2020 BAR EXAMINATIONS TRIAL

CIVIL LAW
(PART 2)

LEGAL EDGE BAR REVIEW CENTER

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0942-949-9176 / 0917-894-5356

B.18

After a big flood that devastated the city, the kitchenware store of Cecilia was ransacked by thieves. All
but a few furniture and decorations were left behind. Cecilia anonymously posted on Facebook
Marketplace that she was looking for specific types of chinaware. A day later, a certain Manolo
responded and said that he had several sets of plates and glasses sourced directly from China that he
was selling at very affordable prices. After a series of negotiations, Cecilia and Manolo met. Unknown
to Manolo, Cecilia brought police officers who immediately arrested Manolo for theft and estafa. Manolo
claimed, however, that he also bought the chinaware from an online seller several days before Cecilia
posted her advertisement. Cecilia, however, identified the chinaware to be those which were stolen
from her store.

a) In civil law, does Cecilia have a right to recover the chinaware from Manolo? Explain. (2.5%)

b) Is Manolo’s claim that he also bought the chinaware from an online seller a valid defense? Why?
(2.5%)

SUGGESTED ANSWER:

a) Yes.

Under Article 559 of the Civil Code, one who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in possession of the same.

Based on the facts, Cecilia’s chinaware was stolen during the devastating flood and they were
found in the possession of Manolo.

Thus, applying Article 559 of the Civil Code, Cecilia, as the owner of the chinaware, can recover
them from Manolo.

b) No.

Under Article 559 of the Civil Code, if the possessor of a movable lost or of which the owner has
been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain
its return without reimbursing the price paid therefor.

Assuming that Manolo in fact purchased the chinaware from an online seller, the transaction is
not a public sale. It is merely a private sale which is not the sale that constitutes a defense under
the law.

Thus, Manolo’s defense is not valid.

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B.19

To address the shortage of water supply in the city, Ibrahim applied for a permit to construct and/or
install a motorized deep well within his property. The application was denied because NAPOCOR had
installed tunnels underneath his property for siphoning water from the nearby lake to NAPOCOR’s
projects in another town. Ibrahim filed an action against NAPOCOR for recovery of possession of the
subterranean portion of his property. Alternatively, Ibrahim demanded just compensation for the taking
of his property. NAPOCOR opposed the claim, arguing that it was doing public service and that the
subterranean portion of the land is still government property.

a) Does Ibrahim have a right, and NAPOCOR the obligation, to return the subterranean portion of
Ibrahim’s property? Why? (2.5%)

b) Is NAPOCOR’s defense valid? Why? (2.5%)

SUGGESTED ANSWER:

a) Yes. Under Art. 437 of the Civil Code, the owner of a parcel of land is the owner of its surface
and of everything under it, and he can construct thereon any works or make any plantations and
excavations which he may deem proper, without detriment to servitudes and subject to special
laws and ordinances. Here, the tunnels traversed underneath Ibrahim’s property without
Ibrahim’s consent or permission. Hence, Ibrahim has a right to recover the portion of his property
under it.

b) No.

Under the law, once a property has been registered to a private person, it ceases to be
government property. Furthermore, under Article 437 of the Civil Code, the registered owner has
a right not only to the surface but everything under it. Lastly, under Section 9, Article III of the
Constitution, private property shall not be taken for public use without just compensation.

In this case, NAPOCOR has taken private property for a public purpose.

As provided under relevant laws, NAPOCOR should pay Ibrahim just compensation for depriving
Ibrahim the use and enjoyment of the subterranean portion of his property. (NAPOCOR vs.
Ibrahim, G.R. No. 168732, January 29, 2007)

B.20

When Margarita died, she was survived by her husband and five children. Margarita also left several
parcels of land. During the settlement of the estate, Margarita’s husband applied for authority to sell
one property to the City Government. It was approved and the sale was executed. Consequently, the
City Government constructed a public market. Nine (9) years after the sale, the five children filed a
petition for recovery of the subject property, claiming that their father was only induced by the then City
Mayor to sell the property. The City Government, however, claimed that the action is barred by
prescription or laches.

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a) Has the action prescribed? Why? (2.5%)

b) Is the action barred by laches? Why? (2.5%)

SUGGESTED ANSWER:

a) No.

Article 1106 of the Civil Code provides that, by prescription, one acquires ownership and other
real rights through the lapse of time in the manner and under the conditions laid down by law. In
the same way, rights and obligations are lost by prescription. Moreover, actions to recover
property based on an implied trust prescribe in 10 years.

In the case at bar, the action was filed nine years after the sale between the children’s father
and the City Government.

Hence, the action has not yet prescribed.

b) Yes.

As defined by jurisprudence, while prescription is concerned with the fact of delay, laches is
concerned with the effect of delay. Laches is principally a question of inequity of permitting a
claim to be enforced, the inequity being founded on some change in the condition of the property
or the relation of the parties.

In this case, the subject property was immediately converted to a public market. It was apparent
and the children could have immediately filed the action to recover the property. Without showing
any justifiable reason for the delay, they obviously slept on their rights and waited for 9 years
before acting to recover the property.

Thus, while the action may not have prescribed, the action is barred by laches. (Maneclang vs.
Baun, L-27876, April 22, 1992)

B.21

Chris and Claire were married in 2009 but they separated in fact in 2018. In 2020, Claire’s mother filed
an action for nullity of marriage on the ground that Chris was allegedly psychologically incapacitated to
marry. Chris opposed the petition on the ground that the action was filed more than 10 years since he
and Claire got married. Also, Chris questioned the legal standing of Claire’s mother to file the action.

a) Has the action prescribed? Why? (2.5%)

b) In the problem above, is Claire’s mother a proper party to the petition? Why? (2.5%)

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SUGGESTED ANSWER:

a) No.

Article 36 of the Civil Code which provides that psychological incapacity is a ground for the nullity
of marriage, was amended by Executive Order No. 227 removing the prescriptive period of an
action to declare said marriage null and void.

Here, assuming Claire’s mother is a proper party to file the action, the action is imprescriptible.

b) No.

Under A.M. No. 02-11-10-SC, the Supreme Court Rule on Declaration of Absolute Nullity of
Marriage, etc., a petition for declaration of absolute nullity of void marriage may be filed solely
by the husband or the wife.

In the case at bar, Claire’s mother is neither the husband nor the wife to the marriage.

Hence, Claire’s mother is not a proper party to file the action for declaration of nullity of marriage
on the ground of psychological incapacity.

B.22

Wella Corp., a Filipino corporation, and W-Land, a Taiwanese corporation, entered into a Memorandum
of Agreement as a prelude to a Share-Purchase Agreement whereby the latter will buy shares in Wella
Corp. so that both can engage in the aviation business in the Philippines. W-Land paid the sum of P7
Million for more than 1 Million shares in Wella Corp. Further negotiations, however, collapsed and no
Share-Purchase Agreement was executed by the parties. W-Land filed an action to rescind its
agreement with Well Corp. and demanded the return of the P7 Million but Wella Corp. refused saying
that for rescission under Art. 1381 of the Civil Code to prosper, there must be economic disadvantage,
meaning lesion. In this case, the P7 Million was properly valued as price for the shares to be purchased.

a) What is the difference between rescission under Art. 1191 and rescission under Art. 1381?
(2.5%)

b) Is W-Land entitled to rescission? Why? (2.5%)

SUGGESTED ANSWER:

a) The failure of one of the parties to comply with its reciprocal prestation allows the wronged party
to seek the remedy of Article 1191. The wronged party is entitled to rescission or resolution
under Article 1191, and even the payment of damages. Article 1381, on the other hand, pertains
to rescission where creditors or even third persons not privy to the contract can file an action
due to lesion or damage as a result of the contract.

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b) Yes.

Under Art. 1191 of the Civil Code, the power to rescind obligations is implied in reciprocal ones
in case one of the obligors should not comply with what is incumbent upon him. The injured party
may choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case.

Here, W-Land is seeking rescission and restitution what it had paid on the ground that the Share
Purchase Agreement did not materialize. This case does not involve prejudicial transactions
affecting guardians, absentees, or fraud of creditors.

Hence, rescission under Art. 1191 of the Civil Code is proper. (Wellex vs. U-Land, G.R. No.
167519, January 14, 2015)

B.23

Margaret leased her studio apartment to Myrna, her co-worker, for a stipulated rent of P15,000 per
month for one year, payable on the first Friday of every month. Before the lease commenced, Myrna
noticed and demanded that the plumbing be fixed within a month, to which Margaret agreed.
Meanwhile, when the first rent fell due, Margaret demanded payment from Myrna. The latter, however,
refused to pay on the ground that Margaret had not yet complied with her obligation to fix the plumbing.
Believing that Myrna is in delay, Margaret sued her for ejectment.

a) Is Myrna in delay? Explain. (2.5%)

b) Under the Civil Code, what are the instances where demand by the creditor is not necessary for
delay to exist? (2.5%)

SUGGESTED ANSWER:

a) No.

Art. 1169, paragraph 3, of the Civil Code provides that in reciprocal obligations, neither party
incurs in delay if the other does not comply or is not ready to comply in a proper manner with
what is incumbent upon him.

Here, Margaret, the lessor, had the obligation to repair the plumbing of the leased premises.
This was incumbent upon her, on top of her obligation to give Myrna, the lessee, the peaceful
use and enjoy the property.

Thus, considering that Margaret herself has not yet complied with the obligation to repair the
plumbing of the leased premises, Myrna cannot yet be considered in delay.

b) Under Art. 1169, second paragraph, of the Civil Code, demand upon the debtor is not necessary
in the following situations:

1. When the obligation or the law expressly so declares; or

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2. When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment of the contract; or
3. When demand would be useless, as when the obligor has rendered it beyond his
power to perform.

B.24

Jose and Angel entered into a conditional contract of sale wherein Jose sold his property to Angel for
the price of P1.5 Million with a downpayment of P500,000.00. It was stipulated that the balance of P1
Million shall be paid after Angel shall have obtained a road right of way to the property. Angel however
delayed in negotiating with the owners of adjacent properties. Thus, unable to obtain the road right of
way, Jose wrote Angel stating that the contract is not valid in view of the potestative condition which
depends entirely on Angel’s will whether or not to obtain the road right of way.

a) What is a potestative condition and what is its legality? (2.5%)

b) In the problem, is the contract invalid because the obtaining of road right of way is a potestative
condition? Why? (2.5%)

SUGGESTED ANSWER:

a) A potestative condition is one that depends upon the exclusive will of one of the parties. Under
Art. 1182 of the Civil Code, it is considered void.

b) No.

According to the Civil Code and jurisprudence, a potestative condition is one that depends upon
the exclusive will of one of the parties. When it is imposed on the perfection of the contract, the
contract is void. But if it is imposed on its fulfillment, only the condition is avoided, leaving
unaffected the obligation itself.

In the case at bar, the supposed potestative condition is imposed on the fulfillment or
performance of an obligation, not on the perfection of the contract. The condition is imposed on
the obligation of the buyer to pay the balance of the purchase price.

Hence, the contract is not invalid even despite the condition which depended entirely on the will
of the buyer. What the seller can do is go to court and ask the court to fix the period for the
buyer to comply with the condition. (Catungal vs. Rodriguez, G.R. No. 146839, March 23, 2011)

B.25

XYZ Bank was ordered by the Bangko Sentral ng Pilipinas to divest itself of real property investments
so as to preserve its liquidity. However, most of these real properties were locations for XYZ Bank’s
branches. So, XYZ Bank formed ABC Corp. and sold to the latter the affected real properties.
Simultaneously, ABC Corp. leased back the properties to XYZ Bank. However, XYZ Bank never paid
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rent to ABC Corp. Several years later, ABC Corp. sued XYZ Bank for ejectment on the ground of non-
payment of rent. XYZ Bank countered that there was an unwritten trust agreement between XYZ Bank
and ABC Corp., with the latter holding the properties in trust for the former.

a) Is the alleged trust agreement between XYZ Bank and ABC Corp enforceable? Why? (2.5%)

b) Is the trust agreement valid? Why? (2.5%)

SUGGESTED ANSWER:

a) No.

Art. 1443 of the Civil Code provides that no express trusts concerning an immovable or any
interest therein may be proved by parol evidence. This has been interpreted to mean that the
express trust must be in writing.

Here, XYZ Bank claims that there was an express trust between it and ABC Corp. However,
this was an unwritten trust.

Hence, the alleged trust agreement is unenforceable.

b) No.

A trust agreement, like any other contract, must not be contrary to law, morals, good customs,
public order or public policy.

Under the facts, the alleged trust agreement was made to evade the order of the Bangko Sentral
ng Pilipinas for XYZ Bank to divest itself of real property investments so as to preserve its
liquidity.

Thus, for being contrary to law, the alleged trust agreement is void. (Tala Realty vs. Banco
Filipino, G.R. No. 137533, November 22, 2002.)

B.26

Grilli, an Italian national, and Rebecca, a Filipina, were common-law partners. Grilli gave money to
Rebecca for her to buy a beach lot in Siargao Island and to register it in her name. Then, they executed
a Contract of Lease which stipulated, among others, that Grilli would rent the lot for a period of fifty (50)
years, to be automatically renewed for another fifty (50) years, for a monthly rental of P10,000.00; and
that Rebecca, as the lessor, was prohibited from selling, donating, or encumbering the said lot except
with the written consent of Grilli. Also, they executed a Memorandum of Agreement (MOA) whereby
Rebecca acknowledged that the money used in buying the property belonged to Grilli and that should
they separate, Rebecca must deliver the property to Grilli. Subsequently, they broke up and Grilli
ordered Rebecca to vacate the property. Rebecca, however, claimed that the contract of lease and
MOA are void and counter-charged for ejectment.

a) Are the Contract of Lease and MOA valid? Why? (2.5%)

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b) Will the in pari delicto rule apply and the parties left where they are? Why? (2.5%)

SUGGESTED ANSWER:

a) No.

The Philippine Constitution prohibits foreigners from acquiring lands in the Philippines. In
decisions of the Supreme Court, this prohibition has been extended to leases amounting to the
transfer of all or substantially all the rights of dominion.

In the case at bar, Rebecca virtually transferred all her rights to the property to Grilli. This would
amount to Grilli, a foreigner national, owning the land which is not allowed by the Constitution.

Thus, the Contract of Lease and Memorandum of Agreement are void.

b) No.

The in pari delicto principle states that neither courts of law nor equity will interpose to grant
relief to the parties when an illegal agreement has been made, and both parties stand in pari
delicto. An accepted exception arises when its application contravenes well-established public
policy.

Here, Rebecca is allowed to obtain affirmative relief against Grilli for, otherwise, the Constitution
would be defeated and its continued violation sanctioned if the land continue to remain in the
hands of a foreigner. (Fullido vs. Grilli, G.R. No. 215014, February 29, 2016)

B.27

Crispina and Isabel were co-owners of a parcel of land. In 1972, Isabel sold a definite portion of the
property to Doroteo. In 1974, Crispina sold her share in the co-owned property to Isabel. The heirs of
Isabel sought the recovery of the property from Doroteo, claiming that when Isabel sold a definite
portion of the co-owned property, she did not have title thereto because Crispina did not give her
consent. Doroteo, however, claimed that estoppel applies because Crispina subsequently sold her
share to Isabel.

a) What is estoppel? (2.5%)

b) Is the sale between Isabel and Doroteo valid? Why? (2.5%)

SUGGESTED ANSWER:

a) Article 1431 of the Civil Code provides that through estoppel, an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or disproved as against
the person relying thereon. Estoppel is based on public policy, fair dealing, good faith and justice.
Its purpose is to forbid one to speak against his own act, representations, or commitments to the
injury of one who reasonably relied thereon.
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b) Yes.

Under Article 1434 of the Civil Code, when a person who is not the owner of a thing sells or
alienates and delivers it, and later the seller or grantor acquires title thereto, such title passes by
operation of law to the buyer or grantee.

Here, the seller (Isabel) was not yet the owner when she sold the property to the buyer (Doroteo),
but the defect was cured when Isabel subsequently acquired title after the other co-owner
(Crispina) sold the property to her (Isabel).

Thus, the sale is valid. (Castrillo vs. Court of Appeals, L-18046, March 31, 1964)

B.28

Valentin assigned to Encarnacion the former’s contract of lease over a building. The assignment,
however, was without the consent of the owner/lessor. Encarnacion later sub-leased the building to
Josie, the latter not knowing that Encarnacion was not the owner. Josie continued to pay the rent
pursuant to their contract, until Josie received a letter from the owner telling her that she was leasing
the property illegally. Josie then executed a contract with the owner and stopped paying the rents to
Encarnacion. Encarnacion still demanded the arrearages, asserting that they had a contract.

a) Was the contract of lease between Encarnacion and Josie valid? Why? (2.5%)

b) Is Josie, the lessee, estopped from questioning the title of Encarnacion, her lessor? (2.5%)

SUGGESTED ANSWER:

a) No.

Art. 1649 of the Civil Code states that the lessee cannot assign the lease without the consent of
the lessor, unless there is a stipulation to the contrary.

Here, Encarnacion was not the original lessee. She was a mere assignee of the original lessor.
Since this assignment was without the consent of the owner/lessor, Encarnacion had no right to
the leased premises. Necessarily, Encarnacion also had no right to sub-lease the leased
premises to Josie.

Hence, the contract of lease between Encarnacion and Josie is void.

.
b) No.

Art. 1436 of the Civil Code provides that a lessee or a bailee is estopped from asserting title to
the thing leased or received, as against the lessor or bailor. This is similar to Section 2(b), Rule
131 of the Rules of Court which provides that the tenant is not permitted to deny the title of his
landlord at the time of the commencement of the relation of landlord and tenant between them.

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However, in this case, the rule cannot be applied against Josie because Encarnacion was shown
to have no right or authority to lease the building as, in fact, Josie had entered into a contract of
lease with the real owner, and to require Josie to continue paying the rents to Encarnacion would
be tantamount to unjust enrichment of Encarnacion at the expense of Josie.

Thus, Josie is not estopped from questioning Encarnacion’s title. (Tamio vs. Ticson, G.R. No.
154895, November 18, 2004)

B.29

Arthur sued Nenita for damages arising from a breach of contract. The Regional Trial Court granted the
complaint. However, instead of appealing the decision, Nenita filed a petition for certiorari before the
Court of Appeals raising lack of jurisdiction. Without a temporary restraining order, the decision of the
lower court became final and a writ of execution was issued. Nenita was visited by the Sheriff and
Nenita paid the judgment award in the amount of P200,000. Consequently, the Court of Appeals
declared the decision of the lower court null and void because of lack of jurisdiction. Nenita sought to
recover the P200,000 which she previously paid to Arthur, through the Sheriff, but Arthur refused to
return it on the ground that it was a natural obligation, having been voluntarily made. He claimed that
he has the right to retain it.

a) What is a natural obligation and what is its legality? (2.5%)

b) In the problem, was the payment made by Nenita a natural obligation for which Arthur has a right
of retention? Why? (2.5%)

SUGGESTED ANSWER:

a) Applying Art. 1423 of the Civil Code, natural obligations are not based on positive law but based
on equity and natural law. They do not grant a right of action to enforce their performance but
after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered
or rendered by reason thereof.

b) No.

Under the law, natural obligations must be voluntarily made despite knowledge that there is no
such legal obligation or duty such as when the claim has prescribed or when the action to recover
the amount was dismissed by the court.

In the case at bar, the payment made by Nenita to Arthur was not voluntary, it was thru a coercive
process of the writ of execution issued at the request and insistence of Arthur. Certainly, were it
not for said writ of execution, Nenita would not have paid to Arthur the amount in question.

Hence, Nenita has a right to recover what she paid pursuant to the writ of execution. (Manila
Surety vs. Lim, L-9343, December 29, 1959)

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B.30

Mateo was a local agent of Star Ships, a shipping company based in the United States. For Mateo’s
services in recruiting seafarers, he regularly received commissions from his principal. In 2002, he billed
Star Ships his commissions and Star Ships sent instructions to its US bank to, in turn, wire $1,400.00.
Philippine National Bank (PNB), the depositary bank of Mateo, received the instructions from the
affiliated US bank and immediately credited $14,000.00 to Mateo’s bank account. Eight years later, or
in 2010, PNB demanded from Mateo the return of $12,600 ($14,000 less $1,400) which was credited
to his account by mistake. PNB claimed that this is a case of solutio indebiti.

a) What is solutio indebiti? (2.5%)

b) Is PNB entitled to recover the $12,600 paid to Mateo? Explain. (2.5%)

SUGGESTED ANSWER:

a) Solutio indebiti is a quasi-contract which is embodied under Art. 2154 of the Civil Code. It is a
tie or juridical relation which, by virtue of a payment of what is not due, made through mistake,
is created between the person who paid and the one who received the payment, compelling the
latter, in consequence thereof, to return what he has received.

b) No.

While the facts make out a case for solutio indebiti, Art. 1145(2) of the Civil Code provides that
an action upon a quasi-contract shall prescribe in six (6) years.

Here, the cause of action arose in 2002 but PNB’s action to recover the amount mistakenly paid
was filed only after 8 years, or in 2010. Clearly, the action has prescribed.

Thus, PNB can no longer recover the $12,600.00 from Mateo. (PNB vs. Court of Appeals, G.R.
No. 97995, January 21, 1993)

-NOTHING FOLLOWS-

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