2018 BAR EXAMINATIONS

CIVIL LAW

September 9, 2018 1:00 P.M. – 3:00 P.M.

INSTRUCTIONS

1. This Questionnaire contains five (5) pages. Check the number of pages and
make sure it has the correct number of pages and their proper numbers.

All items have to be answered within two (2) hours. Since there are ten (10)
questions, you have 20 minutes to answer each question. You may write on the
Questionnaire for notes relating to the questions.

Read each question very carefully and write your answers in your Bar Examination
Notebook in the same order the questions are posed. Write your answers only on
the front of every sheet in your Notebook. If not sufficient then start with the back
page of the first sheet and thereafter. Note well the allocated percentage points for
each number, question, or sub-question. In your answers, use the numbering
system in the questionnaire.

2. Answer the Essay questions legibly, clearly, and concisely. Start each
number on a separate page. An answer to a sub-question under the same number
may be written continuously on the same page and the immediately succeeding
pages until completed.

Yours answer should demonstrate your ability to analyze the facts, apply the
pertinent laws and jurisprudence, and arrive at a sound or logical conclusion.
Always support your answer with the pertinent laws, rules, jurisprudence, and the
facts.

A mere “Yes” or “No” answer without any corresponding explanation or

discussion will not be given full credit. Thus, always briefly but fully explain your
answers although the question does not expressly ask for an explanation. You do
not need to re-write or repeat the question in your Notebook.

3. Make sure you do not write your name or any extraneous note/s or distinctive
marking/s on your Notebook that can serve as an identifying mark/s (such as
names that are not in the given questions, prayers or private notes to the
Examiner). Writing, leaving, or marking any distinguishing or identifying mark in
the exam Notebook is considered cheating and can disqualify you.

YOU CAN BRING HOME THE QUESTIONNAIRE

JUSTICE MARIANO C. DEL CASTILLO

Chairman
CIVIL LAW 2

2018 Bar Examinations

-I-

B Corp. is A Corp.’s subsidiary. A Corp. is the registered owner of a van,

which was assigned for the sole and exclusive use of Mr. C, who was B. Corp.’s
Logistics Manager. A Corp.’s van figured in a collision with a vehicle that was
owned by E Corp. The mishap occurred during a public holiday, and while A
Corp.’s van was being driven by Mr. D, who was B Corp.’s Operations Manager.
Mr. D was pursuing personal errands on the occasion of the mishap.

E Corp. filed a case for the recovery of damages based on quasi-delict

against A. Corp and B. Corp. In turn, A Corp. and B. Corp argued that Mr. D was
not in the performance of his work at the time of the mishap, and that his use of A
Corp.’s van was not authorized (because the vehicle was assigned for the sole and
exclusive use of Mr. C). Are the defenses of A Corp. and B Corp. meritorious?
(10%)

Suggested Answer:

Yes. When the ownership of the van and Mr. D’s employment were proved,
a presumption of negligence arose against A Corp. and B Corp., as the registered
owner of the van and as Mr. D’s employer. The burden of proof then shifted to A
Corp. and B Corp. to show that no liability under Article 2180 of the Civil Code
arose. This may be done by proof of any of the following: (a) that they had no
employment relationship with Mr. D; (b) that Mr. D acted outside the scope of his
assigned tasks; or (c) that they exercised the diligence of a good father of a family
in the selection and supervision of Mr. D.

A Corp. and B Corp. overcame the presumption of negligence by proving

that when the collision took place, Mr. D was not in the performance of his work;
that he was in possession of a service vehicle that did not belong to his employer B
Corp., but to A Corp., and which vehicle was not officially assigned to him, but to
another employee; that his use of the A Corp.’s van was unauthorized; and that the
accident occurred on a holiday and while Mr. D was pursuing personal errands.

- II -

Computer Depot Inc. (CDI) purchased computer hardware from Super Tech
Corp (STC). CDI was to pay STC P100 Million representing the total purchase
price of the goods. CDI opened a letter of credit with Basic Commercial Bank for
the amount of P100 Million, naming STC as beneficiary. BCB duly informed STC
of the opening of a letter of credit.

In the meantime, CDI filed a petition for corporate rehabilitation. The

rehabilitation court issued a Stay Order to stay the enforcement of all claims
against CDI.
CIVIL LAW 3

After shipping the computers, STC presented the shipping documents to BCB,
and demanded payment of the letter of credit opened in its favor. CDI, on the other
hand, informed CBC of the Stay Order and instructed it to deny payment to CDI.

a) If you were counsel for BCB, would you recommend that the latter follow
the instructions of CDI? (5%)

Suggested Answer:

Yes, BCB shall not pay STC in the meantime. However, the issuance of a
Stay Order shall not be deemed in any way to diminish or impair the security of
lien in favor of STC, except that his right to enforce said security or lien may
only be suspended during the term of the Stay Order. (Section 60, FRIA)

b) Assume that CDI and STC entered into contract whereby STC will supply
CDI with computer hardware for a period of five (5) years. On the 3rd year,
STC learned of the rehabilitation proceedings initiated by SDI and obtained
a copy of the Stay Order issued by the court. Can STC thereafter suspend the
supply of computer hardware to SDI? (5%)

Suggested Answer:

Yes, subject to the procurement of an order from the court which issued the
stay order. Under Section 4(q) of FRIA, “[t]rust assets and bailment, and other
property and assets of a third party that are in the possession of the debtor as of
commencement date, are excluded [from the insolvent debtor’s estate].” Hence,
the computer hardware, as the subject of a bailment contract between CDI and
STC, is excluded from the insolvent debtor’s estate and remains as owned by
STC.

- III -

Marilyn, a Filipino citizen, initiated a divorce proceeding in Japan against

her husband Maruki, a Japanese national. After successfully obtaining a divorce
decree in Japan, she now files a Petition for the recognition of the divorce decree
and cancellation of entry of marriage. Marilyn invokes Article 26 of the Family
Code to support her petition. Does Article 26 allow a Filipino citizen like Marilyn
to obtain a divorce decree against a foreign spouse and have it recognized here in
the Philippines? (10%)

Suggested Answer:

Yes. The Supreme Court in Republic v. Manalo ruled that the fact that a
validly obtained foreign divorce initiated by the Filipino spouse can be recognized
and given legal effects in the Philippines is implied in Fujiki v. Marinay and
Medina v. Koike. There is no compelling reason to deviate from the above rulings.
When the Supreme Court recognized a foreign divorce decree that was initiated
and obtained by the Filipino spouse and extended its legal effects on the issues of
child custody and property relations, it should not stop short in likewise
CIVIL LAW 4

acknowledging that one of the usual and necessary consequences of absolute

divorce is the right to remarry. Article 26 does not distinguish whether the Filipino
spouse or the foreign spouse is the one who initiated the divorce proceedings.
- IV -

State whether the contract is valid, void, voidable, rescissible, or unenforceable

and briefly provide the reasons for your answer:

a) A contract of sale between high school classmates Tom and Jerry, both 17
years old, where Tom agreed to sell his iPhone X to Jerry for P40 thousand.
(2%)

Suggested Answer:

Unenforceable. The contract entered into by both parties who are

incapable of giving consent is unenforceable. Minors are incapable of giving
consent. Since both Tom and Jerry are minors, the contract is unenforceable.

b) Ana’s sale of her car to Karen which is subject of pending civil case filed by
Nina against Ana for recovery of the car without approval of the court or of
Nina. (2%)

Suggested Answer:

Rescissible. A contract involving a thing under litigation that was

entered into by the defendant without the knowledge and approval of the
litigants or of competent judicial authority is rescissible. Here, the car was
the subject of pending civil case and there was no approval of the court or
Nina, the plaintiff. Thus, the contract is rescissible.

c) A barter between Star and Marco, both 7 years old, of toys, with the parents
of Star ratifying the barter. (2%)

Suggested Answer:

Voidable. Article 1407 of the Civil Code provides that “In a contract
where both parties are incapable of giving consent, express or implied
ratification by the parent, or guardian, as the case may be, of one of the
contracting parties shall give the contract the same effect as if only one of
them were incapacitated.” Since only the parents of Star ratified the barter,
the contract was if entered by one incapacitated party. Thus, the contract is
voidable.

d) A verbal lease agreement between Bob, the mayor of the City of Manila, and
Pat, a side street vendor for the latter’s small fruit stall situated in the streets
of the City of Manila for consideration of P500 per day for a period of 30
days. (2%)

Suggested Answer:
CIVIL LAW 5

Valid. A verbal contract of lease may be considered as unenforceable

if the period for the lease is more than one year. The lease here is for 30 days
only. The contract is thus not unenforceable but valid.
e) A gift of a laptop valued at P50 thousand given out of pure generosity by
Joey to Tina, his girlfriend of three (3) months without any formal deed.
(2%)

Suggested Answer:

Void. According to Article 748 of the Civil Code, “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.”
The gift of laptop worth more than P5,000 by Jose to Tina is a donation
because the consideration is pure generosity of Jose. Since neither the
donation nor the acceptance of the donation is in writing, the contract is
void.

-V-

Republic Steel Corporation (RSC) obtained a loan from Prime Universal

Bank in the aggregate principal amount of P200 million, evidenced by a
promissory note, and secured by (i) a real estate mortgage over a parcel of land
owned by RSC; (ii) a continuing suretyship of RSC’s principal stockholder, Mr.
Isaac Lim, for P50 million, (iii) a guarantee of RSC’s president and general
manager, Mr. Jose Ong, for P150 Million; and (iv) a chattel mortgage over various
machineries and equipment owned by RSC’s wholly-owned subsidiary, Republic
Paints Corporation (RPC).

RSC defaulted on the payment of its loan.

a) The bank extra-judicially foreclosed on the real estate mortgage put up by

RSC and was the sole bidder for P160 million. Can the bank sue RPC for
the P40 million deficiency? Explain. (5%)

Suggested Answer:

Yes. A creditor is not precluded from recovering any unpaid balance

on the principal obligation if the extrajudicial foreclosure sale of the
property subject of the real estate mortgage results in a deficiency. (BPI vs.
Reyes, G.R. No. 182769, 2012)

b) The bank extra-judicially foreclosed on the chattel mortgage put up by RPC

and was the sole bidder for P110 million. Can the bank sue RSC for the P90
million deficiency? Explain. (5%)

Suggested Answer:
CIVIL LAW 6

Yes. The bank-creditor is entitled to recover deficiency from the

debtor since the chattel mortgage is a security for a contract of loan and not a
security for the purchase of personal property in installments, in which case,
the Recto Law will apply barring the further recovery of any deficiency from
the foreclosure of the chattel mortgage.

c) Can the bank judicially foreclose on the property mortgaged by RSC and, if
there is a deficiency, recover the same from Messrs. Lim and Ong? Explain.
(5%)

Suggested Answer:

The bank may recover the deficiency from Messr. Lim, who is a
continuing surety, but not from Messr. Ong, who is a guarantor. The liability
of a surety is primary, without reference to the solvency of the principal – he
is an insurer of the debt. The liability of a guarantor is only subsidiary, and
all the properties of the principal debtor must first be exhausted before the
guarantor may be held answerable for the debt. (Aglibot vs. Santia, G.R. No.
185945, 2012) Without any finding that RSC is insolvent, the bank may not
recover from the guarantor, Messr. Ong.

d) If the bank opts to file an action for collection against RSC, can it afterwards
(and while the civil case against RSC is pending) institute an action against
RPC to foreclose the chattel mortgage? Explain. (5%)

Suggested Answer:

No. The mortgage lien is deemed abandoned by obtaining a personal

judgment from a civil action to recover the amount of the loan.

- VI -

Liza married George in 2001. Their property regime was conjugal

partnership. In 2004, George died in a car accident. The year following George’s
death, Liza fell in love with and married George’s best friend, Raphael. In their
marriage settlement, Liza and Raphael stipulated that their regime will be conjugal
partnership provided that once property is adjudicated to Liza after the settlement
of the estate of George, their regime will be separation of property. What is the
property regime of Liza and Raphael? Explain your answer. (10%)

Suggested Answer:

If the estate of George was not liquidated within one year from his death, or
Liza did not liquidate the conjugal partnership property either judicially or
extrajudicially within the same period, Liza and Raphael’s property relations shall
be governed by a mandatory regime of separation of properties in accordance with
Art. 130 of the Family Code. If the aforesaid requirements are complied with, Liza
and Raphael may enter into a marriage settlement provided that the property
regime must commence at the precise moment that the marriage is celebrated and
CIVIL LAW 7

the same cannot be waived or changed during the marriage except in case of
judicial separation of property. Since the marriage settlement of Liza and Raphael
provides for a shift in the regime during the marriage, which is contrary to law,
their marriage settlement is void. Hence, the system of absolute community of
property shall govern as provided in Art. 74.

- VII -

A Corp.’s bus figured in a collision with another vehicle. As a result of the

mishap, Mr. B, a passenger on A Corp.’s bus, sustained injuries resulting in the
amputation of his arm. The collision occurred after a jeepney in front of the bus
suddenly stopped, which constrained the bus driver to swerve and encroach upon
the lane of the vehicle with which it collided.

a) B sought to recover moral damages against A Corp. Will you award B’s
claim for moral damages? (5%)

Suggested Answer:

No. As a general rule, moral damages may only be recovered in the

cases enumerated in Article 2219 of the Civil Code. Breach of contract
of is not one of the cases enumerated in Article 2219, and thus, moral
damages are generally not recoverable in those cases. By way of
exception, moral damages may be recovered in cases involving a breach
of contract of carriage: (a) when a passenger dies; or (b) when the
common carrier is guilty of fraud or bad faith, even if the passenger does
not die.

Here, B did not die but merely sustained physical injuries. Moreover,
there is no evidence to prove that A Corp. induced B to enter into a
contract of carriage through insidious machinations, or that A Corp. acted
with deceit or concealed material facts leading B to board its bus. Thus,
it cannot be said that A Corp. acted fraudulently. Furthermore, there are
no circumstances indicating that A Corp.’s breach of its contract of
carriage was attended by some motive, interest, or ill will. Consequently,
it also cannot be said that A Corp. acted with bad faith. It also does not
appear that the negligence of A Corp.’s driver was so gross as to amount
to bad faith. There is thus no basis to award moral damages in B’s favor.

b) B also sought to recover actual damages for the loss or impairment of his
earning capacity. However, B failed to present documentary evidence to
prove his actual income, and instead presented testimonial evidence only.
Will you award actual damages to compensate B for the loss or
impairment of his earning capacity? (5%)

Suggested Answer:

No. The general rule is that documentary evidence is essential to

support a claim for actual damages for loss or impairment of earning
CIVIL LAW 8

capacity. By way of exception, damages for loss or impairment of

earning capacity may be awarded despite the absence of documentary
evidence when: (a) the deceased/injured party was self-employed and
earning less than the minimum wage under current labor laws, in which
case, judicial notice may be taken of the fact that in the deceased/injured
party's line of work no documentary evidence is available; or (b) the
deceased/injured party was employed as a daily worker earning less than
the minimum wage under current labor laws.

It does not appear that B falls under any of these exceptions. Thus,
actual damages cannot be awarded in his favor due to his failure to
present documentary evidence to prove his actual income. Nevertheless,
because B lost his arm, temperate damages in lieu of actual damages for
loss/impairment of earning capacity may be awarded. Temperate or
moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature
of the case, be proved with certainty.

c) B also sought to recover actual damages for the cost of replacing his
amputated arm with a prosthetic one. In support of this claim, B
presented a quotation for a unit of elbow prosthesis. Will you award B’s
claim for actual damages? (5%)

Suggested Answer:

No. Actual proof of expenses incurred for medicines and other

medical supplies necessary for treatment and rehabilitation must be
presented by the claimant, in the form of official receipts, to show the
exact cost of his medication and to prove that he indeed went through
medication and rehabilitation. In the absence of these, a claim for actual
damages cannot be granted.

(Spouses Estrada v. Philippine Rabbit Bus Lines, Inc., G.R. No.

203902, July 19, 2017; see also Darines v. Quiñones, G.R. No. 206468,
August 2, 2017; Del Castillo)

- VIII -

A was indebted to B in the amount of P1.5 million evidenced by a written

contract due and payable in 2005. A failed to pay the loan obligation and it was
only in 2018 that B finally demanded payment from A. Without the knowledge and
consent of A, A’s sister, X paid the entire obligation, which B accepted. A,
knowing that the debt obligation had prescribed, nonetheless reimbursed X for the
entire payment. Later on, however, A’s relationship with X turned sour prompting
her to demand the return of the reimbursement considering that the payment of X
to B did not benefit her; hence, A had no obligation to pay X. Can A recover the
payment to X? Explain with legal reasons. (5%)
CIVIL LAW 9

Suggested Answer:

No. Article 1425 of the Civil Code provides that “When without the
knowledge or against the will of the debtor, a third person pays a debt which the
obligor is not legally bound to pay because the action thereon has prescribed, but
the debtor later voluntarily reimburses the third person, the obligor cannot recover
what he has paid.” Because A voluntarily reimbursed X for the payment of a
prescribed loan, A cannot recover said amount.

- IX -

Juan and Pedro negotiated the lease of Juan’s commercial lot to Pedro. After
a series of negotiation, Juan offered the lease for a period of 5 years, renewable for
another 5 years upon mutual consent of the parties, with monthly lease of
P400thousand. Pedro wrote to Juan agreeing to the terms but requested for revision
of the monthly lease to P350 thousand for the 1st and 2nd years and P400 thousand
for the 3rd to 5th years. A few days later, Pedro discovered that Juan had signed a
lease contract over the same commercial lot with Tomas. Aggrieved, Pedro files a
case for specific performance compelling Juan to execute the contract of lease with
him. Will Pedro’s action against Juan prosper? Explain with legal reasons. (5%)

Suggested Answer:

No because there is no contract of lease. A perfected contract requires a

meeting of the minds as to the subject and consideration. Here, there was no
acceptance on the part of Pedro. Pedro instead made a counter-offer, which was not
accepted by Juan. Thus, the case will not prosper.

-X-

B sold withdrawal authorities representing bags of cement to A. A

attempted to withdraw the cement from the manufacturing plant, but was
disallowed from doing so on the ground that the price of cement had increased, and
thus, A allegedly had to pay a higher price to withdraw the bags of cement.

A then filed a criminal case for estafa through misappropriation against B.

The trial court acquitted B, and ruled that the facts from which B’s civil liability
may arise did not exist. A appealed the civil aspect of the trial court’s ruling in the
estafa case to the Court of Appeals.

While the appeal concerning B’s civil liability ex delicto was pending, A
filed a civil case for breach of contract and abuse of rights against B, which was
based on the same facts above. B then moved to dismiss A’s appeal pending
before the Court of Appeals, as well as the civil case for breach of contract and
abuse of rights, on the theory that A had violated the rule against forum-shopping.
Will you grant B’s motion to dismiss these cases? (5%)

Suggested Answer:
CIVIL LAW 10

No. A single act or omission that causes damage to an offended party may
give rise to two separate civil liabilities on the part of the offender: (a) civil
liability ex delicto, that is, civil liability arising from the criminal offense under
Article 100 of the Revised Penal Code; and (b) independent civil liability, that is,
civil liability that may be pursued independently of the criminal proceedings. The
independent civil liability may be based on an obligation not arising from the act or
omission complained of as a felony, as provided in Article 31 of the Civil Code
(such as for breach of contract or for tort).

Because of the distinct and independent nature of the two kinds of civil
liabilities, the offended party may pursue the two types of civil liabilities
simultaneously or cumulatively, without offending the rules on forum shopping.
There is no identity of causes of action here because the civil action for breach of
contract and tort is separate and distinct from the criminal prosecution based on the
same act.

Independent civil actions are not deemed instituted together with the
criminal action, and there is no need for the offended party to reserve the right to
institute independent civil actions separately from the criminal action. The
criminal action, with the action for the recovery of civil liability ex delicto
impliedly instituted, may proceed simultaneously with the independent civil action
for the recovery of damages based on breach of contract and tort, subject only to
the prohibition against double recovery.

(Lim v. Kou Co Ping, G.R. No. 175256, 179160, August 23, 2012; Del Castillo)