G.R. No. L-4436; January 28, 1955
SOLEDAD OSORIO DE FERNANDEZ and VICENTE T. FERNANDEZ, plaintiffs-appellees, vs. HON. J. HOWARD MCGRATH as successor of the U.S. Philippine Alien Property Administrator, defendant-appellant; REPUBLIC OF THE PHILIPPINES, intervenor-appellant.

FACTS

Plaintiff Soledad Osorio de Fernandez, the registered owner of three lots in Navotas, Rizal, executed a deed of sale on December 29, 1942, conveying Lot No. 2 and its improvements to the Japanese corporation Osaka Boeki Kaisha, Inc., for a stated price of P70,555. On the same day, she also executed an affidavit requesting the cancellation of an annotated lease with an option to buy on another lot (Lot No. 1), which was unrelated to the sale. Both documents were notarized by Leandro Sevilla and presented for registration on January 5, 1943, by her son, Jose O. Fernandez. The sale was registered, and Transfer Certificate of Title No. 44631 was issued in the name of the Japanese corporation. The plaintiffs later filed an action to annul the deed of sale on the ground of duress and intimidation, claiming that the manager of the Japanese corporation, Mori, accompanied by a Japanese officer, coerced her into signing by threats that the Japanese Navy could appropriate the land and that refusal would mean punishment or death. They alleged only a P3,000 advance was delivered at signing, with the balance of P67,555 paid by check on January 22, 1943, which they deposited and from which they made monthly withdrawals. After her claim was disallowed by the Alien Property Custodian, the Court of First Instance of Rizal rendered judgment annulling the conveyance. The defendant Alien Property Administrator (with the U.S. Attorney General later substituted) and the intervenor, Republic of the Philippines, appealed.

ISSUE

Whether the deed of sale executed by Soledad Osorio de Fernandez in favor of Osaka Boeki Kaisha, Inc., is invalid due to duress and intimidation.

RULING

The Supreme Court reversed the decision of the lower court and dismissed the complaint. The Court held that the plaintiffs failed to prove duress and that the deed of sale was valid and regular. The testimony of the notary public, Leandro Sevilla, who was neutral, contradicted the plaintiffs’ claim of coercion. He testified that both the deed of sale and the unrelated affidavit for cancellation of the lease on Lot No. 1 were prepared at the instance of the plaintiff’s son, signed by the plaintiff in a dog-cart on Escolta without Mori or her husband present, and later acknowledged in the corporation’s office where the downpayment was made. The simultaneous execution of the affidavit concerning Lot No. 1, which was for the plaintiff’s exclusive benefit, rebutted the claim that her free agency was destroyed. The physical appearance of the deed showed no signs of a later insertion of the acknowledgment clause. Furthermore, the plaintiffs’ actions constituted ratification of the contract: they deposited the full payment check and made repeated withdrawals from it over many months, which waived any right to annulment. Finally, the Court rejected the theory of “general duress” by the Japanese military occupant as a ground for invalidating otherwise voluntary acts.