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PERSONS

1. Bon, a Filipino, got married to Naiz, an Australian citizen, but the marriage was dissolved by adivorce decree on May 18, 1989 issued by an Australian family court. On June 26, 1992, Bon became anAustralian citizen and got married to Elaine on January 12, 1994. They lived separately without judicialdecree. On March 3, 1998, Elaine filed a complaint for declaration of nullity of her marriage with Bon onthe ground of bigamy stating that prior to the marriage, she did not know that her husband had a

previous marriage. On July 7, 1998, Bon was able to obtain a decree of divorce from Elaine, hence heprayed in his answer to the complaint that it be dismissed on the ground that it stated no cause ofaction. The court dismissed the case on the basis of the divorce which dissolved the marriage andrecognized the Philippines. Was the divorce between Elaine and Bon duly proven?

NO, Philippine law does not provide for absolute divorce, hence our courts cannot grant it. Amarriage between two Filipinos cannot be dissolved even by a divorce obtained abroad, because of Arts. 15and 17, NCC. In mixed marriages involving a Filipino and a foreigner, Art. 26 of the Family Code allows theformer to contract a subsequent marriage in case the divorce is validly obtained abroad by the alien spousecapacitating him or her to remarry. A divorce obtained abroad by a couple, who are both aliens, may berecognized in the Philippines, provided it is consistent with their respective national laws (Van Dorn vs.Romillo). The same must be proved as a fact according to the rules of evidence.

Therefore, before a foreign divorce decree can be recognized by our courts, the party pleading it

must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it. Presentationsolely of the divorce decree is insufficient (Garcia vs. Recio; Roehr vs. Rodriguez, June 20, 2003).

2. Au and Jay are married without a valid license. During their marriage, Jay contracted asubsequent marriage with Jen. Au discovered that Jay was cohabiting with Jen and that he wasdisposing of their properties without her consent. A petition for declaration of nullity of marriage wasfiled by Au. Jay filed a Motion to Dismiss on the ground that the petition stated no cause of action itbeing superfluous and unnecessary, their marriage being void. Is Jays contention tenable?

NO. A declaration of the absolute nullity of a marriage is explicitly required either as cause of actionor a defense. Where the absolute nullity of a previous marriage is sought to be invoked for purposes ofcontracting a second marriage, the sole basis acceptable in law for said projected marriage to be free fromlegal infirmity is a final judgment declaring the previous marriage void (Art. 40, FC). With the judicial

declaration of the nullity of his first marriage, the person who marries again cannot be charged with bigamy.

3. In 1975, Roberto, a Filipino pensioner of the U.S Govt., contracted a bigamous marriage withJoan, despite the fact that his first wife, Sofie, was still living. In 1977, Roberto and Joan jointly boughta parcel of riceland, with the title being placed jointly in their names. Shortly thereafter, theypurchased a house and lot which was placed in Joans name alone as the buyer. In 1981, Roberto diedand Sofie promptly filed an action against Joan to recover both the Riceland and the house and lotclaiming them to be conjugal property of the first marriage. Joan contends that she is the owner of thehouse and lot and the Riceland is co-owned by her and Roberto. Assuming that Joan fails to prove thatshe had actually used her own money in either purchase, how do you decide the case?

Sofies action to recover both the Riceland and the house and lot is well founded. Both are conjugalproperty in view of the failure of Joan to prove that her own money was used in the purchases made. The

Supreme Court, in one case applies Article 148 of the Family Code despite the fact that the husbands deathtook place prior to the effectivity of the said law. However, even under Article 144 of the Civil Code, thesame conclusion would have been reached in view of the bigamous nature of the second marriage.

4. Jun and Angel signed a marriage contract but their marriage was not solemnized. Subsequently,Jun married Rhea. Can Jun be liable for bigamy?

NO. The subsequent marriage of Jun and Rhea is valid. Since the marriage of Jun and Angel was notsolemnized, Jun cannot be charged with bigamy when he contracted a second marriage. The mere signing ofthe marriage contract was a mere private act. Thus, the marriage of Jun and Angelica did not exist in theeyes of the law (Morigo vs. People).

5. George and Cynthia Abad, both Filipino citizens, contracted marriage in 1990. Sometime in1996, George and Cynthia, together with their two children, migrated to the United States. After twoyears of stay in the US, their marriage turned sour. As a consequence, Cynthia and their two childrenwent back to the Philippines. After George successfully obtained US citizenship, he filed for a divorce

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and was granted by the court. Subsequently, George went back to the Philippines and married hischildhood friend, Marian.

What is the status of the marriage of George and Marian? Explain.

The marriage of George and Marian is void ab initio because it is a bigamous marriage contracted byGeorge during the subsistence of his marriage with Cynthia. The marriage of George and Marian does notvalidly exist. Art. 26 of the Family Code do not apply because the marriages covered by the said provision are

only mixed marriages from the very beginning. In addition, Art. 15 of the New Civil Code provides thatregardless of where a citizen of the Philippines might be, he or she will be governed by Philippine laws withrespect to his or her family rights and duties, or to his or her status, condition and legal capacity.

6. Pam and Toshio, a Japanese national started a common-law relationship in Japan. The twothereafter lived in the Philippines. After some time, Pam gave birth to their child. Pam and Toshio weremarried under a civil ceremony. One month after their marriage, Toshio returned to Japan and promisedto return by Christmas. That promise was not fulfilled as Toshio never came back to them. Toshiolikewise stopped giving financial support to her and their child. Pam then filed an action for declarationof nullity of marriage.

a. Were the alleged acts of abandonment and irresponsibility of Toshio amount to psychologicalincapacity?

NO. The guidelines under Republic vs. Molina incorporate three basic requirements: (a) gravity; (b)juridical antecedence; and (c) incurability. The foregoing guidelines do not require that a physician examinethe person to be declared psychologically incapacitated. In fact, the root cause may be medically orclinically identified. What is important is the presence of evidence that can adequately establish the partyspsychological condition. If the totality of the evidence presented is enough to sustain a finding ofpsychological incapacity, then actual medical examination of the person concerned need not be resorted to.However, the totality of evidence presented fell short of proving that Toshio was psychologicallyincapacitated to assume his marital responsibilities. Toshios act of abandonment was doubtlesslyirresponsible but it was never alleged nor proven to be due to some psychological illness.

b. Is Pam entitled to moral damages?

NO. Pam cannot claim moral damages unless there is evidence that the marriage was done

deliberately and with malice by Toshio who had knowledge of his disability and willfully concealed it. Sincepsychological incapacity means that one is truly incognitive of the basic marital covenants that one mustdischarge or assume, it removes the basis for the contention that Toshio purposely deceived Pam(Buenaventura vs. Buenaventura, March 31, 2005).

c. Assuming that the marriage is declared void by reason of psychological incapacity, what shallbe the effects of such void marriage?

The effects of a marriage declared void on the ground of psychological incapacity are as follows: (1)The property relation is co-ownership; (2) The same shall be partitioned and distributed equally; and (3)Properties acquired are prima facie presumed to have been obtained through their joint efforts and industry.

7. Ismael, a wealthy business man, is married to Noeli with three children. During their marriage,

Ismael had an affair with Vida, and a child named John, was born out of such union. When Ismael died,VIda filed an action to compel the children of Ismael and Noeli to recognize John as Ismaels illegitimateson. Will the action prosper?

NO. It is settled that a child born within a valid marriage is presumed legitimate even though themother may have declared against its legitimacy. Secondly, only the husband, and in exceptional cases, hisheirs, could impugn the legitimacy of the child born in a valid and subsisting marriage. If the husband,presumed to be the father does not impugn the legitimacy of the child, then the status of the child is fixed,and the latter cannot choose to be the child of his mothers alleged paramour ( Liyao, Jr. vs. Liyao, Mar.7,2002).

8. Sharlyne holds a public document signed by her alleged father, containing an admission oflegitimate filiation. Is there a need for Sharlyne to seek a decree of recognition from the courts?

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NO. An admission of legitimate filiation in a public instrument or a private handwritten instrumentand signed by the parent concerned is a complete act of recognition without need of court action ( De Jesusvs. De Jesus, Oct. 2, 2001).

9. Jem and John contracted marriage without a valid marriage license. Subsequently, Jem andEdwin contracted another marriage. John then filed a criminal action for bigamy against Jem. On theother hand, Jem filed a civil case for the declaration of nullity of his marriage to John. Jem claimed that

the civil case constitutes a prejudicial question in the criminal case for bigamy. Is the contention of Jemtenable? Explain.

NO. The elements of a prejudicial question are the following: (1) the previously instituted civil actioninvolves an issue similar or intimately related to the issue raised in the subsequent criminal action and (2)the resolution of such issue determines whether or not the criminal action may proceed. In the case at bar,the criminal action for bigamy was instituted or filed ahead of the civil case for the declaration of nullity ofmarriage. The civil case must be filed ahead of a criminal case in order to be considered a prejudicialquestion.

Moreover, as held in Mercado vs. Tan, it is only a judicially declared prior void marriage which canconstitute a defense against a criminal charge for bigamy. The previous void marriage of A and B must bejudicially declared a nullity before A can use it a defense in the criminal action instituted by B.

PROPERTY

10. Under a deed of donation, the donor reserved his right to dispose of the property donated atanytime while he lives and that the donee shall not register the deed until after the death of the former.Is this a donation inter vivos or donation mortis causa?

It is a DONATION MORTIS CAUSA. The provision under the deed of donation indicates that theconveyance was not intended to produce any definitive effects, nor to finally pass any interest to the donee,except from and after the death of the donor. It signifies that the liberality herein expressed is testamentaryin nature, and therefore, must appear with the solemnities of last wills and testaments in order to be valid.

11. Federico died, leaving his three daughters, Anna, Elaine and Jen-ang, a hacienda which was

mortgaged to the Rural Bank of Marilao. Due to the failure of the daughters to pay the bank, the latterforeclosed the mortgage and the hacienda was sold to it as the highest bidder. Six months later, Jen-angwon the grand prize at the lotto and used part of it to redeem the hacienda from the bank. Thereafter,she took possession of the hacienda and refused to share its fruits with her sisters, contending that itwas owned exclusively by her, having bought it from the bank with her own money. Is she correct ornot?

NO, Jen-ang is not correct. The 3 daughters are the co-owners of the hacienda being the only heirsof Federico. When the property was foreclosed, the right of redemption belongs also to the 3 daughters.When Jen-ang redeemed the entire property before the lapse of the redemption period, she also exercisedthe right of redemption of her co-owners on their behalf. As such she is holding the shares of her 2 sisters inthe property, and all the fruits corresponding thereto, in trust for them. Redemption by one co-owner inuresto the benefit of all. However, Jen-ang is entitled to be reimbursed the shares of her 2 sisters in the

redemption price.

12. Ryan leased a building to Wendy. In the lease agreement, it was stipulated that any machineryinstalled by Wendy shall belong to the lessor, Ryan, upon the termination of the lease. Wendysubsequently attached several machineries which were necessary for her business. When the leaseended, Ryan demanded the retention of the installed machineries on the basis of the lease agreementand the fact that such machineries have become immovable property. Wendy however, protested, citingthat since she is not an agent of Ryan, such properties could not belong to him. To whom does therightful ownership of the machineries belong to?

Ryan is the rightful owner of said machineries. As a general rule, machineries placed inside a buildingonly become immovable properties when they are placed by the owner, otherwise they are consideredmerely as movable properties, because the lessee did not act as agent of the owner. The exception is that ifthe machinery is attached by the lessee, but with an agreement that upon expiration of the lease contract itwill form part of the properties of the lessor, it becomes immovable property as the lessee will not removeand thus acts as agent of the lessor. (Davao Saw Mills v. Castillo,61 PHIL 709)

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13. Lei and Jen are co-owners of a parcel of land, over which Lei constructed a house. They decidedto partition the land, hence a survey was conducted which resulted in the finding that Leis houseencroached on the portion awarded to Jen by the court. Jen then petitioned the court for the removalor destruction of the portion encroaching on her property, however Lei argued that she was a builder ingood faith, hence she is entitled to reimbursement. Jen protested, on the ground that reimbursement isonly proper when the improvements are introduced on the land of another.

a. What rights are available to both parties concerning their properties?

Lei is entitled to compensation because she is a builder in good faith. As stated in Art. 448, being abuilder in good faith, she is entitled to the right of retention until payment of indemnity for necessary anduseful expenses. Jen, on the other hand, has the right to acquire the improvements after payment ofindemnity to Lei or to sell the encroached portion to Lei only if its value is considerably higher than the valueof the improvements itself or rent such property.

b. If however, after the partition, Lei made some constructions which resulted in the extensionof her house beyond her property and into Jens portion, what are the rights available to Jen?

In this case, Lei is already a builder in bad faith. As such, Jen, the owner of the encroached propertyhas the right to either acquire the improvements without paying indemnity plus collect damages, or order

the restoration or demolition of the property built by Lei, or lastly, sell or rent the property to Lei andcollect damages.

14. Ricas watch was stolen by Alexis. Later on, Alexis sold the watch to Yuri, but the latter was ableto cheat the former by obtaining the property without paying. When Rica discovered that the watch wasnow in Yuris possession, Rica filed an action to recover the watch. Will such an action prosper? Why?

YES. If a person is unlawfully deprived of his personal property, he can get back the object from thepresent possessor even if he bought it from the thief. The thief could not have transmitted a better rightthan what we had. However, if he bought it from a merchants store or in a public auction, he can no longerrecover the property.

Even if there is already a sale but there is no intention to deliver until paid and the buyer cheatedthe seller, got it without paying, sold it to another, he can still recover because such buyer is considered a

thief.

15. Wren bought a parcel of land owned by Ian, surrounded by several houses on a compound lot. Apathway to the compound leads to the national highway, traversing the houses on the compound. Ianlater constructed a house on the pathway, thereby blocking passage to the national highway. Wrenargued that his property had been isolated by the construction of the house by Ian, blocking passage tothe highway. In this case, may Ian demand a right of way on the property? Why?

NO. The owner of an estate may only claim a compulsory right of way when the following requisitesare met, namely,

1. The estate is surrounded by other immovables and is without adequate outlet to a publichighway;

2. Proper indemnity is paid;

3. the isolation is not due to the proprietors own acts; and4. the right of way claimed is at a point least prejudicial to the servient estate and, insofar as

consistent with this rule, where the distance of the dominant estate to a public highway may bethe shortest.

In this case, it was the owner who built the house, which caused the isolation, hence the thirdrequisite is not present. Thus, there can be no compulsory right of way.

16. In a deed of donation, Naiz donated to her friend, Bon, a parcel of land with the reservation thatownership of the fruits shall belong to her during her lifetime and will be transmitted only after herdeath.

a. Is such a donation inter vivos or mortis causa?

Donation inter vivos. In the deed of donation, the donor only reserved for himself, during hislifetime, the owners share of the fruits or produce a reservation that would be unnecessary if the ownershipof the donated property remained with the donor. There was likewise no stipulation, that the donor couldrevoke the donation.

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b. Would your answer be the same if Naiz reserved ownership of both the land and the fruitsthereof in the deed of donation, the ownership of which shall be transferred only after her death?

NO. In that case, such would be a donation mortis causa as it contains the following requisites:1. Convey no title or ownership to the transferee before the death of the transferor, or, what

amounts to the same thing, that the transferor should retain the ownership, full or naked, and

control of the property while alive;2. That before his death, the transfer should be revocable by the transferor at will, ad nutuum; butrevocability may be provided for indirectly by means of a reserved power in the donor to disposeof the property conveyed;

3. That the transfer should be void if the transferor should survive the transferee.

SUCCESSION

17. In Domingos will, he instituted Anton as heir to a parcel of land, with the obligation to preserveand transmit the property to Ian, Antons son after a period of 20 years. Is there a fideicommissarysubstitution in this case?

YES. In fideicommissary substitution, the first and second heirs are one degree apart. One degree

means the second heir must be in the first degree of relationship with the first heir as the word degree isused in Arts. 963, 964 and 966. The second heir must be the child or parent of the first heir. ( Palacios v.Ramirez, 111 SCRA 304)

18. Norman, the decedent, was survived only by Milagros, an illegitimate daughter of Rico, Normanslegitimate son. In this case, can Milagros claim an inheritance?

NO because of the iron curtain which prohibits the illegitimate child from inheriting from thelegitimate relatives of her father. If there is an illegitimate child of a legitimate decedent, he has no right ofinheritance. But if there is an illegitimate child of an illegitimate decedent, he can represent himself as toher inheritance. This is the doctrine of unintended consequence. (Art. 902 in relation to Art. 992, DelaMerced vs. Dela Merced)

19. Mr. Palicpic executed a last will and testament in Turkey, attested and subscribed by only onewitness, Mohammed. He instituted in his will his two sons, Toto and Butch, as his heirs and entirelyomitting his only daughter, Rose. The testator died. Rose opposed the probate of his fathers will on thefollowing grounds: (1) there was preterition of compulsory in the direct line and (2) that only onewitness attested and subscribed the will of the testator. What law or laws should govern the formalitiesand intrinsic validity of the will?

When it comes to the forms and solemnities of contracts, wills and other public instruments, the lawthat will govern is the law of the country in which they are executed. This is the principle of lex locicelebrationis. The formalities prescribed by the laws of Turkey shall govern with respect to the formalvalidity of the will.

However, with respect to the order of succession, the amount of successional rights and the intrinsicvalidity of testamentary provisions, the law that will govern shall be the national law of the testator or the

person whose succession is under consideration. The New Civil Code shall govern with respect to thetestamentary provision of the will in which case, the preterition of Rose in his fathers will shall annul theinstitution of heirs.

OBLIGATIONS AND CONTRACTS

20. NPC, who is in charge of the maintenance of Angat Dam, was warned of an impending stormwhich may cause destruction of property to nearby residents. NPC notified the residents by posting awarning that overflowing of the dam may cause damage to properties, but not all residents were madeaware therof. At around 3 a.m. of the next day, NPC released water from the dam to preventoverflowing, but caused damages to nearby residents. In a case for damages filed by the residents, NPCinvoked as its defense fortuitous event. Is such defense tenable?

NO. In this case, where upon the happening of the fortuitous event or an act of God, there occurs acorresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of theobligation which results in loss or damage, the obligor cannot escape liability. Fortuitous events must be

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occasioned exclusively by the violence of nature, and human agencies are to be excluded from creating orentering into the case of the mischief. To be exempt from liability for loss, because of an act of God, theperson must be free from any previous negligence or misconduct by which the loss or damage may have beenoccasioned. (NPC vs. CA, May 16, 1988)

21. US Defense Communications Agency (USDCA) contracted with American companies for theinstallation of communication facilities in the US military bases in Clark and Subic. The American

companies contracted with Globe Telecom (Globe) for the use of the facilities. On the other hand, Globecontracted with Philcomsat where the latter obligated itself to establish, operate and provide saidfacilities and for Globe to rent the same for five years. When the contract was executed, both partiesknew the impending termination of the RP-US Bases Agreement. Thereafter, the Senate rejected therenewal of the said Bases Agreement. Globe wanted to discontinue to contract on the ground that thecontract is rendered ineffectual by force majeure. Philcomsat contends otherwise. Rule on the partiescontention.

I would rule in Globes favor. Art. 1174 of the New Civil Code, which exempts an obligor fromliability on account of fortuitous events or force majeure, refers not only to events that are unforeseeable,but also to those which are foreseeable, but inevitable. In this case, the non-renewal or the lapse of theBases Agreement are either unforeseeable, or foreseeable but beyond the control of the parties.

A fortuitous event under Art. 1174 of the New Civil Code may either be an act of God or naturaloccurrences such as floods or typhoons, or an act of Man such as riots, strikes or wars. The enumeration inthe parties contract of events constitutingforce majeure does not run contrary to, or expands, the conceptof fortuitous event under Art. 1174.

22. XYZ Corporation entered into a contract of loan with ABC Bank secured by a chattel mortgage.When XYZ Corporation failed to pay the loan upon maturity, the bank foreclosed the mortgage; but itwas objected to by the debtor contending that there was a novation of the contract when it executed areal estate mortgage when an extension of the loan was granted by the bank. Is the contention of XYZCorporation correct? Why?

NO. Novation takes place where the object or principal condition of an obligation is changed oraltered. Novation is never presumed; it must explicitly stated or there must be manifest incompatibility

between the old and the new obligations in every aspect. There is no incompatibility between the twocontracts especially so that the new contract was executed as additional security to the chattel mortgage.

23. Alezandro Casabar, crippled and 90 years of age, entered into a contract with his friend, Ian Pua,a Chinese, by virtue of which he leased to the latter a portion of his property in Rizal Avenue, Manila,for 50 years at a monthly rental of P3,120. This contract was amended 4 times in a period of about ayear so as to make it cover the entire property, giving the lessee Pua an option to buy said property forP120,000 payable within 50 years, and extending the term of the lease to 99 years, at a monthly rentalof P3,480, but imposing the condition that the lessee must become a Filipino citizen. About 6 monthsafter the execution of the last contract, the lessor brought an action against the lessee for annulment ofthe lease contracts. If there is a violation of the constitutional ban against alien landholding, is theprinciple ofpari delicto applicable so as to prevent the lessor or his heirs from recovering the leasedproperty from the lessee?

It does not follow that because the parties are in pari delicto, they will be left where they arewithout relief. Art. 1416 of the New Civil Code provides, as an exception to the rule on pari delicto, thatwhen the agreement is not illegal per se but is merely prohibited, and the prohibition by law is designed forthe protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid ordelivered. It is well-settled that the provision of the Constitution in Art. XIII, Sec. 5, is an expression ofpublic policy to conserved lands for Filipinos. This policy would certainly be defeated and its continuedviolation sanctioned, if the general rule ofpari delicto is applied. Hence, the contracts in question areannulled. (Phil. Banking Corp. vs. Lui She)24. On March 5, 2005, Ron wrote a letter to Raffy offering to him the lease of a building. On March6, 2005, at 1:00 pm, Raffy sent a letter of acceptance, which was received by Ron at 4:00 pm that day.But at 2:00 pm, Ron had already sent Raffy a letter of withdrawal of the offer, which was received byRaffy at 5:00 pm. Was the contract perfected?

NO. The decisive moment to consider in this case is the time when Ron had knowledge of theacceptance made by Raffy. This is so because, according to law, the contract is perfected only from the

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moment that the offeror has knowledge of acceptance by the offeree. (Art. 1319, par. 2; Laudico vs. Arias,43 Phil. 270)

25. Happie and Victor entered into a verbal contract whereby Happie agreed to sell to Victor his onlyparcel of land for P200,000 and Victor agreed to buy at the aforementioned price. What is the status ofthe contract?

Under Art. 1318 of the NCC, there is no contract unless the following requisites concur: (1) consentof the contracting parties; (2) object certain which is the subject matter of the contract; (3) cause of theobligation which is established. The question of validity of a contract is dependent upon the existence of theabove requisites. However, the contract is unenforceable because it did not comply with the Statute ofFrauds. Those that do not comply with the Statute of Frauds shall be unenforceable by action unless thesame or some note or memorandum thereof is in writing and subscribed by the party charged or by his agent.

SALES AND LEASE

26. Ed purchased a condominium unit in Makati from the Cityland Corp. for a price of P10 million,with down payment of P3 million and the balance with interest thereon at 14% per annum payable in 60equal monthly installments of P198,333.33. They executed a Deed of Conditional Sale in which it isstipulated that should the vendee fail to pay 3 successive installments, the sale shall be deemed

automatically rescinded without the necessity of judicial action and all payments made by the vendeeshall be forfeited in favor of the vendor by way of rental for the use and occupancy of the unit and asliquidated damages. For 46 months, Ed paid the monthly installments religiously, but on the 47 th and 48th

months, he failed to pay. On the 49th month, he tried to pay the installments due but the vendor refusedto receive the payments tendered by her. The following month, the vendor sent her a notice that it wasrescinding the Deed of Conditional Sale pursuant to the stipulation for automatic rescission, anddemanded that he vacate the premises. He replied that the contract cannot be rescinded without

judicial demand or notarial act pursuant to Art. 1592, NCC.a. Is Art. 1592 applicable?

NO. Art. 1592, NCC does not apply to a conditional sale. In Valero vs. CA, the SC held that Art. 1592applies only to a contract of sale and not to a Deed of Conditional Sale where the seller has reserved title tothe property until full payment of the purchase price. The law applicable is the Maceda Law.

b. Can the vendor rescind the contract?

NO. The vendor cannot rescind the contract under the circumstances. Under the Maceda Law, theseller on installments may not rescind the contract until after the lapse of the mandatory grace period of 30days for every one year of installment payments, and only after 30 days from notice of cancellation ordemand for rescission by a notarial act. In this case, the refusal of the seller to accept payment from thebuyer on the 49th month was not justified because the buyer was entitled to 60 days grace period and thepayment was tendered within that period. Moreover, the notice of rescission served by the seller on thebuyer was not effective because the notice was not by a notarial act. Beside, the seller may still pay within30 days from such notarial notice before rescission may be effected. All these requirements for a validrescission were not complied with by the seller. Hence, the rescission is invalid.

27. Alnaiza sold a parcel of land to Elaine through a private instrument. Later on, the land was soldto Ian, in a registered public instrument. Ian, however, knew of the first sale to Elaine. Who has a betterright?

Elaine has a better right. Mere registration of the sale is not enough. Good faith must concur withregistration. Bad faith renders the registration nothing but an exercise in futility.

28. There was a contract of lease for 1 year with option to purchase. It expired without the lesseepurchasing the property, but he remained in possession, hence, there was an implicit renewal of thecontract. Can he still purchase the premises under the impliedly renewed contract?

NO more, because while the other terms are revived , in an impliedly renewed contract, yet therenewed ones are only those germane to the lease or the lessees right of continued enjoyment of theproperty and does not extend to alien matters, like the option to buy the leased premises.

PARTNERSHIP AGENCY AND TRUSTS

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29. X is an owner of a department store selling consumer goods. Y, a namesake of of X, went toCereno Corporation, represented himself to be an agent of X, stating, among other things, that he is Xsagent to contract with Cereno Corp. for the supply of one ton of goods every month. They entered intoa contract, hence every month thereafter, Y picked up the goods from Cereno Corp. After 6 months,the Corp sent its billing to X, who refused to pay on the ground that he never authorized anyone torepresent him. Is X liable? Why or why not?

NO, because Cereno Corp never required the presentation of the power of attorney. Persons dealingwith an assumed agent are bound at their peril, if they would hold the principal to ascertain not only thefact of the agency but also the nature and extent of the authority, and in case either is controverted, theburden of proof is upon them.

30. Nidz executed a special power of attorney authorizing Raisser to secure a loan from a bank or tomortgage her property covered by a title. Raisser executed a real estate mortgage with the property ofNidz as security but DID NOT specify the he was acting for Nidz. Is Nidz liable? Why?

NO, because the mortgage was not made, signed and sealed in the name of Nidz, hence, not bindingupon her. It is necessary that Raisser must make it appear that he was acting for Nidz, because if an agentacts for and in his own name, the principal is not bound. The agent is the one liable. (Rural Bank of

Bombon vs. CA, August 1992).

31. Supposing the principal executed a General Power of Attorney, which includes the power to sell,is there still a need to execute another Special Power of Attorney?

NO. There is no need to execute a separate special power of attorney since the general power ofattorney had expressly authorized the power to sell the property. He SPA can be included in the GPA when itis specified therein the act or transaction for which the SPA is required. Whether the instrument bedenominated as general power of attorney or a special power of attorney, what matters is the extent ofpowers contemplated upon the agent. Where the power to sell is specific, not being merely implied, suchagent may execute a valid sale even if such couched power in general terms. (Veloso vs. CA, August 1996)

32. Michael bought a parcel of land in favor of his daughter, Denny. Subsequently, Michael registered

the land in his daughters name. Is there an automatic presumption of trust in this case if Denny latersells the property to Elaine?

NO. If one sells a property not his own and acquires a title over it later, he cannot invoke his owntitle against the buyer from him because of the principle of estoppel. (Martin v. Reyes, Buction v. Gabor)

CREDIT TRANSACTIONS

33. Bon and Jay entered into a contract of loan with an interest of 5.5% PER MONTH. Is thestipulation valid?

Although stipulation on the rate of interest which is over and above the Usury Law is not usurious,since the Usury Law has already been rendered ineffective, it may still be declared void if it is excessive,

iniquitous and unconscionable for being contrary to morals. Interest at the rate of 55% per month or 66% PERANNUM is contrary to morals and therefore void. (Medel vs. CA, Nov. 1998)

34. Odi borrowed money from Charo and gave a piece of land as security by way of mortgage. It wasexpressly agreed between parties in the mortgage contract that upon non-payment of the debt on timeby Odi, the motgaged land would already belong to Charo. If Odi defaulted in paying, would Charo nowbecome the owner of the mortgaged land on time? Why?

NO. Charo could not become the owner of the land. The stipulation is in the nature of PactumCommisorium, which is prohibited by law. The property should be sold at the public auction and theproceeds thereof applied to the indebtedness. Any excess shall be given to the mortgagor.

34. Would your answer be the same if in the preceding question, the agreement between Odi andCharo was that if Odi failed to pay the mortgage land on time, the debt shall be paid with the landmortgaged by Odi to Charo?

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NO. The answer would not be the same. This is a valid stipulation and does not constitute PactumCommissorium. In Pactum Commissorium, the acquisition is automatic without need of any further action.In the instant problem, another act is required to be performed, namely, the conveyance of the property aspayment (dacion en pago).

TORTS AND DAMAGES

35. Alnaiza Bus No.143, driven by James, collided with a jeepney after the bus attempted toovertake the overloaded jeepney. One of those who died in the accident was Juan, son of hereinclaimants. After trial, James was found liable. Although accepting the factual findings of the court,James assails the courts computation contending that there are varying computations used in thedecisions of the courts. In People vs. Lopez, the net income was derived by deducting the 50% of thegross annual income, while in People vs. Muyco, the amount deducted was 80% of the gross annualincome. James argues that this case being decided by the Court of Appeals, 1 and year after thepromulgation of People vs. Muyco, therefore the Court should apply the computation in the latter case.Is this contention correct?

NO. When there is no showing that the living expenses constituted a smaller percentage of the grossincome, the court fixes the living expenses at half (50%) of the gross income. To hold that one would haveused only a small part of the income with the larger part going to the support of ones children, would be

conjectural and unreasonable. There being no evidence in the case at bar whether the living expenses of thevictim constituted a baggier or smaller percentage of his gross income, it is fair to assume that it is 50% ofhis gross annual income. It must be noted however, that only the net earnings, not gross earnings, are to beconsidered; that is, the total of the earnings less earnings less expenses necessary in the creation of suchearnings and income, less living and other incidental expenses. (Magbanua vs. Tabusares, June 2004)

36. An information charging Randy for murder was filed. After trial on the merits, the court foundthe accused guilty as charged. The court condemned the accused to pay the heirs of the deceased thesum of P3,629.75 as reimbursement for hospital expenses, based on receipts presented during trial. Is itproper to award temperate damages in the case at bar?

YES. Actual damages for hospital expenses were duly supported by receipts. However, instead ofawarding actual damages, temperate damages is proper pursuant to the case of People vs. Villanueva,

wherein the SC held that when actual damages proven by receipts during the trial amount to less thanP25,000 as in this case, the award of temperate damages for P25,000 is justified in lieu of actual damages ofa lesser amount. Conversely, if the amount of actual damages proven exceeds P25,000, then temperatedamages may no longer be awarded; Actual damages based on receipts presented during the trial should begranted instead.

LAND TITLES AND DEEDS

37. The spouses Elaine and Ian mortgaged a piece of registered land to Meanne, delivering as wellthe OCT to the latter, but they continued to possess and cultivate the land, giving of each harvest toMeanne in partial payment of their loan to the latter. Meanne, however, without the knowledge ofElaine and Ian, forged a deed of sale of the aforesaid land in favor of herself, got a TCT in her name, andthen sold the land to Jun, who bought the land relying on Meannes title, and who thereafter also got a

TCT in his name. It was only then that the spouses Elaine and Ian learned that their land had been titledin Juns name. May said spouses file an action an action for reconveyance of the land in question againstJun?

The action of Elaine and Ian against Jun for reconveyance of the land will not prosper because Junhas acquired a clean title to the property being an innocent purchaser for value.

A forged deed is an absolute nullity and conveys no title. The fact that the forged deed wasregistered and a certificate of title was issued in his name, did not operate to vest upon Meanne ownershipover the property of Elaine and Ian. The registration of the forged deed will not cure the infirmity. However,once the title to the land is registered in the name of the forger and title to the land thereafter falls into thehands of an innocent purchaser for value, the latter acquires clean title thereto. A buyer of a registered landis not required to explore beyond what the record in the registry indicates on its face in quest for any hiddendefect or inchoate right which may subsequently defeat his right thereto. This is the mirror principle ofthe Torrens system which makes it possible for a forged deed to be the root of a good title.

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Besides, it appears that spouses Elaine and Ian are guilty of contributory negligence when theydelivered this OCT to the mortgagee without annotating the mortgage thereon. Between them and theinnocent purchaser for value, they should bear the loss.

CONFLICTS OF LAW

38. Ed is a Filipino citizen. When he went to Sydney for vacation, he met a former business

associate, who proposed to him a transaction which took him to Moscow. Ed brokered a contractbetween Sydney Coals Corp. (Coals), an Australian firm, and Moscow Energy Corp. (Energy), a Russianfirm, for Coals to supply coal to Energy on a monthly basis for three years. Both these firms were notdoing, and still do not do, business in the Philippines. Felipe shuttled between Sydney and Moscow toclose the contract. He also executed in Sydney a commission contract with Coals and in Moscow withEnergy, under which contracts he was guaranteed commissions by both firms based on a percentage ofdeliveries for the three-year period, payable in Sydney and in Moscow, respectively, through deposits inaccounts that he opened in the two cities. Both firms paid Felipe his commission for four months, afterwhich they stopped paying him. Felipe learned from his contacts, who are residents of Sydney andMoscow, that the two firms talked to each other and decided to cut him off. He now files suit in Manilaagainst both Coals and Energy for specific performance.

a. Define or explain the rule of "forum non conveniens."

Forum non conveniens means that a court has discretionary authority to decline jurisdiction over acause of action when it is of the view that the action may be justly and effectively adjudicated elsewhere.

b. Should the Philippine court assume jurisdiction over the case? Explain.

NO, the Philippine courts cannot acquire jurisdiction over the case of Felipe.Firstly, under the rule offorum non conveniens, a Philippine court or agency may assume jurisdiction

over the case if it chooses to do so provided: (1) that the Philippine court is one to which the parties mayconveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to thelaw and the facts; and (3) that the Philippine court has or is likely to have power to enforce its decision. 37

The conditions are unavailing in the case at bar. The Philippine court is not a convenient forum as all theincidents of the case occurred outside the Philippines. Neither are both Coals and Energy doing businessinside the Philippines.

Secondly, the contracts were not perfected in the Philippines. Under the principle of lex locicontractus, the law of the place where the contract is made shall apply.

Lastly, the Philippine court has no power to determine the facts surrounding the execution of saidcontracts. And even if a proper decision could be reached, such would have no binding effect on Coals andEnergy as the court was not able to acquire jurisdiction over the said corporations. ( Manila Hotel Corp. v.NLRC, 343 SCRA 1, 3-14 2000)

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