00:02

hello guys so we are already in chapter two when we study

the parties to the contract of sale so just to remind you of
this which are the general rules on the capacity of parties to
contract so we know under the civil code the only persons
who have capacity to act or those who can validly consent
may enter into contracts including a contract of sale so
there are several circumstances which affect capacity to act
and this are age sanity imbecility state of being deaf mute
marital status and when there is visceral of consent such as
when there's intimidation violence undue influence fraud or
mistake okay so article 39 of the civil code tells us that
penalty prodigality family relations alienage absence
insolvency and trusteeship also limits the capacity to up of
individuals so we all know that there is a required legal age
in order for an individual to act and for those acts to be
given legal effect so minors are considered under the law as
persons who cannot give consent to a contract including uh
insane or demented persons and deaf mutes who do not
know how to write so completely automatic definite you
don't have the capacity to give consent only those deaf
mutes who do not know how to write are incapacitated
under the law so why are these persons considered by law

02:22

as ones who cannot give consent because these persons can

easily be victims of fraud as they're not capable to
understand or know the nature or import of their actions so
typically they can enter into contracts which will bind them
if there is an intermediary like for minors usually their
parents were and for insane or demented persons their
guardians or parents said so what is the consequence when
persons without capacity to act end up executing contracts
so contracts they enter into are considered as voidable so
they can be annulled or they can be ratified so when an
insane or demented person enters into a contract during a
lucid interval under article 1327 it is considered as valid
interval how about contracts entered or executed during a
state of drunkenness um how do we treat that contract so
under article 1327 these contracts are considered as
voidable how about if the contract is executed during a
hypnotic spell sweetie is this scenario possible how about if
the contract uh if the parties to a contract are both minors
what is the status of the contract in such case so under
article 1327 uh if you enter into a contract during a state of
drunkenness or during a hypnotic spell it's still considered
as voidable okay but if both parties are incapacitated and if
you recall under the

05:03

law on obligations and contracts the contract is considered

as unenforceable pursuant to article 1403 so just recall the
rules when the contract is considered as voidable and when
it is considered as unenforceable 2017 bar question a
contract of sale between a 16 year old and an adult wherein
the minor agreed to sell her grand piano for five thousand so
this is voidable aborter of toys between a 12 year old and a
10 year old unenforceable a sale entered by barry and gary
both minors which their parents later ratified so this time
contract is already considered as valid okay gratify there is
a situation wherein sale to a minor is considered as valid
under the law okay and this is when there is a sale of
necessaries to minors so what are necessaries can you still
recall article 194 of the family code so i made a demonic for
that sdc met so it is considered these are considered as
necessaries so any uh any object we're in uh involving s
sustenance the dwelling the clothing uh medical attention
education and transportation to a minor so any expenses
related to those coming sdc met they are considered as
necessaries and if you happen to have sold such necessaries
to a minor

07:18

then the contract is considered as valid okay but there are

requisites still for the sale to be valid uh the sale must
already be perfected okay and of course the necessaries
must have been delivered to the minor so the minor here
should have benefited enjoyed the sale of necessaries to him
so if there was no delivery of necessaries to the minor then
it will go back to the rule that the sale is voidable okay
subject to either annulment or ratification so when there is a
sale to my norse there is a period granted by law within
which the uh the contract may be annulled okay and the
period begins when when the minor will reach the age of
majority i know not the age of majority guys article 1391
provides that the action for announcement should shall be
brought within uh four years generally okay and uh with
respect to contracts uh entered into by minors from the time
that uh the age of majority ceases or when the guardianship
will cease uh with respect to other incapacitated persons so
the effect of an element of the contract is provided under
article 1398 wherein the parties will restore to each other
whatever was received or given in the contract and article to
1401 provides that when the thing is lost because of the
fault of the

09:27

incapacitated party so the thing is lost so therefore it's not

possible anymore to restore the thing so the rule is that the
action for annulment of the contract shall be deemed
extinguished okay when the thing that the object thereof is
lost through the fault of the incapacitated persons take note
however guys that uh when you are dealing with a minor uh
you're considered to be uh in bad faith okay so uh adults
dealing with minors cannot actually bring on a suit for an
element of the contract only the incapacitated party is given
by law the right to analda one trap so take note that under
article 1401 if a minor will choose to annul the contract then
he must still make restoration of whatever was received out
of that contract however there's a catch the miner will only
restore those will only restore the amount that he spent
which rebounded to his benefit like for example [Music] yes
a purchase price and he spent it on payment of his tuition
fees so if that miner will choose to annul the contract then
the miner will need to reimburse the money spent for
payment of the tuition fees a necessaries however if the
miner here spent the purchase price on expenses which did
not redound to his benefit meaning hiwaldas nian corta
[Music]

12:02

the miner here is not actually obliged to return that partner

he spent on non-necessaries so beware guys when you deal
with a miner is not okay mcmakeup so favorite national bar
question what's the consequence if you enter into a contract
with minor with minors so what if uh the sale is made by
miners who pretended that they were of age okay so they
looked apart they looked like they were already 18 and
above they acted like they had capacity to contract another
party so in an old case in mercado and mercado versus
peritu the court here actually applied the principle of
estopel right so if the minor pretended that he was of age
then he is actually stopped later on from denouncing the
sale so the sale is considered as valid and they cannot be
permitted afterwards to excuse themselves from compliance
with the obligations assumed by them or to seek their
annulment so legal basis for the ruling in this case was
estoppel okay under article 1431 so this is an old case guys
so we need to take this with a grain of salt considering
protecting the miner but still it's uh it's curious that there is
this kind of ruling in our case law so how about in senility
and advanced age so general rule is that a person is not

14:24

made incompetent to contract merely because of advanced

tears or by reason of physical infirmities so what are those
situations wherein age or physical infirmity will amount to
incapacity to contract so are contracts entered into by senile
persons void or voidable so knight two schools of thought
ani under article 1390 they're considered as merely voidable
because it's a vice in consent but in one case in paragus
versus ears of balakano the court actually ruled that the
contract they enter into is in fact void okay so important to
note here guys is the fact that you're you have a disease you
have a physical infirmity if it does not affect your mental
faculties then the contract will be considered as valid
because you are still considered to have uh capacity to give
free and informed consent but in this paragas case guys
what's the facts here in the paragas case the court held that
the pawn track was void how did the court reach that
conclusion considering uh civil code only says that the
contract is avoidable a few moments i'm pulling up the facts
of the casa this is an interesting one versus chief so in the
so in the pariagas uh case guys the court ended up voiding
the contract because they applied article 24 of the civil code
24 provides that in all contractual

18:16

property or other relations when one of the parties is at a

disadvantage on account of his moral dependence ignorance
indigence mental weakness tender age or other handicap
the courts must be vigilant for his protection okay so the
court found that in light of the fact that the deed of sale was
signed by the seller on his deathbed in the hospital so it
raised doubts on his physical and mental capacity to freely
consent to the contract so since there was no free consent
they avoided this contract pursuant to article 140
international article article uh 1318-1319 of the civil code so
under article 13 18 there is no contract unless the following
requisites concor there is consent of the contracting parties
objects written and cause so okay uh already in his
deathbed hospital it's as if there was no consent at all so the
court declared it as void in violation of 1318 of the civil code
however 1390 article 1390 clearly shows us guys that um
article 1390 clearly shows us that contracts are only
avoidable or unknowable when [Music] those where one of
the parties is incapable of giving consent or when the
consent is be shated by mistake violence intimidation and
influence or fraud so these contracts are supposed to be
binding until annulled or ratified

20:41

okay so two schools of thought therefore but personally i

would rather apply article 1390 rather than this unique
ruling subparagas how about when the parties to a contract
of sale one of the parties to the contract of sale is death
mute and dump because the ones who are incapacitated are
only deaf mutes who do not know how to write okay they are
considered as incapable of giving consent so if the deaf
mute knows how to write the contract is of course valid
because he is able capable of giving his intelligent consent it
presupposes that you also know how to read india blind so
there is a way of ensuring that he can give his free consent
so a deaf mute who knows how to write necessarily knows
how to read okay but a deaf mute who knows how to read
but cannot write for example amputee or there was a birth
defect uh so the rule is that they can still validly enter into a
contract so as long as you are able to prove that the def
mute is able to read by only those who are dubbman who
cannot [Music] read or write are incapacitated to enter into
contracts so another another important concept that we
must learn is what are the rules when there is a sale by
spouses and between spouses in sale by spouses

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under the family code we take a look at this provisions so

article 73 article 96 and article 124 and article 256 are
important provisions for us to appreciate the rules on sale
by spouses so article 96 and 124 are identical so 96 say
that's for absolute community of property regime was a 124
that's the conjugal partnership of gains regime so general
rule is that administration and enjoyment of the community
property belongs jointly to both spouses but in case of this
agreement the husband shall prevail but the wife may assail
the contract in court within five years from the date of the
contract and in case of incapacity or inability to participate
in administration by one spouse then the other spouse can
assume sole powers of administration so we're talking here
with administration only alienation of the property must be
with the written consent of the other spouse or obtained by
court authority the effect of lack of written consent by the
other spouse and lack of court authority is that the contract
will become void but there is a special rule in the family
code that even if the contract is void the transaction
between the seller spouse and the third party the buyer is
considered as a continuing offer on the part of the
consenting spouse and the third person and since there is
continuing offer it can still be

25:04

perfected as a binding contract provided that the non-

consenting spouse will accept okay or when the consenting
spouse is able to obtain authorization from the court okay
but this continuing offer lasts only when the offeror and the
offeree has not yet withdrawn the contract so for example
see wife without written consent of the husband who is an
ofw so the wife and the buyer is considered to be still
engaged in the negotiation stage uh notwithstanding the
fact now it's possible the malignant wife or uh buyer but
under this uh rules of family code uh it's considered as if nah
nah pasil is a negotiation stage why okay the transaction is
considered as a continuing offerman it's in the negotiation
stage and i offer an acceptance and when there's acceptance
then there's considered as meeting of the minds so by this
uh by this rule this continuing offer rule it's considered as if
they are still negotiating so tagants see consenting spouse
to obtain the written consent of the other spouse right and
if god gives the other spouse then the spouse who wants to
sell the property can obtain court authorization they
provided that the wife and the buyer has not yet withdrawn
their respective offers so she buyer opponent wife okay so
this continuing offer guys take note of this this is an
important uh modification with respect to the family code
compared to civil code

27:25

so another important provision in the family code is article

73 so under article 73 either spouse can engage in any
legitimate profession business or activity even without the
consent of the other spouse okay so transactions made by
the spouses in the exercise of a legitimate profession
occupation business or activity by default is considered to
have redounded to the benefit of the family right so what
happens if one of the spouses will enter into a transaction in
relation to his job or in relation to his work and that
transaction actually binds the community property like what
happened in the case of ayala investment versus court of
appeals wherein the husband who was an executive of a
company acted as a surety or guarantor in a transaction of
the in a company transaction he acted as a surety but uh
that transaction uh got into some problems and the creditor
here ended up trying to demand uh satisfaction from the
husband acting a shorty or guarantor for the company so
can the creditor here reach or demand satisfaction from the
community property of the husband so the rule is that even
if the transaction was entered by the husband in pursuit of
his profession or occupation it is uh considered as an
isolated transaction it can be considered as isolated an
isolated transaction because it did not benefit the family it
was for the benefit of the

29:32

company where the husband worked so a transaction must

be proven to have benefited the family in order for the
community property to be bound right so take a look at this
guys uh the difference between the rules of the civil code
and family code so the civil code husband is the
administrator okay but the wife's consent is still required if
there's any alienation or encumbrance of conjugal property
if there's no consent from the wife then the contract is
actually considered as voidable so remedy is an element of
entire contract and the time given to the wife is during the
marriage or 10 years from the date of transaction right but
there's uh an exception in the civil code when the consent of
the wife will not be needed when the sale is necessary to
answer for conjugal liabilities so what are the initial
exceptions of family code guys so in abalos versus
makatangai we see here the exception to article 166 of the
family code let's take a look at this case [Music] so in the
case of abalos versus makatangai uh the court ruled here
that the husband may sell the property belonging to the
conjugal partnership even without the consent of the wife if
the sale is necessary to answer for a big conjugal liability
which might endanger the family's economic standing
31:42

this is one instance when the wife's consent is not required

and no judicial intervention is even necessary so there must
be a big conjugal liability which might endanger the family's
economic standing so that's the exception to obtaining the
written the consent of the wife under the civil code okay but
the family code however is clear no exception guys the uh
alienation or the any alienation of community property must
be with written consent of the wife otherwise it is void but
subject to the continuing offer rule so let's take a look at
article 256 of the family code and how it affects any
alienation or transactions made by the spouses so any
alienation or encumbrance of conjugal property made during
the effectivity of the family code is governed by article 124
of the family code so that's what the gist is of article 256
any alienation or incumbents so for example what if married
zilla under the civil code they disposed of their properties
after the effectivity of the family code so what do you apply
do you apply the rules a civil code there's a family code so
by virtue of article 256 it says here that if the alienation or
encumbrance happened during the effectivity of the family
code then it is the family code that will apply considering
that

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family code itself provides for retroactivity but there's a

catch provided that no vested rights are impaired with the
application of the family code to a civil code marriage so
how do we how do we wrap our head around this rule so i
assign a case for this fuentes versus roca so what happened
in santos versus roca so the court here ended up applying
the family code uh here the spouses tarsano and rosario got
married in 1950 however tarsana dusband sold the pro sold
conjugal property on january 11 1989 a few months after the
family code took effect so never forget this magic number
guys the date when the family code took effect which was
august 3 1988. so considering the facts of the case guys uh
supreme court held here that uh when tarshano the husband
sold the conjugal on january 11 1989 the law that governed
the disposal of the lot was already the family code okay
another simple august 3 1988 all right so they're gonna get
questions on you guys danny and elsa were married in 2002.
in 2000 in 2012 elsa left conjugal home and a billion minor
children in 2015 dany sold without elsa's consent a parcel of

35:59

land registered in the name registered in his name that he

had purchased prior to the marriage so the answer here is
that the sale is actually void okay the parties got married
under the family code so even if the wife abandoned the
family even if the proceeds of the sale was used for the
christian of the children even if dany acquired the property
prior to his marriage under the family code anything that
you bring into the marriage is considered as belonging to
the absolute community of property pat only important uh
thing to know here is when the marriage took place and
whether or not they entered into uh property agree uh they
entered into a different regime now conjugal property of
gainzilla but even then the rules in the family code
pertaining to alienation whether absolute community of
property or conjugal property of gains the same mancha so
answer here is that the sale is void but not just void you cite
the whole rule the sale is void but but the transaction is
considered to be a continuing offer on the part of the
consenting spouse and the third person and it may be
perfected as a binding contract upon acceptance of the
other spouse or upon authorization of the court but it must
be either before either before the offer has been withdrawn
by the consenting spouse or the

38:01

were married in 1989 ten years later gina left marco and live
with another man when marco needed money for their
children's education he sold a purcell of land without gina's
consent so the answer here guys is that the same will
happen and answer the previous question the sale is still
void but subject to the continuing offer rule in the family
code why because the parties here even if they got married
clearly in 1989 when the family code already took effect
right so that's how you answer questions like this guys uh
you take note when the marriage took effect uh you take
note how you take note when the parties got married and
you identify whether their marriage is was celebrated under
the civil code or family code next question is you determine
whether the transaction the sale happened under the family
code so once you know those facts it's very easy for you to
apply the rules right this is an application of the retroactive
effect of the family code in 1980 nagminio is a civil coder for
but the transaction took place in 1990 after the effectivity of
the family code so as long as no vested rights are impaired
you apply the rule in the family code which makes the sale
void okay so how about in sale between spouses

39:57

how do we deal with this of course spouses cannot sell

property to each other this includes sales and legal
redemption compromises and renunciations exceptions will
be when there is separation of property agreed upon in the
married settlements or when there is judicial decree of
separation of property so who has legal standing to assail
the contracts between the spouses uh only those persons
who have interest and this these are usually the ears of
either spouses or creditors at the time of the transfer okay
but not subsequent creditors and of course the government
the government or the state can always assail this contract
between spouses how about sale between common law
spouses it's also considered as void under article 1409
because uh its cost is contrary to law morals good customs
public order public policy also considered as void under
article 1352 1409 or 1352 on a legal basis so just a brief
recaps uh law where the uh the rules when there is a
common law marriage uh take note guys that where where
the common law spouses are both in good faith meaning
there's no legal impediment for them to marry then the
property they acquired through work and industry or
property acquired while living together it's presumed to be
in a state of co-ownership and they are co-owned in equal
shares okay
42:00

so consent of both the common law spouses are required for

the alienation or encumbrance to be valid if one party is in
bad faith then the share of the party in bad faith is forfeited
to the common children of the valid marriage to their
common uh it's forfeited to the child to the common children
of the common law spouses however if both are in bad faith
then there's no presumption of co-ownership guys the
ownership of the property must be proven through actual
joint contribution of money property or industry and if it's
proven that there was joint contribution then co-ownership
in proportion to respective contributions but if there's no
proof of actual contribution then you apply the previous rule
they are co-owned in equal shares but if one party is
married the share accrues to the community property of the
married party and if not married it's forfeited to common
children or descendants or to the innocent party okay so
sample bar question right so the law also provides for cases
wherein there is incapacity but it's only specific uh it's
specific in capacity to contract because of pre-existing
fiduciary relations between the parties so for example it was
uh examples of this specific incapacity it's prohibited that
there be a contract of sale between the following persons
okay involving properties under their administration

44:11

so the guardian is the awards property the agent as to the

principal's property executors or administrators with with
respect to the property belonging to the estate that they are
administering public officers and employees as to the
property of the state or government under their
administration then administrators of justice as to
properties in litigation lawyers with respect to the
properties of their client in a pending litigation and other
persons specially disqualified so other other other
disqualified persons aliens as to the purchase of private
agricultural lands and in article 1533 in 1476 the unpaid
seller na right of lian or right to stop goods in transit cannot
buy the very goods itself in the public or private sale that
may be undertaken then the officer conducting the
execution sale and his or her deputies cannot become a
purchaser in any purchase at an execution sale so the scope
of prohibition guys it applies also to sales and legal
redemption compromises and renunciations and they are
also disqualified to become lessees of the things mentioned
their own so what happens if you enter into a contract in
violation of article 1491 and 1492 so they are considered
void okay but can the contracts be ratified despite that they
are void so it's because of this uh particular ruling in rubias
vs battalia [Music]

46:33

absolutely void that cannot be ratified okay but there are uh

contracts that can be ratified but limited long like for
example cunning uh but take note that ratification here
means that the void contract itself cannot anymore be
changed by the parties but the parties can ratify ratify it by
entering into a new contract for example um agent and
principal okay executor and administrator of an estate with
regards to the ears of that estate okay but what cannot be
ratified at all and we're using ratified hera in a very liberal
sense ratified enter this line to a new contract to cure the uh
nullity of their first contract but in the case of public officers
employees administrators of justice and lawyers the nullity
of the prohibited contract is definite and permanent and
cannot be cured even by entering into a new contract right
and take note that uh when there is extra judicial
foreclosure sale by virtue of act 3135 uh the this special law
enacted the timely president ferdinand marquaz it provides
here that um if there is an agreement between the parties
wherein the creditor is granted the right to extrajudicially
foreclose the property mortgage then by virtue of that
agreement on extrajudicial foreclosure the creditor or the
mortgagee or any person authorized by them

48:53

can participate in the bidding right so default rule if there is

power to extrajudicially foreclose then the mortgage can uh
end up by himself buying the property so if you do not want
the mortgage or the creditor to purchase the or acquire the
property then this must be expressly contradicted in the
agreement okay that's pursue one to section five article
three one three five by under the civil code mortgage or
trustee in a mortgage or deed of trust uh generally cannot
be purchasers okay at the sale at the foreclosure at the
foreclosure sales but if uh the parties have agreed on this
person want to act three one three five then the nacilla
disqualified read some jurisprudence on specific incapacity
uh resale of the purcells of land to the guardian herself
through a third person is considered void okay whether
directly or indirectly the prohibition will apply hereditary
rights are not included in the prohibition insofar as the
administrator or executor of the estate of the disease so if
the executor administrator is also an ear to the estate then
of course she uh the that executor administrator will acquire
the property by virtue off okay woman inheritance the
prohibition on judges and lawyers under article 1491 applies
only during the period of litigation terminated litigation then
the disqualification will no longer apply and of course

51:12

as lawyers and future lawyers contingency fee arrangements

between lawyers and clients are not subject to the
prohibition so absolute and relative incapacity uh it's
absolute when a party cannot bind himself in any case and
relative only when certain persons under certain
circumstances cannot buy certain properties so with respect
to spouses the their incapacity is actually absolute unless uh
however guardians agents executors chatter of 1491 is only
specific in capacity okay in other in all other cases with
other persons uh delaying ato ilan relations like guardian
ward principal agent they're not incapacitated so an
absolute incapacity will be kind of spouse between sale
between spouses between two incapacitated persons okay
so this was a question in the 2013 bar see attorney cruz so
just answer this yourself right so another case that will
affect another circumstance which will affect capacity to act
is when there is vices in consent so devices that we know of
in the civil code are mistake violence intimidation undue
influence and fraud so take note that usual exaggerations
are not in themselves considered as fraudulent it's a normal
part of the deal okay a mere expression of an opinion does
not signify fraud for example internet uh so that's just an
expression of opinion however if the person expressing his
opinion is considered an expert and his status of being an
expert was relied upon by the other party

53:59

then [Music] it may signify fraud if it so turns out that the

opinion that the expert was if it so turns out that the uh
warranties or representations given by the expert turned
out to be false so take note guys reviewed only obligations
and contracts so i'm presupposing that you're already
familiar with these concepts so just a special look in fraud
guys uh there's causal fraud and there is incidental fraud
there is causal fraud when there is serious deception or
misrepresentation and that serious deceit or
misrepresentation was employed by the party at the time of
the perfection of the agreement like at the time that the
parties are giving their consent that time that they are
meeting their minds so without that serious deceit or
misrepresentation the other party would not have entered
into the contract so by virtue of that guys since this is
happening at the time that they are giving their consent
when the meeting of the minds then it will affect the status
of the contract so causal fraud therefore will render the
contract avoidable because it's a vice in consent okay on the
other hand uh we have incidental fraud so a serious deceit
and a misrepresentation so even if another party the other
party would still have entered into the contract so it's not
considered as affecting the giving of the consent by the
other party

55:57

so the contract is valid so the difference langnila is that uh

you can annul when there is causal fraud and you can also
seek damages but in incidental fraud damages only okay so
just uh answer yourself this 2015 bar question so that
concludes our discussion on chapter two so i'll upload
another video pertaining to chapter three okay so see you so
next video