Case Digest: Montecillo vs. Reyes, et.al., G.R. No. 138018

Rido Montecillo vs. Ignacia Reynes and Spaires Redemptor & Elisa Abucay, G.R. No. 138018, July 26, 2002

Subject: Obligations and Contracts

FACTS

Reynes was the owner of the “Mabolo lot” in Mabolo, Cebu City containing an area of 448 square meter. 1n 1981, he sold the 185 square meter to Abucay Spouses. 

On March 1, 1984 she signed a Deed of Sale of the Mabolo Lot in favor of Montecillo. Reynes, being illiterate, signed by affixing her thumb-mark on the document. Montecillo promised to pay the agreed P47,000.00 purchase price within one month from the signing of the Deed of Sale. However, Montecillo failed to pay the purchase price after the lapse of the one-month period, prompting Reynes to demand from Montecillo the return of the Deed of Sale. Since Montecillo refused to return the Deed of Sale, Reynes executed a document unilaterally revoking the sale and gave a copy of the document to Montecillo.

On May 23, 1984 Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire Mabolo Lot. However, they received information that the Register of Deeds of Cebu City issued a title of Mabolo lot in the name of Montecillo.

Hence, in June 1984, Reynes and Abucay Spouses filed a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo. Reynes and the Abucay Spouses argued that "for lack of consideration there (was) no meeting of the minds" between Reynes and Montecillo. Trial Court decided in favor of Reyes. CA affirmed the decision. Hence this petition.

ISSUE

Whether or not the deed of sale void from the beginning or simply rescissible.

RULING

Yes, the deed of sale is void ab initio and not simply rescissible.

Under the law (Art 1318, NCC), there is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; (3) cause of the obligation which is established.

This is not merely a case of failure to pay the purchase price, as Montecillo claims, which can only amount to a breach of obligation with rescission as the proper remedy. What we have here is a purported contract that lacks a cause — one of the three essential requisites of a valid contract. Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract. SC ruled that 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.