Relative Incapacity to Consent in Sales Law in the Philippines

I. Introduction

Consent is an essential element of every contract under Article 1318 of the Civil Code of the Philippines. For a contract of sale to be valid, the parties must not only actually agree on the object and price – they must also possess capacity to give consent as defined by law.

Most discussions focus on absolute incapacity (e.g., minors, insane persons). Less appreciated, but extremely important in Sales, is relative incapacity – situations where certain persons are not allowed to buy or sell in relation to specific persons or properties, even though they are generally capable of contracting.

In sales law, relative incapacity appears mainly through special disqualifications to buy or sell, grounded on public policy: to prevent conflicts of interest, self-dealing, and abuse of fiduciary or official positions.

This article walks through everything essential about relative incapacity to consent in sales law in the Philippine setting, focusing on the Civil Code and its interaction with other laws.

II. Consent and Capacity in Philippine Contract Law

A. Requisites of a Valid Contract

Article 1318 of the Civil Code provides that a contract is perfected when the following concur:

Consent of the contracting parties;
A determinate object; and
A cause of the obligation.

Consent presupposes that:

The parties freely manifest their will; and
They are legally capable of giving such consent.

B. General Incapacity vs. Special Disqualifications

Articles 1327 and 1328 state who cannot give consent to a contract:

Unemancipated minors;
Insane or demented persons;
Deaf-mutes who do not know how to write;
Persons in a state of drunkenness; and
Persons under a hypnotic spell.

Contracts with these persons (when they act as parties) are voidable under Article 1390(1), because one party is incapable of giving consent.

Article 1329 then adds a critical clause: the incapacity declared in those provisions is “without prejudice to special disqualifications established in the laws.”

Those “special disqualifications” are what we call relative incapacity – not a total civil incapacity, but an incapacity in relation to specific transactions, persons, or properties.

III. Concept of Relative Incapacity in Sales

A. Definition

Relative incapacity in sales law refers to situations where a person who is otherwise generally capable of contracting is prohibited by law from entering into a contract of sale involving certain persons or certain properties.

Key points:

It is transaction-specific (e.g., “you cannot buy this particular property”).
It is often role-based (e.g., guardians, agents, public officers, judges).
It is grounded on public policy, not on personal civil status (like minority or insanity).

B. Distinction from Absolute Incapacity

Aspect	Absolute Incapacity (e.g., minors)	Relative Incapacity (special disqualifications)
Scope	Generally cannot give consent to contracts	Can contract generally, but not in particular relationships
Legal basis	Arts. 1327, 1328, 1390	Art. 1329 + specific provisions (e.g., Arts. 1490–1491)
Typical effect of contract	Voidable (can be annulled)	Typically void (forbidden by law) or treated as inexistent
Rationale	Protection of incapacitated person	Protection of public interest, avoidance of self-dealing, etc.

Relative incapacity in sales is mainly embodied in Articles 1490 and 1491 of the Civil Code, which impose disqualifications to buy or sell in specific relationships.

IV. Relative Incapacity Between Spouses: Article 1490

A. The Rule

Article 1490 provides, in substance, that:

The husband and the wife cannot sell property to each other, except in cases where:

A separation of property was agreed upon in the marriage settlements; or

There has been a judicial separation of property.

This rule applies regardless of whether the property regime is conjugal partnership, absolute community, or another regime, subject to the Family Code and transitional rules.

B. Rationale

The prohibition aims to:

Protect the marital and property regime from simulated transfers that might:
- Prejudice creditors,
- Evade mandatory rules on property relations, or
- Skew future partition or legitimes of compulsory heirs.
Prevent undue influence and protect the weaker spouse from subtle coercion or pressure.
Avoid conflicts of interest in the management of conjugal or community property.

C. Scope of the Prohibition

Sales between spouses The prohibition is directed at contracts of sale (onerous transfers). It traditionally does not extend to:
- Donations (which have their own rules and limitations),
- Exchanges in some doctrines (though still suspicious if used to circumvent the law), or
- Partition of co-owned property (if genuinely partition, not disguised sale).
Property covered
- Generally applies to property of either or both spouses, whether exclusive or part of the common fund, because the law fears manipulation of assets regardless of technical title.
- Particularly significant when property is conjugal or community, as “selling” to spouse could be meaningless but used to create documents that prejudice creditors or future heirs.
Interposition of intermediaries (dummies) The spirit of the law is easily thwarted if one spouse sells to a third person who resells to the other spouse. Courts look at substance over form—if the intermediate sale is a mere façade to circumvent Article 1490, the transaction can still be struck down as void.

D. Exceptions

Separation of property in marriage settlements If, before marriage, the parties agree in their marriage settlements on a complete separation of property, each spouse owns his or her property independently. In that case, Article 1490 allows spouses to sell property to each other because:
- There is no common fund being manipulated.
- The risk of self-dealing against a common property regime is minimized (though creditors’ rights must still be respected).
Judicial separation of property When a court decrees a judicial separation of property (e.g., due to abandonment, incapacity, or other grounds allowed by law), the spouses’ properties become separate. The law then allows them to enter into sales with each other, subject to:
- Protection of creditors, and
- Observance of procedural safeguards in the judicial decree.

E. Nature and Effect of Violation

General view: void contract Because the law expressly prohibits the sale, the prevailing doctrinal view treats the sale as void under Article 1409(7) (contracts expressly prohibited by law). Consequences:
- It produces no legal effect between the parties.
- It is not susceptible to ratification.
- The action or defense for declaration of nullity is imprescriptible (though related actions, like recovery of property, might be subject to prescription or laches in particular factual scenarios).
Restitution and protection of third persons
- Between the spouses, generally, each must return what he or she has received if possible.
- If property has passed to third parties in good faith and for value, the rights of innocent third persons may be protected under the rules on double sales, registration, and protection of innocent purchasers in good faith.

V. Relative Incapacity to Buy: Article 1491

Article 1491 enumerates persons who are disqualified from acquiring by purchase certain properties and rights, either directly or “through the mediation of another.”

This is a classic articulation of relative incapacity in sales law.

A. Guardian and Ward’s Property

A guardian cannot purchase, even at public or judicial auction, the property of his ward.

Rationale: Guardians have a fiduciary duty to protect the ward’s interests. Allowing purchase would turn the guardian into an adverse party tempted to exploit the ward’s vulnerability.
Contracts covered: Any form of onerous acquisition by purchase, whether:
- Direct purchase,
- Through another person acting as dummy, or
- By “assignment” that is essentially a purchase.

The prohibition remains even after termination of guardianship in relation to transactions arising out of the guardianship that are still subject to review or are closely tied to duties previously held.

B. Agents and Property Entrusted to Them

An agent is disqualified from purchasing the property whose sale or administration has been entrusted to him.

Example: A real estate agent authorized to sell a particular parcel of land cannot buy that land for himself, directly or indirectly, as long as it is still subject to the agency.
Rationale:
- To prevent the agent from acting in his own interest rather than in the principal’s best interest (conflict of interest).
- To avoid “lowballing” the value of the property and secretly capturing a higher market value.

Some doctrinal discussions recognize that, under certain circumstances, a sale may be allowed when:

There is full disclosure, and
The principal freely and expressly consents to the sale to the agent, often with a price fixed by an independent standard.

But absent such safeguards, the default rule is strict prohibition, and the transaction is vulnerable to a declaration of nullity.

C. Executors and Administrators and Estate Property

An executor or administrator cannot purchase the properties of the estate under his administration.

Rationale: Fiduciaries must administer estate assets solely in the best interest of heirs and creditors. Allowing them to buy those assets creates:
- Strong temptation to sell at undervalue, or
- Manipulate the process of liquidation.

The rule applies regardless of whether the sale is private or public, and whether the purchase is direct or through intermediaries.

D. Public Officers and Employees and Public Property

Public officers and employees connected with the sale, administration, or custody of public property or funds cannot purchase such property directly or indirectly.

Rationale:
- Prevent corruption, self-dealing, and misuse of public office.
- Uphold public trust and integrity in the administration of government property.

This rule often overlaps with administrative and criminal statutes, such as:

Anti-Graft and Corrupt Practices laws, and
Government auditing and procurement rules.

Violation may thus lead not only to nullity of the sale but also to administrative and criminal liability.

E. Judges, Prosecutors, Lawyers, Clerks, and Court Personnel

Judges, justices, prosecutors, lawyers, clerks of court, and other judicial personnel are disqualified from acquiring by purchase:

Property and rights in litigation within the court where they exercise jurisdiction or perform their functions.

Key concepts:

Property “in litigation” – typically understood as:
- Property forming the subject matter of an ongoing case;
- Rights in dispute or under judicial review.
Persons covered:
- The judge or justice deciding the case;
- The prosecutor in cases where the government is a party;
- Court clerks and other employees who might have access to sensitive information.
Rationale:
- To preserve impartiality and integrity of the justice system.
- To avoid insider dealing where a judge or lawyer leverages confidential information or influence to acquire property cheaply.

The prohibition remains keenly applied throughout the litigation process and often extends in spirit to closely connected transactions that might compromise the dignity of the court.

F. “Others Specially Disqualified by Law”

Article 1491 ends with a catch-all: “others specially disqualified by law.”

This clause incorporates prohibitions in other statutes, for example:

Certain public officers under special laws (e.g., procurement laws, banking regulations, etc.) may be barred from acquiring specific assets.
Directors and officers of corporations may be restricted by corporate law or by-laws from certain self-dealing transactions (though technically not always framed as “sales” incapacity, they function similarly).

The idea is that if another law says “X cannot purchase Y,” Article 1491 ensures that such special disqualification is treated as part of sales law.

VI. Nature and Effects of Relative Incapacity Under Articles 1490 and 1491

A. Are These Contracts Void or Voidable?

In general:

Contracts involving persons absolutely incapable of giving consent (e.g., minors) are voidable (Art. 1390).
Contracts expressly prohibited or declared void by law (like those under Articles 1490 and 1491) are treated as void under Article 1409(7).

Thus, sales violating Articles 1490 and 1491 are commonly considered:

Void or inexistent from the beginning (ab initio),
Not capable of ratification, because ratification presupposes a voidable contract, not a void one.

However, some academic writers discuss the idea that such contracts may be voidable at the instance of the protected party, especially where it would be unfair to treat them as valid, but this typically yields to the dominant view: these are absolute prohibitions grounded on public policy.

B. Who May Invoke the Incapacity?

Even though the contract is void:

Parties protected by the prohibition (e.g., ward, principal, heirs, State) can seek a judicial declaration of nullity.
The disqualified person himself generally cannot benefit from his own wrongful act.

Third persons who suffer prejudice (e.g., creditors, co-heirs) may also invoke nullity when necessary to protect their rights, subject to rules on standing and proper cause of action.

C. Prescription

Actions or defenses for the declaration of absolute nullity of void contracts are generally considered imprescriptible. This aligns with the principle that what is legally inexistent can never acquire efficacy by mere lapse of time.

However:

Related actions, such as those for recovery of property or damages, may still be subject to prescriptive periods, depending on their nature.
Laches (equitable estoppel by delay) may apply in exceptional cases, particularly when third-party rights and the demands of equity are strong.

VII. Relative Incapacity and the Use of Intermediaries

Articles 1490 and 1491 explicitly or implicitly cover purchases made “through the mediation of another.”

Key implications:

Dummy purchases do not cure the defect. A guardian cannot lawfully have a friend or relative buy the ward’s property and later transfer it to the guardian; courts will pierce such arrangements.
Substance over form. Courts look at the economic reality of the transaction:
- Who provided the purchase money?
- Who ends up with control and beneficial ownership?
- Was the intermediary acting independently or merely as a conduit?
Standard of proof. Relative incapacity cases often involve factual issues about intent and agency. Documentary evidence, financial flows, and witness testimonies are critical to establishing that an intermediary was merely a dummy.

VIII. Interaction with Other Legal Regimes

A. The Family Code and Matrimonial Property Relations

With the Family Code:

The default property regime for marriages now is absolute community of property, unless validly modified by marriage settlements.
This has implications for Article 1490:
- Sales between spouses involving community property are even more suspect, as the property technically belongs to both already; a “sale” is often a legal fiction.
- Courts remain wary of such transfers as they can be used to favor certain creditors or heirs over others.

Judicial separation of property and agreed separation in marriage settlements remain the two principal exceptions that permit sales between spouses.

B. Anti-Graft and Public Accountability Laws

Public officers disqualified under Article 1491 may also face:

Administrative liability (disciplinary proceedings, dismissal, etc.),
Criminal liability under anti-graft laws (e.g., for acts constituting corrupt practices such as direct or indirect financial interest in transactions requiring approval of their office).

Even if, hypothetically, a court were to find the sale technically valid between private parties, violations of public accountability laws may lead to separate consequences.

C. Corporate Law and Self-Dealing

Directors, officers, and dominant shareholders involved in self-dealing transactions—such as buying corporate property at an underprice—are subject to:

Corporate statutes requiring:
- Board approval with disinterested directors,
- Proper disclosure,
- Compliance with fairness standards.
Breach may lead to:
- Annulment of the transaction,
- Damages,
- Liability for breach of fiduciary duty.

While these are not always framed as “relative incapacity” in the Civil Code sense, the underlying rationale is identical: avoid abuse of position and conflicts of interest in sales.

IX. Practical Consequences in Litigation and Practice

A. Due Diligence Considerations

Lawyers and parties dealing with sales should always consider:

Capacity vs. disqualification
- Even if the parties are adults and seemingly capable, ask:
  - Is one a guardian of the other?
  - Is one an agent, executor, public officer, judge, or lawyer in relation to the property?
Check for fiduciary relationships
- Existence of agency, guardianship, estate administration, or judicial proceedings involving the property.
Check marital status and property regime
- Are the parties married to each other?
- Is the property conjugal, community, or exclusive?

B. Drafting and Documentation

Contracts often contain representations and warranties that:
- The parties have full capacity to contract; and
- They are not disqualified by any law, including Articles 1490 and 1491, or any special law, from entering into the sale.
In sensitive cases (e.g., where a former guardian later buys property), additional safeguards may be used:
- Independent appraisals,
- Explicit disclosures,
- Judicial approval where required.

C. Remedies When Relative Incapacity is Violated

Action for declaration of nullity of sale
- To declare the transaction void ab initio.
- Often accompanied by reconveyance of the property.
Restitution and accounting
- Return of purchase price (if allowed by equity), and
- Accounting for fruits and improvements.
Administrative and criminal proceedings
- If the disqualified person is a public officer, judge, or professional, there may be:
  - Administrative complaints (e.g., before the Ombudsman, Supreme Court, or professional regulatory bodies),
  - Criminal prosecution under applicable statutes.

X. Relative Incapacity vs. Vitiated Consent

Relative incapacity must not be confused with vices of consent (error, fraud, violence, intimidation, undue influence).

Vices of consent: The parties are capacitated, but consent is flawed. The contract is voidable and may be ratified.
Relative incapacity: The law prohibits the transaction itself due to the relationship or role of the parties. The contract is typically void, and ratification is not allowed.

Sometimes both can exist: e.g., a guardian exerts undue influence on a ward to sell property; the transaction may be void for violating Article 1491 and also considered tainted by undue influence. But in practice, courts need only rely on the more fundamental ground of statutory prohibition.

XI. Summary and Key Takeaways

Relative incapacity in Philippine sales law arises from special disqualifications imposed by law on generally capacitated persons, preventing them from buying or selling in relation to specific persons or properties.
The main Civil Code provisions are:
- Article 1490 – spouses cannot sell property to each other, except where there is a separation of property in the marriage settlements or a judicial separation of property.
- Article 1491 – guardians, agents, executors/administrators, certain public officers, judges, prosecutors, lawyers, clerks, and others specially disqualified by law cannot acquire by purchase, even through intermediaries, properties and rights related to their fiduciary or official functions.
These rules are rooted in public policy:
- To prevent conflicts of interest and self-dealing;
- To protect vulnerable parties (wards, principals, heirs, the State, litigants);
- To maintain integrity in public office and the justice system.
Sales made in violation of these prohibitions are generally treated as void, not voidable:
- They produce no legal effects between the parties;
- They are not susceptible to ratification;
- The action or defense to declare nullity is typically imprescriptible, subject to particular rules on related claims and equity.
Use of dummies or intermediaries does not escape the prohibition. Courts look at the real party in interest and the economic substance of the transaction.
Relative incapacity in sales law intersects with:
- The Family Code on property relations of spouses,
- Anti-graft and public accountability laws,
- Corporate and professional responsibility rules, and
- General doctrines on fiduciary duties.
In practice, lawyers must treat relative incapacity as an essential part of due diligence, contract drafting, and risk assessment in any sale involving fiduciaries, spouses, public officers, or judicial personnel.

In short, relative incapacity to consent in sales law in the Philippines is not about mental or physical inability; it is about legal and ethical boundaries that the law sets around certain relationships and roles. Understanding these boundaries is crucial to ensuring that contracts of sale are not only valid, but also consistent with public policy and the demands of fiduciary honesty and public trust.