Vales vs. Villa

A threat by a contracting party to refuse to comply with an existing contract unless the other party gives additional consideration is not intimidation or duress in law, because it does not create a reasonable and well-grounded fear of imminent and serious injury to person or property and leaves the other party free to sue for breach. Even if intimidation exists, a party who, with knowledge of the cause of nullity and after it has ceased, performs acts implying ratification or renunciation loses the right to annul the contract.

Jose Vales owned several real properties in Ermita, Manila. Felipa Silvestre was a widow and the aunt of Maria Guia Garcia, who was married to Simeon A. Villa. Vales had prior indebtedness to Felipa Silvestre, and the parties’ dealings involved conveyances of Vales’s properties to Maria Guia Garcia. The litigation concerned whether those conveyances and related payments were vitiated by duress, fraud, or undue influence.

Jose Vales owned several improved properties in Ermita, Manila: two houses of strong materials at Nos. 37 to 47 (now 105-113) Calle Nebraska, with their lots, assessed at P23,644; one house at No. 49 (now 303-311) Calle Mercado, with its lot; one house at No. 45 (now 221-225) Calle Mercado, consisting of 11 doors or posesiones, with its lot; and two houses on Callejon Maria Paz numbered 47a, 47b, and 11, 13, 15, and 17, with their lots. In 1904 he was indebted to Felipa Silvestre in the sum of P20,000. In that year he executed to her a conveyance of those properties in consideration of the debt, containing a clause giving him the right to repurchase within one year by paying the stated consideration. He did not repurchase.

On March 22, 1909, having become indebted to Felipa Silvestre in an additional P5,000, Vales conveyed the premises to Maria Guia Garcia at Felipa’s request, Felipa being an elderly woman who considered Maria her heir. The consideration was the P20,000 debt, the purchase price named in the 1904 conveyance, and the additional P5,000 debt. The deed was absolute on its face and conveyed the property in fee simple. Vales contended that a parol agreement made at the time of the conveyance gave him the right to repurchase the premises at any time upon paying the P25,000 consideration; the defendants denied any such parol agreement. This controversy was the origin of the differences between the parties.

After the March 22, 1909 conveyance, one parcel was sold to Judge Jocson and later a second parcel, with Maria Guia Garcia appearing as vendor in both conveyances. Still later another parcel was sold to Garchitorena, again with Maria Guia Garcia as vendor. In 1911 Vales conveyed to Maria Guia Garcia, for P7,580, certain property on Calle Salsipuedes that was not part of the March 22, 1909 conveyance; in 1913 he conveyed an adjoining parcel for P752. In 1911 he also conveyed to Maria Guia Garcia a house and lot on Padre Faura Street for P8,000. On April 4, 1913, Maria Guia Garcia conveyed to Vales the properties described in the March 22, 1909 conveyance that remained unsold, for P6,800. Vales claimed that he had already paid the full P25,000 and was therefore entitled to receive the reconveyance without further consideration.

Vales claimed that after the March 22, 1909 conveyance he continued in possession of the properties as virtual owner and paid only interest on the P25,000 at 9 per cent per annum, or P2,250 a year. He also claimed that he rented portions he did not personally occupy and collected the rents for his own use. The defendants denied that he occupied the premises as owner; they asserted that he occupied them as tenant of Maria Guia Garcia and paid rent continuously, the rent being reduced as portions were sold. They further asserted that in December 1911 they canceled Vales’s lease and thereafter collected the rents from all occupants, including Vales, and that Vales had sublet portions as their tenant with permission.

With respect to the sales to Judge Jocson and Garchitorena, Vales claimed that he received the consideration as the real owner and that he paid P10,000 from the Jocson sale and P15,000 from the Garchitorena sale to Maria Guia Garcia as payments toward the P25,000 under the verbal agreement to reconvey. He asserted that those payments totaled the full P25,000 and entitled him to a reconveyance of the remaining properties. It was admitted that Vales personally conducted the negotiations for both sales. The defendants denied that he acted as owner; they alleged that he acted as their agent, that Maria Guia Garcia received the full purchase price in each case, and that Vales received only payment for his services as agent.

Vales also claimed that the Salsipuedes and Padre Faura properties were obtained from him by threats that the defendants would not reconvey the March 22, 1909 properties and would repudiate the verbal agreement unless he executed those conveyances. He asserted that the considerations paid were grossly inadequate. The defendants denied the verbal agreement and denied that any threat or intimidation was made. The plaintiff’s counsel argued that the transactions were induced by fraud or undue influence and that the consideration was absent or grossly inadequate, while the defendants denied the material allegations, asserted that the March 22, 1909 sale was absolute, that Vales occupied as tenant, that the Salsipuedes and Padre Faura conveyances were voluntary and for adequate consideration, and that Vales assisted them in obtaining Torrens titles and later repurchased the remaining properties. The action was commenced on October 25, 1915.

• No Parol Agreement / Absolute Sale: Defendants-appellants, the appealing parties, maintained that the March 22, 1909 conveyance was an absolute sale intended as such by the parties and denied the existence of any verbal agreement to reconvey.
• Tenancy and Rent: They asserted that after the conveyance Vales occupied the premises as tenant of Maria Guia Garcia, paid rent, and that they later canceled the lease and collected rents from all occupants, including Vales.
• Voluntary Conveyances and Adequate Consideration: They argued that the Salsipuedes and Padre Faura conveyances were voluntary on Vales’s part and for consideration regarded as adequate at the time, and denied making any threats or exercising intimidation.
• Agency in Sales: They claimed that Vales acted as their agent in the Jocson and Garchitorena sales, that Maria Guia Garcia received the full purchase prices, and that Vales received only payment for his services as agent.
• Ratification and Contradictory Acts: They argued that Vales’s subsequent acts—including assisting them in obtaining Torrens titles and repurchasing the remaining properties—contradicted his claims and amounted to ratification or renunciation of any right to complain.

• Parol Agreement to Reconvey: Plaintiff-appellee Vales argued that the March 22, 1909 absolute deed was accompanied by a verbal agreement giving him the right to repurchase the premises upon payment of P25,000.
• Payments Toward the P25,000: He claimed that he paid P10,000 from the Jocson sale and P15,000 from the Garchitorena sale to Maria Guia Garcia, completing the P25,000, and was entitled to reconveyance of the remaining properties.
• Duress/Intimidation: He maintained that the Salsipuedes and Padre Faura conveyances and the P6,800 payment were extorted by the defendants’ threats to refuse reconveyance and repudiate the verbal agreement, leaving him no practical choice but to comply.
• Fraud and Inadequate Consideration: His counsel asserted that the transactions were induced by fraud or undue influence and that the considerations were absent or grossly inadequate.
• Accounting and Damages: The action sought to set aside the transfers, compel reconveyance, refund sums paid, require an accounting of rents, issues, and profits, and award P25,000 damages.

• Duress/Intimidation: Whether the conveyances and the payment of P6,800 were obtained by intimidation under Articles 1265, 1267, and 1268 of the Civil Code, where the defendants allegedly threatened to refuse reconveyance unless Vales gave additional consideration.
• Fraud/Deceit: Whether the transactions were vitiated by fraud or deceit, given that Vales knew the facts and the defendants allegedly failed to fulfill their verbal promises.
• Ratification/Renunciation: Whether, assuming intimidation existed, Vales ratified or renounced his right to annul the contracts by his subsequent acts, including continued dealings, acceptance of benefits, assistance in Torrens registration, and repurchase of the remaining properties.
• Recovery of Properties Already Repurchased: Whether Vales could recover the properties described in the March 22, 1909 conveyance after he had already repurchased them from the defendants on April 4, 1913, for P6,800.

• Duress/Intimidation: No. A threat to refuse to comply with a contract unless additional consideration is given is not intimidation in law; it does not create a reasonable and well-grounded fear of imminent and serious injury to person or property and leaves the other party free to sue for breach.
• Fraud/Deceit: No. Mere failure to fulfill a contract is not fraud or deceit; there was no misrepresentation of an existing or past fact, and Vales knew the facts when he entered into the transactions.
• Ratification/Renunciation: Yes, assuming intimidation existed. Under Articles 1309, 1311, and 1313 of the Civil Code, Vales’s acts after knowledge of the alleged cause and after it had ceased implied confirmation and extinguished the action for nullity.
• Recovery of Properties Already Repurchased: No. Vales had already recovered the remaining properties by purchasing them from the defendants on April 4, 1913, for P6,800 before suit; that voluntary transaction terminated the relations and could not be repudiated along with the prior transactions.

• Duress/Intimidation: The Court examined Articles 1265, 1267, and 1268 of the Civil Code. Intimidation requires a reasonable and well-grounded fear of imminent and serious injury to person or property. The defendants’ alleged refusal to live up to the verbal agreement unless Vales gave additional consideration did not create such a fear. Vales had a choice: refuse and sue for breach, or pay the additional consideration. His decision to pay was a voluntary act upon reflection, not the mechanical act of one whose will had been overcome. A threat to breach a contract is not intimidation; it is an offer to make a new contract and leaves the other party free to seek redress in court. The Court distinguished reluctant consent, which is still voluntary, from a complete disappearance of personality under irresistible force or intimidation.
• Fraud/Deceit: The Court found no fraud. There was no misrepresentation of an existing or past fact, and Vales entered each transaction knowing all the facts as well as the defendants. The defendants did no more than break their verbal contracts; a mere failure to live up to a contract is not fraudulent or deceitful. The Court noted that, under some authorities, fraud may exist if a party at the time of contracting intends to break it and that intent is the main consideration, but such fact must be alleged and proved; it was not alleged or proved here.
• Ratification/Renunciation: Even assuming intimidation, Vales ratified and renounced his right to annul. After the defendants first rejected the claimed parol agreement in 1909, Vales continued dealing with them, conveyed the Salsipuedes and Padre Faura properties, apparently assented to his ejection as tenant from the Ermita properties, paid P6,800 for the reconveyance of the remaining properties, assisted the defendants in obtaining Torrens titles to properties he claimed, and waited six months after the repurchase before suing. Under Articles 1309, 1311, and 1313, confirmation may be implied when, aware of the cause of nullity and the cause having ceased, the party executes an act implying renunciation; confirmation purges the contract of defects from execution. By repurchasing the remaining properties in April 1913, Vales accepted everything as it stood and elected to take the conveyance as a final termination of all relations.
• Recovery of Properties Already Repurchased: The ultimate purpose of the action was to recover the properties described in the March 22, 1909 deed that remained unsold. But Vales had already recovered them by purchasing them from the defendants on April 4, 1913, for P6,800. Before the action began, he had obtained the very thing he sought. Having recovered the properties through a voluntary agreement, he could not repudiate not only the transactions in which he claimed to have been defrauded or intimidated but also the very transaction by which he recovered them.

• Duress and Intimidation — Under the Civil Code, consent given by error, violence, intimidation, or deceit is void. Violence exists when irresistible force is used; intimidation exists when one party is inspired with a reasonable and well-grounded fear of suffering an imminent and serious injury to his person or property. A threat to refuse to comply with a contract unless additional consideration is given is not intimidation in law; it is an offer to make a new contract and does not destroy the other party’s volition because he remains free to sue for breach. Applied: the defendants’ alleged refusal to reconvey unless Vales conveyed more property or paid P6,800 did not vitiate his consent.
• Reluctant Consent vs. No Consent — A person acts voluntarily in the eyes of the law even when he acts reluctantly, against his judgment, or under the pressure of a bad bargain. Duress exists only when the will is overcome by force or intimidation to such an extent that the actor becomes a mere automation and the contract has only one party. Applied: Vales’s payments and conveyances were voluntary acts performed upon reflection, not mechanical acts lacking consent.
• Fraud and Deceit — Fraud requires a misrepresentation of an existing or past fact or, under some authorities, a present intent to break a contract that is alleged and proved and enters into the contract as the main consideration. A mere failure to fulfill a contract is not fraud or deceit. Applied: no fraud was alleged or proved; Vales knew the facts and the defendants merely failed to perform their verbal promises.
• Ratification/Confirmation of Voidable Contracts — The action for nullity is extinguished once the contract is validly confirmed. Confirmation may be express or implied; implied confirmation exists when, with knowledge of the cause of nullity and after that cause has ceased, the party executes an act implying a wish to renounce the right to invoke it. Confirmation purges the contract of all defects from the moment of execution. Applied: Vales’s continued dealings, acceptance of benefits, assistance in Torrens registration, and repurchase of the remaining properties ratified the challenged transactions and renounced any right to annul.
• Courts Cannot Relieve Foolish Bargains — Courts do not intervene merely because a party made a bad bargain or was worsted by another; there must be a violation of law or an actionable wrong. Applied: Vales’s failure to reduce the verbal agreement to writing and his subsequent unwise dealings did not themselves warrant judicial relief.
• Recovery of Subject Matter Before Suit — A plaintiff who has already obtained the very thing sought through a voluntary agreement cannot later repudiate both the prior transactions and the transaction by which he recovered it. Applied: Vales had already repurchased the remaining properties for P6,800 before suit, leaving nothing further to recover.

• "A threat to refuse to comply with the terms of a contract without an additional consideration is not, of itself, intimidation. It is an offer to make a new contract, to establish new relations, with a statement from the one making the offer that he will no longer abide by the old contract." — This passage states the ratio decidendi on duress: the defendants’ refusal to perform unless Vales paid more did not amount to intimidation.
• "There must be, in addition, a violation of law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it." — This passage explains why courts will not relieve a party from a foolish or disadvantageous bargain absent an actionable wrong.
• "It is impossible, as we view the law, for plaintiff, after having been deprived of property by intimidation, to recover that property through a voluntary agreement between him and those who intimidated him, and then repudiate not only the transactions in which he was deprived of that property, but also the very transaction by which he recovered it." — This passage articulates the ratification/renunciation rationale and the finality of the repurchase.
• "Taking the case as a whole, we are therefore of the opinion that there was no intimidation and that, if there was, the plaintiff has placed himself in a position where he was not entitled to urge it as a defense." — This is the Court’s ultimate holding on duress and ratification.

• Article 1265, Civil Code — Consent given by error, violence, intimidation, or deceit is void. The Court used this provision to frame the inquiry into whether Vales’s consent was vitiated.
• Article 1267, Civil Code — Defines violence as irresistible force and intimidation as a reasonable and well-grounded fear of imminent and serious injury to person or property. The Court applied this definition to hold that the defendants’ alleged refusal to perform did not amount to intimidation.
• Article 1268, Civil Code — Violence or intimidation annuls the obligation even if employed by a third person who did not take part in the contract. The Court cited it in its exposition of duress.
• Article 1309, Civil Code — The action of nullity is extinguished from the moment the contract may have been validly confirmed. The Court applied this to bar relief despite the alleged intimidation.
• Article 1311, Civil Code — Confirmation may be express or implied; implied confirmation exists when, being aware of the cause of nullity and the cause having ceased, the person entitled to invoke it executes an act implying a wish to renounce that right. The Court applied this to Vales’s subsequent acts.
• Article 1313, Civil Code — Confirmation purges the contract of all defects it may have contained from the moment of its execution. The Court applied this to the challenged conveyances and payments.
• Section 355, Code of Civil Procedure — Mentioned in connection with the defendants being called as witnesses by the plaintiff; the Court did not decide its effect but noted that the section may have penalties as well as rewards.

Arellano, C.J., concurred. Johnson and Trent, JJ., concurred in the result. Torres and Araullo, JJ., took no part.

• Justice Carson — Dissented from the majority decision. The provided text does not set out the grounds for the dissent.