PERSONS AND FAMILY RELATIONS

1. Define an accion in rem verso. Distinguish it from solutio indebiti.

An accion in rem verso is an action for recovery of what has been paid without just cause. In
order that an accion in rem verso may prosper, the following conditions must concur: (1) that the
defendant has been enriched; (2) that the plaintiff has suffered a loss; (3) that the enrichment of
the defendant is without just or legal ground; and (4) that the plaintiff has no other action based
on contract, quasi-contract, crime or quasi-delict.

In solutio indebiti, mistake is an essential element while in an accion in rem verso, it is not
necessary that there should have been a mistake in the payment. (Rabuya, Civil Law Reviewer
Vol 1, 2017 ed.)

2. X, Y and Z, employees of ABC Company, claimed reimbursements for the hospital

expenses of their dependents. The parties’ CBA provides for the hospitalization
insurance benefits for the covered dependents. ABC Company paid only a portion of
their hospitalization insurance claims, not the full amount. However, X, Y and Z claim
that under the CBA, they are entitled to hospital benefits which should not be
reduced by the amounts paid by MEDICard. However, ABC denied the claims
contending that double insurance would result if the said employees would receive
from the company the full amount of hospitalization expenses despite having already
received payment of portions thereof from other health insurance providers. Is ABC
correct in denying the reimbursement of the full amount of hospitalization expenses?
Yes. This is consistent with the principle of indemnity which proscribes the insured from
recovering greater than the loss. To profit from a loss will lead to unjust enrichment and
therefore should not be countenanced. (Mitsubishi Motors Phil. Salaried Employees Union v.
Mitsubishi Motors Phil. Corp., G.R. 175773, June 17, 2013, DEL CASTILLO)

3. Jose filed a Petition for the declaration of presumptive death of his wife, Netchie. He
testified that after getting married, they lived together as husband and wife for a
month only because he left to work as a seaman while Netchie went to Hongkong as
a domestic helper. For three months, he did not receive any communication from
Netchie. He likewise had no idea about her whereabouts. While still abroad, he tried
to contact Netchie’s parents, but failed, as the latter had allegedly left Clarin, Misamis
Occidental. He returned home after his contract expired. He then inquired from
Netchie’s relatives and friends about her whereabouts, but they also did not know
where she was. Because of these, he had to presume that his wife Netchie was
already dead. He filed the Petition so he could contract another marriage pursuant to
Article 41 of the Family Code. Are the efforts made by Jose enough as to satisfy the
standard required by law to declare his wife as presumed dead?

No. Jose’s pathetically anemic efforts to locate the missing Netchie are notches below the
required degree of stringent diligence prescribed by jurisprudence. For, aside from his bare
claims that he had inquired from alleged friends and relatives as to Netchie’s whereabouts, did
not prove that he sought the assistance of the pertinent government agencies as well as the
media. Nor did he show that he undertook a thorough, determined and unflagging search for
Netchie. Under Article 41 of the Family Code, one of the essential requisites for the declaration of
presumptive death is that the present spouse has a well-founded belief that the absentee is
dead. The "well-founded belief" requisite under Article 41 of the Family Code is complied with
only upon a showing that sincere honest-to-goodness efforts had indeed been made to ascertain

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 whether the absent spouse is still alive or is already dead. (Republic v. Sareñogon, Jr., G.R.
199194, February 10, 2016, DEL CASTILLO)

4. What are the instances when marriage license may be dispensed with?

a. Marriage in articulo mortis (at the point of death) even if the ailing party subsequently
survives; (Art. 27, FC)
b. If the residence of either party is so located that there is no means of transportation to
enable such party to personally appear before the local civil registrar; (Art. 28, FC)
c. Marriage among Muslims or among members of the ethnic cultural communities, provided
they are solemnized in accordance with their customs, rites or practices; (Art. 33, FC)
d. Marriage between a man and a woman who have lived together as husband and wife for at
least five years and without impediment to marry each other; (Art. 34, FC)

5. Around 11 months before his death, Tamano married Estrellita twice—initially

under the Islamic laws and tradition on May 27, 2012 and, subsequently, under a
civil ceremony officiated by an RTC Judge on June 2, 2012. In their marriage
contracts, Tamano’s civil status was indicated as ‘divorced.’ Since then, Estrellita
has been representing herself to the whole world as Tamano’s wife, and upon his
death, his widow. On November 23, 2012, Zorayda, in her own behalf and in behalf
of the rest of Tamano’s legitimate children with Zorayda, filed a complaint for the
declaration of nullity of marriage between Estrellita and Tamano for being
bigamous. Tamano married Zorayda on May 31, 2000 under civil rites, and that
this marriage remained subsisting when he married Estrellita in 2012. Estrellita
claims that only the husband or the wife in a void marriage can file a petition for
declaration of nullity of marriage. Is she correct?

No. In Juliano-Llave v. Republic, G.R. No. 169766, March 30, 2011, the aggrieved spouse in
the prior marriage has personality to file the petition of absolute nullity of a subsequent
marriage on the ground of bigamy. The Court explained that AM No. 02-11-10-SC does not
preclude a spouse of a subsisting marriage to question the validity of a subsequent marriage.
On the contrary, the rule refers to the husband or wife of the subsisting marriage because the
parties to the subsequent bigamous marriage are neither the husband or the wife under the
law.

6. A and B got married in 1990. What transpired during the said marriage was a mere
signing of the marriage contract by the two, without the presence of a solemnizing
officer. Afterwards, A reported back to work in Canada leaving B behind. A filed a
petition for divorce with the Ontario Court with was granted. Subsequently, B
married X. Later on, B filed a complaint for judicial declaration of nullity of marriage.
The complaint sought among others, the declaration of nullity of B’s marriage with A,
on the ground that no marriage ceremony actually took place. B was charged with
bigamy in an Information filed by the City Prosecutor.

Did B commit bigamy?

No. The first element of bigamy as a crime requires that the accused must have been legally
married. But in this case, legally speaking, B was never married to A. Thus, there is no first
marriage to speak of. The mere private act of signing a marriage contract bears no semblance to
a valid marriage and thus, needs no judicial declaration of nullity. Such act alone, without more,
cannot be deemed to constitute an ostensibly valid marriage for which B might be held liable for
bigamy unless he first secures a judicial declaration of nullity before he contracts a subsequent
marriage. (Morigo vs. People, G.R. No. 145226, February 6, 2004)

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7. Tyrone and Malyn got married in 1990. However, Tyrone had an extramarital affair
with another woman. Malyn left the conjugal home in 2000, leaving their kids to
Tyrone's care. Nine years later, Tyrone filed petition for declaration of nullity of
marriage based on Article 36 of the Family Code. He alleged that Malyn was
psychologically incapacitated to perform and comply with the essential marital
obligations at the time of the celebration of their marriage. He further claimed that
her psychological incapacity was manifested by her immaturity and irresponsibility
towards Tyrone and their children during their co-habitation, as shown by Malyn’s
acts: 1) she left the children without proper care and attention as she played
mahjong all day and all night; 2) she left the house to party with male friends and
returned in the early hours of the following day; and 3) she committed adultery on
June 10, 1999, which act Tyrone discovered in flagrante delicto. Has Tyrone
sufficiently proved that Malyn is psychologically incapacitated?

No. Psychological incapacity is the downright incapacity or inability to take cognizance of and to
assume the basic marital obligations. The burden of proving psychological incapacity is on the
plaintiff. The plaintiff must prove that the incapacitated party, based on his or her actions or
behavior, suffers a serious psychological disorder that completely disables him or her from
understanding and discharging the essential obligations of the marital state. The psychological
problem must be grave, must have existed at the time of marriage, and must be incurable. An
extramarital affair with another man alone cannot, by itself, be equated with obsessive need for
attention from other men. Sexual infidelity per se is a ground for legal separation, but it does not
necessarily constitute psychological incapacity. (Kalaw v. Fernandez, G.R. No. 166357,
September 19, 2011, DEL CASTILLO)

8. A and B are married. They purchased a parcel of land for Php250,000 where they live
and dwell. During their marriage, the family home was loaned to support their
children’s education. In 2012, Robinsons Corporation purchased the adjacent
properties and put up a mall. Consequently, the fair market value of the property
shoot up to P3 Million. C, a creditor filed a foreclosure suit against the spouses A&B to
enforce collection of debt worth Php 500,000 secured by a real estate mortgage –
their family home. Judgment was rendered in favor of C. In effect, the judge attached
their family home worth P3 Million and ordered its garnishment to satisfy the claim
on C. Is the judge correct?

No, the judge is not correct. While Article 160 of the Family Code authorizes the sale of family
home pursuant to an order obtained by a judgment creditor not listed in Article 155 of the Code,
to warrant the execution sale, the following facts must be established: (1) there was an increase
in its actual value; (2) the increase resulted from voluntary improvements on the property
introduced by the persons constituting the family home, its owners or any of its beneficiaries;
and (3) the increased actual value exceeded the maximum allowed under Article 157.

In this case, while the first and third requisites are present, the 2 nd requisite is wanting because
the reason for the increase in the actual value of the family home is due to involuntary
improvement. Here, the value of the property appreciated because of the action of a third
person. (Eulogio vs. Bell, Sr., 762 SCRA 103, G.R. No. 186322 July 8, 2015)

9. Spouses Fortaleza obtained a loan from spouses Rolando in the amount of P1.2
million. As security, spouses Fortaleza executed a Deed of Real Estate Mortgage over
their residential house and lot in Cebu City. When spouses Fortaleza failed to pay the
indebtedness including the interests and penalties, the creditors applied for
extrajudicial foreclosure of the Real Estate Mortgage. At the sale, the creditors’ son

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 Dr. Lapitan emerged as the highest bidder with the bid amount of P2.5 million. Then,
they were issued a Certificate of Sale. The one-year redemption period expired
without the spouses Fortaleza redeeming the mortgage. Thus, Dr. Lapitan executed
an affidavit of consolidation of ownership and caused the registration of the subject
property in their names. Despite the foregoing, the spouses Fortaleza refused
spouses Lapitan’s formal demand to vacate and surrender possession of the subject
property.

Is the property exempt from forced sale considering that it is a family home?

No. As a rule, the family home is exempt from execution, forced sale or attachment. However,
Article 155(3) of the Family Code explicitly allows the forced sale of a family home “ for debts
secured by mortgages on the premises before or after such constitution .” In this case, there is no
doubt that spouses Fortaleza voluntarily executed a deed of Real Estate Mortgage over the
subject property. And assuming that the property is exempt from forced sale, spouses Fortaleza
did not set up and prove to the Sheriff such exemption from forced sale before it was sold at the
public auction. (Spouses Fortaleza v. Spouses Lapitan, G.R. No. 178288, August 15, 2012, DEL
CASTILLO)

10. A sought for a judicial decree of presumptive death of her husband B which allowed
her to validly marry her childhood sweetheart, C. Later, B appeared. What is the
effect of B’s re-appearance to A’s subsequent marriage?

It will have no effect on the validity of A’s subsequent marriage, unless B files an Affidavit of Re-
appearance. The second marriage shall automatically be terminated by recording B’s affidavit of
reappearance, unless there is a judgment annulling the previous marriage or declaring it void ab
initio. The sworn statement of the fact and circumstances of reappearance shall be recorded in
the civil registry of the residence of the parties to the subsequent marriage at the instance of any
interested person, with due notice to the spouses of the subsequent marriage and without
prejudice to Spouse the fact of reappearance being judicially determined in case such fact is
disputed. (Arts. 41, 42, FC).

11. Is the SSS Form E-1 acknowledged and notarized before a notary public, a competent
proof of filiation?

Yes. Article 172 of the NCC provides that the filiation of illegitimate children, like legitimate
children, is established by (1) the record of birth appearing in the civil register or a final
judgment; or (2) an admission of legitimate filiation in a public document or a private
handwritten instrument and signed by the parent concerned. In the absence thereof, filiation
shall be proved by (1) the open and continuous possession of the status of a legitimate child; or
(2) any other means allowed by the Rules of Court and special laws.

SSS Form E-1 satisfies the requirement for proof of filiation under Article 172 of the Family Code;
by itself, said document constitutes an "admission of legitimate filiation in a public document or a
private handwritten instrument and signed by the parent concerned." ( Aguilar vs. Siasat, GR
200169, January 28, 2015, DEL CASTILLO)

12. X is a Japanese national who married Y. The marriage did not sit well with X's
parents. Thus, X could not bring Y to Japan where he resides. Eventually, they lost
contact with each other.

Y met another Japanese, Z. Without the first marriage being dissolved, Y and Z
married in the Philippines and Y went to Japan with Z. But Y suffered physical abuse

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 from Z. Thus, Y left Z and started to contact X. Subsequently Y and X were able to
reestablish their relationship. Hence, X helped Y obtain a judgment from a family
court in Japan which declared the marriage between X and Y void on the ground of
bigamy. Subsequently, X filed a petition with the RTC praying that the Japanese
Family Court judgment be recognized and the bigamous marriage between Y and Z be
declared void ab initio under Articles 35 and 41 of the Family Code.

Can X be allowed to file the petition for recognition of foreign judgment?

Yes, A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to question the
validity of a subsequent marriage on the ground of bigamy. Under Article 35(4) of the Family
Code, bigamous marriages are void from the beginning. Thus, the parties in a bigamous marriage
are neither the husband nor the wife under the law. The husband or the wife of the prior
subsisting marriage is the one who has the personality to file a petition for declaration of
absolute nullity of void marriage.

In this case, X is clearly the aggrieved party. Being a real party in interest, X is entitled to sue in
order to declare a bigamous marriage void. For this purpose, he can petition a court to recognize
a foreign judgment nullifying the bigamous marriage and judicially declare as a fact that such
judgment is effective in the Philippines. (Fujiki vs. Marinay, G.R. No. 196049, June 26, 2013)

13. What are the exceptions to the rule that the husband and wife must jointly adopt?

(a) If one spouse seeks to adopt the legitimate son/daughter of the other; or
(b) If one spouse seeks to adopt his/her own illegitimate son/daughter; provided, however, that
the other spouse has signified his/her consent thereto; or
(c) If the spouses are legally separated from each other (Sec. 7. RA 8552)

14. What is the effect of donations propter nuptias if the marriage is judicially declared
void?

General rule: Donation remains valid, but may be revoked by the donor. (Art 86, [1], FC)

Exceptions:

(a) If marriage is judicially declared void by reason of non-compliance with the requirement of
judicial declaration of nullity of marriage and the donee spouse contracted the
marriage in bad faith, in which case the donation is revoked by operation of law. (Art. 50,
FC)
(b) If an absent spouse is presumed dead and both spouses of the subsequent marriage acted in
bad faith, said marriage shall be void ab initio and all donations by reason of marriage and
testamentary disposition made by one in favor of the other are revoked by operation of law.
(Article 44, FC)

15. Yoshido, a Japanese national and Marelyn, a Filipino, are married in the Philippines.
For whatever reasons, Marelyn filed a divorce in Japan to nullify their marriage. The
Japanese court granted the petition. Marelyn went back to the Philippines to enforce
the Japanese Court decision and revert back to a single status and use of her maiden
name. RTC denied and declared the divorce in effected following Article 26 (2) of the
Family Code. Appeal was made and the same was granted. Decide.

The divorce must be recognized. The absolute divorce obtained by the Filipino spouse married to
a foreigner is valid even if it is the Filipino spouse who obtained it. Article 26 of the Family Code

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 applies even if it was the Filipino spouse who filed for divorce against the foreign spouse because
the decree obtained makes the foreigner no longer married to the Filipino, enabling the foreigner
to remarry. It would be unjust to consider the Filipino still married to the foreigner who is no
longer considered married to the Filipino. (Republic v. Marelyn Tanedo Manalo, G.R. No. 221029,
April 2018)

16. Celerina was declared presumptively dead after her husband, Ricardo, had filed a
petition for declaration of absence or presumptive death for the purpose of
remarriage. In his petition for declaration of absence or presumptive death, Ricardo
alleged that Celerina left Tarlac to work abroad and never heard from her again.
Ricardo further alleged that he exerted efforts to locate Celerina. It was almost 12
years when Celerina left. He believed that she passed away.

Celerina claimed that she never resided in Tarlac. She also never left and worked as a
domestic helper abroad. Ricardo was aware that she never left their conjugal
dwelling in Quezon City. Celerina filed a petition for annulment of judgment on the
grounds of extrinsic fraud and lack of jurisdiction. The Court dismissed Celerina's
petition for annulment of judgment for being a wrong mode of remedy. According to
the Court, the proper remedy was to file a sworn statement before the civil registry,
declaring her reappearance in accordance with Article 42 of the Family Code. Is the
court correct?

No. The provision on reappearance in the Family Code as a remedy to effect the termination of
the subsequent marriage does not preclude the spouse who was declared presumptively dead
from availing other remedies existing in law. This court had, in fact, recognized that a
subsequent marriage may also be terminated by filing "an action in court to prove the
reappearance of the absentee and obtain a declaration of dissolution or termination of the
subsequent marriage. (Santos vs. Santos, G.R. No. 187061, October 8, 2014)

17. Discuss the property regimes of the two kinds of unions without marriage.

ARTICLE 147 ARTICLE 148

APPLICABILITY
1. Capacitated to marry each other. 1. With legal impediment to marry.
2. Live exclusively as husband and wife a. Adulterous relationships
without the benefit of marriage or under a b. Bigamous or polygamous marriages
void marriage (due to absence of formal c. Incestuous marriages
requisites) d. Void marriages by reason of public policy
under Art. 38
SALARIES & WAGES
Owned in equal shares. Separately owned by the parties.
PROPERTY ACQUIRED EXCLUSIVELY BY EITHER PARTY
Belongs to such party provided there is proof Belongs to such party.
that he/she acquired it by exclusive funds.
PROPERTY ACQUIRED BY BOTH PARTIES
Governed by the rules on co-ownership Owned by them in common in proportion to
their respective contributions.
PRESUMPTION (PRIMA FACIE)
Presumption of joint acquisition and equal No presumption of joint acquisition. When
sharing as to property acquired while they live there is evidence of joint acquisition but none
together. as to the extent of actual contribution, there is
a presumption of equal sharing.
FORFEITURE

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When one of the parties is bad faith his share If one of the parties is validity married to
in the co-ownership shall be fortified: another, his/her share in the co-ownership
a) In favor of their common children; shall accrue to the absolute community or
b) In favor of the innocent party, in default of conjugal partnership existing in such valid
or in case of waiver by any or all of the marriage.
common children or their descendants.
If the party who acted in bad faith is not validly
married to another or if both parties are in bad
faith, such share shall be fortified in the
manner provided in the last paragraph of Art.
147

18. Atty. Adriano was married to Rosario. The couple had two sons and a daughter. They
were eventually separated-in-fact. Years later, Atty. Adriano courted Fe, decided to
live together as husband and wife. In 1992, Atty. Adriano died. Fe took it upon herself
to shoulder the funeral and burial expenses for Atty. Adriano. When Rosario learned
about the death of her husband, she immediately called Fe and requested that she
delay the interment for a few days but her request was not heeded. Claiming that
they were deprived of the chance to view the remains of Atty. Adriano, Rosario
commenced suit against Fe praying that the remains of Atty. Adriano be exhumed
and transferred to the family plot at the Holy Cross Memorial Cemetery in Novaliches,
Quezon City. Decide.

I would rule in favor of Rosario. Article 305 of the Civil Code, in relation Article 199 of the Family
Code, specifies the persons who have the right and duty to make funeral arrangements for the
deceased, to wit: a) the spouse; b) the descendants in the nearest degree; c) the ascendants in
the nearest degree; and d) brothers and sisters. Further, Section 1103 of the Revised
Administrative Code provides that if the deceased was a married man or woman, the duty of the
burial shall devolve upon the surviving spouse if he or she possesses sufficient means to pay the
necessary expenses. It is undeniable that the law simply confines the right and duty to make
funeral arrangements to the members of the family to the exclusion of one's common law
partner. Hence, Rosario can validly recover the corpse of her husband, Atty. Adriano. (Valino vs.
Adriano, G.R. No. 182894, April 22, 2004)

19. A, a Dutch national, is married to B a Filipina. A filed for divorce in his own country
and was granted. As a result, he is now free to remarry. The marriage of A and B
resulted to C, their only child. After the grant of divorce, A did not support C anymore
despite demands from B. After several years, A went back to the Philippines. Upon
knowledge of B as to the whereabouts of A, she filed a case praying for support. Can
this be granted?

Yes, the claim is meritorious. Even if the laws of the Netherlands neither enforce a parent’s
obligation to support his child nor penalize the noncompliance therewith, said foreign law cannot
be applied in the Philippines because it is contrary to a sound and established policy of the forum
and that, additionally, prohibitive laws concerning persons, their acts or property, and those
which have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon
in a foreign country. Thus notwithstanding his national law, his obligation to support his child is
still duly enforceable in the Philippines because it would be of great injustice to the child to be
denied of financial support when the latter is entitled thereto. ( Del Soccoro vs. Van Wilsem, G.R.
No. 193707, December 10, 2014)

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20. A and B were sweethearts for 4 years now. A proposed to B for a marriage which B
accepted because of love. During the application of her marriage license, the PSA
advised that it cannot issue a certificate of no marriage (CENOMAR) because she is
legally married to a certain foreigner. B was surprised and filed a case for correction
of entry before the civil registrar. It appears that through fraud, it was made to
appear that she was married to the said foreigner. However, the civil registrar
refused to act and advised B that said marriage should be first terminated. Decide.

The petition for correction of entry in B’s favor should be acted by the civil registrar. Rule 108 of
the Rules of Court and not annulment of marriage is the proper remedy. In Republic vs Olaybar,
the SC ruled that in cases where the identity of a person is stolen, the procedure on Rule 108
should be followed and not an annulment procedure because there is no marriage to annul in the
first place.

21. Discuss the difference between bigamous marriage under Article 40 and Article 35
(4)?

Article 40 should refer to situations where the prior marriage is itself void but a party thereto did
not secure a judicial declaration of nullity of the prior marriage before contracting a subsequent
marriage. In such a situation, the subsequent marriage is also void because of failure to comply
with Article 40 of the Family Code.

If the prior marriage is perfectly valid, or at least voidable, and a party thereto contracts another
marriage prior to its termination, the subsequent marriage is void for being bigamous pursuant to
Article 35(4) of the Family Code. (Rabuya, Civil Law Reviewer Vol 1, page 94, 2017 ed.)

22. Atty. C was married to Rosario. Unfortunately, they separated. Their marriage bore
two daughters: Rose Marie and Joanne. In August 2000, a petition for adoption of
Jose Maria Jed Gregorio (Jed) and Ana Maria Regina Gregorio (Regina) was instituted
by Atty. C alleging that Jed and Regina were his illegitimate children with Miss L.
Petition was granted by the court. Rosario refute the claim and alleges that the
adoption is not proper because her and Joanne’s consent was not obtained. Should
the adoption decree be annulled?

Yes. The law on adoption requires that the adoption by the father of a child born out of wedlock
obtain not only the consent of his wife but also the consent of his legitimate children. Under
Article III, Section 7 of Republic Act No. 8552, the husband must first obtain the consent of his
wife if he seeks to adopt his own children born out of wedlock. (Castro vs. Gregorio, 738 SCRA
415, G.R. No. 188801 October 15, 2014)

23. John was employed in Kham Pany Inc. He was enrolled under the government’s
Employees’ Compensation Program (ECP). He died due to an accident while on board
the vessel. John was, at the time of his death, childless and unmarried. Bernardina,
John’s biological mother filed a claim for death benefits. SSS denied the claim on the
ground that Bernardina was no longer considered as the parent of John since he was
legally adopted by Cornelio Colcol. According to the records, Cornelio died during
John’s minority.

Is Bernardina qualified as beneficiary?

Yes, the death of an adopting parent during the minority of the adopted child automatically
revives the filial relationship of the child to his/her biological parents.

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 Is the parental authority Bernardina restored upon death of Cornelio during the
minority of John?

Yes. It is apparent that the biological parents retain their rights of succession to the estate of
their child who was the subject of adoption. While the benefits arising from the death of an SSS
covered employee do not form part of the estate of the adopted child, the pertinent provision on
legal or intestate succession at least reveals the policy on the rights of the biological parents and
those by adoption vis-à-vis the right to receive benefits from the adopted. In the same way that
certain rights still attach by virtue of the blood relation, so too should certain obligations, which,
We rule, include the exercise of parental authority, in the event of the untimely passing of their
minor offspring’s adoptive parent. (Bartolome vs. Social Security System, 740 SCRA 78, G.R. No.
192531 November 12, 2014)

PROPERTY

24. W is seeking to register a parcel of land. W alleged that she is the owner in fee simple
by virtue of a Deed of Sale executed by G in her favor. During trial, W claimed that
because the property is planted with coffee, a fruit-bearing tree, it automatically
follows the lot is cultivated, thus she is able to show actual possession and
occupation in the concept of an owner. The Solicitor-General opposed her claim,
arguing that W failed to explain who planted the coffee, nor that the plants were
maintained or harvested or if any other acts were undertaken by W or her
predecessors-in-interest to cultivate the property. Is W’s claim correct?

No. W was unable to demonstrate her alleged possession was in the concept of an owner, since
she could not point to any acts of occupation, development, cultivation or maintenance over the
property. “Mere casual cultivation” of the land does not amount to exclusive and notorious
possession that would give rise to ownership. The presence of an unspecified number of coffee
plants, without proof that W or her predecessors-in-interest actually and deliberately cultivated
them is not sufficient to support a claim of title. [Wee v. Republic of the Philippines, G.R. No.
177384, December 8, 2009, DEL CASTILLO]

25. How can possession be the basis for acquisitive prescription

Possession, to constitute the foundation of acquisitive prescription, must be possession under a

claim of title or must be adverse. Acts of possessory character performed by one who holds the
property, by mere tolerance of the owner, are clearly not in the concept of an owner, and such
possessory acts, no matter how long continued, do not start the running of period of prescription.
It must be noted that under the Torrens system of registration, registered land cannot be
acquired by prescription or adverse possession (Sec. 47 of P.D. 1529).

26. What is the effect of the vendor’s forged signature on a Deed of Absolute Sale to an
innocent purchaser for value?

The vendor’s forged signature on a Deed of Absolute Sale is null and conveys no title. The
presentation of the forged deed, even if accompanied by the owner’s duplicate Certificate of
Title, does not cause the registered owner to lose his title, and neither does the assignee in the
forged deed acquire any right or title to the property subject of such a deed. ( Spouses Bernales
vs. Heirs of Sambalan, G.R. No. 163271, January 15, 2010, DEL CASTILLO)

27. In an action for quieting of title, A presented tax declarations over the property.
Should the court rule in her favor?

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 No. Tax declarations, by themselves, are not conclusive evidence of ownership of real property.
In the absence of actual, public, and adverse possession, the declaration of the land for tax
purposes does not prove ownership. [Palali v. Awisan, G.R. No. 158385, February 12, 2010, DEL
CASTILLO]

28. In resolving ejectment cases, who has preference between the registered owner vis-
à-vis a transferee?

In resolving the Petition for Review, the CA lost sight of the legal principle that in resolving the
issue of possession in an ejectment case, the registered owner of the property is preferred over
the transferee under an unregistered deed of sale. While respondent has in his favor deeds of
sale over the eight parcels of land, these deeds were not registered; thus, title remained in the
name of the owner and seller Atilano. (Endaya vs. Villalaos, G.R. No. 202426, January 27, 2016,
DEL CASTILLO)

29. May an unlawful detainer case be instituted on the basis of a Contract to Sell?

Yes. It must have escaped the attention of the MTCC, the RTC, and the CA that an ejectment
case is not limited to lease agreements or deprivations of possession by force, intimidation,
threat, strategy, or stealth. It is as well available against one who withholds possession after the
expiration or termination of his right of possession under an express or implied contract, such as
a contract to sell.

It was plainly erroneous for the lower courts to require a demand to pay prior to filing of the
ejectment case. This is not one of the requisites in an ejectment case based on petitioner's
contract to sell with respondent. As correctly argued by petitioner, the full payment of the
purchase price in a contract to sell is a positive suspensive condition whose non-fulfillment is not
a breach of contract, but merely an event that prevents the seller from conveying title to the
purchaser; in other words, the non-payment of the purchase price renders the contract to sell
ineffective and without force and effect. Respondent's failure and refusal to pay the monthly
amortizations as agreed rendered the contract to sell without force and effect; it therefore lost its
right to continue occupying the subject property, and should vacate the same. (Union Bank vs.
Philippine Rabbit, G.R. No. 205951, July 04, 2016, DEL CASTILLO)

30. What is the presumption enjoyed by a person occupying a parcel of land?

A person occupying a parcel of land, by himself and through his predecessors-in-interest, enjoys
the presumption of ownership. Anyone who desires to remove him from the property must
overcome such presumption by relying solely on the strength of his claims rather than on the
weakness of the defense. (Palali v. Awisan, G.R. No. 158385, February 12, 2010, DEL CASTILLO)

31. Lot Nos. 2193 and 2194 were registered in the name of the Province of Bataan. The
Bataan Colleges (BC) and the Bataan School of Arts and Trades (BSAT), both State-
run schools, occupied both lots. Subsequently, the Congress passed a law, converting
the BSAT into Bataan Polytechnic State College (BPSC). The law provides that “All
parcels of land belonging to the government occupied by BSAT and BC are declared to
be the property of the BPSC and shall be titled under that name.”

Based on the above provision, Cong. Garcia wrote to the Governor of Bataan,
requesting to cause the transfer of the title of the aforesaid lots to BPSC. No transfer
was effected. According to the Governor, the subject lots were the patrimonial
properties of the Province of Bataan, and as such, the National Government cannot

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 take them without due process of law and without just compensation.

Is the Governor’s contention correct?

No, because the lands are not patrimonial.

Properties of local governments are either (a) properties for public use, or (b) patrimonial
properties. The capacity in which the property is held by a local government is dependent on the
use to which it is intended and for which it is devoted. If the property is owned by the municipal
corporation in its public and governmental capacity, it is public and Congress has absolute control
over it; but if the property is owned in its private or proprietary capacity, then it is patrimonial
and Congress has no absolute control, in which case, the municipality cannot be deprived of it
without due process and payment of just compensation.

Here, the subject lots were not the patrimonial properties of the Province of Bataan, In the
absence of proof that the Province of Bataan acquired them with its own private or corporate
funds, the lots must be presumed to belong to the State. Hence, the lands are public and
Congress has absolute control over it. (Sanggunian Panlalawigan of Bataan vs. Cong. Garcia,
G.R. No. 174964, October 5, 2016)

32. Spouses A and B entered into a Contract to Sell with Boston Development
Corp whereby the latter agreed to sell to the spouses a house and lot for
Php500,000.00 payable thru installments. After two years, the spouses demolished
the original house and constructed a three-story house valued at P3.5 million.
Unfortunately, the spouses defaulted in the payment of the monthly amortizations
after 4 years of religiously paying the same. This prompted Boston to issue a
notarized Notice of Delinquency and Cancellation of Contract to Sell due to the
latter’s failure to pay the monthly amortizations. The spouses questioned the validity
of the cancellation of the contract. Alternatively, the spouses are demanding for the
payment of the value of the house contending that they were builders in good faith.
Boston argues that the spouses are not builders in good faith because they knew that
they were not the owners of the land at the time of the construction of the house.

Distinguish between the limited definition of the concept of a builder in good faith
and its expanded definition.

Under the limited definition of the concept of a builder in good faith, the builder must have a
claim of ownership over the land. Further, the builder must believe that he is the owner of the
land at the time of construction by means of a mode of acquisition, which turns out to be invalid
because of a flaw or defect, and that he is ignorant of the existence of such flaw or defect at the
time of the construction. On the other hand, and under the expanded definition, the builder is
aware that he is not the owner of the land but owner expressly allowed or permitted the
construction or building. (Communities Cagayan, Inc. vs. Nanol, G.R. No. 176791, November 14,
2012, DEL CASTILLO)

Is the cancellation of the Contract to Sell valid?

No. The sale of real property thru installment payments is governed by the Maceda Law. Under
the said law, the actual cancellation of a contract to sell takes place after 30 days from (1)
receipt by the buyer of the notarized notice of cancellation, and (2) upon full payment of the
cash surrender value to the buyer. Until and unless the seller complies with these twin mandatory
requirements, the contract to sell between the parties remains valid and subsisting. Thus, the
buyer has the right to continue occupying the property subject of the contract to sell, and may

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 "still reinstate the contract by updating the account during the grace period and before the actual
cancellation" of the contract.

In this case, Boston complied only with the first condition by sending a notarized notice of
cancellation to the spouses. It failed, however, to refund the cash surrender value of the house
and lot. Thus, the Contract to Sell remains valid and subsisting and supposedly, the spouses have
the right to continue occupying the subject property. (Communities Cagayan, Inc. vs. Nanol, G.R.
No. 176791, November 14, 2012, DEL CASTILLO)

33. A bought a parcel of land in Quezon City in 2012. Sometime in 2014, A discovered
that X and Y constructed houses on his lot. A made repeated demands for X and Y to
vacate the premises and to pay a monthly rental of Php10,000, but X and Y refused to
heed A’s demand.

X and Y alleged that they believed in all honesty and good faith that the lot belonged
to B. They claimed that they possessed the land and built their houses on the lot only
after receiving B’s permission. X and Y also claimed that they and B agreed that the
latter would sell them the areas occupied by their houses, provided that pending full
payment, they would pay B Php2,000 per month as rent. Hence, X and Y constructed
their respective houses on the lot in the belief that they would eventually own the
areas they were occupying.

Are X and Y builders in good faith?

No. X and Y’s reliance that B owned the lot and the subsequent permission from B to build their
houses on the land did not make the them builders in good faith. It should be noted that B was
a complete stranger to them. The lack of blood relation should have been enough to put X and Y
on guard and convince them not to rely on B’s claim of ownership. Considering that the one who
gave permission to X and Y to construct is not the owner of the land, X and Y are not considered
builders in good faith. (Padilla Jr., vs. Malicsi, G.R. No. 201354, September 21, 2016)

34. R filed a petition for reconstitution of title and presented a survey plan and technical
description, as well as tax declarations, to support his claim. Are these competent
evidence in order that reconstitution can be granted.

No. The survey plan and technical description are not competent and sufficient sources of
reconstitution when the petition is based on Section 2(f) of RA 26. They are mere additional
documentary requirements. A tax declaration is not a reliable source of reconstitution of a
certificate of title; a tax declaration can only be prima facie evidence of claim of ownership,
which, however, is not the issue in a reconstitution proceeding. (Republic of the Philippines v.
Ramos, G.R. No. 169481, February 22, 2010, DEL CASTILLO)

35. Explain briefly the concept of laches. Can laches bar recovery of possession?

Yes. Laches is the failure of or neglect for an unreasonable and unexplained length of time to do
that which by exercising due diligence, could or should have been done earlier, or to assert a
right within reasonable time, warranting a presumption that the party entitled thereto has either
abandoned it or declined to assert it. (Philgreen Trading vs. CA, G.R. No. 120408, April 18, 1997)

36. In an action for recovery of possession of realty, who has the better right of
possession, the registered owner armed with a Torrens title or the occupants
brandishing a notarized but unregistered deed of sale executed before the land was
registered under the Torrens system?

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 The registered owner armed with a Torrens title has the better right of possession. It is settled
that a Torrens title is evidence of indefeasible title to property in favor of the person in whose
name the title appears. It is conclusive evidence with respect to the ownership of the land
described therein. It is also settled that the titleholder is entitled to all the attributes of ownership
of the property, including possession. (Vda. De Aguilar v. Alfaro, G.R. No. 164402, July 5, 2010).

37. Feliciano sold a 2,056sqm portion of his land to Jose, who then applied for
registration of the land sold to him. However, the property indicated on the
Certificate of Title was 2,739sqm. Feliciano filed a complaint stating that he still has
ownership over the land in excess of what was sold. On the other hand, Jose raised
the defense that the Certificate of Title issued in his name is an absolute and
indefeasible evidence of ownership of the property which is binding and conclusive
proof upon the whole world. Is Jose’s contention correct?

No. The rule that a Torrens Certificate of Title is conclusive evidence of ownership of the land
described therein does not apply when such land, or a portion thereof, was illegally or
erroneously included in said title. Settled is the rule that a person, whose certificate of title
included by mistake or oversight the land owned by another, does not become the owner of such
land by virtue of the certificate alone. (Spouses Valenzuela v. Mano, G.R. No. 172611, July 9,
2010, DEL CASTILLO)

38. L sold a parcel of land to M, who immediately took possession and constructed a
house and enclosed it in a fence, but did not register the land under her name. A few
months later, L sold the same parcel of land to P, who immediately had it registered
under her name even after seeing the improvements upon the land. When this was
discovered by M, she filed a case seeking to cancel the certificate of title under P’s
name. P raised the defense that she is an innocent purchaser for value and a
registrant in good faith, thus the land rightfully belongs to her. Is P’s defense valid?

No, P’s defense is not valid and she is not an innocent purchaser for value nor a registrant in
good faith. The burden of proof to establish the status of a purchaser and registrant in good faith
lies upon the one who asserts it. She was negligent in not taking the necessary steps to
determine the status of the subject lot despite the circumstances which would have impelled a
reasonably cautious man to do so. One is considered a buyer in bad faith not only when he
purchases real estate with knowledge of a defect or lack of title in his seller but also when he has
knowledge of facts which should have alerted him to conduct further inquiry or investigation
[Spouses Pudadera v. Magallanes, G.R. No. 170073, October 18, 2010, DEL CASTILLO] .

39. V Bank foreclosed E’s mortgaged property, and the same bank emerged as the
winning bidder in the foreclosure sale. E did not redeem the property within the 1-
year period, and also did not vacate nor surrender possession of the property to V
Bank. Thirteen (13) years after the foreclosure sale, V Bank filed a Petition for
issuance of a Writ of Possession. E moved to dismiss on the ground that the right to a
Writ of Possession has prescribed after five (5) years. If you were the judge, how
would you rule in this case?

If I were the judge, I would rule in favor of V Bank. The purchaser’s right to request for issuance
of the writ of possession of the land never prescribes. The right to possess a property merely
follows the right of ownership, and it would be illogical to hold that a person having ownership of

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 a parcel of land is barred from seeking possession thereof. (Spouses Edralin v. Veterans Bank,
G.R. No. 168523, March 9, 2011, DEL CASTILLO)

40. Armando and Lydia are co-owners of a house and lot; however, the Certificate of Title
is only registered solely in the name of Lydia without annotation of the co-ownership.
Lydia then secured a loan secured by a mortgage on the property. Is the mortgage
valid?

The mortgage is null and void insofar as the ½ share of Armando in the subject property is
concerned, but is valid only on the ½ share of Lydia. Under Article 493 of the Civil Code, a co-
owner can alienate only his pro indiviso share in the co-owned property, and not the share of his
co-owners. (Alano v. Planter’s Development Bank, G.R. No. 171628, June 13, 2011, DEL
CASTILLO)

41. A is the owner of an unregistered land who mortgaged it as collateral for loans with
PNB, a bank in 1971. A was able to secure original registration of the mortgaged land
in his name under a free patent, but this was subsequently foreclosed by PNB for
failure to repay the loans, and the mortgaged land was thus transferred under PNB’s
name. As it turns out, a portion of A’s mortgaged land was erroneously included in A’s
free patent application, and such portion actually belongs to C, who was able to
demonstrate continuous, actual and exclusive possession over the disputed portion of
land since the 1950s. C filed a complaint for Declaration of Nullity of the Mortgage
and Reconveyance of the disputed land in 1996 on the ground that he is the owner
and that PNB is not an innocent mortgagee for value. PNB contested that it is an
innocent mortgagee in good faith because, at the time of the mortgage, A’s certificate
was clean and devoid of any adverse annotations, and also claimed that C’s action for
reconveyance based on implied trust has prescribed.

(a) Is PNB an innocent mortgagee for value?

No, PNB is not an innocent mortgagee for value because it failed to overcome the burden of
proving itself as such. The land, when it was first mortgaged in 1971, was still unregistered, and
thus PNB should have conducted an ocular inspection of the property to be mortgaged, in which
case it would have discovered that the disputed portion was actually occupied by C.

(b) Has C’s action for reconveyance prescribed?

No, the action for reconveyance has not yet prescribed because C was in actual possession of the
property, and thus the action is one for quieting of title. There is no implied trust because that is
only applicable in cases where the property acquired through mistake or fraud by another is not
in the possession of the true owner. (PNB v. Jumamoy, G.R. No. 169901, August 3, 2011, DEL
CASTILLO)

42. D sold a parcel of land by virtue of a Deed of Absolute Sale to Raccoon City, but the
certificate of title was not transferred to the city’s name. Raccoon City then leased
the Areano Law Foundation, Inc. (ALF) which took physical possession of the land
and made improvements upon the same. A few years later, D filed a Complaint for
Unlawful Detainer against ALF. In their Complaint, D maintained that ALF took
possession and control of the subject property without any contractual or legal basis.
Is the complaint for unlawful detainer proper?

No. The proper complaint to be filed is a complaint for forcible entry. Forcible entry and unlawful

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 detainer are two distinct causes of action. In forcible entry, one is deprived of physical possession
of any land or building by means of force, intimidation, threat, strategy, or stealth. In unlawful
detainer, one unlawfully withholds possession thereof after the expiration or termination of his
right to hold possession under any contract, express or implied.

D maintained that ALF took possession and control of the subject property without any
contractual or legal basis. Assuming that these allegations are true, it hence follows that ALF’s
possession was illegal from the very beginning. Therefore, the foundation of D’s complaint is one
for forcible entry that is the forcible exclusion of the original possessor by a person who has
entered without right. (Del Rosario v. Gerry Roxas Foundation, Inc., G.R. No. 170575, June 8,
2011, DEL CASTILLO)

43. Ricardo entered into a 20-year lease agreement over a parcel of Francisco’s land, for
purposes of constructing a three-storey apartment building in 1989. Francisco then
sold the land to Carlos in 2008, who initiated a request for structural inspection of
the building. The following year, the building was declared by the Office of the
Building Official (OBO) to be Dangerous and Ruinous due to its dilapidated condition,
and ordered the tenants to vacate in order to make way for the building’s demolition.
Ricardo filed a case to reverse the order of the OBO, contending that it was actually
an attempt to oust them and circumvent their rights as builders in good faith, and
that abatement of nuisances should have been applied in this case thus precluding
the OBO from ordering the demolition, who should have first ordered the repair of the
ruinous and dangerous buildings.

Is Ricardo correct in saying that abatement of nuisances should have been applied in
this case?

No. The fact that the buildings could have constituted nuisances under the New Civil Code does
not preclude the Office of the Building Official from issuing the demolition order, as they have the
authority under the National Building Code to order the repair, vacation or demolition, as the
case may be, without prejudice to further action that may be undertaken under the relevant
provisions of the Civil Code. (Spouses Hipolito v. Cinco, G.R. No. 174143, November 28, 2011,
DEL CASTILLO)

44. Nancy, Punong Barangay of Barangay Areano, saw a group of teenage boys from a
neighboring barangay who removed the padlock of her barangay’s basketball court to
play basketball. Nancy ordered the barangay tanod to destroy the basketball ring by
cutting it up in half with a hacksaw. The owners of the basketball court, Areano
Sports Foundation, then filed a complaint against the barangay officials. In their
defense, Nancy claimed that her actions are justified as the basketball court is a
nuisance and they were merely performing an abatement of public nuisance. Nancy
argued that the basketball court affected the peace of the barangay and residents
have been complaining about it, and that it blocked jeepneys from passing through.
They also claimed that it was the site of rampant betting and fights between players
of different barangays, where innocent persons are hurt as a result.

(a) Were the actions of Nancy and Benjie justified?

No, their actions are not justified as the basketball court is not a nuisance per se, thus it could
not be summarily abated. Based on the facts, the basketball court cannot, by any measure, be
considered nuisance per se, which is defined as “one that affects the immediate safety of persons
and property, which may be summarily abated under the undefined law of necessity”. (Cruz v.
Pandacan Hiker’s Club, Inc., G.R. No. 188213, January 11, 2016)

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 (b) Distinguish nuisance per se and nuisance per accidens.

Nuisance per se is one that affects the immediate safety of persons and property, which may be
summarily abated under the undefined law of necessity, while nuisance per accidens is one which
depends upon certain conditions and circumstances, and its existence being a question of fact, it
cannot be abated without due hearing thereon in a tribunal authorized to decide whether such a
thing does in law constitute a nuisance. (Cruz v. Pandacan Hiker’s Club, Inc., G.R. No. 188213,
January 11, 2016)

45. Who is a Riparian Owner?

The law defines a riparian owner as such owner of lands adjoining banks of rivers and to whom
belongs the accretion gradually received from the effects of the current of the waters. (Art. 457,
NCC)

46. Rodrigo is the riparian owner of a parcel of land (the Motherland) adjacent to the
Pasig River. Unbeknownst to Rodrigo who migrated as an OFW to New Zealand, an
accretion developed in 1980 by force of nature, which Daniel immediately took actual
possession and control as owner, but only registered it in his name in 1991. As a
result of global warming, a second accretion developed in 1992 adjacent to the first
accretion registered in Daniel’s name, which Daniel immediately took actual
possession and control by building a rest house, but neglected to register it in his
name. Thus, his driver Procopio registered the second accretion in his name in 1995.
Upon his return to Manila in 2015, Rodrigo discovered what happened while he was
overseas and a legal battle ensued.

(a) Rodrigo filed an action for Reconveyance and Cancellation of Title against Daniel
and Procopio on the ground that he is the riparian owner. In his defense, Daniel
claimed that the action for reconveyance has prescribed. Decide on the case filed by
Rodrigo against Daniel and Procopio with reasons.

The case filed by Rodrigo against Daniel and Procopio will not prosper, as the action for
reconveyance has prescribed. Alluvial property automatically belongs to the owner of the estate
to which it may have been added, but the owner of the adjoining property must register the
same under the Torrens System; otherwise, the alluvial property may be subject to acquisition by
prescription by third persons (Heirs of Narvasa v. Imbornal, G.R. No. 182908, August 8, 2014).

(b) Daniel also filed an action for reconveyance and cancellation of title against
Procopio, on the ground that he is the riparian owner of the First Accretion. In his
defense, Procopio claimed that Daniel’s action has prescribed as 20 years have lapsed
since he registered the Second Accretion in his name. Decide with reasons.

The case filed by Daniel against Procopio will prosper because Daniel was able to take actual
possession and control of the Second Accretion. There is no prescription when, in an action for
reconveyance, the claimant is in actual possession of the property because this, in effect, is an
action for quieting of title (PNB v. Jumamoy, G.R. No. 169901, August 3, 2011).

(c) Supposing that Rodrigo returned in 2000 and initiated a case in the same year,
with Daniel raising the defense that the action has prescribed as he has been in
actual possession and control in the concept of an owner over the First Accretion
since 1980, how would you then decide?

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 If Rodrigo had returned in 2000, I will decide in his favor. An action for reconveyance of a parcel
of land based on implied constructive trust prescribes in 10 years, the point of reference being
the date of the deed or the date of the issuance of the certificate of title of the property.
(Villanueva-Mijares v. Court of Appeals, G.R. No. 108921, April 12, 2000)

47. Felix purchased a parcel of land in Lobo, Batangas covered by a Transfer Certificate of
Title from Oliver. While in the process of registering the certificate of title under
Felix’s name, a man named Miguel filed an action for cancellation of title on the
ground that he is the true owner of the land. In order to support his claim, Miguel
presented a photocopy of a TCT No. T-17186 registered in his name, as well as
certification from the Register of Deeds of Batangas that their office burned down in
and that it has no records of TCT No. T-17186. Miguel claims that mere existence of
his earlier title negates Oliver’s title under the principle that an earlier title prevails
over a subsequent one. Decide with reasons.

Miguel’s case has no merit. The principle that the earlier title prevails over a subsequent one
applies when there are two apparently valid titles over a single property does not apply in this
case. The said principle presupposes the existence of an earlier valid title, which renders the
subsequent title void because a single property cannot be registered twice. It is evident from the
facts of this case that Miguel failed to establish that he holds a valid title to the property, thus in
the absence of a valid title he cannot invoke the principle of indefeasibility of Torrens titles.
(Heirs of Oliveros v. San Miguel Corporation, G.R. No. 173541, February 1, 2012, DEL
CASTILLO).

48. Anton and Roda married in 1993, and received as donation propter nuptias a parcel of
land from their aunt, Felicidad. The couple happily accepted the donation in a public
instrument, which Felicidad stapled to the back of the certificate of title. They built
their dream house on the land. In 2000, they finally found time to carry out the
registration process of the parcel of land in their name, but they were shocked to find
that it was already listed in the name of Jhonel, who claimed that Felicidad (who has
since died) sold the land to him by virtue of a Deed of Absolute Sale in 1995. Anton
and Roda thus filed a Complaint for Quieting of Title and Declaration of Nullity of
Document against Jhonel, claiming that the land is rightfully theirs by virtue of the
donation propter nuptias. In his defense, Jhonel claimed that he is an innocent
purchaser for value, having no knowledge of the donation propter nuptias because
this was not annotated on Felicidad’s certificate of title, therefore it is not binding
upon him as he relied solely on the certificate of title given to him by Felicidad.
Decide on the case.

Anton and Roda are the true owners of the land. The non-registration of a deed of donation of
immovable property does not affect its validity, although non-registration does not bind other
parties ignorant of a previous transaction. Nonetheless, Jhonel cannot be said to be an innocent
purchaser for value. A buyer of a piece of land that is in actual possession of persons other than
the seller must be wary and should investigate the rights of those in possession. Without such
inquiry, the buyer can hardly be regarded as a buyer in good faith. In this case, the presence of
Anton and Roda’s house should have alerted Jhonel to inquire further on the status of the land.
(Spouses Cano v. Spouses Cano, G.R. No. 188666, December 14, 2017)

49. What are the Requirements of Legal Easement of Right of Way? (PISO)

a. Prejudicial – the easement of ROW should be established at a point least prejudicial with

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 the owner of the servient estate.
b. Indemnity – should be paid to the owner of the servient estate
c. Surrounded – the owner of the dominant estate is surrounded with other estates without
an adequate outlet to a public highway.
d. Own acts – the surrounding or encirclement of the dominant estate by the other estate
should not be through the own acts of the dominant owner. (Art. 649, NCC)

50. A land was declared alienable and disposable. Is it still considered land of public
domain?

Yes, it is still a land of public domain. It only becomes patrimonial upon express declaration of
the State that it is no longer needed for public use, public service, or the development of the
national wealth. Patrimonial lands may be subject to commerce hence they are not exempt from
payment of real payment taxes per the Local Government Code. (Republic vs. City of Paranaque,
G.R. No. 191109, July 18, 2012)

51. Accused was charged by PLDT with theft for using their services, without paying
therefor, to route international long distance calls to his business. Accused argues
that PLDT cannot acquire ownership over the phone calls facilitated by their services.
Is this defense meritorious?

No. There is a difference between ownership of the calls and the business of providing
telecommunication services. Although PLDT merely encodes and transmits phone calls, PLDT
owns the business which the Court deems as personal property. A business or enterprise or
interest in either is considered a personal property. Since a business is a personal property, it
may be object of theft. (Laurel vs. Abrogar, G.R. No. 155076, 13 January 2009)

OBLIGATIONS AND CONTRACTS

52. A and B executed a Contract of Lease over a parcel of land for a period of three years.
During the effectivity of the lease, A offered to sell to B the subject parcel of land for
Php 5 Million. Further, B was given two years from January 1, 2018 to decide on the
said offer. Around July 2018, B learned that A sold the land to the latter’s daughter
for a lesser price of Php 1 Million. B claims that A violated his right to buy subject
property under the principle of right of first refusal by not giving him notice and the
opportunity to buy the property under the same terms and conditions or specifically
based on the much lower price paid by the A’s daughter.

Is B correct in stating that the offer of A entitles him to a right of first refusal?

No. What is involved here is an option contract. An option contract is entirely different and
distinct from a right of first refusal in that in the former, the option granted to the offeree is for a
fixed period and at a determined price. Lacking these two essential requisites, what is involved is
only a right of first refusal. In this case, what was granted to B is an option contract, and not a
right of first refusal. It is undisputed that B did not accept the terms stated in the letter of A.
There is therefore no contract that was perfected between them. B, thus, does not have any
right to demand that the property be sold to him at the price for which it was sold to A’s
daughter neither does he have the right to demand that said sale to the daughter be annulled.
(Tuazon vs. Del Rosario-Suarez, G.R. No. 168325, December 8, 2010, DEL CASTILLO)

53. Ricardo obtained a loan of P4 million from XYZ Bank to develop DELTA Homes.
Ricardo executed a real estate mortgage over his properties, including Lot 4.
Subsequently, DELTA executed a Contract to Sell with Angeles over Lot no. 4. It

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 provides that a final Deed of Sale will only be issued upon full payment of the
consideration. Delta then defaulted on its loan obligation. XYZ Bank, instead of
foreclosing the REM, agreed to a dation in payment wherein Delta would assign real
estate properties to XYZ Bank in payment of the total obligation. One of the
properties included was Lot 4.

Is the loan obligation extinguished by the dacion en pago?

Yes. The dacion en pago extinguished the loan obligation notwithstanding the existence of the
Contract to Sell over Lot 4 in favor of Angeles.

As a rule, the dation in payment extinguishes the obligation to the extent of the value of the
thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by
agreement, express or implied, or by their silence, consider the thing as equivalent to the
obligation, in which case the obligation is totally extinguished.

In this case, there was an agreement that the assigned properties served as full payment of
Delta’s total obligation to XYZ Bank without any reservation or condition. It is the intention of the
parties in the dation in payment which determines whether the property subject of the dation will
be considered as the full equivalent of the debt and will therefore serve as full satisfaction of the
said debt. (Luzon Development Bank v. Enriquez, G.R. No. 168646, 168666, January 12, 2011)

54. Oscar purchased a piece of property from AFPMBAI through a loan facility. Oscar and
ABC Rural Bank, executed a Loan and Mortgage Agreement with Oscar as borrower.
The Rural Bank issued a letter of guaranty informing AFPMBAI that the proceeds of
Oscar’s approved loan shall be released to AFPMBAI after title to the property is
transferred in Oscar’s name. As a result of the letter, AFPMBAI executed in Oscar’s
favor a Deed of Absolute Sale and a new title was issued in his name, with the
corresponding annotation of his mortgage agreement with the Rural Bank.

Unfortunately, the loan facility did not push through and the Rural Bank closed.
Meanwhile, AFPMBAI made oral and written demands for Oscar to pay the loan/
consideration for the property. Hence, Oscar filed a complaint for consignation,
alleging that as a result of the Rural Bank’s closure, he was left in a quandary as to
where he should tender full payment of the loan and how to secure cancellation of
the mortgage annotation.

Is consignation proper?

Yes. Under Article 1256 of the Civil Code, the debtor shall be released from responsibility by the
consignation of the thing or sum due, without need of prior tender of payment, when the creditor
is absent or unknown, or when he is incapacitated to receive the payment at the time it is due, or
when two or more persons claim the same right to collect, or when the title to the obligation has
been lost.

Applying Article 1256 to the case, it now appears that there are two entities which Oscar must
deal with in order to fully secure his title to the property. The lack of prior tender of payment by
Oscar is not fatal to his consignation case. He filed the case for the exact reason that he was at a
loss as to which between the two – the Rural Bank or AFPMBAI – was entitled to such a tender of
payment. Besides, as earlier stated, Article 1256 authorizes consignation alone, without need of
prior tender of payment, where the ground for consignation is that the creditor is unknown.
(Spouses Cacayorin v. Armed Forces and Police Mutual Benefit Association, Inc., G.R. No.
171298, April 15, 2013, DEL CASTILLO)

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55. Ang entered into a rice supply contract with Manlar Rice Mill Inc. where the former
purchased rice from the latter. This transaction was covered by nine postdated
checks issued by Ang. Upon presentment, all 9 checks were dishonored. Manlar made
oral and written demands upon Ang and Deyto (Ang’s mother) which went unheeded.
Manlar filed a Complaint for Sum of Money against Deyto and Ang seeking to hold
them solidarily liable on the rice supply contract. Deyto claims that she did not
contract with Malar or any of its representatives regarding the purchase and delivery
of rice.

Can Deyto be held solidarily liable with Ang?

No. As a general rule, a contract affects only the parties to it, and cannot be enforced by or
against a person who is not a party thereto. It is a basic principle in law that contracts can bind
only the parties who had entered into it; it cannot favor or prejudice a third person. Under,
Article 1311 of the Civil Code, contracts take effect only between the parties, their assigns and
heirs. Thus, Manlar may sue Ang, but not Deyto, who is not a party to the rice supply contract.
(Manlar Rice Mill, Inc. v. Deyto, G.R. No. 191189, January 29, 2014, DEL CASTILLO)

56. Securitron through its General Manager (Eleazar) – sent a Letter addressed to First
Optima – through its Executive Vice-President, (Young) – offering to purchase a
parcel of land owned by First Optima. A series of telephone calls ensued, but only
between Eleazar and Young’s secretary. Sometime thereafter, Eleazar offered to pay
for the subject property in cash, which he already brought with him. However, Young
declined to accept payment, saying that she still needed to secure her sister’s advice
on the matter. Securitron sent a letter to First Optima, accompanied with a check, as
an earnest money. The check was eventually deposited with and credited to First
Optima’s bank account. Thereafter, Securitron demanded in writing that First Optima
proceed with the sale of the property, but Young denied that the contract was
perfected.

Was there a perfected contract of sale by the delivery of money to First Optima?

No. It cannot be denied that there were negotiations between the parties conducted after the
Securitron’s letter-offer. These negotiations culminated in a meeting between Eleazar and Young
whereby the latter declined to enter into an agreement and accept cash payment then being
tendered by the former. Instead, Young informed Eleazar during said meeting that she still had
to confer with her sister.

Thus, as between them, there is no sale to speak of. When there is merely an offer by one party
without acceptance of the other, there is no contract. Here, the parties never got past the
negotiation stage. Nothing shows that the parties had agreed on any final arrangement
containing the essential elements of a contract of sale, namely, (1) consent or the meeting of the
minds of the parties; (2) object or subject matter of the contract; and (3) price or consideration
of the sale. (First Optima Realty Corp. v. Securitron Security Services, Inc., G.R. No. 199648,
January 28, 2015, DEL CASTILLO)

57. PIRRA entered into construction contracts with the PSHS for the construction of
academic buildings, dormitories and a school canteen (Project A and Project C).

In Project A, PIRRA requested for its payment and sent a letter to PSHS requesting
for substantial acceptance and completion of the Project, as the accomplishment for
Project A was already 94.09%. PSHS replied without any objection, and merely

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 stated that payment could not be made because of certain defects found on the
Project pursuant to a COA report. However, In Project C, PSHS found out that PIRRA
suspended work without its approval, hence, it informed PIRRA that it was
terminating the Project C contract because of the latter’s delay, default, and
abandonment. PIRRA demanded from PSHS payment for the constructions made on
Project A and C.

a. Can PIRRA validly demand payment for the constructions made on Project A?

Yes. Article 1234 of the Civil Code provides that if the obligation is substantially performed in
good faith, the obligor, may recover as if it had strictly and completely fulfilled its obligation, less
damages suffered by the obligee. In this case, PSHS acknowledged the substantial compliance of
PIRRA on Project A. In fact, PSHS initially expressed its willingness to pay only to put it on hold
because of a COA report which found the existence of defects and undelivered items. Such
report, however, cannot affect PSHS’ obligation to pay because the payment was due on the
performed items that were completed or were otherwise already performed, save for the defects.

b. Is PIRRA entitled to payment for the constructions made on Project C despite its
non-completion?

Yes. Although PIRRA was guilty of delay, suspension of work without any approval from PSHS,
and abandonment of the project, PSHS should still pay PIRRA for the value of the work done. To
deny payment thereof would result in unjust enrichment of PSHS at the expense of PIRRA.
(Philippine Science High School-Cagayan Valley Campus v. PIRRA Construction Enterprises, G.R.
No. 204423, September 14, 2016)

58. Chua leased her commercial building to PNB for a period of five years. Meanwhile,
Chua obtained a loan from PNB which was secured by a Real Estate Mortgage
constituted over the leased property. When the lease expired, PNB continued to
occupy the property on a month-to-month basis. Thus, Chua filed a Complaint for
Unlawful Detainer of PNB, alleging that the latter failed to pay its monthly rentals
from October 2004 until August 2005. In its defense, PNB claimed that it applied the
rental proceeds from October 2004 to January 15, 2005 as payment for Chua’s
outstanding loan which became due and demandable in October 2004. As for the
monthly rentals from January 16, 2005 to February 2006, PNB claimed that it
received a demand letter from a certain Lamberto Tan who claimed to be the new
owner of the leased property and requested that the rentals be paid directly to him.
PNB thus deposited the rentals in a separate non-drawing savings account for the
benefit of the rightful party with the Office of the Clerk of Court of the MeTC of
Manila.

Was there a valid consignation?

No. For consignation to be valid, the debtor must comply with the following requirements: 1)
there was a debt due; 2) valid prior tender of payment, unless the consignation was made
because of some legal cause; 3) previous notice of the consignation has been given to the
persons interested in the performance of the obligation; 4) the amount or thing due was placed
at the disposal of the court; and 5) after the consignation had been made, the persons interested
were notified thereof. Absence of any of the requirements is enough ground to render a
consignation ineffective.

In the present case, PNB had the option to pay the monthly rentals to Chua or to apply the same
as payment for Chua’s loan with the bank, but PNB did neither. PNB instead opened a non-

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 drawing savings account, where it deposited the subject monthly rentals, due to the claim of Tan
of the same right to collect the rent. Further, PNB consigned the payments with the Office of the
Clerk of Court of the MeTC of Manila. Note that PNB's deposit of the subject monthly rentals in a
non-drawing savings account is not the consignation contemplated by law, precisely because it
does not place the same at the disposal of the court. Consignation is necessarily judicial; it is not
allowed in venues other than the courts. ( Philippine National Bank vs Chan, G.R. No. 206037,
March 13, 2017, DEL CASTILLO)

59. Dante, who is engaged in paper mill business, delivered scrap papers to ABC
Company. When Dante delivered the raw materials, ABC issued a post-dated check as
partial payment. When he deposited the check, it was dishonored for being drawn
against a closed account. On the same day, ABC and a certain Eric Sy executed an
agreement where ABC bound themselves to deliver their finished products to
Megapack Corporation, owned by Eric Sy. According to the agreement, Dante would
supply the raw materials. Due to non-payment, Dante filed a complaint for collection
of sum of money against ABC. The trial court rendered a judgment in favor of ABC
and dismissed the complaint, holding that when ABC and Eric Sy entered into the
agreement, novation took place, which extinguished ABC’s obligation to Dante. Is the
trial court correct?

No. Novation extinguishes an obligation between two parties when there is a substitution of
objects or debtors or when there is subrogation of the creditor. It occurs only when the new
contract declares so "in unequivocal terms" or that "the old and the new obligations be on every
point incompatible with each other. Article 1293 of the Civil Code provides that novation which
consists in substituting a new debtor in the place of the original one, may be made even without
the knowledge or against the will of the latter, but not without the consent of the creditor. If the
memorandum of agreement was intended to novate the original agreement between the parties,
Dante must have first agreed to the substitution of Eric Sy as his new debtor. The agreement
must also state in clear and unequivocal terms that it has replaced the original obligation of ABC
to Dante. Neither of these circumstances is present in this case. (Arco Pulp vs. Lim, G.R. No.
206806, June 25, 2014)

60. FG Properties entered into a contract to sell a condominium unit to Spouses AA. The
spouses paid a total of Php 2.5 Million of the full contract price set at Php 10 Million.
FG Properties failed to develop the condominium project. Thus, the spouses
demanded the refund of the amount they paid, plus interest. When FG did not refund
the spouses, the latter filed a complaint against FG. FG claimed that the spouses had
no cause of action since the delay in the construction of the condominium was caused
by the financial crisis that hit the Asian region, a fortuitous event over which it had
no control. Is FG’s defense tenable?

No. The Asian financial crisis cannot be generalized as unforeseeable and beyond the control of
the business corporation. A real estate enterprise engaged in the pre-selling of condominium
units is concededly a master in projections on commodities and currency movements and
business risks. The fluctuating movement of the Philippine peso in the foreign exchange market
is an everyday occurrence, and fluctuations in currency exchange rates happen everyday, thus,
not an instance of caso fortuito. (Fil-Estate Properties vs. Spouses Ronquillo, G.R. No. 185798,
January 13, 2014)

61. ABC engaged the services of XYZ for the withdrawal, processing and delivery of its
imported products to its warehouse. However, XYZ sub-contracted the delivery from
the port to the warehouse to CCC Trucking Services. Along the way, the truck
disappeared. After being subrogated to ABC's rights, DDD, an insurance company,

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 sent XYZ a demand letter for payment of the lost goods. XYZ refused to pay DDD,
claiming that the hijacking of the trucks was a fortuitous, thus absolving it of any
liability. IS XYZ’s contention tenable?

No. XYZ is considered a common carrier. A common carrier should be held responsible for the
loss, destruction, or deterioration of the goods it transports unless it results from: (1) Flood,
storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in
war, whether international or civil; (3) Act of omission of the shipper or owner of the goods; (4)
The character of the goods or defects in the packing or in the containers; (5) Order or act of
competent public authority. For all other cases - such as theft or robbery - a common carrier is
presumed to have been at fault or to have acted negligently, unless it can prove that it observed
extraordinary diligence. (Torres-Madrid Brokerage v. Feb Mitsui Insurance, G.R. No. 194121, Jul
11, 2016)

62. What are the requisites of legal compensation?

a. That each one of the obligors be bound principally and that he be at the same time a
principal creditor of the other;
b. 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;
c. That the two debts are due;
d. That they be liquidated and demandable;
e. That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor (Art. 1279, NCC)

63. Joey, Jovy and Jojo are solidary debtors under a loan obligation of P300,000.00
which has fallen due. The creditor has, however, condoned Jojo's entire share in the
debt. Since Jovy has become insolvent, the creditor makes a demand on Joey to pay
the debt.

1. How much, if any, may Joey be compelled to pay?

Joey can be compelled to pay only the remaining balance of P200.000, in view of the remission
of Jojo's share by the creditor. (Art. 1219, NCC)

2. To what extent, if at all, can Jojo be compelled by Joey to contribute to such

payment?

Jojo can be compelled by Joey to contribute P50,000. Since the insolvent debtor's share which
Joey paid was P100,000, and there are only two remaining debtors - namely Joey and Jojo -
these two shall share equally the burden of reimbursement. Jojo may thus be compelled by Joey
to contribute P50,000.00. (Art. 1217. par. 3, NCC)

64. Distinguish dacion en pago from payment by cession.

DACION EN PAGO PAYMENT BY CESSION

There is a transfer of ownership from the No transfer of ownership. The creditors simply
debtor to the creditor. acquire the right to sell the properties and apply
the proceeds of the sale to the satisfaction of
debt.
Debtor does not have to be insolvent. Debtor is insolvent.
Obligation is extinguished up to the value of Shall release the debtor from responsibility for
the thing given, unless the parties agree on the net proceeds of the thing assigned, unless

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 a total extinguishment. (PNB vs Dee, G.R. there is stipulation to the contrary. (Art. 1255,
No. 182128, February 19, 2014) NCC)

65. Colipano and her daughter were paying passengers in the jeepney operated by
Sanico, which was driven by Castro. Colipano was made to sit on an empty beer case
at the edge of the rear entrance/exit of the jeepney with her sleeping child on her
lap. At an uphill incline in the road, the jeepney slid backwards because it did not
have the power to reach the top. Because the step board was wet, her left foot
slipped and were crushed between the step board and a coconut tree, which the
jeepney bumped, causing the jeepney to stop its backward movement. Colipano's leg
was badly injured and was eventually amputated. Colipano filed a complaint for
breach of contract of carriage against Sanico and Castro. Will the complaint for
breach of contract of carriage prosper?

Yes, but only against Sanico. Since the cause of action is based on a breach of a contract of
carriage, the liability of Sanico is direct as the contract is between him and Colipano. Castro,
being merely the driver of Sanico's jeepney, cannot be made liable, as he is not a party to the
contract of carriage. Since Castro was not a party to the contract of carriage, Colipano had no
cause of action against him and the complaint against him should be dismissed. Although he was
driving the jeepney, he was a mere employee of Sanico, who was the operator and owner of the
jeepney. The obligation to carry Colipano safely to her destination was with Sanico. (Castro vs.
Colipano, G.R. No. 209969, September 27, 2017)

66. What is the nature of an action for rescission?

The action for rescission is subsidiary; it cannot be instituted except when the party suffering
damage has no other legal means to obtain reparation for the same. (Art. 1383, NCC). Hence, it
must be availed of as the last resort, availed only after all legal remedies have been exhausted
and proven futile. (Anchor Savings Banks vs. Furigay, G.R. No. 191178, March 13, 2013)

67. X sold his car to Y for Php400,000. After Y paid Php300,000, X agreed to have the car
transferred in the name of Y provided that Y would pay the balance of Php100,000
within 10 days from the registration of the same. After the certificate of registration
was issued, Y sold it to Z who registered it under his name. Y failed to pay. Can X
rescind the contract? If not, what is his remedy?

X can no longer rescind the contract because Y cannot return the thing to him anymore.
Rescission creates the obligation of mutual restitution of the object and the cause or
consideration. (Art. 1385, NCC). Since Y has already transferred the car to Z, rescission is no
longer possible.

X can, however, file an action for specific performance with damages against Y. (Art. 1191, NCC)

68. C claims to be an agricultural lessee of a fishpond. Despite expiration of the lease, he

refused to surrender the fishpond to the true owner P. Case was filed by P against C
for Recovery of Possession involving the same fishpond. Court ordered payment of
rentals, value of produce plus damages. Pending the decision of the case. C owned
several properties which were transferred through a deed of sale to his children prior
to the execution of the decision. Thus, P filed a complaint seeking for the nullity of
sale alleging that the contacts of sale between C were simulated for the purpose of
evading the levy of the properties. Is the sale of the property simulated, thus void?

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 Yes. The subject Deeds of Absolute Sale executed by the C to his children are absolutely
simulated and fictitious. The Deeds of Absolute Sale were executed when the possession case
was already pending, evidently to avoid the properties from being attached or levied upon by P.
Indeed, the deeds were executed for the purpose of putting the properties beyond the reach of
creditors. (Campos-Bautista v. Pastrana, G.R. No. 175994, December 8, 2009)

SALES

69. JJ and his brother KK entered into an oral contract to sell covering JJ’s share, fixed at
P500,000.00. as co-owner of the family’s building. KK made a downpayment. It was
agreed that the deed of sale shall be executed upon payment of the remaining
balance.

However, KK failed to pay the remaining balance. Meanwhile, the building was leased
out to third parties, but JJ’s share in the rents were not remitted to him. Despite
demands by JJ, KK failed to render an accounting and remit his share in the rents and
fruits of the building.

Thus, JJ filed a Complaint against KK before the RTC. JJ prayed that KK be ordered to
render an accounting of all the transactions over the subject building; and that KK be
ordered to deliver to JJ his share in the rents; KK filed his answer and argued that JJ
had no more claim in the rents in the subject building since he had already sold his
share to KK.

Was there a valid contract of sale entered into between JJ and KK?

No. The contract entered into by JJ and KK was a contract to sell. The stipulation to execute a
deed of sale upon full payment of the purchase price is a unique and distinguishing characteristic
of a contract to sell. It also shows that the vendor reserved title to the property until full
payment. In this case, KK agreed to buy JJ’s share in the subject building for the price of
P500,000.00. Hence, the contract is a contract to sell and pending the full payment of the price,
JJ is still entitled to his share in the rents of the subject property. (Diego v. Diego, G.R. No.
179965, February 20, 2013, DEL CASTILLO)

70. B offered to sell a laptop computer for the sum of P15,000.00 to A. Since A was
undecided, B left the laptop with A for two days. The following day, A told B that she
was willing to buy the laptop on installment. B agreed; thus, A gave P5,000.00 as
initial payment and promised to pay on installments the balance. A then gave her
second installment of P3,000.00 to B. But when B returned to get the remaining
balance, A offered to pay only P2,000.00 claiming that the laptop was only
worth P10,000.00. Due to the refusal of A to pay the remaining balance, B then
instituted a collection suit against A. A, however, contended that under the Statute of
Frauds, a contract of sale to be enforceable must be in writing. Is A’s contention
correct?

A is not correct. A contract of sale is perfected the moment the parties agree upon the object of
the sale, the price, and the terms of payment. Once perfected, the parties are bound by it
whether the contract is verbal or in writing because no form is required. The Statute of Frauds
does not apply in the present case as this provision applies only to executory, and not to
completed, executed or partially executed contracts. In this case, the contract of sale had been
partially executed because the possession of the laptop was already transferred to A and the

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 partial payments had been made by her. Thus, the absence of a written contract is not fatal to
B’s case. (Duarte v. Duran, G.R. No. 173038, September 14, 2011, DEL CASTILLO)

71. What are the remedies of an unpaid seller?

When a seller is an “unpaid seller”, he is entitled to the following rights and remedies:

(a) Possessory lien;

(b) Stoppage in transitu;
(c) Special right of resale; and
(d) Special right to rescind.

The four (4) remedies of an unpaid seller have a hierarchical application, as in fact, the special
rights to resell and to rescind can be availed of by the unpaid seller only when two prior rights of
possessory lien or stoppage in transit have been exercised by the unpaid seller. (Art. 1526, NCC)

72. A and B executed a notarized agreement which provided that the property of B will
be sold to A. They agreed that title to the property will pass to A upon full payment of
the price. A paid the reservation fee upon the execution of the agreement. Thereafter,
A also made payments on several occasions. However, he failed to tender full
payment of the balance. When B arrived from a trip, A tendered payment of the
balance, but the former refused to accept it. Instead, B told him that the property
was no longer for sale and B was forfeiting A’s payments. Soon thereafter, he
discovered that X had already bought the subject property from B. A filed a Complaint
for specific performance and damages.

A contended that while the agreement with B was admittedly a mere contract to sell
where title is retained by the latter until full payment of the price, they nonetheless
have a superior right over the subject property, as against X, by virtue of the
applicability of Article 1544 (Double Sales) and the fact that X was a buyer in bad
faith. Is the contention of A correct?

No. The contract in the present situation is a contract to sell, wherein the payment of the price is
a positive suspensive condition, failure of which is not a breach of contract warranting rescission
but rather just an event that prevents the prospective buyer from compelling the prospective
seller to convey title. In other words, the non-fulfillment of the condition of full payment renders
the contract to sell ineffective and without force and effect. And it is precisely for the above
reason that Article 1544 of the Civil Code cannot apply. Since failure to pay the price in full in a
contract to sell renders the same ineffective and without force and effect, then there is no sale to
speak of.

As between the parties to the instant case, there could be no double sale which would justify the
application of Article 1544. A failed to pay the purchase price in full, while X did. Thus, there is
only one sale - and that is, the one in X's favor. "Since there is only one valid sale, the rule on
double sales under Article 1544 of the Civil Code does not apply.” (Spouses Domingo v. Spouses
Manzano, G.R. No. 201883, November 16, 2016, DEL CASTILLO)

73. XYZ Inc. entered into a Contract of Conditional Sale with Mr. XX. However, neither
the Contract of Conditional Sale nor the Deed of Absolute Sale concerning the subject
property could be annotated on the certificate of title covering the subject property
because the then Register of Deeds of Bohol, refused to annotate both deeds.

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 It appears, however, that Mr. XX already sold the subject property to M, who is a
foreigner. XYZ Inc. instituted against M a civil action for quieting of title and/or
recovery of ownership and cancellation of title before the RTC. The RTC ruled in favor
of M and decreed that there was a double sale in the case at bench. XYZ Inc.,
however, contended that there could not have been a double sale in the instant case
because the earlier sale between Mr. XX and M was absolutely null and void, as this
was a violation of the constitutional provision prohibiting aliens from acquiring or
purchasing land in the Philippines; hence, there was only one valid sale in this case,
and that was the sale between Mr. XX and XYZ Inc. Is the contention of XYZ Inc.
correct?

Yes, XYZ Inc. is correct. Given the fact that the sale by Mr. XX to M, who is a foreigner
was totally abhorrent and repugnant to the Philippine Constitution, and is thus, void ab initio, it
stands to reason that there can be no double sale to speak of in the case at bench. There being
only a single valid sale in the present case, there was no double sale since the rules on double
sale presupposes a situation where the same property is validly sold to different vendees by the
same vendor In this case, there is only one sale to advert to, that between the Mr. XX and XYZ
Inc. (Taina Manigque-Stone v. Cattleya Land, Inc. G.R. No. 195975, September 05, 2016, DEL
CASTILLO)

74. A sold an automobile to B for P20,000 to be paid as follows: P10,000 upon delivery of
the car to B, and the balance at the rate of P2,000 every three (3) months thereafter.
The automobile, however, was burned in the possession of B, without his fault,
before the payment of the balance. Is B obliged to pay the balance? Reason.

Yes. B is still obliged to pay the balance. The ownership of the automobile was transmitted to
him upon delivery since there was no stipulation to the contrary. (Arts. 1477, 1478, NCC.)
Consequently, applying the principle of res perit domino, the loss is imputable to him. (Art. 1504,
NCC)

75. Distinguish a contract to sell from a contract of sale.

In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing
sold; in a contract to sell, ownership is, by agreement, reserved in the seller and is not to pass to
the buyer until full payment of the purchase price. Otherwise stated, in a contract of sale, the
seller loses ownership over the property and cannot recover it until and unless the contract is
resolved or rescinded; whereas, in a contract to sell, title is retained by the seller until full
payment of the price. In the latter contract, payment of the price is a positive suspensive
condition, failure of which is not a breach but an event that prevents the obligation of the vendor
to convey title from becoming effective. (Spouses Montecalvo v. Heirs of Primero, G.R. No.
165168, July 9, 2010)

76. Distinguish Maceda Law from Recto Law.

MACEDA LAW RECTO LAW

Applies to sale or financing of real estate on The Recto law applies also to contracts
installment payments, including residential purporting to be leases of personal property with
condominium apartments. The MACEDA law option to buy, when the lessor has deprived the
applies to sale of real estate on lessee of the possession or enjoyment of the
installments, whether the contract be one of thing (Art. 1485, NCC).
contract to sell (Villanueva, Sales, 432; Rillo
v. CA, 274 SCRA 461). This law covers contracts of sale of personal
property by installments (Act No. 4122). It is also

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 Not Applicable: applied to contracts purporting to be leases of
personal property with option to buy, when the
Sale of industrial lots lessor has deprived the lessee of the possession
Sale of commercial buildings or enjoyment of the thing. (PCI Leasing and
Sale of urban land covered by Urban Land Finance Inc. v. Giraffe‐ X Creative Imaging, Inc.,
Reform and agricultural land under Agrarian G.R. No. 142618, July 12, 2007)
Reform Law
Sale of lands payable in straight terms

77. Interested in acquiring a lot in Cavite, AA asked Moldex, the developer, to reserve the
lot for her as shown by a Reservation Application. AA opted to pay on installment and
began making periodical payments from 1992 to 1996. Moldex also sent AA notices
reminding her to update her account. Upon inquiry, however, AA was shocked to find
out that she already owed Moldex a huge sum of money. Moldex thus suggested to
AA to execute a written authorization for the sale of the subject lot to a new buyer
and a written request for refund so that she can get half of all payments she made.
However, AA never made a written request for refund. Moldex then sent AA a
Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell. Is
AA entitled to a refund?

Yes. AA is entitled to the cash surrender value of the payments on the property, equivalent to
50% of the total payments made. Under the Maceda Law, the defaulting buyer who has paid at
least two years of installments has the right of either to avail of the grace period to pay or, the
cash surrender value of the payments made. In this case, AA had already paid more than two
years of installments. However, AA has also defaulted in her succeeding payments. Hence, she
could thus no longer avail of the option which is to pay her unpaid installments within the grace
period. The only option available is to claim the cash surrender value of the payments made.
(Moldex Realty, Inc. v. Saberon, G.R. No.176289, April 8, 2013, DEL CASTILLO)

78. In 1992, ZZZ as buyer, entered into a Contract to Sell with Bliss Corp. involving a
house and lot. Barely a year after, ZZZ, this time as the seller, entered into another
Contract to Sell with YYY concerning the same property under certain terms and
conditions. Immediately after the execution of the said second contract, YYY took
possession of the property. However, except for the down payment, YYY failed to pay
any of the stipulated subsequent amortization payments. ZZZ filed before the RTC a
Complaint for Rescission of Contract and Damages against YYY. Is rescission of
contract the correct remedy?
No. The contract between the parties is a contract to sell, as such, rescission is not the proper
remedy. In a contract to sell, payment of the price is a positive suspensive condition, failure of
which is not a breach of contract warranting rescission under Article 1191 of the Civil Code but
rather just an event that prevents the supposed seller from being bound to convey title to the
supposed buyer. Also, Article 1191 cannot be applied to sales of real property on installment
since they are governed by the Maceda Law. (Spouses Bonrostro v. Spouses Luna, G.R. No.
172346, July 24, 2013, DEL CASTILLO)

79. What is an Option Contract?

A privilege existing in one person, for which he had paid a consideration, which gives him the
right to buy certain merchandise or property from one person at any time within the agreed
period at a fixed price. In case of breach of promise to buy or to sell, injured party can only seek
damages. (Art. 1479, NCC)

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80. R and L executed a Contract of Lease over a parcel of land for a period of three years.
During the effectivity of the lease, L offered to sell to R the parcel of land. L gave him
two years to decide on the said offer. More than four months after the expiration of
the Contract of Lease, L sold subject parcel of land to her only child and her two
grandsons. The new owners notified R to vacate the premises. R claims that L
violated his right to buy subject property under the principle of right of first refusal
by not giving him notice and the opportunity to buy the property under the same
terms and conditions. Did the offer of Lourdes entitle Roberto to a right of first
refusal?

No. What is involved here is an option contract. An option contract is entirely different and
distinct from a right of first refusal in that in the former, the option granted to the offeree is for
a fixed period and at a determined price. Lacking these two essential requisites, what is involved
is only a right of first refusal.

The offer of L embodies an option contract as it grants R a fixed period of only two years to buy
the subject property. It being an option contract, the unilateral promise to buy or sell is a mere
offer, which is not converted into a contract except at the moment it is accepted. It is undisputed
that R did not accept the terms of L. There is therefore no contract that was perfected between
them. R, thus, does not have any right to demand that the property be sold to him. (Tuazon v.
Del Rosario-Suarez, G.R. No. 168325, December 8, 2010, DEL CASTILLO)

LEASE

81. What are the obligations of a lessor?

(a) To deliver the thing which is the object of the contract in such a condition as to render it fit for
the use intended;
(b) To make on the same during the lease all the necessary repairs in order to keep it suitable for
the use to which it has been devoted, unless there is a stipulation to the contrary;
(c) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire
duration of the contract. (Art. 1654, NCC)

82. What are the obligations of a lessee?

(a) To pay the price of the lease according to the terms stipulated;
(b) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and in
the absence of stipulation, to that which may be inferred from the nature of the thing leased,
according to the custom of the place;
(c) To pay expenses for the deed of lease. (Art. 1657, NCC)

83. State the rule on the assignment of lease to a third person and the subleasing of the
premises to a third person.

The lessee of real property may not assign the lease to a third person without the lessor’s
consent, unless there is a stipulation in the contract of lease to the contrary. (Art. 1649, NCC)
On the other hand, the lessee may sublease the premises to a third person without the consent
of the lessor, unless there is an express prohibition in the contract of lease. (Art. 1650, NCC)

PARTNERSHIP, AGENCY, TRUST

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84. Assuming that there is a mutual contribution of money, property, or industry to a
common fund, is the receipt by a person of a share of the profits of a business
conclusive evidence that he is a partner in the business?

No, it is not conclusive evidence that he is a partner in the business. It is merely prima facie
evidence that he is a partner. This inference, however, cannot be drawn if such profits are
payments for the following:

(a) Debt payable by installments or otherwise;

(b) wages of an employee or rent to a landlord;
(c) annuity to a widow or to a legal representative of a deceased partner;
(d) interest on a loan;
(e) sale of the goodwill of a business or other property by installments or otherwise. (Art. 1769,
NCC)

85. What are the formalities required by law for the organization or constitution of a
partnership?

A partnership may be constituted in any form, except where immovable property or real rights
are contributed to the common fund, in which case a public instrument, to which is attached an
inventory of said property, signed by any of the partners, shall be necessary for validity. (Arts.
1771, 1773, NCC) Furthermore, if it has a capital of P3,000 or more, it must appear in a public
instrument, which shall be recorded in the Office of the Securities and Exchange Commission.
However, this is not necessary for its validity. (Art. 1772, NCC)

If the partnership is limited, it is required that the contracting parties, in addition to the
formalities prescribed for the organization of a general partnership, shall execute a certificate of
limited partnership which must be recorded in the Office of the Securities and Exchange
Commission. (Art. 1843, NCC) These formalities must be complied with, otherwise, the
partnership is not limited but general.

86. Differentiate a Limited Partner from a General Partner

GENERAL LIMITED
Personally liable for partnership obligations Liability extends only to his capital contributions
When the manner of management is not No participation in the management
agreed upon, all General Partners have an
equal right in the management of the
business
To contribute cash, property or industry May only contribute CASH or PROPERTY but not
Industry
Proper party to proceedings by/against Not a proper party to proceedings by/against
partnership partnership

87. Can a limited partner be held liable for partnership obligations?

As a general rule, a limited partner cannot be held personally liable for partnership obligations. (Art.
1843, NCC). However, in the following instances, a limited partner may be held liable up to his
personal property:

 If he participates in the management of the business;

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  If his surname appears in the partnership or firm name except when a) a surname of a
general partner is the same as that of the limited partner and b) such surname was already
in the firm name prior to his entry in the partnership; and
 When he is a general partner and a limited partner at the same time. (Arts. 1846, 1848,
NCC)

88. X, Y and Z are engaged in the buying and `selling of clothing. In order to gain
additional funds for their plan to expand their business venture, Z sold a building
owned by the partnership. Will Z’s act bind the partnership?

No. An act of a partner which is not apparently for the carrying on of the business of the
partnership in the usual way, does not bind the partnership unless authorized by the other
partners. In this case, since X, Y and Z are engaged in the buying and `selling of clothing, the
sale of a building would not bind the partnership as the same is not for the carrying on of the
partnership in the usual way. The same can only bind the partnership when authorized by Y and
Z. (Art. 1818, NCC)

89. What are the instances where a Special Power of Attorney is required?

(a) To make such payments as are not usually considered as acts of administration;
(b) To effect novations which put an end to obligations already in existence at the time the agency
was constituted;
(c) To compromise, to submit questions to arbitration, to renounce the right to appeal from a
judgment, to waive objections to the venue of an action or to abandon a prescription already
acquired;
(d) To waive any obligation gratuitously;
(e) To enter into any contract by which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration;
(f) To make gifts, except customary ones for charity or those made to employees in the business
managed by the agent;
(g) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation
of the things which are under administration;
(h) To lease any real property to another person for more than one year;
(i) To bind the principal to render some service without compensation;
(j) To bind the principal in a contract of partnership;
(k) To obligate the principal as a guarantor or surety;
(l) To create or convey real rights over immovable property;
(m) To accept or repudiate an inheritance;
(n) To ratify or recognize obligations contracted before the agency;
(o) Any other act of strict dominion. (Art. 1878, NCC)

90. Distinguish between a contract of agency and a contract with an independent

contractor.

CONTRACT OF AGENCY CONTRACT WITH AN INDEPENDENT

CONTRACTOR
The principle of representation exists. Representation does not exist.
An agent is more or less under the control An independent contractor is not under the
of his principal. control of the person with whom he contracts.
An agent binds his principal provided that An independent contractor generally cannot bind
he acts within the scope of his authority. the person with whom he contracts by his acts
If a third person is injured through the fault If a third person is injured through the fault or
or negligence of an agent, he can proceed negligence of an independent contractor, he

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 against the principal for damages. cannot proceed against the person with whom
the latter had contracted for damages.
A contract of agency is a preparatory This is a principal contract.
contract.
(Jurado, Civil Law Reviewer, 21st ed)

91. AA is the owner of a parcel of land in Cagayan de Oro City. CC borrowed the title on
the pretext that she was going to show it to an interested buyer. CC then obtained a
loan in the amount of P30,000.00 from ABC bank. As security for the loan, CC
mortgaged AA’s house and lot to ABC bank using a Special Power of Attorney (SPA)
allegedly executed by AA in favor of CC. The Real Estate Mortgage (REM) was signed
by CC in her own name. Upon failure to pay the loan, AA’s house and lot were
foreclosed. AA filed with the RTC a case for Annulment of Mortgage, Foreclosure, and
SPA against CC. Will the suit prosper?

Yes. The REM was entered into by CC in her own personal capacity. In this case, the authorized
agent failed to indicate in the mortgage that she was acting for and on behalf of her principal.
The Real Estate Mortgage, was signed by CC in her own name and in her own personal capacity.
There is nothing in the document to show that she was acting or signing as an agent of AA.
Thus, consistent with the law on agency and established jurisprudence, AA cannot be bound by
the acts of CC. (Bucton v. Rural Bank of El Salvador, Inc.G.R. No. 179625, February 24, 2014,
DEL CASTILLO)

92. X and Y entered into a contract of agency. X as the principal designated Y to sell his
two-hectare lot in Kalibo, Aklan. Z, interested on buying the said lot, contacted Y and
negotiations begun. During said negotiations, X died. Y, having no knowledge of his
principal’s death, entered into a contract of sale with X’s land in Kalibo as the object.
The sale was perfected, and the land was transferred in the name of Z. The heirs of X
contested the sale made by Y, stating that the sale was void because the contract of
agency between X and Y has already extinguished upon the death of Y. What is the
status of the sale?

The sale is valid. Anything done by the agent, without knowledge of the death of the principal or
of any other cause, which extinguishes the agency, is valid and shall be fully effective with
respect to third persons who may have contracted with him in good faith. (Art. 1931, NCC)

CREDIT TRANSACTIONS

93. What are the characteristics of a contract of loan?

(1) It is a real contract because the delivery of the thing loaned is necessary for the perfection of
the contract. (Art. 1934; see also Art. 1316)
(2) It is a unilateral contract because once the subject matter has been delivered, it creates
obligation on the part of only one of the parties, i.e., the borrower.

94. Distinguish guaranty from suretyship.

Guaranty is a contract by virtue of which a person called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.
Suretyship, on the other hand, is a contract by virtue of which a person binds himself solidarily
with the principal debtor to fulfill the obligation. (Art. 2047, NCC)

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 95. Can a guaranty be given as security for future debts or obligations?

Yes, a guaranty may also be given as security for future debts, the amount of which is not yet
known. However, there can be no claim against the guarantor until the debt is liquidated. (Art.
2053, NCC)

96. What are the requisites that must be present in order for an interest to be due and
demandable?

No interest must be due unless (1) there is an express stipulation for the payment of interest and
(2) the agreement to pay interest is reduced in writing. (De la Paz v. L & J Development
Company, Inc., G.R. No. 183360, September 8, 2014, DEL CASTILLO)

97. A Corp. executed a promissory note and a Chattel Mortgage over several motorized
sewing machines and other allied equipment to secure their obligation to B Corp. The
same properties have been pledged to C. However, A Corp.’s debt to C remained
unpaid. C then filed with the RTC a complaint with prayer for the issuance of ex-parte
writs of preliminary attachment and replevin against A Corp. B Corp., however,
contended that the pledge of the subject properties, it being unnotarized, has no
binding effect on B Corp. Is the argument of B Corp. correct?

Yes, B Corp. is correct. Under Article 2096 of the Civil Code, a pledge shall not take effect against
third persons if a description of the thing pledged and the date of the pledge do not appear in a
public instrument. The pledge in this case not having been notarized, the same could not take
effect against B Corp. (Union Bank of the Philippines v. Juniat, G.R. No. 171569, August 1, 2011,
DEL CASTILLO)

98. When is a depositary liable for the loss of thing through fortuitous event?

The depositary is liable for the loss of the thing through a fortuitous event:

a. If it is so stipulated;
b. If he uses the thing without the depositor’s permission;
c. If he delays its return;
d. If he allows others to use it, even though he himself may have been authorized to use the
same. (Art. 1979, NCC)

99. On March 3, 2003, AA, an ABC Bank depositor, accompanied XX, her Taiwanese client
in opening with ABC Bank’s Binondo Branch a Joint Dollar Account. On July, 2003,
however, ABC Bank issued a "Hold Out" order against AA’s accounts by reason of
unauthorized and fraudulent withdrawal of US$75,000.00 from XX’s dollar account.
On September, 2003, the bank, filed before the Office of the Prosecutor of Manila a
criminal case for Estafa against AA which was eventually dismissed.

By reason of the hold out order, AA filed a case for Breach of Obligation and Contract
with Damages against ABC Bank. AA alleged that they attempted several times to
withdraw their deposits but were unable to because the bank had placed their
accounts under "Hold Out" status. Will the case filed by AA prosper? Explain.

Yes. The case will prosper. The "Hold Out" clause applies only if there is a valid and existing
obligation arising from any of the sources of obligation enumerated in Article 1157 of the Civil
Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this case, although a
criminal case was filed by ABC Bank against respondent AA, this is not enough reason for the

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 bank to issue a "Hold Out" order as the case is still pending and no final judgment of conviction
has been rendered against AA. In fact, it is significant to note that at the time the bank issued
the "Hold Out" order, the criminal complaint had not yet been filed. Thus, considering that AA is
not liable under any of the five sources of obligation, there was no legal basis for petitioner to
issue the "Hold Out" order. Bank deposits, which are in the nature of a simple loan or
mutuum, must be paid upon demand by the depositor. (Metropolitan Bank and Trust Company v.
Rosales, G.R. No. 183204, January 13, 2014, DEL CASTILLO)

WILLS AND SUCCESSION

100. A, a citizen of Argentina and domiciled in the Philippines, died testate. He gave his
property located in Australia to his illegitimate son, B. During probate, his legitimate
son, also a citizen of Argentina opposed the probate. The law of Argentina prohibits an
illegitimate child to succeed. Decide.

B will not succeed because the national law of the decedent prohibits an illegitimate child from
succeeding. Art. 16 of the Civil Code provides that intestate and testamentary successions, both
with respect to the ORDER of SUCCESSION, the AMOUNT OF SUCCESSIONAL RIGHTS, and
INSTRINSIC VALIDITY of testamentary provisions, shall be regulated by the national law of the
decedent, regardless of whatever the nature of the property and wherever the property may be
found.

101. An Australian living in the Philippines acquired shares of stock worth P10 million in
food manufacturing companies. He died in Manila, leaving a legal wife and a child in
Australia and a live-in partner with whom he had two children in Manila. He also left a
will done according to Philippine laws leaving all his properties to his live-in partner
and their children. What law will govern the validity of the disposition in the will?

The law of Australia. Intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of testamentary
provisions, shall be regulated by the national law of the person whose succession is under
consideration. (Article 16, NCC)

102. P obtained a loan from F and to secure the loan, P executed a chattel mortgage on his
Isuzu jeep in favor of F. Upon F’s death, F’s heirs sought to collect from P but to no avail.
F’s heir authorized C to act as their attorney-in-fact through a Special Power of
Attorney. P questioned the authority of C to represent her co-heirs because
F’s estate had a personality of its own. May F’s heirs through C and on behalf of
the estate of the deceased sue P for collection of the proceeds of the loan?

Yes. Unpaid loans are considered assets of the estate of the creditor-decedent. While it is true that
F’s estate has a different juridical personality than that of the heirs, the latter certainly have an
interest in the preservation of the estate and the recovery of its properties for at the moment of F’s
death, the heirs start to own the property, subject to the decedent’s liabilities. This is consistent with
Article 777 of the Civil Code which provides that “the rights to the succession are transmitted from
the moment of the death of the decedent. Nonetheless, the proceeds of the loan should be released
to F’s heirs only upon settlement of her estate because to allow the release of the funds directly to
the heirs would amount to distribution of the estate, which distribution and delivery should be made
only after, not before, the payment of all debts, charges, expenses, and taxes of the estate have
been paid. (Pasco vs De Guzman, G.R. No. 165554; July 26, 2010 [Del Castillo])

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103. What are the requisites of a valid notarial will?

a. It must be in writing;
b. It must be subscribed at the end thereof by the testator himself or by the testator’s name written
by some other person in his presence, and by his express direction;
c. It must be attested and subscribed by three or more credible witnesses in the presence of the
testator and of one another;
d. It must be signed by the testator or the person requested by him to write his name and the
instrumental witnesses of the will in each and every page thereof, except the last, on the left
margin;
e. The Attestation shall state the number of pages used upon which the will is written, and the fact
that the testator signed the will and every page thereof, or caused some other person to write
his name, under his express direction, in the presence of the instrumental witnesses, and that
the latter witnessed and signed the will and all the pages thereof in the presence of the testator
and one another;
f. All the pages shall be numbered correlatively in letters placed on the upper part of each page;
and
g. It must be executed in the language known to the testator (Art. 805, NCC).

104. Enrique died, leaving a last will and testament. His son, Richard, filed a petition for
probate of his father’s Last Will and Testament. The RTC disallowed the probate of the
will for failure to indicate in the attestation clause the number of pages used upon
which the will is written. Is the RTC correct?

Yes. Article 805 of the Civil Code provides that the attestation shall state the number of pages used
upon which the will is written. The purpose of the law is to safeguard against possible interpolation
or omission of one or some of its pages and prevent any increase or decrease in the page. (Lopez
vs. Lopez, G. R. No. 189984, November 12, 2012).

105. M, a widower without any children and already in the twilight years of his life,
executed a last will and testament before three attesting witnesses. The attestation
clause recites that the testator signed the will and all its pages in the presence of the
three attesting witnesses and states as well the number of pages but the same does not
expressly state therein the circumstance that said witnesses subscribed their respective
signatures to the will in the presence of the testator and of each other. May the will be
probated?

No. Article 805 of the NCC provides that the attestation shall state the number of pages used upon
which the will is written, and the fact that the testator signed the will and every page thereof in the
presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the
pages thereof in the presence of the testator and of one another. Where the attestation clause
totally omits the fact that the attesting witnesses signed each and every page of the will in the
presence of the testator and of each other, the defect is not only in the form or the language of the
attestation clause but the total absence of a specific element required by Article 805 to be
specifically stated in the attestation clause of a will. (Caneda vs. CA, G.R. No. 103554, May 28,
1993)

106. During the proceedings for the probate of the will of A, it was proved that while the
testator, A, and two (2) of the instrumental witnesses, B and C, were signing the will
and all of the pages thereof in the sala of A’s house, the third witness, D, was resting in
the an adjoining room which was separated from the sala by a curtain. It is now
contended by the oppositor of the will that since A, B and C did not sign the will and all

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 of the pages thereof in the presence of D, the will can not be admitted to probate. If you
are the judge, how will you decide the case?

A’s will cannot be admitted to probate. As held by the Supreme Court in several cases, the true test
of presence of the testator and the witnesses in the execution of the will is not whether they
actually saw each other sign, but whether they might have seen each other sign, had they chosen to
do so, considering their mental and physical condition and position with relation to each other at the
moment of inscription of each signature. (Jaboneta vs Gustilo, 5 Phil. 541; Nera vs Rimando, 18 Phil
450; Neyra vs Neyra, 76 Phil. 296) Here, it is clear that the curtain separating the adjoining room
from the sala impeded the line of vision of D; consequently, it would not have been possible for D to
see the actual signing of the will by the others had he chosen to do so. Hence, A, B and C did not
sign the will and all of the pages thereof in the presence of D. There is, therefore, non-compliance
with a mandatory requirement of the law. (Jurado, Civil Law Reviewer, 2009)

107. May a blind person make a notarial will?

Yes, provided that he is of legal age and of sound and disposing mind, the will shall be read to him
twice; once, by one of the subscribing witnesses, and again, by the notary public before whom the
will is acknowledged. (Art. 797, 798, 808, NCC)

108. What are the requirements of a valid will if the testator is deaf or mute?

(a) If the testator is able to read, he must personally read the will, or
(b) If unable to read, he must designate two persons to read it and communicate to him, in some
particular manner, the contents thereof. (Art. 807, NCC)

109. A and B, both Filipinos, executed a joint will in X country, where joint wills are
allowed. Is the said will enforceable in the Philippines?

No. Joint wills executed by Filipinos in a foreign country shall not be valid in the Philippines, even
though authorized by the laws of the country where they may have been executed. (Art. 819, NCC)

110. What is a holographic will? What are the requirements for probate?

It is a written will which must be entirely written, dated and signed by the hand of the testator
himself, without the necessity of any witness. (Art. 810, NCC) In case of probate, at least one
witness who knows the handwriting and signature of the testator must explicitly declare that the
will and the signature are the handwriting of the testator. If the will is contested, at least 3 of such
witnesses shall be required. (Art. 811, NCC)

111. If a will is executed by a testator who is a Filipino citizen, what law will govern if the
will is executed in the Philippines? What law will govern if the will is executed in
another country?

If the testator who is a Filipino citizen executes his will in the Philippines, Philippine law will govern
the formalities. If said Filipino testator executes his will in another country, the law of the country
where he maybe or Philippine law may govern the formalities. (Article 815, NCC)

112. If a will is executed by a foreigner, for instance, a Japanese, residing in the

Philippines,
what law will govern if the will is executed in the Philippines? And what law will govern
if the will is executed in Japan, or some other country, for instance, the U.S.A.?

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 If the testator is a foreigner and executes his will in a foreign country, 1) the law of his place of
residence or 2) the law of the country of which he is a citizen or 3) the law of the place of
execution, or 4) Philippine law will govern the formalities (Articles 816, 817, NCC)

113. By virtue of a Codicil appended to his will, Theodore devised to Divino a tract of sugar
land, with the obligation on the part of Divino or his heirs to deliver to Betina a specified
volume of sugar per harvest during Betina’s lifetime. It is also stated in the Codicil that
in the event the obligation is not fulfilled, Betina should immediately seize the property
from Divino or latter’s heirs and turn it over to Theodore’s compulsory heirs. Divino
failed to fulfill the obligation under the Codicil. Betina brings suit against Divino for the
reversion of the tract of land.

a) Distinguish between modal institution and substitution of heirs.

A modal institution is the institution of an heir made for a certain purpose or cause (Arts. 871 and
882, NCC). Substitution is the appointment of another heir so that he may enter into the inheritance
in default of the heir originality instituted. (Art. 857, NCC)

b) Distinguish between simple and fideicommissary substitution of heirs.

SIMPLE SUBSTITUTION OF HEIRS FIDEICOMMISSARY SUBSTITUTION

The testator designates one or more The testator institutes a first heir and charges him
persons to substitute the heirs instituted in to preserve and transmit the whole or part of the
case such heir or heirs should die before inheritance to a second heir.
him, or should not wish or should be
incapacitated to accept the inheritance.
Only one heir inherits. Both the first and second heirs inherit.
(Art. 859 and 869, NCC)

c) Does Betina have a cause of action against Divino? Explain.

Betina has a cause of action against Divino. This is a case of a testamentary disposition subject to a
mode and the will itself provides for the consequence if the mode is not complied with. To enforce
the mode, the will itself gives Betina the right to compel the return of the property to the heirs of
Theodore. (Rabadilla v. Conscoluella, 334 SCRA 522, 2000)

114. Distinguish Preterition from Disinheritance. (Art. 854 and 918, NCC)

PRETERITION DISINHERITANCE
Deprivation of a compulsory heir of his Deprivation of a compulsory heir of his legitimate
legitimate is tacit. is express.
May be voluntary but the law presumes that Always voluntary
it is involuntary
Law presumes that there has been merely Done with a legal cause
an oversight or mistake on the part of the
testator
Omitted heir gets not only his legitimate but If disinheritance is not lawful, compulsory heir is
also his share in the free portion not merely restored to his legitime.
disposed of by way of legacies/devisees

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115. Don died after executing a Last Will and Testament leaving his estate valued at P12
Million to his common-law wife Roshelle. He was survived by his brother Ronnie and his
half-sister Michelle.

Was Don’s testamentary disposition of his estate in accordance with the law on
succession?

Yes, the testamentary disposition is in accordance with the law on succession. Don was not survived
by any compulsory heir. Hence, he could will his entire estate to anybody of his choice including a
total stranger. His institution of his common-law wide to his entire estate is valid. The disposition is
not in consideration of an adulterous relationship because both of them are not married to anyone at
the time of his death. Relationship between two unmarried persons is not adulterous. The law does
not prohibit testamentary disposition in favor of a common law spouse. What the law prohibits are
donations in favor of common law spouse under the Family Code. Such provision does not include a
disposition mortis causa such as testamentary institution. (UPLC Suggested Answer, BAR 2006, X (1))

116. “B” and “J”, both male and single, lived together as common law spouses and agreed
to raise a son, “B’s” living brother as their child without legally adopting him. “B”
worked while J took care of their home and the boy. In their 20 years of cohabitation
they were able to acquire real estate assets registered in their names as co-owners.
Unfortunately, “B” died of cardiac arrest, leaving no will. B was survived by his
biological siblings, “J”, and the boy. What are the successional rights of the boy raised
as their son and “J”?

Neither of the two will inherit from B. J cannot inherit because the law does not recognize the right
of a stranger to inherit from the decedent in the absence of a will. Their cohabitation will not vest
Joe with the right to inherit from B. The child will likewise not inherit from B because of the lack of
formal adoption of the child. A mere ward or “ampon” has no right to inherit from the adopting
parents. (Manuel v. Ferrer, 247 SCRA 476)

117. Can an adopted child inherit from his adoptive parent?

Yes. In cases of legal and intestate succession, the adopter(s) and the adoptee shall have reciprocal
rights of succession without distinction from legitimate filiation. However, if the adoptee and his/her
biological parent(s) had left a will, the law on testamentary succession shall govern. (Article 18,
Domestic Adoption Act)

118. The testator “T” is survived by his widow, “W,” his legitimate children, “A” and “B,”
and his illegitimate children, “C” and “D.” The net value of his estate is P40,000. What is
the legitime of each survivor?

According to Art. 888, the legitime of legitimate children, “A” and “B” is ½ of the estate. They are,
therefore, entitled to P10,000 each.

The surviving spouse. “W” under Art. 897 of the NCC is entitled to a legitime equal to legitime of
either “A” or “B” which must be taken from the free portion. Hence, her legitime is also P10,000.

Under the first paragraph of Art. 895, the legitime of each acknowledged natural children shall
consist ½ of the legitime of each of the legitimate children or descendants. Under Art. 176, the
second sentence of the Family Code, the legitime of each illegitimate child shall consist of ½ of the
legitime of the legitimate child. Hence, the illegitimate children “C” and “D” shall each receive
P5,000 as their legitime. Nothing remains for free disposal. (Jurado, Civil Law Reviewer, 2009)

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119. The testator has three (3) children “A,” “B,” and “C,” a wife ”W,” a father “F,” and an
acknowledged natural child “N”. “A” is a handicapped child, and the testator wants to
leave to him as much of the estate as he can legally do under the law. State the specific
aliquot parts of the estate that the testator can leave to his son “A” as well as to his
other aforementioned relatives. Assume a net estate of P1,200,000 and that all of the
above-named relatives survived the testator

Under the law on legitime, the survivors shall be entitled on the following legitime:

a. “A, “B” and C – ½ of the estate which they shall divide in equal shares. Since the net value of
the estate is P1,200,000.00, each of them shall, therefore, be entitled to P200,000.00

b. “W” – the same as each of the legitimate children, or P200,000.

c. “F” – none. “F” cannot participate in the succession because he is excluded by the legitimate
children of the testator

d. “N” – ½ of the legitime of each legitimate child, or P100,000.00

Thus, the disposable free portion is P200,000.00. If the testator so desires, he can leave this
disposable portion to his son “A.”

120. H died leaving a last will and testament wherein it is stated that he was legally
married to W by whom he had two legitimate children A and B. H devised to his said
forced heirs the entire estate except the free portion which he gave to X who was living
with him at the time of his death. In said will he explained that he had been estranged
from his wife W for more than 20 years and he has been living with X as man and wife
since his separation from his legitimate family. In the probate proceedings, X asked for
the issuance of letters testamentary in accordance with the will wherein she is named
sole executor. This was opposed by W and her children. Should the will be admitted in
said probate proceedings? Was it proper for the trial court to consider the intrinsic
validity of the provisions of said will? Explain your answers

Yes, the will may be probated if executed according to the formalities prescribed by law. The
institution giving X the free portion is not valid, because the prohibitions under Art. 739 of the Civil
Code on donations also apply to testamentary dispositions (Article 1028, Civil Code). Among
donations which are considered void are those made between persons who were guilty of adultery
or concubinage at the time of the donation. As a general rule, the will should be admitted in probate
proceedings if all the necessary requirements for its extrinsic validity have been met and the court
should not consider the intrinsic validity of the provisions of said will. However, the exception arises
when the will in effect contains only one testamentary disposition. In effect, the only testamentary
disposition under the will is the giving of the free portion to X, since legitimes are provided by law.
Hence, the trial court may consider the intrinsic validity of the provisions of said will. (Nuguid v.
Nuguid, et al. No. L23445, June 23, 1966, 17 SCRA; Nepomuceno v. CA, L-62952)

121. What are the requisites of Reserva Troncal?

(a) Property previously acquired by gratuitous title (e.g. donation or succession) by the descendant
(praepositus) from another ascendant or from a brother or sister (origin);
(b) Descendant-praepositus should have died without an issue (i.e. without children);
(c) Property should have been acquired by operation of law (intestate or compulsory succession) by
an ascendant (reservista) from the descendant-praepositus; and

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 (d) There are living relatives within the third degree counted from the descendant-praepositus and
belonging to the same line from where the property originally came (reservatarios).
(e) In order that the reserve will exist, all the foregoing persons should be legitimately related.
(Chua v. CFI of Negros Occidental, Branch V, 78 SCRA 412, 1977)

122. Esteban and Martha had four (4) children: Rolando, Jun, Mark, and Hector. Rolando
had a daughter, Edith, while Mark had a son, Philip. After the death of Esteban and
Martha, their three (3) parcels of land were adjudicated to Jun. After the death of Jun,
the properties passed to his surviving spouse Anita, and son Cesar. When Anita died, her
share went to son Cesar. Ten (10) years after, Cesar died intestate, without issue,
Peachy, Anita’s sister adjudicated to herself the properties as the only surviving heir of
Anita and Cesar. Edith and Philip would like to recover the properties claiming that they
should have been reserved by Peachy in their behalf and must now revert back to them.
Is the contention of Edith and Philip valid?

No, their contention is not valid as the property is not subject to reserva troncal. Under Article 891 of
the Civil Code, the ascendant who inherits from his descendant any property which the latter may
have acquired by gratuitous title from another ascendant, or a brother or sister is obliged to reserve
such property as he may have acquired by operation of law for the benefit of relatives who are within
the third degree and who belong to the line from which said property came. There is no reserva
troncal here because Anita is not an ascendant or a brother or sister of Jun. Jun cannot qualify as a
prepositus, because the property which he inherited from his ascendant was not inherited by another
ascendant by operation of law. Moreover, Art. 891 of the Civil Code provides that the person obliged
to reserve the property should be an ascendant. Peachy is not Cesar’s ascendant but a mere
collateral relative. (UPLC Suggested Answer, BAR 2014, XIII)

123. What is the Iron Curtain or Barrier Rule?

An illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of
his father or mother; nor shall such children or relatives inherit in the same manner from the
illegitimate child. (Art. 992, NCC)

124. X was married to Y, and their marriage produced a son, N. In turn, N married F, but
their union produced no offspring. N had an extramarital affair with S, who gave birth to
A. X died leaving properties to N and his wife. N died subsequently leaving the
properties to his illegitimate son. Y died shortly thereafter with a will. A claims
entitlement to the properties as the heir of N and by virtue of the will executed by Y.
Does A have a right to inherit?

No. As provided under Art. 992 of the Civil Code (Iron Curtain Rule), an illegitimate child has no
right to inherit ab intestato from the legitimate children and relatives of his father or mother; nor
shall such children or relatives inherit in the same manner from the illegitimate child. The right of
representation is not available to illegitimate descendants of legitimate children in the inheritance of
a legitimate grandparent. A could not inherit from the estate of Y by virtue of the latter’s last will
and testament. (Arado vs. Alcoran, G.R. No. 163362, July 08, 2015)

125. Mr. Palma, widower, has three daughters D, D-l and D-2. He executes a Will
disinheriting D because she married a man he did not like, and instituting daughters D-1
and D-2 as his heirs to his entire estate of P 1,000,000.00, Upon Mr. Palma's death, how
should his estate be divided? Explain.

This is a case of ineffective disinheritance because marrying a man that the father did not approve
of is not a ground for disinheriting D. (Article 919, NCC) Therefore, the institution of D-l and D-2

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 shall be annulled insofar as it prejudices the legitime of D, and the institution of D-l and D-2 shall
only apply on the free portion in the amount of P500,000.00. Therefore, D, D-l and D-2 will get
their legitimes of P500.000.00 divided into three equal parts and D-l and D-2 will get a reduced
testamentary disposition of P250,000.00 each. Hence, the shares will be: D P166,666.66; D-l
P166,666.66 + P250.000.00; and D-2 P166,666.66 + P250,000.00. (Article 918, NCC)

126. When does the right of representation take place?

In testamentary succession:

a. In case a compulsory heir in the direct descending line dies before the testator survived by his
children or descendants (Art. 856, NCC)
b. In case a compulsory heir in the direct descending line is incapacitated to succeed from the
testator and he has children or descendants (Art. 856, 1035, NCC)
c. In case a compulsory heir in the direct descending line is disinherited and he has children or
descendants. (Art. 923, NCC)

In intestate succession:

a. In case a legal heir in the direct descending line dies before the decedent survived by his children
or descendant (Arts. 981, 982, NCC), or in the absence of other heirs which can exclude them
from the succession, a brother or sister dies before the decedent survived by his or her own
children. (Arts. 972, 975 NCC)

b. In case a legal heir in the direct descending line is incapacitated to succeed from the decedent
and he has children or descendants (Art. 1035), or in the absence of other heirs who can exclude
them from the succession, a brother or sister is incapacitated to succeed from the decedent and
he or she has children. (Arts. 972, 975, 1035, NCC) (Jurado, Civil Law Reviewer, 2009)

127. Tessie dies survived by her husband Mario, and two nieces, Michelle and Jorelle, who
are the legitimate children of an elder sister who had predeceased her. The only
property she left behind was a house and lot worth two million pesos, which Tessie and
her husband had acquired with the use of Mario’s savings from his income as a doctor.
How much of the property or its value, if any, may Michelle and Jorelle claim as
hereditary shares?

Article 1001 of the Civil Code provides, “Should brothers and sisters or their children survive with the
widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and
sisters or their children to the other half.”

Tessie’s gross estate consists of a house and lot acquired during her marriage, making it part of the
community property. Thus, one-half of the said property would have to be set aside as Mario’s
conjugal share from the community property. The other half, amounting to one million pesos, is her
conjugal share (net estate), and should be distributed to her intestate heirs. Applying the provision
of the law, Michelle and Jorelle, Tessie’s nieces, are entitled to one-half of her conjugal share worth
one million pesos, or P500,000 pesos, while the other one-half amounting to P500,000 will go to
Mario, Tessie’s surviving spouse. Michelle and Jorelle are then entitled to P250,000 each as their
hereditary inheritance. (UPLC Suggested Answer, BAR 1998, XI)

128. Ernesto donated in a public instrument a parcel of land to Demetrio, who accepted it
in the same document. It is there declared that the donation shall take effect
immediately, with the donee having the right to take possession of the land and receive
its fruits but not to dispose of the land while Ernesto is alive as well as for ten years

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 following his death. Moreover, Ernesto also reserved in the same deed his right to sell
the property should he decide to dispose of it at any time - a right which he did not
exercise at all. After his death, Ernesto's heirs seasonably brought an action to recover
the property, alleging that the donation was void as it did not comply with the
formalities of a will. Will the suit prosper?

Yes, the suit will prosper as the donation did not comply with the formalities of a will. In this
instance, the fact that the donor did not intend to transfer ownership or possession of the donated
property to the donee until the donor's death, would result in a donation mortis causa and in this
kind of disposition, the formalities of a will should be complied with, otherwise, the donation is
void. Donation mortis causa embodied only in a public instrument without the formalities of a will
could not have transferred ownership of disputed property to another.

One of the essential distinctions between a donation inter vivos and a donation mortis causa is that
while the former is the clauses or conditions mentioned in the deed of donation, except one, are
consistent with the rule of irrevocability and would have sustained the view that the donation is
inter vivos and therefore valid. The lone exception is the clause which reserves the donor's right to
sell the property at any time before his death. Such a reservation has been held to render the
donation revocable and, therefore, becomes a donation mortis causa (Puig vs. Penaflorida, 15
SCRA 276, at p. 286). That the right was not exercised is immaterial; its reservation was an implied
recognition of the donor's power to nullify the donation anytime he wished to do so. Consequently,
it should have been embodied in a last will and testament. The suit for nullity will thus prosper.

129. On July 27, 1997, Pedro mailed in Manila a letter to his brother, Jose, a resident of
Iloilo City, offering to donate a vintage sports car which the latter had long been
wanting to buy from the former. On August 5, 1997, Jose called Pedro by cellular phone
to thank him for his generosity and to inform him that he was sending by mail his letter
of acceptance. Pedro never received that letter because it was never mailed. On August
14, 1997, Pedro received a telegram from Iloilo informing him that Jose had been killed
in a road accident the day before (August 13, 1997)

a) Is there a perfected donation?

None. There is no perfected donation. Under Article 748 of the Civil Code, the donation of a
movable may be made orally or in writing. If the value of the personal property donated exceeds
five thousand pesos, the donation and the acceptance shall be made in writing. Assuming that
the value of the thing donated, a vintage sports car, exceeds P5,000.00 then the donation and
the acceptance must be in writing. In this instance, the acceptance of Jose was not in writing,
therefore, the donation is void. Upon the other hand, assuming that the sports car costs less than
P5,000.00 Code which requires the donation and the acceptance then the donation maybe oral,
but still, the simultaneous delivery of the car is needed and there being none, the donation was
never perfected.

b) Will your answer be the same if Jose did mail his acceptance letter but it was
received by Pedro in Manila days after Jose's death?

Yes, the answer is the same. If Jose's mail containing his acceptance of the donation was
received by Pedro after the former's death, then the donation is still void because under Article
734 of the Civil Code, the donation is perfected the moment the donor knows of the acceptance
by the donee. The death of Jose before Pedro could receive the acceptance indicates that the
donation was never perfected. Under Article 746 acceptance must be made during the lifetime of
both the donor and the donee.

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130. Can a person related to the decedent by affinity effect a repudiation of the co-
ownership?

No. One who is merely related by affinity to the decedent does not inherit from the latter and
cannot become a co-owner of the decedent’s property. Consequently, he cannot effect a repudiation
of the co-ownership of the estate that was formed among the decedent’s heirs. Under the Family
Code, family relations, which is the primary basis for succession, exclude relations by affinity. (Ining
vs. Vega, G.R. No. 174727 August 12, 2013, DEL CASTILLO)

TORTS

131. Popoy and Basha’s wedding was set on April 30, and Popoy’s family will be coming
from New Zealand. With this, Popoy and Basha decided to renovate their house at
Batangas to accommodate all Popoy’s relatives. On January 1, Popoy and Basha
contracted an architect/engineer, Carlo, for the construction of the house for
Php500,000.00. The contract stated that the house will be completed as agreed on
March 30, a month before the wedding. Popoy and Basha fully paid the contract price
with Php50,000.00 allowance. Unfortunately, the construction has not been finished as
of the wedding date, forcing Popoy’s relatives to stay in a 3-star hotel.

Popoy and Basha filed a complaint alleging that Carlo started the project without
securing the necessary permits from the city engineer’s office, which mainly caused the
delay, with prayer for the return of Php50,000.00 over payment, Php100,000.00 for
repairing, and Php200,000.00 to complete the project. Carlo, in turn, countered that
over payment was for an additional work, and that the delay is due to circumstances
beyond control of the petitioner.

Is Popoy and Basha entitled to the actual damages prayed for?

No. Article 2199 of the New Civil Code provides that “one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved.” In Ong v. CA, the Court held
that “actual damages are such compensation or damages for an injury that will put the injured party
in the position in which he had been before he was injured. They pertain to such injuries or losses
that are actually sustained and susceptible of measurement.” To be recoverable, actual damages
must not only be capable of proof, but must actually be proved with reasonable degree of certainty.
Before actual damages can be awarded, there must be competent proof of the actual amount of
loss, and credence can be given only to claims which are duly supported by receipts. (Engr.
Apolinario Dueñas v. Alice Guce-Africa, GR No. 165679, October 5,2009 – DEL CASTILLO)

132. Explain the principle of Emergency Rule.

In Gan v. CA, the Supreme Court defined the Principle of Emergency Rule as “that when one who
suddenly finds himself in a place of danger, and is required to act without time to consider the best
means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to
adopt what subsequently and upon reflections may appear to have been a better method, unless
the emergency in which he finds himself is brought about by his own negligence.” ( Orix Metro
Leasing and Finance Corporation v. Mangalinao y Dizon, GR No. 174089, 174266, January 25, 2012
– DEL CASTILLO)

133. Joan, seller, and Angela, buyer, entered into a Conditional Deed of Sale for a parcel of
land for Php1,000,000.00. After three years and despite the payment of Php500,000.00,
Joan was not able to transfer the said land. Hence, Angela demanded the return of the

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 amount paid. In reply, Joan promised to return the same within 120 days. Angela
agreed but imposed an interest of 12% annually. A still failed despite demands.

Angela filed a complaint with the RTC against Joan. In her answer, Joan averred that
she is willing to pay the principal amount but without the interest as it was not agreed
upon the Conditional Deed of Sale, which provides only for the return of the down
payment in case of breach. RTC ruled that Angela is entitled to the interest but only at
the rate of 6% per annum.

Is the imposition of 6% interest, even not stipulated in the Conditional Dees of Sale,
proper?

Yes. The interest may be imposed even in the absence of stipulation in the contract. Article 2210 of
the Civil Code expressly provides that “interest may, in the discretion of the court, be allowed upon
damages awarded for breach of contract.” In this case, there is no question that Joan is legally
obligated to return the Php1,000,000.00 because of her failure to fulfill the obligation under the
Conditional Deed of Sale, despite demand. Joan enjoyed the use of the money from the time it was
given to her until now. Thus, Joan is already in default of her obligation from the date of demand.
(Hermojina Estores v. Spouses Arturo and Laura Supangan, GR No. 175139, April 18, 2012, DEL
CASTILLO)

134. Karmelle and her friend Janine were having a conversation when Janine’s friend,
Finela, approached her to ask if she could have Finela’s check cleared and encashed for
a service fee of 2.5%. The check is under the account of another person and drawn by a
certain John against Bank of America Alhambra Branch in USA, payable to cash. Because
Janine does not have a dollar account in which to deposit the check, she asked Karmelle
if she could accommodate Finela’s request since she has a dollar savings account.
Karmelle agreed. She deposited the check and was informed of the 15-day clearing
period. Five days later, the proceeds of the subject check had been temporarily credited
to PNB’s account. After informing Karmelle that the check had already been cleared and
that the amount had been credited to her account, she personally withdrew the
proceeds and gave them to Finela.

PNB learned about the bounced check when it received a debit advice and a letter from
Philadelphia National Bank demanding the return of the money. Karmelle contacted
Finela to get the money back but the latter told her that all the money had already been
given to several people. Later on, PNB demanded the payment of the amount withdrawn
by Karmelle, while the latter, as her main defense, claimed that the proximate cause of
PNB’s injury was its own negligence of paying the amount without waiting for the 15-
day clearing period

Is the act of PNB, in releasing the proceeds of the check prior to the lapse of the 15-day
clearing period the proximate cause of the loss?

Yes. The payment of the amounts of checks without previously clearing them with the drawee
bank, especially so where the drawee bank is a foreign bank and the amounts involved were large,
is contrary to normal or ordinary banking practice. Clearly, PNB’s disregard of its preventive and
protective measure against the possibility of being victimized by bad checks had brought upon itself
the injury of losing a significant amount of money. PNB miserably failed to do its duty of exercising
extraordinary diligence and reasonable business prudence. The disregard of its own banking policy
amounts to gross negligence, which the law defines as “negligence characterized by the want of
even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently
but willfully and intentionally with a conscious indifference to consequences in so far as other

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 persons may be affected.” (Philippine National Bank v. Spouses Cheah, GR No. 170865, April 25,
2002 – DEL CASTILLO)

Is Karmelle guilty of contributory negligence?

Yes. Karmelle is guilty of contributory negligence and is bound to share the loss with the bank.
Karmelle failed to observe caution in giving her full trust in accommodating a complete stranger
and this led her to be swindled. The fact that the check was cleared after only eight banking days
from the time it was deposited or contrary to what Janine told Karmelle that clearing takes 15 days
should have already put Karmelle on guard. (Philippine National Bank v. Spouses Cheah, GR No.
170865, April 25, 2002 – DEL CASTILLO)

135. Explain the doctrine of res ipsa loquitur and provide its requisites.

Under the doctrine of res ipsa loquitur, where the thing that caused the injury complained of is shown
to be under the management of the defendant or his servants; and the accident, in the ordinary
course of things, would not happen if those who had management or control used proper care.

The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as follows: 1)
the accident is of a kind which does not ordinarily occur unless someone is negligent; 2) the cause of
the injury was under the exclusive control of the person in charge and 3) the injury suffered must not
have been due to any voluntary action or contribution on the part of the person injured.

136. Joshua, registered owner of a motor vehicle, allowed Julia to use his car and drive it
to school. On its way to school, Julia accidentally bumped an old man and caused his
death.

Is Joshua, the registered owner of the vehicle, liable?

Yes. Joshua is the registered owner of the motor vehicle, hence primarily liable. Article 2180 should
defer to the settled doctrine concerning accidents involving registered motor vehicles, i.e., that the
registered owner of any vehicle, even if not used for public service, would primarily be responsible
to the public or to third persons for injuries caused the latter while the vehicle was being driven on
highways and streets. (Aguilar Sr., vs. Commercial Savings Bank)

137. Juan executed a Special Power of Attorney in favor or Pedro authorizing Pedro to
obtain a Php5,000,000.00 loan using Juan’s properties as collateral. Pedro processed
the loan and advanced Php500,000.00 to Juan in exchange of the certificate of titles.
However, the loan processed amounted only to Php2,000,000.00. Unsatisfied, Juan
revoked the SPA. Pedro contended that the SPA cannot be revoked solely by Juan.

a) Is Pedro’s contention tenable?

No. There is no question that the SPA executed by Juan in favor of Pero is a contract of agency
coupled with interest. This is because their bilateral contract depends upon the agency. Hence, it
“cannot be revoked at the sole will of the principal.”

b) Is Pedro entitled to actual damages and exemplary damages?

Yes, Pedro is entitled to actual damages. In exchange for his possession of the titles, Pedro
advanced the amount of P500,000.00 to Juan. Considering that the loan application did not push
through, Juan is liable to return the said amount to Pedro.

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 On the other hand, Pedro is not entitled to exemplary damages. Article 2229 of the Civil Code
provides that exemplary damages may be imposed “by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.” They are,
however, not recoverable as a matter of right. They are awarded only if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. In this case, although the
revocation was done bad faith, Juan did not act in a wanton, fraudulent, reckless, oppressive or
malevolent manner. Juan revoked the SPA because he was not satisfied with the amount of the loan
approved. Thus, petitioners are not entitled to exemplary damages. (Albert M. Ching and Romeo J.
Bautista v. Felix M. Bantolo, GR No. 177086, December 5, 2012 – DEL CASTILLO)

138. What is malicious prosecution?

The term ‘malicious prosecution’ has been defined as ‘an action for damages brought by one against
whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and
without probable cause, after the termination of such prosecution, suit, or other proceeding in favor
of the defendant therein.’ While generally associated with unfounded criminal actions, the term has
been expanded to include unfounded civil suits instituted just to vex and humiliate the defendant
despite the absence of a cause of action or probable cause. (Meyr Enterprises Corp. v. Cordero, GR
No. 197336, September 3, 2014 – DEL CASTILLO)

Requisites for malicious prosecution are: (1) prosecution occurred, and the defendant either was the
prosecutor or instigated its commencement; (2) the criminal action ended with an acquittal; (3) in
bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was
impelled by legal malice.

Note: The recovery of moral damages for malicious prosecution is allowed under Article 2219 of the
Civil Code, while attorney’s fees and expenses of litigation may be adjudged in malicious prosecution
cases pursuant to Article 2208 of the same Code.

139. Distinguish monetary interest from compensatory interest.

Monetary interest refers to the compensation set by the parties for the use or forbearance of
money. No such interest shall be due unless it has been expressly stipulated in writing. On the other
hand, compensatory interest refers to the penalty or indemnity for damages imposed by law or by
the courts. The interest mentioned in Articles 2209 and 2212 of the Civil Code applies to
compensatory interest. (Sun Life of Canada (Phils.), Inc. v. Tan Kit, GR No. 183272, October 15,
2014 – DEL CASTILLO)

140. Discuss the two concepts of attorney’s fees—ordinary and extraordinary.

In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal
services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant
to be paid by the losing party as indemnity for damages. Although both concepts are similar in some
respects, they differ from each other. The attorney’s fees which a court may, in proper cases, award
to a winning litigant is, strictly speaking, an item of damages. It differs from that which a client pays
his counsel for the latter’s professional services. (Rosario vs. De Guzman, G.R. No. 191247, July 10,
2013)

141. In criminal cases involving death, can the Court award damages when no
documentary evidence is provided?

Yes. The table of damages provides that in all criminal cases involving death, wherein no
documentary evidence of burial or funeral expenses is presented in court, the amount of

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 Php50,000.00 as temperate damages shall be awarded. (People v. Ireneo Jugueta, GR No. 202124,
April 5, 2016)

142. Company A engaged the services of Contractor B for the construction of its watch
assembly plant. Specifically, one of the agreed services was construction administration,
which includes guarding Company A from defects and deficiencies during the
construction phase by determining the progress and quality of the work of the general
contractor.

However, after five years from the year the construction began, Company A noticed roof
defects. The major construction work was done in December 2008, wherein Company A
was forced to stop its operations from December 1-18, 2008, putting its employees on
forced leave with pay. Company A spent Php1,000,000.00 for shoring expenses and
wages of its employees for the period December 1-18, 2008. Company A has no
receiving copy of the payments, only the master list of the daily and monthly paid
employees.

Laying the blame on Contractor B for the roof defects, Company A sought
reimbursement of everything it had spent for the corrective work by suing Contractor B
for damages. One of which is the reimbursement of the Php1,000,000.00.

Is the action for reimbursement of Company A tenable?

No. Article 2199 of the New Civil Code provides that “one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved.” A claimant is entitled to be
compensated reasonably and commensurately for what he or she has lost as a result of another’s
act or omission, and the amount of damages to be awarded shall be equivalent to what have been
pleaded and adequately proven. To prove that salaries have been paid, Company A has the burden
to show that payments have actually been made to its employees. The master list of daily and
monthly paid employees does not substantiate such plea for the full reimbursement of the salaries.

Should the claimant fail to prove with exactitude the extent of injury he or she sustained, the court
will still allow redress if it finds that the claimant has suffered due to another’s fault. While Company
A failed to prove the exact amount of the salaries it had paid, the Court, however, acknowledged
that Company A had to pay its employees during the shutdown and had suffered pecuniary loss for
the structural problem. As a matter of equity, therefore, a relief to Company A in the form of
temperate damages is warranted. (Adrian Wilson International Associates Inc. v. TMX Philippines,
GR No. 162608, July 26, 2010, DEL CASTILLO)

143. On September 8, 2011, an multiple-vehicle collision happened in North Luzon

Expressway (NLEX), resulting in the death of all the passengers in one vehicle, which
includes the Osorio spouses and a sibling of the surviving orphan minor heirs.

An action for damages based on quasi-delict was filed by the minor children of the
Osorio spouses through their legal guardian against the drivers A and B, as well as the
operators and registered owners of the subject trucks, namely Y and Z.

Y interposed that it is not the actual owner of the truck and contended that the children
had no cause of action against it because on September 7, 2011, it sold the truck to
MMO Trucking owned by C. The latter being the alleged owner at the time of the
collision, Y filed a Third Party Complaint against C.

Is the contention of Y tenable?

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 No. Y as the operator on record of the truck is liable to the heirs of the victims of the mishap. Y
cannot point fingers at the alleged real owner to exculpate itself from vicarious liability under Article
2180 of the Civil Code, which states that the obligation imposed by Article 2176 is demandable not
only for one’s own acts or omissions, but also for those of persons for whom one is responsible.
Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry. Regardless of whoever Y claims to be the actual owner of the truck by reason of a contract
of sale, it is nevertheless primarily liable for the damages or injury caused by the truck registered
under his name. (Orix Metro Leasing and Finance Corporation v. Mangalinao y Dizon, GR No.
174089, January 25, 2012, DEL CASTILLO)

144. Marielle own several fishponds in Bulacan and through her duly appointed attorney-
in-fact Nerie, leased out these fishponds to Spouses Reyes. The lease was to be for five
years, or from June 30, 2008 up to June 30, 2013, as provided under the Contract of
Lease. The lease expired on June 30, 2013, but Spouses Reyes did not vacate and
continued to occupy and operate the fishponds until August 11, 2013, or an additional
41 days beyond the contract expiration date.

Thus, Mariel and Nerie instituted Civil Case for collection of a sum of money with
damages, claiming that Spouses Reyes committed violations of their lease agreement –
non-payment of rents as stipulated, subletting the fishponds, failure to maintain the
warehouses, and refusal to vacate the premises on expiration of the lease – which
caused Marielle and Nerie to incur actual and liquidated damages and other expenses in
the respective amounts of Php570,101.00 for unpaid rent, Php275,430.00 for unpaid
additional rent for petitioners’ one-month extended stay beyond the contract date, and
Php2,000,000.00 for expenses incurred in restoring and repairing their damaged
warehouses. In addition, Marielle and Nerie prayed to be awarded moral and exemplary
damages.

If you are the judge, will you award Marielle and Nerie moral and exemplary damages?

Yes. By refusing to honor their solemn obligations under the lease, and instead unduly profiting from
these violations, the spouses were guilty of bad faith. Under the law, moral damages may be
awarded when the breach of contract is attended with bad faith. Also, exemplary damages may be
awarded when a wrongful act is accompanied by bad faith or when the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner. (Spouses Alberto and Susan Castro
v. Amparo Palenzuela, GR No. 184698, January 21, 2013, DEL CASTILLO)

145. The Republic filed a verified complaint for the expropriation of a parcel of land
belonging to Anna. Anna received two checks from DPWH representing 100% of the
zonal value of the subject property. Anna signified in open court that she is interposing
no objection, and that she has received the total sum of Php683,349.22 and no longer
intending to claim any just compensation. The RTC directed the Republic to pay
consequential damages equivalent to the value of the capital gains tax and other taxes
necessary for the transfer.

Should the awarded consequential damage be granted?

No. Consequential damages are only awarded if, as a result of the expropriation, the remaining
property of the owner suffers from impairment or decrease in value. In this case, given that the
payment of capital gains tax on the transfer of the subject property has no effect on the increase or
decrease in value of the remaining property, it can hardly be considered as consequential damages

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 that may be awarded to respondents. (Republic of the Philippines v. Spouses Senado F. Salvador
and Josefina R. Salvador, GR No. 205428, June 7, 2017, DEL CASTILLO)

146. Armando operated a school bus to ferry his two sons and five of their schoolmates
from their houses to their school, and back. The parents of the five schoolmates paid for
the service. One morning, Basilio, the driver, took a short cut on the way to school
because he was running late, and drove across an unmanned railway crossing. At the
time, Basilio was wearing earphones because he loved to hear loud music while driving.
As he crossed the railway tracks, a speeding PNR train loudly blared its horn to warn
Basilio, but the latter did not hear the horn because of the loud music. The train
inevitably rammed into the school bus. The strong impact of the collision between the
school bus and the train resulted in the instant death of one of the classmates of
Armando’s younger son.

The parents of the fatality sued Armando for damages based on culpa contractual
alleging that Armando was a common carrier; Basilio for being negligent; and the PNR
for damages based on culpa acquiliana.

Assuming that the fatality was a minor of only 15 years of age who had no earning
capacity at the time of his death because he was still a student in high school, and the
trial court is minded to award indemnity, what may possibly be the legal and factual
justifications for the award of loss of earning capacity? Explain your answer.

The basis for the computation of the deceased’s earning capacity should be the minimum wage in
effect at the time of his death, pursuant to the ruling of the Court in Perena v. Zarate. In the same
case, the Court also ruled that the computation of the victim’s life expectancy rate should not be
reckoned from his age of 15 years at the time of his death, but on 21 years, his age when he would
have graduated from college.

In the same case, the Court justified the indemnification of the victim’s loss of earning capacity
despite him having been unemployed because compensation of this nature is awarded not for loss
of time or earnings but for loss of the deceased’s power or ability to earn money.

147. A driver of a bus owned by company Z ran over a boy who died instantly. A criminal
case for reckless imprudence resulting in homicide was filed against the driver. He was
convicted and was ordered to pay P2 Million in actual and moral damages to the parents
of the boy who was an honor student and had a bright future. Without even trying to
find out if the driver had assets or means to pay the award of damages, the parents of
the boy filed a civil action against the bus company to make it directly liable for the
damages. (2015 Bar Question)

Will their action prosper?

Yes, the action will prosper. The liability of the employer in this case may be based on quasi-delict
and is included within the coverage of independent civil action. It is not necessary to prove the
insolvency of the driver since the liability of the employer for the quasi-delicts committed by their
employees is direct and primary, subject to the defense of due diligence on their part. (Article 2176;
2180, NCC)

If the parents of the boy do not wish to file a separate civil action against the bus
company, can they still make the bus company liable if the driver cannot' pay the award
for damages? If so, what is the nature of the employer's liability and how may civil
damages be satisfied?

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Yes. The employer may still be held subsidiarily liable under Article 103 of the RPC. In order that an
employer may be held subsidiarily liable for the employee’s civil liability in the criminal action, it
should be shown (1) that the employer is engaged in any kind of industry; (2) that the employee
committed the offense in the discharge of his duties; and (3) that he is insolvent. The subsidiary
liability of the employer, however, arises only after conviction of the employee in the criminal action.
If all these requisites are present, the employer becomes ipso facto subsidiarily liable upon the
employee’s conviction and upon proof of the employee’s insolvency.

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