Writ of Possession and Foreclosure: When a Threat to Foreclose Does Not Vitiate Consent

In De Guia v. Presiding Judge, RTC, Malolos, Bulacan (G.R. No. 161074, March 22, 2010), the Supreme Court settled a dispute arising from a series of real estate transactions over a fishpond in Bulacan. The case clarifies important rules on extrajudicial foreclosure, the validity of contracts executed under threat of foreclosure, and the limits of appellate review. For property owners and lenders alike, the ruling offers practical guidance on what makes a mortgage or sale valid—and what does not.

The Facts: A Web of Deeds and Mortgages

The case began with Primitiva Lejano Davis, who owned a one-half undivided portion of two parcels of land in Meycauayan, Bulacan. Over several years, Primitiva executed multiple documents involving the property: deeds of sale, deeds of mortgage, and lease agreements with the respondents. On November 10, 1979, she executed a new Kasulatan ng Sanglaan (deed of mortgage) in favor of the Spouses Morte for a loan of P500,000.00, payable within one year at 12% interest. She also executed a lease agreement with the Spouses Villarico.

When Primitiva failed to pay the loan, the Spouses Morte filed a petition for extrajudicial foreclosure. Before the auction sale could proceed, the petitioners—Primitiva's heirs and their alleged successor-in-interest—filed a complaint to annul the mortgage and lease, claiming these documents were simulated and executed under threat of foreclosure.

The Issue: Was Consent Vitiated by the Threat of Foreclosure?

The central question was whether Primitiva's consent to the mortgage was vitiated because she signed it under threat of immediate foreclosure of the property. The petitioners argued that this threat rendered the contract void.

The Ruling: A Legal Threat Does Not Vitiate Consent

The Supreme Court denied the petition and affirmed the decisions of the lower courts. The Court held that the issue raised was primarily factual, and under Rule 45 of the Rules of Court, only questions of law may be raised in a petition for review on certiorari. The Court is not a trier of facts, and it found no reason to depart from the factual findings of the trial court and the Court of Appeals.

More importantly, the Court applied Article 1335 of the Civil Code, which provides that a threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent. Since foreclosure of mortgaged property upon default is a legal remedy afforded to a creditor, a threat to foreclose does not, by itself, invalidate a debtor's consent.

The Court also rejected the claim that the documents were simulated or lacked consideration. Evidence showed that Primitiva executed the mortgage to restructure her outstanding loan obligations, and that additional amounts were given to her. The notary public testified that money changed hands in his presence. The Court likewise noted that the petitioners failed to present evidence to support their claim of simulation.

The Innocent Purchaser Argument: Raised Too Late

The petitioners also argued that one of them was an innocent purchaser for value who bought the property without notice of the mortgage. The Court refused to consider this argument because it was not raised in the trial court. As a rule, issues not raised below cannot be raised for the first time on appeal—basic considerations of due process require this.

Practical Takeaways

• A threat to foreclose is not duress. If a debtor owes a debt and the creditor threatens to foreclose as allowed by law, that threat does not vitiate consent. Debtors cannot later claim their mortgage is void simply because they signed to avoid foreclosure.
• Read before you sign. The Court gave weight to the fact that the petitioner and his mother read and understood the documents before signing, and that the notary public explained their contents. Courts presume that parties know what they sign.
• Simulation requires proof. A claim that a contract is simulated or fictitious must be supported by clear and convincing evidence. Bare allegations will not suffice.
• Raise all defenses at trial. Arguments not presented in the trial court—such as a claim of being an innocent purchaser for value—will not be considered on appeal.
• Extrajudicial foreclosure is a valid remedy. When a mortgagor defaults, the mortgagee may pursue extrajudicial foreclosure as provided by law, and courts will generally uphold this remedy.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.