8. FERNANDO T. MATE v.

​CA and INOCENCIO TAN

G.R. No. 120-724-25 | May 21, 1998 | Martinez, J.
Pia | Topic: Formation and Perfection of the Contract of Sale
Case Summary: ​Mate accommodated Rey so that Rey will not be sued by Tan for violating BP 22 (bouncing checks).
Mate agreed to prepare a deed of sale with right of repurchase executed over his lots in favor of Tan, with Rey giving
him 2 checks representing the supposedly selling price and interest of this fictitious sale. Unfortunately, the checks
were dishonored and Rey went into hiding. Thus, Mate filed a civil case against Tan arguing that the contract of sale is
null and void for lack of consideration. SC upheld the validity of the contract holding that there was consideration – the
checks issued by Rey (although uncashed and bounced) aside from his kindness to his cousin-in-law Rey. The
institution by the Mate of a criminal action against Rey for violation of BP 22 also served as a tacit admission that there
was indeed a consideration in the contract.

Doctrine​: The filing of the criminal cases was a tacit admission by petitioner that there was a consideration of the pacto
de retro sale. Once agreed upon, and provided all the essential elements are present, it is valid and binding between
the parties.
​ EY IS MATE’S COUSIN IN LAW**
Not that relevant but sir might ask: R
Facts:
1. On October 6, 1986, Josefina R. Rey and Inocencio Tan Tan went to the residence of petitioner Fernando Mate, to
solicit his help to delay Josefina and her family's prosecution (by Tan) for violation of BP 22, on account of the rubber
checks that Josefina, her mother, sister and brother issued to Tan amounting to P4,432,067.00.
2. Rey requested Mate to cede to Tan his (Mate's) three lots in order to placate him.
3. Rey explained that Mate was in no danger of losing his properties as he will merely execute a simulated document
transferring them to Tan but they will be redeemed by her with her own funds.
4. After a long discussion, Mate agreed to execute a fictitious deed of sale with right to repurchase covering his 3 lots,
with the ff. Conditions:
a. The amount to be stated in the document is P1.4 Million with interest thereon at 5% a month;
b. The properties will be repurchased within six (6) months or on or before April 4, 1987;
c. Although it would appear in the document that Mate is the vendor, it is Josefina Rey who will provide the money
for the redemption of the properties with her own funds;
d. Titles to the properties will be delivered to Tan but the sale will not be registered in the Register of Deeds and
annotated on the titles.
5. For assurance, Rey issued 2 postdated BPI checks (one for the supposedly selling price and repurchase price of
P1.4M, the other for the supposedly interest of P420K for 6 months.
6. After the deed of sale has been signed and notarized, it was given to Tan with the titles of the propertoes and Tan did
not registter the ttransaciton in the Register of Deeds.
7. On January 14, 1987, when Mate deposited the checks, both checks were dishonored for having been drawn against
a closed account.
8. Mate tried to look for Rey but she was no where to be found. He filed criminal cases against Josefina for violation of
BP Blg 22. After the criminal cases were archived as Rey could not be found, he filed a civil action for Annulment of
Contract with Damages against Josefina and Tan.
9. Rey was later on declared in default, so the case proceeded against Tan alone.
10. On August 29, 1994, the RTC decided in favor of Tan, upholding the validity of the Deed of Sale with Right to
Repurchase on the ground that the period to redeem has expired and therefore, Tan's ownership of the properties
was consolidated by operation of law. CA affirmed.
11. Hence this petition for review​. Mate's contends that the Deed of Sale with Right to Repurchase is null and void
for lack of consideration​ because
a. no money changed hands when he signed it and the checks that were issued for redemption of the properties
have been dishonored by the drawee bank for having been drawn against a closed account; &
b. the pacto de retro sale1 was subject to the condition that in the event the checks were dishonored, then the
document shall be declared null and void for lack of consideration.

Issue/s: ​WON the Deed of Sale with Right to Repurchase is null and void for lack of consideration -- NO.

1
​Pacto de Retro sale ​refers to the sale wherein the seller has the right to repurchase the subject matter or the property being sold.The
essence of a pacto de retro sale is that the title and ownership of the property sold transfers immediately to the vendee a retro.
However it is still subject to the resolutory condition of repurchase of the subject property by a vendor a retro within the period agreed
upon by them, or, in the absence thereof, as provided by law or else it would vests upon the vendee a retro absolute title and ownership
over the property sold by operation of law. (http://realestatelawyer.com.ph/extinguishment-of-sale/)
Holding:​ NO. SC held that there was a consideration.
● As correctly ruled by CA:
● Mate actually accommodated Rey by preparing and executing the deed of sale with right or repurchase and delivering
Tan the land titles. He got 2 postdated checks from her as security or assurance that he could repurchase his lots. 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, Mate was convinced he had a good bargain. It is plain that consideration existed at the time of
the execution of the deed. It is not only Mate’s kindness to Rey, being his cousin, but also his receipt of the check
relating to the interest (P420K) impelled him to execute the contract.
● While he did not receive the P1.4M purchase price from Tan, he had a postdated check of Josefina in that
exact amount, precisely to repurchase the two lots on or before the sixth month.
● :) By virtue of said sale with pacto de retro, Josie gave Mate a check with the amount of P1.4M which represented the
repurchase price of the 2 lots. Aside from such check, Rey issued another P420K which was apparently the Mate’s
fee for having executed the pacto de retro document. Josefina thus assumed the responsibility of paying the
repurchase price on behalf of Mate to Tan.
● Mate cannot annul the contract on the ground of lack of consideration, invoking his failure to encash the 2 checks. His
cause of action was to file criminal actions against Rey under B.P. 22, which he did. The filing of the criminal cases
was a tacit admission that there was a consideration of the pacto de retro sale.

As to Mate’s argument that pacto de retro sale was subject to the condition that when checks are dishonored, document
shall be declared null and void for lack of consideration:
● Mate knew that he was bound by the deed of sale with right to repurchase, as evidenced by his filing criminal cases
against Rey when the two checks bounced.
● Mate is a lawyer. He is aware of the risk involved​ (especially knowing the history of Rey family’s history of issuing
worthless checks). ​When Jose na's checks bounced, he should have repurchased his lots with his own
money.​ Instead, he sued not only Jose fina but also Tan for annulment of contract on the ground of lack of
consideration and false pretenses on their part.
● Mate is not an innocent person. As a matter of fact, he gave occasion for the damage caused by virtue of the
deed which he prepared and signed. ​Thus, there is the equitable maxim that between two innocent parties, the one
who made it possible for the wrong to be done should be the one to bear the resulting loss.

As to allegation on deceit by Tan:

● Contrary to Mate’s pretension, Tan did not employ any devious scheme to make the Mate sign the deed of sale.
● This is not borne out by the evidence nor by Mate's own statement of facts.​ Tan only signed the contract.
● It is to be noted that Tan waived his right to collect from Jose na Rey by virtue of the pacto de retro sale.
● Apparently, it was his greed for a huge profit that impelled him to accede to the scheme of Josefina even if he
knew it was a dangerous undertaking.
● A contract is a contract. Once agreed upon, and provided all the essential elements are present, it is valid
and binding between the parties. Mate has no one to blame but himself for his misfortune. :(

Ruling:
CA Decision is AFFIRMED. Petition for review is DENIED. Deed of Sale with Right to Repurchase is VALID.