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a) As finance officer of K and Co., Victorino arranged a loan of P5 Million from PNB for the corporation. However, he was required by the bank to sign a Continuing Surety Agreement to secure the repayment of the loan. The corporation failed to pay the loan, and the bank obtained a Judgment against it and Victorino. jointly and severally. To enforce the judgment, the sheriff levied on a farm owned by the conjugal partnership of Victorino and his wife Elsa. Is the levy proper or not? (3%)


b) On April 15, 1980, Rene and Angelina were married to each other without a marriage settlement. In 1985, they acquired a parcel of land In Quezon City. On June 1, 1990, when Angelina was away in Bagulo, Rene sold the said lot to Marcelo. Is the sale void or voidable? (2%)


For five years since 1989. Tony, a bank Vice-President, and Susan, an entertainer, lived together as husband and wife without the benefit of marriage although they were capacitated to marry each other. Since Tony's salary was more than enough for their needs. Susan stopped working and merely "kept house". During that period. Tony was able to buy a lot and house in a plush subdivision, However, after five years. Tony and Susan decided to separate.

a) Who will be entitled to the house and lot ? (3%)


For five years since 1989. Tony, a bank Vice-President, and Susan, an entertainer, lived together as husband and wife without the benefit of marriage although they were capacitated to marry each other. Since Tony's salary was more than enough for their needs. Susan stopped working and merely "kept house". During that period. Tony was able to buy a lot and house in a plush subdivision, However, after five years. Tony and Susan decided to separate.

b) Would it make any difference if Tony could not marry Susan because he was previously married to Alice from whom he is legally separated ? (2%)


a) Manuel, a Filipino, and his American wife Eleanor, executed a Joint Will in Boston. Massachusetts when they were residing In said city. The law of Massachusetts allows the execution of Joint wills. Shortly thereafter. Eleanor died. Can the said Will be probated in the Philippines for the settlement of her estate ? (3%)


b) Cristy and her late husband Luis had two children. Rose and Patrick. One summer, her mother-in-law, aged 70, took the two children, then aged lOand 12, with her on a boat trip to Cebu. Unfortunately, the vessel sank en route, and the bodies of the three were never found. None of the survivors ever saw them on the water. On the settlement of her mother-in-law's estate. Cristy flies a claim for a share of her estate on the ground that the same was Inherited by her children from their grandmother in representation of their father, and she Inherited the same from them. Will her action prosper? (2%)


In his last will and testament, Lamberto 1) disinherits his daughter Wilma because "she is disrespectful towards me and raises her voice talking to me", 23 omits entirely his spouse Elvira, 3) leaves a legacy of P100.000.00 to hia mistress Rosa and P50.000.00 to his driver Ernie and 4) institutes his son Baldo as his sole heir. How will you distribute his estate of PI.000,000.00? (5%)


Sometime In 199O, Sarah. Bom a Filipino but by then a naturalized American citizen, and her American husband Tom, filed a petition in the Regional Trial Court of Makati. for the adoption of the minor child of her sister, a Filipina. Can the petition be granted? (5%)


The coconut farm of Federlco Is surrounded by the lands of Romulo. Federlco seeks a right of way through a portion of the land of Romulo to bring his coconut products to the market. He has chosen a point where he will pass through a houging project of Romulo. The latter wants him to pass another way which Is one kilometer longer. Who should prevail? (5%)


a) Arturo borrowed P500.000.00 from his father. After he had paid P300.000.00. his father died. When the administrator of his father's estate requested payment of the balance of P200.00O.OO, Arturo replied that the same had been condoned by his father as evidenced by a notation at the back of his check payment for the P300,000.00 reading: "In full payment of the loan". Will this be a valid defense in an action for collection? |3%)


b) Anastacia purchased a house and lot on Installments at a housing project in Quezon City. Subsequently, she was employed in California and a year later, she executed a deed of donation, duly authenticated by the Philippine Consulate in Los Angeles, California, donating the house and lot to her friend Amanda. The latter brought the deed of donation to the owner of the project and discovered that Anastacia left unpaid Installments and real estate taxes. Amanda paid these so that the donation in her favor can be registered in the project owner's office. Two months later, Anastacia died, leaving her mother Rosa as her sole heir. Rosa filed an action to annul the donation on the ground that Amanda did not give her consent in the deed of donation or in a separate public instrument. Amanda replied that the donation was an onerous one because she had to pay unpaid installments and taxes; hence her acceptance may be implied- Who is correct? (2%)


a) Republic Act 1899 authorizes municipalities and chartered cities to reclaim foreshore lands bordering them and to construct thereon adequate docking and harbor facilities. Pursuant thereto, the City of Cavite entered into an agreement with the Fil-Estate Realty Company, authorizing the latter to reclaim 300 hectares of land from the sea bordering the city, with 30% of the land to be reclaimed to be owned by Fil-Estate as compensation for its services. The Solicitor General questioned the validity of the agreement on the ground that It will mean reclaiming land under the sea which is beyond the commerce of man. The City replies that this is authorized by R.A. 1899 because It authorizes the construction of docks and harbors. Who is correct? (3%)


b) Reglna has been leasing foreshore land from the Bureau of Fisheries and Aquatic Resources for the past 15 years. Recently, she learned that Jorge was able to obtain a free patent from the Bureau of Agriculture, covering the same land, on the basis of a certification by the District Forester that the same is already "alienable and disposable". Moreover. Jorge had already registered the patent with the Register of Deeds of the province, and he was Issued an Original Certificate of Title for the same. Reglna filed an action for annulment of Jorge's title on the ground that it was obtained fraudulently. Will the action prosper? (2%)


b) In good faith, Pedro constructed a five-door commercial building on the land of Pablo who was also in good faith. When Pablo discovered the construction, he opted to appropriate the building by paying Pedro the cost thereof. However. Pedro insists that he should be paid the current market value of the building, which was much higher because of inflation.

1) Who is correct, Pedro or Pablo ?(1%)

2) In the meantime that Pedro Is not yet paid, who is entitled to the rentals of the building, Pedro or Pablo? (1%)


a) Demetrio knew that a piece of land bordering the beach belonged to Ernesto. However, since the latter was studying in Europe and no one was taking care of the land, Demetrio occupied the same and constructed thereon nlpa sheds with tables and benches which he rented out to people who want to have a picnic by the beach. When Ernesto returned, he demanded the return of the land. Pemetrio agreed to do so after he has removed the nipa sheds. Ernesto refused to let Demetrio remove the nlpa sheds on the ground that these already belonged to him by right of accession. Who is correct? (3%)


a) Ambrosio died, leaving his three daughters, Belen, Rosario and Sylvia a hacienda which was mortgaged to the Philippine National Bank. Due to the failure of the daughters to pay the bank, the latter foreclosed the mortgage and the hacienda was sold to it as the highest bidder. Six months later. Sylvia won the grand prize at the lotto and used part of it to redeem the hacienda from the bank. Thereafter, she Wok possession of the hacienda and refused to share Its fruits with her sisters, contending that it was owned exclusively by her, having bought it from the bank with her own money. Is she correct or not? (3%)

10 b.

b) Felix cultivated a parcel of land and planted It to sugar cane, believing it to be his own. When the crop was eight months old, and harvestable after two more months, a resurvey of the land showed that it really belonged to Fred. What are the options available to Fred? (2%)


Eugenlo died without issue, leaving several parcels of land In Bataan. He was survived by Antonio, his legitimate brother; Martina, the only daughter of his predeceased sister Mercedes; and five legitimate children of Joaquln, another predeceased brother. Shortly after Eugenie's death. Antonio also died, leaving three legitimate children. Subsequently. Martina, the children of Joaquin and the children of Antonio executed an extrajudiclal settlement of the estate of Eugenlo. dividing it among themselves. The succeeding year, a petition to annul the extrajudlctal settlement was filed by Antero. an illegitimate son of Antonio, who claims he is entitled to share in the estate of Eugenlo. The defendants filed a motion to dismiss on the ground that Antero is barred by Article 992 of the CM1 Code from Inheriting from the legitimate brother of his father. How will you resolve the motion? (5%)

12. Free Patent

In 1979, Nestor applied for and was granted a Free Patent over a parcel of agricultural land with an area of 30 hectares, located In General Santos City. He presented the Free Patent to the Register of Deeds, and he was issued a corresponding Original Certificate of Title (OCT) No. 375. Subsequently, Nestor sold the land to Eddie. The deed of sale was submitted to the Register of Deeds and on the basis thereof, OCT No. 375 was cancelled and Transfer Certificate of Title (TCT) No. 4576 was Issued In the name of Eddie. In 1986, the Director of Lands filed a complaint for annulment of OCT No. 375 and TCT No. 4576 on the ground that Nestor obtained the Free Patent through fraud. Eddie filed a motion to dismiss on the ground that he was an Innocent purchaser for value and In good faith and as such, he has acquired a title to the property which Is valid, unassailable and Indefeasible. Decide the motion. (5%)


Prlscilla purchased a condominium unit in Makati City from the Cltlland Corporation for a price of IMO Million, payable P3 Million down and the balance with interest thereon at 14% per annum payable in sixty (60) equal monthly Installments of PI 98.333.33. They executed a Deed of Conditional Sale in which it Is stipulated that should the vendee fail to pay three (3) successive installments, the sale shall be deemed automatically rescinded without the necessity of judicial action and all payments made by the vendee shall be forfeited in favor of the vendor by way of rental for the use and occupancy of the unit and as liquidated damages. For 46 months, Prlscilla paid the monthly installments religiously, but on the 47th and 48th months, she failed to pay. On the 49th month, she tried to pay the Installments due but the vendor refused to receive the payments tendered by her. The following month, the vendor sent her a notice that it was rescinding the Deed of Conditional Sale pursuant to the stipulation for automatic rescission, and demanded that she vacate the premises. She replied that the contract cannot be rescinded without judicial demand or notarial act pursuant to Article 1592 of the Civil Code.

a) Is Article 1592 applicable? (3%)
b) Can the vendor rescind the contract? (2%)


Kristlna brought her diamond ring to a jewelry shop for cleaning. The Jewelry shop undertook to return the ring by February 1, 1999. When the said date arrived, the jewelry shop informed Krisuna that the Job was not yet finished. They asked her to return, five days alter. On February 6, 1999, Kristlna went to the shop to claim the ring, but she was informed that the same was stolen by a thief who entered the shop the night before. Kristlna filed an action for damages against the Jewelry shop which put up the defense of force majeure. Will the action prosper or not? (5%)


a) Lolita was employed In a finance company. Because she could not account for the funds entrusted to her, she was charged with estafa and ordered arrested. In order to secure her release from Jail, her parents executed a promissory note to pay the finance company the amount allegedly misappropriated by their daughter. The finance company then executed an affidavit of desistance which led to the withdrawal of the information against Lolita and her release from jail. The parents failed to comply with their promissory note and the finance company sued them for specific performance. Will the action prosper or not? (3%)


hi an action brought to collect a sum of money based on a surety agreement, the defense of laches was raised as the claim was filed more than seven years from the maturity of the obligation. However, the action was brought within the ten-year prescriptive period provided by law wherein actions based on written contracts can be instituted.

a) Will the defense prosper? Reason. (3%)

b) What are the essential elements of laches? (2%)


In 1955. Ramon and his sister Rosarlo inherited a parcel of land in Albay from their parents. Since Rosarlo was gainfully employed In Manila, she left Ramon alone to possess and cultivate the land. However. Ramon never shared the harvest with Rosario and was even able to sell one-half of the land in 1985 by claiming to be the sole heir of his parents. Having reached retirement age In 1990 Rosarlo returned to the province and upon learning what had transpired, demanded that the remaining half of the land be given to her as her share. Ramon opposed, asserting that he has already acquired ownership of the land by prescription, and that Rosarlo is barred by laches from demanding partition and reconveyance. Decide the conflicting claims. (5%)


A foreign manufacturer of computers and a Philippine distributor entered Into a contract whereby the distributor agreed to order 1.000 units of the manufacturer's computers every month and to resell them in the Philippines at the manufacturer's suggested prices plus 10%. All unsold units at the end of the year shall be bough t back by the manufacturer at the same price they were ordered. The manufacturer shall hold the distributor free and harmless from any claim for defects in the units. Is the agreement one for sale or agency? (5%)


a) A leased his house to B with a condition that the leased premises shall be used for residential purposes only. B subleased the house to C who used it as a warehouse for fabrics. Upon learning this, A demanded that C stop using the house as a warehouse, but C ignored the demand. A then filed an action for ejectment against C, who raised the defense that there is no privity of contract between him and A, and that he has not been remiss In the payment of rent. Will the action prosper? (3%)


b) In 1995. Mark leased the rice land of Narding in Nueva Ecija for an annual rental of P1.000.00 per hectare. In 1998, due to the El Nino phenomenon, the rice harvest fell to only 40% of the average harvest for the previous years. Mark asked Narding for a reduction of the rental to P500.00 per hectare for that year but the latter refused. Is Mark legally entitled to such reduction? (2%)

20-a. Failure to State a Cause of Action

a) Silvestre leased a car from Avls-Rent-A-Car Co. at the Mactan International Airport. No sooner had he driven the car outside the airport when, due to his negligence, he bumped an FX taxi owned and driven by Victor, causing damage to the latter In the amount of P100.000.00. Victor filed an action for damages against both Sllvestre and Avis, based on quasi-delict. Avis filed a motion to dismiss the complaint against it on the ground of failure to state a cause of action. Resolve the motion. (3%)

20 b. Failure to State a Cause of Action

b) Despite a warning from the police that an attempt to" hijack a PAL plane will be made in the following week, the airline did not take extra precautions, such as frisking of passengers, for fear of being accused of violating human rights. Two days later, an armed hijacker did attempt to hijack a PAL flight to Cebu. Although he was subdued by the other passengers, he managed to fire a shot which hit and killed a female passenger. The victim's parents sued the airline for breach of contract, and the airline raised the defense of force majeure. Is the airline liable or not? (2%)