G.R. No. L-12035; March 29, 1961
JOSEFITA T. VDA. DE LACSON, ET AL., plaintiffs-appellants, vs. SANTIAGO GRANADA, ET AL., defendants-appellees. VICTORINO FLORO, substituted by PLACIDO FLORO, intervenor-appellee.
FACTS
The case involves the validity of a 1944 sale of “Hacienda San Jose.” The property was originally subject to a 1940 lease with an option to repurchase granted to Santiago Granada by then-owner Joseph Arcache for P60,000 in Philippine currency, exercisable until May 31, 1944. In 1941, Arcache sold the property to the Lacson sisters (Balbinita and Josefita), who assumed Granada’s repurchase right. On April 4, 1944, Granada exercised his option, repurchasing the property from the Lacsons for P60,000 paid in Japanese military notes. On the same day, Granada sold the property to intervenor Victorino Floro under a pacto de retro sale. In 1951, the Lacson sisters filed for annulment of the 1944 sale to Granada, arguing inadequate consideration (Japanese war notes), lack of Josefita’s consent via her attorney-in-fact, and duress.
The trial court upheld the validity of both the sale to Granada and the subsequent transfer to Floro. The plaintiffs appealed, contending the trial court erred in finding the consideration adequate, the power of attorney sufficient, and in dismissing their complaint alleging vitiated consent due to fear.
ISSUE
The primary issues were: (1) whether the payment of the stipulated repurchase price in Japanese military notes constituted valid consideration; (2) whether Josefita’s consent was vitiated by duress or by her attorney-in-fact exceeding his authority; and (3) consequently, the validity of the sale to Granada and the subsequent transfer to Floro.
RULING
The Supreme Court affirmed the trial court’s decision, upholding the validity of all transactions. On the issue of consideration, the Court ruled that the payment was valid. The transaction was not an original sale but the exercise of a pre-war option to repurchase at a fixed price of P60,000. In such agreements, the price is often deliberately minimal to facilitate repurchase and is seldom equivalent to the property’s real value; thus, inadequacy alone is not a ground for annulment. While the 1940 contract specified “Philippine currency,” by 1944, Japanese military notes were the legal tender. No evidence showed the parties intended payment exclusively in pre-war Commonwealth currency. The phrase “Philippine currency” was likely to distinguish it from U.S. dollars, also legal tender before the war. Following precedent, payment in the currency of the occupation was deemed sufficient.
Regarding consent, the Court found no valid duress. The general fear under Japanese occupation, without specific, overwhelming threats directed at the vendors, was insufficient to vitiate consent. On Josefita’s claim that her attorney-in-fact, Ricardo Lacson, exceeded his authority by not obtaining the “best price,” the Court noted the power of attorney was executed precisely to facilitate the reconveyance to Granada at the pre-agreed price. Josefita, having purchased the property subject to Granada’s repurchase right, was bound by its terms. The condition in the power of attorney could not defeat Granada’s superior contractual right to repurchase at P60,000. Having validated the sale to Granada, the transfer to Floro was likewise upheld. The decision was affirmed with costs against appellants.