LOLITA R. ALAMAYRI, petitioner, vs.

ROMMEL, ELMER, ERWIN, ROILER and

AMANDA, all surnamed PABALE, respondents. G.R. No. 151243 April 30,

FACTS:

On February 6, 1984, a complaint for specific performance with damages was filed
by Sesinando Fernando before the RTC alleging that Nelly Nave reneged on their
agreement involving the sale of Nave’s land.

On February 20, 1984, Nelly Nave executed a Deed of Absolute Sale in favor of the
Pabale siblings. Subsequently, the Pabale siblings filed a Motion to Intervene. Nave
filed a Motion to Dismiss but was denied. Nave then filed a Motion to Admit
Amended Answer and Amended Reply and Cross-claim against the Pabale siblings
alleging the she is incapacitated to contact because of her mental deficiency based
on the psychological evaluation report conducted on 1985 by a clinical
psychologist. The motion was denied. She filed a motion for reconsideration but
before the motion could be acted upon, Atty. Vedasto Gesmundo, her husband,
filed a Petition for Guardianship of Nave with the RTC. The petition was granted
and Atty. Paner was appointed as regular guardian.

Nave thereafter died, and on September 20, 1993, Atty. Gesmundo executed an
Affidavit of SelfAdjudication for the estate of Nave. On February 14, 1996, he filed
a motion to dismiss the case filed against Nave. The Pabale siblings opposed. On
January 9, 1997, Gesmundo filed a motion asking the court to substitute him over
the case as successor to Nelly. Later, Lolita Alamayre, as buyer of the parcel of
land under dispute, petitioned the court to be substituted over Gesmundo. The
RTC decided in favor of Alamayre, contending that the sale to the Pabale siblings
is null and void. The decision was reversed on appeal. Hence, this petition.

ISSUE:

Whether or not the Deed of Sale executed by Nave in favour of the Pabale siblings
is valid despite Nave’s mental incapacity.

DISCUSSION:

The Court of Appeals ruled that the Deed of Sale is valid and binding. The court’s
ruling is based on the fact that Nave’s mental incapacity was not established at
the time she executed the Deed of Sale. A finding that she was incompetent in
1986 does not automatically mean that she was so in 1984. Hence, the
significance of the two-year gap herein cannot be gainsaid since Nave’s mental
condition in 1986 may vastly differ from that of 1984 given the intervening period.
Capacity to act is supposed to attach to a person who has not previously been
declared incapable and such capacity is presumed to continue so long as the
contrary be not proved provided that at the moment of his acting he was
incapable, crazy or insane , or out of his mind. The burden of proving incapacity to
enter into contractual relations rests upon the person who alleges it. If no
sufficient proof is presented, capacity will be presumed. Nave was examined and
diagnosed by doctors to be mentally incapacitated only in 1986, and she was not
judicially declared an incompetent until 22 June 1988 when a Decision in said
case was rendered by the RTC, resulting in the appointment of Atty. Leonardo C.
Paner as her guardian. Thus, prior to 1986, Nave is still presumed to be
capacitated and competent to enter into contracts such as the Deed of Sale over
the subject property, which she executed in favor of the Pabale siblings on 20
February 1984. The burden of proving otherwise falls upon Alamayri, which she
dismally failed to do, having relied entirely on the 22 June 1988.
GROUP OPINION AND CONCLUSION:

Regional Trial Court Decision

The trial court ruled in favor of Alamayri, declaring the Contract to Sell between
Fernando and Nave null and void, as well as the Deed of Sale between Nave and
the Pabale siblings. The court recognized Alamayri as the owner of the property
and ordered the Pabale siblings to execute a transfer of title to her. The court also
ordered the Pabale siblings to surrender possession of the property and pay
Alamayri attorney's fees and costs.

Group’s opinion and conclusion regarding the Regional Trial Court’s decision:

Nave raises several grounds for not being ordered to execute the corresponding
Deed of Sale in favor of Fernando. Firstly, Nave argues that she was not fully
informed about the nature of the document that Fernando asked her to sign on
January 3, 1984. Upon learning that it was for the sale of her property in
Calamba, Laguna, she immediately returned the paper to Fernando and
repudiated it. Furthermore, Nave refused to accept the partial down payment
tendered by Fernando, which further supports her repudiation. Secondly, Nave
claims that she had already sold the property in good faith to the Pabale siblings
(Rommel, Elmer, Erwin, Roller, and Amanda) on February 20, 1984. This sale took
place after the complaint was filed against her but before she received a copy of it.
Nave argues that Fernando has no cause of action against her as he is suing on
behalf of S.M. Fernando Realty Corporation, which is not a party to the alleged
Contract to Sell. Even if the corporation is considered the real party in interest,
Nave asserts that there is no evidence to show that Fernando was duly authorized
to represent it in the lawsuit. Based on these grounds, Nave contends that the
Motion to Dismiss should be granted and she should not be ordered to execute the
Deed of Sale in favor of Fernando.

Basing from the facts above, it can be perceived that the contract entered into by
Nave and Fernando is a Contract to Sell rather than a Contract of Sale. As defined
in the Article 1458 of the Civil Code, by the contract of sale, one of the contracting
parties obligates himself to transfer the ownership of, and to deliver, a determinate
thing, and the other to pay therefor a price certain in money or its equivalent. A
contract of sale is a consensual contract and, thus, is perfected by mere consent
which is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. Until the contract of sale is
perfected, it cannot, as an independent source of obligation, serve as a binding
juridical relation between the parties. With that being said, Fernando does not
have the grounds to claim that Nave is bound to transfer the ownership and
deliver the title of the land since there is no meeting of the minds that took in the
first place. Moreover, we agree that Fernando has no cause of action as he is
suing on behalf of S.M. Fernando Realty Corporation, which is not a party to the
alleged Contract to Sell. Under the Section 22 of the New Corporation Code, A
corporation, being a juridical entity, may act through its board of directors, which
exercises almost all corporate powers, lays down all corporate business policies
and is responsible for the efficiency of management. The general rule is that, in the
absence of authority from the board of directors, no person, not even its officers,
can validly bind a corporation. Hence, Fernando being represented by S.M.
Fernando Realty Corporation is proven to be insufficient from the factual basis for
his action because he is unauthorized to represent the said corporation.
To sum it up, we object with the decision of the Regional Trial Court that denied
Nave's Motion to Dismiss. We firmly believe that the raised grounds are
undeniably more than capable to dismiss the case. Moreover, the contract between
the Pabale siblings and Nave has been executed in good faith.

The Court of Appeals and Supreme Court

The Court of Appeals reversed the trial court's decision and upheld the validity of
the Deed of Sale. Alamayri filed a motion for reconsideration, but it was denied by
the Court of Appeals.

Petition for Review on Certiorari to the Supreme Court.

Alamayri filed a Petition for Review on Certiorari with the Supreme Court, arguing
that the Court of Appeals erred in not considering the 1988 guardianship decision,
which declared Nave incompetent. The Supreme Court ruled that there was no
identity of parties and issues between the guardianship proceedings and the civil
case, and therefore the guardianship decision did not bar the ruling on the validity
of the Deed of Sale. The Supreme Court affirmed the decision of the Court of
Appeals, upholding the validity of the Deed of Sale.

Final Decision.
The Supreme Court ultimately affirmed the decision of the Court of Appeals, ruling
that the Deed of Sale was valid.

Group’s opinion and conclusion regarding the Court of Appeal’s and Supreme
Court’s decision:

We agree with the ruling that Alamayri's motion for reconsideration has been
denied by the Court of Appeals. Firstly, because there is no issue between the
guardianship proceedings and the civil case, and therefore the guardianship
decision did not bar the ruling on the validity of the Deed of Sale. Under the Article
1491 of the Civil Code, it is stated that the guardian cannot acquire by purchase,
even at a public or judicial auction, either in person or through the mediation of
another, the property of the person or persons who may be under his
guardianship. It is true that, Alamayri's reason for motion for consideration is
legal, however, since she could not submit evidence or certain documents to
establish that the Pabale siblings are acting as the guardian of Nave, his argument
has no merit. Furthermore, Alamayri's argument that since Nave was already
judicially determined to be an incompetent since 1980, then all contracts she
subsequently entered into should be declared null and void, including the Deed of
Sale, dated 20 February 1984, which she executed over the subject property in
favor of the Pabale siblings. Although it is true that under Article 1489, persons
who are incapacitated cannot bind themselves and do not have the capacity to
enter into a contract of sale, the burden of proving incapacity to enter into
contractual relations rests upon the person who alleges it. If no sufficient proof is
presented, capacity will be presumed. Hence, since Alamayri do not have sufficient
proof that Nave is incompetent at the time of the execution of the contract between
her and the Pabale siblings, we concur with the decision of Court of Appeals to
dismiss the argument of Alamayri.

In addition, under the case of Mendezona vs. Ozamis, G.R. No. 143370, A dispute
over a notarized Deed of Absolute Sale is brought to the Supreme Court, which
rules in favor of the petitioners, affirming the validity of the deed and emphasizing
the presumption of regularity and lack of sufficient evidence of mental incapacity
The case involves a dispute over a notarized Deed of Absolute Sale executed by
Carmen Ozamiz in favor of the petitioners, her nephews. The respondents sought
to annul the deed, claiming that it was simulated and that Carmen Ozamiz was
not of sound mind when she executed it. The trial court ruled in favor of the
petitioners, finding that the sale was valid and that Carmen Ozamiz was of sound
mind at the time. However, the appellate court reversed the decision, finding that
there was no consideration for the sale and that Carmen Ozamiz's mental faculties
were impaired. The petitioners filed a motion for a new trial, claiming that the
testimony of Judge Durias, which was not presented during the trial, could prove
Carmen Ozamiz's mental condition. The appellate court denied the motion, and
the petitioners appealed to the Supreme Court. The Supreme Court ruled in favor
of the petitioners, reinstating the trial court's decision.

In this similar case, the Court emphasized the presumption of regularity enjoyed
by a notarized document and the lack of sufficient evidence to prove Carmen
Ozamiz's mental incapacity. The Court noted that the burden of proof was on the
respondents to prove the alleged fraud or invalidity of the deed, and they failed to
do so. The Court further stated that a person is presumed to be of sound mind at
any particular time, and the condition is presumed to continue to exist in the
absence of proof to the contrary.
 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS:

LOLITA R. ALAMAYRI, petitioner, vs. ROMMEL, ELMER, ERWIN, ROILER and

AMANDA, all surnamed PABALE, respondents. G.R. No. 151243

Case Digest

Adong, Ovelina
Domegyas, Jovie Ann
Falansi, Merly France
Mango, Purificasion
Patna-an, Arvie
Simeon, Cherrie Dee

February 14,2024