Can't share this digest on Facebook? Here's why.
GENERAL RULE: All parties with capacity to contract can enter into a valid contract of sale.
2. Juridical – corporation/partnership/associations/Cooperatives
- Status of contract valid
- Remedies available therefor are:
- specific performance
EXCEPTION TO GENERAL RULE:
- status of contract: voidable only, therefore can be ratified
**Justice Paras: Minors may buy, but the contract is GENERALLY void. If what is bought by the minor is/are necessaries, then the minor must pay a reasonable price therefor.
- remedy is action for annulment (with partial restitution in so far as the minor is benefited)
2. SALE BY & BETWEEN SPOUSES
a. Contract with 3rd parties
- status of contract is valid
b. Sale between spouses
- Status not provided for by law but VOID according to case law (Uy Siu Pin vs Cantollas).
i. prevent defraudation of creditors
Rule: A sale of one spouse to the other is VOID. This is to protect creditors. BUT if a creditor becomes a creditor only AFTER the contract of sale between the spouses, then such creditor may not invoke the nullity of the sale. Creditor here is not protected.
(Atty. Bandonill Jr: This is one instance when a void act creates legal effects.)
ii. avoid situation where dominant spouse take advantage of others
iii. avoid circumvention on prohibition of donation between spouses
i. separation of property agreed (marriage settlement)
ii. judicial separation of property
c. Common Law Spouses (Paramours)
- Status of contract: VOID (per case law)
- Rationale: evil sought to be avoided is present
3. OTHERS PER SPECIFIC PROVISIONS OF LAW – (Article 1491 of the Civil Code) (Relative Incapacity)
a. Guardian with regards to property of ward during period of guardianship
b. Agent with regards to property of principal
c. Executor/administrator with regards to the estate of the deceased
d. Public officers with regards to the property of the estate
e. Officer of court & employee – with regards to property in litigation
** A violation of Article 1491 renders the sale VOIDABLE.
** In the sale of an agent with regards to the property of the principal, it would be valid if it is with the principal’s consent. Consent should be written.
TWO GROUPS OF PROHIBITED PARTIES FROM ENGAGING IN CONTRACT OF SALE:
1. Guardian / Agent / Executors – ratifiable in the sense that only private wrong is involved.
2. Public Officials / Officers of Court – not ratifiable in the sense that public wrong is concerned.
Contract of Sale Involving Lawyers
Not Allowed if:
1. Lawyer-Client relationship exists.
2. Subject matter of sale is in litigation.
3. Lawyer is not allowed to buy said property while in litigation. May include property subject to future litigation.
- Reason: due to public policy; ground for malpractice
a. Client is at the mercy of the lawyer
b. Law is a noble profession
c. 2 Masters – 2 interest; one cannot serve 2 masters at the same time
- Exception: CONTINGENT FEE ARRANGEMENT
a. Amount of legal fees is based on a value of property
b. Property itself is involved
- Not a sale but service contract
- I give that you may do (innominate contract) so has to be governed by law on sales but because of public policy, considered VALID
- Reason why contingent fee is followed:
i. constitutional prohibition against impairment of contract
ii. subject to control of courts (may be reduced if unconscionable or nullified)
iii. canons of legal ethics