AINZA VS. PADUAThis is a case involving family members. In April 1987, Ainza and her daughter Eugenia orally agreed that Ainza pay P100k inexchangefor half of theportionof Eugenias undivided conjugal property (a lot located in QC). No Deed of Absolute Sale was executed. There was physical delivery of the land through Concepcions other daughter (Natividad) acting as atty-in-fact. Concepcion thereafter allowed Natividad and her husband occupy the purchasedportionof the land.In 1994, Antonio caused the division of the lot into three (two were occupied by the spouses), necessarily displacing Natividad. He also had each subdivision titled. Antonio requested Natividad to vacate the premises. Antonio averred that his wife only admitted of selling 1/3 of the property to Concepcion for which a receipt was issued signed by Concepcion. The RTC ruled in favor of Concepcion. The CA reversed the RTC ruling. CA explained that the property is conjugal hence the sale should have been with Antonios consent.ISSUE:Whether or not the contract of sale between Ainza and Eugenia is valid.HELD:Yes it is valid until annulled (voidable). There was a perfected contract of sale between Eugenia and Concepcion. The records show that Eugenia offered to sell aportionof the property to Concepcion, who acceptedthe offerand agreed to pay P100,000.00 as consideration. The contract of sale was consummated when both parties fully complied with their respective obligations. Eugenia delivered the property to Concepcion, who in turn, paid Eugenia the price of P100,000.00, as evidenced by the receipt. Since the land was undivided when it was sold, Concepcion is entitled to have half of it.Antonio cannot, however, attack the validity of the sale b/n his wife and his mom-in-law, either under the Family Code or the Old Civil Code due to prescription. The sale came to his knowledge in 1987. He only filed the case in 1999. His right prescribed in 1993 (under the FC [5 years]) and 1997 (under OCC [10 years]).

MCCULLOUGH VS BERGER

DICHOSO VS ROXASFACTS: Roxas sold to Dichoso and Hernandez a parcel of unregistered coconut land, subject to the condition that the vendor could repurchase the land within 5 years from the date ofsale. Roxas received from Dichoso several sums of money as initial or advance payments, with the agreement that Roxas would sell the same property, by absolute sale, to Dichoso. Out of their remaining balance, they would use P850 to repurchase the property from Borja and Alanguilan within the period stipulated. Dichoso informed Borja of their readiness to repurchase and sent Roxas a check. Roxas returned the check with the request that they indorsed it to Borja and Alanguilan when they make the repurchase. Despite the repeated demands and representations, Roxas and Borja had deliberately fails to execute the corresponding deed ofabsolute sale and deed ofresale.

ISSUE:Whether or not there was adouble sale.

HELD:No. The contract betweenthe petitionersand Roxas was a merepromise to sellbecause Roxas merely promised to execute a deed of absolute sale upon Dichosos completion of payment. On the date that Roxas could possibly sell or convey in relation to the property in question was her right to repurchase the same from Borja. The private document executed between Roxas and Dichoso can be considered as an assignment by Roxas to Dischoso of her right to repurchase which Roxas only had knowledge thereof when Dichoso attempted to make the repurchase. Such being its condition, it could not possibly give rise to the case of one and the same property having been sold to two different purchasers. The sale in favor of Borja was of the property itself, while the one in favor of Dichoso, if not a mere promise to assign, was at most an actual assignment of the right to repurchase the same PROPERTY. Art. 1544, par.3 of the CC do not apply.

LUZON BROKERAGE VS. MARITIME BUILDINGLuzon Brokerage Co. v. Maritime Building Co. (1972)Plaintiff-appellee: Luzon Brokerage Co.Defendants: Maritime Building Co and Myers Building CoPonente: Reyes, J.B.L., J.

Doctrine: The distinction between contracts of sale and contract to sell with reserved title has been recognized by this Court in repeated decisions upholding the power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for, as in this case.

Short version: Myers corp sold land to Maritime. In the agreement, they agreed on an installment plan and that if Maritime missed a payment, the contract will be annulled and the payments already made will be forfeited. Maritime failed to pay so Myers annulled the contract and did not return payments. SC says Myers can do this because under contracts to sell, promisors, in case of failure of the other party to complete payment, can extrajudicially terminate the contract, refuse conveyance, and retain installments already received, where such rights are provided.

In Manila, Myers owned 3 parcels of land w/ improvements. Myers then entered into a contract called a Deed of Conditional Sale with Maritime Building.

Myers sold the land for P1million. They agreed on the manner of payment (installment, initial payment upon execution of contract, interest rate) In the contract it was stipulated that in case of failure of buyer to pay any of the installments, the contract will be annulled at the option of the seller and all payments made by the buyer is forfeited.

Later on, the stipulated installment of P10k with 5%interest was amended to the P5k with 5.5% per annum. Maritime paid the monthly installments but failed to pay the monthly installment of March.VP of Maritime wrote to Pres of Myers requesting for a moratorium on the monthly payment of the installments because the company was undergoing financial problems. Myers refused.

For the months of March, April, and May, Maritime failed to pay and did not heed the demand of Myers.Myers wrote Maritime cancelling the Deed of Conditional Sale Myers demanded return of possession of properties

Held Maritime liable for use and occupation amounting to P10k per month

In the meantime, Luzon Brokerage was leasing the property from Maritime. Myers demanded from Luzon the payment of monthly rentals of P10k. Myers also demanded surrender of property. While actions and crossclaims between Myers and Maritime were happening, the contract between Maritime and Luzon was extended for 4more years. Turns out, Maritimes suspension of its payments to Myers corp arose from a previous event: An award of backwages made by the Court ofIndustrial Relations in favor of Luzon Labor Union (employees employed by Luzon).

FH Myers was a major stockholder of Luzon Brokerage. FH Myers promised to indemnifySchedler (who controlled Maritime) when Shedlerpurchased FH Myerss stock in Luzon Brokerage company. (This indemnificationis for the award of backwages by the CIR)

Schedler claims that after FH Myers estates closed, he was notified that the indemnity on the Labor Union case will not be honored anymore. And so, Schedler advised Myers corp that Maritime is withholding payments to Myers corp in order to offset the liability when Myersheirs failed to honor the indemnity agreement.

TC ruled Maritime in breach of contract.

Issue: Has there been a breach of contract?Can Myers extrajudicially terminate the contract?

Held: Yes.

Ratio: Failure to pay monthly installments constitute a breach of contract. Default was not made in good faith. The letter to Myers corp means that the non-payment of installments was deliberately made to coerce Myers crp into answering for an alleged promise of the dead FH Myers. Whatever obligation FH Myers had assumed is not an obligation of Myers corp. No proof that board of Myers corp agreed to assume responsibility to debts of FH Myers and heirs.

Schaedler allowed the estate proceedings of FH Myers to close without providing liability. By the balance (of payment) in the Deed of Conditional Sale, Maritime was attempting to burden the Myers corp with an uncollectible debt, since enforcement against FH Myers estate was already barred. Maritime acted in bad faith.

Maritimes contract with Myers is not the ordinary sale contemplated in NCC 1592 (transferring ownership simultaneously with delivery).

The distinction between contracts of sale and contract to sell with reserved title has been recognized by this Court in repeated decisions upholding the power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for, as in this case. Decision affirmed

PORTIC VS. CRISTOBAL

in 1968, spouses Portic acquired a parcel of land with a 3 door apartment from Sps. Alcantara even though theyre aware that the land was mortgaged to the SSS. Portic defaulted in paying SSS. The Portics then executed a contract with Cristobal and the latter agreed to buy the said property for P200k. Cristobals down payment was P45k and she also agreed to pay SSS. The contract between them states: That while the balance of P155,000.00 has not yet been fully paid the FIRST PARTYOWNERS shall retain the ownership of the above described parcel of land together with its improvements but the SECOND PARTY BUYER shall have the right to collect the monthly rentals due on the first door (13-A) of the said apartment; (payment is due 22May 1985, if Cristobal will not be able to payPortic will reimburse)A transfer certificate was executed in favor of Cristobal. Cristobal was not able to pay on the due date. A suit ensued to lift the cloud on the title.

ISSUE: Who is the rightful owner of the parcel of land?

HELD: The Portics insofar as there was no contract of sale. What transpired between the parties was a contract to sell. The provision of the contract characterizes the agreement between the parties asa contract tosell, not acontract of sale.Ownership is retained by the vendors, the Portics; it will not bepassed to the vendee, the Cristobals, until the full payment ofthe purchase price.Such payment is a positive suspensive condition, and failure to comply with it is not abreach of obligation; it is merely an event that prevents the effectivity of the obligation of thevendorto convey the title.In short, untilthe full priceis paid, thevendorretains ownership.The mere issuance of the Certificate of Title in favor of Cristobal did not vest ownership in her. Neither did it validatethe alleged absolute purchaseof the lot.Registration does not vest,but merely serves as evidence of, title.Our land registration laws do not give the holders any bettertitle than that which they actually have prior to registration. Under Article 1544 of the Civil Code, mere registration is not enough to acquire a new title. Good faith mustconcur. Clearly, Cristobal has not yetfully paid the purchase price.Hence, as long as it remainsunpaid, she cannot feigngood faith.She is alsoprecluded from asserting ownership against the Portics.The CAs finding that shehad a validtitle to the property must be set aside.

HEIRS OF MASCUNANA VS. CAFacts: Masunana bought a parcel of land from the Wuthrich siblings. Part of which Mascunana, he later sold to Sumilhig. The contract price is 4,690 with 3,690 as down payment. Their agreement says: That the balance of ONE THOUSAND PESOS (P1,000.00) shall be paid by the VENDEE unto the VENDOR as soon as the above-portions of Lot 124 shall have been surveyed in the name of the VENDEE and all papers pertinent and necessary to the issuance of a separate Certificate of Title in the name of the VENDEE shall have been prepared. Sumilhig later sold the same lot to Layumas. Years after, Layumas wrote to the heirs of Mascunana (since Mascunana died already) offering to pay the 1,000 balance of the purchase price of the property. The addressee, however, refused to receive the mail matter. Heirs Mascunana then filed a complaint for recovery of possession against Barte ( an individual whom Layumas allowed to stay on the subject property). Issue: WON the contract of alienation of the subject lot in favor of Sumilhig was a contract to sell or a contract of sale Held: In this case, there was a meeting of the minds between the vendor and the vendee, when the vendor undertook to deliver and transfer ownership over the property covered by the deed of absolute sale to the vendee for the price of P4,690.00 of which P3,690.00 was paid by the vendee to the vendor as down payment. The vendor undertook to have the property sold, surveyed and segregated and a separate title therefor issued in the name of the vendee, upon which the latter would be obliged to pay the balance of P1,000.00. There was no stipulation in the deed that the title to the property remained with the vendor, or that the right to unilaterally resolve the contract upon the buyers failure to pay within a fixed period was given to such vendor. Patently, the contract executed by the parties is a deed of sale and not a contract to sell. Applying these principles to this case, it cannot be gainsaid that the contract of sale between the parties is absolute, not conditional. There is no reservation of ownership nor a stipulation providing for a unilateral rescission by either party. In fact, the sale was consummated upon the delivery of the lot to respondent. Thus, Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. The condition in the deed that the balance of P1,000.00 shall be paid to the vendor by the vendee as soon as the property sold shall have been surveyed in the name of the vendee and all papers pertinent and necessary to the issuance of a separate certificate of title in the name of the vendee shall have been prepared is not a condition which prevented the efficacy of the contract of sale. It merely provides the manner by which the total purchase price of the property is to be paid. The condition did not prevent the contract from being in full force and effect: The stipulation that the payment of the full consideration based on a survey shall be due and payable in five (5) years from the execution of a formal deed of sale is not a condition which affects the efficacy of the contract of sale. It merely provides the manner by which the full consideration is to be computed and the time within which the same is to be paid. But it does not affect in any manner the effectivity of the contract. In a contract to sell, ownership is retained by a seller and is not to be transferred to the vendee until full payment of the price. Such payment is a positive suspensive condition, the failure of which is not a breach of contract but simply an event that prevented the obligation from acquiring binding force. It bears stressing that in a contract of sale, the non-payment of the price is a resolutory condition which extinguishes the transaction that, for a time, existed and discharges the obligation created under the transaction. A seller cannot unilaterally and extrajudicially rescind a contract of sale unless there is an express stipulation authorizing it. In such case, the vendor may file an action for specific performance or judicial rescission. Article 1169 of the New Civil Code provides that in reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him; from the moment one of the parties fulfills his obligation, delay by the other begins. In this case, the vendor (Jesus Mascuana) failed to comply with his obligation of segregating Lot No. 124-B and the issuance of a Torrens title over the property in favor of the vendee, or the latters successors-in-interest, the respondents herein. Worse, petitioner Jose Mascuana was able to secure title over the property under the name of his deceased father.URSAL VS. CAIn January 1985, Winifreda Ursal and spouses Jesus and Cristita Monesetenteredinto a Contract to Sell Lot & House. The amount agreed upon was P130,000.00. Ursal is to pay P50k as down payment and will continue to pay P3k monthly starting the next month until the balance is paid off. After 6 months, Ursal stopped paying the Monesets for the latter failed to give her the transfer of certificate title.In November 1985, the Monesets executed an absolute deed of sale with one Dr. Canora. In September 1986, the Monesets mortgaged the same property to the Rural Bank of Larena for P100k. The Monesets failed to pay the P100k hence the bank filed for foreclosure.Trial ensued and the RTC ruled in favor of Ursal. The trial court ruled that there was fraud on the part of the Monesets for executing multiple sales contracts. That the bank is not liable for fraud but preference to redeem should be given to Ursal. The Monesets are ordered to reimburse Ursal plus to pay damages and fees. Ursal was not satisfied as she believed that the bank was also at fault.ISSUE:Whether or not the Contract to Sell vested ownership in Ursal.HELD:No. There should be no special preference granted to Ursal in redeeming the property. What she had with the Monesets was contract to sell in which case ownership was not transferred to her due the suspensive condition of full payment. Further, the property was sold to other properties already.A contract to sell 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 such contract, the prospective seller expressly reserves the transfer of title to the prospective buyer, until the happening of an event, which in this case is the full payment of the purchase price. What the seller agrees or obligates himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. Stated differently, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.Since the contract in this case is a contract to sell, the ownership of the property remained with the Monesets even after petitioner has paid the down payment and took possession of the property.

CARRASCOSO VS. CAIn March 1972, El Dorado Plantation Inc, through board member Lauro Leviste, executed a Deed of Sale with Carrascoso. The subject of the sale was a 1825 hectare of land. It was agreed that Carrascoso is to pay P1.8M. P290K would be paid by Carrascoso to PNB to settle the mortgage placed on the said land. P210k would be paid directly to Leviste. The balance ofP1.3M plus 10% interest would be paid over the next 3 years at P519k every 25th of March. Leviste also assured that there were no tenants hence the land does not fall under the LandReform Code. Leviste allowed Carrascoso to mortgage the land which the latter did. Carrascoso obtained a total of P1.07M as mortgage and he used the same to pay the downpayment agreed upon in the contract. Carrascoso defaulted from his obligation which was supposed to be settled on March 25, 1975. Leviste then sent him letters to make good his end of the contract otherwise he will be litigated. In 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the sale was the same land sold to Carrascoso by Leviste but itwas only the 1000 sq mportion thereof. The land is to be sold at P3M. Part of the terms and conditions agreed upon was that Carrascoso is to remove all tenants from the land within one year. He is also given a 6 month extension incase hell need one. Thereafter, PLDT will notify Carrascoso if whether or not PLDt will finalize the sale. PLDT gained possession of the land. El Dorado filed a civilcase against Carrascoso. PLDT intervened averring that it was a buyer in good faith. The RTC ruled in favor of Carrascoso. CA reversed the RTC ruling.

ISSUE:What is thenature of each contract?

HELD:The contract executed between El Dorado and Carrascoso was a contract of sale. It was perfected by their meeting of the minds and was consummated by the delivery of the property to Carrascoso. However, ElDorado has the right to rescind the contract by reason of Carrascosos failure to perform his obligation.

A contract of sale is a reciprocal obligation.The seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain in money or its equivalent. The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time existed, and discharges the obligationsc reated thereunder.Such failure topay the pricein the mannerprescribed by the contract ofsale entitles the unpaid seller to sue for collection or to rescind the contract.T he contract between Carrascoso and PLDT is a contract to sell. This is evidenced by the terms and conditions that they have agreed upon thatafter fulfillment of Carrascosos obligation PLDT has to notify Carrascoso of its decision whether or not to finalize the sale.Carrascoso also averredthat therewas a breach on El Dorados partwhen it comes to warranty. Carrascoso claimed that there were tenants on the land and he spent about P2.9Mrelocating them. The SC ruled that Carrascoso merely had abare claim without additional proofto support it.

Requisites of Express warranty in a Contract of Sale(1) the express warranty must be an affirmation of fact or any promise by the seller relating to the subject matter of the sale;(2) the natural tendency of such affirmation or promise is to induce the buyer to purchase the thing; and(3) the buyer purchases the thing relying on such affirmation or promise thereon

SACOBIA HILLS DEVT CRP VS. TYFacts: Petitioner Sacobia Hills Development Corporation (Sacobia) is the developer of True North Golf and Country Club which boasts of amenities that include a golf course, clubhouse, sports complex and several vacation villas. Respondent Allan U. Ty wrote to Sacobia a letter expressing his intention to acquire one Class A share of True North and accordingly paid the reservation fee of P180,000.00 as evidenced by PCI Bank Check No. 0038053. Sacobia assured its prospective shareholders that the development of True North was proceeding on schedule; that the golf course would be playable by October 1999; that the Environmental Clearance Certificate (ECC) by the Department of Environment and Natural Resources (DENR) as well as the Permit to Sell from the Securities and Exchange Commission (SEC) should have been released by October 1997; and that their registration deposits remained intact in an escrow account. Sacobia then approved the purchase application and membership of Ty for P600,000.00, subject to certain terms and conditions. The notice of approval provided the following: Terms and Conditions 1. Approval of an application to purchase golf/country club shares is subjected to the full payment of the total purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our receipt of a down payment of at least 30% and the balance payable in installments over a maximum of eleven (11) months from the date of application, and covered by postdated cheques. 2. Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to settle your obligation within fifteen (15) days from due date, or failure to cover the value of the postdated cheques upon their maturity, or your failure to issue the required postdated cheques. In which case, we shall reserve the right to offer the said shares to other interested parties. This also means forfeiture of 50% of the total amount you have already paid. 3. We will undertake to execute the corresponding sales documents/ Deed of Absolute Sale covering the reserved shares upon full payment of the total purchase price. The Certificate of Membership shall be issued thereafter.

However, on January 12, 1998, Ty notified Sacobia that he is rescinding the contract and sought refund of the payments already made due to the latters failure to complete the project on time as promised (supposedly October 1997). Sacobia wrote him a letter, stating that the DENR had issued the required ECC only on March 5, 1998, and that the golf course would be ready for use by end of 1998( in fact ahead of promised date which is October 1999). Sacobia again wrote the respondent advising him that the 18-hole golf course would be fully operational by summer of 1999. Sacobia also sought to collect from respondent the latters outstanding balance of P190,909.08 which was covered by five (5) post dated checks. However, Ty notified Sacobia that he had stopped payment on the five (5) post dated checks and reiterated his demand for the refund of his payments which amounted to P409,090.92. Sacobia denied his request thus Ty filed a complaint for rescission and damages.

Issue: Whether or not respondent Ty can rescind the contract and demand for damages from Sacobia Hills for breach of contract

Held:No, Ty cannot rescind the contract and demand for damages from Sacobia Hills for breach of contract because the contract to sell between them has not yet been perfected for failure by Ty to pay the full purchase price. The Supreme Court ruled as follows:1. The terms of the agreement between Sacobia and Ty can be deduced, not on a formal document like a deed of sale, but from a series of correspondence and acts signifying the parties intention to enter into a contract. The absence of a formal deed of conveyance is a strong indication that Sacobia did not intend to transfer title until respondent shall have completely complied with his correlative obligation of paying the contact price.2. In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. It is one where the happening of the event gives rise to an obligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed to perform the suspensive condition which enforces a juridical relation. In fact with this circumstance, there can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred as yet. Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code is the obligors failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation.3. Ty did not pay the full purchase price which is his obligation under the contract to sell, therefore, it cannot be said that Sacobia breached its obligation. No obligations arose on its part because respondents non-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Indeed, there can be no rescission under Article 1191of the Civil Code because until the happening of the condition, i.e. full payment of the contract price, Sacobias obligation to deliver the title and object of the sale is not yet extant. A non-existent obligation cannot be subject of rescission.Article 1191 speaks of obligations already existing, which may be rescinded in case one of the obligors fails to comply with what is incumbent upon him.4. In the present case, respondents failure to fulfill this suspensive condition prevented the perfection of the contract to sell. With an ineffective contract, Ty had not acquired the status of a shareholder but remained, at most, a prospective investor. In the absence of a juridical tie between the parties, Ty cannot claim the rights and privileges accorded to Sacobias full-fledged members and shareowners, including the full enjoyment of the amenities being offered. Unfortunately for Ty, he cannot avail of rescission as envisioned by Article 1191 of the Civil Code. However, he can withdraw his investment subject to the restrictions under the terms and conditions pertinent to a reneging investor.5. Tys complaint for rescission of contract and damages in Civil Case No. 01-99696 isdismissed He isordered to payto Sacobia Hills Development Corporation the amount of Pesos: One Hundred Ninety Thousand Nine Hundred Nine and Eight Centavos (P190,909.08) without interest within thirty (30) days from finality of this decision; otherwise, fifty percent (50%) of his total payments shall be forfeited.

KEPPEL BANK VS. ADAOFACTS: Project Movers Realty and Development Corporation (PMRDC) owe P200M to Keppel Bank Philippines, Inc. By way ofdacion en pago, PMRDC transferred and conveyed tothe bank25 of its properties consisting of townhouses and condominiums. One of the units transferred was occupied by Philip Adao.In February 2000,the Bankdemanded Adao to vacate. Adao refused. An ejectment case was filed. Adao averred that he had a Contract to Sell with PMRDC. He presented an affidavit showing that he made full payment thereof. The MeTC, RTC and CA ruled in favor of Adao. The lower courts ordered Keppel to respect the contract to sell between Adao and PMRDC for when the properties were transferred by way ofdacion en pago,the bankmerely stepped into the shoes of PMRDC.ISSUE:Whether or not Keppel is bound by the contract to sell.HELD:No. Though Keppel is not a purchaser in good faith for not looking into the tile of the property (checking if it was infirm and free from other claims),the bankis not bound by it.The contract to sell does not by itself give Adao the right to possess the property. Unlike in a contract of sale, here in a contract to sell, there is yet no actual sale nor any transfer of title, until and unless, full payment is made. The payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. Adao must have fully paid the price to acquire title over the property and the right to retain possession thereof. In cases of non-payment, the unpaid seller can avail of the remedy of ejectment since he retains ownership of the property.Adao must also, aside from showing an affidavit, show other proof of full payment made to PMRDC. Considering that Adao failed to discharge the burden of proving payment, he cannot claim ownership of the property and his possession thereof was by mere tolerance. His continued possession became unlawful upon the owners demand to vacate the property.EDRADA VS. RAMOSBefore a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established, as such stands as essential to the validity of the sale. After all, such agreement on the terms of payment is integral to the element of a price certain, such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. (Sps. Edrada vs. Sps. Ramos, G.R. No. 154413, August 31, 2005 citing Swedish Match, AB vs. CA, G.R. No. 128120, October 20, 2004, 441 SCRA 1).GAITE VS. FONACIERFacts:Facts:Defendant-appellant Fonacier was the owner/holder of 11 iron lode mineral claims, known as the Dawahan Group, situated in Camrines Norte.

By Deed of Assignment, Respondent constituted and appointed plaintiff-appellee Gaite as attorney-in-fact to enter into contract for the exploration and development of the said mining claims on. On March 1954, petitioner executed a general assignment conveying the claims into the Larap Iron Mines, which owned solely andbelongingto him. Thereafter, he underwent development and the exploitation for the mining claims which he estimates to be approximately 24 metric tons of iron ore.

However, Fonacier decide to revoke the authority given to Gaite, whereas respondent assented subject to certain conditions. Consequently a revocation of Power of Attorney and Contract was executed transferring P20k plus royalties from the mining claims, all rights and interest on the road and other developments done, as well as , the right to use of the business name, goodwill, records,documentsrelated to the mines. Furthermore, included in the transfer was the rights and interest over the 24K+ tons of iron ore that had been extracted. Lastly the balance of P65K was to be paid for covering the first shipment of iron ores.

To secure the payment of P65k, respondent executed a surety bond with himself as principal, the Larap Mines and Smelting Co. and its stockholder as sureties. Yet, this was refused by petitioner. Appelle further required another bond underwritten by a bonding company to secure the payment of the balance. Hence a second bond was produced with Far Eastern Surety as an additional surety, provided the liability of Far Eastern would only prosper when there had been an actual sale of the iron ores of not less than the agreed amount of P65k, moreover, its liability was to automatically expire on December 1955.

On December 1955, the second bond had expired and no sale amounting to the stipulation as prior agreed nor had the balance been paid to petitioner by respondent. Thus such failure, prompted petitioner to file a complaint in the CFI of Manila for the payment of the balance and other damages.

The Trial Court ruled in favor of plaintiff ordering defendant to pay the balance of P65k with interest. Afterwards an appeal was affected by the respondent where several motions were presented for resolution: a motion for contempt; two motions to dismiss the appeal for becoming moot and academic; motion for a new trial, filed by appellee Gaite. The motion for contempt was held unmeritorious, while the rest of the motions were held unnecessary to resolve

Issue:Whether or not the Lower Court erred in holding the obligation of appellant Fonacier to pay appelle Gaite the balance of P65k, as one with a period or term and not one with a suspensive condition; and that the term expired on December 1955

Held:No error was found, affirming the decision of the lower court. Gaite acted within his rights in demanding payment and instituting this action one year from and after the contract was executed, either because the appellant debtors had impaired the securities originally given and thereby forfeited any further time within which to pay; or because the term of payment was originally of no more than one year, and the balance of P65k, became due and payable thereafter.

The Lower Court was legally correct in holding the shipment or sale of the iron ore is not a condition or suspensive to the payment of the balance of P65k, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force as distinguished from its demandability, is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties wouldstandas if the conditional obligation had never existed.

The sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to fix the future date of the payment.

While as to the right of Fonacier to insist that Gaite should wait for the sale or shipment of the ore before receiving payment; or, in other words, whether or not they are entitled to take full advantage of the period granted them for making the payment. The appellant had indeed have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier (first bond).

Under paragraphs 2 and 3 of Article 1198 of the Civil Code of thePhilippines: ART. 1198. The debtor shall lose every right to make use of the period: (2) When he does not furnish to the creditor the guaranties or securities which he has promised. (3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory.

Appellants' failure to renew or extend the surety company's bond upon its expiration plainly impaired the securities given to the creditor (appellee Gaite), unless immediately renewed or replaced.

Nevertheless, there is nomeritin appellants' argument that Gaite'sacceptanceof the surety company's bond with full knowledge that on its face it would automatically expire within one year was a waiver of itsrenewalafter the expiration date. No such waiver could have been intended, for Gaite stood to lose and had nothing to gain barely; and if there was any, it could be rationally explained only if the appellants had agreed to sell the ore and pay Gaite before the surety company's bond expired on December 8, 1955. But in the latter case the defendants-appellants' obligation to pay became absolute after one year from the transfer of the ore to Fonacier by virtue of the deed, first bond.

BUENAVENTURA VS. CAFacts:Sought to be declared null and voidab initioare certain deeds of sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children. The petitioners contend that there was no actual validconsiderationand that assuming that there wasconsiderationin the sums reflected the properties are more than three-fold times more valuable than the small sumsappearingtherein. The RTC ruled in favor of the defendants and dismissed the case. RTCs ruling was affirmed by CA. Hence the appeal.

Issue:Whether or not there was a validconsiderationin the deeds of sale

Held: If there is a meeting of the minds of the parties as to the price, thecontract of saleis valid, despite the manner of payment, or even the breach of that manner of payment. If the real price is not stated in the contract, then thecontract of saleis valid but subject to reformation.

Art. 1355. Except incasesspecified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence.

Article 1470 of the Civil Code further provides:Gross inadequacy of price does not affect acontract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.

Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. All the respondents believed that they received thecommutativevalue of what they gave.

CELESTINO VS. CIRFacts: Celestino is the owner of Oriental Sash Factory. It paid 7% on the gross sales of their sales. In 1952, they began to pay only 3% tax. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders from the customers, hence, it is not engaged in manufacturing under sec 186, but only in sales of services covered by sec 191. Having failed to convince BIR, petitioner went to the Court of Tax Appeal where it also failed. CTA, in its decision, holds that the petitioner has chosen for its tradename and has offered itself to the public as a Factory, which means it is out to do business, in its chosen lines on a big scale. As a general rule, sash factories receive orders for doors and windows of special design only in particular cases but the bulk of their sales is derived from a ready-made doors and windows of standard sizes for the average home.Issue: Whether the petitioner company provides special services or is engaged in manufacturing.Ruling: The Oriental Sash Factory is engaged in manufacturing. The company habitually makes sash, windows and doors as it has been represented to the public. 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.CIR VS ENGINEERING EQUPMENT & SUPPLY CO.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 contractor? CONTRACTOR.2) Corrollarily WON the installation of a centralized air-conditioning system a contact of sale or a contract for piece of work? CONTRACT FOR PIECE OF WORK.3) Is Celestino Co vs. CIR case applicable in this case? NO.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)NATURE OF OBJECT TEST: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.3)Celestino Co compared to Engineering Equipment:Points of discussion:1) Advertisement as manufacturer/contractor2) Ready-made materialsIn Celestino Co, the Court held the taxpayer to be a manufacturer rather than a contractor of sash, doors and windows manufactured in its factory. From the very start, Celestino Co intended itself to be a manufacturer of doors, windows, sashes etc. as it did register a special trade name for its sash business and ordered company stationery carrying the bold print ORIENTAL SASH FACTORY. As a general rule, sash factories receive orders for doors and windows of special design only in particular cases, but the bulk of their sales is derived from ready-made doors and windows of standard sizes for the average home, which sales were reflected in their books of accounts totalling P118,754.69 for the period of only nine (9) months. The Court found said sum difficult to have been derived from its few customers who placed special orders for these items.In the present case, the company advertised itself as Engineering Equipment and Supply Company, Machinery Mechanical Supplies, Engineers, Contractors and not as manufacturers. It likewise paid the contractors tax on all the contracts for the design and construction of central system. Similarly, it did not have ready-made air conditioning units for sale.QUIROGA VS. PARSONSFacts: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.

PUYAT VS. ARCO AMUSEMENT CO.Facts: Respondent is engaged in operating cinematographs, while petitioner is acting as an agent for Starr Piano Company of Richmond. Respondent negotiated with petitioner and agreed that petitioner would order sound reproducing equipment on its behalf, and respondent would pay 10% commission and out-of-pocket expenses in addition to the selling price. Transactions for 2 orders transpired. After 3 years, respondent discovered that that price quoted to them by petitioner was not the net price but the list price. They sought to obtain reimbursement from the petitioner, and failing on this, filed the instant case.Issue: Whether the contract between petitioner and respondent is that of agency where agent is bound to indemnify the principal for damages, or a mere contract of salesHeld: The letters, by which the respondent accepted the prices for the sound reproducing equipment subject of its contract with the petitioner, are clear in their terms and admit no other interpretation that the respondent in question at the prices indicated which are fixed and determinate. The respondent admitted in its complaint filed with the Court of First Instance of Manila that the petitioner agreed tosellto it the first sound reproducing equipment and machinery.We agree with the trial judge that "whatever unforseen events might have taken place unfavorable to the defendant (petitioner), such as change in prices, mistake in their quotation, loss of the goods not covered by insurance or failure of the Starr Piano Company to properly fill the orders as per specifications, the plaintiff (respondent) might still legally hold the defendant (petitioner) to the prices fixed of $1,700 and $1,600." This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge of his commission provided he acts in accordance with the instructions received from his principal (section 254, Code of Commerce), and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part (article 1729, Civil Code).

While the letters state that the petitioner was to receive ten per cent (10%) commission, this does not necessarily make the petitioner an agent of the respondent, as this provision is only an additional price which the respondent bound itself to pay, and which stipulation is not incompatible with the contract of purchase and sale.

In the second place, to hold the petitioner an agent of the respondent in the purchase of equipment and machinery from the Starr Piano Company of Richmond, Indiana, is incompatible with the admitted fact that the petitioner is the exclusive agent of the same company in the Philippines. It is out of the ordinary for one to be the agent of both the vendor and the purchaser. The facts and circumstances indicated do not point to anything but plain ordinary transaction where the respondent enters into a contract of purchase and sale with the petitioner, the latter as exclusive agent of the Starr Piano Company in the United States.

It follows that the petitioner as vendor is not bound to reimburse the respondent as vendee for any difference between the cost price and the sales price which represents the profit realized by the vendor out of the transaction. This is the very essence of commerce without which merchants or middleman would not exist.LO VS. KJS ECO-FORMWORK SYSTEM PHIL. INC.FACTS:Respondent KJS Eco-Framework System is a corporation engaged in the sale of steel scaffoldings, while petitioner Sonny Lo, doing business under the name of Sans Enterprises, is a building contractor.1.In February 1990, petitioner ordered scaffolding equipments from the respondent amounting to P540, 425.80. He paid a down payment of P150,000 and the balance was to be paid in 10 monthly installments2.However, Lo was only able to pay the first 2 monthly installments due to financial difficulties despite demands from the respondent3.In October 1990, petitioner and respondent executed a deed of assignment whereby petitioner assigned to respondent his receivables of P335,462.14 from Jomero Realty Corp4.But when respondent tried to collect the said credit from Jomero Realty Corp, the latter refused to honor the deed of assignment because it claimed that the petitioner was also indebted to it. As such, KJS sent Lo a demand letter but the latter refused to pay, claiming that his obligation had been extinguished when they executed the deed of assignment5.Subsequently, respondent filed an action for recovery of sum of money against petitioner.6.Petitioner argued that his obligation was extinguished with the execution of the deed of assignment of credit. Respondent alleged that Jomero Realty Corp refused to honor the deed of assignment because it claimed that the petitioner had outstanding indebtedness to it7.The trial court dismissed the complaint on the ground that the assignment of credit extinguished the bligation8.Upon appeal, CA reversed the trial court decision and held in favor of KJS.CA held thata.Petitioner failed to comply with his warranty under the deedb.The object of the deed did not exist at the time of the transaction, rendering it void under Art 1409 NCCc.Petitioner violated the terms of the deed of assignment when he failed to execute and do all acts necessary to effectually enable the respondent to recover the collectibles

ISSUE:WON the deed of assignment extinguished the petitioners obligation

HELD:No, the petitioners obligation was not extinguished with the execution of the deed of assignment.

Anassignment of credit is an agreement by virtue of which the owner of a credit, known as the assignor, by a legal cause, such as sale,dacion en pago, exchange or donation, and without the consent of the debtor, transfers his credit and accessory rights to another, known as the assignee, who acquires the power to enforce it to the same extent as the assignor could enforce it against the debtor.

Indacion en pago, as a special mode of payment, the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt.In order that there be a validdationin payment, the following are the requisites: (1) There must be the performance of the prestation in lieu of payment (animo solvendi) which may consist in the delivery of a corporeal thing or a real right or a credit against the third person; (2) There must be some difference between the prestation due and that which is given in substitution (aliud pro alio); (3) There must be an agreement between the creditor and debtor that the obligation is immediately extinguished by reason of the performance of a prestation different from that due. The undertaking really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtors debt.As such, the vendor in good faith shall be responsible, for the existence and legality of the credit at the time of the sale but not for the solvency of the debtor, in specified circumstances.

Hence,it may well be that the assignment of credit, which is in the nature of a sale of personal property, produced the effects of a dation in payment which may extinguish the obligation. However, as in any other contract of sale, the vendor or assignor is bound by certain warranties.More specifically, the first paragraph of Article 1628 of the Civil Code provides:The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should have been sold as doubtful; but not for the solvency of the debtor, unless it has been so expressly stipulated or unless the insolvency was prior to the sale and of common knowledge.

From the above provision,petitioner, as vendor or assignor, is bound to warrant the existence and legality of the credit at the time of the sale or assignment.When Jomero claimed that it was no longer indebted to petitioner since the latter also had an unpaid obligation to it, it essentially meant that its obligation to petitioner has been extinguished by compensation.In other words, respondent alleged the non-existence of the credit and asserted its claim to petitioners warranty under the assignment.Therefore, it necessary for the petitioner to make good its warranty and pay the obligation.

Furthermore, the petitionerbreached his obligation under the Deed of Assignment, toexecute and do all such further acts and deeds as shall be reasonably necessary to effectually enable said ASSIGNEE to recover whatever collectibles said ASSIGNOR has in accordance with the true intent and meaning of these presents.

Indeed, by warranting the existence of the credit, petitioner should be deemed to have ensured the performance thereof in case the same is later found to be inexistent.He should be held liable to pay to respondent the amount of his indebtedness.PARAGAS VS. HEIRS OF BALACANOFACTS: Gregorio Balacano, married to Lorenza,owned 2 parcels of land. He wasalready 81 years old, very weak, could barely talk, and had been battling w/liver disease for over a month. On his deathbed,barely a week before he died, he allegedly signed a Deed of Absolute Sale over the lots in favor of the Paragas Spouses, accompanied by Atty. De Guzman who proceededto notarize the same, alleging thatit was a mere confirmation of a previous sale and thatGregorio had already paid a P 50,000.00deposit. The Paragas driver was also there to take a picture of Gregorio signing the said deed, w/ a ballpen in his hand. There was nothing to show that thecontents of the deed wereexplained to Gregorio. Paragas then sold a portion of the disputed lot toCatalino. The grandson of Gregorio, Domingo, sought to annul the sale and partition. There was no sufficient evidence to support any prior agreement or partial execution thereof.

ISSUE:W/N Balacano is incapacitated to enter into a contract of sale

HELD:A person is not renderedincompetent merely because of old age; however,when such age has impaired the mental faculties as to prevent a person from protecting his rights,then he is undeniably incapacitated. He is clearly at a disadvantage, and thecourts must be vigilant for his protection. In this case, Gregorios consent was clearly absent hence the sale was null and void. The dubious circumstances raise serious doubts on his capacity to renderconsent. Considering that the Paragas Spouses arenot owners of the said properties, itonly follows that the subsequent sale thereof to Catalinowho was not in good faithis likewise void. Further, thelots pertained to the conjugal partnership having been inherited by Gregorio during his marriage to Lorenza. It cannot thus be sold w/othe latters consent.

CALIMILIM-CANULLAS VS. FORTUN

Facts: Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married in 1962, with 5 children, and were living on a house situated on a land inherited by the latter. In 1978, Fernando abandoned his family and lived with Corazon Daguines. In 1980, Fernando sold the house and lot to Daguines, who initiated a complaint for quieting of title. Mercedes resisted, claiming that the house and lot were conjugal properties, and the sale was null nad void for she had not consented thereto.Issues:(1) Whether or not the construction of a conjugal house on the exclusive property of the husbandipso factogave the land the character of conjugal property(2) Whether or not the sale of the lot together with the house and improvements thereon was valid under the circumstances surrounding the transactionHeld:(1) Both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot, which value would be reimbursed at the liquidation of the conjugal partnership. FERNANDO could not have alienated the house and lot to DAGUINES since MERCEDES had not given her consent to said sale.(2) The contract of sale was null and void for being contrary to morals and public policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived and from whence they derived their support. That sale was subversive of the stability of the family, a basic social institution which public policy cherishes and protects. The law emphatically prohibits the spouses from selling property to each other subject to certain exceptions. Similarly, donations between spouses during marriage are prohibited. And this is so because if transfers or con conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other,as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the wig of the parties.PHILIPPINE TRUST CO. VS. ROLDANFacts:Mariano Bernardo, a minor, inherited 17 parcels of land from his deceased father. Respondent, Marianos step-mother, was appointed his guardian. As guardian, she sold the 17 parcels to Dr. Ramos, her brother-in-law, for P14,700. After a week, Dr. Ramos sold the lands to her for P15,000. Subsequently, she sold 4 out of 17 parcels to Emilio Cruz. Petitioner replaced Roldan as guardian, and two months thereafter, this litigation sought to declare as null and void the sale to Dr. Ramos, and the sale to Emilio Cruz.Issue:Whether the sale of the land by the guardian is null and void for being violative of the prohibition for a guardian to purchase either in person or through the mediation of another the property of her wardHeld:Remembering the general doctrine that guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his wards interest, and in line with the courts suspicion whenever the guardian acquires wards property we have no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her wards parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies.RUBIAS VS. BATILLERFacts:Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question.Issue:Whether or not the contract of sale between appellant and his father-in-law was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in disputeHeld:The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof made by his father-in- law in his favor, at a time when Militante's application for registration thereof had already beendismissedby the Iloilo land registration court and was pending appeal in the Court of Appeals.Article 1491 of our Civil Code (like Article 1459 of the Spanish 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; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law.Fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning."Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded onpublic policydiffers from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a newcontact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then bevalid from its execution; however, it does not retroact to the date of the first contract."FABILLO VS. IACFACTS: Florencio Fabillo contracted the services of Atty.Murillo to revive a lost case over his inheritance from hisdeceased sister Justinia. He sought to acquire the SanSalvador and Pugahanay Properties that his sister leftbehind against the latters husband. They entered into acontract where a contingent fee in favor of Atty. Murilloin case the case won was agreed upon. The fee was 40%of the value of whatever benefit Florencio may derivefrom the suitsuch as if the properties were sold,rented, or mortgaged. It was vague, however, regardingthe fee in case Florencio or his heirs decide to occupy