Francisco v. Herrera
REITERATIONFacts
The Antecedents: The underlying dispute concerns the sale of two parcels of land by Eligio Herrera, Sr. to Julian Francisco. Respondent Pastor Herrera, son of Eligio, Sr., claims ownership of one parcel by prior sale and co-ownership over the other with his siblings. He further alleged that his father was suffering from senile dementia at the time of the sale, rendering him incapacitated to give consent and thus making the contracts void. Procedural History: Respondent Pastor Herrera filed a complaint with the Regional Trial Court (RTC) of Antipolo City, seeking to annul the deeds of sale. The RTC declared the deeds of sale null and void and ordered the return of the properties, with the respondent refunding the purchase price. The Court of Appeals affirmed the RTC's decision in its entirety. This led to the present petition for review on certiorari before the Supreme Court. The Petition: Petitioner Julian Francisco seeks review of the Court of Appeals' decision, arguing that the appellate court erred in ignoring the distinction between void and voidable contracts. He contends that the contracts, if any defect existed due to the alleged senile dementia of the seller, were merely voidable and were ratified by the respondent's actions, including receiving the purchase price and negotiating for a higher amount. The petition also challenges the appellate court's findings on the inadequacy of the consideration and the alleged senile dementia of the seller, asserting these were contrary to established jurisprudence and factual background.
Issue(s)
Whether the contracts of sale are void or merely voidable. Whether the respondent ratified the contracts of sale. Whether Eligio, Sr. had the legal capacity to sell the properties. Whether the consideration for the contracts was grossly inadequate.
Ruling
The Supreme Court granted the petition, reversed the decision of the Court of Appeals, and declared the two contracts of sale valid. The Court ordered the return of the properties to the petitioner and the refund of the purchase price to the respondent.
Ratio Decidendi
On whether the contracts are void or voidable: The Court held that a contract entered into by an insane or demented person is merely voidable or annullable, not void ab initio, pursuant to Article 1390 of the Civil Code. The essential requisites for a valid contract were present, but the consent was vitiated by the vendor's incapacity due to senile dementia. Therefore, the contracts were valid and binding unless annulled through a proper court action. On ratification: The Court found that the respondent ratified the contracts. His act of receiving the installment payments on behalf of his father, coupled with his negotiation to increase the purchase price, indicated his agreement to the contracts. The Court found unconvincing his claim that he merely received the payments to prevent misuse, as he did not immediately institute an action for reconveyance or offer to return the payments. The acceptance and retention of benefits from a contract constitute implied ratification. On Eligio, Sr.'s capacity to sell: The Court upheld the findings of the lower courts that Eligio, Sr. was the declared owner of the lots. As the declared owner, he possessed the right to transfer ownership under the principle of jus disponendi. The arguments regarding prior sale to the respondent and co-ownership were dismissed based on the conclusive factual finding of ownership by the lower courts. On inadequacy of consideration: While the Court of Appeals ruled on the inadequacy of consideration, the Supreme Court's reversal of the lower courts' decision on the validity of the contracts rendered this issue moot. The primary issue was the voidability and subsequent ratification of the contracts, not the adequacy of the price itself, once ratification was established.
Main Doctrine
A contract entered into by a person suffering from senile dementia is merely voidable, not void ab initio, and can be ratified by the acceptance of the benefits thereof. The act of negotiating for an increase in the purchase price while receiving installment payments constitutes ratification.