Deed of Sale 101

(Last of two parts)

As a general rule, all persons who are authorized by the Civil Code to obligate themselves may enter into a contract of sale. This includes all persons who have juridical capacity—that is, those who are fit to be the subject of legal relations, and those who have the capacity to act—that is, the power to do acts with legal effect.

Minors and insane and demented persons are incapacitated to signify their consent to a contract of sale.

But, minors must pay a reasonable price for necessaries, or everything indispensable for their sustenance, dwelling, clothing, medical attendance, education and transportation, which they may have purchased.

Spouses are absolutely prohibited from selling property to each other, except when, among others, a separation of property was agreed upon in the marriage settlements. In Ching v. Goyangko, the Supreme Court held that if transfers or conveyances between spouses were allowed, that would destroy the system of conjugal partnership, a basic policy in civil law.

The prohibition likewise seeks to prevent the exercise of undue influence by one spouse over the other, as well as to protect the institution of marriage.

In the Ching case, the Supreme Court further ruled that this prohibition against spouses applies to common-law relationships, or couples living as husband and wife without the benefit of marriage.

Moreover, the following are prohibited from purchasing, even at a public or judicial auction, either in person or through the mediation of another:

the guardian, the property of the person or persons who may be under his guardianship;

agents, the property whose administration or sale may have been intrusted to them, unless the consent of the principal has been given;

public officers and employees, the property of the State or any subdivision thereof, or of any government owned or controlled corporation, or institution, the administration of which has been intrusted to them, including judges and government experts who in any manner whatsoever took part in the sale;

justices, judges, prosecuting attorneys, clerks of superior and inferior courts, other lawyers, 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 jurisdiction or territory they exercise their respective functions; and

any others specially disqualified by law, such as non-Filipinos from acquiring or holding title to private lands, except only by way of legal succession, or if the acquisition was made by a former natural-born citizen.

Except in cases specified by law, inadequate price or consideration shall not invalidate a contract, unless: (a) there has been fraud, mistake, or undue influence; or (b) the parties intended a donation or some other act or contract.

In this regard, the Supreme Court held in Delfin v. Dellota that the price in a contract of sale need not be equal to the exact value of the thing sold.

Failure to pay the price does not invalidate a contract of sale, but merely gives rise to a right in favor of the seller to either demand specific performance or rescission of said contract.

Under a contract of sale, the seller is obliged to preserve the thing sold; deliver said thing; deliver its fruits and accessions; and warrant said thing, as may be required by law or as may be stipulated in the contract.

In his book entitled, “Law on Sales,” former Ateneo Law School Dean Cesar L. Villanueva discussed that under Article 1599 of the Civil Code, when the seller breaches his warranties under a contract of sale, the buyer may opt to avail himself of any of the following remedies:

accept or keep the thing and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;

accept or keep the thing and maintain an action against the seller for damages for the breach of warranty;

refuse to accept the thing, and maintain an action against the seller for damages for breach of warranty; and

rescind the sale and refuse to receive the thing or if the thing was already received, return it or offer to return it to the seller and recover the price or any part thereof which has been paid.

The buyer meanwhile is obliged to pay the price and accept delivery of the thing bought.