Montecillo v Reynes

G.R. No.138018. July 26, 2002

Art. 1318 - Requisites of Contract

Facts:

·         Respondents Ignacia Reynes and Spouses Abucay filed a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo.

·         Reynes signed a Deed of Sale in favor to Montecillo in consideration for P47,000.00 purchase price payable within one month from the signing of the Deed of Sale.

·         Reynes further alleged that 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.

·         Subsequently, Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire Mabolo Lot, at the same time confirming the previous sale of a 185-square meter portion of the lot.

·         Respondents, receiving  information that the Register of Deeds of Cebu City issued Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot, argued that “for lack of consideration there was no meeting of the minds” between Reynes and Montecillo. Thus, the trial court should declare null and void ab initio Montecillo’s Deed of Sale, and order the cancellation of Certificate of Title in the name of Montecillo.

Issue:

WoN the failure of Montecillo to pay the 47,000 as consideration for the lot prevented the existence of the contract.

Held:

Yes, the Supreme Court holds that the failure of Montecillo to pay the purchase price of the lot ceases the contract to exist.

Under Article 1318 of the Civil Code, “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.”

Where the deed of sale states that the purchase price has been paid but in fact has never been paid for lack of consideration. This has been the well-settled rule as early as Ocejo Perez & Co. v. Flores:

In that case at bar, the agreed purchase price in consideration of the lot in questioned has in fact never been paid by Monticillo to the Reyes. Hence, the deed of sale is null and void ab initio as such a sale is non-existent or cannot be considered consummated.

           Thus, the petition is DENIED.