Binua v. Ong
REITERATIONFacts
The Antecedents: Petitioners Spouses Victor and Euna Binua sought the declaration of nullity of real estate mortgages executed by petitioner Victor in favor of respondent Lucia P. Ong. The mortgages were allegedly executed under fear, duress, and threat, stemming from petitioner Edna Binua's conviction for Estafa in several criminal cases. Petitioner Edna was sentenced to imprisonment and ordered to pay respondent the amount of ₱2,285,000.00 with interest and damages. Procedural History: To avoid criminal liability, petitioner Edna executed real estate mortgages over Victor's properties for ₱7,000,000.00. Subsequently, the Regional Trial Court (RTC) granted Edna's motion for new trial and rendered a decision on February 24, 2006, ordering Edna to pay ₱2,285,000.00 as actual damages with interest. The RTC ruled that a promissory note dated March 4, 1997, novated the original agreement into a civil obligation, and Edna admitted her indebtedness. Despite this, Edna failed to settle the obligation, leading respondent to foreclose the mortgages. Petitioners filed a case for Declaration of Nullity of Mortgage Contracts, alleging duress. The RTC dismissed the complaint, ruling that a threat to enforce a just claim through competent authority does not vitiate consent, and that Edna benefited from the mortgages by being acquitted. The Court of Appeals (CA) affirmed the RTC decision, holding that the fear of a spouse going to jail due to a lawful conviction does not constitute intimidation as defined by law, as the threat must be of an unjust act. The Petition: Petitioners contend that the lower courts erred in giving credence to the findings of fact not supported by evidence, in refusing to declare the mortgage contracts void despite findings of fear, duress, and threat, and in refusing to rule on the legality of the ten percent (10%) monthly interest rate. They argue that the RTC-Branch 2 decision showed Edna's lack of criminal liability due to novation and that there was no evidence of the promissory note or its basis for exoneration. They also claim the threat and coercion did not fall under Article 1335 of the Civil Code.
Issue(s)
Whether the mortgage contracts were executed under duress or intimidation that would vitiate consent. Whether the lower courts erred in their findings of fact and application of law. Whether the ten percent (10%) monthly interest rate imposed is legal.
Ruling
The petition is DENIED for lack of merit. The Supreme Court affirmed the decision of the Court of Appeals, upholding the validity of the real estate mortgages.
Ratio Decidendi
On the issue of duress and intimidation: The Court reiterated that for intimidation to vitiate consent, the threatened act must be unjust or unlawful. In this case, the petitioners' fear stemmed from petitioner Edna's conviction for estafa, a lawful judicial process. The respondent's act of informing them of the conviction, or even the prospect of Edna's imprisonment, did not constitute an unjust or unlawful threat. Article 1335 of the Civil Code explicitly states that a threat to enforce a claim through competent authority, if the claim is just or legal, does not vitiate consent. The conviction of Edna was a valid consequence of a judicial process, and the execution of the mortgages to settle this obligation, thereby avoiding imprisonment, was a choice made to mitigate a lawful consequence, not to succumb to an unjust threat. The petitioners failed to present clear and convincing proof of fraud, duress, or undue influence, and their own allegations pointed to the enforcement of a legal claim. The Court emphasized that the petitioners benefited from the mortgages by avoiding Edna's imprisonment, and they could not later seek to nullify the very instruments they used to achieve this outcome. The CA correctly ruled that the fear of a spouse going to jail due to a lawful conviction is not the intimidation contemplated by law, as it lacks the essential ingredient of an unjust act. On the alleged errors in findings of fact and application of law: The Court stressed that in a Rule 45 petition, only questions of law can be raised, and findings of fact by the CA, when supported by substantial evidence, are conclusive and binding. The petitioners' arguments were found to be repetitions of issues raised in the CA and lacked convincing reasons to alter the resolution. The Court highlighted that the RTC-Branch 2 Decision dated February 24, 2006, which declared petitioner Edna civilly liable and overturned her previous conviction, had already attained finality. This decision became the law of the case and barred a rehash of issues, including the existence of the promissory note. The Court reiterated the principle of immutability of a final judgment, stating that such a decision cannot be altered even if it contains legal infirmities. Therefore, any discussion about the nature of Edna's liability prior to the final judgment was irrelevant to the issue of whether the mortgages were executed under duress. On the legality of the ten percent (10%) monthly interest rate: The Court declined to rule on the legality of the ten percent (10%) monthly interest rate imposed by the RTC-Branch 2 in the criminal cases for estafa. This was because the decision in those cases had already become final and executory. To consider the petitioners' arguments on this issue would sanction their attempt to subvert the immutability of a final judgment. The Court's role in the present case was limited to resolving the validity of the mortgage contracts based on the alleged duress, and not to re-examine issues already settled by a final and executory decision.
Main Doctrine
A threat to enforce a just or legal claim through competent authority does not vitiate consent under Article 1335 of the Civil Code. The conviction of a spouse for estafa, which leads to the execution of real estate mortgages to settle the obligation, does not constitute intimidation that would render the mortgage contracts voidable, as the enforcement of a lawful judgment is not an unjust or unlawful act.