II. PARTIES TO A CONTRACT OF SALE
Gregorio Balacano, married to Lorenza Sumichay (both dead) – owned 2
1. General Rule: Every person having legal capacity to obligate himself,
may validly enter into a contract of sale, whether as seller or as buyer
(Art 1489)
Voidable – has a defect (e.g. vitiated consent); valid until annulled
2. Minors, Insane and Demented Persons, Deaf-Mutes (Arts 1327, 1397 and
1399)
A minor cannot be deemed to have given her consent to a sale; consent is
among the essential requisites of a contract of sale, absent of which there can
be no valid contract
a. “Necessaries” (Art 1489 and 290)
Art 194 of FC – Comprises everything indispensable for sustenance,
dwelling, clothing, medical attendance, education and transportation.
[will only pay for the price fixed by the court
b. Protection of the Senile and Elderly (Art 24), Illiterates (Art 1332)
While a person is not incompetent to contract merely because of
advances years or by reason of physical infirmities, when such age
or infirmities have impaired the mental faculties so as to prevent the
person from properly, intelligently or firmly protecting his property
rights, then as to prevent the person from properly, intelligently or
firmly protecting his property rights, then he undeniably
incapacitated, and the sale he entered into is void.
EQUITY CASE – protective of the senile and elderly
“You don’t need to be the owner of the subject upon the
perfection of the contract (only in delivery) – remedies are
available in delivery defects.
Government is exercising vigilant protection of the senile and
elderly.
Paragas vs Heirs of Dominador Balacano
G.R. No. 168220
August 31, 2005
J. Chico-Nazario
Doctrine: A person is not rendered incompetent merely because of old age; however,
when such age has impaired the mental faculties as to prevent a person from protecting
his rights, then he is undeniably incapacitated.
Facts:
1.
parcels of land
2. When he was already 81 years old:
a. Very weak
b. Could barely talk
c. Battling liver disease for almost a month
3. That on his death bed, a week before his death – he allegedly signed a Deed
of Absolute Sale over the parcels of lands in favor of Spouses Paragas
a. Atty De Guzman notarized the same alleges that it was just a
confirmation of a previous sale – there was already a payment of 50k
deposit.
b. Paragas’ “Driver” – WITNESS – took a picture of Gregorio Balacano
signing said deed with a ballpen in his hand;
4. There was nothing to show that the contents of the deed were explained to
Balacano;
5. October 1996 Paragas then sold a portion of the disputed land to Catalino
6. The Petitioner’s, the grandchildren, asks for the nullification if he deed of sale,
to wit:
a. Their grandfather Gregorio could not have appeared before the
notary public on July 1996 at Santiago City because he was then
confined at Veterans Memorial Hospital in QC
b. At the time of the alleged execution of the deed of sale, Gregorio
was:
i. Seriously ill – which VITIATED HIS CONSENT
c. Catalino manipulated the execution of the deed and prevailed upon
dying Gregorio to sign his name on a paper the contents of which he
never understood because of his serious condition
7. The Respondents move to dismiss the comlaint, to wit:
a. The plaintiffs have no legal capacity
b. An indispensable party was not impleaded – Alfredo, Gregorio’s
other son was not made a party to the suit
c. Complaint has no cause of action – the Domingo’s children failed to
allege a ground for the annulment of the Deed of sale, because they
failed to cite the ff:
i. Mistake
ii. Violence
iii. Initimidation
iv. Undue influence
v. Fraud
8. Lower court: denied motion to dismiss – declared the sale – NULL AND VOID
9. CA affirmed lower trial court – found that there was no prior and perfected
contract of sale that remained to be fully consummated.
Issue: W/N Gregorio Balacano is incapacitated to enter a contract of sale, YES
Held:
A person is not rendered incompetent merely because of old age; however, when such
age has impaired the mental faculties as to prevent a person form protecting his rights,
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then he is undeniably incapacitated. He is clearly at a disadvantage, and the courts
maybe vigilant for his protection.
In the case at bar, Balacano’s consent was clearly ABSENT hence the sale was null
and void. The circumstances raise serious doubts on his capacity to render consent.
Considering that the Paragas spouses are not owners of the said properties, it only
follows that the subsequent sale to Catalino – who was not in good faith – is likewise
VOID. Furthermore, the lots pertained to the conjugal partnership having been inherited
by Balacano during his marriage to Lorenza. Thus it cannot be sold without the latter’s
consent.
3. Sales By and Between Spouses:
a. Sales with 3rd Parties (Arts 73, 96 and 124 FC)
Under Art 124 FC, sale by a husband of a conjugal property without the
wife’s consent is void, not merely voidable, for lacking the essential
elements of “full consent”.
Except: Husband may dispose of conjugal property without wife’s consent
when necessary to answer for conjugal liabilities mention in Art 161162
A wife affixing her signature to a Deed of Sale as a witness is deemed to
have given her consent.
 SPECIAL TYPE OF A VOID CONTRACT
 Can constitute as a continuing offer between the husband and the
3rd party – can be ratified by the non-consenting spouse
b. Sales Between Spouses
Special type of Void Contract
Matabuena vs Cervantes
G. R. No. L-28771
March 31, 1971
J. Fernando
Doctrine: Art. 133 of the Civil Code considers as void a “donation between the spouses
during the marriage” – Applicable to Common-law relationship. Buenaventura vs CA,
Justice JBL Reyes – “A donation between common law spouses falls within the
prohibition and is null and void as contrary to public policy.
Facts:
1. That the Petitioner, Cornelia Matabuena, sister of the the deceased Felix
Matabuena claimes that a donation made while he was living martially without
benefit of marriahe to the Respondent Petronila Cervantes, was VOID.
2. Respondent uphold its validity. To wit:
a. That the deceased Feliz Matabuena owned the property in question
b. That Feliz executed a Deed of Donation inter vivos in favor of the
Respondent on February 1956 (before their marriage) and she
accepted
c. That the donation of the land was made during the common law
relationship as husband and wife, BEFORE they were married March
1962
d. That the deceased died September 1962
e. That the Petitioner claims the property by reason of being the only
sister and nearest collateral relative of the deceased
3. Lower court: ruled in favor of the Respondent, to wit:
a. Noted that the donation was made at a time before the defendant
was married to the donor.
b. That they only became spouses 6 years after the donation was
executed.
Issue: W/N the prohibition against married spouses in also applicable to Common Law
relationships, YES
Held: The questioned donation is deemed VOID
If the policy of the law is, in the language of the opinion of the then Justice JBL Reyes:
“to prohibit donations in favor of the other consort and his descendants because of fear
of undue and improper pressure and influence upon the donor, a prejudice deeply
rooted in our ancient law.”
NOTE: The lack of validity of the donation made by the deceased to the defendant
Petronilla does not necessarily result in plaintiff having exclusive right to the disputed
property. Prior to the death of Felix Matabuena, the relationship between him and the
defendant was legitimated by their marriage on March 1962 – she is therefore a Widow.
- As per the Civil Code, she is entitled half of the inheritance as the
surviving sister to the other half.
Rubias vs Batiller
G. R. No. L-35702
May 29, 1973
J. Teehankee
Doctrine: Violation of the Prohibition provided in Art 1491
Facts:
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 1. Militante claimed ownership over a parcel of land and applied for the
registration of the same with the CFI
2. His counsel was his son-in-law, Atty. Runias
3. His claim was dismissed by the trial court – thus he appealed
4. Pending the appeal, Militante, sold the lot to Atty. Rubias
5. Batiller, on the other hand claimed to have inherited the same parcel of land
fro mhis ancestors – who have been in an open, public, peaceful and actual
possession – under a claim of a title
6. Atty. Rubias filed an ejectment suit against Batiller who assailed the validity of
the sale to Atty. Rubias
a. Given the dismissal of Militante’s application for the registration of
land, he had no right over the said land that he may have validly
transferred to Atty. Rubias
7. Trial Court: Held that the purchase by a lawyer of the property in litigation from
his client is categorically prohibited by Art 1491 (5) – NOT SUBJECT TO
RATIFICATION
8. CA: Affirmed Trial Court, to wit:
a. Lack of right of claim or title of Militante to the land was conclusively
and decisively judicially determined
b. There was no right or title to the land that could be transferred or sold
by Militante’s purported sale in favor of Atty. Rubias
Issue: W/N the sale to Atty. Rubias is void, YES
Held:
Even assuming Militante had the title there to, the sale of the lot to Atty. Rubias was
null and void for being expressly prohibited by the Civil Code. Lawyers cannot acquire
by purchase the property or rights under litigation over which they take part by virtue of
their profession. The same rule applies to judges, clerks of court, and other judicial
officers with respect to the same. The purchase in violation of the above provision is
not merely voidable as Atty. Rubias contends, to wit:
 It is VOID and INEXISTENT from the very beginning – Contrary to Public
Policy
 The right to set up the defense of its illegality cannot be waived
o Unlike in other cases involving agents, guardians or administrators
with respect to the properties under their charge – it is not susceptible
to compromise or ratification
“The nullity of such prohibited contracts is definite and permanent and cannot be cured
by ratification. The public interest and public policy remain paramount and do not permit
of compromise or ratification. In this aspect, the permanent disqualification of public
and judicial officers and lawyers grounded on public policy differs from the first three
cases of guardians, agents and administrators, as to those transactions. It has been
opined that they may be “ratified” by means of and in “the form of a new contract”, in
which case it validity shall be determined only by the circumstances at the time of the
execution of such new contract.”
The Philippine Trust Company vs Roldan
G. R. No. L-8477
March 31, 1956
J. Bengzon
Doctrine: As Guardianship is a trust of highest order, the trustee cannot be allowed to
have any inducement to neglect his ward’s interest; and whenever the guardian
acquires the ward’s property through an intermediary, he violates the provision of Art
1459 of the Civil Code and such transaction and subsequent one emanating therefrom
shall be annulled
Facts:
As guardian of the property of the minor Mariano Bernanrdo, the Philippines Trust
Company (Petitioner) filed in Manila CFI a complaint to annul two contracts regarding
17 parcels of land, to wit:
a. Sale thereof by Socorro Roldan, as guardian of said minor to Fidel C.
Ramos
b. Sale thereof by Fidel C. Ramos to Socorro Roldan personally.
The complaint likewise sought to annul a conveyance of four out of the said seventeen
parcels by Socorro to Emilio Cruz
1. That Mariano Bernanrdo, a Minor, inherited among other 17 parcels of land
from his deceased father;
2. That Socorro Roldan was appointed as his guardian;
3. Roldan sought and was granted authority to sell the lots to her brother-in-law
Ramos – shortly after Ramos sold back to Roldan the same properties;
4. Roldan, then sold 4 parcels of land to Emilio Cruz
5. Philippine Trust Company replaced Roldan as guardian and sought to annul
the aforesaid sales.
Issue: W/N the Sale made by Roldan is Valid, NO
Held:
The Court annuls the sale. Guardianship is the trust of the highest order. In the case at
bar, for all intents and purposes, it was as if Roldan herself purchased the properties of
her ward. She indirectly sold the properties to herself – the same applies even though
there was no actual malice or collusion proven. Since the sale to Roldan was null and
void, it only follows that the sales made by Roldan to Cruz were likewise VOID. One
cannot sell what is not his property,
[Roldan, tried to correct the problem by allowing Mariano to re-purchase the said
properties. However, the child would still be at the losing end because it would not
entitle him to the fruits of the property during the time he was not in possession thereof.]
Fabillo vs Intermediate Appellate Court (IAC)
G. R. No. 68838
March 11, 1991
J. Fernan
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Doctrine: CONTIGENT FEE – A contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Art. 1491 (5) of the CC because
the payment of the said fee is not made during the pendency of the litigation but only
after judgment has been rendered in the case handled by the lawyer (subject to
suspensive condition).

Facts:

1. Florencio Fabillo contracted the services of Atty. Murillo to revive a lost case
over his inheritance from his deceased sister Justinia;
2. He sought to acquire the San Salvador and Pugahanay Properties that his
sister left behind against the the latter’s husband;
3. Subsequently, they entered into a contract where a contingent fee in favor of
Atty. Murillo in case the case won was agreed upon;
a. The fee was 40% of the value of whatever benefit Florencio may
derive from the suit, to wit:
i. Such that when the properties were sold, rented or
mortgaged
4. However, it was vague, regarding the fee in case Florencio or his heirs decide
to occupy
a. This falls within the prohibition under Art. 1450 of the house –
allowing Atty. Murillo the option to occupy or lease 40% of the said
house and lot
5. A compromise agreement was entered into where Florencio acquired both
properties;
6. Atty Murillo installed a tenant in the Puganahay Property;
7. Later on, Florencio claimed exclusive rights over the properties invoking Art.
1491 of the CC.
8. Both died and were succeeded by their respective heirs.

Issue: W/N Contingent fees agreed upon ae valid, YES

Held:

Contingent fees are not contemplated in Art. 1491 disallowing lawyers to purchase
properties of their clients under litigation. The said prohibition applies only during the
pendency of the litigation. Payment of the contingent fee is made after the litigation,
and is thus not covered by the prohibition. For as long as the fees are not exorbitant,
the same as valid and enforceable. It is even recognized by the Canon of Professional
Ethics.

[However, considering that the contract is vague on the matter of division of the shares
of Florencio occupies the property; the ambiguity is to be construed against Atty. Murillo
being the one who drafted the contract and being a lawyer more knowledgeable about
the law. The Court thus invoking the time-honored principle that a lawyer shall uphold
the dignity of the legal profession, ordered only a contingent fee of 3k as reasonable
attorney’s fees.]