Digest Cases Oblicon

Topics: Contract, Appellate court, Supreme court Pages: 50 (20785 words) Published: January 15, 2013
OBLICON: EXTINGUISHMENT OF OBLIGATIONs  Payment or Performance 1. Montecillo vs. Reynes FACTS: Respondents Ignacia Reynes and Spouses Abucay filed on June 20, 1984 a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo. Reynes asserted that she is the owner of a lot situated in Mabolo, Cebu City containing an area of 448 square meters. In 1981, Reynes sold 185 square meters of the Mabolo Lot to the Abucay Spouses who built a residential house on the lot they bought. Reynes signed a Deed of Sale of the whole 448 square meters Mabolo Lot in favor of Montecillo on March 1, 1984. Montecillo promised to pay the agreed P47,000.00 purchase price within one month from the signing of the Deed of Sale. 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, on May 23, 1984 Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire Mabolo Lot, at the same time confirming the previous sale in 1981 of a 185-square meter portion of the lot. Respondents alleged that on June 18, 1984 they received information that the Register of Deeds of Cebu City issued Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot. Respondents 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 No. 90805 in the name of Montecillo. In his answer, Montecillo claimed he was a buyer in good faith and had actually paid the P47,000.00 consideration stated in his Deed of Sale. He, however, admitted he still owed Reynes a balance of P10,000.00. He also alleged that he paid P50,000.00 for the release of the chattel mortgage which he argued constituted a lien on the Mabolo Lot. He paid to Cebu Ice and Cold Storage Corporation for the mortgage debt of Bienvenido Jayag. Montecillo argued that the release of the mortgage was necessary since the mortgage constituted a lien on the Mabolo Lot. Reynes, however, stated that she had nothing to do with Jayag’s mortgage debt except that the house mortgaged by Jayag stood on a portion of the Mabolo Lot. Reynes further claimed that the mortgage debt had long prescribed since the P47,000.00 mortgage debt was due for payment on January 30, 1967. On March 24, 1993, the RTC of Cebu City, Branch 18, rendered a Decision declaring the deed of sale of a parcel of land in favor of petitioner null and void ab initio. The Court of Appeals, in its July 16, 1998 Decision as well as its February 11, 1999 Order denying petitioner’s Motion for Reconsideration, affirmed the trial court’s decision in toto. Before this Court now is a Petition for Review on Certiorari assailing the Court of Appeals’ decision and order. ISSUES: 1. “Was there 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?” 2. “If there was none, is the Deed of Sale void from the beginning or simply rescissible?

HELD: 1. Absent any evidence showing that Reynes had agreed to the payment of the purchase price to any other party, the payment to be effective must be made to Reynes, the vendor in the sale. Article 1240 of the Civil Code provides that “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.” Thus, Montecillo’s payment to Cebu Ice Storage is not the payment that would extinguish Montecillo’s obligation to Reynes under the Deed of Sale. It militates against common sense for Reynes to...
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