Catalan vs Basa

This case involves a donation contracted by a person diagnosed with schizophrenia.

Facts: October 20, 1948, FELICIANO CATALAN (Feliciano) 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 reaction, catatonic type, which incapacitates him because of flattening of mood and affect, preoccupation with worries, withdrawal, and sparce (sic) and pointless speech.September 28, 1949, Feliciano married Corazon Cerezo

June 16, 1951, a document was executed, titled Absolute Deed of Donation,[3] wherein Feliciano allegedly donated to his sister MERCEDES CATALAN(Mercedes) one-half of the real propertyDecember 11, 1953, Peoples Bank and Trust Company filed Special Proceedings No. 4563[6] before the Court of First Instance of Pangasinan to declare Feliciano incompetent. On December 22, 1953, the trial court issued its Order for Adjudication of Incompetency for Appointing Guardian for the Estate and Fixing Allowance[7] of Feliciano. The following day, the trial court appointed Peoples Bank and Trust Company as Felicianos guardian.[8] Peoples Bank and Trust Company has been subsequently renamed, and is presently known as the Bank of the Philippine Islands (BPI).

On November 22, 1978, Feliciano and Corazon Cerezo donated Lots 1 and 3 of their property, registered under Original Certificate of Title (OCT) No. 18920, to their son Eulogio Catalan.[9]

On March 26, 1979, Mercedes sold the property in issue in favor of her children Delia and Jesus Basa.[10] The Deed of Absolute Sale was registered with the Register of Deeds of Pangasinan on February 20, 1992, and Tax Declaration No. 12911 was issued in the name of respondents.[11]

On June 24, 1983, Feliciano and Corazon Cerezo donated Lot 2 of the aforementioned property registered under OCT No. 18920 to their children Alex Catalan, Librada Catalan and Zenaida Catalan. On February 14, 1983, Feliciano and Corazon Cerezo donated Lot 4 (Plan Psu-215956) of the same OCT No. 18920 to Eulogio and Florida CatalanBPI Contentions:April 1, 1997, BPI, acting as Felicianos guardian, filed a case for Declaration of Nullity of Documents, Recovery of Possession and Ownership,[13] as well as damages against the herein respondents. BPI alleged that the Deed of Absolute Donation to Mercedes was void ab initio, as Feliciano never donated the property to Mercedes. In addition, BPI averred that even if Feliciano had truly intended to give the property to her, the donation would still be void, as he was not of sound mind and was therefore incapable of giving valid consent. Thus, it claimed that if the Deed of Absolute Donation was void ab initio, the subsequent Deed of Absolute Sale to Delia and Jesus Basa should likewise be nullified, for Mercedes Catalan had no right to sell the property to anyone. BPI raised doubts about the authenticity of the deed of sale, saying that its registration long after the death of Mercedes Catalan indicated fraud. Thus, BPI sought remuneration for incurred damages and litigation expenses.

Trial Court: trial court found that 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 court declared, the presumption of sanity or competency not having been duly impugned, the presumption of due execution of the donation in question must be upheld

CA: Affirmed Trial Court

Petitioners aver that the presumption of Felicianos competence to donate property to Mercedes had been rebutted because they presented more than the requisite preponderance of evidence. First, they presented the Certificate of Disability for the Discharge of Feliciano Catalan issued on October 20, 1948 by the Board of Medical Officers of the Department of Veteran Affairs. Second, they proved that on December 22, 1953, Feliciano was judged an incompetent by the Court of First Instance of Pangasinan, and put under the guardianship of BPI. Based on these two pieces of evidence, petitioners conclude that Feliciano had been suffering from a mental condition since 1948 which incapacitated him from entering into any contract thereafter, until his death on August 14, 1997. Petitioners contend that Felicianos marriage to Corazon Cerezo on September 28, 1948 does not prove that he was not insane at the time he made the questioned donation. They further argue that the donations Feliciano executed in favor of his successors (Decision, CA-G.R. CV No. 66073) also cannot prove his competency because these donations were approved and confirmed in the guardianship proceedings.[19] In addition, petitioners claim that the Deed of Absolute Sale executed on March 26, 1979 by Mercedes Catalan and her children Jesus and Delia Basa is simulated and fictitious. This is allegedly borne out by the fact that the document was registered only on February 20, 1992, more that 10 years after Mercedes Catalan had already died. Since Delia Basa and Jesus Basa both knew that Feliciano was incompetent to enter into any contract, they cannot claim to be innocent purchasers of the property in question.[20] Lastly, petitioners assert that their case is not barred by prescription or laches under Article 1391 of the New Civil Code because they had filed their case on April 1, 1997, even before the four year period after Felicianos death on August 14, 1997 had begun.

Issue: Whether the donation made by Feliciano is valid?

Ruling:

GR: In order for donation to be valid, what is crucial is the donor's capacity to give consent at the time of the donation; the burden of proving incapacity rests upon the person who alleges it.

A donation is an act of liberality whereby a person disposes gratuitously a thing or right in favor of another who accepts it.

Requisites of consent in contract: 1. it should be intelligent or with an exact notion of the mater to which it refers; 2 it should be free 3. it should be spontaneousA person suffering from schizophrenia does not necessarily lose his competence to intelligently dispose his property.

From scientific studies it had been deduced that a person suffering from schizophrenia does no necessarily lose his competence to intelligently dispose his property. By merely alleging schizophrenia, petitioners failed to show substantial proof from the date of donation, June 16,1951,, Feliciano Catalan had lost total control of his mental faculties.

Thus, the lower court 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 was only established when theCOurt of First Instance of Pangasinan declared him an incompetent on Dec 22,1953

Competence and freedom from undue influence, shown to have existed in the other acts done or contracts executed, are presumed to continue until the contrary is shown. -It is interesting to note that the petitioners questioned Feliciano's capacity at the time he donated the property, yet did not see fit to question his mental competence when he entered into a contract of marriage with Corazon Cerezo or when he executed deeds of donation of his other properties in their favor.

The presumption that Feliciano remained competent to execute contracts, despite his illness, is bolstered by the existence of these other contracts. Competency and freedom from undue influence, shown to have existed in the other acts done or contracts executed, are presumed to continue until the contrary is shown.

Needless to state, since the donation was valid, Mercedes had the right to sell the property to whomever she chose.[33] Not a shred of evidence has been presented to prove the claim that Mercedes sale of the property to her children was tainted with fraud or falsehood. It is of little bearing that the Deed of Sale was registered only after the death of Mercedes. What is material is that the sale of the property to Delia and Jesus Basa was legal and binding at the time of its execution. Thus, the property in question belongs to Delia and Jesus Basa.

Notes about Schizophrenia:A study of the nature of schizophrenia will show that Feliciano could still be presumed capable of attending to his property rights. Schizophrenia was brought to the attention of the public when, in the late 1800s, Emil Kraepelin, a German psychiatrist, combined hebrephrenia and catatonia with certain paranoid states and called the condition dementia praecox. Eugene Bleuler, a Swiss psychiatrist, modified Kraepelins conception in the early 1900s to include cases with a better outlook and in 1911 renamed the condition schizophrenia. According to medical references, in persons with schizophrenia, there is a gradual onset of symptoms, with symptoms becoming increasingly bizarre as the disease progresses. The condition improves (remission or residual stage) and worsens (relapses) in cycles. Sometimes, sufferers may appear relatively normal, while other patients in remission may appear strange because they speak in a monotone, have odd speech habits, appear to have no emotional feelings and are prone to have ideas of reference. The latter refers to the idea that random social behaviors are directed against the sufferers.[27] It has been proven that the administration of the correct medicine helps the patient. Antipsychotic medications help bring biochemical imbalances closer to normal in a schizophrenic. Medications reduce delusions, hallucinations and incoherent thoughts and reduce or eliminate chances of relapse.[28] 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.

Villanueva vs Chiong

This case involves a property of a couple that is separated in fact. What is the effect of being separated in fact to the conjugal partnership of gains, whether the deed of absolute sale is void or voidable.

Facts:Florentino and Elisera Chiong were married sometime in January 1960 but have been separated in fact since 1975. During their marriage, they acquired a lot situated at Poblacion, Dipolog City. Sometime in 1985, Florentino sold the one-half western portion of the lot to petitioners for P8,000, payable in installments. Thereafter, Florentino allowed petitioners to occupy the lot and build a store, a shop, and a house thereon. Shortly after their last installment payment on December 13, 1986, petitioners demanded from respondents the execution of a deed of sale in their favor. Elisera, however, refused to sign a deed of sale.

July 5, 1991, Elisera filed with the RTC a Complaint for Quieting of Title with Damages, docketed as Civil Case No. 4383. On February 12, 1992, petitioners filed with the RTC a Complaint for Specific Performance with Damages, docketed as Civil Case No. 4460. Upon proper motion, the RTC consolidated these two cases.

On May 13, 1992, Florentino executed the questioned Deed of Absolute Sale in favor of petitioners.

RTC:, annulled the deed of absolute sale dated May 13, 1992, and ordered petitioners to vacate the lot and remove all improvements therein. The RTC likewise dismissed Civil Case No. 4460, but ordered Florentino to return to petitioners the consideration of the sale with interest from May 13, 1992CA: Affirmed the decision

Contentions of Villanueva: Petitioners contend that the Court of Appeals erred when it held that the lot is conjugal property. They claim that the lot belongs exclusively to Florentino because respondents were already separated in fact at the time of sale and that the share of Elisera, which pertains to the eastern part of Lot No. 997-D-1, had previously been sold to Spouses Jesus Y. Castro and Aida Cuenca. They also aver that while there was no formal liquidation of respondents' properties, their separation in fact resulted in its actual liquidation. Further, assuming arguendo that the lot is still conjugal, the transaction should not be entirely voided as Florentino had one-half share over it.

Contentions of Elisera: Elisera, for her part, counters that the sale of the lot to petitioners without her knowledge, consent or authority, was void because the lot is conjugal property. She adds that the sale was neither authorized by any competent court nor did it redound to her or their children's benefit. As proof of the lot's conjugal nature, she presented a transfer certificate of title, a real property tax declaration, and a Memorandum of Agreement14 dated November 19, 1979 which she and her husband had executed for the administration of their conjugal properties

Issue:1. Is the subject lot exclusive propert of Florentino? No, Conjugal2. Whether or not the sale by Florentino is valid without Eliseras valid consent? Voidable

1 - Respondents' separation in fact neither affected the conjugal nature of the lot nor prejudiced Elisera's interest over it. Under Article 17816 of the Civil Code, the separation in fact between husband and wife without judicial approval shall not affect the conjugal partnership. The lot retains its conjugal nature.Likewise, under Article 16017 of the Civil Code, all property acquired by the spouses during the marriage is presumed to belong to the conjugal partnership of gains, unless it is proved that it pertains exclusively to the husband or to the wife. Petitioners' mere insistence as to the lot's supposed exclusive nature is insufficient to overcome such presumption when taken against all the evidence for respondents.

On the basis alone of the certificate of title, it cannot be presumed that the lot was acquired during the marriage and that it is conjugal property since it was registered "in the name of Florentino Chiong, Filipino, of legal age, married to Elisera Chiong ."18 But Elisera also presented a real property tax declaration acknowledging her and Florentino as owners of the lot. In addition, Florentino and Elisera categorically declared in the Memorandum of Agreement they executed that the lot is a conjugal property.19 Moreover, the conjugal nature of the lot was admitted by Florentino in the Deed of Absolute Sale dated May 13, 1992, where he declared his capacity to sell as a co-owner of the subject lot.20

2 - Without the wife's consent, the husband's alienation or encumbrance of conjugal property prior to the effectivity of the Family Code on August 3, 1988 is not void, but merely voidable.- The sale by Florentino without Elisera's consent is not however void ab initio.The sale by Florentino without Elisera's consent is not, however, voidab initio. InVda. de Ramones v. Agbayani,21citingVillaranda v. Villaranda,22we held that without the wife's consent, the husband's alienation or encumbrance of conjugal property prior to the effectivity of the Family Code on August 3, 1988 is not void, but merely voidable. Articles 166 and 173 of the Civil Code23provide:ART. 166. Unless the wife has been declared anon compos mentisor a spendthrift, or is under civil interdiction or is confined in a leprosarium,the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consentThis article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.ART. 173.The wife may,during the marriage, andwithin ten years from the transactionquestioned,askthe courts for theannulment of any contractof the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband. (Emphasis supplied.)

In a case involving the annulment of sale executed by the husband without the consent of the wife, it was held that the alienation must be annulled in its entirety and not only insofar as the share of the wife in the conjugal property is concerned.Petitioners finally contend that, assumingarguendothe property is still conjugal, the transaction should not be entirely voided as Florentino had one-half share over the lot. Petitioners' stance lacks merit. InHeirs of Ignacia Aguilar-Reyes v. Mijares24citingBucoy v. Paulino, et al.,25a case involving the annulment of sale executed by the husband without the consent of the wife, it was held that the alienation must be annulled in its entirety and not only insofar as the share of the wife in the conjugal property is concerned. Although the transaction in the said case was declared void and not merely voidable, the rationale for the annulment of the whole transaction is the same. Thus:The plain meaning attached to the plain language of the law is that the contract, in its entirety, executed by the husband without the wife's consent, may be annulled by the wife. Had Congress intended to limit such annulment in so far as the contract shall "prejudice" the wife, such limitation should have been spelled out in the statute. It is not the legitimate concern of this Court to recast the law. As Mr. Justice Jose B. L. Reyes of this Court and Judge Ricardo C. Puno of the Court of First Instance correctly stated, "[t]he rule (in the first sentence of Article 173) revokesBaello vs. Villanueva, 54 Phil. 213 andCoque vs. Navas Sioca,45 Phil. 430," in which cases annulment was held to refer only to the extent of the one-half interest of the wifeIf a voidable contract is annuled, the restoration of what has been given is proper. The effect of the annulment is to wipe it out of existence, and to restore the parties, insofar as legally and equitably possible, to their original situation before the contract was entered into.

Additional Notes: The separation in fact between the husband and wife without judicial approval shall not affect conjugal partnership.

Art 160 all property acquired by the spouses during the marriage is presumed to belong to the conjugal partnership of gains, unless it is proved that it pertains exclusively to the husband or wife. (Petitioner's mere insistence as to the lot's supposed exclusive nature is insufficient to overcome such presumption when taken against all the evidence for respondents.

Ayson vs Paragas

This case involves an equitable mortgage and its prescriptive period.

Facts: The controversy commenced with the filing of an ejectment complaint[3]on April 12, 1993 before Branch 1 of the Municipal Trial Court in Cities (MTCC) of Dagupan City by herein petitioner Amado Z. Ayson, as represented by his natural father Zosimo S. Zareno[4](Zareno), against respondent-spouses Felix and Maxima Paragas.The complaint, docketed as Civil Case No. 9161, alleged, among others, that: (1) petitioner is the registered owner of the property being occupied by the respondent-spouses as shown by Transfer Certificate of Title No. 59036 of the Registry of Deeds of Dagupan City in his name; (2) respondent-spouses are occupying the said land through his tolerance without rent; (3) on April 8, 1992, respondent-spouses executed an Affidavit[5]which declared:1.That we are occupants of a parcel of land (Lot 6595-A-2) covered by Transfer Certificate of Title No. 57684 located at Caranglaan District, Dagupan City owned by Amado Ll. Ayson;2.That we occupy the said land by tolerance without paying any rental whatsoever;3.That we further agree to vacate the aforesaid land within three (3) months from the date hereof and to remove and transfer our house therefrom to another place;4.That in consideration of vacating the said parcel of land the amount of Twenty Thousand Pesos (P20,000.00) shall be paid to us; and, that the amount of Ten Thousand Pesos (P10,000.00) shall be paid upon signing of this affidavit and the balance of Ten Thousand Pesos (P10,000.00) shall be paid upon removal of our house on the third month from date hereof.

despite the receipt of theP10,000.00 upon the execution of the Affidavit, respondent-spouses refused to vacate the land as agreed upon; and (5) despite demands, respondent-spouses still refused to vacate, thus constraining him to file the complaint.Aside from respondents vacating the land, petitioner prayed for the return of theP10,000.00 he paid them; and the payment ofP10,000.00 actual damages,P10,000.00 exemplary damages,P20,000.00 attorneys fees, and the costs.

During the preliminary conference, the following admissions were made By petitioner:(1)That the defendants (respondent spouses) had been in possession of the land in question since 1930; and(2)That the semi-concrete house of the defendants (respondent spouses) stands on the land in question.By respondent spouses:(1)That the defendant (respondent) Felix Paragas had executed an affidavit on April 8, 1992 wherein he admitted that he is occupying the land by tolerance of the plaintiff (petitioner) without paying any rental whatsoever and had agreed to vacate the premises within three (3) months but refused to vacate later;(2)That the plaintiff (petitioner) is the registered owner of the land in question;(3)That there was a demand to vacate the premises; and(4)That there is a Certification to File Action in CourtMTCC Decided in favor of AysonRTC Affirmed the decision

Nullity of Sale October 11, 1993, during the pendency of the appeal with the RTC, respondent-spouses filed against petitioner, as represented by his attorney-in-fact Zosimo S. Zareno, the heirs of Blas F. Rayos, the spouses Delfin and Gloria Alog, and Hon. Judge George M. Mejia, as Presiding Judge of the Metropolitan Trial Court, Branch 1 of Dagupan City, also before the RTC of Dagupan City, a complaint[13]for declaration of nullity of deed of sale, transactions, documents and titles with a prayer for preliminary injunction and damages.complaint alleged,inter alia, that respondent Maxima is a co-owner of a parcel of land originally covered by TCT No. 7316 of the Registry of Deeds of Dagupan City, her share having an area of 435.75 square meters.Sometime prior toApril 13, 1955, respondent Felix, then an employee of the defunct Dagupan Colleges (nowUniversityofPangasinan) failed to account for the amount ofP3,000.00.It was agreed that respondent Felix would pay the said amount by installment to the Dagupan Colleges.Pursuant to that agreement, Blas F. Rayos and Amado Ll. Ayson, then both occupying high positions in the said institution, required respondent-spouses to sign, without explaining to them, a Deed of Absolute Sale onApril 13, 1955over respondent Maximas real property under threat that respondent Felix would be incarcerated for misappropriation if they refused to do so.The complaint further alleged that later, respondent-spouses, true to their promise to reimburse the defalcated amount, took pains to pay their obligation in installments regularly deducted from the salaries received by respondent Felix from Dagupan Colleges; that the payments totaledP5,791.69; that notwithstanding the full payment of the obligation, Amado Ll. Ayson and Blas F. Rayos did nothing to cancel the purported Deed of Absolute Sale; and that they were shocked when they received a copy of the complaint for ejectment filed by petitioner.

Petitioner adds that respondent-spouses are bound by estoppel and guilty of laches in light of the judicial admissions they have already made and the unreasonable length of time that had lapsed before they questioned the validity of the Deed of Absolute Sale and the Affidavit they executed onApril 8, 1992.He also asseverates that the Deed of Absolute Sale is a true sale and not an equitable mortgage, arguing that the alleged payments made by respondent Felix were made from December 29, 1965 to December 17, 1980, long after the execution of the contract on April 13, 1955; that respondent-spouses only paid realty taxes over their house and not on the disputed land; that their possession of the property was by his mere tolerance; that there was no evidence proffered that the amount ofP3,000.00 as consideration for the sale was unusually inadequate in 1955; and that the other co-owners of the land did not question or protest the subdivision thereof leading to the issuance of TCT No. 59036 in his name.Lastly, petitioner claims that he is a transferee in good faith, having had no notice of the infirmity affecting the title of his predecessor Amado Ll. Ayson over the property.He says that he was only exercising his right as an heir when he adjudicated unto himself the parcel of land pertaining to his adoptive father,[18]resulting in the issuance of TCT No. 59036 in his name, and, thus, should not be penalized for his exercise of a legal right.

Ruling:

Ejectment case:Nevertheless, it must be remembered that in ejectment suits the issue to be resolved is merely the physical possession over the property,i.e., possessionde factoand not possessionde jure, independent of any claim of ownership set forth by the party-litigants.[19]Should the defendant in an ejectment case raise the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.[20]The judgment rendered in such an action shall be conclusive only with respect to physical possession and shall in no wise bind the title to the realty or constitute a binding and conclusive adjudication of the merits on the issue of ownership.Therefore, such judgment shall not bar an action between the same parties respecting the title or ownership over the property,[21]which action was precisely resorted to by respondent-spouses in this case.

The Deed of Absolute Sale is, in reality, an equitable mortgage or a contract of loan secured by a mortgage.The Civil Code enumerates the cases in which a contract, purporting to be a sale, is considered only as a contract of loan secured by a mortgage,viz.:Art. 1602.The contract shall be presumed to be an equitable mortgage, in any of the following cases:(1)When the price of the sale with right to repurchase is unusually inadequate;(2)When the vendor remains in possession as lessee or otherwise;(3)When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;(4)When the purchaser retains for himself a part of the purchase price;(5)When the vendor binds himself to pay the taxes on the thing sold;(6)In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws

Respondent-spouses have clearly proven that they have already paid the aforesaid amount.That the obligation was paid in installments through salary deduction over a period of 10 years from the signing of the Deed of Absolute Sale is of no moment.It is safe to assume that this repayment scheme was in the nature of an easy payment plan based on the respondent-spouses capacity to pay.Also noteworthy is that the deductions from respondent Felixs salary amounted to a total ofP5,791.69,[25]or almost double the obligation ofP3,000.00.Furthermore, it cannot be denied that petitioner failed to adduce countervailing proof that the payments, as evidenced by the volume of receipts, were for some other obligation.That the realty taxes paid by respondent-spouses was only for their house can be explained by the fact that, until the filing of the ejectment case, respondent Maxima was not aware that the land she co-owned was already partitioned, such that the payments of real estate taxes in her name were limited to the improvement on the land.

An equitable mortagage is a voidable contract; it may be annuled within 4 years from the time the cause of action accrues. An equitable mortgage is a voidable contract. As such, it may be annuled within 4 years from the time the cause of actuin accures.

This case, however, not only involves a contract resulting from fraud but covers a trasaction ridden with threat, intimidation, and continuing undue influence which started when petitioner's adoptive father Amado Ayson and Blas Rayos, Felix's superiors at Dagupan Colleges, practically bullied respondent-spouses into signing the deed of absolute sale under threat of incarceration.

Thus, the 4year period should start from the time the defect in consent ceases. while at first gkancem it would seem that the defect in the consent of the respondent-spouses ceased either from the payment of the obligation through salary deduction or from the death of Amado Ayson and Rayos, it is apparent that such defect of consent never ceased up to the time of the signing of the affidavit on April 8,1992 when Zareno, acting on behalf of petitioner, caused respondent Felix to be brought to him, and taking advantage of the latter being unlettered, unduly influenced Felix into executing the said affidavi for a fee of P10,000,

The compalint praying for the nullity of the Deed of Absolute Sale was filed on October 11,1993, within the 4-year prescriptive period.