G.R. No. 211687, February 10, 2021
Spouses Eugenio de Vera and Rosalia Padilla, Petitioners, vs. Fausta Catungal, substituted by her heirs, namely: Gaudencio G. Diaz, Sr., Alfonso C. Diaz, and Lourdes C. Lopez, Respondents.

FACTS

Vicente Catungal owned two unregistered parcels of land. Upon his death, he was survived by five children, including Fausta Catungal and Genaro Catungal. On July 23, 1994, Fausta and Genaro executed a Deed of Extrajudicial Settlement Among Heirs with Absolute Sale, adjudicating the two parcels to themselves and selling them to the petitioner Spouses Eugenio and Rosalia de Vera for P30,000.00. Fausta, who was illiterate, affixed her thumbmark on the Deed. Eugenio de Vera is a grandchild of Vicente. After the sale, new tax declarations were issued in the spouses’ names, but Fausta was allowed to remain on the property.
On July 23, 1997, Fausta filed a complaint before the Regional Trial Court (RTC) for Declaration of Nullity of Documents, Recovery of Ownership, Reconveyance, and Damages. She alleged that the spouses took advantage of her illiteracy and old age, deceiving her into believing the Deed was merely evidence of a loan, not a sale. She claimed the Deed was void due to fraud, pretention of other heirs, her illiteracy, her non-appearance before the notary, and her lack of a community tax certificate. Fausta died during the pendency of the case and was substituted by her heirs.
The RTC dismissed the complaint, finding Fausta failed to prove by preponderance of evidence that her consent was vitiated by fraud. The Court of Appeals (CA) reversed the RTC, declaring the Deed null and void. The CA applied Article 1332 of the Civil Code, which presumes fraud or mistake if one party is illiterate and the contract is unreasonable. It found the spouses failed to overcome this presumption by proving the Deed’s contents were fully explained to Fausta. The CA ordered the spouses to restore the land to Fausta’s heirs and pay attorney’s fees.

ISSUE

Whether the Deed of Extrajudicial Settlement Among Heirs with Absolute Sale is null and void due to vitiated consent (fraud) on the part of the illiterate vendor, Fausta Catungal.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Deed is declared null and void.
The Court held that for a contract to be valid, consent must be given intelligently, freely, and spontaneously. Under Article 1330 of the Civil Code, consent may be vitiated by fraud. Article 1332 establishes a presumption of fraud or mistake when one of the parties is unable to read or understand the language of the contract, and the contract is grossly inequitable or unconscionable. This presumption applies even if the illiterate party signed the document through a thumbmark.
The Court found the presumption under Article 1332 applicable. It was undisputed that Fausta was illiterate. The contract was grossly inequitable as it involved the sale of her hereditary share for a mere P30,000.00, a consideration the Court found “grossly inadequate” for two parcels of land. The petitioners failed to rebut this presumption. Their own witnesses admitted Fausta was illiterate and could not have read the document. They failed to present clear and convincing evidence that the Deed’s contents, particularly its nature as an absolute sale, were fully explained to Fausta in a language she understood before she affixed her thumbmark. The fact that her daughter Lourdes was allegedly present did not satisfy this burden, as there was no showing Lourdes explained the document to her mother.
The Court rejected the petitioners’ arguments. The presumption of regularity of a notarized document yields to the stronger presumption of fraud under Article 1332. The failure of Fausta’s co-vendor Genaro to testify did not weaken her case, as the burden to rebut the presumption was on the petitioners. The testimony of Fausta and her daughter, while containing minor inconsistencies, remained credible on the material point of her illiteracy and lack of understanding.
Consequently, the contract was voidable due to vitiated consent. The Court affirmed the CA’s orders for the petitioners to restore the properties to Fausta’s heirs and to pay attorney’s fees and costs.