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1. Buenaventura vs.

CA FACTS: Defendant spouses Leonardo and Feliciana Landrito are parents of co-defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino. They are also the parents of plaintiffs Consolacion, Nora, Emma, and Natividad. A deed of sale was executed by the defendant spouses in favor of their co-defendant children. However, such deed of sale is sought to be declared null and void by the plaintiffs arguing that there was no consideration, and that assuming there was one, the property was 3 times more valuable than the appearing consideration and that the sale was intended to deliberately deprive the compulsory heirs their legitimes. RTC ruled in favor of the defendants and dismissed the complaint. On the grounds that plaintiffs does not have a valid cause of action against defendants since there can be no legitime to speak of prior to the death of their parents. ISSUE: W/N the Deeds of Sale are void for lack of consideration HELD: The court ruled that the deed of sale is valid. A contract of sale is consensual which becomes binding upon the meeting of the minds as to the price. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment. 2. Gaite vs. Fonacier 3. Celestino Co & Co. vs. Collector of Internal Revenue Facts: Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of Oriental Sash Factory. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash, door and window factory. However in 1952 it began to claim liability only to the contractors 3 per cent tax (instead of 7 per cent) under section 191 of the same Code. It alleges primarily that it is an ordinary contractor, presenting as evidence letters, sketches and price quotations sent by the manager to four customers who allegedly made special orders to doors and window from the said factory. It contended that it does not manufacture ready-made doors, sash and windows for the public but only upon special order of its select customers. Issue: 1) WON Co & Co. is a manufacturer or contractor? MANUFACTURER, hence still liable for 7% tax. 2) WON Is Co & Co.s business a matter of contract of sale or contract of piece of work? SALE. Held: 1) The important thing to remember is that Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it manufactures the same is practically admitted by appellant itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders as called for the employment of such material-moulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. The Oriental Sash Factory does nothing more than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and combining them in such forms as its customers may desire. 2) Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is contract for a piece of work. When it accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. Oriental Sash Factory did not merely sell its services to Teodoro & Co. It sold materials ordinarily manufactured by it sash, panels, mouldings to Teodoro & Co., although in such form or combination as suited the fancy of the purchaser. Such new form does not divest the Oriental Sash Factory of its character as manufacturer. Neither does it take the transaction out of the category of sales under Article 1467 above quoted, because although the Factory does not, in the ordinary course of its business, manufacture and keep on stock doors of the kind sold to Teodoro, it could stock and/or probably had in stock the sash, mouldings and panels it used therefor. Supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a contractor. But as the doors and windows had been admittedly manufactured by the Oriental Sash Factory, such transactions could be, and should be taxed as transfers thereof under section 186 of the National Revenue Code. 4. Commissioner of Internal Revenue vs. Engineering and Supply Company Facts: Engineering Equipment and Supply Co., an engineering and machinery firm, is engaged in the design and installation of central type air conditioning system, pumping plants and steel fabrications. CIR received an anonymous letter denouncing Engineering for tax evasion by misdeclaring its imported articles and failing to pay the correct percentage taxes due thereon in connivance with its foreign suppliers. Engineering was likewise denounced to the Central Bank (CB) for alleged fraud in obtaining its dollar allocations. So, NBI and Central Bank conducted a raid and search on which occasion voluminous records of the firm were seized and confiscated. CIR also

reported about deficiency advance sales tax. CIR assessed against the Company payment of the increased amount and suggested that P10,000 be paid as compromise in extrajudicial settlement of the Companys penal liability for violation of the Tax Code. The firm, however, contested the tax assessment and requested that it be furnished with the details and particulars of the Commissioners assessment. Engineering appealed the case to the Court of Tax Appeals. During the pendency of the case the investigating revenue examiners reduced the Companys deficiency tax. CTA declared that Engineering is a contractor and is exempt from deficiency manufacturers sales tax. The Commissioner, not satisfied with the decision of the CTA, appealed to the Supreme Court. Issue: 1) WON Engineering Equipment is a manufacturer or a contractor 2) WON the installation of a centralized air-conditioning system a contact of sale or a contract for piece of work? Held: 1) The word contractor has come to be used with special reference to a person who, in the pursuit of the independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to the petty details. The true test of a contractor is that when he renders service in the course of an independent occupation, representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished. Engineering did not manufacture air conditioning units for sale to the general public, but imported some items (as refrigeration compressors in complete set, heat exchangers or coils) which were used in executing contracts entered into by it. Engineering undertook negotiations and execution of individual contracts for the design, supply and installation of air conditioning units of the central type taking into consideration in the process such factors as the area of the space to be air conditioned; the number of persons occupying or would be occupying the premises; the purpose for which the various air conditioning areas are to be used; and the sources of heat gain or cooling load on the plant such as sun load, lighting, and other electrical appliances which are or may be in the plan. Relative to the installation of air conditioning system, Engineering designed and engineered complete each particular plant and that no two plants were identical but each had to be engineered separately. 2) The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one NOT in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. If the article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no change or modification of it is made at defendants request, it is a contract of sale, even though it may be entirely made after, and in consequence of, the defendants order for it. The air conditioning units installed in a central type of air conditioning system would not have existed but for the order of the party desiring to acquire it and if it existed without the special order of Engineerings customer, the said air conditioning units were not intended for sale to the general public. Hence, it is a contract for a piece of work. 5. Quiroga vs. Parsons Hardware Co. Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an agent of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds. Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. With the exception of the obligation on the part of the defendant to order the beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds. Issue: Whether the contract is a contract of agency or of sale. Held: In order to classify a contract, due attention must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. Payment was to be made at the end of sixty days, or before, at the plaintiffs request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not

succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. In respect to the defendants obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will. For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. 11. Paragas vs. Heirs of Dominador Blanco FACTS: Gregorio Balacano, 80, was the registered owner of two lots in Isabela. His wife died before him. Prior to his death, Gregorio was admitted to the Philippine Veterans Hospital on June 19, 1996 due to liver cirrhosis before his death roughly after a week. Gregorio purportedly signed a Deed of Sale with spouses Rudy and Corazon Paragas for the two lots with a consideration of P500,000.00 on June 22, 1996. The spouses later sold the lots to a certain Catalino. Gregorios certificates of title over the lands were thereafter cancelled and new certificates were made in favour of the buyer. Later on, the children of Gregorios son, Domingo, filed a suit to nullify the sales entered into on the ground of the impossibility that Gregorio on his week physical and mental faculties can enter into a meeting of minds and give his consent on a Deed of Sale and that Catalino have manipulated Gregorio into the contract against the latters will. They also contend that even if the sale is valid, Gregorio can only transfer half of the property since the same is conjugal. The other party denies the allegations of the former and claims that there is no cause of action for the complaint because the complainants failed to present any ground for vitiation of consent they allege to have taken place. They filed a motion to dismiss the case on such a basis. Evidence and witness testimonies have been presented by both parties to prove their claims. The lower court denied the motion to dismiss and decided the case against spouses Paragas on the grounds that the Deed of Sale is void since the same has not been notarized properly and that the spouses failed to prove the validity of the Deed of Sale. Their witnesses testimonies have been held to be unreliably and untruthful. The Court of Appeals affirmed the decision with modification in declaring that the properties involved are of Gregorios estate. The Supreme Court denied the motion for reconsideration filed by the spouses and affirmed the CA decision. ISSUE: (1) Whether or not the Deed of Sale between Gregorio and the spouses is valid (2) Whether or not the transfer of the lots in favour of Catalino is valid RULING: (1) NO. Exception to the general rule that advanced age does not mean incompetence to enter into a contract is when the advanced age and condition brings reasonable doubt as to the ability of the person to give his consent freely and knowingly. In this case, Gregorio is not only of advanced age but is also in the advanced stage of a disease that eventually took his life. It cannot be expected of him to be of the right faculties to give his free consent. (2) NO. Nobody can dispose of which that does not belong to him. Nemo dat quod non habet. The seller-spouses does not have a valid right over the property; hence, the transferee also has no right to claim. 12. Calimlim-Canullas vs. Fortun Facts: Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married with five children and were staying in a house built in a lot inherited by the latter from his father and situated in Bugallon, Pangasinan. In 1978, Fernando left the family home to cohabitate with one Corazon Daguines. In 1968, Fernando sold the disputed lot to Daguines. Daguines then filed a suit for quieting of title for the property. Mercedes resisted the claim by Daguines on the grounds that the sale is invalid because the property allegedly transferred is part of the conjugal property and she did not give her consent. The suit of Mercedes was granted by the Court of First Instance of Pangasinan under the sala of Willelmo Fortun. Issue: Whether or not the sale of Fernando of the property to Daguines is valid. Ruling: NO. 1. The property is part of the conjugal properties of Mercedes and Fernando as mandated in the Civil Code of the Philippines that governs their marriage. In case a family home is built in a property exclusively owned by one of the spouses, the property becomes part of the conjugal partnership with a corresponding liability of the conjugal partnership to the estate of the spouse-owner. Hence, the lot cannot be sold without the Mercedes consent.

2. The sale is also invalid for being against public policy and morals. Like other kinds of contract, a sale can also be held void if it falls against the law, public policy, morals, good customs. In the instant case, the husband left the conjugal home for his concubine, leaving the family on their own. Now, he is taking the property where the family depends for support. Such acts are detrimental to the stability of the family, the basic unit of society. Also, as in the case of prohibition of donations between husband and wife, donations between common-law partners are also prohibited for reasons such as the possibility of causing unhealthy control of one spouse over the other. Such a transfer is against public policy. 13. Cruz vs. CA FACTS: Gloria R. Cruz is the owner of Lot 10, Blk. 565, PSD-38911 with an area of 747.7 sq. m, together with the improvements situated at 22 Bituan St., Bgy. Doa Imelda, QC (TCT No. 242553 in her name). On 1997, Cruz and Romeo V. Suzara lived together as husband and wife without benefit of marriage 1982, Out of love and affection for Suzara, Cruz executed a deed of absolute sale over Lot 10 in favor of Suzara without any monetary consideration. Suzara registered the document in his favor and used the property as collateral for a bank loan of P350,000.00. He failed to pay the loan. After 4 years, the mortgage was foreclosed. Cruz paid the bank P40,638.88 to restructure the loan resulting in the extension of the redemption period to 2 years. Without the knowledge of Cruz and before the expiration of the extended period, Suzara redeemed the property. Cruz executed an Affidavit of Adverse Claim to protect her interest. She filed this with the Register the Deeds of QC asserting that her sale in favor of Suzara was null and void for lack of consideration and being contrary to law and public policy. Cruz filed a complaint with the RTC of Manila against respondent Suzara for Quieting of title, declaration of nullity of documents and damages with prayer for writ of preliminary injunction Suzaras claims that he was already the registered owner of the property as evidenced by TCT No. 295388, having acquired the same from petitioner through a notarized deed of absolute sale The sale was for a valuable consideration and not tainted with fraud nor executed under duress Cruz was estopped from impugning the validity of the sale and questioning his title over the property. RTC issued a temporary restraining order enjoining Suzara, his agents and/or any person or persons acting in his behalf, from disposing and/or encumbering the litigated property until further orders. Cruz filed an ex parte motion to admit her amended complaint impleading respondentanuel R. Vizconde as additional defendant and praying that the Register of Deeds of QC be ordered to annotate her notice of lis pendens on Suzaras title RTC admitted the amended complaint and ordered the Register of Deeds to show cause why it was refusing to annotate the notice of lis pendens filed by Cruz. Register of Deeds filed a manifestation informing the trial court that the property had been sold by respondent Suzara to his co-respondent Vizconde who was already the registered owner and since Vizconde was not impleaded in the case the notice of lis pendens could not be annotated on his title until the requirements of law were met and the annotation of the notice judicially ordered. The motion to admit amended complaint impleading respondent Vizconde was filed ex parte. Vizconde claims that there was no privity of contract between him and petitioner. He was a purchaser for value in good faith The sale between him and Suzara was executed on long before the execution of the Affidavit of Adverse Claim. The action was barred by laches, estoppel and prescription. RTC dismissed the complaint and the counterclaims as well as the cross claim of Vizconde. CA affirmed the RTC judgment ISSUE: Whether or not the sale between Suzara and Vizconde could be declared null and void. HELD: NO. Although under Art. 1490 CC the husband and wife cannot sell property to one another as a rule which, for policy consideration and the dictates of morality require that the prohibition apply to common-law relationships, Cruz can no longer seek reconveyance of the property to her as it has already been acquired by respondent Vizconde in good faith and for value from her own transferee. A purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.At the time respondent Suzara executed the deed of absolute sale in favor of respondent Vizconde, which was acknowledged before a notary public, Suzara was the registered owner appearing in the certificate of title. When the sale was executed, nothing was annotated in the certificate to indicate any adverse claim of a third person or the fact that the property was the subject of a pending litigation. When Vizconde bought the property he had no knowledge that some other person had a right to or an adverse interest in the property. Vizconde paid a full and fair price for the property at the time of the purchase and before he had any notice of petitioner's claim or interest in the property. 14. Rubias vs. Batiller FACTS: Before the Japanese war, one Francisco Militante filed an application for registration of the disputed land located in Iloilo. By the end of the war, the application was heard and denied by the Court of First Instance of Iloilo. An appeal was filed by Militante. While the appeal is still pending, Militante sold the land to petitioner Atty. Domingo D. Rubias, his sonin-law. Rubias thereafter filed a case of forcible entry against Isaias Batiller who is currently occupying the land in question. Batiller claims that he is in continuous, actual, open possession of the land since the 1930s; hence, he is the bona fide owner. He also claims that the lot is owned by his grandfather Felipe Batiller which was inherited by his father

Basilio Batiller on the formers death in 1920 and was later passed on him. The lower court decided in favour of Batiller. Rubias filed an appeal in the CA which was forwarded by the latter to the Supreme Court as a pure question of law. Batiller also contends that the sale to Rubias was void because Rubias is the counsel hired by Militante for a land registration case regarding the disputed property. ISSUE: Whether or not the sale of Militante to Rubias is valid. HELD: NO. Article 1491 of the Civil Code prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; (5) judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law. Public policy renders such transactions void and invalid. The case of Rubias falls other (5) as he was the lawyer of Militante at the time of the sale. The sale entered between Militante and Rubias is invalid. 15. Phil Trust Co. vs. Roldan Facts: Mariano L. Bernardo, a minor, is the owner of seventeen parcels of land he inherited from his father, Marcelo Bernardo. Being a minor, the court granted guardianship of Mariano to his stepmother, Socorro Roldan, on 1947. By the alleged power of such guardianship, Roldan sold all seventeen parcels of land to a certain Dr. Fidel C. Ramos. A week thereafter, Ramos sold the land back to Roldan. Roldan then transferred four of the seventeen parcels to a certain Emilio Cruz. On 1948, guardianship over Bernardo was transferred to plaintiff Philippine Trust Company. The latter thereafter filed a suit to nullify the acts of former guardian Roldan over the parcels of lands owned by Bernardo on the grounds that the sale of land to Ramos that later sold the same back to Roldan is in fact a purchase of wards land by a guardian which is in violation of Article 1459 of the Civil Code; and, in this regard, the sale to Cruz is also void because of Roldans lack of capacity to sell properties not under her ownership. The lower court affirmed the validity of the sales contracts on the basis of Roldans claims that she preserved the properties to the outmost of her abilities for her wards advantage, with the option to Bernardo to purchase the lands back for P15,000 within one year. The Court of Appeals affirmed the decision adding that Bernardo actually consented to the sale and further that Deeds of sale are to be presumed valid without clear and positive proof of bad faith or fraud. Hence, this appeal to the Supreme Court. Issue: Whether or not the disputed sales contracts are valid. Ruling: NO. The general doctrine of guardianship is trust between the guardian and his ward. The trustee should not be allowed to be induced to neglect his wards interest. This is the basic tenet of the prohibition of Art. 1459 that prohibits guardians from purchasing properties of his ward under his care. 16. Macariola vs. Asuncion FACTS: Judge Elias Asuncion was the presiding Judge in Civil Case No. 3010 for partition. Among the parties thereto was Bernardita R. Macariola. On June 8, 1863 respondent Judge rendered a decision, which became final for lack of an appeal. On October 16, 1963 a project of partition was submitted to Judge Asuncion which he approved in an Order dated October 23, 1963, later amended on November 11, 1963. On March 6, 1965, a portion of lot 1184-E, one of the properties subject to partition under Civil Case No. 3010, was acquired by purchase by respondent Macariola and his wife, who were major stockholders of Traders Manufacturing and Fishing Industries Inc.,Bernardita Macariola thus charged Judge Asuncion of the CFI of Leyte, now Associate Justice of the Court of Appeals with acts unbecoming of a judge. Macariola alleged that Asuncion violated , among others, Art. 1491, par. 5 of the New Civil Code and Article 14 of the Code of Commerce. ISSUE: Is the actuation of Judge Asuncion in acquiring by purchase a portion of property in a Civil Case previously handled by him an act unbecoming of a Judge? HELD: Article 1491 , par. 5 of the New Civil Code applies only to the sale or assignment of the property which is the subject of litigation to the persons disqualified therein. The Supreme Court held that for the prohibition to operate, the sale or assignment must take place during the pendency of the litigation involving the property. In the case at bar, when respondent Judge purchased on March 6, 1965 a portion of lot 1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties filed an appeal within the reglamentary period hence, the lot in question was no longer subject of litigation. Moreover at the time of the sale on March 6, 1965, respondents order date October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long been final for there was no appeal from said orders. Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs in Civil Case

No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs after the finality of the decision in Civil Case No. 3010. Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of partition, and not during the pendency of the litigation, there was no violation of paragraph 5, Article 1491 of the New Civil Code. Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Art. 14 of the Code of Commerce must be deemed to have been abrogated because where there is a change of sovereignty , the political laws of the former sovereign , whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign. 17. Fabillo vs. IAC FACTS: Juliana Fabillo, in her last will and testament dated Aug. 16, 1957, bequeathed to her brother, Florencio, a house and lot in San Salvador, Palo, Leyte and to his husband Gregorio D. Brioso a piece of land in Pugahanay, Palo, Leyte. After Justinas death, Florencio filed a petition for the probate of said will. Florencio sought the assistance of Atty. Alfredo M. Murillo in recovering the San Salvador property. Florencio and Murillo entered into a contract, stipulating therein that Murillo shall represent Florencioin the conclusion of the two cases, and in consideration of Murillos legal services, he shall be paid, in case of success 40%of what he may acquire from the favorable judgment. In case that the properties are sold, mortgaged or leased, Murillo shall be entitled to 40% of the purchase price, proceeds of the mortgage, or rentals, respectively. Pursuant to the said contract, Murillo filed a civil case against Gregorio D. Brioso to recover the San Salvador property. However, the case was terminated when the parties entered into a compromise agreementdeclaring Florencio as the lawful owner of not only the San Salvador property but also of the parcel of land locatedat Pugahanay. As a result, Murillo proceeded to implement the contract of services between him and Florencio by taking possession and exercising rights of ownership over 40% of said properties. In 1966, Florencio claimed exclusive right of ownership over the two properties and refused to give to Murillo his share of the properties. Murillo filed in the CFI a complaint for ownership of the parcel of land. ISSUE: WON THE CONTRACT OF SERVICES VIOLATED THE PROVISION OF ART. 1491, NCC. HELD: NO! The contract of services did not violate Art. 1491,NCC. The said prohibition applies only if the sale or assignment of the property takes place during the pendency of the litigation involving the clients property. Thus, the contract between the lawyer and a client stipulating a contingent fee is not covered by said prohibition under Art. 1491(5), CC because the payment of said fee is not made during the pendency of the litigation but only after the judgment was rendered final. As long as the lawyer did not exert undue influence on his client, that no fraud is committed or implication applied, or that the compensation is clearly not excessive as to amount to extortion, a contract for contingent fee is valid and enforceable. However, the Court disagrees that the contingent fee stipulated by the parties is 40% of the properties subject of the litigation. A careful scrutiny of the contract shows that the parties intended 40% of the value of the properties as Murillos contingent fee. This is borne out by the stipulation that in case of success of any or both cases, Murillo shall be paid the sum equivalent to 40% of whatever benefit Fabillo would derive from favorable judgments. 18. PUP vs. CA Facts: Petitioner National Development Corp., a government owned and controlled corporation, had in its disposal a 10 hectares property. Sometime in May 1965, private respondent Firestone Corporation manifested its desire to lease a portion of it for ceramic manufacturing business. On August 24, 1965, both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Prior to the expiration of the aforementioned contract, Firestone wrote NDC requesting for an extension of their lease agreement. It was renewed with an express grant to Firestone of the first option to purchase the leased premise in the event that it was decided "to dispose and sell the properties including the lot..."Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through letters and calls that it was renewing its lease. No answer was given. Firestone's predicament worsened when it learned of NDC's supposed plans to dispose the subject property in favor of petitioner Polytechnic University of the Philippines. PUP referred to Memorandum Order No. 214 issued by then President Aquino ordering the transfer of the whole NDC compound to the National Government. The order of conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National Government. Firestone instituted an action for specific performance to compel NDC to sell the leased property in its favor. Issue: Whether or not there is a valid sale between NDC and PUP. Ruling: A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a determinate thing and the

promise of the vendee to receive and pay for the property so delivered and transferred. The Civil Code provision is, in effect, a "catch-all" provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration. All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the "disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject matter, and consideration therefor. Consent to the sale is obvious from the prefatory clauses of Memorandum Order No. 214 which explicitly states the acquiescence of the parties to the sale of the property. Furthermore, the cancellation of NDC's liabilities in favor of the National Government constituted the "consideration" for the sale 19. Martinez vs. CA 20. Atilano vs. Atilano FACTS: Eulogio Atilano I acquired by purchase Lot No. 535 in Zamboanga. He then acquired the transfer certificate of title in his name. He had the land subdivided into 5 parts and after it was subdivided heexecuted a deed of sale of lot 535-E to his brother, Eulogio Atilano II.He also sold the other portions retaining only for himself Lot 535-A.When he died the title of the lot passed on to his son, thedefendant. Eulogio Atilano II became a widower. He and his children wanted toend the co-ownership over the land so they caused it to be resurveyed so that it could be subdivided. It was discovered that theland they had in possession was not Lot 535-E but lot 535-A. The heirs of Atilano II filed the present action in court alleging thatthey had offered to surrender their lot and demanded that thedefendants surrender lot 535-E to them. The defendants refusedunderstandably since Lot 535-E had a bigger area. Defendants alleged that the intention of the parties was really to selllot 535-A and the reference to the deed as lot 535-E was an involuntary error. They also alleged that Eulogio Atilano I has beenin possession of Lot 535-E since 1916 up to his death, when he was succeeded by his heirs. He even increased the area when he boughta portion of the adjoining lot, 536. RTC ruled in favor of the plaintiffs (heirs of Eulogio Atilano II) onthe ground that the defendants couldnt acquire the land inprescription because it was registered under the Land RegistrationAct Issue: Won the parties intended to sell lot 535-A or lot 535-E. Ruling: logic and common sense lean in favor of the defendants. When onebuys real property like a piece of land, one buys as he sees it, in itsactual setting and by its physical metes and bounds and not by themere lot number assigned to it in the certificate of title. Eulogio Atilano II was already in possession of lot 535-A even beforehe acquired it by sale. He constructed a house therein where theplaintiff heirs reside up to now. In the same way that Eulogio AtilanoI already had lot 535-E in his possession and even acquired theproperty beside it. The real issue is not adverse possession but the intention of theparties. From the facts and circumstances it can be seen that thereal intention was that the specific portion where the vendees areresiding, where they constructed the house, where the heirs stillreside be the one conveyed and that the designation in the deedwas a simple mistake in the drafting of the document. The mistake did not vitiate the consent of the parties. The remedyhere is reformation of the instrument. But in this case the saleexecuted in the deed no longer needs to be reformed. 21. LUIS PICHEL vs. PRUDENCIO ALONZO Facts: Prudencio Alonzo and his wife sold to Pichel through a deed of sale all the fruits of the coconut trees which may be harvested in the land from 15 September 1968 to 1 January 1976, in consideration of P4,200.00. It was further stipulated that the vendors right, title, interest and participation h erein conveyed is of his own exclusive and absolute property, free from any liens and encumbrances and he warrants to Pichel good title thereto and to defend the same against any and all claims of all persons whomsoever. Even as of the date of sale, howev er, the land was still under lease to one Ramon Sua, and it was the agreement that part of the consideration of the sale, in the sum of P3,650.00, was to be paid by Pichel directly to Ramon Sua so as to release the land from the clutches of the latter. Pending said payment Alonzo refused to allow the Pichel to make any harvest. In July1972, Pichel for the first time since the execution of the deed of sale in his favor, caused the harvest of the fruit of the coconut trees in the land. Alonzo filed an action for the annulment of a Deed of Sale before the CFI Basilan City. The lower court rendered its decision holding that although the agreement in question is denominated by the parties as a deed of sale of fruits of the coconut trees found in the vendors land, it actually is, for all legal intents and purposes, a contract of lease of the land itself; an encumbrance prohibited under RA 477. The court thus held that the deed of sale is null and void. Issue: Is the contract of sale valid? Held: Contract of sale valid, essential elements valid The document in question expresses a valid contract of sale as it has the essential elements of a contract of sale as defined under Article 1458 of the New Civil Code. Article1458 provides that 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, and that a contract of sale maybe absolute or conditional. The subject matter of the contract of sale is the fruits of the coconut trees on the land during the years from 15 September 1968 up to 1 January1976, which subject matter is a determinate thing. Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the contract of sale. A valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, and then belonging to the vendor, and the title will vest in the buyer the moment the thing comes into existence. A man may sell property of which he is potentially and not actually possessed. The Supreme Court set aside the judgment of the lower cour t and entered another dismissing the complaint; without costs. 22. Londres vs. CA Facts: The present case stemmed from a battle of ownership over Lots 1320 and 1333. A certain Paulina Arcenas originally owned these two parcels of land. After Paulinas death, ownership of the lots passed to her daughter, Filomena VidaI. The surviving children of Filomena, herein Petitioners, now claim ownership over Lots 1320 and 1333. On the other hand, private respondents, Consolation and Elena Santos, anchor their right of ownership over Lots 1320 and 1333 on the Absolute Sale executed by Filomena. Filomena sold the two lots in favor of private respondents. On March 30, 1989, petitioners filed a complaint for the declaration of nullity of contract, damages and just compensation. In their Complaint, petitioners claimed that as the surviving children of Filomena, they are the owners of Lots 1320 and 1333. Petitioners claimed that these two lots were never sold to private respondents. They doubt the validity of the Absolute Sale because it was tampered. The cadastral lot number of the second lot mentioned in the Absolute Sale was altered to read Lot 1333 when it was originally written as Lot 2034. Private respondents maintained that they are the legal owners of the Lots in question. Private respondents claimed that the alteration in the Absolute Sale was made by Filomena to make it conform to the description of the lot in the Absolute Sale. Issue: 1. Whether or not there is a valid Deed of Absolute Sale between the private respondents and Filomena. 2. Whether or not private respondents are the true owners of the lands in question. Held: 1. Petitioners implore the Court to declare the Absolute Sale void for failing to identify with certainty the two parcels of land sold by Filomena, their mother, to private respondents. However, there is no valid ground for annulling the Absolute Sale. The Absolute Sale is clear as to the first parcel of lot sold, which is Lot 1320. What raises some doubt is the identity of the second parcel of lot sold. In civil cases, the party with the burden of proof must establish his case by a preponderance of evidence. Petitioners have the burden of proving that Lot 2034 was the real object. The trial court and the Court of Appeals found the evidence of private respondents far more convincing and ruled that the correction was made by the parties to reflect the true object of the sale, which was Lot 1333, not Lot 2034. Thereby, the Deed of Absolute Sale for Lots 1320 and 1333 is valid. These factual findings are binding upon the Court. As a rule, the appellate jurisdiction of the Court is limited only to question of law. No exceptional circumstances are present in this case that would justify a re-evaluation of the factual findings of the trial court and the Court of Appeals, findings that are duly supported by evidence of record. 2. Petitioners anchor their right of ownership over the two lots. However, Filomena had already ceded her right of ownership over the lots when she executed the Absolute Sale. A sale of real property is a contract transferring dominion and other real rights in the thing sold. Proof of the conveyance of ownership is the fact that from the time of the sale, or after more than 30 years, private respondents have been in possession of Lots 1320 and 1333. Petitioners on the other hand have never been in possession of the two lots. It is unthinkable for Filomena to have allowed private respondents to enjoy ownership of Lots 1320 and 1333 if she never really intended to sell the two lots to private respondents or if she had Lot 2034 in mind when she signed the Absolute Sale. 23. Yu Tek & Co. vs. Gonzalez Facts: A contract was executed between the herein parties, whereby Mr. Basilio Gonzales acknowledges the receipt of P3,000 from Yu Tek & Co., and that in consideration of which he obligates himself to deliver to the latter 600 piculs of sugar of the first and second grade, according to the result of polarization, within 3 months. There is a stipulation providing for rescission with P1,200 penalty in case of failure to deliver. No sugar was delivered, so plaintiff filed a case praying for the judgment of P3,000 plus P1,200. P3,000 was awarded, thus, both parties appealed. Issue: Whether or not there is a perfected sale. Held:

We conclude that the contract in the case at bar was merely an executory agreement; a promise of sale and not a sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 1182 are not applicable. The defendant having defaulted in his engagement, the plaintiff is entitled to recover the P3,000 which it advanced to the defendant, and this portion of the judgment appealed from must therefore be affirmed. 24. Johanes Schuback & Sons Phil. Trading Corp. vs CA Facts: On October 16, 1981, defendant submitted to plaintiff the list of bus spare parts he wanted to purchase to its counterpart in Hamburg. Plaintiff sent an offer on the items listed. The defendant informed plaintiff that he preferred genuine to replacement parts, and requested a 15% discount. He then submitted its formal offer. The defendant then submitted a purchase order, and submitted the quantity. Plaintiff immediately ordered the items from Schuback Hamburg, which thereafter ordered the same from NDK, a supplier in Germany. Plaintiff sent a pro-forma invoice to be used in applying for letter of credit. On February 16, 1982, plaintiff reminded defendant to open a letter of credit to avoid delay in shipment. Defendant mentioned the difficulty he was encountering in procuring the same. Plaintiff continued receiving invoices and partial deliveries from NDK. On October 18, 1982, plaintiff again reminded the defendant to open a letter of credit. Defendant replied that he did not make a valid purchase order and that there was no definite contract between him and the plaintiff. Plaintiff sent a rejoinder explaining that there is a valid Purchase Order and suggesting that defendant either proceed with the order and open a letter of credit or cancel the order and pay the cancellation fee of 30% of F.O.B. value, or plaintiff will endorse the case to its lawyers. Demand letters sent to defendant by plaintiff's counsel but to no avail. Consequently, petitioner filed a complaint for recovery of actual or compensatory damages, unearned profits, interest, attorney's fees and costs against private respondent. Issue: Whether or not a contract of sale had been perfected between the parties. Held: Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter offer." Private respondent informed petitioner of his desire to avail of the prices of the parts at that time and simultaneously enclosed its Purchase Order. At this stage, a meeting of the minds between vendor and vendee has occurred, the object of the contract: being the spare parts and the consideration, the price stated in petitioner's offer was accepted by the respondent. In the letter of credit, the situation reveals that private respondent failed to open an irrevocable letter of credit without recourse in favor of Johannes Schuback of Hamburg, Germany. This omission, however, does not prevent the perfection of the contract between the parties, for the opening of the letter of credit is not to be deemed a suspensive condition. The opening of a letter of credit in favor of a vendor is only a mode of payment. It is not among the essential requirements of a contract of sale enumerated in Article 1305 and 1474 of the Civil Code, the absence of any of which will prevent the perfection of the contract from taking place. 25. Mapalo vs Mapalo Facts: Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of a residential land in Manaoag, Pangasinan. Out of love and affection for Maximo Mapalo, Miguels brother who was about to get married, they decided to donate the eastern half of the land. However, they were deceived into signing a deed of absolute sale of the entire land. The document showed a consideration of P500, but the spouses actually did not receive anything. The spouses built a fence segregating the donated land. They continued to possess the western part up to the present. Not known to them, Maximo registered the deed of sale in his favor and was able to obtain a TCT. He sold the entire land to the Narcisos, and a TCT was issued. The Narcisos took possession of the eastern part and filed a suit against Miguel and Candida to take away the land. The spouses filed an answer with counterclaim, seeking cancellation of the TCT of the Narcisos on the ground that their consent to the deed of sale in favor of Maximo was obtained through fraud. The spouses also instituted a complaint to nullify the deeds of sale of 1936 and 1951. According to the appellate court, the sale is voidable and subject to annulment only within 4 years after discovery of fraud. Issues: 1. Whether, under the old civil code which was in effect during the execution of the sale, the sale to Maximo is void or merely voidable. 2. Whether the Narcisos were purchasers in good faith. Held: 1. For a contract to exist at all, three essential requisites must concur: (1) consent, (2) object, and (3) cause or consideration. The consent here was admittedly given, albeit obtained by fraud. Accordingly, said consent,

although defective, did exist. In such case, the defect in the consent would provide a ground for annulment of a voidable contract, not a reason for nullity ab initio. The parties are agreed that the second element of object is likewise present in the deed of October 15, 1936, namely, the parcel of land subject matter of the same. Not so, however, as to the third element of cause or consideration. As regards the eastern portion of the land, the Mapalo spouses are not claiming the same, it being their stand that they have donated and freely given said half of their land to Maximo Mapalo. Now, as to the western portion, however, the fact not disputed herein is that no donation by the Mapalo spouses obtained as to said portion. Accordingly, we start with the fact that liberality as a cause or consideration does not exist as regards the western portion of the land in relation to the deed of 1936; that there was no donation with respect to the same. Since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether its case is one wherein there is no consideration, or one with a statement of a false consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred (P500.00) Pesos. In fact, however, said consideration was totally absent. A contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. It is safe to state that this act of Pacifico Narciso is a conclusive manifestation that they (the Narcisos) did not only have prior knowledge of the ownership of said spouses over the western half portion in question but that they also have recognized said ownership. It also conclusively shows their prior knowledge of the want of dominion on the part of their vendor Maximo Mapalo over the whole land and also of the flaw of his title thereto. Under this situation, the Narcisos may be considered purchasers in value but certainly not as purchasers in good faith. 26. Mate vs. CA 27. Ong vs. ONG 28. Bagnas vs CA Facts: Hilario Mateum died, single, without ascendants or descendants, and survived only by petitioners who are his collateral relatives. He left no will, no debts, and an estate consisting of 29 parcels of land in Kawit and Imus, 10 of which are involved in this controversy. On April 3, 1964, respondents who are also collateral relatives of the deceased, but more remote, registered 2 deeds of sale purportedly executed by Mateum in their favor. The considerations were P1.00 and services rendered, being rendered, and to be rendered for my benefit. On the strength of the deeds, respondents were able to secure title over the 10 parcels of land. On May 22, 1964, petitioners commenced a suit against respondents, seeking annulment of the deeds of sale a fictitious, fraudulent or falsified or, alternatively, as donations void for want of acceptance in public instrument. Respondents contend that the sales were made for valuable considerations, and attacked the legal standing of the petitioners as being mere collateral heirs. Issue: 1. Whether petitioners have the legal standing to sue. 2. Whether the sale is void for want of consideration. Held: 1. The law as it is now no longer deems contracts with a false cause, or which are absolutely simulated or fictitious, merely voidable, but declares them void, i.e., inexistent ("nulo") unless it is shown that they are supported by another true and lawful cause or consideration. If afterwards the transferor dies the property descends to his heirs, and without regard to the manner in which they are called to the succession, said heirs may bring an action to recover the property from the purported transferee. As pointed out, such an action is not founded on fraud, but on the premise that the property never leaves the estate of the transferor and is transmitted upon his death to heirs, who would labor under no incapacity to maintain the action from the mere fact that they may be only collateral relatives and bound neither principally or subsidiarily under the deed or contract of conveyance. The Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio. Neither can the validity of said conveyances be defended on the theory that their true causa is the liberality of the transferor and they may be considered in reality donations because the law also prescribes that donations of immovable property, to be valid, must be made and accepted in a public instrument, and it is not denied by the respondents that there has been no such acceptance which they claim is not required. The transfers in question being void, it follows as a necessary consequence and conformably to the concurring opinion in Armentia, with which the Court fully agrees, that the properties purportedly conveyed remained part of the estate of Hilario Mateum, said transfers notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such is not challenged.

31. Toyota Shaw vs. CA Facts: Private respondent Luna Sosa went with his son Gilbert to Toyota office at Shaw Boulevard with the intent of buying a new Toyota Lite Ace. There they met Popong Bernardo, a sales representative of Toyota. Sosa repeatedly told Bernardo that he needed the car not later than June 17, 1989 which Bernardo assured would be met. The next day, the parties

met once again where Sosa paid Bernardo a downpayment with the balance to be paid through B.A. Finance. Bernardo then filled up a Vehicle Sales Proposal although leaving the delivery information in blank. On the morning of June 17 however, Bernardo called Sosa to inform him that the desired car cannot be delivered because it was given to someone with better connections. On the other hand, Toyota claims that the car was not delivered because B.A. Finance denied the application filed by Sosa. Toyota offered Sosa to purchase the car in cash instead but he refused; instead, he demanded refund of his downpayment which was duly refunded by Toyota through a check. Sosa then demanded for interest on the downpayment and damages. This time Toyota refused which led to a suit filed by Sosa. Sosa alleges that a contract of sale has been entered unto which is denied by Toyota. The trial court rendered a decision against Toyota and the same was affirmed by the CA. Issue: Whether or not there is a perfected sale between Toyota and Sosa. Ruling: NO. A perfected contract of sale requires a definite agreement on the manner of payment. In the instant case, no obligation on the part of Toyota to deliver the car and no correlative liability on the part of Sosa to pay a price certain can be established. The P100,000.00 downpayment made did not give any reference to the sale. Definiteness of price is an essential element in a binding contract of sale of a personal property. 32. Limson vs. CA FACTS: Spouses Lorenzo de Vera and Asuncion Santos de Vera through their agent Marcos Sanchez offered to sell a parcel of land they own located in Paraaque, Metro Manila to petitioner Lourdes Limson. On 31 July 1978, Limson agreed with the sale and paid an earnest money of P20,000, receiving a receipt that states the payment was an earnest money for a ten-day option to purchase. Limson was informed that the property is under a mortgage to Emilio Ramos and Isidro Ramos and she was asked by the de Veras to pay for the loan balance. On 5 August, Limson agreed to meet the de Veras and the Ramoses but the Ramoses never showed up. Limson claims that by 11 August, she was willing to pay the purchase price but the sale did not materialize. She issued checks to pay for the taxes due on the land which is part of the purchase price. Thereafter, she learned that the de Veras are under negotiation with Sunvar Realty Development Corporation for the sale of the same land. A Deed of Sale was entered into between de Veras and Sunvar. Title to the lot was issued to Sunvar with annotation of the claim of Limson. Limson then filed a petition praying for the cancellation of the Deed of Sale between the de Veras and Sunvar, the cancellation of Sunvars certificate of title, and the execution of a Deed of Sale between him and the De Veras. Limson claims that the property was sold to Sunvar in violation of his legal right to purchase to purchase and Sunvar is a purchaser in bad faith. Sunvar denied having knowledge about the contract between the De Veras and Limson and subsequently filed a counter-claim against the De Veras for bad faith. De Veras claims that there is no contract to sell but only an option contract which already expired when they negotiated with Sunvar and that Sunvar checked the documents before agreeing to the sale. The RTC ruled in favour of Limson but the CA reversed the RTC decision; hence, this appeal filed by Limson. Issue: Whether or not there is a perfected contract of sale. Ruling: NO. The contract between Limson and the De Veras is merely an option contract. Although the receipt states that the P20,000.00 paid by Limson is earnest money, the words used in the receipt makes it clear that such is only consideration for the option given to Limson which was never used. All the succeeding meetings between the parties occurred after the expiration of the option period. Also, even if the said meetings are within the option period, no sale can be perfected because Limson was never able to pay the purchase price in cash as agreed upon. The demand letter allegedly received by Limson by September 1978 cannot also be used as evidence of the existence of a sales contract or extension of the option period but merely an act showing that the de Veras are giving Limson the chance to purchase the land even beyond the option purchase although losing the option privilege. No contract of sale existed. 33. Velasco vs CA Facts: November 10, 1965, Alta Farms secured from the GSIS a Three Million Two Hundred Fifty Five Thousand Pesos (P3,255,000.00) loan and an additional loan of Five Million Sixty-Two Thousand Pesos (P5,062,000.00) on October 5, 1967, to finance a piggery project. Alta Farms defaulted in the payment because of this that Alta Farms executed a Deed of Sale With Assumption of Mortgage with Asian Engineering Corporation on July 10, 1969 but without the previous consent or approval of the GSIS and in direct violation of the provisions of the mortgage contracts. Even without the approval of the Deed of Sale With Assumption of Mortgage by the GSIS, Asian Engineering Corporation executed an Exclusive Sales Agency, Management and Administration Contract in favor of Laigo Realty Corporation, with the intention of converting the piggery farm into a subdivision. After developing the area, on December 4, 1969, Laigo entered into a contract with Amable Lumanlan, one of the petitioners, to construct for the home buyers, 20 houses on the subdivision. Petitioner Lumanlan allegedly constructed 20 houses for the home buyers and for which he claims a balance of P309,187.76 from the home buyers and Laigo. Out of his claim, petitioner Lumanlan admits that Mrs. Rhody

Laigo paid him in several checks totalling P124,855.00 but which checks were all dishonoured. On December 29, 1969, Laigo entered into a contract with petitioner Pepito Velasco to construct houses for the home buyers who agreed with Velasco on the prices and the downpayment. Petitioner Velasco constructed houses for various home buyers, who individually agreed with Velasco, as to the prices and the downpayment to be paid by the individual home buyers.When neither Laigo nor the individual home buyers paid for the home constructed, Velasco wrote the GSIS to intercede for the unpaid accounts of the home buyers. Issue: W/N GSIS is liable to the petitioners for the cost of the materials and labor furnished by them in construction of the 63 houses now owned by the GSIS? Ruling: Yes. GSIS should pay the petitioners. GSIS assumed ownership of the houses built by petitioners and was benefited by the same. Art. 2127, the mortgage extends to the natural accessions, to the improvements, growing fruits, rents. 34. San Miguel vs. Huang