Insanity, demented mind affecting capacity to act; consent in contracts

Under Article 39 of the Civil Code of the Philippines, the following circumstances, among others, modify or limit capacity to act: age, insanity, imbecility, the state of being a deaf-mute, penalty, prodigality, family relations, alienage, absence, insolvency and trusteeship. The consequences of these circumstances are governed in [said Code], other codes, the Rules of Court, and in special laws. Capacity to act is not limited on account of religious belief or political opinion.

The giving of consent to a contract by an insane person, a demented person or a person who is deaf-mute is legally limited. Under Article 1327, the following cannot give consent to a contract: (1) unemancipated minors; (2) insane persons; (3) demented persons; and (4) deaf-mutes who do not know how to write.

In Standard Oil Co. vs. Codina Arenas (G.R. No. 5921, July 25, 1911), the Supreme Court said:
Certainly the trial court founded its judgment on the basis of the medico-legal doctrine which supports the conclusion that such monomania of wealth does not necessarily imply the result that the defendant Villanueva was not a person capable of executing a contract of bond like the one here in question. 
This court has not found the proof of the error attributed to the judgment of the lower court. It would have been necessary fo show that such monomania was habitual And constituted a veritable mental perturbation in the patient; that the bond executed by the defendant Villanueva was the result of such monomania, and not the effect of any other cause, that is, that there was riot, nor could there have been any other cause for the contract than an ostentation of wealth and this purely an effect of such monomania of wealth; and that the monomania existed on the date when the bond in question was executed. xxx

In our present knowledge of the state of mental alienation such certainty has not yet been reached as to warrant the conclusion, in a judicial decision, that he who suffers the monomania of wealth, believing himself to be very wealthy when he is not, is really insane and it is to be presumed, in the absence of a judicial declaration, that he acts under the influence of a perturbed mind, or that his mind is deranged when be executes an onerous contract. The bond, as aforesaid, was executed by Vicente S. Villanueva on December 15,1908, and his incapacity, for the purpose of providing a guardian for him, was not declared until July 24, 1909. xxx 
Capacity to act must be supposed to attach to a person who has not previously been declared incapable, and such capacity is presumed to continue so long as the contrary be not proved, that is, that at the moment of his acting he was incapable, crazy, insane, or out of his mind: which, in the opinion of this court, has not been proved in this case.