Voidable Contracts: Effects
Miguel Katipunan v. Braulio Katipunan, Jr.
G.R. No. 132415
January 30, 2002
FACTS:
Respondent Braulio Katipunan, Jr. is the owner of a 203 square meter lot and
a five-door apartment constructed thereon located at 385-F Matienza St., San
Miguel, Manila. The lot is registered in his name under TCT No. 109193 of the
Registry of Deeds of Manila. The apartment units are occupied by lessees.
On December 29, 1985, respondent, assisted by his brother, petitioner
Miguel Katipunan, entered into a Deed of Absolute Salewith brothers Edgardo
Balguma and Leopoldo Balguma, Jr. (co-petitioners), represented by their
father Atty. Leopoldo Balguma, Sr., involving the subject property for a
consideration of P187,000.00. Consequently, respondents title to the
property was cancelled and in lieu thereof, TCT No. 168394 was registered
and issued in the names of the Balguma brothers. In January, 1986, Atty.
Balguma, then still alive, started collecting rentals from the lessees of the
apartments.
On March 10, 1987, respondent filed with the RTC of Manila, Branch 21, a
complaint for annulment of the Deed of Absolute Sale. He averred that his
brother Miguel, Atty. Balguma and Inocencio Valdez (defendants therein, now
petitioners) convinced him to work abroad. They even brought him to the NBI
and other government offices for the purpose of securing clearances and
other documents which later turned out to be falsified. Through insidious
words and machinations, they made him sign a document purportedly a
contract of employment, which document turned out to be a Deed of
Absolute Sale. By virtue of the said sale, brothers Edgardo and Leopoldo, Jr.
(co-defendants), were able to register the title to the property in their names.
Respondent further alleged that he did not receive the consideration stated
in the contract. He was shocked when his sister Agueda Katipunan-Savellano
told him that the Balguma brothers sent a letter to the lessees of the
apartment informing them that they are the new owners. Finally, he claimed
that the defendants, now petitioners, with evident bad faith, conspired with
one another in taking advantage of his ignorance, he being only a third
grader.
After hearing, the trial court dismissed the complaint, holding that
respondent failed to prove his causes of action since he admitted that: (1) he
obtained loans from the Balgumas; (2) he signed the Deed of Absolute Sale;
and (3) he acknowledged selling the property and that he stopped collecting
the rentals.
Upon appeal by respondent, the Court of Appeals reversed said decision of
the RTC.
ISSUE: Is subject contract void ab initio or voidable on the ground that one
of the parties is incapable of giving consent or where consent is vitiated by
mistake, fraud, or intimidation?
RULING:
A contract of sale is born from the moment there is meeting of minds upon
the thing which is the object of the contract and upon the price. This meeting
of minds speaks of the intent of the parties in entering into the contract
respecting the subject matter and the consideration thereof. Thus, the
elements of a contract of sale are consent, object, and price in money or its
equivalent. Under Article 1330 of the Civil Code, consent may be vitiated by
any of the following: (a) mistake; (b) violence; (c) intimidation; (d) undue
influence; and (e) fraud. The presence of any of these vices renders the
contract voidable.
A contract where one of the parties is incapable of giving consent or where
the consent is 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. The effect of annulment is to restore the parties to the status
quo ante in so far as legally and equitably possible. As an exception,
however, to the principle of mutual restitution, Article 1399 provides that
when the defect of the contract consists in the incapacity of one of the
parties, the incapacitated person is not obliged to make restitution, except
when he has been benefited by the things or price received by him. 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. Therefore, the petitioners are hereby
ordered to turn over to respondent Braulio Katipunan, Jr. the rentals they
received for the five-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.
