G.R. No. 120724-25 – FERNANDO T. MATE, petitioner, vs. THE HONORABLE COURT OF APPEALS and INOCENCIO TAN, respondents.
MARTINEZ, J.
Rule Synopsis
Absence and failure of consideration are different things. While absence of consideration may invalidate a contract, the latter being an essential element, failure of consideration is not a ground for the same. Instead, failure of consideration (e.g. check given as payment was dishonored) gives the obligee thereof a cause of action to recover the same.
Facts
Josefina “Josie” Rey convinced her cousin, Fernando Mate to help her stave off a B.P. 22 prosecution by one Inocencio Tan on account of Josie’s issuance of bouncing checks to the latter. Mate agreed to cede to Tan 3 lots by executing a fictitious deed of sale with right to repurchase. Josie ensured Mate that the lots will be returned to him as the same will be redeemed by her own funds. Josie then issued post-dated checks in favor of Mate which were then dishonored. Mate filed a criminal case for violation of the bouncing checks law against Josie; Josie absconded.
Thus, Mate filed a case for annulment of the contract of sale with damages against Josie and Tan.
The RTC and the CA upheld the validity of the sale. The SC affirmed.
Issue
Was the Deed of Sale with right to repurchase void for lack of consideration, given that allegedly no money changed hands when Mate signed it and the checks that were issued for redemption of the properties involved in the sale have been dishonored?
Ruling and Discussion
No. The Deed of Sale with right to repurchase was not void for lack of consideration.
Consideration existed at the time of the execution of the deed of sale with right of repurchase. It is not only Mate’s kindness to Josie, being his cousin, but also his receipt of P420k from her which impelled him to execute such contract. He also had in his possession checks from Josie in an equivalent amount precisely to repurchase the two lots. Josie thus assumed the responsibility of paying the repurchase price on behalf of Mate to Tan. That the checks issued by Josie were dishonored created a cause of action for her prosecution for violation of B.P. 22, but not for the annulment of the subject contract.
Dispositive
Petition denied. Decision affirmed.