G.R. No. L-16590 January 30, 1965
ROBERTO LAPERAL, plaintiff-appellee, vs. HON. WILLIAM P. ROGERS, in his capacity as Attorney General of the United States, defendant-appellant, REPUBLIC OF THE PHILIPPINES, intervenor-appellant.

FACTS

Roberto Laperal was the registered owner of a residential lot and building in Manila. On April 12, 1944, he executed a deed of sale conveying the property to the Japanese-sponsored occupation Republic of the Philippines for P500,000 in Japanese Military War Notes. The property’s title was transferred to the vendee. After World War II, the U.S. Alien Property Custodian, finding the occupation Republic to be an instrumentality of the Japanese Army, issued a Vesting Order divesting it of the title. The property was subsequently transferred to the Philippine Alien Property Administrator. Laperal filed a claim for the return of the property, which was not acted upon, prompting him to file an action in the Court of First Instance of Manila for annulment of the deed of sale, alleging the sale was made under duress and threats by representatives of the Japanese Military Administration and that the consideration was grossly inadequate. The Republic of the Philippines intervened as a party defendant after the U.S. President authorized the property’s transfer to it, pending the case’s outcome. The Philippine Alien Property Administrator (later substituted by the U.S. Attorney General) and the intervenor Republic defended the sale’s validity. The trial court ruled in favor of Laperal, ordering the cancellation of the deed, reconveyance of the property upon Laperal’s refund of the equivalent of the purchase price in present currency, payment of monthly rental by the Republic from the filing of the complaint, and payment of attorney’s fees. The defendants appealed.

ISSUE

The primary issue was whether the deed of sale executed by Laperal in favor of the occupation Republic of the Philippines was void due to duress employed by the Japanese Military Administration. Subsidiary issues concerned the propriety of the trial court’s orders for payment of rent and attorney’s fees, and reimbursement for repair expenses.

RULING

The Supreme Court affirmed the trial court’s finding that the sale was void due to duress. The evidence, including Laperal’s testimony, that of his son, and the deposition of Japanese General Wachi, established that Laperal’s consent was vitiated by intimidation and pressure from Japanese military authorities. The Court modified the trial court’s decision by deleting the orders for the Republic of the Philippines to pay rent for the use of the property from the filing of the complaint and to pay attorney’s fees. The Court held that equity presumed the benefits derived by Laperal (possession of the purchase money) and the Republic (possession of the property) were more or less equal in the absence of evidence showing considerable disparity. It also found that the appellants did not act in bad faith in defending the suit. The Court rejected the Republic’s claim for reimbursement of repair expenses, as the repairs were made for its own use, not for preservation. The dispositive portion ordered the cancellation of the deed, the reconveyance of the property to Laperal upon his refund of P35,714.28 (the equivalent in present currency of the P500,000 Japanese notes paid), and eliminated the rental and attorney’s fees awards, without costs.