Teodoro A. Reyes vs. Ettore Rossi

G.R. No. 159823, February 18, 2013; per Bersamin, J.

Facts

Reyes and Rossi executed a deed of conditional sale involving the purchase by Reyes of equipment consisting of a dredging pump. The parties agreed therein that Reyes would pay the down payment, and the balance through four post-dated checks. Rossi deposited the checks, however, the same were returned with the notation Account Closed stamped on them. Reyes commenced an action for rescission of contract and damages in the Regional Trial Court in Quezon City.

Meanwhile, Rossi charged Reyes with estafa and violation of Batas Pambansa Blg. 22 before the Office of the City Prosecutor. Reyes as well as argued that the Office of the City Prosecutor of Makati should suspend the proceedings because of the pendency in the RTC of the civil action for rescission of contract that posed a prejudicial question as to the criminal proceedings.

Issue

Whether or not the civil action for rescission of the contract of sale raised a prejudicial question that required the suspension of the criminal prosecution for violation of Batas Pambansa Blg. 22

Ruling

Then Supreme Court ruled the pendency of the civil case does not bar the continuation of the proceedings in the preliminary investigation on the ground that it poses a prejudicial question.

Indeed, under the Jaw on contracts, vitiated consent does not make a contract unenforceable but merely voidable, the remedy of which would be to annul the contract since voidable contracts produce legal effects until they are annulled. On the other hand, rescission of contracts in case of breach pursuant to Article 1191 of the Civil Code of the Philippines also presupposes a valid contract unless rescinded or annulled.

In the present case, considering that the contracts are deemed to be valid until rescinded, the consideration and obligatory effect thereof are also deemed to have been validly made, thus demandable. Consequently, there was no failure of consideration at the time when the subject checks were dishonored.