Mejia, Moira B

184097

MERCEDES MARTINEZ Y FERNANDEZ, ET AL​., plaintiffs-appellants, vs.

FACTS​:
Alejandro S. Macleod was for many years the managing partner of the house of Aldecoa & Co. in the city
of Manila. He withdrew from the management when Aldecoa & Co. went into liquidation. At the time
that Aldecoa & Co. ceased active business the Hongkong & Shanghai banking Corporation was a creditor
of that firm to the extent of several hundred thousand pesos and claimed to have a creditor's lien in the
nature of a pledge over certain properties of the debtor. Subsequently, the bank began a civil action
against Alejandro S. Macleod, his wife, Mercedes Martinez, Aldecoa & Co., and the firm known as Viuda
e Hijos de Escaño. In the bank's complaint it was alleged that a certain undertaking in favor of Aldecoa &
Co. had been hypothecated to the bank to secure the indebtedness of Aldecoa & Co., but that this
obligation had been wrongfully transferred by Alejandro S. Macleod into an obligation in favor in his
wife, Mercedes Martinez, to the prejudice of the bank. Then Aldecoa & Co. began a civil action against
Alejandro S. Macleod and others for the recovery of certain shares of stock of the par value of P161.000

When the two causes of action above referred to were discovered and the suits there mentioned
commenced, Alejandro S. Macleod and Mercedes Martinez, his wife, engaged the services of Messrs.
Del-Pan, Ortigas and Fisher, attorneys at law, to represent and defend them in the matter.

It becoming apparent that criminal proceedings would be instituted against him, Macleod went from
Manila to the Portuguese colony of Macao, a territory not covered, it appears, by extradition treaty
between the United States and the Portuguese Government. Four days thereafter, Aldecoa & Co. filed a
complaint against Mr. Macleod, charging him with the falsification of a commercial document, and a
warrant for his arrest was issued and the executive department of the Philippine Government issued a
formal request to the Portuguese authorities for the extradition of the accused. This request was denied. In
the meantime the attorneys for the respective parties were engaged in negotiations for the settlement and
compromise of the difference then pending and a clearance of Mr. Macleod from all claims and demands
of his creditors. Aldecoa & Co. and the bank, as a consideration for such settlement, insisted upon the
conveyance not only of all the property of Alejandro S. Macleod but also of at least a portion of the
property claimed by his wife, the plaintiff herein. The settlement offered at that time was the same which
was subsequently accepted and consummated. There appears to have been little resistance to this demand
on the part of the representatives of Mr. Macleod, but his wife, the plaintiff herein, stoutly objected to the
conveyance required of her, maintaining that the property which she was asked to transfer was her
separate and exclusive property and not liable for the debts of her husband.

This being the state of affairs, one of the attorneys for the bank was called upon by counsel for both
Aldecoa & Co. and the plaintiff in this action, who requested him to act as intermediary between the
parties and to suggest means by which a settlement could be obtained. At that interview it was agreed that
a full explanation of the condition of affairs should be made to Mr. Kingcome, a son-in-law of the
plaintiff and a businessman. Whether or not Mr. Kingcome communicated the substance of that interview
with Mr. Stephen to his mother-in-law, the plaintiff, before she signed the document in question is in
dispute in this case. It seems at that interview that Mr. Stephen suggested to Mr. Kingcome that he advise
his mother-in-law to act reasonably in negotiating the proposed settlement. It appears that Mr. Kingcome
got the impression from that interview that Mr. Stephen thought unless the settlement were consummated
additional and mortifying misfortunes wound fall upon Mr. Macleod's family.

The prosecuting attorney filed a second complaint against Alejandro S. Macleod and his associate,
Osorio, charging them with embezzlement and causing warrants of extradition to issue.

A long conference was held between plaintiff, her attorney, Mr. Kingcome, her son-in-law, and William
Macleod, her attorney-in-fact, at which she was informed in substance that if she assented to the
requirements of Aldecoa & Co. and the bank the civil suits against herself and her husband would be
dismissed and the criminal charges against him withdrawn, while if she refused her husband must either
spend the rest of his life in Macao or be criminally prosecuted on the charged already filed and to be filed.
At that interview plaintiff refused to accede to the terms of settlement.

At an interview had between the plaintiff and her attorney-in-fact, Mr. William Macleod, the plaintiff
acceded to the terms proposed by the defendants and authorized Mr. William Macleod to execute the
contract of settlement on her behalf.

The plaintiff filed her complaint in the present action, and, after the joining of issue and the hearing of
evidence, judgment was rendered in favor of defendants.

The Civil Code in relation to the subject-matter in hand contains the following provisions:

ART. 1265. Consent given under error, violence, intimidation, or deceit shall be null.

ART. 1267. There is violence when, in order to obtain the consent, irresistible force is used.

There is intimidation when one of the contracting parties gives his consent on account of a reasonable and
well-grounded fear of suffering an imminent and serious injury to his person or property, or to the person
or property of his spouse, descendants, or ascendants.

In determining whether or not there is intimidation the age, sex, and status of the person intimidated must
be considered.

Fear of displeasing the persons to whom obedience and respect are due shall not annul the contract.

ART. 1268. Violence or intimidation shall annul the obligation, even though such violence or intimidation
shall have been used by a third person who did not take part in the contract

ISSUE:
Whether or not Mercedes Martinez was acting according to the dictates of her own judgment or from fear,
force, or undue influence
RULING:
In order that this contract be annulled it must be shown that the plaintiff never gave her consent to the
execution thereof. If a competent person has once assented to a contract freely and fairly, he is bound.
Contracts which are declared void and of no force upon the ground that they were obtained by fraud,
duress, or undue influence are so declared for the reason that the complaining party never really gave his
consent thereto.

It is necessary to distinguish between real duress and the motive which is present when one gives his
consent reluctantly. A contract is valid even though one of the parties entered into it against his wishes
and desires or even against his better judgment. Contracts are also valid even though they are entered into
by one of the parties without hope of advantage or profit. A contract whereby reparation is made by one
party for injuries which he has willfully inflicted upon another is one which from its inherent nature is
entered into reluctantly and against the strong desires of the party making the reparation. He is confronted
with a situation in which he finds the necessity either of making reparation or of taking the consequences,
civil or criminal, of his unlawful acts. He makes the contract of reparation with extreme reluctance and
only by the compelling force of the punishment threatened. Nevertheless such contract is binding and
enforceable. Such a contract differs entirely in its incidents from a contract entered into by a party for the
purpose of gain. The latter contract is made with pleasure and its terms complied with gladly. The former
is a contract the execution of which the party is very apt to repent and the terms of which he is very likely
to evade if he can. It is not conclusive against them that Aldecoa & Co. demanded that the plaintiff do
something upon pain of punishing her husband for his crimes. It is not conclusive that the plaintiff
disliked exceedingly to do what they demanded. Neither is it conclusive that the plaintiff now regrets
having performed at their demand instead of compelling a resort to judicial proceedings. It is not for these
reasons that this contract may be declared null and void

There were at no time during the course of these negotiations for settlement any direct personal relations
or communications between the parties to this action. During the whole course of the negotiations no
person communicated with the plaintiffs on behalf of the defendants alone. The offers, proposition, or
treats, if any, made by the defendants were filtered to her through the personality, mind, and judgment of
her own attorneys or relatives, all of them being persons who had her welfare and the welfare of her
family deeply at heart and who were acting for her and her husband and not for the defendants. That
personal presence of threatening party and the influence springing therefrom, factors so potent in duress
and undue influence, were wholly lacking

On the trial an attempt was made to show that the defendants had attempted to influence the plaintiff,
Mercedes Martinez, by acting upon her through her son-in-law, Mr. Kingcome. There was some dispute
as to whether or not Mr. Kingcome actually communicated the substance of the interview to his
mother-in-law prior to her signing the contract in question. Mr. Kingcome in his testimony states that
according to his best recollection he communicated the substance of that interview to his mother-in-law.
In considering this matter it must be remembered that the interview between Mr. Stephen and Mr.
Kingcome was not brought about by Aldecoa & Co. or its representative. It was brought about by Mr.
Cohn acting as mediary between Mr. Fisher and Mr. Rosado, the one the attorney for the plaintiffs and the
other the attorney for the defendant company, upon the request and with the express approval of both of
them
It must also be remembered that the plaintiff, Mercedes Martinez, never at any time stood alone in the
negotiations. It appears undisputed that she and her relatives and lawyers considered throughout the
negotiations and down to and including the time of the execution of the agreement of settlement that her
best interest would be subserved by acceding to the terms laid down by the defendants. From the evidence
in the case it is difficult to arrive at a conclusion other that that the acts which she performed in making
the settlement in question were acts which contributed to her welfare and the welfare of her whole family.
While this fact may not be conclusive in the present case, it nevertheless is of very importance and
significance in determining the question whether duress and undue influence were exercised or weighing
the reasons pro and con.

As already stated, not every contract executed by a wife, even though made solely to save her husband
from the consequences of his crimes, is voidable. Solicitation, importunity, argument, and persuasion are
not undue influence and a contract is not to be set aside merely because one party used these means to
obtain the consent of the other. Influence obtained by persuation or argument or by appeals to the
affection is not prohibited either in law or morals and is not obnoxious even in courts of equity. Such may
be termed "due influence." The line between due and undue influence, when drawn, must be with full
recognition of the liberty due every true owner to obey the voice of justice, the dictates of friendship, of
gratitude and of benevolence, as well as the claims of kindred, and, when not hindered by personal
incapacity or particular regulation, to dispose of his own property according to his own free choice.

DISPOSITIVE:
From the whole case we are of the opinion that the finding of the court below that the plaintiff executed
the contract in suit of her own free will and choice and not from duress is fully sustained by the evidence.