G.R. No. 138018 - Montecillo vs. Reynes

Petitioner Rido Montecillo was the vendee in a Deed of Sale dated March 1, 1984 purporting to convey a parcel of land in Mabolo, Cebu City (the "Mabolo Lot").
Respondents Ignacia Reynes and Spouses Redemptor and Elisa Abucay were the plaintiffs below; Reynes alleged she owned the Mabolo Lot covered by Transfer Certificate of Title No. 74196 containing 448 square meters.
In 1981 Reynes sold 185 square meters of the Mabolo Lot to the Spouses Abucay, who occupied the portion purchased.

The Deed of Sale recited consideration of FORTY SEVEN THOUSAND (P47,000.00) PESOS "to me in hand paid by Rido Montecillo, receipt of which is hereby acknowledged," and described the Mabolo Lot as TCT No. 74196.
Reynes signed by thumb-mark because she was illiterate.
Montecillo promised to pay the agreed P47,000.00 within one month from signing.

Montecillo allegedly did not pay the purchase price within the one-month period; Reynes demanded return of the Deed of Sale, which Montecillo refused.
Reynes unilaterally revoked the sale and on May 23, 1984 executed a Deed of Sale transferring the entire Mabolo Lot to the Spouses Abucay for FIFTY THOUSAND (P50,000) PESOS, confirming the 1981 sale of the 185-square-meter portion.
On June 18, 1984 Reynes and the Spouses Abucay learned that the Register of Deeds had issued Certificate of Title No. 90805 in the name of Montecillo.

Montecillo claimed to be a buyer in good faith and alleged he had actually paid the P47,000.00 consideration but admitted a balance of P10,000.00 remained.
He asserted he paid P50,000.00 to release a chattel mortgage involving Bienvenido Jayag with Cebu Ice and Cold Storage Corporation ("Cebu Ice Storage") and paid real property tax and capital gains tax.
At pre-trial Montecillo maintained his payment to Cebu Ice Storage for Jayag's mortgage constituted the consideration for his purchase.

Reynes asserted she had nothing to do with Jayag's mortgage debt and that the chattel mortgage on Jayag's house could not encumber the Mabolo Lot.
They alleged Montecillo had no authority to discharge the chattel mortgage after Reynes revoked the Deed and that Montecillo procured the release of the mortgage by machination.
They alleged the payment to Cebu Ice Storage did not benefit Reynes and that the mortgage debt had prescribed (debt due January 30, 1967).

The Regional Trial Court, Branch 18, Cebu City, found that Montecillo never paid Reynes the...(Subscriber-Only)

Whether there was an agreement between Reynes and Montecillo that the stated consideration of P47,000.00 in the Deed of Sale should be paid to Cebu Ice and Cold Storage to secure release of the Transfer Certificate of Title.
If there was no such agreement, whether the Deed of Sale is void ab initio or simply rescissible.