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, People’s 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 People’s Bank and
Trust Company as Feliciano’s 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 Feliciano’s 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 donor’s 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 ef fect 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
Alzheimer’s 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.

Espino vs. Vicente

Facts:
The crux of the controversy in this case arose from the execution by Emerenciana and
Marcelina Espino on January 9, 1997 of a document, denominated as "Pagkakaloob,"
purportedly donating two lots to respondent Emma Vicente, the wife of Ricardo Vicente,
nephew of Emerenciana.

It appears that sometime in December 1996, Emma convinced Marcelina and

Emerenciana that she could facilitate the registration and titling in their name of the
house and lot where they are staying. Emma allegedly asked Emerenciana and Marcelina
who are both illliterate to sign a document to be used in titling the property in their name.

Subsequently, Emerenciana and Marcelina learned that the document they signed was a
Deed of Donation or a "Pagkakaloob," of the house and lot in favor of Emma, including
the 20 square-meter portion that was earlier sold to Marissa. As a consequence, when
Emma filed an application for free patent with the DENR-PENRO Office of Malolos,
Bulacan on January 13, 1997, Marissa delos Santos filed an opposition with the DENR-
PENRO and the Register of Deeds. On the other hand, Emerenciana and Marcelina
executed a Deed of Revocation of Donation or "Kasulatan ng Pagpapawalang Bisa sa
Kasulatan ng Pagkakaloob".
Petitioners then filed a petition for annulment of patent/title and reconveyance of real
property with damages with the Regional Trial Court of Malolos, Bulacan dated April 14,
1997. The trial court ruled in favor of the plaintiffs, but when the respondents appealed to
the Court of Appeals, the appellate court reversed the decision.

Held:
The petition is impressed with merit.

A DONATION is an act of liberality whereby a person disposes gratuitously a thing or a

right in favour of another, who accepts it. Like any other contract, an agreement of the
parties is essential. Consent in contracts presupposed 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 that attendance of vice of consent, like in any
other contract, renders the donation voidable.

It is evident that fraud attended the act of respondent Emma when she procured the
signatures of Marcelino and Emerciana. There is fraud when through insidious words or
machinations of one of the contracting parties, the other is induces into a contract which
without them, he would have agreed to. When one of the parties is unable to read, or if
the contract is in a language not understood by him, and mistake or fraud is alleged, the
person enforcing the contract must show that the terms thereof have been fully explained
to the former.