Montecillo v. Reynes
REITERATIONFacts
The Antecedents: Respondents Ignacia Reynes and Spouses Abucay filed a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo. Reynes alleged she owned a lot (Mabolo Lot) covered by TCT No. 74196. In 1981, she sold a portion to the Abucay Spouses. On March 1, 1984, Reynes, being illiterate, signed a Deed of Sale of the Mabolo Lot in favor of Montecillo, who promised to pay P47,000.00 within one month. Montecillo failed to pay, prompting Reynes to revoke the sale. Subsequently, Reynes sold the entire Mabolo Lot to the Abucay Spouses on May 23, 1984. On June 18, 1984, Reynes and the Abucay Spouses learned that TCT No. 90805 was issued in Montecillo's name. They argued that the sale to Montecillo was void for lack of consideration and meeting of the minds. Procedural History: The Regional Trial Court (RTC) declared Montecillo's Deed of Sale null and void ab initio, ordered the cancellation of TCT No. 90805, and declared the Abucay Spouses as rightful vendees. The RTC found that Montecillo never paid the P47,000.00 purchase price to Reynes, rendering the deed without cause or consideration. The Court of Appeals affirmed the RTC's decision, holding that the deed of sale was void for lack of consideration. The appellate court also denied Montecillo's motion for reconsideration. The Petition: Montecillo filed a Petition for Review on Certiorari, questioning whether the Deed of Sale was void from the beginning or simply rescissible, and whether there was an agreement that the P47,000.00 be paid to Cebu Ice and Cold Storage to secure the release of a title.
Issue(s)
Whether there was an agreement between Reynes and Montecillo that the stated consideration of P47,000.00 in the Deed of Sale be paid to Cebu Ice and Cold Storage to secure the release of the Transfer Certificate of Title, and whether such payment, if made, constituted valid payment to Reynes. Whether the Deed of Sale is void ab initio due to lack of consideration and consent, or merely rescissible.
Ruling
The petition is devoid of merit. The Supreme Court affirmed the decision of the Court of Appeals, holding that Montecillo's Deed of Sale is null and void ab initio for lack of consideration and lack of consent.
Ratio Decidendi
On the first issue (manner of payment to Cebu Ice Storage): Montecillo failed to present any evidence that Reynes agreed to have the P47,000.00 purchase price paid to Cebu Ice Storage. Article 1240 of the Civil Code mandates that payment must be made to the person in whose favor the obligation was constituted, or his successor, or an authorized person. Montecillo's payment to Cebu Ice Storage for a chattel mortgage debt of a third party did not extinguish his obligation to Reynes. The trial court correctly found that Reynes had no involvement with the mortgage debt, and the payment made by Montecillo was a matter between him and the third party, not an encumbrance on the land. Therefore, Montecillo's payment to Cebu Ice Storage was not a valid payment to Reynes. On the second issue (void ab initio or rescissible): The Deed of Sale stated that the P47,000.00 was paid and acknowledged by Reynes. However, evidence showed that Montecillo never paid Reynes, and Reynes never received the purchase price. This constitutes a total absence of consideration, making the contract void ab initio under Article 1352 of the Civil Code. Furthermore, there was no meeting of the minds between Reynes and Montecillo regarding the manner of payment. Reynes expected direct payment, while Montecillo believed he was to pay Cebu Ice Storage. This disagreement on a fundamental aspect of the sale prevented the formation of consent, rendering the contract void for lack of consent, as per the ruling in San Miguel Properties Philippines, Inc. v. Huang. Thus, the Deed of Sale is null and void ab initio for both lack of consideration and lack of consent.
Main Doctrine
A deed of sale is null and void ab initio for lack of consideration when the purchase price stated as paid has in fact never been paid. Furthermore, a contract of sale is void for lack of consent if there is no meeting of the minds between the parties on the essential elements, including the manner of payment of the purchase price.