I.

 

Alden and Stela were both former Filipino citizens. They were married in the Philippines but they later migrated to the United States where they were naturalized as American citizens. In their union they were able to accumulate several real properties both in the US and in the Philippines. Unfortunately, they were not blessed with children. In the US, they executed a joint will instituting as common heirs to divide their combined estate in equal shares, the five siblings of Alden and the seven siblings of Stela. Alden passed away in 2013 and a year later, Stela also died. The siblings of Alden who were all citizens of the US instituted probate proceedings in a US court impleading the siblings of Stela who were all in the Philippines.

 

(A) Was the joint will executed by Alden and Stela who were both former Filipinos valid? Explain with legal basis. (3%) (B) Can the joint will produce legal effect in the Philippines with respect to the properties of Alden and Stela found here? If so, how? (C) is the situation presented in Item I an example of dépeçage?

 

SUGGESTED ANSWERS

 

(A) The joint will shall be valid if it was executed in accordance with U.S. law. At the time of the will’s execution, Alden and Stela were U.S. citizens. The will of an alien who is abroad produces effect in the Philippines if made with the formalities prescribed by the place of the law in which he resides, or according to the formalities observed in his country (Art. 816, Civil Code). Art. 819 of the Civil Code does not apply as it refers specifically to the invalidity of joint wills “executed by Filipinos in a foreign country”.

 

(B) The joint will may produce legal effect in the Philippines if it was validly executed in accordance with the laws of the U.S. To be given legal effect in the Philippines, it must be probated in this country. Since the will was executed abroad by aliens, it must comply with Article 17 or Article 816 of the Civil Code. Under Article 17, the forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed. Under Article 816, the will of an alien who is abroad produces effect in the Philippines if made with the formalities prescribed by the place of the law in which he resides, or according to the formalities observed in his country, or in conformity with those which this Code prescribes. Since Alden and Stela were both naturalized American citizens at the time of the execution of the will, they are allowed to execute a will in accordance with the formalities prescribed by the law of their country, where they reside, or Philippine law. Moreover, Article 16(2) requires a will to be intrinsically in accordance with the national law of the testator, hence should also be in accordance with US law. However, Alden’s siblings are all US citizens. Insofar as the real properties situated in the Philippines, the prohibition regarding alien ownership of Philippine land found in the Constitution is applicable. Article 17 of the Civil Code provides that 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.

 

(C) No, the situation presented in Item I is not an example of dépeçage. repeçage is a term used where different aspects of a case involving a foreign element may be governed by different systems of law. In this case, only one system of laws governs, that of U.S. law. Under Article 16 par. (2) of the Civil Code, intestate and testamentary succession, 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, whatever may be the nature of the property and regardless of the country wherein said property may be found. For the will to be probated, it must also comply with US law under Articles 17 and 816 of the Civil Code, as the US was the place of the will’s execution, the residence of the spouses, and the country where they are nationals.

Note: It is suggested that the examinees be given full credit for I(C) as the term ‘dépeçage’ is not commonly taught in this jurisdiction.

 

II.

 

Marco and Gina were married in 1989. Ten years later, or in 1999, Gina left Marco and lived with another man, leaving their two children of school age with Marco. When Marco needed money for their children’s education he sold a parcel of land registered in his name, without Gina’s consent, which he purchased before his marriage. Is the sale by Marco valid, void or voidable? Explain with legal basis. (4%)

 

SUGGESTED ANSWER

 

The sale is void. The marriage was celebrated during the effectivity of the Family Code. In the absence of a marriage settlement, the property relations between the spouses is governed by absolute community of property, whereby all the properties owned by the spouses at the time of the celebration of the marriage, as well as whatever they may acquire during the marriage, shall form part of the community property, as a rule (Art. 91, Family Code). The parcel of land sold is part of the community property as Marco owned it before the marriage. In an absolute community of property regime, the administration and enjoyment shall belong to both spouses jointly (Art. 96, Family Code). Neither spouse may dispose or encumber common properties without the authority of the court or the written consent of the other spouse, and in the absence of such authority or consent, the disposition or encumbrance shall be void (Art. 96, Family Code). Despite separation de facto for more than 10 years, Gina remains Marco’s spouse, and her consent is still required for the sale to be valid. Since Marco sold the lot without Gina’s consent, the sale is void.

 

III.

Julie had a relationship with a married man who had legitimate children. A son was born out of that illicit relationship in 1981. Although the putative father did not recognize the child in his certificate of birth, he nevertheless provided the child with all the support he needed and spent time regularly with the child and his mother. When the man died in 2000, the child was already 18 years old so he filed a petition to be recognized as an illegitimate child of the putative father and sought to be given a share in his putative father’s estate. The legitimate family opposed, saying that under the Family Code his action cannot prosper because he did not bring the action for recognition during the lifetime of his putative father.

(A) If you were the judge in this case, how would you rule? (4%)

(B) Wishing to keep the peace, the child during the pendency of the case decides to compromise with his putative father’s family by abandoning his petition in exchange for 1/2 of what he would have received as inheritance if he were recognized as an illegitimate child. As the judge, would you approve such a compromise? (2%)

 

SUGGESTED ANSWER

(A) I would rule against the illegitimate child. The action for recognition as an illegitimate child based on the open and continuous possession the status of an illegitimate child may be brought during the lifetime of the alleged parent (Art. 175, Family Code). Since the putative father has already died, the action for recognition based on such ground, as indicated by the support and regular spending of time with the child and mother, cannot prosper.

 

(B) I would not approve the compromise. The compromise involved herein is a compromise of the civil status of the child, which is prohibited under Art. 2035 of the Civil Code.

 

ALTERNATIVE ANSWER

(B) I would approve the compromise. The subject matter of the compromise between the parties is abandonment of the petition or the end of the litigation between the parties, not the child’s civil status; there would be no ruling as to the civil status of the child. Hence, the prohibition against compromise of the civil status of persons in Art. 2035 of the Civil Code does not apply.

 

IV.

Bert and Joe, both male and single, lived together as common law spouses and agreed to raise a son of Bert’s living brother as their child without legally adopting him. Bert worked while Joe 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, Bert died of cardiac arrest, leaving no will. Bert was survived by his biological siblings, Joe, and the boy.

 

(A) Can Article 147 on co-ownership apply to Bert and Joe, whereby all properties they acquired will be presumed to have been acquired by their joint industry and shall be owned by them in equal shares? (2%)

(B) What are the successional rights of the boy Bert and Joe raised as their son? (2%)

(C) If Bert and Joe had decided in the early years of their cohabitation to jointly adopt the boy, would they have been legally allowed to do so? Explain with legal basis? (3%)

 

SUGGESTED ANSWER

(A) No, Article 147 of the Family Code is not applicable to the case of Bert and Joe. Article 147 applies only when a “man and a woman, who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage”. In this case, Bert and Joe are both men; they ar also incapacitated from marrying each other since in this jurisdiction, marriage may only take place between a man and a woman (Arts. 1 and 2, Family Code).

 

(B) The boy has no successional rights. Since Bert died without a will, intestate succession shall apply. While the boy is the son of Bert’s living brother, and hence is Bert’s nephew, he cannot inherit from Bert as a legal heir since he is excluded by his father under the proximity rule (Art. 962, Civil Code). Moreover, he cannot invoke the rights of an adopted child to inherit from Bert since the boy was not legally adopted.

 

(C) No, Bert and Joe could not have jointly adopted the boy. Under the Domestic Adoption Act, joint adoption is permitted, and in certain cases mandated, for spouses. In this case, Bert and Joe are not spouses.

 

V.

 

Mrs. L was married to a ship captain who worked for an interna maritime vessel. For her and her family’s support, she would do monthly allotments from her husband’s company. One day, while en ro from Hong Kong to Manila, the vessel manned by Captain L encounter a severe typhoon at sea. The captain was able to send radio messages of distress to the head office until all communications were lost. In the weeks that followed, the search operations yielded debris of the lost ship but the bodies of the crew and the passengers were not recovered. The insurance company thereafter paid out the death benefits to all the heirs of the passengers and crew. Mrs. L filed a complaint demanding that her monthly allotments continue for the next four years until her husband may be legally presumed dead because of his absence. If you were the magistrate, how would you rule? (3%)

 

SUGGESTED ANSWER

 

I would rule against Mrs. L. When a person disappears under circumstances involving danger of death as enumerated in Article 391 of the Civil Code, the death of the person is presumed to have taken place at the beginning of the four year period provided in said article. In this case, Captain L disappeared while on board a vessel lost during a sea voyage, and thus is presumed dead when the vessel was lost at sea. Hence, Mrs. L is not entitled to the monthly allotments for the next four years.

 

ALTERNATIVE ANSWER

 

I would rule in favor of Mrs. L. A person missing under the circumstances as those of Captain L may not be legally considered as dead until the lapse of the period fixed by law on presumption of death. To allow the argument that Captain L’s death should be considered on the very day of the occurrence of the event from which death is presumed would mean that no claim for death compensation benefits would ever prosper, since the heirs of a missing seaman have to wait for four years under Art. 391 before the seaman may be declared legally dead, and after four years, the prescriptive period for filing money claims would lapse (Pantollano v. Korphil, G.R. 169575, March 30, 2011).

 

VI

Kardo as a young lieutenant, met Glenda, and after a whirlwind courtship they were married. In the early part of his military career, Kardo was assigned to different places all over the country but Glenda refused to accompany him as she preferred to live in her hometown. They did not live together until the 12th year of their marriage when Kardo had risen un the ranks and was given his own command. They moved to living quarters in Fort Gregorio. One day, while Kardo was away on official business, one of his military aides caught Glenda having sex with the corporal assigned as Kardo’s driver. The aide immediately reported the matter to Kardo who rushed home to confront his wife. Glenda readily admitted the affair and Kardo sent her away in anger. Kardo would later come to know the true extent of Glenda’s unfaithfulness from his aides, his household staff, and former neighbors who informed him that Glenda has had intimate relations with various men throughout their marriage whenever Kardo was away on assignment.

 

Kardo filed a petition for declaration of nullity of marriage under Article 36. Based on interviews from Kardo, his aide, and the housekeeper, a psychologist testified that Glenda’s habitual infidelity was due to her affliction with Histrionic Personality disorder, an illness characterized by excessive emotionalism and uncontrollable attention-seeking behavior rooted in Glenda’s abandonment as a child by her father. Kardo himself, his aide, and his housekeeper also testified in court. The RTC granted the petition, relying on the liberality espoused by Te v. Te (G.R. No. 161793, February 13, 2009) and Azcueta v. Republic (G.R. No. 180668, May 26, 2009). However, the OSG filed an appeal, arguing that sexual infidelity was only a ground for legal separation and that the RTC failed to abide by the guidelines laid down in the Molina case. How would you decide the appeal? (5%)

 

SUGGESTED ANSWER

I would dismiss the appeal if the incapacity is incurable and so grave as to prevent Glenda from performing her essential marital obligations. For the Histrionic Personality Disorder to be a ground for declaration of nullity of marriage under Article 36 of the Family Code, it must be characterized by (1) gravity; (2) juridical antecedence; and (3) incurability. The sexual infidelity in this case was not the ground for the declaration of the nullity of the marriage, but merely the manifestation of Glenda’s incapacity to comply with her obligation to Kardo as a spouse, and her inability to accord respect to the sanctity of their marriage, satisfying the requisite of gravity. There was juridical antecedence since the psychologist testified that the incapacity already existed at the time of the marriage, as it was rooted in Glenda’s abandonment as a child by her father. The fact that Glenda was not personally examined is immaterial. As held by the Supreme Court, “there is no requirement that the respondent spouse be personally examined by a physician or psychologist as a condition sine qua non for the declaration of nullity of marriage based on psychological incapacity. What matters is whether the totality of evidence presented is adequate to sustain a finding of psychological incapacity” (Marcos v. Marcos, G.R. No. 136490, October 19, 2000). Moreover, it has been held by the Supreme Court that the Molina doctrine should not be rigidly or strictly applied. Molina is not set in stone and the interpretation of Article 36 must rely on a case-to-case basis (Antonio v. Reyes, G.R. 155800, March 10, 2006).

 

ALTERNATIVE ANSWER

I would grant the appeal. First, there was no showing that the incapacity is incurable or that it was so grave that she could not perform her essential marital obligations. Also, as held in the case of Ochosa v. Alano (G.R. No. January 26, 2011), there was insufficient evidence that Glenda’s defects were already present at the inception of, or prior to the marriage; psychological incapacity did not satisfy the jurisprudential requisite of juridical antecedence, as laid down in Republic v. CA and Molina (G.R. 108763, February 13, 1997). It was not shown how the psychologist arrived at the conclusion that Glenda’s habitual infidelity was due to her affliction with Histrionic Personality Disorder. It is possible that the psychologist evaluated her condition only indirectly, from information gathered from Kardo and his witnesses, which evokes the possibility that the information was biased in favor of Kardo’s cause. Although the Supreme Court has held that personal examination of a party alleged to be psychologically incapacitated is not a mandatory requirement (Marcos v. Marcos, G.R. 136490, October 19, 2000), it has also ruled that to make conclusions and generalizations on a spouse’s psychological condition based on the information fed by only one side, similar to the case at bar, is not different from admitting hearsay evidence as proof of the truthfulness of the content of such evidence (Padilla-Rumbaua v. Rumbaua, G.R. No. 166738, August 14, 2009, 596 SCRA 157). Mere sexual infidelity is not itself a ground for dissolution of marriage under Article 36, even if habitual; at most, it can only be a ground for legal separation.

 

VII.

 

Mr. and Mrs. X migrated to the US with all their children. As they had no intention of coming back, they offered their house and lot for sale to their neighbors, Mr. and Mrs. A (the buyers) who agreed to buy the property for 8 Million. Because Mr. and Mrs. A needed to obtain a loan from a bank first, and since the sellers were in a hurry to migrate, the latter told the buyers that they could already occupy the house, renovate it as it was already in a state of disrepair, and pay only when their loan is approved and released. While waiting for the loan approval, the buyers spent P1 Million in repairing the house. A month later, a person carrying an authenticated special power of attorney from the sellers demanding that the buyers either immediately pay for the property in full now or vacate it and pay damages for having made improvements on the property without a sale having been perfected.

 

(A) What are the buyers’ options or legal rights with respect to the expenses they incurred in improving the property under the circumstances? (3%)

(B) Can the buyers be made to immediately vacate on the ground that the sale was not perfected? Explain briefly. (3%)

 

SUGGESTED ANSWER

(A) The sale was perfected and Spouses A acquired ownership over the house and lot upon delivery. Payment of the price was subject to an indefinite period, that is, after the approval of the bank loan. As owners, they have the right to make improvements on the said properties, and to retain the same. Even assuming for the sake of argument that the sale was not perfected and Spouses A had not acquired ownership over the house and lot because of a notarized deed of sale, or in case or rescission, they may be considered builders in good faith since they entered into the property believing in good faith that they were the owners of the property in question. As builders in good faith, they are entitled to reimbursement for necessary and useful expenses incurred upon the property, and may retain the property until reimbursement therefore (Art. 448 and 546 Civil Code). The improvements in ques. tion are necessary and useful since the house was already in a state of disrepair.

 

(B) No, the buyers may not be made to vacate the properties. A contract of sale is a consensual contract which is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price (Art. 1475, Civil Code). In this case, the sale was already perfected since there was already a meeting of the minds as to the object of the sale, which is the house and lot, and as to the price, which is P8 Million. The fact that there was no payment yet is immaterial since it is not a requisite for the perfection of the contract.

Even assuming that the sale was rescinded, the buyers may still not be made to vacate the properties. Since the buyers made necessary and useful improvements upon the properties, they have the right to retain the properties in question until the full reimbursement of such expenses (Arts. 448 and 546, Civil Code).

 

VIII

 

X, Y, Z are siblings who inherited a 10-storey building from their parents, They agreed in writing to maintain it as a co-owned property for leasing out and to divide the net profits among themselves equally for a period of 20 years. On the 8th year, X wanted to get out of the co-ownership so he could get his 1/3 share in the property. Y and Z refused, saying X is bound by their agreement to keep the co-ownership for 20 years. Are Y and Z correct? Explain. (3%)

SUGGESTED ANSWER

Y and Z are partly correct. As a general rule, no co-owners shall be obliged to remain in the co-ownership, and each co-owner may demand at any time the partition of the thing owned in common. However, as one of the exceptions to the general rule, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years, shall be valid (Art. 494, CC). In this case, X, Y, and Z stipulated for a period of indivision of 20 years, which exceeds the maximum allowed by law. The stipulation would be void only as to the period beyond such maximum of ten years. Hence, X cannot yet ask for the partition, as there remains two more years for the agreement to remain in force.

 

IX.

 

Jose, single, donated a house and lot to his only niece, Maria, who was of legal age and who accepted the donation. The donation and acceptance thereof were evidenced by a Deed of Donation. Mana then lived in the house and lot donated to her, religiously paying resway, a taxes thereon. Twelve years later, when Jose had already passed away, a woman claiming to be an illegitimate daughter of Jose filed a complaint against Maria. Claiming rights as an heir, the woman prayed that Maria be ordered to reconvey the house and lot to Jose’s estate. In her complaint she alleged that the notary public who notarized the Deed of Donation had an expired notarial commission when the Deed of Donation was executed by Jose. Can Maria be made to reconvey the property? What can she put up as a defense? (4%)

 

SUGGESTED ANSWER

Maria cannot be made to reconvey the property. In order for a donation of an immovable to be valid, it must be made in a public document (Art. 749, Civil Code). Since the notary public before whom the deed of donation was acknowledged had an expired notarial commission, the deed of donation remained a private instrument; hence, the donation was void. However, assuming that the donation is not inofficious, Maria can put up the defense of prescription. Since she possessed the house and lot in the concept of an owner and in good faith that she had just title to the property by virtue of the donation, she became the owner of the property by virtue of acquisitive prescription 10 years after she took possession thereof, assuming that the land on which the house was built was not registered land (Arts. 1117, 1118, 1127 and 1134, Civil Code).

 

X.

 

X, a dressmaker, accepted clothing materials from Karla to make two dresses for her. On the day X was supposed to deliver Karla’s dresses, X called up Karla to say that she had an urgent matter to attend to and willI deliver them the next day. That night, however, a robber broke into her shop and took everything including Karla’s two dresses. X claims she is not liable to deliver Karla’s dresses or to pay for the clothing materials Considering she herself was a victim of the robbery which was a fortuitous event and over which she had no control. Do you agree? Why? (3%)

 

SUGGESTED ANSWER

Yes, I agree that X is not liable. The contract between the parties is a contract for a piece of work wherein the contractor, X, bound herself to execute a piece of work for the employer, Karla, in consideration of a certain price or compensation (Art. 1713, Civil Code). Article 1717 of the Civil Code provides that if the contractor bound himself to furnish the material, he shall suffer the loss if the work should be destroyed before its delivery, save when there has been delay in receiving it. Since the contractor X did not furnish the material, she shall not suffer the loss of the work which took place before its delivery. There was no delay in the receipt of the work since the parties agreed to the delivery of the dresses on the day after the original date of delivery. Hence, X is not bound to suffer the loss, and is liable for neither the delivery of the dresses nor the cost of the materials.

 

ALTERNATIVE ANSWER

No, I do not agree. The obligation involved in this case is an obligation to do, since X’s obligation is to make dresses for Karla. Under Article 1167 of the Civil Code, if a person obliged to do something fails to do it, the same shall be executed at his cost. Although X may not be compelled to deliver the dresses to Karla, she may be held liable for the cost of having another person to make the dresses for Karla, which including the cost of the materials.

 

XI.

Jackie, 16, inherited a townhouse. Because she wanted to study in an exclusive school, she sold her townhouse by signing a Deed of Sale and turning over possession of the same to the buyer. When the buyer discovered that she was still a minor, she promised to execute another Deed of Sale when she turns 18. When Jackie turned 25 and was already working, she wanted to annul the sale and return the buyer’s money to recover her townhouse. Was the sale contract void, voidable or valid? Can Jackie still recover the property? Explain. (4%)

 

SUGGESTED ANSWER

The contract of sale is voidable. Where one of the parties is incapable of giving consent to a contract, the contract is voidable. (Art. 1390, Civil Code.) It appears that only Jackie was incapacitated by virtue of her minority.

Jackie cannot recover the property. First, since the contract is voidable, Jackie had only 4 years from the time she attained the age of majority to bring the action for annulment of the contract (Art. 1391, Civil Code). In this case, Jackie should have brought the action for annulment of the contract within four years after turning eighteen years old, or up until the age of twenty-two. Since she is already 25 years old, the period for bringing the action has prescribed. Second, Jackie may be considered to have actively misrepresented as to her age. Thus, she will be bound to the contract under the principle of estoppel.

 

XII

 

1. Iya and Betty owed Jun P500,000.00 for advancing their equity in a corporation they joined as incorporators. Iya and Betty bound themselves solidarily liable for the debt. Later, Iya and Jun became sweethearts so Jun condoned the debt of P500,000.00. May lya demand from Betty P250,000.00 as her share in the debt? Explain with legal basis. (2%)

 

(B) Juancho, Don and Pedro borrowed P150,000.00 from their friend Cita to put up an internet café orally promising to pay her the full amount after one year. Because of their lack of business know-how, their business collapsed. Juancho and Don ended up penniless, but Pedro was able to borrow money and put up a restaurant which did well. Can Cita demand that Pedro pay the entire obligation since he, together with the two others, promised to pay the amount in full after one year? Defend your answer. (2%)

 

SUGGESTED ANSWER

(A) No, Iya can not demand reimbursement from Betty. The remission of the whole obligation, obtained by one of the solidary debtors, does not entitle him or her to reimbursement from his co-debtors (Art. 1220, Civil Code).

(B) No, Cita can not demand payment of the entire obligation from Pedro.

The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when law or the nature of the obligation requires solidarity (Art. 1207, Civil Code). In this case, there is no indication that they bound themselves solidarily to pay Cita, nor does the law or nature of the obligation require solidarity. Hence, Juancho, Don and Pedro’s obligation is joint, and Cita can only demand payment of 1/3 of the obligation from Pedro, which is presumed to be his share in the obligation in the absence of stipulation to the contrary (Art. 1208, Civil Code).

 

XIII

 

(A) X and Y are partners in a shop offering portrait painting. Y provided the capital and the marketing while X was the portrait artist. They accepted the 50,000.00 payment of Kyia to do her portrait but X passed away without being able to do it. Can Kyla demand that Y deliver the portrait she had paid for because she was dealing with the business establishment and not with the artist personally? Why or why not? (3%)

 

(B) In this jurisdiction, is a joint venture (i.e., a group of corporations contributing resources for a specific project and sharing the profits therefrom) considered a partnership? (3%)

 

SUGGESTED ANSWER

(A) No, Kyla cannot validly demand that y deliver the portrait. Although she may be correct that it is the partnership that she contracted with, Kyla cannot demand that Y deliver the portrait ‘if the intention of the parties was that the portrait should be done by X and this is precisely why the obligation was constituted. With the death of X, the obligation was extinguished because it is a purely personal obligation which is extinguished upon the death of the obligor. Finally, the obligation is an obligation to do. To oblige the surviving partner, Y, to deliver the painting (do the painting) would be tantamount to an involuntary servitude, which is against the law.

 

ALTERNATIVE ANSWER

1. Yes. Art. 1768 states that a partnership has a juridical personality separate and distinct from that of each of the partners. The facts do  not allege that Kyla contracted for a purely personal service, hence the partnership is the entity which she contracted with, so even upon the death of X, she can demand that Y as the remaining partner deliver the portrait in fulfillment of the obligation of the partnership to her.

 

SUGGESTED ANSWER

(B) Yes. The Supreme Court has ruled that a joint venture may be considered a species of partnership (Aurbach v. Sanitary Wares Manufacturing Corp., G.R. No. 75875, December 15, 1989; Philex Mining v. CIR, G.R. No. 148187, April 16, 2008). It has also ruled that “a joint venture is hardly distinguishable from, and may be likened to, a partnership since their elements are similar, i.e., community of interests in the business and sharing profits and losses. Being a form of partnership, a joint venture is generally governed by the law on partnerships” (Litonjua v. Litonjua, G.R. Nos. 166299-300, December 13, 2005).

 

ALTERNATIVE ANSWER

(B) No, a joint venture is not considered a partnership. Although the Supreme Court has recognized that for certain purposes, a joint venture is a form of partnership and should be governed by the law of partnerships, it has also recognized a distinction between the two business forms, and has held that although a corporation cannot ente into a partnership contract, it may however engage in a joint ven with others. (Aurbach v. Sanitary Wares Manufacturing Corp., G.R. 75875, December 15, 1989).

 

XIV

 

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.

(A) Will their action prosper? (4%)

(B) 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? (3%)

 

SUGGESTED ANSWER

(A) Yes, the action will prosper. The cause of action against the company is different from the cause of action against the driver in the criminal case. The civil action against the employer is rooted on the fact that employers are vicariously liable for the damage caused by their employees while in the performance of their functions. The vicarious liability of the employers under Art. 2180 of the Civil Code does not require as a condition sine qua non that the driver should have been declared insolvent or unable to pay the awards of damages. The cause of action against the driver, on the other hand, is rooted in Art. 2176, which defines a quasi-delict. Moreover, if negligence was proven in the criminal case which requires proof beyond reasonable doubt. then it can likewise be proven in a civil action which requires only preponderance of evidence.

 

(B) Yes. The employer may still be held subsidiarily liable under Art. 103 of the Revised Penal Code. 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, as ruled in Carpio v. Doroja (G.R. No. 84516, December 5, 1989). For these requisites to be established adequately, however, there must be a hearing which will determine the sufficiency or insufficiency of the properties of the employee to compensate the plaintiffs, as well as to allow the employer to present his defenses.

 

XV

 

(A) Sara borrowed P50,000.00 from Julia and orally promised to pay it within six months. When Sara tried to pay her debt on the 8th month, julia demanded the payment of interest of 12% per annum because of Sara’s delay in payment. Sara paid her debt and the interest claimed by Julia. After rethinking, Sara demanded back from Julia the amount she had paid as interest. Julia claims she has no obligation to return the interest paid by Sara because it was a natural obligation which Sara voluntarily performed and can no longer recover. Do you agree?Explain. (4%)

 

(B) Distinguish civil and natural obligations. (2%)

 

SUGGESTED ANSWER

 

(A) No, I do not agree with Julia. For a creditor to be entitled to compensatory interest, the debtor must be in delay. As a rule, in order for delay to exist, demand must have been made. In this case, there was no demand made upon the expiration of the 6-month period; thus, Sara cannot be considered in delay, and is not liable to pay compensatory interest. There being no obligation to pay compensatory interest, Julia must return the interest mistakenly paid since she was not entitled thereto, and delivery was made merely through mistake. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises (Art. 2154, Civil Code).

 

(B) Civil obligations give a right of action to compel their performance.

Natural obligations, not being based on positive law but on equity and natural law, 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 (Art. 1423, Civil Code).

 

XVI

Donna pledged a set of diamond ring and earrings to Jane for P200.0 She was made to sign an agreement that if she cannot pay her debt w six months, Jane could immediately appropriate the jewelry for heren After six months, Donna failed to pay. Jane then displayed the earring and ring set in her jewelry shop located in a mall. A buyer, Juana, bou. the jewelry set for P300,000.00.

 

(A) Was the agreement which Donna signed with Jane valid? Explain with legal basis. (2%)

(B) Can Donna redeem the jewelry set from Juana by paying the amount she owed Jane to Juana? Explain with legal basis. (2%).

(C) Give an example of a pledge created by operation of law. (2%)

 

SUGGESTED ANSWER

(A) No, the agreement that if Donna cannot pay her debt within 6 months, Jane could immediately appropriate the jewelry for herself is void as it constitutes pactum commissorium, which is void under the law. Under Art. 2088, pactum commissorium is a provision in a pledge or mortgage agreement where the property pledged or mortgaged by the debtor automatically becomes the property of the creditor in the event the debtor fails to pay the debt or commits a breach of the loan agreement.

 

(B) No. Donna cannot redeem the jewelry set from Juana because there is no privity of contract between Donna and Juana. Moreover, Juana is a third person who purchased the thing in good faith from a merchant store. Under Art. 1505, even if the seller does not have the right to sell the buyer acquires absolute ownership over the thing if he bought it in a merchant store in good faith, the owner neither having been unlawfully deprived thereof, nor was the thing lost (Sun Brothers v. Perez, G.R. No. L-17527, April 30, 1963)

 

(C) [Any of the following answers should be given full credit] 1. Art. 546 states: “Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession, having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.” 2. Art. 1731 states: “He who has executed work upon a movable has a right to retain it by way of pledge until he is paid.” 3. Art. 1994 states: “The depositarý may retain the thing in pledge until the full payment of what may be due him by reason of the deposit.” 4. Art. 1914 states: “The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles.

 

XVII.

 

Z, a gambler, wagered and lost P2 Million in baccarat, a card.game. He was pressured into signing a Deed of Absolute Sale in favor of the winner covering a parcel of land with improvements worth P20 Million. One month later, the supposed vendee of the property demanded that he and his family vacate the property subject of the deed of sale. Was the deed of sale valid? What can Z do? (4%)

 

SUGGESTED ANSWER

No, the Deed of Sale was not valid. Under Article 2014 of the Civil Code, no action can be maintained by the winner for the collection of what he has won in a game of chance. In this case, the Deed of Sale represents the winnings in the baccarat game; hence, it was made for illegal consideration, and is void.

 

XVIII

 

A lawyer was given an authority by means of a Special Power of Attorney by his client to sell a parcel of land for the amount of P3 Million. Since the client owed the lawyer P1 Million in attorney’s fees in a prior case he handled, the client agreed that if the property is sold, the lawyer was entitled to get 5% agent’s fee plus P1 Million as payment for his unpaid attorney’s fees. The client, however, subsequently found a buyer of his own who was willing to buy the property for a higher amount. Can the client unilaterally rescind the authority he gave in favor of his lawyer? Why or why not? (4%)

 

SUGGESTED ANSWER

No, the client cannot unilaterally rescind the authority he gave in favor of , his lawyer because the agency is coupled with interest, the interest being the attorney’s fees which the client owed the lawyer. Under Art. 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling the obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. In this case, if the lawyer could sell his client’s property, the lawyer will be entitled not only to his commission, but also to his attorney’s fees. These attorney’s fees were already owed by the client to his lawyer before the SPA was executed. The agency is a means of fulfilling an obligation already contracted.

 

XIX

Mr. A, a businessman, put several real estate properties under the name : or his eldest son X because at that time, X was the only one of legal age among his four children. He told his son he was to hold those assets for his siblings until they become adults themselves. X then got married. After 5 years, Mr. A asked X to transfer the titles over three properties to his three siblings, leaving two properties for himself. To A’s surprise, X said that he can no longer be made to transfer the properties to his siblings because more than 5 years have passed since the titles were registered in his name. Do you agree? Explain. (4%)

 

SUGGESTED ANSWER

No, I don’t agree with X. This is a clear case of an implied trust provided in Article 1453 of the Civil Code which states that “when property is conveyed to a person in reliance upon his declared intention to hold it for, or transfer it to another or the grantor, there is an implied trust in favor of the person for whose benefit it is contemplated.” In this case, A is the trustor, X is the trustee, and the three other children of A are the beneficiaries. A and/or his three children may file an action to compel X to transfer title in favor of his three siblings within ten (10) years from the time the cause of action accrues upon an obligation created by law – when the children attains the age of majority (Art. 1144, Civil Code).

 

XX

 

(A) Mr. and Mrs. Roman and Mr. and Mrs. Cruz filed an application for registration of a parcel of land which after due proceedings was granted by the RTC acting as a land registration court. However, before the decree of registration could be issued, the spouses Roman and the spouses Cruz sold the lot to Juan. In the notarized deed of sale, the sellers expressly undertook to submit the deed of sale to the land registration court so that the title to the property would be directly issued in Juan’s name. Is such a stipulation valid? (2%)

 

(B) Distinguish a direct attack from a collateral attack on a title. (2%)

 

(C) If the title in Item XX.(A) is issued in the names of the original sellers, would a motion filed by Juan in the same case to correct or amend the title in order to reflect as owner be considered a collateral attack? (2%)

 

SUGGESTED ANSWER

(A) Yes, the stipulation is valid. Section 22 of P.D. No. 1529 expressly provides that “after the filing of the application and before the issuance of the decree of registration, the land therein described may still be the subject of dealings in whole or in part, in which case the interested party shall present to the court the pertinent instruments together with a subdivision plan approved by the Director of Lands in case of transfer of portions thereof, and the court, after notice to the parties, shall order such land registered subject to the conveyance or encumbrance created by said instruments, or order that the decree of registration be issued in the name of the person to whom the property has been conveyed by said instruments”.

 

(B) An action is deemed an attack on a title when the object of the action is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of the action is to annui or set aside the judgment, or enjoin its enforcement. The attack is indirect or collateral when in an action to obtain a different relief, an attack on the judgment is nevertheless made an incident thereof.

(C) No, it cannot be considered a collateral attack. A collateral attack exists when an attack on an incidental matter is made on the judgment in an action to obtain a different relief. In this case, Juan’s motion to correct or amend the title in order to reflect his name would not be attacking the judgment directing the issuance of the title in the names of the sellers; rather, his motion impliedly admits the validity of the title of the sellers or his predecessors-in-interest.