For additional information,  you may contact J.A.B. Bulao & Associates at jabblaw@yahoo.com or send a message to  Cell No. 09155205254.

CARMELA BROBIO MANGAHAS VS. EUFROCINA A. BROBIO (G.R. NO. 183852, 20 OCTOBER 2010)

 

DOCTRINE RE CONSENT AND CONSIDERATION IN CONTRACTS

 

DIGEST

 

FACTS:

ABC needed from  XYZ an original copy of a deed of extrajudicial settlement. XYZ told ABC that he will sign only if ABC will give him the additional money he promised as his share in the estate in the amount of P1,000,000.00. XYZ bargained until the reduced amount of P600,000.00was agreed. Since XYZ has no money at that time, he executed a promissory note. When the due date came, XYZ refused to pay. ABC sued. The defense of XYZ was there was no consent since  he was just forced to sign the promissory note and there was no consideration. RTC ruled in favor of ABC. Court of Appeals reversed the RTC decision on the ground that there was indeed no consent and consideration in the execution of the promissory note.

ISSUE: Was the promissory note void for lack of consent and consideration?

RULING:

When XYZ signed the promissory note there was consent and consideration.

As to the matter of  consent, the Court ruled as follows:

Contracts are voidable where consent thereto is given through mistake, violence, intimidation, undue influence, or fraud. In determining whether consent is vitiated by any of these circumstances, courts are given a wide latitude in weighing the facts or circumstances in a given case and in deciding in favor of what they believe actually occurred, considering the age, physical infirmity, intelligence, relationship, and conduct of the parties at the time of the execution of the contract and subsequent thereto, irrespective of whether the contract is in a public or private writing.[1][14]

Nowhere is it alleged that mistake, violence, fraud, or intimidation attended the execution of the promissory note.  Still, respondent insists that she was “forced” into signing the promissory note because petitioner would not sign the document required by the BIR.  In one case, the Court – in characterizing a similar argument by respondents therein – held that such allegation is tantamount to saying that the other party exerted undue influence upon them.  However, the Court said that the fact that respondents were “forced” to sign the documents does not amount to vitiated consent.[2][15]

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.[3][16] For undue influence to be present, the influence exerted 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.[4][17]

Respondent may have desperately needed petitioner’s signature on the Deed, but there is 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: she could have refused to execute the promissory note and resorted to judicial means to obtain petitioner’s signature.  Instead, respondent chose to execute the promissory note to obtain petitioner’s signature, thereby agreeing to pay the amount demanded by petitioner.

The fact that respondent may have felt compelled, under the circumstances, to execute the promissory note will not negate the voluntariness of the act. As rightly observed by the trial court, the execution of the promissory note in the amount of P600,000.00 was, in fact, the product of a negotiation between the parties.

Contrary to the CA’s findings, the situation did not amount to intimidation that vitiated consent. There is intimidation when one of the contracting parties is compelled to give his 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.[5][19] Certainly, the payment of penalties for delayed payment of taxes would not qualify as a “reasonable and well-grounded fear of an imminent and grave evil.”

We join the RTC in holding that courts will not set aside contracts merely because solicitation, importunity, argument, persuasion, or appeal to affection was used to obtain the consent of the other party. Influence obtained by persuasion or argument or by appeal to affection is not prohibited either in law or morals and is not obnoxious even in courts of equity.[6][20]

As to the matter of consideration, the court ruled as follows:

On the issue that the promissory note is void for not being supported by a consideration, we likewise disagree with the CA.

A contract is presumed to be supported by cause or consideration.[7][21] The presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration. To overcome the presumption, the alleged lack of consideration must be shown by preponderance of evidence.[8][22] The burden to prove lack of consideration rests upon whoever alleges it, which, in the present case, is respondent.

Respondent failed to prove that the promissory note was not supported by any consideration. From her testimony and her assertions in the pleadings, it is clear that the promissory note was issued for a cause or consideration, which, at the very least, was petitioner’s signature on the document.

It may very well be argued that if such was the consideration, it was inadequate. Nonetheless, even if the consideration is inadequate, the contract would not be invalidated, unless there has been fraud, mistake, or undue influence.[9][23]  As previously stated, none of these grounds had been proven present in this case.


[1][14]          Leonardo v. Court of Appeals, 481 Phil. 520, 532 (2004).

[2][15]          Development Bank of the Philippines v. Court of Appeals, G.R. No. 138703, June 30, 2006, 494 SCRA 25, 42-43.

[3][16]          Civil Code of the Philippines, Art. 1337.

[4][17]          Carpo v. Chua, G.R. Nos. 150773 and 153599, September 30, 2005, 471 SCRA 471, 482.

[5][19]          Civil Code of the Philippines, Art. 1335.

[6][20]          Martinez v. Hongkong & Shanghai Bank, 15 Phil. 252, 270 (1910).

[7][21]          Civil Code of the Philippines, Art. 1354.

[8][22]          Saguid v. Security Finance, Inc., G.R. No.159467, December 9, 2005, 477 SCRA 256, 270-271.

[9][23]          Civil Code of the Philippines, Art. 1355.