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Name: SARACHO, NICOLE R.

Bar Year: 1995


I.
Civil Law (insert all questions and answers)
1. Lawrence, a retired air force captain, decided to go into the air
transport business. He purchased an aircraft in cash except for an
outstanding balance of P500,000.00. He incurred an indebtedness of
P300,000.00 for repairs with an aircraft repair company. He also
borrowed P1 Million from a bank for additional capital and constituted a
chattel mortgage on the aircraft to secure the loan.
While on a test flight the aircraft crashed causing physical
injuries to a third party who was awarded damages of P200,000.00.
Lawrence's insurance claim for damage to the aircraft was denied thus
leaving him nothing else but the aircraft, which was then valued only
at P1 Million. Lawrence was declared insolvent. Assuming that the
aircraft was sold for Pl Million, give the order of preference of the
creditors of Lawrence and distribute the amount of P1 Million.
SUGGESTED ANSWER:
Assuming that the aircraft was sold for P1 Million, there is no order of
preference. The P1 Million will all go to the bank as a chattel
mortgagee because a chattel mortgage under Art. 2241 (4) NCC
defeats Art. 2244 (12) and (14}. Art. 2241 (3) and (5) are not
applicable because the aircraft is no longer in the possession of the
creditor.
2. Olivia owns a vast mango plantation, which she can no longer
properly manage due to a lingering illness. Since she is indebted to
Peter in the amount of P500.000.00 she asks Peter to manage the
plantation and apply the harvest to the payment of her obligation to
him, principal and interest, until her indebtedness shall have been fully
paid. Peter agrees.
1) What kind of contract is entered into between Olivia and Peter?
Explain.
2) What specific obligations are imposed by law on Peteras a
consequence of their contract?
3) Does the law require any specific form for the validity of their
contract? Explain
4) May Olivia re-acquire the plantation before her entire indebtedness
shall have been fully paid? Explain.

SUGGESTED ANSWERS:
1) A contract of antichresis was entered into betweenOlivia and Peter.
Under Article 2132 of the New Civil Code, by a contract of antichresis
the creditor acquires the right to receive the fruits of an immovable of
his debtor, with the obligation to apply them to the payment of the
interest, and thereafter to the principal of his credit.
2) Peter must pay taxes and charges upon the land and bear the
necessary expenses for preservation and repair, which he may deduct
from the fruits. (Art, 2135, NCC)
3) The amount of the principal and interest must be specified in
writing; otherwise the antichresis will be void. (Art. 2134, NCC)
4) No.Art.2136 specifically provides that the debtor cannot re-acquire
the enjoyment of the immovable without first having totally paid what
he owes the creditor. However, it is potestative on the part of the
creditor to do so in order to exempt him from his obligation under Art.
2135, NCC, The debtor cannot re-acquire the enjoyment unless Peter
compels Olivia to enter again the enjoyment of the pro
II.

Commercial Law (insert all questions and answers):

1.
Michael withdrew without authority funds of the partnership in
the amounts of P500th and US$50th for services he claims he rendered
for the benefit of the partnership. He deposited the P500th in his
personal peso current account with Prosperity Bank and the US$50th in
his personal foreign currency savings account with Eastern Bank.
The partnership instituted an action in court against Michael,
Prosperity, and Eastern to compel Michael to return the subject funds
to the partnership and pending litigation to order both banks to
disallow any withdrawal from his accounts.
At the initial hearing of the case the court ordered Prosperity to
produce the records of Michaels peso current account, and Eastern to
produce the records of his foreign currency savings account.
Can the court compel Prosperity and Eastern to disclose the bank
deposits of Michael? Discuss fully.
SUGGESTED ANSWER:
Yes, as far as the peso account is concerned. Sec 2 of RA 1405
allows the disclosure of bank deposits in case where the money
deposited is the subject matter of litigation. Since the case filed
against Michael is aimed at recovering the amount he withdrew from
the funds of the partnership, which amount he allegedly deposited in
his account, a disclosure of his bank deposits would be proper.

No, with respect to the foreign currency account. Under the Foreign
Currency Law, the exemption to the prohibition against disclosure of
information concerning bank deposits is the written consent of the
depositor.
2. Distinguish
insolvency.

between

voluntary

insolvency

and

involuntary

SUGGESTED ANSWER:
In voluntary insolvency, it is the debtor himself who files the
petition for insolvency, while in involuntary insolvency, at least 3
creditors are the ones who file the petition for insolvency against the
insolvent debtor.

1.
2.

3.
4.
5.

ALTERNATIVE ANSWER:
The following are the distinctions:
In involuntary insolvency, 3 or more creditors are required, whereas in
voluntary insolvency, one creditor may be sufficient;
In involuntary insolvency, the creditors must be residents of the
Philippines, whose credits or demand accrued in the Philippines, and
none of the creditors has become a creditor by assignment within 30
days prior to the filing of the petition, whereas in voluntary insolvency,
these are not required.
In involuntary insolvency, the debtor must have done any of the acts of
insolvency as enumerated by Sec 20, whereas in voluntary insolvency,
the debtor must not have done any of said acts.
In involuntary insolvency, the amount of indebtedness must not be less
than P1,000 whereas in voluntary insolvency, it must exceed P1,000.
In involuntary insolvency, a bond must accompany the petition,
whereas such is not required in voluntary insolvency.