public policy, morality, and the protection of marriage.

What is the general rule on transactions between common-law spouses?

Donations and sales between them are void.

What is the exception to the rule that sales between common-law spouses are void?

When the property has passed to an innocent third-party buyer in good faith and for value.

Who are disqualified from acquiring property under Article 1491?

Persons in fiduciary or public positions such as agents, guardians, executors or administrators, public officers involved in administration of justice, and lawyers.

What is the nature of contracts entered into in violation of Article 1491?

They are voidable due to relative incapacity, not automatically void.

Why are contracts under Article 1491 generally only voidable and not void?

Because the incapacity is relative and intended to protect a specific interest, not public order in general.

Who bears the right to question a voidable contract under Article 1491?

The person whose interest is protected by the law.

When may an agent validly acquire property he manages?

Only when the principal clearly and expressly gives consent.

Why are brokers not disqualified under Article 1491?

Because brokers do not manage or control the property and merely bring buyer and seller together for a commission.

Why are guardians prohibited from buying the ward’s property?

Because guardians exercise fiduciary control and are presumed capable of influencing or abusing the ward.

May a guardian acquire the ward’s property indirectly or through another person?

No, indirect acquisition is equally prohibited.

Does court approval or benefit to the ward cure the prohibition on guardians?

No, the prohibition applies regardless of approval or benefit.

Why are executors and administrators disqualified from acquiring estate property?

Because they manage property of a deceased person and act as officers of the court.

Why are judges and court personnel prohibited from acquiring property under litigation?

To prevent conflict of interest, preserve public trust, and avoid benefiting from cases under their control.

When is property considered “under litigation” for purposes of disqualification?

Once it becomes subject to judicial action, court control, levy, or attachment.

Is it required that the judge has already heard or decided the case for the prohibition to apply?

No, mere pendency of judicial action is sufficient.

Does the civil prohibition on judges last even after the case is finished?

No, it applies only while the case is pending.

If the civil prohibition no longer applies, can liability still arise for judges?

Yes, ethical or administrative liability may still exist.

Why are lawyers prohibited from acquiring property involved in litigation they handle?

Because of the fiduciary relationship and the risk of undue influence over the client.

What is the effect if a lawyer acquires litigated property while acting as counsel?

The sale is void and cannot be cured by consent or ratification.

Why is ratification ineffective in prohibited lawyer acquisitions?

Because public interest overrides private consent.

When does Article 1491 apply to lawyers?

Only when the buyer is a lawyer, is counsel in the case, and the property is the subject of litigation.

If any one of those elements is missing, does Article 1491 apply?

No, the prohibition does not apply.

May a lawyer receive property from a client to satisfy a judgment?

Yes, provided the property was not the subject of litigation.

Does Article 1491 apply while certiorari proceedings are pending?

Yes, because litigation is still considered pending.

Are contingent fee contracts automatically prohibited under Article 1491?

No, because no transfer occurs during litigation.

When does a contingent fee arrangement become prohibited?

When it effectively transfers ownership or possession of litigated property during litigation.

What is the overarching policy behind Article 1491 and Article 1942?

Public interest and prevention of abuse of trust outweigh the freedom to contract.