Fernandez v. McGrath
REITERATIONFacts
The Antecedents: Plaintiffs Soledad Osorio de Fernandez and Vicente Fernandez sought to annul a deed of sale executed by Soledad in favor of Osaka Boeki Kaisha, Inc., a Japanese corporation, on December 29, 1942, for a parcel of land and its improvements. The ground for annulment was alleged duress and intimidation. Procedural History: After the claim was disallowed by the Alien Property Custodian, the case was heard in the Court of First Instance of Rizal. The Republic of the Philippines intervened. The trial court rendered judgment setting aside the conveyance. The defendant Alien Property Administration and the intervenor Republic of the Philippines appealed. The Petition: The plaintiffs claimed that during the Japanese occupation, a manager of Osaka Boeki Kaisha, Inc., accompanied by a Japanese officer, coerced Soledad into signing the deed of sale by threats of appropriation of the land and punishment or death for refusal. They also claimed the notary public was absent, no acknowledgment clause was written, and only an advance payment was made. The plaintiffs further alleged that their son was compelled to register the deed and sign receipts.
Issue(s)
Whether the deed of sale executed by Soledad Osorio de Fernandez in favor of Osaka Boeki Kaisha, Inc. is voidable on the ground of duress and intimidation. Whether the plaintiffs ratified the deed of sale through their subsequent actions.
Ruling
The Supreme Court reversed the decision of the Court of First Instance, dismissed the complaint, and declared the deed of sale valid. The Court found that the plaintiffs failed to rebut the validity and regularity of the deed of sale.
Ratio Decidendi
On the issue of duress and intimidation: The Court found that the testimony of the notary public, Leandro Sevilla, squarely contradicted the plaintiffs' claim. The notary testified that both the deed of sale and an affidavit canceling a lease and option to buy were prepared at the instance of the plaintiffs' son, Jose O. Fernandez, and were signed by Soledad without the presence of Mori or her husband. The notary's testimony was corroborated by the execution of the affidavit of cancellation of the lease and option for Lot No. 1, which had nothing to do with the sale of Lot No. 2 and was executed, ratified, and recorded simultaneously with the questioned sale. The Court held that a party able to carry out an act redounding to its exclusive benefit simultaneously with the assailed contract cannot successfully claim to have acted mechanically under the influence of violence or intimidation destroying its free agency. Furthermore, the appearance of the deed itself did not support the claim that the acknowledgment clause was missing when signed, as no displacement was apparent. The receipt for the transfer certificate of title also belied the testimony that Mori took all the certificates. On the issue of ratification: Even if duress and intimidation were conceded, the Court held that the action for annulment was waived and the contract ratified by the plaintiffs' actions. Specifically, the plaintiffs deposited the check for the purchase price and withdrew part of the money up to a total of P11,500 from January 1943 to November 1944. The Court found the excuse offered for these withdrawals—fear of being misinterpreted by the Japanese—unacceptable for such a prolonged period. The Court also rejected the lower court's reliance on a theory of 'collective' or 'general' duress allegedly exercised by the Japanese military occupant, citing previous jurisprudence that has rejected such a theory as a ground to invalidate otherwise valid and voluntary acts.
Main Doctrine
The voluntary execution of an affidavit for the cancellation of a lease and option to buy, which redounds to the exclusive benefit of the affiant, simultaneously with a questioned deed of sale, rebuts the claim that the latter was executed under duress or intimidation. Furthermore, the subsequent deposit of the purchase price and withdrawal of funds from the bank account where it was deposited constitute ratification of the contract, thereby waiving any claim of duress.