PART 1

A.1.
In January 2018, Mrs. A, a married woman on her sixth (6) 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, in
recklessly 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. Il 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. leao, G.R. No. 26795. July 31, 1970]. 
(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-
deliets 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 Nacur w. 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.
Hand W were married in 1990. 11, 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.
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 II’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 y:
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 Cas his child. 
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 eustody 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 y
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 – Antonio, G.R. No. 206248, February 18, 2014). 
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
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 deeree 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. 
(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): 

 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;
 Property for personal and exclusive use of either spouse. However, 

jewelry shall form part of the community property;

 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 appiies 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. 
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, know but did not object to Mr. Als 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. 
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). 
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 11. 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 II’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%) 
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 I –
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 Care 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%) 
SUGGESTED ANSWER: 
The action for quieting of title does not prescribe, because the plaintiffs are in possession of
the land [Heirs of Uheras v. CFI,  October 30, 1978). 
(c) Assuming that Band C are residing abroad, may A. without the knowledge of Band , 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 P100,000.00 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. 
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 devisce 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 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 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 bis 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: 
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 II’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 (1) 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 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 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: 
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 was
abroad, F surreptitiously broke open O’s sure 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 naine 
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 T’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 th e 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 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 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. 
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: 
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. Lugman, 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. Bis 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. 
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: 
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 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 Railway’s 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 –