CHAPTER I| -CAPACITY TO BUY ORSELL

CHAPTER 2
CAPACITY TOBUY OR SELL
Art. 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.
General rule:
All persons, whether natural or juridical, who can bind themselves,
havelegal capacity to enter into acontract of sale.
Exception:
Persons who are incapacitated.
Kindsof incapacity
1. Absolute incapacity
These are the persons who cannot enter into a contract of sale in all
circumstances; otherwise, the contract of sale is defective, either
voidable or unenforceable.

Example:
Minors, insane, demented persons, and deaf-mutes who do not know
how to write.

2. Relative incapacity
These are certain persons, under certain circumstances, cannot buy
certain property.
Examples:
a. Husband and wife;
b. The guardian, the property of theperson or persons who may be under his
guardianship;
c. Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been given;
d. Executors and administrators, the property of the estate under
administration;
e. 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;

1Wolfson vs. Estate of Martinez, G.R. No. L-5970, October 30, 1911.
61
 SELL
CHAPTERII - CAPACITYYTO BUY OR
f Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and employees connected with the
administration off justice, the property and rights in litigation or levied
upon an execution beforethe court within whose jurisdiction or territory
they exercise their respective functions;
What are necessaries?
These covers everything indispensable for sustenance, dwelling
Clothing medical attendance, education and transportation.

Art. 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.

General rule:
The husband and the wife cannot sellproperty toeach other.
Exception:
1. When a separation of property was agreed upon in the marTiage
settlements; and
2. When there has been a judicial separation of
property.
Note:
The proscription against sale of property between
even to common law relationships. spouses applies
Problem:
On December 30, 1947, H and W
were bornrespondents A, B, C, D, and E. were married. Out of the union
A, B, C, D, and E claim
that in
square meter property but that as they1961, were
their parents acquired a 661
the property was registered in the Chinese citizens at the time.
On May 1, 1993, S name of their aunt. S.
executed
favor of A, B, C, D, and E's father, H. a deed of sale over the property
1993 a deed of sale In turn, H executed on October 14
y TCT No. 1234 was,over the property in favor of his common-law-wife-
thus,
After H's death on issued Y's name.
in
March 11, 1996, A, B, C, D,
that ownership ofithe
property had and E discovered
of Y. A, B, C, D, and E already been
thereupon
had the transferred in the name
father in the deed ofisale
verified by the purported signature of their
Laboratory which found the
same to be a Philippine NationalF Police Crime
A, B, C, D, and E,
thus, filed a forgery.
2Article 194,Family Code of the Philippines.
complaint for recovery of property
62
CHAPTERII -CAPACITY TO BUY OR SELL

Answer:
ARTICLE 1490. The husband and 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 ajudicial separation of propertyunder Article 191.
The proscription against sale of property between spouses
applies even to common law relationships. So this Court ruled
in Calimlim-Canullas v. Hon. Fortun, etc., et al.:
Anent the second issue, we find that the contract of sale was null and void
for being contrary to morals and public policy. The sale was made by a
husband in favor of a concubine after he had abandoned his family
and left the conjugal home where his wife and children lived and
from whence they derived their support. The sale was subversive of
the stability of the family, a basic social institution which public
policy cherishes and protects.
Article 1409 of the Civil Code states inter alia that: contracts whose
cause, object, or purposes is contrary to law, morals, good customs, public
order, or public policy are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or
with unlawful cause, produce no effect whatsoever. The cause is unlawful if it
is contrary to law, morals, good customs, public order, or public policy."
Additionally, the law emphatically prohibits the spouses
from selling property to each other subject to certain
exceptions. Similarly, donations between spouses during marriage
are prohibited. And this is so because if transfers or conveyances
between spouses were allowed during marriage, that would destroy the
also
system of conjugal partnership, a basic policy in civil law. It was over
designed to prevent the exercise of undue influence by one spouse
which is the
the other, as well as to protect the institution of marriage,
cornerstone of family law. The prohibitions apply to a couple living as
husband and wife without benefit of marriage, otherwise, "the
better
condition of those who incurred guilt would turn out to be
public
than those in legal union."Those provisions are dictatedthebyparties.
interest and their criterion must be imposed upon the will of
favor of his
As the conveyance in question was made by H in
common- law-wife-herein Y, it was null and void.3

Note:
Although under Art. 1490, the husband and wife cannot sell property
consideration and the dictates of
to one another as a rule which, for policy
relationships.
morality require that the prohibition apply tocommon-law

Ir., G.R No. 165879, November 10, 2006.

see Maria B. Ching vs. Joseph C. Gayanko,
63
 CAPACITY TO BUY OR SELL
CHAPTERII - -

the improvements
Problem: together with
G was the owner of
a lot, lived together as husband and
respondent R 1982, solely out of
thereon; in 1977 she and marriage; in September
sale overthe said
wife without the benefit ofexecuted a deed of absolute
consideration; thereafter, R
love and affection for IR, she monetary
lot in favor of R without anyfavor and usedthe property coollateral
as
registered the documentt in hisSubsequently, to protect her interest, she
for a bank loan of P350,000. with the Register
Claim which she filed void
executed an Affidavit of Adverse
favor of R was
null and for
lack of
her sale in
of Deeds asserting that to
law and public policy.
consideration and being contrary
filed a complaint against Rfor quieting
On February 22, 1990, she and damages.
of title, declaration of
nullity of documents already the registered
claimed that he was
Denying G's claim,R G through a
the same from consideration
property, having acquired
owner of the sale: the sale was for a valuable
notarized deed of absolute executed under duress; and, G Was
and not tainted with fraud nor
questioning his title
estopped from impugning the validity of the sale and
over the property. filed a manifestation
On May 22, 1990the Register of Deeds soldby R to Mwho
informing the trial court that the property had been
was already the registered owner thereof. complaint, M
On 24 September 1990, responding to the amended and G; Mwas
answered that there was no privity of contract between him
was
apurchaser for value in good faith; the sale between him and R
executed on 22 December 1989 or long before the execution of the
Affidavit of Adverse Claim.
G
insists that she and Rwere common-law husbandand wife, the
sale between them was void and inexistent, citing Art. 1490of the Civil
Code.
Is the sale between G and R valid?
Answer:
Although under Art. 1490, the husband and wife cannot sell
property to one another as a rule which, for policy consideration and the
dictates of morality require that the prohibition apply to common-law
relationships, Gcan no longer seek reconveyance of the property toher
asit has already been acquired by Min good faith and for value from her
own transferee.
At the time R executed the deed of absolute sale on
22December
1989 in favor of M, which was acknowledged before a notary public, K
was the registered owne appearing in the certificate of title When the
sale was executed, nothing was annotated in the certificate to indicate
any
adverse claim of a third person or the fact that the property wasthe
subject of a pending litigation. It was only on 22 January 1990, after the
sale to M,that Gfiled her adverse claim with the Register of Deeds. Based
64
CHAPTER II - CAPACITY TOBUY OR SELL

on this factual backdrop, there is no doubt that Mwas a purchaser for

value in good faith and that when he bought the property he had no
knowledge that some other person had a right to or an adverse interest
in the property. Mpaid a full and fair price for the property at the time of
the purchase and before he had any notice of G's claim or interest in the
property. Acontract of sale is consensual and is perfected once
agreement is reached between the parties on the subject matter and the
consideration therefor. This is without prejudice, however, to any
appropriate remedy G may take against her erstwhile common-law
husband,R.4
Art. 1491. The following personscannot acquire by purchase, even at a
publicor 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
entrusted to them, unless the consent of the principal has been
given;
(3) Executors and administrators, the property of the estate under
administration;
(4) Publicofficers 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
governmnent 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
jurisdictionor 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 inwhich they may take
part by virtue of their profession.
(6) Any others specially disqualified by law. (1459a)
Note:
In contract of agency, after the termination of the relationship,
the agent is not prohibited to purchase a property belonging to the former
principal.

4see Gloria R. Cruz vs. CA, et.al., G.R. No. 120122, November 6, 1997.
65
 SELL
CHAPTERII - CAPACITY 1TO BUY OR

lawyers from
Note:
Code prohibits
Article 1491 (5) of the Civil rightsinvolved which arethe
or
by
of
acquiring
object
purchase or assignment the property
intervene by virtue of their profession. The
the litigation in which they
during the pendency of the suit and does
o after generaly
prohibition applies onlyy
not cover contracts for contingentfees where
thetransfer takes effectonly
the finality ofa favorable judgment. agreement in writing where the
Acontingent fee contract is an
recovered in the action, is madefee,
may be
ojten a fixed percentage of what The payment of the
depend upon the success of the litigation.
litigation involving the
fee
clien' contingent
IS not made during the pendency of the
been rendered in the case
property but only after the judgment has
handled by the lawyer.5
Note:
The above disqualification imposed on public and judicial officers and
lawyers is grounded on public policy considerations which disallow the
transactions entered into by them, whether directly or indirectly, in view of the
fiduciary relationship involved, or the peculiar control exercised by these
individuals over the properties or rights covered.b
Art. 1492. The prohibitions in thetwo preceding articles are applicable
to sales in legal redemption, compromises and renunciations.
The prohibition ordained in paragraph 5 of Article 1491 and Article
1492 isfounded onpublic policy because,by virtue of his office,an attorney
may easily take advantage of the credulity and ignorance of his client and
unduly enrich himself at the expense of his client.
The case of In re: Ruste illustrates the significance of the
aforementioned prohibition. In that case, the attorney acquired his clients
property subject of a case where he was acting as counsel pursuant to a deed
of sale executed by his clients in his favor. Hecontended that the sale was
madeat the instance of his clients because they had no money to pay him
his services. The Court ruled that the lawyer's for
acquisition of the property o
his clients under the circumstances obtaining therein
malpractice. The Court held:
rendered him liable for

Whether the deed of sale in question was executed at respondent,

the instanceorofatUi
spouses driven by financial necessity, as contended by the the
latter's behest, as contendedlby the complainant, is of no moment. In either case
an attorney occupies a vantage
position to
harassed client, in breach of the "rule so press upon or dictate his terms U
amply protective of the confdential

oaingalpartnership of the spouses vicente Cadavedo and

Benita
G.R. No. 173188, January 15, 2014. Arcoy-Cadavedo ve Victorino T. Lacaya,
Crisostomo C. Villegas, A.M.
6Mauro P. Mananquil vs. Atty. No. 2430, August 30, 1990.
66
CHAPTER II - CAPACITY TO BUY OR SELL

relations, which must necessarilyexíst between attorney and client, and of the
rights of both"?

Maquera, B.M. No. 793. Iule

7In Re:Suspension from the practice of law in the territory of Guam of Atty. Leon G.
30, 2004.
67
CHAPTER II-CAPACITY TOBUY OR SELL

Multiple Choice would fix

1. Asold to B her only laptop. It was agreed that A the a
later. At the agreed time, Anamed the price P10, 000. Bagreed. wWas price weey
perfected? the sale
A. No, because the price was left to the discretion of one of tthe
B.
parties.
No, because at the time of sale, the price was not fixed. contracing
C. Yes, because the price fixed by one of the parties was
other. accepted by the
D. Yes, because there was agreement thatA would fix the price
2.On January 1, Sorally sold to Baspecific ring for P450.00. The parties
agreed
that S shall deliver the ring to B on January 5, while B will pay the nrio
January 7.
A. The contract is perfected on January 5, when the
toB.
ring is delivered hvt
B. The contract is perfected on January 1,
of minds on the object and price.
when the parties had a meeting
C. The
contract is perfected on January 7, when the price is paid, since
both parties would then have
contract. performed their obligations in the
D. There isno perfected
3. These are certain contract because the sale was made orally.
persons, under certain
property.
A. Absolute incapacity
circumstances, cannot buy certain
B. Relative incapacity
C. None of the
above
D. Allof the above
4. One of the
A. following is not included in absolute
B.
Minors
Insane
incapacity
C.
Theguardian, the
his guardianship property of theperson or
persons who may be unde
D. Demented persons
5. These cover
medical everything indispensable for
A. attendance,
Necessary expenses
sustenance, dwelling,
education and transportation clothing
B. Useful expenses
C. Expenses of preservation
D. Necessaries
6. 1. The husband and wife
for policy considerationcannot sell
and the property to one as a rule which,
another
prohibition apply to common-law dictates of morality thatthe
require each
II. The law emphatically prohibits
other subject to certain
during marriage are prohibited.
relationships.
the spouses from
exceptions. selling propery
Similarly, donations between
to
spouses
A. Only Iis true
B. Only II is true
68
CHAPTER II - CAPACITY TO BUY OR SELL

C. Both are true

D. Both are false
7. I. All persons, whether natural or jurtdical, who can bind themselves, have
legalcapacity to enter into a contract of sale.
II. Where necessaries arethose sold and delivered to a minor orother person
withoutcapacity to act,he must pay a reasonable pricetherefor.
A. Only Iis true
B. Only Il is true
C. Both are true
D. Both are false
8. S sells to B at P50 per liter 300 liters of gasoline stored in his truck tank,
which is unknown to the parties contains 500 liters. What is the status of the
contract of sale between S and B?
A. The sale is void because the quantity available is mnore than the
quantity sold.
B. The sale is valid up to 500 liters of gasoline. Bmust pay for the
additional 200 liters.
C. The sale is valid up to 300 liters of gasoline. Bbecomes the owner of
3/5 of the whole stock, while Sbecomes the owner of 2/5 thereof.
D. The sale is rescissible because S will suffer lesion of more than ½ of
the value of the whole stock.
9. These are the persons who cannot enter into acontract of sale otherwise the
contract of sale is defective.
A. Absolute incapacity
B Relative incapacity
C. None of the above
D. Allof the above
10.P100
Aoffered for sale to B20 cavans of XYZ rice and fixed the price per cavan at
over the price offered at W's store in La Trinidad Public Market. The
price is:
A. Not certain because the price at La Trinidad Public Market is not
stated.
B. Certain because it has got reference to another thing which is certain.
C. Certain because there is aprice ceiling for price of rice.
D. Not certain so the court may fix the price.
11. One of the following is not included as an example of relative incapacity.
A. Husband and wife
B. The guardian, the property of the person or persons who may be under
his guardianship
C. Deaf-mutes who do not know how to write
D. Agents, the property whose administration or sale
may have been
entrusted to them
12. One of the following is not included as an example of relative incapacity.
A. Demented persons
B.
Executors and administrators, the property of the estate under
administration

69
 SELL
CHAPTER II - CAPACITY TO BUY OR
C. Public oficers and employees, the property of the State, the
of which has been
intrusted to them
administration
D. Justices, judges, and other officers and employees connected with the
administration of justice, the property in litigation before the
functionecourt
within whose jurisdiction they exercise their respective
13. 1. The Civil Code prohibits lawyers from acquiring by purchase
assignment the property or rights involved which are the object of the
litigation in which they intervene by virtue of their profession. The
prohibition applies not only during the pendency of the suit.
II.The proscription against sale of property between spouses does not apply
to common law relationships.
A. Only Iis true
B. Only II is true
C. Both are true
D. Both are false
14. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
A. Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and
B. Executors and administrators employees
C. Brothers and sisters
D. The guardian

70
CHAPTER II- EFFECTSOF THE CONTRACT WHEN THE THING SOLD
HAS BEEN LOST

CHAPTER 3
EFFECTSOF THECONTRACT
WHEN THE THING SOLD HASBEEN LOST
Art. 1493. If at the time the contract of sale is perfected, the thing
which
is the object of the contract has been entirely lost, the contract shall be
without any effect.
But if the thing should have been lost in part only, the vendee
may choose between withdrawing from the contract and
demanding the
remaining part, paying its price in proportion to the total sum agreed
upon.

Loss of the object at the time of perfection of the contract

1. COMPLETELY LOST
If the thing which is the object of the contract has been entirely lost,
the contract shall be without any effect. The reason is because
there is an
absence of an essential element, that is, the object.
2. PARTIALLY LOST
If the thing should have been lost in part only, the
choose between: vendee may
a. Withdrawing from the contract; and
b. Demanding the remaining part, paying its price in proportion to the
total sum agreed upon.
Note:
Athing is lost when it perishes or goes out of commerce or
in such away that its existence is unknown or it cannot be recovered.
disappears

Art. 1494. Where the parties purport a sale of specificgoods, and the
goods without the knowledge of the seller have perished in part or have
wholly or in a material part so deteriorated in quality as to be
substantially changed in character, the buyer may at his option treat the
sale:
(1)As avoided; or
(2) As valid in all of the existing goods or in so much thereof as have
not deteriorated, and as binding the buyer topay the agreed price
for the goods in which the ownership will pass, if the sale was
divisible.

Note:
This article reiterates the principles involved in the preceding article.
They only difer in the object of sale as the preceding article speaks about a
thing while this article speaks of goods.

71
 CHAPTER II - EFFECTS 0OF THE CONTRACT WHEN THE THING SOLD
HAS BEEN LOST

Remedies:
1. Avoidance; or
2. Valid in all of the goods or in so much thereof as have not
existing
deternorated, and as binding the buyer to pay the agreed price for the
goods in which the ownership willpass, if the sale was divisible.

72
 CHAPTER III - EFFECTS OF THE CONTRACT WHEN THE THING SOLD
HAS BEEN LOST

avefor nthoe Multiple Choice

1. Where the parties purport a sale of specific goods, and the goods without the
knowledge of the seller have perished in part or have wholly or in a material
part so deteriorated in quality as to be substantially changed in character, the
buyer may at his option treat the sale:
1. As avoided; or
II. As valid in all of the existing g0ods or in so much thereof as have not
deteriorated, and as binding the buyer to pay the agreed price for the goods
in which the ownership will pass, if the sale was divisible.
A. Only Iis true
B. Only II is true
C. Both are true
D Both are false
2. 1. If the thing which is the object of the contract has been entirely lost at the
time of perfection of sale, the contract shall be without any effect. The
reason is because there is an absence of an essential element, that is, the
consent.

I.Athing is lost when it perishes or goes out of commerce or disappears in

such a way that its existence is unknown or it cannot be recovered.
A. Only I istrue
B. Only Il is true
C. Both are true
D. Both are false
3. Athing is lost when, except:
A. It perishes
B Goes out of conmmerce
C. It is fully depreciated
D. Disappears in such a way that its existence is unknown or it cannot be
recovered
4. If the thing should have been lost in part only at the time of perfection of sale,
the vendee may choose between:
I. Withdrawing from the contract or
II. Damages
A. Only Iis true
B. Only II is true
C. Both are true
D. Both are false
5. I. If at the time the contract of sale is perfected, the thingwhich is the object
of the contract has been entirely lost, the contract shall still be valid.
II. If the thing should have been lost in part only, the vendee may cho0se
between withdrawing from the contract or specificperformance.
A. Only Iis true
B. Only IIis true
C. Both are true
D. Both are false

73