G.R. No. 120724 -25 May 21, 1998
Fernando T. Mate, petitioner, vs. The Honorable Court of Appeals and Inocencio Tan, respondents.

FACTS

On October 6, 1986, Josefina R. Rey, a cousin of petitioner Fernando T. Mate’s wife, solicited Mate’s help to prevent her and her family’s prosecution by respondent Inocencio Tan for violation of B.P. 22 due to rubber checks they issued. Rey requested Mate to cede his three lots in Tacloban City to Tan. Mate initially refused but agreed to execute a simulated Deed of Sale with Right to Repurchase under conditions: the stated amount was P1,400,000.00 with 5% monthly interest; repurchase within six months; Rey would provide the redemption money; and the sale would not be registered. Rey issued Mate two postdated checks for P1,400,000.00 (repurchase price) and P420,000.00 (interest). Mate prepared and signed the deed, delivered it and the titles to Tan, who did not register it. When Mate deposited the checks, they were dishonored for being drawn against a closed account. Mate filed criminal cases against Rey and a civil case against Rey and Tan for annulment of contract. The trial court ordered Tan to file an action for consolidation of ownership, which was consolidated with Mate’s case. The trial court ruled in favor of Tan, ordering registration of the deed and consolidation of Tan’s ownership, and requiring Mate to pay attorney’s fees. The Court of Appeals affirmed with modification.

ISSUE

Whether the Deed of Sale with Right to Repurchase is null and void for lack of consideration.

RULING

No. The Deed of Sale with Right to Repurchase is valid and binding. The Court found that consideration existed at the execution of the deed, consisting of Mate’s accommodation to Rey to avoid criminal charges and his receipt of the P420,000.00 check from Rey. Although Mate did not receive the P1.4 million from Tan, he held Rey’s check for that amount to repurchase the properties. The dishonor of Rey’s checks did not annul the contract for lack of consideration; Mate’s remedy was against Rey, which he pursued by filing criminal cases. The Court emphasized that Mate, a lawyer who prepared the contract, assumed the risks involved. The contract, containing all essential elements, is valid. The petition was denied, and the Court of Appeals’ decision was affirmed.