G.R. No. 149353 ; June 26, 2006
JOCELYN B. DOLES, Petitioner, vs. MA. AURA TINA ANGELES, Respondent.

FACTS

Respondent Ma. Aura Tina Angeles filed a complaint for specific performance against petitioner Jocelyn B. Doles. Respondent alleged that petitioner was indebted to her for a personal loan. To settle this debt, petitioner executed a Deed of Absolute Sale over a townhouse unit in Cavite in favor of respondent, with the condition that respondent would assume the balance of petitioner’s mortgage with the NHMFC. Respondent claimed petitioner later refused to cooperate in formalizing the transfer. Petitioner denied borrowing money, claiming she merely referred friends to respondent, a money lender. When her friends’ checks bounced, respondent allegedly threatened her with criminal prosecution for violation of B.P. 22, forcing her to issue her own checks and later execute the Deed of Sale under duress and without consideration.
The Regional Trial Court dismissed the complaint, declaring the sale void for lack of consideration. It found that respondent admitted the borrowers were petitioner’s friends, negating any direct loan obligation from petitioner to respondent that could serve as the sale’s cause. The Court of Appeals reversed this decision, holding the sale was supported by a valid consideration—the money petitioner owed respondent. The CA concluded petitioner acted as a borrower who then re-lent the funds, making her primarily liable to respondent.

ISSUE

Whether the Deed of Absolute Sale is a valid contract supported by a lawful consideration.

RULING

The Supreme Court granted the petition and reinstated the RTC decision, declaring the Deed of Absolute Sale void. The legal logic centers on the essential requisite of cause or consideration under Article 1350 of the Civil Code. For an onerous contract like a sale, the cause is the prestation or promise of a thing or service by the other party. Here, the purported cause was the pre-existing loan obligation of petitioner to respondent. However, the evidence, including respondent’s own judicial admissions, established that the direct borrowers were petitioner’s friends, not petitioner herself. Petitioner’s role was merely that of an agent who referred clients to a lender. An agent is not personally liable for the principal’s obligations unless expressly bound. There was no proof petitioner expressly bound herself as a solidary debtor. Consequently, no valid loan obligation from petitioner to respondent existed to constitute the cause for the sale. Without a lawful cause, the contract produced no effect whatsoever. The Court also noted irregularities like the property not being solely owned by petitioner, further vitiating consent. The defense of duress, while raised, was not fully substantiated but the absence of consideration alone was sufficient to invalidate the contract.