PARTIES TO A CONTRACT OF SALE

Article 1327. The following cannot give consent to a contract:

(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write. (1263a)
Article 1489. All persons who are authorized in this Code to obligate themselves, may enter into a contract of
sale, saving the modifications contained in the following articles.
Where necessaries are those sold and delivered to a minor or other person without capacity to act, he must
pay a reasonable price therefor. Necessaries are those referred to in article 290. (1457a)
Article 1490. The husband and the wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under article 191. (1458a)
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to them, unless the
consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any
government-owned or controlled corporation, or institution, the administration of which has been
intrusted to them; this provision shall apply to judges and government experts who, in any manner
whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object of any litigation in which they may take part
by virtue of their profession;
(6) Any others specially disqualified by law. (1459a)

Discussions on the capacities of the parties to a sale tackle the essential element of consent in
contracts of sale. Consent which focuses on the integrity or quality of the consent of the parties to a
sale, and thereby leads into discussions on vitiation of consent, and the absolute and relative
incapacities of the parties to enter into a contract of sale.

General Rule on Capacity of Parties

Any person who has capacity to act, or the power to do acts with legal effects, or more specically with the
power to obligate himself, may enter into a contract of sale, whether as seller or as buyer.
For natural persons or individuals, the age of majority begins at 18 years, upon which age they have the
capacity to act. For juridical persons, such as corporations, partnerships, associations and cooperatives, a
juridical personality separate and distinct from that of the shareholders, partners or members, is expressly
recognized by law, with full juridical capacity to obligate themselves and enter into valid contracts.

Minors, Insane or Demented Persons, and Deaf-mutes

Generally, minors, insane and demented persons, and deaf- mutes who do not know how to write, have no
legal capacity to contract, and therefore are disqualified from being parties to a sale.
NOTE: contracts entered into by such legally incapacitated persons are not void, but merely voidable, subject
to annulment or ratication.

The action for annulment cannot be instituted by the person who is capacitated since he is disqualied
from alleging the incapacity of the person with whom he contracts

Contracts entered into during lucid intervals by insane or demented persons are generally valid; whereas, those
entered into in a state of drunkenness, or during a hypnotic spell, are merely voidable.
When the defect of the contract consists in the incapacity of one of the parties, the incapacitated person is not
obliged to make any restitution, except insofar as he has been beneted by the thing or price received by him.
NOTE: Art. 1489. Minor is nor capacitated to validly enter into a sale except for necessities (Art. 194)
In order for the sale of necessaries to minors to be valid, and not merely voidable, two elements need to be
present: (a) perfection of the sale; and (b) delivery of the subject necessaries. If there is only perfection at the
time the case reaches litigation, the sale of course is not void, but voidable for vice in consent, and the rules on
voidable contracts apply.

Sale Between Spouses (Art 1490)

In addition, Article 1492 provides that the prohibition relating to spouses selling to one another is applicable
even to sales in legal redemption, compromises and renunciations.
Contracts entered into in violation of Articles 1490 and 1492 are not merely voidable, but have been declared
by the Supreme Court as being null and void.

Rationale for Prohibition:

(a) To prevent a spouse defrauding his creditors by transferring his properties to the other spouse;
(b) To avoid a situation where the dominant spouse would unduly take advantage of the weaker
spouse, thereby effectively defrauding the latter; and
(c) To avoid an indirect violation of the prohibition against donations between spouses under Article
133 (Art. 87) of the Civil Code.

Prohibition with Respect to Guardians

The relationship between guardian and ward is so intimate, the dependence so complete and influence so
great that any transaction between the two parties entered while the relationship exists are, in the highest
sense, suspicious, and presumptively fraudulent. This influence is presumed to last while the guardians
functions are to any extent still unperformed, while the property is still under his control and until the accounts
have been finally settled.

Prohibition with Respect to Agents

The agents incapacity to buy his principals property rests on the fact that the agent and the principal form one
juridical per- son. Like the guardian, the agent stands in a fiduciary relation with his principal. A sale made by
an agent to himself, directly or indirectly, without the permission of the principal is ineffectual. The prohibition,
however, is not absolute.
(1) The incapacity of the agent is only against buying the property he is required to sell during the
existence of the relationship. Therefore, an agent can buy for himself the property after the termination
of the agency.
(2) The agent may buy property placed in his hands for sale or administration if the principal gives his
consent thereto.

(3) The prohibition does not apply where the sale of the property in dispute was made under a special
power inserted in or attached to the real estate mortgage pursuant to Section 5 of Act No. 3135, as
amended, a special law which governs extra-judicial foreclosure of real estate mortgage. The power to
foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by
the agent but is primarily an authority conferred upon the mortgagee for the latters own protection. By
vir- tue of the exception, the title of the mortgagee-creditor over the property cannot be impeached or
defeated on the ground that the mortgagee cannot be a purchaser at his own sale.

Prohibition with Respect to Executors and Administrators

The prohibition refers only to properties under the administration of the executor or administrator at the
time of the acquisition and does not extend, therefore, to property not falling within this class.
Executors do not administer the hereditary rights of any heir. Such rights do not form part of the
property delivered to the executor for administration. Consequently, the prohibition in No. (3) of Article 1491
does not apply to a purchase by an executor of such hereditary rights (e.g., 1/10 interest in the estate), even in
those cases in which the executor administers the property pertaining to the estate.

Prohibition with Respect to Pubic Officers and Employees

The prohibition refers only to properties: (1) belonging to the State, or of any subdivision thereof, or of any
government-owned or controlled corporation or institution, (2) the administration of which has been entrusted to
the public officials or employees. Thus, a provincial governor or treasurer entrusted with the a ministration of
property belonging to a province cannot buy said property while the school superintendent who has no charge
of the same is not within the scope of the prohibition.
Note that the prohibition includes judges and government experts who, in any manner, take part in the sale

Prohibition with respect to Judges, etc. and lawyers

The prohibition in Article 1491(5) applies only to the sale or assignment of property which is the subject of
litigation to the persons disqualified therein. For the prohibition to operate, the sale or assignment must take
place during the pendency of the litigation involving the property.

Such property is in litigation from the moment it became sub- ject to the judicial action of the judge
who afterwards purchased it. Hence, a purchase made by judge at a public auction of a prop- erty
pursuant to an order of execution issued by said judge is within the prohibition whether or not the
property had been the subject of litigation in his court.

A lawyer cannot purchase, directly or indirectly, the property or rights which are the subject of litigation in which
he takes part by virtue of his profession. The rule applies even after the termination of the case.

A violation of the prohibition constitutes a breach of professional ethics and malpractice for which the
lawyer may be reprimanded, suspended or disbarred from the practice of the legal profession. Good
faith is not a defense.

Effect of Sale in Violation of Art. 1491

(1) With respect to Nos. 1 to 3, the sale shall only be voidable because in such cases only private
interests are affected. The defect can be cured by ratification of the seller.
(2) With respect to Nos. 4 to 6, the sale shall be null and void, public interests being involved therein.