Mangahas vs. Brobio

A promissory note is supported by consideration where it is executed to obtain the payee’s signature on a deed the promisor needs, and the promisor’s claim of being “forced” by circumstances does not amount to intimidation or undue influence absent proof that free agency was destroyed. The presumption of consideration prevails unless lack of consideration is proved by preponderance of evidence.

Petitioner Carmela Brobio Mangahas is an illegitimate child of the late Pacifico S. Brobio, while respondent Eufrocina A. Brobio is Pacifico’s surviving spouse. The promissory note at the center of the case was executed in connection with the extrajudicial settlement of Pacifico’s estate and respondent’s need to process tax obligations with the BIR.

Pacifico S. Brobio died intestate on January 10, 2002, leaving three parcels of land and survived by his wife, respondent Eufrocina A. Brobio, and four legitimate and three illegitimate children; petitioner Carmela Brobio Mangahas is one of the illegitimate children. On May 12, 2002, the heirs executed a Deed of Extrajudicial Settlement of Estate of the Late Pacifico Brobio with Waiver. In the Deed, petitioner and Pacifico’s other children, in consideration of their love and affection for respondent and the sum of ₱150,000.00, waived and ceded their respective shares over the three parcels of land in favor of respondent. According to petitioner, respondent promised to give her an additional amount for her share in her father’s estate. After the signing of the Deed, petitioner demanded from respondent the promised additional amount, but respondent refused to pay, claiming that she had no more money.

A year later, while processing her tax obligations with the BIR, respondent was required to submit an original copy of the Deed. Left with no more original copy, respondent summoned petitioner to her office on May 31, 2003 and asked her to countersign a copy of the Deed. Petitioner refused to countersign the document, demanding that respondent first give her the additional amount promised. Considering the value of the three parcels of land, which she claimed to be worth ₱20M, petitioner asked for ₱1M, but respondent begged her to lower the amount. Petitioner agreed to lower it to ₱600,000.00.

Because respondent did not have the money at that time and petitioner refused to countersign the Deed without any assurance that the amount would be paid, respondent executed a promissory note. Petitioner agreed to sign the Deed when respondent signed the promissory note, which stated that respondent promised to give petitioner financial assistance of ₱600,000.00 on June 15, 2003.

When the promissory note fell due, respondent failed and refused to pay despite demand. Petitioner made several more demands upon respondent, but the latter kept insisting that she had no money. On January 28, 2004, petitioner filed a Complaint for Specific Performance with Damages against respondent. In her Answer with Compulsory Counterclaim, respondent admitted that she signed the promissory note but claimed that she was forced to do so and that the undertaking was not supported by any consideration; she alleged that she was practically held hostage by petitioner’s demand, was pressured and in a hurry to submit documents to the BIR because of a deadline and fear of penalty, and was constrained to make a promissory note in a reduced amount, with the circumstances attended by involuntariness and no or illegal consideration.

The RTC found that the alleged pressure and confused disposition did not constitute undue influence; it observed that respondent took improper advantage of petitioner’s trust and confidence by resorting to a worthless written promise she intended to renege on, and that the promissory note was the product of negotiation and haggling between the parties. Respondent herself testified that she bargained with petitioner to lower the amount from ₱1M to ₱600,000.00 and personally wrote the amount in the note. The CA, on the other hand, found a complete absence of consideration and that intimidation attended the signing because respondent needed the Deed countersigned by petitioner to comply with a BIR requirement and was forced to sign the promissory note to assure petitioner that the money promised would be paid.

• Intimidation: Petitioner argued that the CA erred in appreciating the facts when it found that intimidation attended the execution of the promissory note.
• Consideration: Petitioner argued that the CA erred in finding that the promissory note was without consideration.
• Remedy of Partition: Petitioner argued that the CA erred in stating that she should have filed an action for partition instead of a case for specific performance.

• Vitiated Consent: Respondent countered that she was forced to sign the promissory note because petitioner would not sign the document required by the BIR; she claimed she was practically held hostage by petitioner’s demand, was pressured and in a hurry to submit documents to the BIR due to a deadline and fear of penalty, and was constrained to make the promissory note in a reduced amount, making the execution attended by involuntariness.
• Lack of Consideration: Respondent countered that the undertaking was not supported by any consideration at all or for illegal consideration.

• Intimidation: Whether the CA erred in finding that intimidation attended the execution of the promissory note.
• Consideration: Whether the promissory note was without consideration.
• Remedy of Partition: Whether an action for partition, rather than specific performance, was the proper remedy.

• Intimidation: No. The CA erred in finding intimidation; respondent was not deprived of free agency, and being forced into a situation does not amount to vitiated consent where she still had free will and choice. She in fact negotiated the amount.
• Consideration: No. The CA erred in finding no consideration; a contract is presumed to have consideration, and respondent failed to prove lack by preponderance. At the least, petitioner’s signature on the Deed was consideration; inadequacy does not invalidate absent fraud, mistake, or undue influence.
• Remedy of Partition: No. The CA erred in saying petitioner should have filed for partition; after the extrajudicial settlement and waiver, the properties were no longer co-owned, so there was nothing to partition.

• Intimidation: Contracts are voidable where consent is given through mistake, violence, intimidation, undue influence, or fraud. The SC characterized respondent’s claim that she was “forced” into signing the promissory note because petitioner would not sign the BIR document as tantamount to an undue influence claim, but held that being “forced” to sign documents does not amount to vitiated consent. There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice; the influence must have so overpowered or subjugated the mind of a contracting party as to destroy his free agency, making him express the will of another rather than his own. Respondent may have desperately needed petitioner’s signature on the Deed, but there was no showing that she was deprived of free agency when she signed the promissory note. Being forced into a situation does not amount to vitiated consent where it is not shown that the party is deprived of free will and choice; respondent still had a choice to refuse to execute the promissory note and resort to judicial means to obtain petitioner’s signature, but she chose to execute the note. The fact that she may have felt compelled under the circumstances did not negate voluntariness, and the RTC correctly observed that the note was the product of negotiation, with respondent herself testifying that she bargained to lower the amount from ₱1M to ₱600,000.00. On intimidation, there is intimidation when one of the contracting parties is compelled to give consent by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants, or ascendants; the payment of penalties for delayed payment of taxes would not qualify as such a fear. Courts will not set aside contracts merely because solicitation, importunity, argument, persuasion, or appeal to affection was used to obtain consent, and influence obtained by persuasion or argument or by appeal to affection is not prohibited by law or morals.
• Consideration: A contract is presumed to be supported by cause or consideration. The presumption cannot be overthrown by a mere assertion that there is no consideration; the alleged lack of consideration must be shown by preponderance of evidence, and the burden rests on respondent. Respondent failed to prove that the promissory note was not supported by any consideration. From her testimony and pleadings, the note was issued for a cause or consideration which, at the very least, was petitioner’s signature on the document. Even if such consideration was inadequate, the contract would not be invalidated unless there was fraud, mistake, or undue influence, none of which was proven.
• Remedy of Partition: The remedy suggested by the CA was not proper under the circumstances. An action for partition implies that the property is still owned in common. Considering that the heirs had already executed a deed of extrajudicial settlement and waived their shares in favor of respondent, the properties were no longer under a state of co-ownership; there was nothing more to partition, as ownership had already been merged in one person.

• Presumption of Consideration — A contract is presumed supported by cause or consideration; the presumption cannot be overthrown by mere assertion, and the party alleging lack must prove it by preponderance of evidence. The SC applied this to the promissory note and held respondent failed to prove absence of consideration.
• Undue Influence — There is undue influence when a person takes improper advantage of power over another’s will, depriving the latter of a reasonable freedom of choice; the influence must overpower or subjugate the mind and destroy free agency. The SC held respondent’s claim of being forced by circumstances did not meet this standard because she negotiated and still had a choice.
• Intimidation — Intimidation exists when a contracting party is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or that of his spouse, descendants, or ascendants. Fear of tax penalties for delayed payment was not such an imminent and grave evil.
• Inadequacy of Consideration — Even if consideration is inadequate, the contract is not invalidated unless there is fraud, mistake, or undue influence. The SC applied this after finding at least petitioner’s signature was consideration.
• Partition and Co-ownership — An action for partition presupposes that the property is still owned in common. Where the heirs have executed an extrajudicial settlement and waived their shares in favor of one heir, ownership has merged in one person and there is nothing to partition.

• "There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice." — The SC used this definition to reject respondent’s claim that she was forced into signing the promissory note.
• "Being forced into a situation does not amount to vitiated consent where it is not shown that the party is deprived of free will and choice." — This is the decisive statement on respondent’s intimidation and undue influence defense.
• "A contract is presumed to be supported by cause or consideration." — The SC applied this presumption to the promissory note and placed the burden on respondent to prove lack of consideration.
• "The presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration." — The SC held respondent’s bare claim of no consideration insufficient.

• Leonardo vs. Court of Appeals, 481 Phil. 520, 532 (2004) — Cited for the point that a claim of being “forced” to sign documents is tantamount to an undue influence claim, but being forced to sign does not amount to vitiated consent.
• Development Bank of the Philippines vs. Court of Appeals, G.R. No. 138703, June 30, 2006, 494 SCRA 25, 42-43 — Cited for the definition of undue influence.
• Carpo vs. Chua, G.R. Nos. 150773 and 153599, September 30, 2005, 471 SCRA 471, 482 — Cited for the requirement that the influence must overpower or subjugate the mind so as to destroy free agency.
• Martinez vs. Hongkong & Shanghai Bank, 15 Phil. 252, 270 (1910) — Cited for the rule that courts will not set aside contracts merely because solicitation, importunity, argument, persuasion, or appeal to affection was used.
• Saguid vs. Security Finance, Inc., G.R. No. 159467, December 9, 2005, 477 SCRA 256, 270-271 — Cited for the rule that the presumption of consideration cannot be overthrown by mere assertion and that lack of consideration must be shown by preponderance of evidence.
• Republic vs. Baltazar-Ramirez, G.R. No. 148103, July 27, 2006, 496 SCRA 718, 721 — Cited for the rule that an action for partition implies that the property is still owned in common.

• Civil Code, Art. 1337 — Defines undue influence as taking improper advantage of power over another’s will, depriving the latter of reasonable freedom of choice; the SC applied it to reject respondent’s claim.
• Civil Code, Art. 1335 — Defines intimidation as consent compelled by a reasonable and well-grounded fear of an imminent and grave evil; the SC applied it to hold that fear of tax penalties was insufficient.
• Civil Code, Art. 1354 — Presumes a contract to have cause or consideration; the SC applied it to the promissory note.
• Civil Code, Art. 1355 — Provides that inadequacy of consideration does not invalidate the contract unless fraud, mistake, or undue influence exists; the SC applied it after finding at least petitioner’s signature as consideration.