CIVIL LAW

- I Gabby and Mila got married at Lourdes Church in Quezon City on July 10, 1990.
Prior thereto, they executed a marriage settlement whereby they agreed on the
regime of conjugal partnership of gains. The marriage settlement was registered in
the Register of Deeds of Manila, where Mila is a resident. In 1992, they jointly
acquired a residential house and lot, as well as a condominium unit in Makati. In
1995, they decided to change their property relations to the regime of complete
separation of property. Mila consented, as she was then engaged in a lucrative
business. The spouses then signed a private document dissolving their conjugal
partnership and agreeing on a complete separation of property.
Thereafter, Gabby acquired a mansion in Baguio City, and a 5-hectare agricultural
land in Oriental Mindoro, which he registered exclusively in his name.
In the year 2000, Milas business venture failed, and her creditors sued her for
P10,000,000.00. After obtaining a favorable judgment, the creditors sought to
execute on the spouses house and lot and condominium unit, as well as Gabbys
mansion and agricultural land.
a) Discuss the status of the first and the amended marriage settlements. (2%)
b) Discuss the effect/s of the said settlements on the properties acquired by the
spouses. (2%)
c) What properties may be held answerable for Milas obligations? Explain. (2%)
- II In 1985, Sonny and Lulu, both Filipino citizens, were married in the Philippines.
In 1987, they separated, and Sonny went to Canada, where he obtained a divorce in
the same year. He then married another Filipina, Auring, in Canada on January 1,
1988. They had two sons, James and John. In 1990, after failing to hear from
Sonny, Lulu married Tirso, by whom she had a daughter, Verna. In 1991, Sonny
visited the Philippines where he succumbed to heart attack.
a) Discuss the effect of the divorce obtained by Sonny and Lulu in Canada. (2%)
b) Explain the status of the marriage between Sonny and Auring. (2%)
c) Explain the status of the marriage between Lulu and Tirso. (2%)
d) Explain the respective filiation of James, John and Verna. (2%)
e) Who are the heirs of Sonny? Explain. (2%)
- III Emil, the testator, has three legitimate children, Tom, Henry and Warlito; a wife
named Adette; parents named Pepe and Pilar; an illegitimate child, Ramon; brother,
Mark; and a sister, Nanette. Since his wife Adette is well-off, he wants to leave
to his illegitimate child as much of his estate as he can legally do. His estate
has a net amount of P1,200,000.00, and all the above-named relatives are still
living. Emil now comes to you for advice in making a will.
How will you distribute his estate according to his wishes without violating the
law on testamentary succession? (5%)
- IV Steve was married to Linda, with whom he had a daughter,
Tintin. Steve fathered a son with Dina, his secretary of 20 years,
whom Dina named Joey, born on September 20, 1981. Joeys birth
certificate did not indicate the fathers name. Steve died on August
13, 1993, while Linda died on December 3, 1993, leaving their
legitimate daughter, Tintin, as sole heir. On May 16, 1994, Dina filed
a case on behalf of Joey, praying that the latter be declared an
acknowledged illegitimate son of Steve and that Joey be given his
share in Steves estate, which is now being solely held by Tintin.
Tintin put up the defense that an action for recognition shall only be
filed during the lifetime of the presumed parents and that the
exceptions under Article 285 of the Civil Code do not apply to him
since the said article has been repealed by the Family Code. In any
case, according to Tintin, Joeys birth certificate does not show that
Steve is his father.
a) Does Joey have a cause of action against Tintin for
recognition and partition? Explain. (2%)

b) Are the defenses set up by Tintin tenable? Explain. (2%)

c) Supposing that Joey died during the pendency of the action,
should the action be dismissed? Explain. (2%)
- V In 1984, Eva, a Filipina, went to work as a nurse in the USA. There, she met and
fell in love with Paul, an American citizen, and they got married in 1985. Eva
acquired American citizenship in 1987. During their sojourn in the Philippines in
1990, they filed a joint petition for the adoption of Vicky, a 7-year old daughter
of Evas sister. The government, through the Office of the Solicitor General,
opposed the petition on the ground that the petitioners, being both foreigners,
are disqualified to adopt Vicky.
a) Is the governments opposition tenable? Explain. (2%)
b) Would your answer be the same if they sought to adopt Evas illegitimate
daughter? Explain. (2%)
c) Supposing that they filed the petition to adopt Vicky in the year 2000, will
your answer be the same? Explain. (2%)
- VI Hans Herber, a German national, and his Filipino wife, Rhoda, are permanent
residents of Canada. They desire so much to adopt Magno, an 8-year old orphaned
boy and a baptismal godson of Rhoda. Since the accidental death of Magnos parents
in 2004, he has been staying with his aunt who, however, could hardly afford to
feed her own family. Unfortunately, Hans and Rhoda cannot come to the Philippines
to adopt Magno although they possess all the qualifications as adoptive parents.
Is there a possibility for them to adopt Magno? How should they go about it? (5%)
- VII Don was the owner of an agricultural land with no access to a public road. He had
been passing through the land of Ernie with the latters acquiescence for over 20
years. Subsequently, Don subdivided his property into 20 residential lots and sold
them to different persons. Ernie blocked the pathway and refused to let the buyers
pass through his land.
a) Did Don acquire an easement of right of way? Explain. (2%)
b) Could Ernie close the pathway and refuse to let the buyers pass? Give reasons.
(2%)
c) What are the rights of the lot buyers, if any? Explain. (2%)
- VIII State with reason whether each of the following is a nuisance, and if so, give its
classification, whether public or private:
a)A squatters hut (1%)
b)A swimming pool (1%)
c)A house of prostitution (1%)
d)A noisy or dangerous factory in a private land (1%)
e) Uncollected garbage (1%)
- IX Marvin offered to construct the house of Carlos for a very reasonable price of
P900,000.00, giving the latter 10 days within which to accept or reject the offer.
On the fifth day, before Carlos could make up his mind, Marvin withdrew his offer.
a) What is the effect of the withdrawal of Marvins offer? (2%)
b) Will your answer be the same if Carlos paid Marvin P10,000.00 as consideration
for that option? Explain. (2%)
c) Supposing that Carlos accepted the offer before Marvin could communicate his
withdrawal thereof? Discuss the legal consequences. (2%)

- X Bernie bought on installment a residential subdivision lot from DEVLAND. After

having faithfully paid the installments for 48 months, Bernie discovered that
DEVLAND had failed to develop the subdivision in accordance with the approved
plans and specifications within the time frame in the plan. He thus wrote a letter
to DEVLAND informing it that he was stopping payment. Consequently, DEVLAND
cancelled the sale and wrote Bernie, informing him that his payments are forfeited
in its favor.
a) Was the action of DEVLAND proper? Explain. (2%)
b) Discuss the rights of Bernie under the circumstances. (2%)
c) Supposing DEVLAND had fully developed the subdivision but Bernie failed to pay
further installments after 4 years due to business reverses. Discuss the rights
and obligations of the parties. (2%)
- XI Before he left for Riyadh to work as a mechanic, Pedro left his Adventure van with
Tito, with the understanding that the latter could use it for one year for his
ersonal or family use while Pedro works in Riyadh. He did not tell Tito that the
brakes of the van were faulty. Tito had the van tuned up and the brakes repaired.
He spent a total amount of P15,000.00. After using the vehicle for two weeks, Tito
discovered that it consumed too much fuel. To make up for the expenses, he leased
it to Annabelle.
Two months later, Pedro returned to the Philippines and asked Tito to return the
van. Unfortunately, while being driven by Tito, the van was accidentally damaged
by a cargo truck without his fault.
a) Who shall bear the P15,000.00 spent for the repair of the van? Explain. (2%)
b) Who shall bear the costs for the vans fuel, oil and other
materials while it was with Tito? Explain. (2%)
c) Does Pedro have the right to retrieve the van even before the lapse of one
year? Explain. (2%)
d) Who shall bear the expenses for the accidental damage caused by the cargo
truck, granting that the truck driver and truck owner are insolvent? Explain. (2%)
- XII On July 14, 2004, Pedro executed in favor of Juan a Deed of Absolute Sale over a
parcel of land covered by TCT No. 6245. It appears in the Deed of Sale that Pedro
received from Juan P120,000.00 as purchase price. However, Pedro retained the
owners duplicate of said title. Thereafter, Juan, as lessor, and Pedro, as
lessee, executed a contract of lease over the property for a period of one (1)
year with a monthly rental of P1,000.00. Pedro, as lessee, was also obligated to
pay the realty taxes on the property during the period of lease.
Subsequently, Pedro filed a complaint against Juan for the reformation of the
Deed of Absolute Sale, alleging that the transaction covered by the deed was an
equitable mortgage. In his verified answer to the complaint, Juan alleged that the
property was sold to him under the Deed of Absolute Sale, and interposed
counterclaims to recover possession of the property and to compel Pedro to turn
over to him the owners duplicate of title.
Resolve the case with reasons. (6%)
- XIII Rod, the owner of an FX taxi, found in his vehicle an envelope containing TCT No.
65432 over a lot registered in Cesars name. Posing as Cesar, Rod forged Cesars
signature on a Deed of Sale in Rods favor. Rod registered the said document with
the Register of Deeds, and obtained a new title in his name. After a year, he sold
the lot to Don, a buyer in good faith and for value, who also registered the lot
in his name.
a) Did Rod acquire title to the land? Explain. (2%)
b) Discuss the rights of Don, if any, over the property. (2%)
c) In an ejectment case filed by Don against Cesar, can the latter ask for the
cancellation of Dons title considering that he (Cesar) is the rightful owner of
the lot? Explain. (2%)
- XIV -

Under a written contract dated December 1, 1989, Victor leased his land to Joel
for a period of five (5) years at a monthly rental of P1,000.00, to be increased
to P1,200.00 and P1,500.00 on the third and fifth year, respectively. On January
1, 1991, Joel subleased the land to Conrad for a period of two (2) years at a
monthly rental of P1,500.00.
On December 31, 1992, Joel assigned the lease to his compadre, Ernie, who acted
on the belief that Joel was the rightful owner and possessor of the said lot. Joel
has been faithfully paying the stipulated rentals to Victor. When Victor learned
on May 15, 1992 about the sublease and assignment, he sued Joel, Conrad and Ernie
for rescission of the contract of lease and for damages.
a) Will the action prosper? If so, against whom? Explain. (2%)
b) In case of rescission, discuss the rights and obligations of
the parties. (2%)
- XV Under the law on quasi-delict, aside from the persons who
persons, who else are liable under the following circumstances:

caused

injury

to

a) When a 7-year-old boy injures his playmate while playing with his fathers
rifle. Explain. (2%)
b) When a domestic helper, while haggling for a lower price with a fish vendor in
the course of buying foodstuffs for her employers family, slaps the fish vendor,
causing her to fall and sustain injuries. Explain. (2%)
c) A carpenter in a construction company accidentally hits the right foot of his
co-worker with a hammer. Explain. (2%)
d) A 15-year-old high school student stabs his classmate who is his rival for a
girl while they were going out of the classroom after their last class. Explain.
(2%)
e) What defense, if any, is available to them? (2%)
XVI
Dr. and Mrs. Almeda are prominent citizens of the country and are frequent
travelers abroad. In 1996, they booked round-trip business class tickets for the
Manila-Hong Kong-Manila route of the Pinoy Airlines, where they are holders of
Gold Mabalos Class Frequent Flier cards. On their return flight, Pinoy Airlines
upgraded their tickets to first class without their consent and, inspite of their
protestations to be allowed to remain in the business class so that they could be
with their friends, they were told that the business class was already fully
booked, and that they were given priority in upgrading because they are elite
members/holders of Gold Mabalos Class cards. Since they were embarrassed at the
discussions with the flight attendants, they were forced to take the flight at the
first class section apart from their friends who were in the business class. Upon
their return to Manila, they demanded a written apology from Pinoy Airlines. When
it went unheeded, the couple sued Pinoy Airlines for breach of contract claiming
moral and exemplary damages, as well as attorneys fees.
Will the action prosper? Give reasons. (5%)
COMMERCIAL LAW
- I (1.) What is a negotiable instrument? Give the characteristics
of a negotiable instrument. (2%)
(2.) Distinguish a negotiable document from a negotiable
instrument. (2%)
(3.) State and explain whether the following are negotiable
instruments under the Negotiable Instruments Law:
(i) Postal Money Order;
(ii) A certificate of time deposit which states This is to certify that bearer
has deposited in this bank the sum of FOUR THOUSAND PESOS (P4,000.00) only,
repayable to the depositor 200 days after date.
(iii) Letters of credit;
(iv) Warehouse receipts;
(v) Treasury warrants payable from a specific fund.
(5%)

- II -

(1.) Dagul has a business arrangement with Facundo. The latter would lend money
to another, through Dagul, whose name would appear in the promissory note as the
lender. Dagul would then immediately indorse the note to Facundo.
Is Dagul an accommodation party? Explain. (2%)
(2.) a) What is a crossed check? What are the effects of crossing a check?
Explain.
b) Distinguish an irregular indorser from a general indorser.
(3%)
(3.) Brad was in desperate need of money to pay his debt to Pete, a loan shark.
Pete threatened to take Brads life if he failed to pay. Brad and Pete went to see
Seorita Isobel, Brads rich cousin, and asked her if she could sign a promissory
note in his favor in the amount of P10,000.00 to pay Pete. Fearing that Pete would
kill Brad, Seorita Isobel acceded to the request. She affixed her signature on a
piece of paper with the assurance of Brad that he will just fill it up later. Brad
then filled up the blank paper, making a promissory note for the amount of
P100,000.00. He then indorsed and delivered the same to Pete, who accepted the
note as payment of the debt.
What defense or defenses can Seorita Isobel set up against Pete? Explain. (3%)
- III 1.) Under what conditions may a stock corporation acquire its own shares? (2%)
(2.) Janice rendered some consultancy work for XYZ Corporation. Her compensation
included shares of stock therein.
Can XYZ Corporation issue shares of stock to pay for the services of Janice as its
consultant? Discuss your answer. (2%)
- IV Divine Corporation is engaged in the manufacture of garments for export. In the
course of its business, it was able to obtain loans from individuals and financing
institutions. However, due to the drop in the demand for garments in the
international market, Divine Corporation could not meet its obligations. It
decided to sell all its equipment such as sewing machines, perma-press machines,
high speed sewers, cutting tables, ironing tables, etc., as well as its supplies
and materials to Top Grade Fashion Corporation, its competitor.
a) How would you classify the transaction?
b) Can Divine Corporation sell the aforesaid items to its competitor, Top Grade
Fashion Corporation? What are the requirements to validly sell the items? Explain.
c) How would you protect the interests of the creditors of Divine Corporation?
d) In case Divine Corporation violated the law, what remedies are available to Top
Grade Fashion Corporation against Divine Corporation?
(5%)
- V (1.) a) Under what circumstances may a corporation declare dividends? (2%)
b) Distinguish dividend from profit; cash dividend from stock dividend. (2%)
c) From what funds are cash and stock dividends
sourced? Explain why. (2%)
(2.) A Korean national joined a corporation which is engaged in the furniture
manufacturing business. He was elected to the Board of Directors. To complement
its furniture manufacturing business, the corporation also engaged in the logging
business.
With the additional logging activity, can the Korean national still be a member of
the Board of Directors? Explain. (3%)

- VI Jojo deposited several cartons of goods with SN Warehouse Corporation. The

corresponding warehouse receipt was issued to the order of Jojo. He endorsed the
warehouse receipt to EJ who paid the value of the goods deposited. Before EJ could
withdraw the goods, Melchor informed SN Warehouse Corporation that the goods
belonged to him and were taken by Jojo without his consent. Melchor wants to get
the goods, but EJ also wants to withdraw the same.
a) Who has a better right to the goods? Why?
b) If SN Warehouse Corporation is uncertain as to who is entitled to the property,
what is the proper recourse of the corporation? Explain.
(5%)
- VII (1.) Briefly discuss the doctrine of corporate opportunity. (2%)
(2.) Malyn, Schiera and Jaz are the directors of Patio Investments, a close
corporation formed to run the Patio Caf, an al fresco coffee shop in Makati City.
In 2000, Patio Caf began experiencing financial reverses, consequently, some of
the checks it issued to its beverage distributors and employees bounced.
In October 2003, Schiera informed Malyn that she found a location for a second
caf in Taguig City. Malyn objected because of the dire financial condition of the
corporation.
Sometime in April 2004, Malyn learned about Fort Patio Caf located in Taguig City
and that its development was undertaken by a new corporation known as Fort Patio,
Inc., where both Schiera and Jaz are directors. Malyn also found that Schiera and
Jaz, on behalf of Patio Investments, had obtained a loan of P500,000.00, from
PBCom Bank, for the purpose of opening Fort Patio Caf. This loan was secured by
the assets of Patio Investments and personally guaranteed by Schiera and Jaz.
Malyn then filed a corporate derivative action before the Regional Trial Court of
Makati City against Schiera and Jaz, alleging that the two directors had breached
their fiduciary duties by misappropriating money and assets of Patio Investments
in the operation of Fort Patio Caf.
a) Did Schiera and Jaz violate the principle of corporate opportunity? Explain.
b) Was it proper for Malyn to file a derivative suit with a prayer for injunctive
relief? Explain.
c) Assuming that a derivative suit is proper, may the action continue if the
corporation is dissolved during the pendency of the suit? Explain.
(5%)
- VIII Aaron, a well-known architect, is suffering from financial reverses. He has four
creditors with a total claim of P26 Million. Despite his intention to pay these
obligations, his current assets are insufficient to cover all of them. His
creditors are about to sue him. Consequently, he was constrained to file a
petition for insolvency.
a) Since Aaron was merely forced by circumstances to petition the court to declare
him insolvent, can the judge properly treat the petition as one for involuntary
insolvency? Explain.
b) If Aaron is declared an insolvent by the court, what would be the effect, if
any, of such declaration on his creditors? Explain.
c) Assuming that Aaron has guarantors for his debts, are the guarantors released
from their obligations once Aaron is discharged from his debts? Explain.
d) What remedies are available to the guarantors in case they are made to pay the
creditors? Explain.
(5%)
- IX (1.) What are the effects of an irrevocable designation of a beneficiary under the
Insurance Code? Explain. (2%)
(2.) Jacob obtained a life insurance policy for P1 Million designating
irrevocably Diwata, a friend, as his beneficiary. Jacob, however, changed his mind

and wants Yob and Jojo, his other friends, to be included as beneficiaries
considering that the proceeds of the policy are sufficient for the three friends.
Can Jacob still add Yob and Jojo as his beneficiaries? Explain.
(2%)
- X (1.) M/V Pearly Shells, a passenger and cargo vessel, was insured for
P40,000,000.00 against constructive total loss. Due to a typhoon, it sank near
Palawan. Luckily, there were no casualties, only injured passengers. The shipowner
sent a notice of abandonment of his interest over the vessel to the insurance
company which then hired professionals to afloat the vessel for P900,000.00. When
re-floated, the vessel needed repairs estimated at P2,000,000.00. The insurance
company refused to pay the claim of the shipowner, stating that there was no
constructive total loss.
a) Was there constructive total loss to entitle the shipowner to recover from
the insurance company? Explain.
b) Was it proper for the shipowner to send a notice of abandonment to the
insurance company? Explain.
(5%)
(2.) a) When does double insurance exist? (2%)
b) What is the nature of the liability of
insurance? Explain. (2%)

the

several

insurers

in

double

- XI Ricardo mortgaged his fishpond to AC Bank to secure a P1 Million loan. In a

separate transaction, he opened a letter of credit with the same bank for
$500,000.00 in favor of HS Bank, a foreign bank, to purchase outboard motors.
Likewise, Ricardo executed a Surety Agreement in favor of AC Bank.
The outboard motors arrived and were delivered to Ricardo, but he was not able to
pay the purchase price thereof.
a) Can AC Bank take possession of the outboard motors? Why?
b) Can AC Bank also foreclose the mortgage over the fishpond? Explain.
(5%)
- XII Hi Yielding Corporation filed a complaint against five of its officers for
violation of Section 31 of the Corporation Code. The corporation claimed that the
said officers were guilty of advancing their personal interests to the prejudice
of the corporation, and that they were grossly negligent in handling its affairs.
Aside from documents and contracts, the corporation also submitted in evidence
records of the officers U.S. Dollar deposits in several banks overseas - Boston
Bank, Bank of Switzerland, and Bank of New York.
For their part, the officers filed a criminal complaint against the directors of
Hi Yielding Corporation for violation of Republic Act No. 6426, otherwise known as
the Foreign Currency Deposit Act of the Philippines. The officers alleged that
their bank deposits were illegally disclosed for want of a court order, and that
such deposits were not even the subject of the case against them.
a) Will the complaint filed against the directors of Hi Yielding Corporation
prosper? Explain.
b) Was there a violation of the Secrecy of Bank Deposits Law (Republic Act No.
1405)? Explain.
(5%)
- XIII (1.) Discuss the kabit system in land transportation and its legal consequences.
(2%)
(2.) Procopio purchased an Isuzu passenger jeepney from Enteng, a holder of a
certificate of public convenience for the operation of public utility vehicle
plying the Calamba-Los Baos route. While Procopio continued offering the jeepney
for public transport services, he did not have the registration of the vehicle
transferred in his name. Neither did he secure for himself a certificate of public
convenience for its operation. Thus, per the records of the Land Transportation
Franchising and Regulatory Board, Enteng remained its registered owner and

operator. One day, while the jeepney was traveling southbound, it collided with a
ten-wheeler truck owned by Emmanuel. The driver of the truck admitted
responsibility for the accident, explaining that the truck lost its brakes.
Procopio sued Emmanuel for damages, but the latter moved to dismiss the case on
the ground that Procopio is not the real party in interest since he is not the
registered owner of the jeepney.
Resolve the motion with reasons. (3%)

(3.) Baldo is a driver of Yellow Cab Company under the boundary system. While
cruising along the South Expressway, Baldos cab figured in a collision, killing
his passenger, Pietro. The heirs of Pietro sued Yellow Cab Company for damages,
but the latter refused to pay the heirs, insisting that it is not liable because
Baldo is not its employee. Resolve with reasons. (2%)
- XIV (1.) On a clear weather, M/V Sundo, carrying insured cargo, left the port of
Manila bound for Cebu. While at sea, the vessel encountered a strong typhoon
forcing the captain to steer the vessel to the nearest island where it stayed for
seven days. The vessel ran out of provisions for its passengers. Consequently, the
vessel proceeded to Leyte to replenish its supplies.
a) Assuming that the cargo was damaged because of such deviation, who between the
insurance company and the owner of the cargo bears the loss? Explain.
b) Under what circumstances can a vessel properly proceed to a port other than its
port of destination? Explain.
(4%)
(2.) Star Shipping Lines accepted 100 cartons of sardines from Master to be
delivered to 555 Company in Manila. Only 88 cartons were delivered, however, these
were in bad condition.
555 Company claimed from Star Shipping Lines the value of the missing goods, as
well as the damaged goods. Star Shipping Lines refused because the former failed
to present a bill of lading.

Resolve with reasons the claim of 555 Company. (4%)

- XV -

(1.) S Development Corporation sued Shangrila Corporation for using the S logo
and the tradename Shangrila. The former claims that it was the first to register
the logo and the tradename in the Philippines and that it had been using the same
in its restaurant business.
Shangrila Corporation counters that it is an affiliate of an international
organization which has been using such logo and tradename Shangrila for over 20
years.
However, Shangrila Corporation registered
Philippines only after the suit was filed.

the

tradename

and

logo

in

the

a) Which of the two corporations has a better right to use the logo and the
tradename? Explain.
b) How does the international affiliation of Shangrila Corporation affect the
outcome of the dispute? Explain. (5%)
(2.) Cezar works in a car manufacturing company owned by Joab. Cezar is quite
innovative and loves to tinker with things. With the materials and parts of the
car, he was able to invent a gas-saving device that will enable cars to consume
less gas. Francis, a co-worker, saw how Cezar created the device and likewise,
came up with a similar gadget, also using scrap materials and spare parts of the
company. Thereafter, Francis filed an application for registration of his device

with the Bureau of Patents. Eighteen months later, Cezar filed his application for
the registration of his device with the Bureau of Patents.
a) Is the gas-saving device patentable? Explain.
b) Assuming that it is patentable, who is entitled to the patent? What, if any, is
the remedy of the losing party?
c) Supposing Joab got wind of the inventions of his employees and also laid claim
to the patents, asserting that Cezar and Francis were using his materials and
company time in making the devices, will his claim prevail over those of his
employees? Explain. (5%)