**Facts:**
The case centers around respondent Braulio Katipunan, Jr., who owns a 203 square meter lot with a five-door apartment in Manila, under TCT No. 109193. On December 29, 1985, Braulio, with the assistance of his brother, petitioner Miguel Katipunan, entered into a Deed of Absolute Sale with Edgardo and Leopoldo Balguma, Jr., represented by Atty. Leopoldo Balguma, Sr., selling the property for P187,000.00. This resulted in the cancellation of Braulio’s title, replaced by TCT No. 168394 in the Balgumas’ names. In January 1986, Atty. Balguma began collecting rentals from the apartments.
On March 10, 1987, Braulio filed a complaint for the annulment of the Deed of Absolute Sale, alleging he was tricked into signing a contract he believed was for employment abroad. The document turned out to be the sale deed, through which the Balguma brothers registered the title to the property in their names. He also claimed he didn’t receive the sale’s consideration and was unaware of what he was signing due to the machinations of Miguel, Atty. Balguma, and Inocencio Valdez.
The case was initially dismissed twice by the RTC after Braulio filed motions to dismiss, claiming he was instigated by his sister to file the complaint and that he reached an amicable settlement with Atty. Balguma. The court eventually reinstated the case, citing concerns over Braulio’s comprehension and the validity of his consent to dismiss.
After a trial, the RTC dismissed the complaint, but the Court of Appeals reversed this decision, nullifying the Deed of Sale and restoring Braulio’s title to the property.
**Issues:**
1. Whether the consent of Braulio Katipunan, Jr. to the Deed of Absolute Sale was vitiated by mistake, fraud, or undue influence.
2. The capacity of Braulio to comprehend and consent to the contract in light of his alleged mental incapacitation.
3. Whether the terms of the contract were fully explained to Braulio, who was unable to read or understand the language of the contract.
4. The restitution (return) of the property and its fruits after the annulment of the contract.
**Court’s Decision:**
The Supreme Court denied the petition, affirming the decision of the Court of Appeals with modifications. It found that Braulio’s consent was indeed vitiated due to undue influence exerted by the petitioners. It underscored Braulio’s incapacity to consent, given his limited education and mental condition, described as having the mental age of a six-year-old child. The Court also highlighted that the provenance and amount of the consideration for the sale were dubious, as Braulio did not receive the stated purchase price. As a consequence, the Court ordered the Balgumas to restore the property to Braulio and return all the rentals received from the property starting January 1986, with interest at the legal rate.
**Doctrine:**
1. The Court reiterated principles related to the assessment of consent in contract formation, particularly focusing on how mistake, fraud, or undue influence can vitiate consent, rendering a contract voidable.
2. Affirmed that contracts involving parties unable to give consent due to incapacity or those deceived into signing a contract under false pretenses must be annulled, protecting the rights of the aggrieved party.
3. Emphasized the protective clause under Article 24 of the Civil Code, urging courts to protect parties at a disadvantage due to ignorance, mental weakness, or other similar handicaps.
**Class Notes:**
– **Vitiated Consent:** Consent can be deemed vitiated due to mistake, fraud, or undue influence (Art. 1330, Civil Code).
– **Voidable Contracts:** A contract where consent was vitiated is not void ab initio but voidable and can be annulled through proper Court action (Art. 1390, Civil Code).
– **Protection of Disadvantaged Parties:** Courts are mandated to protect parties disadvantaged by ignorance, mental weakness, or handicaps (Art. 24, Civil Code).
– **Restitution after Annulment:** Upon annulment of a contract, parties are to be restored to their original state as much as possible, with considerations for incapacitated parties (Art. 1398, Civil Code).
**Historical Background:**
This case highlights the intricacies and sensitivities involved in legal contracts where one party might not fully comprehend the nature and consequences of their agreement. It underscores the Philippine legal system’s recognition of the need to protect individuals who are mentally incapacitated or otherwise taken advantage of, reflecting a broader commitment to fairness and justice in contractual dealings.
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