AGENCY DY.

If DY later defaults and fails to pay the loan, CX is liable

Agency (2003) to pay. However, his liability is limited to the extent of the
Jo-Ann asked her close friend, Aissa, to buy some groceries value of the said property. ALTERNATIVE ANSWER: CX
for her in the supermarket. Was there a nominate contract is not personally liable to the bank loan because it was
entered into between Jo-Ann and Aissa? In the affirmative, contracted by DY in his personal capacity. Only the property
what was it? Explain. 5% of CX is liable. Hence, while CX has authorized the mortgage
SUGGESTED ANSWER: on his property to secure the loan of DY, the bank cannot
Yes, there was a nominate contract. On the assumption that sue CX to collect the loan in case DY defaults thereon. The
Aissa accepted the request of her close friend Jo-Ann to but bank can only foreclose the property of CX.
some groceries for her in the supermarket, what they entered CIVIL LAW Answers to the BAR as Arranged by Topics (Year
into was a nominate contract of Agency. Article 1868 of the 1990-2006)
New Civil Code provides that by the contract of agency a And if the proceeds of the foreclosure are not sufficient to All
person binds himself to render some service or to do those contracts were executed by B while A was
something in representation or on behalf of another, with the pay the loan in full, the bank cannot run after CX for the
consent or authority of the latter. deficiency.
ALTERNATIVE ANSWER: ALTERNATIVE ANSWER:
Yes, they entered into a nominate contract of lease to service While as a general rule the principal is not liable for the
in the absence of a relation of principal and agent between contract entered into by his agent in case the agent acted in
them (Article 1644, New Civil Code). his own name without disclosing his principal, such rule does
Agency vs. Sale (2000) not apply if the contract involves a thing belonging to the
A foreign manufacturer of computers and a Philippine principal. In such case, the principal is liable under Article
distributor entered into a contract whereby the distributor 1883 of the Civil Code. The contract is deemed made on his
agreed to order 1,000 units of the manufacturer's computers behalf (Sy-juco v. Sy-juco 40 Phil. 634 [1920]).
every month and to resell them in the Philippines at the ALTERNATIVE ANSWER:
manufacturer's suggested prices plus 10%. All unsold units at CX would not be liable for the bank loan. CX's property
the end of the year shall be bought back by the manufacturer would also not be liable on the mortgage. Since DY did not
at the same price they were ordered. The manufacturer shall specify that he was acting for CX in the transaction with the
hold the distributor free and harmless from any claim for bank, DY in effect acted in his own name. In the case of
defects in the units. Is the agreement one for sale or agency? Rural Bank of Bombon v. CA, 212 SCRA, (1992), the
(5%) Supreme
SUGGESTED ANSWER: Court, under the same facts, ruled that "in order to bind the
The contract is one of agency, not sale. The notion of sale is principal by a mortgage on real property executed by an
negated by the following indicia: (1) the price is fixed by the agent, it must upon its face purport to be made, signed and
manufacturer with the 10% mark-up constituting the sealed in the name of the principal, otherwise, it will bind the
commission; (2) agent only. It is not enough merely that the agent was in fact
the manufacturer reacquires the unsold units at exactly the authorized to make the mortgage, if he, has not acted in the
same name of the principal. Neither is it ordinarily sufficient that in
price; and (3) warranty for the units was borne by the the mortgage the agent describes himself as acting by virtue
manufacturer. of a power of attorney, if in fact the agent has acted in his
The foregoing indicia own name and has set his own hand and seal to the
units was never intended to transfer to the distributor. mortgage. There is no principle of law by which a person can
Agency; coupled with an interest (2001) become liable on a real estate mortgage which she never
Richard sold a large parcel of land in Cebu to Leo for P100 executed in person or by attorney in fact".
million payable in annual installments over a period of ten Appointment of Sub-Agent (1999)
years, but title will remain with Richard until the purchase X appoints Y as his agent to sell his products in Cebu City.
price is fully paid. To enable Leo to pay the price, Richard Can Y appoint a sub-agent and if he does, what are the
gave him a power-of-attorney authorizing him to subdivide effects of such appointment? (5%)
the land, sell the individual lots, and deliver the proceeds to SUGGESTED ANSWER:
Richard, to be applied to the purchase price. Five years later, Yes, the agent may appoint a substitute or sub-agent if the
Richard revoked the power of attorney and took over the principal has not prohibited him from doing so, but he shall
sale of the subdivision lots himself. Is the revocation valid or be responsible for the acts of the substitute:
not? Why? (5%) (1) when he was not given the power to appoint one;
SUGGESTED ANSWER: (2) when he was given such power, but without designating
The revocation is not valid. The power of attorney given to the person, and the person appointed was notoriously
the buyer is irrevocable because it is coupled with an interest: incompetent or insolvent.
the agency is the means of fulfilling the obligation of the General Agency vs. Special Agency (1992)
buyer to pay the price of the land (Article 1927, CC). In other A as principal appointed B as his agent granting him general
words, a bilateral contract (contract to buy and sell the land) and unlimited management over A's properties, stating that A
is dependent on the agency. withholds no power from B and that the agent may execute
Agency; Guarantee Commission (2004) such acts as he may consider appropriate.
As an agent, AL was given a guarantee commission, in Accordingly, B leased A's parcel of land in Manila to C for
addition to his regular commission, after he sold 20 units of four (4) years at P60,000.00 per year, payable annually in
refrigerators to a customer, HT Hotel. The customer, advance.
however, failed to pay for the units sold. AL’s principal, B leased another parcel of land of A in Caloocan City to D
DRBI, demanded from AL payment for the customer’s without a fixed term at P3,000.00 per month payable
accountability. AL objected, on the ground that his job was monthly.
only to sell and not to collect payment for units bought by B sold to E a third parcel of land belonging to A located in
the customer. Is AL’s objection valid? Can DRBI collect Quezon City for three (3) times the price that was listed in
from him or not? Reason. (5%) the inventory by A to B.
SUGGESTED ANSWER: confined due to illness in the Makati Medical Center. Rule on
No, AL's objection is not valid and DRBI can collect from the validity and binding effect of each of the above contracts
AL. Since AL accepted a guarantee commission, in addition upon A the principal. Explain your answers,
to his regular commission, he agreed to bear the risk of SUGGESTED ANSWER:
collection and to pay the principal the proceeds of the sale on The agency couched in general terms comprised only acts of
the same terms agreed upon with the purchaser (Article 1907, administration (Art. 1877, Civil Code). The lease contract on
Civil Code) the Manila parcel is not valid, not enforceable and not
Agency; Real Estate Mortgage (2004) binding upon A. For B to lease the property to C, for more
CX executed a special power of attorney authorizing DY to than one (1) year, A must provide B with a special power of
secure a loan from any bank and to mortgage his property attorney (Art. 1878. Civil Code).
covered by the owner’s certificate of title. In securing a loan The lease of the Caloocan City property to D is valid and
from MBank, DY did not specify that he was acting for CX binding upon A. Since the lease is without a fixed term, it is
in the transaction with said bank. Is CX liable for the bank understood to be from month to month, since the rental is
loan? Why or why not? Justify your answer. (5%) payable monthly (Art. 1687, Civil Code).
SUGGESTED ANSWER: The sale of the Quezon City parcel to E is not valid and not
CX is liable for the bank loan because he authorized the binding upon A. B needed a special power of attorney to
mortgage on his property to secure the loan contracted by validly sell the land (Arts. 1877 and 1878, Civil Code). The
sale of the land at a very good price does not cure the defect she incurred expenses in collecting the rents and in some
of the contract arising from lack of authority instances even spent for necessary repairs to preserve the
Powers of the Agent (1994) property.
Prime Realty Corporation appointed Nestor the exclusive 1. What Juridical relation between Amparo and Armando, if
agent in the sale of lots of its newly developed subdivision. any, has resulted from Amparo's unilateral act of assuming the
Prime Realty told Nestor that he could not collect or receive administration of Armando's apartments? Explain.
payments from the buyers. Nestor was able to sell ten lots to 2. What rights and obligations, if any, does Amparo have
Jesus and to collect the down payments for said lots. He did under the circumstances? Explain.
not turn over the collections to Prime Realty. Who shall bear SUGGESTED ANSWER:
the loss for Nestor's defalcation, Prime Realty or Jesus? 1. Negotiorum gestio existed between Amparo and
SUGGESTED ANSWER: Armando, She voluntarily took charge of the agency or
a) The general rule is that a person dealing with an agent management of the business or property of her uncle without
must inquire into the authority of that agent. In the present any power from her uncle whose property was neglected. She
case, if Jesus did not inquire into that authority, he is liable is called the gestor negotiorum or officious manager, (Art.
for the loss due to Nestor's defalcation unless Article 1900, 2144, NCC)
Civil Code governs, in which case the developer corporation 2. It is recommended by the Committee that an enumeration
bears the loss. of any two (2) obligations and two (2) rights as enumerated in
Art. 1900 Civil Code provides: "So far as third persons are Arts. 2145 to 2152, NCC, would entitle the examinee to full
concerned, an act is deemed to have been performed within credit.
the scope of the agent's authority, if such act is within the Alma was hired as a domestic helper in Hongkong by the
terms of the power of attorney, as written, even if the agent Dragon Services, Ltd., through its local agent. She executed a
has in fact exceeded the limits of his authority according to standard employment contract designed by the Philippine
an understanding between the principal and the agent. Overseas Workers Administration (POEA) for overseas
However, if Jesus made due inquiry and he was not informed Filipino workers. It provided for her employment for one
by the principal Prime Realty of the limits of Nestor's year at a salary of US$1,000.00 a month. It was submitted to
authority. Prime Realty shall bear the loss. and approved by the POEA. However, when she arrived in
b) Considering that Prime Realty Corporation only "told" Hongkong, she was asked to sign another contract by Dragon
Nestor that he could not receive or collect payments, it Services, Ltd. which reduced her salary to only US$600.00 a
appears that the limitation does not appear in his written month. Having no other choice, Alma signed the contract but
authority or power of attorney. In this case, insofar as Jesus, when she returned to the Philippines, she demanded payment
who is a third person is concerned, Nestor's acts of collecting of the salary differential of US$400.00 a month. Both Dragon
payments is deemed to have been performed within the scope Services, Ltd. and its local agent claimed that the second
of his authority {Article 1900. Civil Code). Hence, the contract is valid under the laws of Hongkong, and therefore
principal is liable. binding on Alma. Is their claim correct? Explain.
However, if Jesus was aware of the limitation of Nestor's SUGGESTED ANSWER:
power as an agent, and Prime Realty Corporation does not Their claim is not correct. A contract is the law between the
CIVIL LAW Answers to the BAR as Arranged by Topics (Year parties but the law can disregard the contract if it is contrary
1990-2006) to public policy. The provisions of the 1987 Constitution on
ratify the sale contract, then Jesus shall be liable (Article the protection of labor and on social justice (Sec. 10. Art II)
allowing the other general partner to bind the corporation embody a public policy of the Philippines. Since the
1898. Civil Code). application of Hongkong law in this case is in violation of
Termination; Effect of Death of Agent (1997) CIVIL LAW Answers to the BAR as Arranged by Topics (Year
Stating briefly the thesis to support your answer to each of 1990-2006)
the following cases, will the death - (c) of an agent end an that public policy, the application shall be disregarded by Court
agency? of Appeals (G.R No. 104235, Nov. 10, 1993) the
SUGGESTED ANSWER: our Courts. (Cadalin v. POEA. 238 SCRA 762)
Yes. The death of an agent extinguishes the agency, by ALTERNATIVE ANSWERS;
express provision of par. 3, Art 1919 of the Civil Code. a) Their claim is not correct. Assuming that the second
Quasi-Contracts; Negotiorium Gestio (1992) contract is binding under Hongkong law, such second
In fear of reprisals from lawless elements besieging his contract is invalid under Philippine law which recognizes as
barangay, X abandoned his fishpond, fled to Manila and left valid only the first contract. Since the case is being litigated in
for Europe. Seeking that the fish in the fishpond were ready the Philippines, the Philippine Court as the forum will not
for harvest, Y, who is in the business of managing fishponds enforce any foreign claim obnoxious to the forum's public
on a commission basis, took possession of the property, policy. There is a strong public policy enshrined in our
harvested the fish and sold the entire harvest to Z. Thereafter, Constitution on the protection of labor. Therefore, the
Y borrowed money from W and used the money to buy new second contract shall be disregarded and the first contract will
supplies of fish fry and to prepare the fishpond for the next be enforced. (Cadalin v. POEA, 238 SCRA 762).
crop. a) What is the Juridical relation between X and Y b) No, their claim is not correct. The second contract
during X's absence? b) Upon the return of X to the barangay, executed in Hongkong, partakes of the nature of a waiver that
what are the obligations of Y to X as regards the contract is contrary to Philippine law and the public policy governing
with Z? c) Upon X's return, what are the obligations of X as Filipino overseas workers. Art. 17, provides that our
regards Y's contract with W? d) What legal effects will result if prohibitive laws concerning persons, their acts, or their
X expressly ratifies Y's management and what would be the property or which have for their object public order, public
obligations of X in favor of Y? Explain all your answers. policy and good customs shall not be rendered ineffective by
SUGGESTED ANSWER: laws or conventions agreed upon in a foreign country. Besides,
(a) The juridical relation is that of the quasi-contract of Alma's consent to the second contract was vitiated by undue
"negotiorum gestio". Y is the "gestor" or "officious manager" influence, being virtually helpless and under financial distress
and X is the "owner" (Art. 2144, Civil Code). in a foreign country, as indicated by the given fact that she
(b) Y must render an account of his operations and deliver to signed because she had no choice. Therefore, the defendants
X the price he received for the sale of the harvested fish claim that the contract is valid under Hongkong law should be
(Art, 2145, Civil Code). rejected since under the DOCTRINE OF PROCESSUAL
(c) X must pay the loan obtained by Y from W because X PRESUMPTION a foreign law is deemed similar or identical
must answer for obligations contracted with third persons in to Philippine law in the absence of proof to the contrary, and
the interest of the owner (Art. 2150, Civil Code), such is not mentioned in the problem as having been adduced.
(d) Express ratification by X provides the effects of an PARTNERSHIP
express agency and X is liable to pay the commissions Composition of Partnerships; Spouses; Corporations
habitually received by the gestor as manager (Art. 2149, Civil (1994)
Code). 1) Can a husband and wife form a limited partnership
Quasi-Contracts; Negotiorium Gestio (1995) to engage in real estate business, with the wife being a limited
Armando owns a row of residential apartments in San Juan, partner?
Metro Manila, which he rents out to tenants. On 1 April 1991 2) Can two corporations organize a general partnership under
he left for the United States without appointing any the Civil Code of the Philippines? 3) Can a corporation and
administrator to manage his apartments such that uncollected an individual form a general partnership?
rentals accumulated for three (3) years. Amparo, a niece of SUGGESTED ANSWER:
Armando, concerned with the interest of her uncle, took it 1) a) Yes. The Civil Code prohibits a husband and wife from
upon herself to administer the property. As a consequence, constituting a universal partnership. Since a limited
partnership is not a universal partnership, a husband and wife Art, 1813 of the NCC.
may validly form one. b) Yes. While spouses cannot enter ALTERNATIVE ANSWER:
into a universal partnership, they can enter into a limited Interpreting Art. 1830 (1) (c) to mean that if one of the
partnership or be members thereof (CIR u. Suter, etal. 27 partners had assigned his interest on the partnership to
SCRA 152). CIVIL LAW Answers to the BAR as Arranged by Topics (Year
SUGGESTED ANSWER: 1990-2006)
2) a) No, A corporation is managed by its board of another the remaining partners may not dissolve the A should
directors. If the corporation were to become a partner, be hired as Secretary. The decision for the hiring
co-partners would have the power to make the corporation partnership, the dissolution by Patricia and Priscilla without
party to transactions in an irregular manner since the partners the consent of Pauline or Philip is not valid.
are not agents subject to the control of the Board of SUGGESTED ANSWER:
Directors. But a corporation may enter into a joint venture 2. No, Philip has no right to petition for dissolution because
with another corporation as long as the nature of the venture he does not have the standing of a partner (Art. 1813 NCC).
is in line with the business authorized by its charter. (Tuason Dissolution of Partnership; Termination (1993)
& Co., Inc. v. Bolano, 95 Phil. 106). A, B and C formed a partnership for the purpose of
b) As a general rule a corporation may not form a general contracting with the Government in the construction of one
partnership with another corporation or an individual because of its bridges. On June 30, 1992, after completion of the
a corporation may not be bound by persons who are neither project, the bridge was turned over by the partners to the
directors nor officers of the corporation. Government. On August 30, 1992, D, a supplier of materials
However, a corporation may form a general partnership with used in the project sued A for collection of the indebtedness
another corporation or an individual provided the following to him. A moved to dismiss the complaint against him on the
conditions are met: ground that it was the ABC partnership that is liable for the
1) The Articles of Incorporation of the debt. D replied that ABC partnership was dissolved upon
corporation expressly allows the corporation to enter completion of the project for which purpose the partnership
into partnerships; was formed. Will you dismiss the complaint against A If you
2) The Articles of Partnership must provide that were the Judge?
all partners will manage the partnership, and they shall be SUGGESTED ANSWER:
jointly and severally liable; and As Judge, I would not dismiss the complaint against A.
3) In case of a foreign corporation, it must be because A is still liable as a general partner for his pro rata
licensed to do business in the Philippines. share of 1/3 (Art. 1816, C. C.J. Dissolution of a partnership
c) No. A corporation may not be a general partner because caused by the termination of the particular undertaking
the principle of mutual agency in general partnership specified in the agreement does not extinguish obligations,
will violate the corporation law principle that only the board which must be liquidated during the "winding up" of the
of directors may bind the corporation. partnership affairs (Articles 1829 and 1830. par. 1-a, Civil
SUGGESTED ANSWER: Code).
3) No, for the same reasons given in the Answer to Number Effect of Death of Partner (1997)
2 above. Stating briefly the thesis to support your answer to each of
Conveyance of a Partner’s Share Dissolution (1998) the following cases, will the death - of a partner terminate the
Dielle, Karlo and Una are general partners in a merchandising partnership?
firm. Having contributed equal amounts to the capital, they SUGGESTED ANSWER:
also agree on equal distribution of whatever net profit is Yes. The death of a partner will terminate the partnership, by
realized per fiscal period. After two years of operation, express provision of par. 5, Art. 1830 of the Civil Code.
however, Una conveys her whole interest in the partnership to Obligations of a Partner (1992)
Justine, without the knowledge and consent of Dielle and W, X, Y and Z organized a general partnership with W and X
Karlo. as industrial partners and Y and Z as capitalist partners. Y
1. Is the partnership dissolved? contributed P50,000.00 and Z contributed P20,000.00 to the
12%] common fund. By a unanimous vote of the partners, W and
2. What are the rights of Justine, if any, should she desire to X were appointed managing partners, without any
participate in the management of the partnership and in the specification of their respective powers and duties.
distribution of a net profit of P360.000.00 which was realized A applied for the position of Secretary and B applied for the
after her purchase of Una's interest? [3%] position of Accountant of the partnership.
SUGGESTED ANSWER: The hiring of A was decided upon by W and X, but was
1. No, a conveyance by a partner of his whole interest in a opposed by Y and Z.
partnership does not of itself dissolve the partnership in the The hiring of B was decided upon by W and Z, but was
absence of an agreement. (Art. 1813. Civil Code) opposed by X and Y.
SUGGESTED ANSWER: Who of the applicants should be hired by the partnership?
2. Justine cannot interfere or participate in the management or Explain and give your reasons.
administration of the partnership business or affairs. She may, SUGGESTED ANSWER:
however, receive the net profits to which Una would have of A prevails because it is an act of administration which can
otherwise been entitled. In this case, P120.000 (Art. 1813, be performed by the duly appointed managing partners, W
Civil Code) and X.
Dissolution of Partnership (1995) B cannot be hired, because in case of a tie in the decision of
Pauline, Patricia and Priscilla formed a business partnership the managing partners, the deadlock must be decided by the
for the purpose of engaging in neon advertising for a term of partners owning the controlling interest. In this case, the
five (5) years. Pauline subsequently assigned to Philip her opposition of X and Y prevails because Y owns the
interest in the partnership. When Patricia and Priscilla learned controlling Interest (Art. 1801, Civil Code).
of the assignment, they decided to dissolve the partnership Obligations of a Partner; Industrial Partner (2001)
before the expiration of its term as they had an unproductive Joe and Rudy formed a partnership to operate a car repair
business relationship with Philip in the past. On the other shop in Quezon City. Joe provided the capital while Rudy
hand, unaware of the move of Patricia and Priscilla but contributed his labor and industry. On one side of their shop,
sensing their negative reaction to his acquisition of Pauline's Joe opened and operated a coffee shop, while on the other
interest, Philip simultaneously petitioned for the dissolution side, Rudy put up a car accessories store. May they engage in
of the partnership. such separate businesses? Why? [5%]
1. Is the dissolution done by Patricia and Priscilla without SUGGESTED ANSWER:
the consent of Pauline or Philip valid? Explain. Joe, the capitalist partner, may engage in the restaurant
2. Does Philip have any right to petition for the business because it is not the same kind of business the
dissolution of the partnership before the expiration of its partnership is engaged in. On the other hand, Rudy may not
specified term? Explain. engage in any other business unless their partnership
SUGGESTED ANSWER: expressly permits him to do so because as an industrial
1, Under Art. 1830 (1) (c) of the NCC, the dissolution by partner he has to devote his full time to the business of the
Patricia and Priscilla is valid and did not violate the contract partnership [Art. 1789, CC).
of partnership even though Pauline and Philip did not Commodatum & Mutuum
consent thereto. The consent of Pauline is not necessary Commodatum (1993)
because she had already assigned her interest to Philip. The A, upon request, loaned his passenger Jeepney to B to enable
consent of Philip is not also necessary because the assignment B to bring his sick wife from Paniqui. Tarlac to the Philippine
to him of Pauline's interest did not make him a partner, under General Hospital in Manila for treatment. On the way back to
Paniqui, after leaving his wife at the hospital, people stopped prejudiced and fraudulently dispossessed of the same is to
the passenger Jeepney. B stopped for them and allowed them bring an action for damages against those who caused or
to ride on board, accepting payment from them just as in the employed the same. Third, since Juana had the right to her
case of ordinary passenger Jeepneys plying their route. As B share in the property by way of inheritance, she can demand
was crossing Bamban, there was an onrush of Lahar from Mt the partition of the thing owned in common, under Article
Pinatubo, the Jeep that was loaned to him was wrecked. 1) 494 of the Civil Code, and ask that the title to the remaining
What do you call the contract that was entered into by property be declared as exclusively hers.
A and B with respect to the passenger Jeepney that was However, since the farmland was sold to an innocent purchaser
loaned by A to B to transport the latter's sick wife to for value, then Juana has no cause of action against the buyer
Manila? 2) Is B obliged to pay A for the use of the passenger consistent with the established rule that the rights of an innocent
jeepney? 3) Is B liable to A for the loss of the purchaser for value must be respected and protected
Jeepney? notwithstanding the fraud employed by the seller in securing his
SUGGESTED ANSWER: title. (Eduarte vs. CA, 253 SCRA 391)
1) The contract is called "commodatum". [Art. 1933. Civil ADDITIONAL ANSWER:
Code). COMMODATUM is a contract by which one of the share in the proceeds of the sale with legal interest thereof,
parties (bailor) delivers to another (bailee) something not and (b) such damages as she may be able to prove as having
consumable so that the latter may use it for a certain time been suffered by her, which may include actual or
and return it. compensatory damages as well as moral and exemplary
2) No, B is not obliged to pay A for the use of the passenger damages due to the breach of trust and bad faith (Imperial
Jeepney because commodatum is essentially gratuitous. (Art. vs. CA, 259 SCRA 65). Of course, if the buyer knew of the
1933. Civil Code] co-ownership over the lot he was buying, Juana can seek (c)
3) Yes, because B devoted the thing to a purpose different reconvenyance of her one-half share instead but she must
from that for implead the buyer as co-defendant and allege his bad faith in
purchasing the entire lot. Finally, consistent with the ruling in
TRUST Imperial us. CA. Juana may seek instead (d) a declaration that
Express Trust; Prescription (1997) she is now the sole owner of the entire remaining lot on the
On 01 January 1980, Redentor and Remedies entered into an theory that Juan has forfeited his one-half share therein.
agreement by virtue of which the former was to register a ADDITIONAL ANSWER:
parcel of land in the name of Remedies under the explicit 1. Juana can file an action for damages against Juan for having
covenant to reconvey the land to Remigio, son of Redentor, fraudulently sold one of the two parcels which he partly held
upon the son's graduation from college. In 1981, the land in trust for Juana's benefit. Juana may claim actual or
was registered in the name of Remedies. compensatory damage for the loss of her share in the land;
Redentor died a year later or in 1982. In March 1983, Remigio moral damages for the mental anguish, anxiety, moral shock
graduated from college. In February 1992, Remigio and wounded feelings she had suffered; exemplary damage by
accidentally found a copy of the document so constituting way of example for the common good, and attorney's fees.
Remedies as the trustee of the land. In May 1994, Remigio Juana has no cause of action against the buyer who acquired
filed a case against Remedies for the reconveyance of the land the land for value and in good faith, relying on the transfer
to him. Remedies, in her answer, averred that the action certificate showing that Juan is the registered owner of the
already prescribed. How should the matter be decided? land.
SUGGESTED ANSWER: SUGGESTED ANSWER:
CIVIL LAW Answers to the BAR as Arranged by Topics (Year 2. Juana's suit to have herself declared as sole owner of the
1990-2006) entire remaining area will not prosper because while Juan's
The matter should be decided in favor of Remigio (trustee) 1. act in selling the other lot was wrongful. It did not have the
Juana has the right of action to recover (a) her one-half legal effect of forfeiting his share in the remaining lot.
because the action has not prescribed. The case at bar However, Juana can file an action against Juan for partition
involves an express trust which does not prescribe as long as or termination of the co-ownership with a prayer that the lot
they have not been repudiated by the trustee (Diaz vs. sold be adjudicated to Juan, and the remaining lot be
Gorricho. 103 Phil, 261). adjudicated and reconveyed to her.
Implied Trust (1998) ANOTHER ANSWER:
Juan and his sister Juana inherited from their mother two 2. The suit will prosper, applying the ruling in Imperial vs.
parcels of farmland with exactly the same areas. For CA cited above. Both law and equity authorize such a result,
convenience, the Torrens certificates of title covering both said the Supreme Court.
lots were placed in Juan's name alone. In 1996, Juan sold to Strictly speaking, Juana's contention that her brother had
an innocent purchaser one parcel in its entirety without the forfeited his share in the second lot is incorrect. Even if the
knowledge and consent of Juana, and wrongfully kept for two lots have the same area, it does not follow that they have
himself the entire price paid. the same value. Since the sale of the first lot on the Torrens
1. What rights of action, if any, does Juana have against title in the name of Juan was valid, all that Juana may recover
and/or the buyer? |3%] is the value of her undivided interest therein, plus damages.
2. Since the two lots have the same area, suppose Juana In addition, she can ask for partition or reconveyance of her
flies a complaint to have herself declared sole owner of the undivided interest in the second lot, without prejudice to any
entire remaining second lot, contending that her brother had agreement between them that in lieu of the payment of the
forfeited his share thereof by wrongfully disposing of her value of Juana's share in the first lot and damages, the second
undivided share in the first lot. Will the suit prosper? [2%] lot be reconveyed to her.
SUGGESTED ANSWER: ALTERNATIVE ANSWER:
1. When, for convenience, the Torrens title to the two parcels 2. The suit will not prosper, since Juan's wrongful act of
of land were placed in Joan's name alone, there was created pocketing the entire proceeds of the sale of the first lot is not
an implied trust (a resulting trust) for the benefit of Juana a ground for divesting him of his rights as a co-owner of the
with Juan as trustee of one-half undivided or ideal portion of second lot. Indeed, such wrongdoing by Juan does not
each of the two lots. Therefore, Juana can file an action for constitute, for the benefit of Juana, any of the modes of
damages against Joan for having fraudulently sold one of the acquiring ownership under Art. 712, Civil Code.
two parcels which he partly held in trust for Juana's benefit. CIVIL LAW Answers to the BAR as Arranged by Topics (Year
Juana may claim actual or compensatory damage for the loss 1990-2006)
of her share in the land; moral damages for the mental Trust; Implied Resulting Trust (1995)
anguish, anxiety, moral shock and wounded feelings she had In 1960, Maureen purchased two lots in a plush subdivision
suffered; exemplary damage by way of example for the registering Lot 1 in her name and Lot 2 in the name of her
common good, and attorney's fees. brother Walter with the latter's consent. The idea was to
Juana has no cause of action against the buyer who acquired circumvent a subdivision policy against the acquisition of
the land for value and in good faith, relying on the transfer more than one lot by one buyer. Maureen constructed a house
certificate of title showing that Juan is the registered owner on Lot 1 with an extension on Lot 2 to serve as a guest house.
of the land. In 1987, Walter who had suffered serious business losses
ANOTHER ANSWER: demanded that Maureen remove the extension house since
1. Under Article 476 of the Civil Code, Juana can file an the lot on which the extension was built was his property. In
action for quieting of title as there is a cloud in the title to the 1992, Maureen sued for the reconveyance to her of Lot 2
subject real property. Second, Juana can also file an action for asserting that a resulting trust was created when she had the
damages against Juan, because the settled rule is that the lot registered in Walter's name even if she paid the purchase
proper recourse of the true owner of the property who was price. Walter opposed the suit arguing that assuming the
existence of a resulting trust the action of Maureen has already buy the property. Later, another couple, Bernie and Elena,
prescribed since ten years have already elapsed from the offered a similar house at a lower price of P 1.5 Million. But
registration of the title in his name. Decide. Discuss fully. Ray insisted on buying the house of Biong and Linda for
SUGGESTED ANSWER: sentimental reasons. Ray prepared a deed of sale to be signed
This is a case of an implied resulting trust. If Walter claims to by the couple and a manager's check for P2 Million. After
have acquired ownership of the land by prescription or if he receiving the P2 Million, Biong signed the deed of sale.
anchors his defense on extinctive prescription, the ten year However, Linda was not able to sign it because she was
period must be reckoned from 1987 when he demanded that abroad. On her return, she refused to sign the document
Maureen remove the extension house on Lot No. 2 because saying she changed her mind. Linda filed suit for nullification
such demand amounts to an express repudiation of the trust of the deed of sale and for moral and exemplary damages
and it was made known to Maureen. The action for against Ray.
reconveyance filed in 1992 is not yet barred by prescription. Will the suit prosper? Explain. (2.5)
(Spouses Huang v. Court of Appeals, Sept. 13, 1994).
SALES
Assignment of Credit vs. Subrogation (1993)
Peter Co, a trader from Manila, has dealt business with Allied
Commodities in Hongkong for five years. All through the
years, Peter Co accumulated an indebtedness of P500,000.00
with Allied Commodities. Upon demand by its agent in
Manila, Peter Co paid Allied Commodities by check the
amount owed. Upon deposit in the payee's account in Manila,
the check was dishonored for insufficiency of funds. For and
in consideration of P1.00, Allied Commodities assigned the
credit to Hadji Butu who brought suit against Peter Co in the
RTC of Manila for recovery of the amount owed. Peter Co
moved to dismiss the complaint against him on the ground
that Hadji Butu was not a real party in interest and, therefore,
without legal capacity to sue and that he had not agreed to a
subrogation of creditor. Will Peter Co's defense of absence of
agreement to a subrogation of creditor prosper?
SUGGESTED ANSWER:
No, Co's defense will not prosper. This is not a case of
subrogation, but an assignment of credit. ASSIGNMENT OF
CREDIT is the process of transferring the right of the
assignor to the assignee. The assignment may be done either
gratuitously or onerously, in which case, the assignment has
an effect similar to that of a sale (Nyco Sales Corp.v.BA
Finance Corp. G.R No.71694. Aug.16, 1991 200 SCRA 637).
As a
result of the assignment, the plaintiff acquired all the rights of
the assignor including the right to sue in his own name as the
legal assignee. In assignment, the debtor's consent is not
essential for the validity of the assignment
(Art. 1624; 1475. CC; Rodriguez v. CA, et al, G. R No. 84220,
March 25. 1992 207 SCRA 553).
ALTERNATIVE ANSWER:
No, the defense of Peter Co will not prosper. Hadji Butu
validly acquired his right by an assignment of credit under
Article 1624 of the Civil Code. However, the provisions on
the contract of sale (Article 1475 Civil Code) will apply, and
the transaction is covered by the Statute of Frauds. (Art.
1403 par. (2) Civil Code)
Conditional Sale vs. Absolute Sale (1997)
Distinguish between a conditional sale, on the one hand, and
an absolute sale, on the other hand.
SUGGESTED ANSWER:
A CONDITIONAL SALE is one where the vendor is
granted the right to unilaterally rescind the contract predicated
on the fulfillment or non-fulfillment, as the case may be, of
the prescribed condition. An ABSOLUTE SALE is one
where the title to the property is not reserved to the vendor or
if the vendor is not granted the right to rescind the contract
based on the fulfillment or nonfulfillment, as the case may be,
of the prescribed condition.
Contract of Sale vs. Agency to Sell (1999)
A granted B the exclusive right to sell his brand of Maong
pants in Isabela, the price for his merchandise payable within
60 days from delivery, and promising B a commission of 20%
on all sales. After the delivery of the merchandise to B but
before he could sell any of them, B’s store in Isabela was
completely burned without his fault, together with all of A's
pants. Must B pay A for his lost pants? Why? (5%)
SUGGESTED ANSWER:
The contract between A and B is a sale not an agency to sell
because the price is payable by B upon 60 days from delivery
even if B is unable to resell it. If B were an agent, he is not
bound to pay the price if he is unable to resell it.
As a buyer, ownership passed to B upon delivery and, under
Art. 1504 of the Civil Code, the thing perishes for the owner.
Hence, B must still pay the price.
Contract of Sale; Marital Community Property; Formalities
(2006)
Spouses Biong and Linda wanted to sell their house. They
found a prospective buyer, Ray. Linda negotiated with Ray for
the sale of the property. They agreed on a fair price of P2
Million. Ray sent Linda a letter confirming his intention to