GR 151243; (April, 2008) (Digest)
G.R. No. 151243 ; April 30, 2008
LOLITA R. ALAMAYRI, petitioner, vs. ROMMEL, ELMER, ERWIN, ROILER and AMANDA, all surnamed PABALE, respondents.
FACTS
Nelly S. Nave owned a parcel of land in Calamba, Laguna. On January 3, 1984, she signed a handwritten “Kasunduan Sa Pagbibilihan” (Contract to Sell) with Sesinando M. Fernando. Nave later repudiated this agreement, refusing a tendered down payment. Subsequently, on February 20, 1984, Nave executed a Deed of Absolute Sale over the same property in favor of the Pabale siblings. Fernando filed a complaint for specific performance against Nave. During the proceedings, Nave, and later her successor-in-interest Lolita Alamayri, sought to nullify both contracts, asserting Nave’s incapacity due to mental deficiency. A guardianship proceeding in 1988 declared Nave an incompetent. The Regional Trial Court (RTC) nullified both the Contract to Sell with Fernando and the Deed of Sale with the Pabales, ordering reconveyance to Alamayri.
ISSUE
Whether the Deed of Absolute Sale dated February 20, 1984, executed by Nave in favor of the Pabale siblings is valid.
RULING
The Supreme Court upheld the validity of the sale to the Pabale siblings and reversed the RTC. The legal logic rests on the principle of voidable contracts under Article 1390 of the Civil Code, as opposed to void contracts. A contract entered into by an incapacitated person is merely voidable, not void ab initio. For such a contract to be annulled, the action must be brought by the incapacitated party or their guardian, and the other party must have been in bad faith, knowing of the incapacity. The Court found no evidence that the Pabale siblings were aware of Nave’s alleged mental condition at the time of the sale in February 1984. The guardianship decree declaring her incompetent was rendered only in June 1988, over four years later, and cannot retroactively invalidate a prior transaction where the buyers were in good faith. Consequently, the contract was validly executed and remained binding. The claim of incapacity, raised belatedly as a defense against the Pabales, could not overcome the presumption of the contract’s validity and the buyers’ good faith.