CORAZON CATALAN, et al. vs. JOSE BASA, et al. G.R. No.

159567, July 31, 2007

FACTS: On October 20, 1948, FELICIANO CATALAN (Feliciano) was discharged from active military
service because he was found to be unfit to render military service due to his schizophrenic reaction,
catatonic type, which incapacitates him because of flattening of mood and affect, preoccupation with
worries, withdrawal, and space (sic) and pointless speech. On June 16, 1951, Feliciano donated to his
sister MERCEDES CATALAN a real property. The donation was registered with the Register of Deeds.
On December 22, 1953, the trial court issued its Order for Adjudication of Incompetency for Appointing
Guardian for the Estate and Fixing Allowance of Feliciano. The trial court appointed People’s Bank and
Trust Company as Feliciano’s guardian. People’s Bank and Trust Company has been subsequently
renamed, and is presently known as the Bank of the Philippine Islands (BPI).

ISSUE: Is the donation valid?

HELD: 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, June 16, 1951, Feliciano Catalan had lost total control of
his mental faculties. Thus, the lower courts correctly held that Feliciano was of sound mind at that time
and that this condition continued to exist until proof to the contrary was adduced. Sufficient proof of his
infirmity to give consent to contracts was only established when the Court of First Instance of Pangasinan
declared him an incompetent on December 22, 1953.

SIA SUAN AND GAW CHIAO VS. RAMON ALCANTARA

FACTS:
 Rufino Alcantara and sons (including respondent Ramon) executed a deed of sale dated August
3, 1931, conveying five parcels of land to petitioner Sia Suan
 A few days later (within the month after the sale of the parcels of land), Ramon’s counsel wrote to
Suan’s husband, Gaw Chiao, disavowing the contract on the ground that Ramon was a minor
when the signing took place
 After Gaw Chiao responded to the letter, Ramon went to the office of Gaw Chiao’s counsel to
ratify the sale
 After ratification, Ramon received Php 500.00 from Gaw Chiao, as payment for the sold parcels
of land
 Meanwhile, Sia Suan sold the parcels of land to Nicolas Azores; his son Antonio inherited it
 NINE YEARS LATER, Ramon filed a case at the Court of First Instance of Laguna, praying that
the deed of sale may be annulled on the ground of his minority at the time of its sale to Sia Suan
and Gaw Chiao; action was denied and Sia Suan, Gaw Chiao, Ramon’s father and brother,
Nicolas and Antonio Azores were absolved
 Ramon brought case to the Court of Appeals; CFI Decision reversed
o Deed of sale not binding against Ramon due to his minority at the time of the sale
o His counsel’s letter to Gaw Chiao is an indication that the sale was not affirmed; Ramon
was thus shielded from laches and estoppel
o Sia Suan and Gao Chiao was negligent in protecting their interests to the property since
they did nothing when they were informed of Ramon’s minority
o Delay in filing action for annulment filed by Ramon does not bar the said action to
prosper; may be barred only when the time period of filing prescribed by law has expired
o CA refuses to use the doctrine in Mercado and Mercado vs. Espiritu:
 Sale of real estate done by minors is VALID
 Minors are NOT EXEMPT from fulfilling the obligations in the contract
 Minors are NOT ALLOWED to annul the contract by invoking that he/she was a
minor at the time of the signing
o The only protection utilized by Sia Suan and Gaw Chiao here is the ratification done by
Ramon
o The letter of Ramon’s counsel duly informed them of his minority
  Sia Suan and Gaw Chiao files petition for certiorari to the Supreme Court

ISSUE/S:

 Whether or not Ramon Alcantara’s execution of the deed of sale is valid, despite being a minor at
the time of its execution
 Whether or not Ramon is bound by the deed of sale, despite his minority at the time of its
execution
 Whether or not Ramon is allowed to annul the deed of sale

HELD/RULING:

RELATED PROVISIONS:

Art. 1327, NCC: The following cannot give consent to a contract:

Unemancipated minors;

Art. 1390, NCC: The following contracts are voidable or annullable, even though there may have been no
damage to the contracting parties:

Those where one of the parties is incapable of giving consent to a contract;

xxx

These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of
ratification.

Art. 1403, NCC: The following contracts are unenforceable, unless they are ratified:

xxx

(3) Those where both parties are incapable of giving consent to a contract.

Art. 1399, NCC: When the defect of the contract consists in the incapacity of one of the parties, the
incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the
thing or price received by him.

 Ramon may not be allowed to execute deed of sale, but due to his act of ratification, the contract
was given its binding effect
 The deed of sale is binding on Ramon, because he ratified it
 Ramon is not allowed to annul such deed, because he already ratified it
 Mercado doctrine is applicable in this case
 Ramon may have executed his acts in bad faith; he earned money from Gaw Chiao as a result of
the sale and its ratification, yet he summons the courts to annul the sale because he executed it
while still a minor
 “…previous misinterpretation has already estopped him from disavowing the contract”
 The Court of Appeals said that Ramon may not be stopped because of the letter, yet the
Supreme Court holds that he is already stopped by his misrepresentation in the deed of sale, due
to his minority
 The Supreme Court is of the opinion that Sia Suan and Gaw Chiao is hereby absolved, without
incurring any costs on their part