THIRD DIVISION

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

RIDO

MONTECILLO, petitioner,
vs. IGNACIA
REYNES
and
SPOUSES
REDEMPTOR
and
ELISA ABUCAY, respondents.
DECISION

CARPIO, J.:

The Facts
Respondents IgnaciaReynes (Reynes
for brevity) and Spouses Abucay (Abucay
Spouses for brevity) filed on June 20, 1984
a complaint for Declaration of Nullity and
Quieting of Title against petitioner
RidoMontecillo
(Montecillo
for
brevity). Reynes asserted that she is the
owner of a lot situated in Mabolo, Cebu City,
covered by Transfer Certificate of Title No.
74196 and containing an area of 448 square
meters (Mabolo Lot for brevity). 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 alleged further that on March 1,
1984 she signed a Deed of Sale of the
Mabolo Lot in favor of Montecillo
(Montecillos
Deed
of
Sale
for
brevity). 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.
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.
Reynes and the Abucay Spouses
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 Montecillos 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.
The trial court rendered a decision on
March 24, 1993 declaring the Deed of Sale
to Montecillo null and void. The trial court
ordered the cancellation of Montecillos
Transfer Certificate of Title No. 90805 and
the issuance of a new certificate of title in
favor of the Abucay Spouses. The trial court
found that Montecillos Deed of Sale had no
cause or consideration because Montecillo
never
paid
Reynes
the P47,000.00
purchase price, contrary to what is stated in
the Deed of Sale that Reynes received the
purchase price. The trial court ruled that
Montecillos Deed of Sale produced no
effect
whatsoever
for
want
of
consideration.
Not satisfied with the trial courts
Decision, Montecillo appealed the same to
the Court of Appeals.

Ruling of the Court of Appeals

The appellate court affirmed the
Decision of the trial court in toto and
dismissed the appeal on the ground that
Montecillos Deed of Sale is void for lack of
consideration. The appellate court also
denied
Montecillos
Motion
for
Reconsideration on the ground that it raised
no new arguments.

Still dissatisfied, Montecillo filed the

present petition for review on certiorari.

The Issues
Whether or not the Deed of Sale is
void from the beginning or
simply rescissible?

The Ruling of the Court

The petition is devoid of merit.

whether the Deed of Sale is void ab initio

or only rescissible.
Montecillo argues there is only a
breach of his obligation to pay the full
purchase price on time. Such breach
merely gives Reynes a right to ask for
specific performance, or for annulment of
the obligation to sell the Mabolo Lot. These
arguments are not persuasive.
On its face, Montecillos Deed of
Absolute Sale appears supported by a
valuable consideration. However, based on
the evidence presented by both Reynes and
Montecillo, the trial court found that
Montecillo never paid to Reynes, and
Reynes never received from Montecillo,
the P47,000.00 purchase price. There was
indisputably
a
total
absence
of
consideration contrary to what is stated in
Montecillos Deed of Sale. As pointed out
by the trial court
we find no reason to deviate from the
findings of both the trial and appellate courts
that no valid consideration supported
Montecillos Deed of Sale.
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
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.
In summary, Montecillos Deed of Sale
is null and void ab initio not only for lack of
consideration, but also for lack of
consent. The cancellation of TCT No.
90805 in the name of Montecillo is in order
as there was no valid contract transferring
ownership of the Mabolo Lot from Reynes to
Montecillo.
WHEREFORE, the petition is DENIED
and the assailed Decision dated July 16,
1998 of the Court of Appeals in CA-G.R. CV
No. 41349 is AFFIRMED. Costs against
petitioner.

G.R. No. 179653

July 31, 2009

UNITED MUSLIM AND CHRISTIAN URBAN

POOR ASSOCIATION, INC. represented by its
President, MANUEL V. BUEN, Petitioner,
vs.
BRYC-V DEVELOPMENT CORPORATION
represented by its President, BENJAMIN
QUIDILLA; and SEA FOODS CORPORATION,
represented by its Executive Vice President,
VICENTE T. HERNANDEZ,Respondents.
DECISION
NACHURA, J.:
The facts are simple.
Respondent Sea Foods Corporation (SFC) is
the registered owner of Lot No. 300 located in
Lower Calainan, Zamboanga City and covered
by Transfer Certificate of Title (TCT) No. 3182
(T-576).
Sometime in 1991, petitioner United Muslim and
Christian Urban Poor Association, Inc.
(UMCUPAI), an organization of squatters

occupying Lot No. 300, through its President,

Carmen T. Diola, initiated negotiations with SFC
for the purchase thereof. UMCUPAI expressed
its intention to buy the subject property using the
proceeds of its pending loan application with
National Home Mortgage Finance Corporation
(NHMF). Thereafter, the parties executed a
Letter of Intent to Sell by [SFC] and Letter of
Intent to Purchase by UMCUPAI

WHETHER OR NOT THE LETTER OF INTENT

TO SELL AND LETTER OF INTENT TO BUY A
BILATERAL RECIPROCAL CONTRACT
WITHIN THE MEANING OR CONTEMPLATION
OF ARTICLE 1479, FIRST PARAGRAPH, CIVIL
CODE OF THE PHILIPPINES?4

However, the intended sale was derailed due to

UMCUPAIs inability to secure the loan from
NHMF as not all its members occupying Lot No.
300 were willing to join the undertaking. Intent
on buying the subject property, UMCUPAI, in a
series of conferences with SFC, proposed the
subdivision of Lot No. 300 to allow the squatteroccupants to purchase a smaller portion thereof.

Well-entrenched in jurisprudence is the rule that

factual findings of the trial court, especially when
affirmed by the appellate court, are accorded the
highest degree of respect and are considered
conclusive between the parties.5A review of such
findings by this Court is not warranted except
upon a showing of highly meritorious
circumstances, such as: (1) when the findings of
a trial court are grounded entirely on
speculation, surmises or conjectures; (2) when a
lower courts inference from its factual findings is
manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion in the
appreciation of facts; (4) when the findings of the
appellate court go beyond the issues of the
case, or fail to notice certain relevant facts
which, if properly considered, would justify a
different conclusion; (5) when there is a
misappreciation of facts; (6) when the findings of
fact are conclusions without mention of the
specific evidence on which they are based, or
are premised on the absence of evidence, or are
contradicted by evidence on record.6 None of
the foregoing exceptions necessitating a
reversal of the assailed decision obtain in this
instance.

A year later, UMCUPAI filed with the RTC a

complaint against respondents SFC and BRYC
seeking to annul the sale of Lot No. 300-C, and
the cancellation of TCT No. T-121,523.
UMCUPAI alleged that the sale between the
respondents violated its valid and subsisting
agreement with SFC embodied in the Letter of
Intent. According to UMCUPAI, the Letter of
Intent granted it a prior, better, and preferred
right over BRYC in the purchase of Lot No. 300C.
In a separate Answer, SFC countered that the
Letter of Intent dated October 4, 1991 is not, and
cannot be considered, a valid and subsisting
contract of sale. After trial, the RTC dismissed
UMCUPAIs complaint. The lower court found
that the Letter of Intent was executed to facilitate
the approval of UMCUPAIs loan from NHMF for
its intended purchase of Lot No. 300. According
to the RTC, the Letter of Intent was simply
SFCs declaration of intention to sell, and not a
promise to sell, the subject lot. On the whole, the
RTC concluded that the Letter of Intent was
neither a promise, nor an option contract, nor an
offer contemplated under Article 1319 of the Civil
Code, or a bilateral contract to sell and buy.
As previously adverted to, the CA, on appeal,
affirmed in toto the RTCs ruling.
ISSUE:

The petition deserves scant consideration. We

completely agree with the lower courts rulings.

An accepted unilateral promise to buy or to sell

a determinate thing for a price certain is binding
upon the promissor if the promise is supported
by a consideration distinct from the price.
The case of Coronel v. Court of Appeals8 is
illuminating and explains the distinction between
a conditional contract of sale under Article 1458
of the Civil Code and a bilateral contract to sell
under Article 1479 of the same code:
A contract to sell may thus be defined as a
bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the
subject property despite delivery thereof to the

prospective buyer, binds himself to sell the said

property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon,
that is, full payment of the purchase price.
In the instant case, however, the parties
executed a Letter of Intent, which is neither a
contract to sell nor a conditional contract of sale.
As found by the RTC, and upheld by the CA, the
Letter of Intent was executed to accommodate
UMCUPAI and facilitate its loan application with
NHMF.
Blacks Law Dictionary says that a Letter of
Intent is customarily employed to reduce to
writing a preliminary understanding of parties
who intend to enter into contract. It is a phrase
ordinarily used to denote a brief memorandum of
the preliminary understanding of parties who
intend to enter into a contract. It is a written
statement expressing the intention of the parties
to enter into a formal agreement especially a
business arrangement or transaction.
An intention is a mere idea, goal, or plan. It
simply signifies a course of action that one
proposes to follow. It simply indicates what one
proposes to do or accomplish. A mere "intention"
cannot give rise to an obligation to give, to do or
not to do because it does not bind one party,
with respect to the other, to give something, or to
render some service
WHEREFORE, premises considered, the
petition is hereby DENIED. The Decision of the
Court of Appeals in CA G.R. CV No. 62557 and
the Regional Trial Court in Civil Case No.
467(4544) are AFFIRMED. Costs against the
petitioner.

ALI AKANG vs.MUNICIPALITY OF

ISULAN, SULTAN KUDARAT PROVINCE
G.R. No. 186014

June 26, 2013

FACTS:

the

Ali Akang (petitioner) is a member of

national and cultural community

belonging to the Maguindanaon tribe of

Isulan, Province of Sultan Kudarat and the
registered owner of parcel of land located at
Isulan, Sultan Kudarat, with an area of
20,030 square meters.
Sometime in 1962, a two-hectare
portion of the property was sold by the
petitioner to the Municipality of Isulan,
Province of Sultan Kudarat (respondent)
through then Isulan Mayor DatuAmpatuan
under a Deed of Sale executed on July 18,
1962 for P3,000 to be used purposely and
exclusively as a Government Center site.
The
respondent
immediately
took
possession of the property and began
construction of the municipal building.
Thirty-nine (39) years later or on
October 26, 2001, the petitioner, together
with his wife, PataoTalipasan, filed a civil
action for Recovery of Possession of
Subject Property and/or Quieting of Title
thereon and Damages against the
respondent, represented by its Municipal
Mayor, et al.
In his complaint, the petitioner
alleged, among others, that the agreement
was one to sell, which was not
consummated as the purchase price was
not paid.
In its answer, the respondent denied
the petitioners allegations, claiming, among
others: that the petitioners cause of action
was already barred by laches; that the Deed
of Sale was valid; and that it has been in
open, continuous and exclusive possession
of the property for forty (40) years.
ISSUE:
Whether the Deed of Sale dated July 18,
1962 is a valid and perfected contract of
sale;

HELD:
The Deed of Sale is a Valid Contract
of Sale.
By the contract of sale, one of the
contracting parties obligates himself to
transfer the ownership of and to deliver a
determinate thing, and the other to pay
therefore a price certain in money or its
equivalent.The elements of a contract of
sale are: (a) consent or meeting of the
minds, that is, consent to transfer ownership
in exchange for the price; (b) determinate
subject matter; and (c) price certain in
money or its equivalent.
A contract to sell, on the other hand,
is a bilateral contract whereby the
prospective seller, while expressly reserving
the ownership of the subject property
despite delivery thereof to the prospective
buyer, binds himself to sell the said property
exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, that
is, full payment of the purchase price.
In a contract of sale, the title to the
property passes to the buyer upon the
delivery of the thing sold, whereas in a
contract to sell, the ownership is, by
agreement, retained by the seller and is not
to pass to the vendee until full payment of
the purchase price.
The Deed of Sale executed by the
petitioner and the respondent is a perfected
contract of sale, all its elements being
present. There was mutual agreement
between them to enter into the sale, as
shown by their free and voluntary signing of
the contract. There was also an absolute
transfer of ownership of the property by the
petitioner to the respondent.
ESTELITA VILLAMAR,

Petitioner,

April 11, 2
- versus -

BALBINO MANGAOIL,
Respondent.

FACTS:

The
petitioner
Villamar,
the
registered owner of the property, entered
into an agreement with the respondent
Mangaoil to purchase and sale a parcel of
land. The terms in their agreement includes
the down payment of P 185,000 pesos,
which will be for the payment of a loan
secured from the Rural Bank of Cauayan so
that it will be withdrawn and released from
the bank and that a deed of absolute sale
will be executed in favor of the respondent
Mangaoil which was complied by the
parties.

Consequently,
the
respondent
Mangaoil informed the petitioner that he will
withdraw from the agreement for the land
was not yet free from incumbrances as
there were still tenants who were not willing
to vacate the land without giving them back
the amount that they mortgaged the land.
Also, the petitioner failed and refused,
despite repeated demands, to hand over the
Certificate of Title. Then, the respondent
Mangaoil demanded the refund of the down
payment that he had secured with the
petitioner and filed a complaint with the RTC
to rescind the contract of sale. In the
response of the petitioner, she averred that
she had already complied with the
obligations and caused the release of the
mortgaged land and the delivery of the

Certificate of Title will be facilitated by a

certain Atty. Pedro C. Antonio. The
respondent insisted that he can rescind the
contract for the petitioner had failed to
deliver the Certificate of Title.

The RTC and the CA dismissed the

complaints for upon the deed of absolute
sale, there was already a valid and
constructive delivery.

ISSUE:
Whether the failure of petitioner-seller to
deliver the certificate of title over the
property to respondent-buyer is a breach of
obligation in a contract of sale of real
property that would warrant rescission of the
contract;

Whether or not the execution of the deed of

sale of real property is equivalent to a valid
and constructive delivery?

HELD:
A party is entitled to demand for the
rescission of their contract for the failure to
deliver the physical possession of the
subject property and the certificate of title
covering the same notwithstanding the
absence of stipulations in the agreement
expressly indicating the consequences of
such omission, pursuant to Article 1191 of
the NCC, which states that the power to
rescind obligations is implied in reciprocal
ones, in case one of the obligors should not
comply with what is incumbent upon him.

Article 1498 of the NCC generally

considers the execution of a public
instrument as constructive delivery by the
seller to the buyer of the property subject of
a contract of sale. The execution of the
deed of absolute sale does not constitute a
constructive delivery for this case falls under
to the exception since a mere presumption
and not conclusive delivery was created as
the respondent failed to take material
possession of the subject property. A person
who does not have actual possession of the
thing sold cannot transfer constructive
possession by the execution and delivery of
a public instrument. Thus, the respondent
can rescind the contract.
There is symbolic delivery of the
property subject of the sale by the execution
of the public instrument, unless from the
express terms of the instrument, or by clear
inference therefrom, this was not the
intention of the parties. Such would be the
case, for instance, where the vendor has no
control over the thing sold at the moment of
the sale, and, therefore, its material delivery
could not have been made.
As a general rule, the execution of a
public instrument amounts to a constructive
delivery of the thing subject of a contract of
sale. However, exceptions exist, among
which is when mere presumptive and not
conclusive delivery is created in cases
where the buyer fails to take material
possession of the subject of sale. A person
who does not have actual possession of the
thing sold cannot transfer constructive
possession by the execution and delivery of
a public instrument.
The petition was denied and the
petitioner is bound return the down payment
plus interest to the respondent.