The Supreme Court, in this case, affirmed that a person suffering from schizophrenia is not automatically deemed incapable of donating property. The critical factor is whether the donor had the capacity to give consent at the precise moment of donation. The burden of proving incapacity rests on the person alleging it, and absent sufficient proof, capacity is presumed. This ruling underscores the importance of assessing mental competence at the specific time of contract execution and clarifies that a prior diagnosis does not automatically invalidate legal acts.

The Shifting Sands of Sanity: Challenging a Donation Based on Mental Incapacity

The case revolves around Feliciano Catalan, who was diagnosed with schizophrenia in 1948. In 1951, he purportedly donated half of his property to his sister, Mercedes Catalan. Years later, after Feliciano was declared incompetent by the court in 1953, his heirs sought to nullify the donation, arguing he lacked the mental capacity at the time of the donation. This action was triggered after Mercedes sold the property to her children. The central legal question is whether Feliciano’s prior diagnosis of schizophrenia automatically invalidated the donation, or whether his mental state at the specific moment of the donation should determine its validity.

The petitioners argued that Feliciano’s schizophrenia, diagnosed in 1948, and the subsequent court declaration of incompetence in 1953, were sufficient evidence to invalidate the donation made in 1951. They presented the Certificate of Disability and the court order as proof of his incapacity. However, the court emphasized that the critical point is the donor’s capacity at the moment of donation. Capacity to consent is a crucial element for the validity of a contract, including donations. Without it, the donation could be deemed voidable.

The Supreme Court analyzed the nature of schizophrenia, referencing medical literature to illustrate that it does not automatically equate to a loss of mental competence. The court noted that the condition involves cycles of remission and relapse, and patients may appear relatively normal at times. The court’s analysis hinged on the presumption of sanity, which dictates that every person is presumed sane unless proven otherwise. The burden of proof lies with those alleging the incapacity. The court cited Miguela Carillo v. Justimiano Jaojoco, 46 Phil 957, 960 (1924), underscoring this principle.

Furthermore, the court pointed out the inconsistency in the petitioners’ arguments. While questioning Feliciano’s capacity to donate the property to Mercedes, they did not challenge his competence when he married Corazon Cerezo or when he executed deeds of donation in their favor.

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.

This principle further supported the presumption of Feliciano’s competence at the time of the donation.

Regarding the sale of the property by Mercedes to her children, the court found no evidence of fraud or falsehood. The fact that the Deed of Sale was registered after Mercedes’ death was deemed immaterial; what mattered was the legality and binding nature of the sale at the time of its execution. The court referenced Article 428 of the New Civil Code, affirming the owner’s right to dispose of their property.

Article 428 of the New Civil Code. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law.
The owner has also a right of action against the holder and possessor of the thing in order to recover it.

Finally, the court addressed the issue of prescription and laches, raised for the first time on appeal. Even if the appeal had merit, the Deed of Donation was considered a voidable, not a void, contract. As such, it remained binding since it was not annulled in a proper court action within four years, as required by Article 1391 of the New Civil Code. This provision underscores the importance of timely legal action in challenging potentially voidable contracts.

CIVIL CODE, 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.

The court’s decision highlights the importance of proving mental incapacity at the precise moment of a legal act, reinforcing the presumption of sanity and the need for timely legal action to challenge potentially voidable contracts.

FAQs

What was the key issue in this case?	The key issue was whether Feliciano Catalan’s prior diagnosis of schizophrenia and subsequent declaration of incompetence invalidated a donation he made to his sister before the court declaration.
What did the court rule regarding mental capacity and contracts?	The court ruled that the critical factor is the donor’s capacity to give consent at the time of the donation. A prior diagnosis of a mental condition does not automatically invalidate contracts; proof of incapacity at the specific moment is necessary.
Who has the burden of proving mental incapacity?	The burden of proving mental incapacity rests upon the person who alleges it. If no sufficient proof is presented, capacity is presumed.
What is the significance of the presumption of sanity?	The presumption of sanity means that every person is presumed sane unless proven otherwise. This presumption must be overcome with sufficient evidence to invalidate a contract based on mental incapacity.
What is the effect of a voidable contract?	A voidable contract is binding unless it is annulled by a proper action in court within the prescribed period. If not annulled, the contract remains valid and enforceable.
What is the prescriptive period for annulling a voidable contract?	The action for annulment of a voidable contract must be brought within four years from the time the incapacity ceases.
Did the court find any evidence of fraud in the sale of the property?	No, the court found no evidence of fraud or falsehood in the sale of the property by Mercedes Catalan to her children.
Why was the timing of the registration of the Deed of Sale not a significant factor?	The timing of the registration was not significant because what mattered was the legality and binding nature of the sale at the time of its execution, regardless of when it was registered.

This case clarifies that mental capacity to enter into contracts, particularly donations, must be assessed at the time of the agreement. A prior diagnosis does not automatically invalidate legal acts; the key is proving incapacity at the moment of the transaction. The ruling reinforces the importance of legal counsel in situations involving individuals with mental health conditions to ensure their rights and interests are protected.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CORAZON CATALAN, ET AL. VS. JOSE BASA, ET AL., G.R. NO. 159567, July 31, 2007