Case Summary (G.R. No. 204944-45)
Allegations of Fraud and Lack of Consideration
Respondent alleged that he was induced by his brother Miguel, Atty. Balguma, and Valdez to sign what he believed was an employment contract for overseas work. He claimed no knowledge of the sale deed’s nature, received only small coin payments, and did not obtain the ₱187,000 purchase price.
Petitioners’ Denial and Trial Court Dismissals
Petitioners denied fraud, asserted respondent understood and accepted the consideration, and noted he refrained from objecting when rentals were collected. Respondent twice moved to dismiss his own complaint—motions granted by the RTC—alleging instigation by his sister and settlement after partial payment. The trial court later reconsidered, citing respondent’s low comprehension (per psychiatric report) and lack of counsel in signing dismissal motions.
Trial Court Findings on Merits
After pretrial and appointment of a guardian ad litem for respondent, the RTC dismissed the complaint on the merits. It held respondent (1) admitted he obtained loans and signed the deed, (2) acknowledged the sale, and (3) ceased rental collection, concluding he failed to prove fraud or incapacity.
Court of Appeals Reversal on Mental Capacity
The Court of Appeals faulted the RTC for disregarding expert testimony of Dr. Ana Marie Revilla, whose certification established respondent’s very low IQ, illiteracy, and comprehension equivalent to a six-year-old. It applied Civil Code Article 1332 and Rules of Court, characterizing respondent as “incompetent” under Rule 92. The appellate court found no evidence the deed was explained or translated to him, held consent was vitiated by undue influence and fraud, and declared the contract voidable under Article 1390.
Supreme Court’s Review of Factual Findings
This Court recognized the general rule favoring trial-court credibility findings but noted the exception when a material fact—here, the expert psychiatric evidence—was overlooked or misapplied. A factual review was warranted to assess whether respondent’s consent was rational.
Analysis of Vitiated Consent and Incapacity
Under Civil Code Articles 1330 and 1390, consent vitiated by fraud or incapacity renders a sale voidable. Testimony and expert reports conclusively demonstrated respondent’s inability to understand the English-language deed, his deprivation of freedom of choice, and his place
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Facts of the Case
- Braulio Katipunan, Jr. owned a 203-sqm lot with a five-door apartment at 385-F Matienza St., San Miguel, Manila, registered under TCT No. 109193.
- On December 29, 1985, Braulio, assisted by his brother Miguel Katipunan, executed a Deed of Absolute Sale in favor of Edgardo Balguma and Leopoldo Balguma, Jr., represented by their father, Atty. Leopoldo Balguma, Sr., for ₱187,000.
- Braulio’s title under TCT No. 109193 was cancelled; TCT No. 168394 was issued in the names of the Balguma brothers.
- Beginning January 1986, the Balgumas collected rentals from existing lessees under the new registration.
- Braulio claimed he never understood the sale, received no consideration, and was misled by his brother, Atty. Balguma and Inocencio Valdez through falsified documents and promises of overseas employment.
Procedural History
- March 10, 1987: Braulio filed Civil Case No. 87–39891 for annulment of the Deed of Absolute Sale before RTC Manila, Branch 21 (later Branch 28).
- Trial court initially granted Braulio’s two motions to dismiss the complaint upon an alleged settlement and payment of ₱2,500, but reinstated the case after finding Braulio’s poor comprehension and absence of counsel when he signed the dismissals.
- RTC set the case for pre-trial, appointed Braulio’s sister as guardian ad litem, and after trial dismissed the complaint for failure of proof.
- Braulio appealed to the Court of Appeals in CA-GR CV No. 45928.
- July 31, 1997: CA reversed the RTC, annulled the Deed of Sale, declared TCT No. 168394 void, and ordered restoration of TCT No. 109193.
- Petitioners filed a motion for reconsideration in the CA, which was denied. They then elevated the case to the Supreme Court via Rule 45 petition for review on certiorari.
Petitioners’ Contentions
- The RTC correctly assessed Braulio’s capacity and credibility based on firsthand observation of his demeanor.
- The CA erred in overturning the RTC’s factual findings, which are entitled to full faith and credit by the appellate court.
- Expert testimony on mental capacity is advisory and the RTC properly gave it no weight in the face of clear documentary evidence of a valid sale.
Respondent’s Allegations and Evidence
- Braulio was induced to sign a document he believed was an employment contract; he had only third-grade education and no understanding of English‐language legal documents.
- Dr. Annette (Ana Marie)