Relative Incapacity to Give Consent in Law on Sales Philippines

I. Introduction

In Philippine law, a contract of sale is perfected by mere consent (Article 1458, Civil Code). Consent, as an essential requisite of all contracts (Article 1318), must be intelligent, free, spontaneous, and manifested by the concurrence of offer and acceptance upon a definite object and cause (Articles 1319–1326).

For consent to be valid, the party giving it must have legal capacity. Incapacity may be absolute or relative. Absolute incapacity renders the party incapable of giving consent to any contract (Article 1327 in relation to Article 1390), producing a voidable contract. Relative incapacity, on the other hand, does not destroy the general capacity to contract but prohibits certain persons from entering into specific contracts of sale involving particular objects or with particular persons. The purpose is to prevent fraud, undue influence, abuse of confidence, and conflict of interest.

Relative incapacity in the law on sales is governed primarily by Articles 1490, 1491, and 1492 of the Civil Code, as supplemented and modified by the Family Code of the Philippines (Executive Order No. 209, as amended).

II. Nature and Effects of Relative Incapacity in Sales

Unlike absolute incapacity, which makes the contract merely voidable at the instance of the incapacitated party (Article 1390(1)), violation of the prohibitions under Articles 1490 and 1491 produces a sale that is null and void ab initio. The Supreme Court has consistently ruled that such contracts are inexistent for lack of a legitimate cause and are against public policy (Rubias v. Batiller, G.R. No. L-35702, May 29, 1973; Philippine Banking Corp. v. Lui She, G.R. No. L-17587, September 12, 1967; Medina v. Collector, G.R. No. L-9733, September 28, 1957).

The nullity is absolute and may be invoked by any interested party, not merely by the relatively incapacitated person. Prescription does not run against the action to declare the nullity (Article 1410), and ratification is impossible (Article 1409(1)).

III. Specific Instances of Relative Incapacity

A. Sales Between Husband and Wife (Article 1490, Civil Code)

“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 Articles 135 and 136.”

This prohibition is absolute during the marriage regardless of the property regime. The rationale is to protect the conjugal partnership or community property from possible fraud that may be committed by the spouses against each other and to prevent one spouse from unduly influencing the other.

Effect of Violation

The sale is null and void ab initio (Cruz v. Tan, G.R. No. L-19628, April 27, 1967; Uy v. Court of Appeals, G.R. No. 109557, June 29, 2000).

Exceptions

1. Complete separation of property agreed upon in the marriage settlements (ante-nuptial agreement).
2. Judicial separation of property decreed by the court during the marriage (Articles 134–142, Family Code).
3. When the sale is made to prevent the dissipation of assets in cases of de facto separation or abandonment (recognized in some older cases, but now largely superseded by the Family Code provisions on separation of property).

Interaction with the Family Code

Under the default regime of absolute community of property (Articles 75–108, Family Code), any disposition or encumbrance of community property without the consent of the other spouse is voidable (Article 96, Family Code). However, a direct sale between spouses remains absolutely void under Article 1490 even with consent, unless one of the two exceptions exists.

Under conjugal partnership of gains, the same principle applies (Article 124, Family Code).

B. Other Persons Enumerated in Article 1491, Civil Code

The following persons are relatively incapacitated to purchase certain property:

(1) The guardian, as to the property of his ward;
(2) Agents, as to the property whose administration or sale has been entrusted to them, unless the principal gives consent;
(3) Executors and administrators, as to the property of the estate under administration;
(4) Public officers and employees, as to property of the State or any subdivision thereof, GOCC, or institution whose administration is entrusted to them (this includes judges and government experts who take part in the sale);
(5) Justices, judges, prosecuting attorneys, clerks of court, and other officers and employees connected with the administration of justice, as to property and rights in litigation or levied upon execution before their court or within their jurisdiction (this includes acquisition by assignment and applies to lawyers with respect to property involved in litigation in which they take part by virtue of their profession);
(6) Any others specially disqualified by law (e.g., aliens prohibited from acquiring private agricultural lands under the Constitution; physicians prohibited from acquiring property of patients under certain circumstances in medical ethics laws, etc.).

Important Notes on Each Category

1. Guardian–Ward
   The prohibition is absolute. Even after termination of guardianship, the sale remains void (Rodriguez v. Mactal, G.R. No. 43952, November 28, 1938).

2. Agent–Principal
   The agent may purchase only with the express written consent of the principal. The consent must be specific to the transaction. Lack of consent renders the sale void (Distajo v. Court of Appeals, G.R. No. 112954, April 25, 2000).

3. Executor/Administrator–Estate
   The prohibition continues even after the estate is closed if the sale was made during administration (Ganuelas v. Cawed, G.R. No. 123968, April 24, 2003).

4. Public Officers
   The prohibition is broad and covers any property administered by them, not just confiscated or escheated property. It includes purchases through intermediaries (straw men).

5. Judicial Officers and Lawyers
   This is the most strictly construed. A lawyer cannot purchase property involved in a case he is handling, even if the purchase is made after the case is terminated but the property was in litigation while he was counsel (Director of Lands v. Abarca, G.R. No. L-26130, October 31, 1927; Rubias v. Batiller, supra – lawyer buying from client land previously in litigation).
   The prohibition applies even if the lawyer appears only as counsel de oficio or amicus curiae.

6. Others Specially Disqualified

   • Aliens (Article XII, Section 7, 1987 Constitution – private lands).
   • Corporate officers/directors purchasing property in litigation against the corporation they represent (if conflict of interest under Corporation Code).
   • Physicians acquiring property from patients through undue influence (though more ethical than statutory).

C. Extension to Other Juridical Acts (Article 1492)

The prohibitions in Articles 1490 and 1491 apply by analogy to:

• Legal redemption
• Compromises
• Renunciations
• Assignments of rights or credits in litigation (especially for lawyers)

IV. Rationale of the Prohibitions

The law presumes that in these relationships there exists a position of dominance, confidence, or moral ascendancy that may prevent the weaker party from freely giving consent. The prohibition is prophylactic: it removes the opportunity for abuse rather than waiting for proof of actual fraud.

V. Leading Supreme Court Doctrines

1. The nullity is imprescriptible (Article 1410).
2. Third persons who acquire from the prohibited buyer with knowledge of the defect acquire no better title (bad faith).
3. The prohibition applies even if the sale is disguised as a donation or made through an intermediary (Rubias v. Batiller).
4. A lawyer who purchases property in litigation from his client violates not only Article 1491 but also Canon 10 of the old Code of Professional Ethics and Rule 138 of the Rules of Court; the sale is void and the lawyer may be disciplined (Mantyla v. Tan, A.C. No. 407, July 29, 1960).
5. The prohibition on spouses applies even to common-law spouses when the purpose is to defraud legitimate spouses or creditors (Biton v. Momongan, G.R. No. 169664, March 6, 2007 – by analogy).

VI. Conclusion

Relative incapacity under Articles 1490–1492 of the Civil Code constitutes an absolute impediment to the validity of certain contracts of sale. The contracts entered into in violation thereof are null and void from the beginning, producing no legal effects whatsoever. The policy is founded on the highest considerations of public order and morality, and the courts have uniformly enforced these prohibitions with rigor to preserve the integrity of fiduciary relationships and the administration of justice.

Legal practitioners must exercise utmost caution in transactions involving spouses, guardians, agents, administrators, public officers, judges, and lawyers. When in doubt, the safer course is to avoid the transaction altogether or secure the necessary court approval or separation of property decree.