I. Introduction
In Philippine civil law, a contract of sale is perfected by the meeting of minds upon the thing which is the object of the contract and upon the price. For that meeting of minds to be legally effective, the parties must have capacity to give consent.
Not all incapacity is the same. Some persons are absolutely incapacitated to give consent to contracts in general. Others are relatively incapacitated only in particular situations or with respect to certain persons or property. It is this second category—relative incapacity in contracts of sale—that raises many practical and ethical questions, especially when fiduciary relationships or family ties are involved.
This article pulls together the doctrinal framework, statutory provisions, and key principles governing relative incapacity to give consent in sales under Philippine law, with particular focus on the Civil Code and its interaction with the Family Code and special laws.
II. Consent and Capacity in Contracts of Sale
A. Consent as an essential element
Under the Civil Code, a valid contract requires:
- Consent of the contracting parties
- Object certain which is the subject matter of the contract
- Cause of the obligation which is established
For a contract of sale, consent consists of:
- Agreement on the object (the thing to be sold), and
- Agreement on the price.
But even if the parties subjectively agree, the law may refuse to recognize that consent if:
- A party is incapacitated, or
- Consent is vitiated (mistake, violence, intimidation, undue influence, fraud).
Relative incapacity is a form of legal disqualification that limits the power to consent in specific situations, typically to prevent conflicts of interest and abuse of trust.
III. Absolute vs Relative Incapacity
A. Absolute incapacity (general incapacity to contract)
The Civil Code identifies certain persons incapable of giving consent to a contract:
- Unemancipated minors
- Insane or demented persons
- Deaf-mutes who do not know how to write
Contracts entered into by them are generally voidable, meaning they are valid until annulled, and typically only the incapacitated party (or their legal representative) can seek annulment.
B. Relative incapacity (special disqualifications)
The Civil Code clarifies that general incapacity is “without prejudice to special disqualifications”. These “special disqualifications” are cases where, even though a person is generally capacitated, the law forbids them from entering into a contract of sale in specific circumstances.
This is the essence of relative incapacity:
- It does not mean the person cannot contract at all.
- It means the person cannot validly enter into a sale with respect to particular persons or particular property, even if they otherwise have full legal capacity.
Relative incapacity is most clearly seen in:
- Sales between spouses, and
- Sales involving fiduciaries or public officials in relation to the property in their charge or litigation.
IV. Capacity to Buy and Sell: General Rule and Modifications
The Civil Code’s chapter on sales provides the starting point.
A. General rule on capacity in sales
As a rule:
All persons who are authorized in this Code to obligate themselves may enter into a contract of sale.
So, if a person can generally contract (is not absolutely incapacitated), that person can buy or sell.
B. Special rule on “necessaries” for absolutely incapacitated persons
There is an important “softening” of absolute incapacity:
Even those absolutely incapacitated (like minors) may validly enter into a sale of necessaries, when those necessaries are:
- Food
- Clothing
- Shelter
- Medical care, and similar items necessary for subsistence
In such cases, the law protects the seller by allowing the transaction despite the buyer’s incapacity. The incapacitated cannot later invoke their incapacity to escape payment for necessaries.
This is often viewed as a kind of partial or relative capacity: the person remains incapacitated in general, but is treated as capable with respect to contracts for necessaries.
C. Special disqualifications: the heart of relative incapacity
Beyond this, the Civil Code provides that certain persons who are otherwise capacitated are disqualified from purchasing in specific situations. These are no longer about protection of the incapacitated, but about public policy, loyalty, and trust, and they fall under relative incapacity in sales.
V. Relative Incapacity Between Spouses (Sales Between Spouses)
One of the most classic examples of relative incapacity is the prohibition on sales between husband and wife.
A. The prohibition
The Civil Code provides that:
The husband and the wife cannot sell property to each other.
This prohibition applies during the subsistence of a valid marriage, and generally refers to onerous contracts of sale.
B. Rationale
The law’s policy reasons include:
Protection of the marital property regime
- To prevent spouses from manipulating their property relations (e.g., hiding assets, defrauding creditors or heirs) through simulated sales.
Preservation of the family and equality between spouses
- To avoid undue pressure or influence by one spouse upon the other in transactions that may prejudice one of them.
Prevention of circumvention of other prohibitions
- E.g., disguising prohibited donations between spouses as sales for a fictitious price.
C. Interaction with the Family Code
The Family Code introduced new property regimes (absolute community, conjugal partnership of gains, separation of property, etc.) and a prohibition on donations between spouses during marriage, subject to narrow exceptions.
While that donation prohibition is separate, it’s animated by similar policies:
- Avoiding undue influence
- Protecting creditors and compulsory heirs
- Preserving the integrity of the marital regime
Sales between spouses could be used as a disguised form of donation (e.g., grossly inadequate price), hence the parallel concern.
D. Exceptions to the prohibition
The Civil Code recognizes exceptions—notably where the reason for the prohibition (manipulation of the common or conjugal property) is neutralized:
When there is an agreed separation of property in the marriage settlements
- The spouses’ assets are separate from the start, and a sale from one to the other does not distort a common fund.
When there has been a judicial separation of property
- The court has already separated the estates, typically for protection of one spouse or creditors; from that point, the spouses’ patrimonies are distinct.
In these cases, a sale between spouses is allowed because the risk of manipulating a common marital patrimony is greatly reduced.
E. Scope and nuances
Applies only during a valid marriage
- If the marriage is void, jurisprudence tends to treat the spouses not as legally spouses, so the Civil Code prohibition on sales between spouses may not apply in the same way (though other doctrines like co-ownership and fraud may become relevant).
Covers both movable and immovable property
- The law does not distinguish; any property can be the object of the prohibited sale.
Covers direct and indirect sales
- Disguised sales through intermediaries (e.g., selling to a dummy who later sells to the spouse) can still be struck down, particularly when fraud or simulation is shown.
VI. Relative Incapacity of Fiduciaries and Public Officers (Article 1491–Type Disqualifications)
Another major group of relatively incapacitated persons consists of fiduciaries and certain public officers. The Civil Code assembles these in a single provision that identifies persons who cannot acquire by purchase specific property, even at public or judicial auctions, and even through intermediaries.
A. Guardians and the property of the ward
A guardian cannot buy the property of the person under guardianship.
Rationale: The guardian is entrusted with managing and preserving the ward’s property. Allowing the guardian to purchase that property would invite self-dealing, abuse, and dissipation of the ward’s estate.
Scope:
- Applies only while guardianship exists.
- Once guardianship terminates (e.g., ward comes of age or is declared capacitated, and a reasonable time passes), the former guardian and the former ward may transact like ordinary parties.
B. Agents and the property entrusted to them
An agent cannot buy property whose administration or sale has been entrusted to them, unless the principal consents.
Key points:
Core rationale: loyalty to principal
- An agent must act in the best interest of the principal. If agents could freely buy their principals’ property, they might depress prices, manipulate sales, or conceal better offers.
Exception: informed consent
Indirect acquisitions
- Acquisition “through the mediation of another” (e.g., agent’s spouse, dummy, or controlled corporation) is still within the prohibition, especially where the agent stands to benefit.
C. Executors and administrators and the estate
Executors and administrators cannot buy property of the estate they are administering.
- They owe duties of fidelity and impartiality to heirs, creditors, and the court.
- A sale of estate property to the administrator would be a classic conflict of interest: the administrator could undervalue assets or manipulate the liquidation in their favor.
D. Public officers and employees and property under their administration
Public officers and employees are prohibited from purchasing property of the State or government-owned or controlled corporations, or of any political subdivision, when such property has been entrusted to them.
- The concern here is corruption and abuse of public office.
- A public officer with control or influence over public assets might be tempted to dispose of them at undervalue for personal gain.
The prohibition generally applies only:
- While the public officer is in a position of control or administration over the property, and
- To that specific property under their charge, not to any and all public assets.
E. Judges and court personnel and property in litigation
Judges, justices, prosecutors, clerks of court, and other officers and employees of the justice system are disqualified from purchasing property and rights in litigation or levied upon execution in the court where they work.
Features:
Timing:
- The property must be in litigation (or under execution) in their court.
Persons covered:
- Judges and justices exercising jurisdiction over the case
- Prosecutors handling the case
- Clerks of court and other employees connected with the administration of justice in that court
Rationale:
- To preserve impartiality and public confidence in the justice system.
- If judges and court staff could acquire litigated property, litigants might suspect or experience undue pressure or manipulation.
F. Lawyers and property in litigation
Lawyers are also disqualified from purchasing property or rights which are the object of litigation in the court where they participate by virtue of their profession.
Key aspects:
Scope
- The property must be directly the subject of litigation.
- The lawyer must be involved in the case (counsel for any party, in some interpretations).
Exception after litigation
- Once the case is finally terminated, and the property is no longer “in litigation”, a lawyer may, in principle, acquire it—subject to other ethical rules (e.g., on fees and conflicts of interest).
Contingent-fee arrangements
G. “Any others specially disqualified by law”
The Civil Code also opens the door to special laws disqualifying specific persons or groups from purchasing particular property. Examples (from other statutes) include:
- Certain land officials barred from acquiring lands under their jurisdiction;
- Public bidding rules prohibiting bidders who have insider roles in the procuring entity;
- Bank officers and directors restricted from certain self-dealing transactions under banking laws.
All these fall under relative incapacity: capacity is withheld only in relation to specific transactions.
VII. Legal Nature and Effects of Violations
The question now is: What happens if a relatively incapacitated person enters into a prohibited sale?
A. Classification: void, voidable, or unenforceable?
Philippine doctrine generally characterizes:
- Sales prohibited by Articles on disqualifications (e.g., between spouses without exception; under fiduciary/public officer prohibitions)
as void contracts, because they are expressly prohibited or declared void by law.
Consequences of a void sale:
- Produces no legal effect from the beginning (void ab initio).
- Cannot be ratified (no ratification cures the defect).
- Action or defense for declaration of nullity does not prescribe, although laches may, in exceptional cases, bar relief.
- Parties must restore what they have received (mutual restitution), subject to rules on good faith/bad faith possession, fruits, and improvements.
In contrast:
Relative incapacity grounded on specific prohibitions (spouses, fiduciaries, judges, lawyers, etc.) is more severe: the law aims to protect public policy and third parties, not just the individual incapacitated party, so the sanction is usually absolute nullity.
B. Ratification: when is it possible?
Voidable sales (e.g., minor’s sale of non-necessaries)
- Ratification is possible (expressly or impliedly) after capacity is acquired.
Sales under Article 1490 (between spouses)
- Generally considered void and not susceptible of ratification.
- If spouses want to transfer property between them, they must do so after the disqualification is lifted (e.g., after judicial separation of property, or in a new transaction with the proper property regime).
Sales under Article 1491 (fiduciaries, public officers, etc.)
- Similarly, usually treated as void and not ratifiable, except where the law itself allows “consent” (e.g., agent acquiring property with principal’s informed consent).
- In those cases, consent given before or contemporaneously with the sale avoids the prohibition, so the transaction is valid from the start. Consent given afterward may be treated as a ratification, but only where the law explicitly allows it (as with agents).
C. Indirect acquisitions and simulation
To enforce relative incapacity, courts look beyond form to substance:
- A guardian buying through their spouse or corporation
- A judge’s relative buying property in litigation, with the judge as real financier
- A lawyer acquiring property “from” a third party but clearly as an extension of their client’s execution sale
In such cases, courts may:
- Pierce the corporate veil
- Declare the transaction simulated
- Apply the prohibitions by analogy to indirect, mediated acquisitions
The focus is on whether the relatively incapacitated person benefits in substance from the purchase.
D. Registration and protection of third parties
Another nuanced area: what if the sale (though void under relative incapacity) is registered under the Torrens system and a third person later buys in good faith?
Principles typically applied:
- A buyer in good faith and for value relying on a clean title may, in some situations, be protected.
- However, if the root contract is void for being expressly prohibited by law, the disqualified buyer often acquires no title, and therefore cannot pass one—even to an innocent purchaser.
This balance between indefeasibility of title and nullity of illegal contracts is resolved on a case-by-case basis, depending on the nature of the defect, the timing, and the equities involved.
VIII. Relative Incapacity and Professional Ethics
In addition to civil law sanctions, several categories of relatively incapacitated persons are also subject to ethical or administrative rules:
- Lawyers can face disciplinary action (suspension, disbarment) for acquiring property in violation of the prohibitions or ethical canons on conflicts of interest and champerty.
- Judges and justices may be administratively sanctioned (including dismissal) for involvement in prohibited transactions affecting litigated property.
- Public officers may be liable for administrative misconduct and even criminal offenses such as graft and corruption if they exploit their positions to acquire public property.
Thus, relative incapacity in sales is not just a civil-law issue; it intersects with professional responsibility and public accountability.
IX. Practical Implications and Compliance Tips
For practitioners, fiduciaries, and parties transacting under Philippine law, several practical guidelines emerge:
Identify possible special disqualifications early.
- Check whether any party is a spouse, guardian, agent, estate administrator, public officer with control over the property, judge, lawyer, or other specially disqualified person.
Assess the nature of the property.
- Is it estate property, public property, property under litigation, property entrusted for administration or sale, or property of a ward?
- If yes, special prohibitions likely apply.
Avoid “creative” circumventions.
- Using dummies, relatives, or corporations to indirectly purchase prohibited property is risky and likely void, especially if challenged.
Use informed, written consents where allowed.
- For agents, if the principal desires to sell to the agent, secure clear, written, and preferably independent consent, ensuring full disclosure of terms.
Time the transaction appropriately.
- Lawyers and judges should wait until litigation is completely terminated, and ideally until their involvement ceases, before considering any acquisition of the property.
Involve independent counsel and court supervision where appropriate.
- Especially for estate and guardianship transactions, court approval and independent advice can help ensure compliance and protect all parties.
X. Conclusion
Relative incapacity to give consent in sales under Philippine law is a carefully crafted limitation designed to safeguard:
- Vulnerable persons (wards, minors, parties whose property is entrusted to others),
- The integrity of fiduciary and professional relationships, and
- Public trust in institutions like the courts and public service.
While persons subject to these special disqualifications generally enjoy full legal capacity, the law treats them as incapacitated in relation to specific transactions, because the risk of self-dealing, abuse of trust, or corruption is too great.
Understanding these rules—especially the prohibitions on sales between spouses, the fiduciary disqualifications (guardians, agents, executors, administrators), and the restrictions on public officers, judges, and lawyers—is essential for anyone drafting, advising on, or entering into contracts of sale in the Philippines.
They are not mere technicalities; they embody the legal system’s commitment to loyalty, fairness, and public policy in property transactions.