[25] MIGUEL KATIPUNAN, INOCENCIO VALDEZ, EDGARDO BALGUMA and o The property was registered and issued in the

o The property was registered and issued in the names of the Balguma
LEOPOLDO BALGUMA, JR. v. BRAULIO KATIPUNAN, JR. brothers. In January, 1986, Atty. Balguma, then still alive, started collecting
G.R. No. 132415 | January 30, 2002 | Sandoval-Gutierrez, J. rentals from the lessees of the apartments.
 Respondent filed with the RTC-Manila, a complaint for annulment of the Deed of
SUMMARY Absolute Sale
Respondent, who reached only grade three, signed a deed of sale written in English covering his o averred that his brother Miguel, Atty. Balguma and Inocencio Valdez
5-door apartment and lot in favor of petitioners Edgardo and Leopoldo Baguma, Jr. Respondent convinced him to work abroad. They even brought him to the NBI and
later sought to annul this deed on ground of vitiated consent. At the trial, Dr. Annette Revilla, other government offices for the purpose of securing clearances and other
resident psychiatrist at the PGH, testified as an expert witness and declared that respondent has documents which later turned out to be falsified.
a very low IQ, an illiterate, cannot read, slow in comprehension and with a mental age of that of o Through insidious words and machinations, they made him sign a
a six-year old child. Respondent testified that he was forced by his brother, Miguel Katipunan, document purportedly a contract of employment, which document turned
and Atty. Balguma, father of the petitioners, to sign allegedly a contract for his employment out to be a Deed of Absolute Sale. By virtue of the said sale, Edgardo and
abroad; that he did not know the contents thereof; and that he was only given small amounts of Leopoldo, Jr. (co-defendants), were able to register the title to the property
money, even coins, by Miguel and Atty. Balguma. Petitioners did not refute the findings of the in their names.
expert witness and the statements made by respondent. Nonetheless, the trial court dismissed o he did not receive the consideration stated in the contract. He was shocked
the complaint, ruling that respondent failed to prove his causes of action having admittedly when his sister Agueda Katipunan-Savellano told him that the Balguma
signed the deed. On appeal, the decision was reversed. The appellate court found that the trial brothers sent a letter to the lessees of the apartment informing them that
court arbitrarily disregarded the testimony of Dr. Revilla, a skilled witness, and made an they are the new owners.
unsupported finding contrary to her opinion. It ruled that the contract of sale was voidable o defendants, now petitioners, with evident bad faith, conspired with one
under the provision of Article 1390 of the Civil Code. Petitioners moved for reconsideration, but another in taking advantage of his ignorance, he being only a third grader.
the same was denied, hence, this petition.  Petitioners denied the allegations:
o respondent was aware of the contents of the Deed of Absolute Sale and that
DOCTRINE he received the consideration involved
Article 1330, NCC: Consent may be vitiated by any of the following: o also knew that the Balguma brothers have been collecting the rentals since
(a) mistake December, 1985 but that he has not objected or confronted them
(2) violence o he filed the complaint because his sister, Agueda Savellano, urged him to do
(3) intimidation so
(4) undue influence  Twice respondent moved to dismiss his complaint (which were granted) on the
(5) fraud. grounds that he was actually instigated by his sister to file the same; and that the
parties have reached an amicable settlement after Atty. Balguma, Sr. paid him
The presence of any of these vices renders the contract voidable. P2,500.00 as full satisfaction of his claim
o In granting his MRs, the RTC was convinced that respondent did not sign
the motions to dismiss voluntarily because of his poor comprehension, as
A contract where one of the parties is incapable of giving consent or where consent is vitiated by shown by the medical report of Dr. Annette Revilla, a Resident Psychiatrist
mistake, fraud, or intimidation is not void ab initio but only voidable and is binding upon the at the PGH.
parties unless annulled by proper Court action. o Besides, that he did not understand the consequences of his action.
 The effect of annulment is to restore the parties to the status quo ante insofar as legally  RTC dismissed the complaint, holding that respondent failed to prove his causes of
and equitably possible— this much is dictated by Article 1398 of the Civil Code. action since he admitted that: (1) he obtained loans from the Balgumas; (2) he signed
 As an exception however to the principle of mutual restitution, Article 1399 provides the Deed of Absolute Sale; and (3) he acknowledged selling the property and that he
that when the defect of the contract consists in the incapacity of one of the parties, the stopped collecting the rentals
incapacitated person is not obliged to make any restitution, except when he has been  CA reversed the RTC’s decision and ruled that the contract was voidable:
benefited by the things or price received by him. o Dr. Ana Marie Revilla’s, a psychiatrist at the UP-PGH, findings explained
the reason why plaintiff-appellant showed a lot of inconsistencies when he
was put on the stand
FACTS  Plaintiff-appellant is slow in comprehension and has a very low
 Braulio Katipunan, Jr. is the owner of a 203 square meter lot and a 5-door apartment IQ.
constructed thereon located at 385-F Matienza St., San Miguel, Manila. (TCT No. o RTC refused to admit the expert's testimony and prefer to base its decision
109193) on its findings that contrary to the allegation of the appellant, he is
o The apartment units are occupied by lessees nonetheless capable of responding to the questions expounded to him while
 Dec. 29, 1985: respondent, assisted by his brother, petitioner Miguel Katipunan, on the stand
entered into a Deed of Absolute Sale with brothers Edgardo Balguma and Leopoldo o Braulio reached only Grade III due to his very low IQ
Balguma, Jr. (co-petitioners), represented by their father Atty. Leopoldo Balguma, Sr., o he is illiterate; and that he cannot read and is slow in comprehension. His
involving the subject property for a consideration of P187,000.00. mental age is only that of a six-year old child.
o The documents presented by the appellees in their favor, i.e., the
deeds of mortgage and of sale, are all in English.
 o There is no showing that the contracts were read and/or 3. Price in money or equivalent
explained to Braulio nor translated in a language he understood.1  Article 1330, NCC: Consent may be vitiated by any of the following:
o If Braulio has a mental state of a six year old child, he can not be (a) mistake
considered as fully capacitated. He falls under the category of (2) violence
'incompetent' as defined in Section 2, Rule 92 of the Rules of (3) intimidation
Court2 (4) undue influence
o admission of defendant-appellee Miguel Katipunan, that he and (5) fraud.
Braulio received the considerations of the sale, although he did The presence of any of these vices renders the contract voidable.
not explain what portion went to each other of them  The circumstances surrounding the execution of the contract manifest a vitiated
 there is no reason why Miguel should receive part of consent on the part of respondent. Undue influence was exerted upon him by his
the consideration, since he is not a co-owner of the brother Miguel and Inocencio Valdez (petitioners) and Atty. Balguma.
property. Everything should have gone to Braulio. Yet, o It was his brother Miguel who negotiated with Atty. Balguma. However,
Miguel did not refute that he was giving him only small they did not explain to him the nature and contents of the document.
amounts (coins). Worse, they deprived him of a reasonable freedom of choice
o As to the allegation of the scheme utilized in defrauding Braulio, o It bears stressing that he reached only grade three. Thus, it was impossible
neither Miguel nor Atty. Balguma refuted the statement of for him to understand the contents of the contract written in English and
Braulio that he was being enticed to go abroad — which was the embellished in legal jargon.
alleged reason for the purported sale.  The medical findings of Dr. Revilla reveal that respondent has a very low IQ and a
 Nothing was explained about the alleged trip to NBI, mind of a six-year old child. In fact, the trial court had to clarify certain matters
the fake passport, etc., nor of Miguel's own plans to go because Braulio was either confused, forgetful or could not comprehend.
abroad. It is then most probable that it was Miguel who o Thus, his lack of education, coupled with his mental affliction, placed him
wanted to go abroad and needed the money for it. not only at a hopelessly disadvantageous position vis-a-vis petitioners to
enter into a contract, but virtually rendered him incapable of giving rational
W/N THE CA ERRED IN OVERTURNING THE RTC’S DECISION – NO consent.
 Petitioners: CA Appeals erred when it overturned the factual findings of the trial court o To be sure, his ignorance and weakness made him most vulnerable to the
which are amply supported by the evidence on record. deceitful cajoling and intimidation of petitioners.
 SC: No. While it may be true that findings of a trial court, given its peculiar vantage  RTC obviously erred when it disregarded Dr. Revilla's testimony without any reason
point to assess the credibility of witnesses, are entitled to full faith and credit and may at all.
not be disturbed on appeal, this rule is not infallible, for it admits of certain o It must be emphasized that petitioners did not rebut her testimony.
exceptions.  Even the consideration, if any, was not shown to be actually paid to respondent.
1. One of these exceptions is when there is a showing that the trial court had Extant from the records is the fact that Miguel profited from the entire transaction and
overlooked, misunderstood or misapplied some fact or circumstance of gave only small amounts of money to respondent.
weight and substance, which, if considered, could materially affect the  Respondent was telling the truth that he did not receive the purchase price. His
result of the case testimony on this point was not controverted by Miguel. Moreover, Atty. Balguma
2. Also, when the factual findings of the trial court contradict those of the admitted that it was Miguel who received the money from him.
appellate court, this Court is constrained to make a factual review of the o What Miguel gave respondent was merely loose change or "barya-barya,"
records and make its own assessment of the case grossly disproportionate to the value of his property. "
 The instant case falls within the said exception. o It is then most probable that it was Miguel who wanted to go abroad and
 A contract of sale is born from the moment there is a meeting of minds upon the thing needed the money for it."
which is the object of the contract and upon the price. This meeting of the minds  Archipelago Management and Marketing Corp. v. Court of Appeals: Rosalina, who was
speaks of the intent of the parties in entering into the contract respecting the subject quite old at that time she signed the deed, was tricked by her own husband, who
matter and the consideration thereof. employed fraud and deceit, into believing that what she was signing was her
 Elements of a Contract of Sale: application for reconstitution of title.
1. Consent  A contract where one of the parties is incapable of giving consent or where consent is
2. Object vitiated by mistake, fraud, or intimidation is not void ab initio but only voidable and
is binding upon the parties unless annulled by proper Court action.
1 o The effect of annulment is to restore the parties to the status quo ante
Art. 1332, NCC - When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the insofar as legally and equitably possible— this much is dictated by Article
terms thereof have been fully explained to the former.' 1398 of the Civil Code.
2 o As an exception however to the principle of mutual restitution, Article 1399
Sec. 2. Meaning of Word 'Incompetent' - Under this rule, the word 'incompetent' includes persons
provides that when the defect of the contract consists in the incapacity of
suffering the penalty of civil interdiction or who are hospitalized lepers, prodigals, deaf and dumb who are
one of the parties, the incapacitated person is not obliged to make any
unable to read and write, those who are of unsound mind, even though they have lucid intervals, and
restitution, except when he has been benefited by the things or price
persons not being of unsound mind, but by reason of age, disease, weak mind, and other similar causes,
can not, without outside aid, take care of themselves and manage their property, becoming thereby an easy received by him.
prey for deceit and exploitation.'
  Since the Deed of Absolute Sale between respondent and the Balguma brothers is
voidable and hereby annulled, then the restitution of the property and its fruits to
respondent is just and proper. Petitioners should turn over to respondent all the
amounts they received starting January, 1986 up to the time the property shall have
been returned to the latter
 Article 24 of the Civil Code enjoins courts to be vigilant for the protection of a party to
a contract who is placed at a disadvantage on account of his ignorance, mental
weakness or other handicap, like respondent herein.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated July
3, 1997 in CA-GR CV No. 45928 is AFFIRMED with MODIFICATION in the sense that
petitioners Edgardo Balguma and Leopoldo Balguma, Jr., are ordered to turn over to respondent
Braulio Katipunan, Jr. the rentals they received for the 􀀶ve-door apartment corresponding to the
period from January, 1986 up to the time the property shall have been returned to him, with
interest at the legal rate.