Binua vs. Ong

A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent under Article 1335 of the Civil Code, even where the threat involves the imprisonment of a debtor's spouse pursuant to a final criminal conviction for estafa.

Edna Binua was convicted of estafa by the Regional Trial Court (RTC) of Tuguegarao City, Branch 2, in January 2006 and sentenced to imprisonment. To avoid incarceration, her husband Victor executed real estate mortgages over two properties in favor of the private complainant, Lucia Ong, securing a ₱7,000,000.00 obligation. Subsequently, Edna filed a motion for new trial, presenting a promissory note dated 1997, which the RTC ruled had novated the criminal obligation into a purely civil one, resulting in her acquittal. When Edna failed to satisfy the civil liability, Ong foreclosed the mortgages. The spouses then instituted a civil action to declare the mortgages void, claiming they were executed under duress while the threat of imprisonment still hung over them.

• The Criminal Conviction: On January 10, 2006, the RTC of Tuguegarao City, Branch 2, convicted Edna Binua of seven counts of estafa in Criminal Cases Nos. 8230 and 8465-8470, sentencing her to imprisonment ranging from six years and one day to thirty years for each count, and ordering her to pay ₱2,285,000.00 with ten percent (10%) interest.
• The Mortgages: On February 2, 2006, petitioner Victor Binua executed two deeds of real estate mortgage over portions of Lot No. 1319 (TCT No. T-15232) and Lot No. 2399 (TCT No. T-15227) in Tuguegarao City in favor of respondent Lucia Ong, securing a total obligation of ₱7,000,000.00. These were executed to settle Edna's indebtedness and avoid her imprisonment.
• The Novation and Acquittal: Edna filed a motion for new trial, which was granted. During the hearing, she presented a promissory note dated March 4, 1997. In its Decision dated February 24, 2006, the RTC ruled that the promissory note novated the original agreement, converting Edna's liability from criminal to purely civil in nature, and acquitted her criminally while maintaining her civil liability to pay ₱2,285,000.00 with interest.
• The Foreclosure: Edna failed to settle her civil obligation, prompting Ong to foreclose the real estate mortgages. Ong emerged as the highest bidder at the public sale.
• The Civil Action for Nullity: On December 12, 2008, the RTC of Tuguegarao City, Branch 5, dismissed the spouses' complaint for declaration of nullity of the mortgage contracts, finding that while the mortgages were executed under fear of imprisonment, Article 1335 of the Civil Code exempts threats to enforce legal claims from the definition of vitiating intimidation.

• Factual Errors: The Court of Appeals erred in affirming the RTC's factual findings regarding the existence of the promissory note and the novation of the obligation, arguing these findings were unsupported by evidence and inconsistent with the RTC-Branch 2 decision.
• Duress: The threat of Edna's wrongful criminal conviction and imprisonment constituted duress that vitiated consent, falling outside the scope of Article 1335's exception for threats to enforce legal claims.
• Usurious Interest: The ten percent (10%) monthly interest rate imposed on the obligation was illegal and usurious, rendering the mortgages void.

• Finality of Judgment: The RTC-Branch 2 decision dated February 24, 2006, had become final and executory, embodying the law of the case and conclusively establishing the existence of the promissory note and the civil nature of the obligation, thereby barring collateral attacks.
• Legal Threat: The alleged threat consisted merely of informing the petitioners of the valid criminal conviction; such a threat to enforce a claim through competent authority is legal and just, not the unjust or unlawful act required to constitute intimidation under Article 1335 of the Civil Code.
• Insufficient Evidence: Petitioners failed to prove by clear and convincing evidence that force, duress, or undue influence was employed to secure the execution of the mortgages.

• Factual Findings: Whether the Court of Appeals erred in affirming factual findings regarding the promissory note and novation that were allegedly unsupported by evidence.
• Vitiating Intimidation: Whether the real estate mortgages were executed under duress, fear, or threat sufficient to vitiate consent under Article 1335 of the Civil Code.
• Usury: Whether the validity of the mortgages was affected by the alleged ten percent (10%) monthly interest rate on the underlying obligation.

• Factual Findings: The argument was rejected. In a Rule 45 petition for review, only questions of law may be raised; findings of fact by the Court of Appeals are conclusive when supported by substantial evidence. Furthermore, the finality of the RTC-Branch 2 decision dated February 24, 2006, bars any rehash of issues decided therein or collateral attack on the existence of the promissory note and the nature of the obligation, as final judgments become the law of the case regardless of alleged errors.
• Vitiating Intimidation: The mortgages were not executed under vitiating intimidation. For intimidation to invalidate consent under Article 1335, the threatened act must be unjust or unlawful; the threat to enforce a criminal conviction through competent authority constitutes a legal and just claim that does not vitiate consent. The requisites for intimidation—particularly the unjust nature of the threatened act—were absent because Edna's imprisonment would have been the legal consequence of a valid judicial process.
• Usury: The argument was not considered. Assailing the ten percent (10%) interest rate imposed in the final criminal judgment would violate the principle of immutability of final judgments, which prohibits courts from altering or modifying decisions that have attained finality even to correct legal infirmities.

• Intimidation under Article 1335 — Intimidation vitiates consent only when the following requisites concur: (1) the intimidation is the determining cause of the contract; (2) the threatened act is unjust or unlawful; (3) the threat is real and serious, with evident disproportion between the evil and the resistance which all men can offer; and (4) it produces a reasonable and well-grounded fear based on the ability of the threatening party to inflict the injury. A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent.
• Immutability of Final Judgments — Once a decision attains finality, it becomes the law of the case and may no longer be altered, modified, or disturbed even at the risk of occasional legal infirmities or errors it may contain; it bars not only rehashing of issues raised but also issues that might have been raised.
• Burden of Proof in Voidable Contracts — Preponderance of evidence is required to establish the invalidity of a mortgage, and clear and convincing proof is necessary to establish fraud, duress, or undue influence.

• "A threat to enforce one’s claim through competent authority, if the claim is just or legal, does not vitiate consent."
• "once a decision attains finality, it becomes the law of the case regardless of any claim that it is erroneous. Having been rendered by a court of competent jurisdiction acting within its authority, the judgment may no longer be altered even at the risk of occasional legal infirmities or errors it may contain."
• "The petitioners must remember that petitioner Edna's conviction was a result of a valid judicial process and even without the respondent allegedly 'ramming it into petitioner Victor's throat,' petitioner Edna's imprisonment would be a legal consequence of such conviction."

• De Leon v. Court of Appeals, 264 Phil. 711 (1990) — Cited for the four requisites that must concur for intimidation to vitiate consent and render a contract invalid.
• Callanta v. National Labor Relations Commission, G.R. No. 105083, August 20, 1993, 225 SCRA 526 — Applied to hold that a threat to prosecute for estafa is not an unjust act but a valid and legal means to enforce a claim, and thus cannot constitute intimidation.
• Buaya v. Stronghold Insurance Co., Inc., 396 Phil. 738 (2000) — Cited for the doctrine that final judgments become the law of the case and are immutable.
• Pahila-Garrido v. Tortogo, G.R. No. 156358, August 17, 2011, 655 SCRA 553 — Cited regarding the immutability of final judgments and the prohibition against collateral attacks.

• Article 1335, Civil Code — Defines intimidation and establishes the exception that a threat to enforce a just or legal claim through competent authority does not vitiate consent.
• Article 1390(2), Civil Code — Provides that contracts where consent is vitiated by mistake, violence, intimidation, undue influence, or fraud are voidable or annullable.
• Rule 45, Rules of Court — Limits review in petitions for certiorari to questions of law, conclusively binding the Supreme Court to factual findings of the Court of Appeals when supported by substantial evidence.

Maria Lourdes P.A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Lucas P. Bersamin, and Martin S. Villarama, Jr.