University of Mindanao - College of Legal Education

SALES

Case Name Montecillo v. Reynes

Docket Number | Date G.R. No. 138018            July 26, 2002

Ponente CARPIO, J.:

Petitioners RIDO MONTECILLO

Respondents IGNACIA REYNES and SPOUSES REDEMPTOR and

ELISA ABUCAY

Case summary (Maximum of 5
sentences)
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.

Doctrine 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.

Trigger words/Phrase

Relevant Facts

 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 Jayag’s 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 Decidendi

W/N Montecillo should The DoS did not even state that the P47,000 was to be paid to
have paid the purchase Cebu Ice Storage. Montecillo did not produce evidence showing
price to Cebu Ice that Reynes agreed to the payment of the price to CIS. Applying
Storage Art. 1420, payment to CIS would not extinguish the obligation of
Montecillo to Reynes.
ANSWER: NO
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 Jayag’s mortgage debt with CIS. Thus,
payment to CIS could not redound to the benefit of Reynes.

W/N the Deed of Sale is Contracts have 3 essential requisites: consent, object, and
void ab initio or only cause.
rescissible Montecillo argues that the DoS is a valid sale because all three
requisites are present, that there is only a non-payment of
ANSWER: VOID AB consideration, which is just a breach of his obligation to pay on
INITIO 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.

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”

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.

Ruling

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