Catalan vs Basa (Voidable Contract)

Facts: In 1948, Feliciano Catalan was discharged from active military service. The Board of Medical Officers of the Department of Veteran Affairs found that he was unfit to render military service due to his "schizophrenic reactions. In 1949, Feliciano got married to Corazon Cerezo. On June 16, 1951, a document was executed, titled Absolute Deed of DONATION, wherein Feliciano allegedly donated to his sister Mercedes Catalan a parcel of land located at Pangasinan. The donation was then registered with the Register of Deeds. In 1953, Peoples Bank and Trust Company (presently known as BPI) filed a Special Proceeding before the CFI of Pangasinan to declare Feliciano incompetent. The trial court issued its order for adjudication of Incompetency for Appointing Guardian for the Estate and Fixing Allowance of Feliciano. The court consequently appointed Peoples Bank and Trust Company as Felicianos guardian. In 1978, Feliciano and Corazon donated a real property to their son Eulogio. The spouses again, in 1983, donated to their children, Alex, Librada, and Zenaida a parcel of land. On the same year, the spouses donated a parcel of land in favor of Eulogio and Florida Catalan. Conversely, on March 26, 1979, Mercedes sold the property in issue in favor of her children Delia and Jesus Basa (herein respondents). The Deed of Absolute SALE was then registered with the Register of Deeds. In April of 1997, BPI acting as Felicianos guardian, filed a case before the trial court for the Declaration of Nullity of Documents, Recovery of Possession and Ownership with damages against herein respondents. BPI contented that Feliciano was not of sound mind and was therefore incapable of giving a valid consent. Thus, it claimed that the Deed of Absolute DONATION was void and the subsequent Deed of Absolute SALE should likewise be void, for Mercedes had no right to sell the property. When Feliciano passed away on August of 1997, the original complaint was amended to substitute his heirs in lieu of BPI as complainants. The trial court rendered a decision in favor of respondents. On appeal, the CA affirmed the decision of the trial court. Hence, the present petition. Trial Court Ruling: The evidence presented by the complainants was insufficient to overcome the presumption that Feliciano was sane and competent at the time he executed the deed of donation in favor of Mercedes Catalan. Thus the presumption of due execution of the donation in question must be upheld. Issue: Whether or not the donation made by Feliciano was valid? Held: Yes. A donation is an act of liberality whereby a person disposes gratuitously a thing or right in favor of another, who accepts it. Like any other contract, an agreement of the parties is essential. Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. The parties' intention must be clear and the attendance of a vice of consent, like any contract, renders the donation voidable.

In order for donation of property to be valid, what is crucial is the donors capacity to give consent at the time of the donation. Certainly, there lies no doubt in the fact that insanity impinges on consent freely given. However, the burden of proving such incapacity rests upon the person who alleges it; if no sufficient proof to this effect is presented, capacity will be presumed. In the case at bar, the evidence presented by the petitioners was insufficient to overcome the presumption that Feliciano was competent when he donated the property in question to Mercedes. Petitioners make much ado of the fact that, as early as 1948, Feliciano had been found to be suffering from schizophrenia by the Board of Medical Officers of the Department of Veteran Affairs. By itself, however, the allegation cannot prove the incompetence of Feliciano. According to medical references, on one hand, in persons with schizophrenia, there is a gradual onset of symptoms, with symptoms becoming increasingly bizarre as the disease progresses. It has been proven; on the other hand, that administration of correct medicine helps the patient to manage such symptoms and reduces the chances of relapse. Schizophrenia can result in a dementing illness similar in many aspects to Alzheimers disease. However, the illness will wax and wane over many years, with only very slow deterioration of intellect. From these scientific studies it can be deduced that a person suffering from schizophrenia does not necessarily lose his competence to intelligently dispose his property. By merely alleging the existence of schizophrenia, petitioners failed to show substantial proof that at the date of the donation, Feliciano Catalan had lost total control of his mental faculties. Furthermore, the presumption was bolstered by the existence of the other contracts he entered into like his marriage with Corazon and the other donations made in favor of petitioners. It must be noted that sufficient proof of his infirmity to give consent to contracts was only established when the CFI of Pangasinan declared him an incompetent on December 22, 1953. Finally, the petitioners raised the issue of prescription and laches for the first time on appeal before this Court. It is sufficient to note that even if the present appeal had prospered, the Deed of Donation was still a voidable, not a void, contract. As such, it remained binding as it was not annulled in a proper action in court within four years. (Refer to Article 1390 and 1391) Note: Art. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties: 1. Those where one of the parties is incapable of giving consent to a contract; 2. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification. Art. 1391. The action for annulment shall be brought within four years xxx.