Doctrine

Summary

Facts

Montecillo v. Reynes
J. Carpio
July 26, 2002
G.R. No. 138018
Effect of non-payment of price;
Where the deed of sale states that the purchase price has been paid but in fact has never
been paid, the deed of sale is null and void ab initio for lack of consideration.
Reynes and Sps. Abucay filed complaint against Montecillo, regarding a lot in Mabolo, Cebu City. Reynes
signed a Deed of Sale with Montecillo, who agreed to pay the price w/in 1 month. He failed to do so, but
he also refused to return the DoS. Reynes executed a document unilaterally revoking the sale, then sold
the lot to the Sps. Abucay. Montecillo however, was able to register the lot in his name, claiming he was
a buyer in good faith and for value. The trial court and CA declared the DoS to Montecillo void, and this
was affirmed by the SC.

Ignacia Reynes owned a lot (446 m2) in Mabolo, Cebu City and sold 158 m2 to the Sps. Abucay in
1981.

In 1984, Reynes signed a Deed of Sale conveying the Mabolo lot to Montecillo for P47,000 to be
paid in 1 month. Montecillo did not pay on time, but refused to return the DoS. Reynes executed
a document revoking the sale, then sold the entire lot to Sps. Abucay.

However, Montecillo was able to register the land in his name, so Reynes and the Sps. Abucay
filed a complaint for Declaration of Nullity and Quieting of Title against Montecillo, alleging that
there was lack of consideration.

Montecillo claimed he was a buyer in good faith and for value, as he allegedly already paid the
P47,000. Yet, he admitted having a balance of P10,000. Supposedly, he had paid P50,000 to
Cebu Ice Storage for the release of a chattel mortgage debt (of Jayag) which was a lien on the
land. He alleged that he paid real property tax and capital gains tax for the lot.

Reynes claimed Montecillo secured the release of chattel mortgage through machination, and
took advantage of the taxes paid by the Sps. Abucay to transfer the title to his name. She denied
anything to do with Jayags mortgage debt.

The trial court declared the DoS to Montecillo null and void, because there was no cause or
consideration, considering that he had never paid Reynes. Thus, the DoS produced no legal
effect. The CA affirmed the decision in toto, hence this appeal.

Ratio/Issues
I.

W/N Montecillo should have paid the purchase price to Cebu Ice Storage (NO)
(1) The DoS did not even state that the P47,000 was to be paid to Cebu Ice Storage. Montecillo
did not produce evidence showing that Reynes agreed to the payment of the price to CIS.
Applying Art. 14201, payment to CIS would not extinguish the obligation of Montecillo to
Reynes.
(2) It goes against common sense to think that Reynes would sell her land but not gain a single
centavo from the sale, the price going to CIS instead. The trial court found that Reynes had
no connection at all to Jayags mortgage debt with CIS. Thus, payment to CIS could not
redound to the benefit of Reynes.

II.

W/N the Deed of Sale is void ab initio or only rescissible (VOID AB INITIO)
(1) Contracts have 3 essential requisites: consent, object, and cause.
Montecillo argues that the DoS is a valid sale because all three requisites are present, that
there is only a non-payment of consideration, which is just a breach of his obligation to pay
on time. This should give rise to Reynes right to ask for specific performance or annulment
of the obligation to sell. Reynes did not make a demand for payment, but revoked the DoS,
Montecillo says the court should fix a period for payment of the balance.
But, such arguments do not convince the court. The evidence shows that while the DoS
appears supported by valuable consideration, Montecillo never actually paid Reynes
P47,000. There was a total absence of consideration. He merely alleged that he had a
remaining balance of P10,000.
(2) This is not merely a case of failure to pay the purchase price, but a contract that lacks a
cause (hence it is void ab initio). Where the deed of sale states that the purchase price has
been paid but in fact has never been paid, the deed of sale is null and void ab inito for lack
of consideration.
In Mapalo v. Mapalo a contract of sale is null and void and produces no effect whatsoever where the
same is without cause or consideration in that the purchase price which appears thereon as paid has in
fact never been paid
In Vda. De Catindig v. Heirs of Catalina Roque such a sale is non-existent or cannot be considered as
consummated

(3) Moreover, the contract is also void for lack of consent. There was a disagreement on the
manner of payment, as Reynes expected Montecillo to pay directly the P47,000, while
Montecillo thought he should pay the price to Cebu Ice Storage to settle the mortgage debt.
Held

Petiition is DENIED. Assailed Decision of the Court of Appeals is AFFIRMED. Costs against the petitioner.

1 Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it

Prepared by: VJ Dominguez (Sales | Prof. Jardeleza)