FERNANDO T. MATE vs.

THE HONORABLE COURT OF APPEALS and INOCENCIO TAN FACTS: Josie, cousin of petitioners wife, asked for help from Mate for fear of prosecution from private respondent Tan because she had issued several rubber checks in favor of latter which amounted to over P4,000,000. Fearing prosecution under BP 22, Josie convinced Mate to cede to Tan his three lots in Tacloban City subject to the condition that Josie would later on repurchase it for him. Josie explained to him that he was in no danger of losing his properties as he will merely execute a simulated document transferring them to private respondent Tan but they will be redeemed by her with her own funds (as in a pacto de retro sale). Mate agreed to sign the Deed of Sale with Right of Repurchase, on the following conditions: 1. The amount to be stated in the document is P1,400,000.00 with interest thereon at 5% a month; 2. The properties will be repurchased within six (6) months or on or before April 4, 1987; 3. Although it would appear in the document that petitioner is the vendor, it is Josie who will provide the money for the redemption of the properties with her own funds; 4. Titles to the properties will be delivered to private respondent but the sale will not be registered in the Register of Deeds and annotated on the titles. Josie gave Mate 2 post-dated checks (1.4 M for the selling price and 420 K for the interest) to be used in redeeming the property plus interest. However, the checks were dishonored for being drawn against a closed account. Realizing that he was swindled, he sent a telegram to Josie and looked for her in Manila but she was nowhere to be found. Petitioner filed a criminal case against Josie for violation of B. P. 22, but the case was archived since Josie could not be located. Mate now impugns the pacto de retro sale stating, amongst other things, that the sale was void for lack of consideration. Both the trial court and the Court of Appeals upheld the validity of the sale. ISSUE: Whether or not there was a consideration in the sale?

HELD: Yes, there was a consideration. In preparing and executing the deed of sale with right of repurchase and in delivering to Tan the land titles, appellant actually accommodated Josefina so she would not be charged criminally by Tan. To ensure that he could repurchase his lots, appellant got a check of P1,400,000.00 from her. Also, by allowing his titles to be in possession of Tan for a period of six months, appellant secured from her another check for P420,000.00. With this arrangement, appellant was convinced he had a good bargain. It is plain that consideration existed at the time of the execution of the deed of sale with right of repurchase. It is not only appellants kindness to Josefina, being his cousin, but also his receipt ofP420,000.00 from her which impelled him to execute such contract. While Mate did not actually get the 1.4 M from Tan (the vendee), he had in his possession a postdated check of Josie in an equivalent amount precisely to repurchase the two lots on or before the time provided (six months). He even got another check for 420 K representing the interest. There is absolutely no basis for Mate to file a complaint against Tan to annul the sale on the ground of lack of consideration, invoking his failure to encash the checks. His cause of action was to file a BP 22 case against Rey, which he did. But the filing of the criminal cases was itself a tacit admission by Mate that there was a consideration of the pacto de retro sale. He is, in effect, stopped from questioning the same. The filing of the criminal cases was a tacit admission by petitioner that there was a consideration of the pacto de retro sale. (Note: Mate also alleged that there existed a condition upon the sale, a stipulation saying that if the checks ended up being dishonored, the sale would be annulled. Tan was already poised to file criminal cases against Rey for the issuance of past worthless checks. It wouldnt be logical for Tan to agree to this supposed stipulation since he would, in the event of the checks being rejected, still be left unserved.) Full-text: http://sc.judiciary.gov.ph/jurisprudence/1998/may1998/120724_25.htm