A contract entered into by a party whose capacity to consent is vitiated by senile dementia is not void ab initio but merely voidable; such a contract is susceptible to ratification, which can be implied through actions such as accepting and retaining the benefits of the contract, thereby rendering it perfectly valid.

Eligio Herrera, Sr., the father of respondent Pastor Herrera, was the owner of two parcels of land located in Cainta, Rizal. In 1991, Eligio Sr. sold these properties to the petitioner, Julian Francisco, through two separate transactions. Subsequently, the children of Eligio Sr., including the respondent, contested these sales, primarily arguing that the agreed purchase price was grossly inadequate and, more significantly, that Eligio Sr. was suffering from senile dementia at the time of the sales, which allegedly rendered him incapable of giving valid consent to the contracts.

• Eligio Herrera, Sr. was the owner of two parcels of land, one of 500 sq. m. covered by Tax Declaration (TD) No. 01-00495, and another of 451 sq. m. covered by TD No. 01-00497.
• On January 3, 1991, petitioner Julian Francisco purchased the first parcel (TD No. 01-00495) from Eligio Sr. for P1,000,000, with payments made in installments from November 30, 1990, to August 10, 1991.
• On March 12, 1991, petitioner purchased the second parcel (TD No. 01-00497) from Eligio Sr. for P750,000.
• The children of Eligio Sr., including respondent Pastor Herrera, contended that the contract prices were grossly inadequate and attempted to negotiate an increase with the petitioner.
• When negotiations failed, respondent Pastor Herrera filed a complaint for annulment of the sales, alleging that Eligio Sr. was suffering from senile dementia at the time of the transactions and was therefore incapacitated to give consent.
• Respondent also claimed ownership of the second parcel (TD No. 01-00497) by virtue of a prior sale to him in 1973 and alleged that the first parcel (TD No. 01-00495) was co-owned by Eligio Sr. and the heirs of his deceased wife, Francisca A. Herrera, who died intestate before the sales.
• Both the trial court and the Court of Appeals found as a fact that Eligio Sr. was suffering from senile dementia at the time he sold the properties.
• Respondent Pastor Herrera received installment payments of the purchase price on behalf of his father, Eligio Sr.

• The Court of Appeals erred by failing to recognize the distinction between a void contract and a merely voidable contract; the contracts of sale were voidable, not void ab initio, because Eligio Sr.'s alleged senile dementia only vitiated his consent.
• Respondent effectively ratified the voidable contracts by accepting the purchase price on behalf of his father.
• The Court of Appeals' decision regarding "senile dementia" disregarded the factual background of the case, was contrary to established jurisprudence, and was based on erroneous conjecture.
• The Court of Appeals violated petitioner's right to due process when it ruled that the consideration for the questioned contracts was grossly inadequate.

• His act of receiving the purchase price did not constitute ratification, as it was merely a safety measure to prevent the money from being misused by his senile father.
• The sale of the lot covered by TD No. 01-00497 was null and void because Eligio Sr. had previously sold this property to him in 1973.
• The sale of the lot covered by TD No. 01-00495 was null and void because it was co-owned by Eligio Sr. and his children (as heirs of Eligio Sr.'s deceased wife), and Eligio Sr. could not sell the entire property without the consent of the co-owners.
• At the time of the sales, Eligio Sr. was incapacitated due to senile dementia, rendering him unable to give valid consent to the contracts.

• Whether the contracts of sale entered into by Eligio Sr., who was found to be suffering from senile dementia, are void or merely voidable.
• Assuming the contracts are voidable, whether they were subsequently ratified by the respondent through his actions.

• The Supreme Court ruled that the contracts of sale are voidable, not void. While Article 1327 of the Civil Code states that insane or demented persons cannot give consent, Article 1390 classifies contracts where one party is incapable of giving consent as voidable or annullable. Eligio Sr.'s senile dementia vitiated his consent but did not make the contract void per se.
• The Court found that respondent Pastor Herrera's actions constituted implied ratification of the contracts. By accepting installment payments of the purchase price and subsequently negotiating for an increase in said price, respondent demonstrated an intention to be bound by the contracts. His claim that he merely received payments to avoid their misuse was deemed unconvincing.
• The Court emphasized that one cannot negotiate for an increase in the contract price while simultaneously contending that the contract is void. Such actions are inconsistent and point towards ratification.
• Regarding respondent's claims of prior sale and co-ownership, the Court noted that both lower courts found Eligio Sr. to be the "declared owner" of the lots, implying he had the right to transfer ownership under the principle of jus disponendi.
• Consequently, the petition was GRANTED. The decision of the Court of Appeals was REVERSED, and the two contracts of sale were declared VALID.

• Voidable Contracts (Annullable Contracts) — A contract where all essential requisites for validity (consent, object, cause) are present, but the element of consent is vitiated due to incapacity of one of the parties or by mistake, violence, intimidation, undue influence, or fraud. The Court applied this by holding that the contracts entered into by Eligio Sr., whose consent was vitiated by senile dementia, were voidable under Article 1390 of the Civil Code, not void ab initio.
• Ratification of Voidable Contracts — The act by which a defect in a voidable contract is cured, making it valid and binding from its inception. Ratification can be express or implied, such as by accepting and retaining the benefits of a contract. The Court found that respondent's acceptance of installment payments and his attempt to negotiate a higher price for the properties constituted implied ratification, thereby validating the contracts of sale.
• Distinction between Void and Voidable Contracts — Void contracts are those that produce no legal effect from the beginning (e.g., due to absence of an essential element or being contrary to law) and cannot be ratified. Voidable contracts are valid until annulled by a competent court and are susceptible to ratification. This distinction was pivotal, as the Court classified the contracts as voidable due to vitiated consent (senile dementia), allowing for their subsequent ratification.
• Jus Disponendi (Right of Disposition) — An attribute of ownership which grants the owner the right to dispose of their property. The Court invoked this principle by noting that Eligio Sr. was the "declared owner" of the properties, which gave him the right to sell and transfer ownership thereof to the petitioner.
• Binding Effect of Factual Findings of Lower Courts — The principle that factual findings of the trial court, especially when affirmed by the Court of Appeals, are generally considered binding and conclusive on the Supreme Court. While the Supreme Court accepted the factual finding of Eligio Sr.'s senile dementia, it differed on the legal conclusion drawn from this fact, particularly regarding the voidable nature of the contract and its ratification.

• "One cannot negotiate for an increase in the price in one breath and in the same breath contend that the contract of sale is void."
• "A void or inexistent contract is one which has no force and effect from the very beginning. Hence, it is as if it has never been entered into and cannot be validated either by the passage of time or by ratification."
• "By contrast, a voidable or annullable contract is one in which the essential requisites for validity under Article 1318 are present, but vitiated by want of capacity, error, violence, intimidation, undue influence, or deceit."
• "But, if an insane or demented person does enter into a contract, the legal effect is that the contract is voidable or annullable as specifically provided in Article 1390."
• "An annullable contract may be rendered perfectly valid by ratification, which can be express or implied. Implied ratification may take the form of accepting and retaining the benefits of a contract."

• Bordalba v. Court of Appeals, G.R. No. 112443, January 25, 2002 — Cited to support the general rule that findings of fact of the trial court, when affirmed by the appellate court, are binding and conclusive upon the Supreme Court.
• Metropolitan Waterworks and Sewerage System (MWSS) vs. Court of Appeals, 297 SCRA 287 (1998) — Referenced for the principle that implied ratification of a contract may take the form of accepting and retaining the benefits of said contract.

• Civil Code, Article 1318 — This article lists the essential requisites of a contract: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. It was referenced to lay the foundation for distinguishing between void and voidable contracts, noting that in voidable contracts, these requisites are present but consent is vitiated.
• Civil Code, Article 1327(2) — This provision states that insane or demented persons cannot give consent to a contract. The Court acknowledged this but interpreted it in conjunction with Article 1390, concluding that a contract entered into by such a person is voidable, not automatically void.
• Civil Code, Article 1390(1) — This article enumerates which contracts are voidable or annullable, including "(1) Those where one of the parties is incapable of giving consent to a contract." This was the core provision used by the Court to classify the sales contracts entered into by Eligio Sr. (suffering from senile dementia) as voidable.
• Civil Code, Article 1409 — This article lists contracts that are inexistent and void from the beginning. It was cited to contrast with voidable contracts under Article 1390 and to clarify why the contracts in question did not fall under this category.