Training & Convention Division

University of the Philippines Law Center

SUGGESTED ANSWERS
to the
2019 BAR EXAMINATIONS IN
CIVIL LAW

PART I

A.1.

In January 2018, Mrs. A, a married woman on her sixth (6 th) month of

pregnancy, was crossing a street when she was suddenly hit by a car being
recklessly driven by Mr. X. As a result, Mrs. A sustained serious injuries and
further, suffered an unintentional abortion. Mrs. A was hospitalized for two (2)
months, during which she incurred P400,000.00 in medical fees. Her expenses
were all duly substantiated by official receipts. During the two (2)-month period
of her confinement, she was unable to report for work and earn any salary, which
was established at the rate of P50,000.00 per month. Mrs. A then filed a civil
case for damages against Mr. X.

(a) Based on the case filed by Mrs. A, what is the source of Mr. X's
obligation to her as a result of his acts? Explain. (2 %)

SUGGESTED ANSWER:

Mr. X’s obligation arose from a quasi-delict, one of the five sources of
obligations (Art. 1157, Civil Code). The Code also provides that whoever by
act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done and such fault or negligence, is called a
quasi-delict (Article 2176 of the Civil Code). Here, Mr. X, inrecklessly
driving a car, hit Mrs. A, thereby causing serious injuries and unintentional
abortion to the latter.

(b) May Mrs. A claim actual damages from Mr. X? If so, how much can
Mrs. A claim? Explain. (2%)
SUGGESTED ANSWER:

Yes, Mrs. A can claim actual damages amounting to P500,000. Article

2199 of the Civil Code provides that except as provided by law or by
stipulation, one is entitled to actual or compensatory damages only for such
pecuniary loss suffered by him as he has duly proved. The medical fees
totaling P400,000 were duly substantiated by official receipts. Article 2200
of the Civil Code also provides that indemnification for damages shall
comprehend not only the value of the loss suffered, but also that of the
profits which the obligee failed to obtain. The rate of her salary was
established at P50,000 per month; thus, her inability to report for work and
earn salary for two months entitled her to a total of P100,000. Mrs. A,
therefore, can claim her expenses for medical fees and two months’ worth of
salary the total of which is P500.000.

(c) May Mrs. A claim damages on behalf of her unborn baby? Explain.
%
(3 )

SUGGESTED ANSWERS:

No, Mrs. A cannot claim damages on behalf of her unborn baby. Birth
determines personality. The Court has held that an action for pecuniary
damages on account of personal injury or death pertains primarily to the
one injured, and if no action for such damages could be instituted on behalf
of the unborn child on account of the injuries it received, no such right of
action could derivatively accrue to its parents or heirs [Geluz v. Court of
Appeals, G.R. No. L-16439, July 20, 1961].

ALTERNATIVE ANSWER:

Yes, Mrs. A can claim damages on behalf of her unborn baby. Under
Art. II Sec. 12 of the 1987 Constitution, the State is obliged to protect
equally the life of the mother and the life of the unborn from conception.
This provision should be applied in favor of the unborn child, and therefore
modifies the Geluz v. Court of Appeals ruling.

ANOTHER ALTERNATIVE ANSWER:

Yes, Mrs. A can claim damages on behalf of her unborn baby. The
Court has held that a conceived child, although yet unborn, is given by law a
provisional personality of its own for all purposes favorable to it, as
explicitly provided in Art. 40 of the New Civil Code, which includes being a
recipient of donations under Art. 742 of the New Civil Code, as well as
support. A claim for damages in favor of the unborn child should also
prosper [Quimiguing v. Icao, G.R. No. 26795, July 31, 1970].

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 (d) What must Mrs. A prove if she wants to recover moral damages from
Mr. X? (2%)

SUGGESTED ANSWER:

Mrs. A must prove that she suffered physical suffering, mental

anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, or similar injury. She must also prove that
Mr. X’s reckless driving produced the physical injury in natural and
continuous sequence, unbroken by any efficient intervening cause, produces
injury, without which she would not have suffered the same, that is the
reckless driving is the proximate cause of the injury. Moral damages may be
recovered in quasi-delicts causing physical injuries (Article 2219 of the Civil
Code).

ALTERNATIVE ANSWER:

Mrs. A must prove the following: (1) that she suffered physical
injuries; (2) that Mr. X committed a culpable act or omission; (3) that the
wrongful act or omission of Mr. X is the proximate cause of the damages she
sustained; and (4) that X’s act or omission is either a criminal offense
resulting to physical injuries or a quasi-delict causing physical injuries
[Mendoza v. Gomez, G.R. No. 160110, June 18, 2014].

(e) Assuming that Mrs. A is awarded actual and moral damages by the
trial court, may she also claim interest if the final and executory judgment
award remains unpaid by Mr. X? If so, when should the interest be
reckoned and what is the rate of interest? Explain. (3%)

SUGGESTED ANSWER:

Yes, Mrs. A may also claim interest. The interest should be 6% per
annum from the finality of judgment until its satisfaction. The Court held in
Nacar v. Gallery Frames [G. R. No. 189871, August 13, 2013], interpreting
BSP MB Circular No. 799, that when the judgment of the court awarding a
sum of money becomes final and executory, the rate of legal shall be 6% per
annum from such finality until its satisfaction, this interim period being
deemed to be the equivalent to a forbearance of credit.

A.2.

H and W were married in 1990. H, being a member of the Armed Forces

of the Philippines (AFP), was deployed to a rebel-infested area in 1992. Since
then, W has not heard from her husband, H.

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 One day, the AFP informed W that H had been declared missing since
1995. In consequence, W diligently pursued all available means to ascertain her
husband's whereabouts, but to no avail.

Firmly believing that H had already died, W filed a claim before the AFP
in 2008 for the death benefits of the missing serviceman. However, the AFP,
despite being cognizant of H' s status, would not act on the claim, contending
that H could not be presumed dead unless a judicial declaration to this effect is
issued by the proper court.

In what instance/s is a judicial declaration of presumptive death necessary? In

this case, is the contention of the AFP correct? Explain. (3%)

SUGGESTED ANSWER:

Judicial declaration of presumptive death is necessary only for the

purpose of contracting a subsequent marriage. Article 41 of the Family
Code provides that for the purpose of contracting a subsequent marriage
contracted by a person who had a well-founded belief that his/her prior
spouse who had been absent for four consecutive years was already dead,
the spouse present must institute a summary proceeding for the declaration
of presumptive death of the absentee.

The contention of the AFP is incorrect.

The Court has declared that the AFP can decide claims of death
benefits of a missing soldier without requiring the claimant to first produce
a court declaration of the presumptive death of such soldier and the
claimant need only present any "evidence" which shows that the concerned
soldier had been missing for such number of years and/or under the
circumstances prescribed under Articles 390 and 391 of the Civil Code.
Article 391 of the Civil Code provides that a person in the armed forces who
has taken part in war and has been missing for four years shall be presumed
dead for all purposes. Here, W informed the AFP that her husband had
been declared missing since 1995, 23 years before the filing of her claim in
2018. There is, thus, no need for a judicial declaration of presumptive death
before the AFP can act on the claim of W [Tadeo-Matias v. Republic, G.R.
No. 230751, April 25, 2018].

A.3.

Mr. Reyes is legally married to Mrs. Reyes. During the subsistence of

their marriage, Mr. Reyes cohabited with another woman, Ms. Cruz. Out of Mr.
Reyes and Ms. Cruz's illicit relationship, a child named C was born. In C's birth
certificate, "Cruz" appears as the child's surname, although Mr. Reyes expressly
acknowledged C as his child.

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 In 2018, Mr.Reyes and Ms. Cruz ended their relationship. Mr. Reyes
thereafter lodged a petition in court for parental custody and change or correction
of C's surname in the child's birth certificate from "Cruz" to "Reyes." At that
time, C was only ten (10) years old.

(a) Should Mr. Reyes be granted custody of C? Explain. (2.5%)

SUGGESTED ANSWER:

No, Mr. Reyes should not be granted custody because C is an

illegitimate child, who shall be under the parental authority of his mother
(Article 176, Family Code).

The Family Code provides that children conceived and born outside a
valid marriage are illegitimate (Article 165). In this case, C was conceived
and born out of the illicit relationship of Mr. Reyes and Ms. Cruz who are
not married; thus, C is an illegitimate child of Mr. Reyes. The Court has
held that the recognition of an illegitimate child by the father could be a
ground for ordering the latter to give support to, but not custody of the
child. The Court has further declared that since the law explicitly confers to
the mother sole parental authority over an illegitimate child, it follows that
only if she defaults can the father assume custody and authority over the
minor and that only the most compelling of reasons, such as the mother’s
unfitness to exercise sole parental authority, shall justify her deprivation of
parental authority and the award of custody to someone else [Briones v
Miguel, G.R. No. 156343, October 18, 2004]. There is no showing that Ms.
Cruz, C’s mother was unfit to exercise sole parental authority over C;
therefore, she cannot be deprived of C’s custody.

(b) Can Mr. Reyes validly compel the change or correction of C's surname from
"Cruz" to "Reyes"? Explain. (2.5%)

SUGGESTED ANSWER:

No, Mr. Reyes cannot compel the change of surname from “Cruz” to
“Reyes”. The Court has held that Article 176 of the Family Code gives
illegitimate children the right to decide if they want to use the surname of
their father or not. The Court further declared that it is not the father or
the mother who is granted by law the right to dictate the surname of their
illegitimate children; hence, Mr. Reyes cannot validly compel the change or
correction of C’s surname [Grande v. Antonio, G.R. No. 206248, February
18, 2014].

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 If they are still minors, however, the decision to use the father’s
surname may be exercised for them by their mother pursuant to the latter’s
parental authority over illegitimate children. In this case, the father cannot
compel the mother to register the child under his surname.

A.4.

F, a Filipina, married J, a Japanese, in the Philippines. After three (3)

years, they had a falling out and thus, separated. Soon after, F initiated a divorce
petition in Japan which was not opposed by J because under Japanese law, a
grant of divorce will capacitate him to remarry. F's divorce petition was then
granted by the Japanese court with finality.

May the legal effects of the divorce decree be recognized in the

Philippines, and consequently, capacitate F to remarry here? Explain. (3%)

SUGGESTED ANSWER:

Yes, the legal effects of the divorce decree may be recognized in the
Philippines, and consequently, capacitate F to remarry.

In the case of Republic v. Manalo [G.R. No. 221029, April 24, 2018],
the Court held that under Paragraph 2 of Article 26 of the Family Code, a
Filipino citizen has the capacity to remarry under Philippine law after
initiating a divorce proceeding abroad and obtaining a favorable judgment
against his or her alien spouse who is capacitated to remarry. Here, F
initiated a divorce petition in Japan and obtained a favorable judgment
which capacitated her Japanese husband to remarry. Applying Paragraph 2
of Article 26 of the Family Code as interpreted in Republic v. Manalo, the
legal effects of the divorce obtained by F may be recognized in the
Philippines which may capacitate F to remarry here.

[Note: The legal effects of the divorce obtained by F may be recognized in the
Philippines; however, it may not capacitate her to remarry as a matter of
enforcement of said divorce. Recognition is different from enforcement, the
latter being subject to defenses].

A.5.

X and Y were in a live-in relationship for the longest time, and were
already blessed with a child, Z. They finally decided to get married on March 15,
2020. When X's parents found about the news, they were thrilled and thus,
donated in favor of Z, the family heirloom, particularly, a gold ring valued at
P250,000.00, which X and Y orally accepted on behalf of their minor child. One
day, X and Y got into a serious quarrel, which resulted in them setting aside their
marriage plans.

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 (a) Is the donation to Z valid? Explain. (3%)

SUGGESTED ANSWER:

No, it is a void donation. This is an ordinary donation inter vivos, not a

donation proper nuptias. The Civil Code provides that if the value of the
personal property donated exceeds five thousand pesos, the donation and
the acceptance shall be made in writing; otherwise, the donation shall be
void. A piece of jewelry like the family heirloom here which is a gold ring,
valued at P250,000.00, is a personal property. Here, the acceptance was
made orally; therefore, the donation is void (Article 748).

(b) Assuming that the donation to Z is valid, may X's parents revoke the
donation on the ground that the marriage of X with Y did not push
through? Explain. (3%)

SUGGESTED ANSWER:

No, because it is an ordinary donation, not a donation propter nuptias.

The ground that the marriage did not push through may only be raised to
revoke donations by reason of marriage which is defined by Article 126 of
the Family Code, as those which are made before its celebration, in
consideration of the same and in favor of one or both of the future spouses
(Art. 83, FC). Here, the donation was not made in favor of one or both of the
future spouses, but in favor of their child. X's parents, therefore, cannot
revoke the donation on the ground that the marriage of X with Y did not
push through.

A.6.

Name at least two (2) exclusions from the following property regimes as
enumerated under the Family Code:

(a) Absolute community of property (2%)

SUGGESTED ANSWER:

[Any 2 of the 3 may be considered]:

(1) Property acquired during the marriage by gratuitous title by

either spouse, and the fruits as well as the income thereof, if any,
unless it is expressly provided by the donor, testator or grantor
that they shall form part of the community property;
(2) Property for personal and exclusive use of either spouse.
However, jewelry shall form part of the community property;

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 (3) Property acquired before the marriage by either spouse who has
legitimate descendants by a former marriage, and the fruits as
well as the income, if any, of such property. (Article 92 of the
Family Code)

(b) Conjugal partnership of gains (2%)

SUGGESTED ANSWER:

[Any 2 of the 4 may be considered]:

(1) Property which is brought to the marriage as his or her own;

(2) Property which each acquires during the marriage by
gratuitous title;
(3) Property which is acquired by right of redemption, by barter or
by exchange with property belonging to only one of the spouses;
and
(4) Property which is purchased with exclusive money of the wife
or of the husband. (Article 109 of the Family Code)

A.7.

Believing that he owned a certain parcel of land and completely unaware

of any defect in his title thereto, Mr. A started to build a house thereon. When
Mr. P, the real owner of the land learned of Mr. A's actions, Mr. P immediately
demanded Mr. A to leave the premises. However, Mr. A refused to leave, and
instead, asserted that as a builder in good faith, Mr. P is obliged to sell the land
to him.

(a) Is the claim of Mr. A correct? Explain. (3%)

SUGGESTED ANSWER:

No, Mr. A is not correct. Mr. A who was completely unaware of any
defect in his title, is a builder in good faith. Mr. P who prompted Mr. A’s
possession also acted in good faith. Article 448 applies in this case, which
provides that only the owner of the land on which anything has been built,
sown or planted in good faith, has the right to appropriate as his own the
works, sowing or planting, after payment of the indemnity for necessary
expenses and useful expenses where applicable, OR to oblige the one who
built or planted to pay the price of the land, and the one who sowed, the
proper rent; however, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. The
law grants said rights to the owner of the land. The builder in good faith,
Mr. A in this case, cannot compel Mr. P, the owner of the land, to choose
which right to exercise, for the option belongs to the owner alone.

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ALTERNATIVE ANSWER:

No, Mr. A is incorrect. He is a builder in bad faith. When Mr. A

started building his house, he was completely unaware of any defect in his
title and therefore, was, at the outset, a builder in good faith but when Mr. P
immediately demanded Mr. A to leave the premises before he completed the
house, which Mr. A refused to do and he continued building since he
persisted in the belief that his title had no fatal defect, he became a builder
in bad faith. Mr. P, the real owner, who immediately asked him to leave the
premises, acted in good faith. He has by law the option of acquiring the
house without paying for it (Art. 499, Civil Code).

(b) Assuming that Mr. P all the while, knew but did not object to Mr. A's
construction of the house on his property, may Mr. A compel Mr. P to purchase
the said improvement due to Mr. P's bad faith? Explain. (3%)

SUGGESTED ANSWER:

Yes, Mr. A may compel Mr. P to purchase the improvements. Article

454 of the Civil Code provides that when the landowner acted in bad faith
and the builder, planter or sower proceeded in good faith, the provisions of
article 447 shall apply. Article 453 of the same Code provides that it is
understood that there is bad faith on the part of the landowner whenever
the act was done with his knowledge and without opposition on his part.
Article 447 provides that the owner of the land who makes thereon,
personally or through another, plantings, constructions or works with the
materials of another, shall pay their value; and, if the landowner acted in
bad faith, the owner of the materials may remove them in any event, with a
right to be indemnified for damages. The landowner, having known and
without opposing the construction made by Mr. A is deemed to have acted
in bad faith; Article 447, therefore, applies and Mr. P shall pay the value of
the improvement; i.e., the value of the materials, plus damages.

ALTERNATIVE ANSWER:

Since Mr. A is a builder in bad faith for continuing to build despite

being asked to leave the premises, and Mr. P also acted in bad faith for not
objecting to Mr. A’s construction of his house on his property, they shall be
treated to have both acted in good faith (Article 453 of the Civil Code). The
bad faith of Mr. A is neutralized by the bad faith of Mr. P; thus, Article 448
of the Civil Code shall apply. The two options still belong to Mr. P, not Mr.
A.

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 A.8.

Mr. E leased a piece of land from Mr. F to be used for his sawmill
business for a period of ten (10) years. Consequently, Mr. E placed heavy
machineries there on to be used for his aforementioned business, with the
intention of removing them after the expiration of the lease period.

Are Mr. E's heavy machineries considered real properties under the Civil
Code? Explain. (3%)

SUGGESTED ANSWER:

No, they are movables. Machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner thereof in a land
or building which is also owned by him, for an industry or works which may
be carried on in a tenement and which tend directly to meet the needs of
said industry or works, but not when so placed by a tenant, a usufructuary,
or any person having only a temporary right, unless such person acted as
the agent of the owner, for instance, if the lease contained a stipulation that
any useful improvement which the lessee introduces on the leased property
shall pertain to the lessor at the termination of the lease. Here, the heavy
machineries were placed by Mr. E on a piece of land leased from Mr. F with
the intention of removing them after the expiration of the lease period.
Being movable in nature, said machineries were not deemed immobilized
[Davao Saw Mill Co. Inc. v. Castillo, G.R. No. L-40411, August 7, 1935].

A.9.

Ms. U is a usufructuary of a piece of land owned by Mr. L. During the

existence of the usufruct, Ms. U introduced various useful improvements on the
land. Upon termination of the usufruct, Mr. L requested Ms. U to remove the
said improvements, but Ms. U refused, demanding instead that Mr. L reimburse
her the value of the same.

(a) What is a usufruct? (2%)

SUGGESTED ANSWER:

A usufruct gives a right to enjoy the property of another with the

obligation of preserving its form and substance, unless the title constituting
it or the law otherwise provides (Article 562, Civil Code).

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 The Court has further declared that a usufruct, in essence, is nothing
else but simply allowing one to enjoy another’s property. It is also defined as
the right to enjoy the property of another temporarily, including both the
jus utendi and the jus fruendi, (plus, impliedly, the jus possidendi) with the
owner retaining the jus disponendi or the power to alienate the same
[Moralidad v. Sps. Pernes, G.R. No. 152809, August 3, 2006].

(b) Is Ms. U's demand proper? Explain. (3%)

SUGGESTED ANSWER:

No, the demand is not proper. The Civil Code provides that the
usufructuary may make on the property held in usufruct any useful
improvements, or expenses for mere pleasure, which he may deem proper,
provided he does not alter its form or substance; but he shall have no right
to be indemnified therefor. He may, however, remove such improvements
should it be possible to do so without injury to the property (Article 579,
Civil Code).

Ms. U, thus, has no right to be indemnified for any improvements

which she might have made on the land held in usufruct. She may only
remove them should it be possible to do so without injury to the property.

A.10.

Village H and Village L are adjoining residential villages in a

mountainous portion of Antipolo City, Rizal, with Village L being lower in
elevation than Village H. In an effort to beautify Village H, its developer, X,
Inc., constructed a clubhouse which included an Olympic-sized swimming pool
and an artificial lagoon on a portion of land overlooking Village L.

During the monsoon season, the continuous heavy rains caused Village
H's swimming pool and artificial lagoon to overflow, resulting into a massive
spillover that damaged various properties in Village L. Aggrieved, the
homeowners of Village L filed a complaint for damages against X, Inc. In
defense, X, Inc. contended that pursuant to the Civil Code, Village L, as the
lower estate, was obliged to receive the waters descending from Village H, the
higher estate. Hence, it cannot be held liable for damages.

Is X, Inc.'s position tenable? Explain. (3%)

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SUGGESTED ANSWERS:

No, X Inc.’s position is not tenable. The Water Code provides that
lower estates are only obliged to receive waters which naturally and without
intervention of man descend from higher estates (Art. 50, Water Code of the
Philippines). The Code also provides that the owner of the higher estate
cannot make works which will increase the natural flow. Therefore, Village
L, as the lower estate, was only obliged to receive the waters which naturally
and without intervention of man descend from higher estates and not those
which are due to the massive spillover from constructions made by X, Inc.
(Article 537 of the Civil Code).

X, Inc, therefore, is liable for damages.

-END OF PART 1-

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 PART II

B.11.

Mr. R is the registered owner of a parcel of land located in Cebu City

covered by Transfer Certificate of Title (TCT) No. 1234 issued in 1955. Since
his acquisition of the lot, Mr. R and his family had been in continuous, open, and
peaceful possession thereof. Mr. R died in 1980, resulting in the land being
transferred in the names of his heirs, i.e., A, B, and C, who became registered
owners thereof as per TCT No. 5678. During the entire time, said land had never
been encumbered or disposed, and that its possession always remained with
them.

Sometime in 1999, A, B, and C wanted to build a concrete fence around

the parcel of land, but they were opposed by Mrs. X, who started claiming
ownership over the same property on the strength of a Deed of Absolute Sale
purportedly entered into by her with Mr. R during the time that he was still alive.
Aggrieved, A, B, and C intend to file a complaint for quieting of title against
Mrs. X.

(a) What are the substantive requisites for the action to prosper? Do they
obtain in this case? Explain. (3%)

SUGGESTED ANSWER:

For an action to quiet title to prosper, the following requisites must

obtain in the case:

(1) the plaintiff or complainant has a legal or an equitable title

to or interest in the real property subject of the action; and

(2) the instrument, record, claim, encumbrance or proceeding

claimed to be casting cloud on his title must be shown to be
in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.

The requisites for an action to quiet the title obtain in this case, since
A, B, and C are the registered owners of the parcel of land, having inherited
the same from their father Mr. R, and the Deed of Absolute Sale, which cast
a cloud on their title may be shown to be invalid or inoperative [Heirs of
Delfin v. Heirs of Bacud, G.R. No. 187633, April 4, 2016].

(b) Within what period should A, B, and C file the complaint for quieting
of title? Explain. (2%)

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SUGGESTED ANSWER:

The action for quieting of title does not prescribe, because the
plaintiffs are in possession of the land [Heirs of Uberas v. CFI, October 30,
1978].

(c) Assuming that Band C are residing abroad, may A, without the
knowledge of Band C, file the complaint for quieting of title on behalf of
all the heirs? Explain. (2%)

SUGGESTED ANSWER:

Yes, A may file the complaint, provided that he files the same for the
co-ownership. Anyone of the co-owners may bring such an action in
ejectment (Article 87 of the Civil Code), even without joining all the other
co-owners as co-plaintiffs, because the suit is deemed to be instituted for the
benefit of all, assuming A wins the case. Parenthetically, if A loses in the
action to quiet title, it will if not affect B and C, because the Court did not
acquire jurisdiction over their persons. The Court further held that if the
action is for the benefit of the plaintiff alone, such that he claims the
possession for himself and not for the co-ownership, the action will not
prosper [Celino v. Heirs of Alejo, G.R. No. 1618117, July 30, 2004].

B.12.

D, an Overseas Filipino Worker, was on his way home to the Philippines

after working for so many years in the Middle East. He had saved PI00,000.00 in
his local savings account which he intended to use to start up a business in his
home country. On his flight home, tragedy struck as a suicide bomber blew up
the plane. All the passengers, including D, died. He left behind his widowed
mother M; his common-law wife, W, who is the mother of his twin sons, T and
S; and his brother, B. He left no will, no debts, no other relatives, and no other
properties except the money in his savings account.

Who are the heirs entitled to inherit from D and how much should each
receive? Explain. (5%)

SUGGESTED ANSWER:

D’s heirs entitled to inherit from him are:

M (his mother) – P50,000 and T and S (his twin sons) – P25,000 each.

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 D died intestate and his heirs are the mother (legitimate ascendant)
and his twin sons (illegitimate). The mother gets one-half of his estate and
his two illegitimate sons get the other half (Article 991).

W, the “common-law wife” is not an heir ab intestato because she is

not a legal spouse. She is merely a partner in a non-marital union.

B.13.

M, single, named his sister N in his will, as a devisee over a certain parcel
of land that he owned, with the obligation of preserving the land and transferring
it, upon N's death, to her illegitimate daughter O, who was then only a year old.

Is the condition imposed on N to preserve the land and to transmit it upon her
death to O a valid case of fideicommissary substitution? Explain. (3%)

SUGGESTED ANSWER:

Yes, this is a valid case of fideicommissary substitution. Article 863 of

the Civil Code provides that a fideicommissary substitution by virtue of
which the fiduciary or first heir instituted is entrusted with the obligation to
preserve and to transmit to a second heir the whole or part of the
inheritance, shall be valid and shall take effect, provided such substitution
does not go beyond one degree from the heir originally instituted. First,
there is the absolute obligation imposed upon the fiduciary N to preserve
and to transmit to the fideicommissary O the part of the inheritance.
Second, O, the fideicommissary, as the fiduciary’s illegitimate daughter is
one degree from the fiduciary. Furthermore, O’s illegitimate status is of no
moment, because Art. 863, referring to the “heir” does not distinguish
between legitimate from illegitimate relationships.

B.14.

Prior to his death, H, married to W, with children X, Y, and Z, executed a

holographic will entirely written, dated, and signed by him. In his will, H
instituted W, X, and Y as his heirs, and consequently, made testamentary
dispositions in their favor. H, however, expressly disinherited Z on the ground
that the latter once filed a civil case against him in order to collect a particular
sum of money he previously owed Z.

(a) Was the disinheritance of Z proper? Explain. (3%)

SUGGESTED ANSWER:

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 No, it is not a proper ground to disinherit. Article 916 of the Civil
Code provides that disinheritance can be effected only through a will
wherein the legal cause therefor shall be specified. Article 919 of the same
Code provides that the following shall be sufficient causes for the
disinheritance of children and descendants, legitimate as well as illegitimate.
That Z once filed a civil case against him in order to collect a particular sum
of money he previously owed is not one of the grounds for a valid
disinheritance.

(b) Assuming that the disinheritance of Z was improper, how will it affect
the institution of heirs and testamentary dispositions made in H's will?
Explain. (3%)

SUGGESTED ANSWER:

Article 918 of the Civil Code provides that disinheritance for a cause
which is not one of those set forth in this Code, shall annul the institution of
heirs insofar as it may prejudice the person disinherited; but the devises and
legacies and other testamentary dispositions shall be valid to such extent as
will not impair the legitime.

B.15.

Mr. P offered to sell his Manila Polo Club shares to Ms. Q for
P2,500,000.00. Ms. Q accepted on the condition that their agreement will not
take effect until after one (1) year. Mr. P then acceded and both of them shook
hands. Excited about the prospect of acquiring Mr. P's shares, Ms. Q approached
the former and offered to pay him an earnest money equivalent to 1% of the
purchase price, which Mr. P accepted. After one (l) year, Ms. Q approached Mr.
P seeking the enforcement of their agreement for Mr. P to sell his shares to her.
Mr. P refused to honor their agreement, claiming that the same was covered by
the Statute of Frauds because it was not reduced into writing and hence,
unenforceable.

Is the position of Mr. P correct? Explain. (3%)

SUGGESTED ANSWER:

No, the position of P is incorrect. The Statute of Frauds only applies to

purely executory contracts; partial performance removes the contract from
the ambit of the Statute of Frauds and not to partially or completely
executed contracts. Article 1482 of the Civil Code provides that whenever
earnest money is given in a contract of sale, it shall be considered as part of
the price and as proof of the perfection of the contract. The payment of

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earnest money, such as in this case, is tantamount to partial execution of the
contract which precludes the application of the Statute of Frauds. The
contract has been partially performed and a benefit was already accepted
when the seller accepted earnest money from the buyer [Article 1403 (2)(d);
Averia v. Averia, G.R. No. 141877, August 13, 2004; Mactan-Cebu
International Aiport Authority v. Tudtud, (2008)].

B.16.

C Corp. entered into a contract with D, Inc. for the construction of the
latter's production warehouse. In consideration thereof, D, Inc. was obliged to
pay C Corp. the amount of P50,000,000.00 within a period of one (1) month
from the time of the project's completion. To secure the payment of the said sum,
D, Inc. entered into a surety agreement with S Company.
After more than a month from the completion date of the project, C Corp.
remained unpaid. Claiming that it was suffering from serious financial reverses,
D, Inc. asked C Corp. for an extension of three (3) months to pay the
P50,000,000.00 it still owed, to which C Corp. agreed. However, after more than
three (3) months, D, Inc. still refused to pay. Hence, C Corp. proceeded to collect
the above sum from the surety, S Company.
F or its part, S Company refused the claim and raised the defense that the
extension of time granted by C Corp. to D, Inc. without its consent released it
from liability.
(a) Will the defense of S Company against the claim hold water? Explain.
(3%)

SUGGESTED ANSWER:

Yes, the defense holds. The Court has held that the provisions of the
Civil Code on Guarantee, other than the benefit of excussion, are applicable
and available to the surety. One of the provisions of the Civil Code on
Guarantee is Art. 2079 which provides that an extension granted to the
debtor by the creditor without the consent of the guarantor extinguishes the
guaranty. Here, the parties entered into a surety agreement; thus, the
extension granted without the consent of S Company extinguished the
suretyship [Autocorp Group vs. Intra Strata Assurance Corporation, G.R. No.
166662, June 27, 2008; 556 SCRA 250].

(b) Assuming that S Company instead refused the claim on the ground that
C Corp. has yet to exhaust D, Inc. 's property to satisfy the claim
before proceeding against it, will this defense prosper? Explain. (2%)

SUGGESTED ANSWER:

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 No, the defense will not prosper. Art. 2047 provides that if a person
binds himself solidarily with the principal debtor, the provisions of Section
4, Chapter 3, Title I of this Book shall be observed and in such case the
contract is called a suretyship. Under Article 2059, the excussion shall not
take place if he (the guarantor) has bound himself solidarily with the debtor,
S Company, therefore, cannot refuse the claim on the ground that C Corp.
has yet to exhaust D, Inc.'s property to satisfy the claim before proceeding
against it.

B.17.

In 2015, O, the original registered owner of a 300-square meter property

covered by Original Certificate of Title (OCT) No. 0-1234, appointed F as its
caretaker. A year after, while O was abroad, F surreptitiously broke open O's
safe and stole the duplicate copy of the said OCT. F then forged a Deed of
Absolute Sale and made it appear that O sold the property to him. Consequently,
F was able to have OCT No. 0-1234 cancelled and in lieu thereof, a new title,
Transfer Certificate of Title (TCT) No. T-4321, was issued in his name.

A few months after, F offered the property for sale to X. After conducting
the required due diligence to verify the title of F, and finding no occupant in the
property during ocular inspection, X signed the contract of sale, and thereupon,
fully paid the purchase price. A few days later, X was able to obtain TCT No. T-
5678 under his name.

When O discovered F's fraudulent acts upon his return in 2017, O

immediately filed a complaint for reconveyance against F and X, principally
pointing out that F merely forged his signature in the Deed of Absolute Sale
purportedly made in F's favor and thus, F could not have validly transferred the
title thereof to X. Consequently, he sought the return of the subject property to
him.

(a) Will the prayer of O for the return of the subject property prosper?
Explain. (3%)

SUGGESTED ANSWER:

No, the prayer of O will not prosper, because X purchased the land
from an apparent owner in good faith and for value. Section 53 of P.D. 1529
provides that in all cases of registration procured by fraud, the owner may
pursue all his legal and equitable remedies against the parties to such fraud
without prejudice, however, to the rights of any innocent holder for value of
a certificate of title. The Court in the case of Heirs of Abalon v. Andal [G.R.
No. 183448, June 30, 2014], defined an innocent purchaser for value as one
who buys the property of another without notice that some other person has
a right to or interest therein and who then pays a full and fair price for it at

18
the time of the purchase or before receiving a notice of the claim or interest
of some other persons in the property.

(b) Assuming that O could no longer recover the subject property in view
of X's registration thereof in his name, may a claim against the
Assurance Fund pursuant to the provisions of the Property Registration
Decree be instituted? Explain. (3%)

SUGGESTED ANSWER:

Yes, a claim against the Assurance Fund may be instituted. Section 95

of P.D. 1529 provides that a person who, without negligence on his part,
sustains loss or damage, or is deprived of land or any estate or interest
therein in consequence of the bringing of the land under the operation of the
Torrens system arising after original registration of land, through fraud or
in consequence of any error, omission, mistake or misdescription in any
certificate of title or in any entry or memorandum in the registration book,
and who by the provisions of this Decree is barred or otherwise precluded
under the provision of any law from bringing an action for the recovery of
such land or the estate or interest therein, may bring an action in any court
of competent jurisdiction for the recovery of damages to be paid out of the
Assurance Fund.

ALTERNATIVE ANSWER:

The property is already registered under the name of X, an innocent

purchaser for value. The registration of the innocent purchaser for value’s
title is a condition sine qua non in order to properly claim against the
Assurance Fund. This is because it is only after the registration of the
innocent purchaser for value’s title (and not the usurper’s title which
constitutes a breach of trust) can it be said that the claimant effectively
sustains loss or damage, or is deprived of land or any estate or interest
therein [Manuel v. RD for Legazpi City, G.R. No. 224678, July 3, 2018].

B.18.

In light of a new business venture, Mr. A entered into a lease contract with
Mr. B involving one of the latter's warehouses. One day, Mr. B, who was then
encountering financial difficulties, approached Mr. A and sought for a loan,
which Mr. A readily granted to him. In order to secure the loan obligation, Mr. B
mortgaged the leased warehouse in favor of Mr. A. In addition, Mr. B executed a
promissory note in favor of A, wherein prior demand was waived by him.

19
 When Mr. B defaulted on his loan obligation, Mr. A simply stopped
paying rentals due to Mr. B on the ground that legal compensation had already
set in up to the concurrent amount. Furthermore, since there was still a balance
due on the promissory note, Mr. A foreclosed the real estate mortgage over Mr.
B's property, without any prior demand furnished to Mr. B.

Aggrieved, Mr. B opposed the foreclosure due to the lack of prior demand,
contending that the waiver of prior demand was stipulated in the promissory note
and not in the mortgage instrument. Mr. B likewise argued that when Mr. A
invoked legal compensation between the unpaid rentals and the loan arrearages,
it amounted to a novation that resulted in the extinguishment of the loan contract
between them. As such, the real estate mortgage, being a mere accessory contract
to the principal loan, was necessarily extinguished.

(a) May Mr. A validly claim legal compensation? Explain. (2%)

SUGGESTED ANSWER:

Yes, Mr. A may validly claim legal compensation. The Civil Code
provides that when all the requisites mentioned in Article 1279 are present,
compensation takes effect by operation of law, and extinguishes both debts
to the concurrent amount, even though the creditors and debtors are not
aware of the compensation (Article 1290, Civil Code).

All requisites obtain in this case. For compensation to be proper, it is

necessary:

(1) That each one of the obligors be bound principally, and

that he be at the same time a principal creditor of the
other;
(2) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of
the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and
communicated in due time to the debtor (Article 1279,
Civil Code).

(b) May Mr. A validly foreclose on the real estate mortgage even without
prior demand to Mr. B? Explain. (2%)

SUGGESTED ANSWER:

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 Yes, Mr. A may validly foreclose the mortgage. The Court has
declared that a provision on waiver of notice or demand is legal and valid.
Although the Civil Code provides that one incurs in delay or is in default
from the time the obligor demands the fulfillment of the obligation from the
obligee (Article 1169), the law expressly provides that demand is not
necessary under certain circumstances, and one of these circumstances is
when the parties expressly waive demand. Since Mr. B waived the
requirement of prior demand in the promissory note, he was considered in
delay or in default when he failed to pay the loan obligation [Sps. Agner, v.
BPI Family Savings Bank, Inc., G.R. No. 182963, June 3, 2013; BPI v. CA,
523 Phil. 548 (2006)].

(c) Is Mr. B's claim of novation correct? Explain. (2%)

SUGGESTED ANSWER :

No, Mr. B’s claim is incorrect. A novation is express when the new
obligation declares in unequivocal terms that the old obligation is
extinguished and it is implied when the new obligation is incompatible with
the old one on every point. The test of incompatibility is whether the two
obligations can stand together, each one with its own independent existence.
Here there is neither express nor implied novation [Arco Pulp and Paper
Co., Inc. v. Lim, G.R. No. 206806, June 25, 2014].

ALTERNATIVE ANSWER:

No Mr. B’s claim is incorrect, because there was no new contract

entered into between Mr. A and Mr. B. When there is neither a valid new
contract nor a clear agreement between the parties to a new contract, there
is no novation. Without the new contract, the old contract is not
extinguished by novation [Country Bankers Insurance Corp. v. Lagman, G.R.
No. 165487, July 13, 2011]. Besides, legal compensation is another mode of
extinguishment of the obligation different from novation. Here, what took
place is partial legal compensation; hence, Mr. B is still in default as to the
unpaid loan arrearages.

B.19.

Mr. A entered into a lease contract covering one of his commercial

buildings with XYZ Company, a partnership composed of X, Y, and Z, as lessee,
for use as an office space. Upon failure to receive the rental payments when they
fell due, Mr. A immediately sought payment of the same from X, Y, and Z,
asserting that the individual partners are solidarily liable together with the
partnership for its debts.

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 X, Y, and Z disagreed with Mr. A's contention, arguing further that in any
event, rentals should not be paid up until Mr. A makes the necessary
arrangements for the repair of the defective electrical wirings in the office that
caused power outages and hence, made it difficult, if not impossible, for them to
conduct their usual business operations.

Rule on the parties' respective arguments. (5%)

SUGGESTED ANSWER:

Mr. A’s contention that the individual partners are solidarily liable
together with the partnership for partnership debts is untenable. Article
1768 of the Code provides that the partnership has a juridical personality
separate and distinct from that of each of the partners. Article 1816 of the
Civil Code further provides that all partners, including industrial ones, shall
be liable pro rata with all their property and after all the partnership assets
have been exhausted, for the contracts which may be entered into in the
name and for the account of the partnership, under its signature and by a
person authorized to act for the partnership.

The contention of X, Y, Z that the rentals should not be paid up until

Mr. A. makes the necessary arrangements for the repair of the defective
electrical wirings in the office that caused power outages is correct. Article
1658 of the Civil Code provides that the lessee may suspend the payment of
the rent in case the lessor fails to make the necessary repairs or to maintain
the lessee in peaceful and adequate enjoyment of the property leased.
Repair of defective electrical wirings are necessary repairs.

ALTERNATIVE ANSWER:

Mr. A’s contention that the individual partners are solidarily liable
together with the partnership for partnership debts is untenable. X, Y, Z are
not the real parties in interest against whom a claim for payment of the
unpaid lease rentals may be made. According to the Court in the case of
Saludo, Jr. v. Philippine National Bank [G.R. No. 193138, August 20, 2018],
the general rule under Article 1816 of the Civil Code is that partnership
assets are primarily liable for the contracts entered into in the name of the
partnership and by a person authorized to act on its behalf. All partners - in
this case, X, Y, and Z - are only liable pro rata with all their property after
all the partnership assets have been exhausted. This is because it is the
partnership, an entity possessing of a juridical personality separate from its
partners, that entered into the contract of lease. Said partnership has
concomitant rights and obligations with respect to the transactions it enters
into for which the partners may not be made liable.

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 B.20.

Distinguish the following:

(a) Contract of sale and contract to sell (2%)

SUGGESTED ANSWER 1:

A contract of sale may be absolute or conditional (Art. 1458 (2), Civil

Code). A contract to sell is a kind of conditional sale.

In an absolute sale, title to the property passes to the vendee upon the
delivery of the thing sold. In both contracts to sell and contracts of
conditional sale, title to the property remains with the seller despite
delivery. Both contracts are subject to the positive suspensive condition of
the buyer’s full payment of the purchase price or the fulfillment of the
condition.

SUGGESTED ANSWER 2:

In an absolute sale, title to the property passes to the vendee upon the
delivery of the thing sold.

In a contract of conditional sale, the buyer automatically acquires title

to the property upon full payment of the purchase price. This transfer of
title is "by operation of law without any further act having to be performed
by the seller."

In a contract to sell, transfer of title to the prospective buyer is not

automatic. "The prospective seller [must] convey title to the property
[through] a deed of conditional sale [Olivarez Realty Corporation And Dr.
Pablo R. Olivarez V. Benjamin Castillo, G.R. No. 196251, July 9, 2014].

(b) Interruption and tolling of prescription of actions (2%)

SUGGESTED ANSWER:

The interruption of the prescriptive period by written extrajudicial

demand means that the said period would commence anew from the receipt
of the demand [Overseas Bank of Manila v. Geraldez, 94 SCRA 937 (1979)]

Article 1155 of the Civil Code provides that the "prescription of

actions is interrupted" inter alia, "when there is any written
acknowledgment of the debt by the debtor." This simply means that the
period of prescription, when interrupted by such a written
acknowledgment, begins to run anew; and whatever time of limitation might

23
have already elapsed from the accrual of the cause of action is thereby
negated and rendered inefficacious. The effect of the interruption spoken of
in Article 1155 is to renew the obligation, to make prescription run again
from the date of the interruption. [Philippine National Railways vs. National
Labor Relations Commission, 177 SCRA 740 (1989)]

In Overseas Bank of Manila v. Geraldez, the Supreme Court ruled that

tolling merely suspends the period that has already elapsed.

- END OF PART II -

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