& 2019 PRE-WEEK NOTES donation to the former was never perfected. According to Art. 734 of the Civil Code, the donation is perfected the moment the donor knows of the acceptance by the donee. J never read O's letter of acceptance as it was filed together with other unread messages. Moreover, O does not have any remedy since acceptance must be ‘made during the lifetime of both the donor and the donee (CIVIL CODE, Art. 746), therefore, J's donation to him can never be perfected since the latter already passed away. Jose filed a complaint for quieting of title over a parcel of land against Joseph. He alleged that he is the true and registered owner of the parcel of land after acquiring it through a Deed of Donation executed by his mother. His mother acquired the same property from Josia and her co-owner Josephine through a Deed of Sale dated December 16, 1994 which finds its origin from OCT No. R-578. Joseph, in his defense, alleged that his title was based on authentic documents while the title of Jose's predecessor-in-interest is evidently null and vold ab Initio because it was derived from a Deed of Sale, dated December 16, 1994 which was supposedly signed by vendor Josia although she was already dead, having died on August 25, 1988. Moreover, the signatory-vendor, Josephine denied that she ever signed the Deed of Sale which is supposedly that of her husband, Jojo, signifying his conformity to the sale, is likewise a fake signature of her husband because he was already dead at the time of the execution of the document having died on June 14, 1980. ‘The RTC ruled for Joseph noting that the transferors of the title Jose is holding had long been dead before the Deed of Sale had been executed. Jose appeals and argues that he is an innocent holder for value. Decide. by a Deed of Donation and not by, jase. Hence, of an innocent purchaser for value cannot apply to him, Moreover n Ingusahy. Hels of Reyes, fod that on cases of falaied documonts imehing prope ouch a5 Sd cnalbnf thes ry, encanto and soeerart of subuivcion with sale, pended documents, are nulfagd vokt> Ang that TCT issued by vituo of the- falsified documents are. oo ~S * 5 bo Ae ad “There is fraud on ha Panyferoffne preBeriyon sia ant 2h ine t8 Jose's mother on the’ basis of fake signatures consitiering ‘at the the vendor signatories therein\are alhdeagl)As such, by applicability of the foregoing jursprudedc®, the/deed ig considered 9 forged deed and heed null and void. Thus, the tie that sou rir bond urn he rushers Deo nul ana "thgrefore, wan.terved nothing fo him by his mothers Deed, Denaten (Cambio 2502} lanuary 24, 2018, Covered << “" i J Jose is not an innocent Sah Re a,donee acquiring the property gratuitously WW \@& (b) What are the kinds and peried of of sea a. Prescription is a Sage x ediing for tsar Laie, ner real rights. It is concerned with fapse oft Intro manger ard dae copes i ow by a ramoy. tat tho possesson shoud be in the concept of an o¥nerSublic, peaceful unit ntetrupted and adverse. ‘Acquisitive prescription is either ordi 8 Sxiraordinary. Ordinary acquisitive prescription requires possession in good faith and with just ttle for 10 years, In extraordinary prescription ownership and ther real rights over immovable property are acquired through uninterrupted adverse possession thereof for 30 years without need of tile or of good faith (Gesmundo v. CA, G.R. No. 119870, December 23,1899.) How may prescription of actions be interrupted? The prescription of actions is interrupted when: (1) they are filed before the court, (2) there is a written extrajudicial demand by the creditors, and (3) there is any written acknowledgment of the debt by the debtor (CIVIL CODE, Art. 1155). For many years, the Laguna De Bay deposited soil along its bank beside the titled land of J. In time, such deposit reached an area of one thousand square meters. With the permission of J, E cultivated the said area. Thirty-two (32) years later, a big flood occurred in the river and transferred 1000 square meters to the opposite bank, beside the land of A. The land transferred is now contested by J and A as. riparian owners and by E who claims ownership by prescription. Who should prevail? Decide. J should prevail. The disputed area, which is an alluvion, belongs by right of accretion to J, the riparian owner (CIVIL CODE, Art. 457). When, as given in the problem, the very same area was “transferred” by flood waters to the opposite bank, it became an avulsion and ownership thereof is retained by J who has two years to remove it (CIVIL CODE, Art, 459). E's claim based on prescription is baseless since his possession was by 26 | 2015 SAN BEDA LAW CENTRALIZED BAR OPERATIONSa7. 85. 86. mee i mere tolerance of J and, therefore, did not adversely affect J's possession and ownership (CIVIL CODE, Art 537), Acts of possessory character executed due lo license or by mere tolerance of the owner are inadequate for purposes of acquisitive prescription. Possession by toleranca is not adverse and such possessory acts, no matter how long performed, do not start the running of the period of acquisitive prescription. Hence, the 30- year period necessary for the operation of acquisitive prescription had yet to be-attained (Lamsis v. Semon Dong-E, G.R No. 173021, October 20, 2010). NORE oF Y filed'a complaint for the “return” of the ownership and possession of Lots 1 and 2 against A, B and C. During the pendency of said casé, A sold Lots 1-A, 1-B (divisions of Lot 1) to S. A died thereafter. The Court, finding that S was a buyer in good falth, declared that the Heirs of Y should recover the actual value of the land because the sale executed between A and S was without court approval. The Heirs of A now contend that the liability arising from the sale should be the sole liability of A’s estate since they did not inherit the particular property Involved in the case. Is the contention correct? No, the contention is not correct as the lability should still be shouldered by the helrs. Art. 774 of the Civil Code provides: Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the Inheritance, of a porson are transmitted through his death to another or others ‘ther by his will or by operation of law. Art: 776 further provides that the inheritance includes all the property, Shs and obligation ofa pereon which ae no gxtpauished by his death. Even if Heirs of A did net inherit the p me sd herein, this is of no moment because by legal fiction, the monetary equivalent thereof devolved sof ta faa Neeser eae, and that the hereditary assets are always hablo tho ttl ent tne debts of the estate tiuststowevery Be mae eat petiloner are abe gry tothe ett TEPER tor nnertance (ANorosv ING, Oi No. L-68053, May 7, 1990). ‘Spouses A’and B are the owners’dfia parcel of land. They hive a daughter named C. After A died, B Sha°S teas case agulngh corporation D for ieleaton ofall and vold realestate mortgage, promissory note cancellation of notation wa ete conieate ofc and damages". Corporation D riow alleges that © has ho. personality, to sug since there: hlrship anit does not appear.in the reco (ht juctal o ir Bec pprior judicial declaration of C's diclal partition was made by A's Ikis not required that there bé prio judicial oo Bf,of nership to have personality to sus. Under the. Civil Code, the tile to the property Swned Soh Who Wiewintestate passes at once to his heirs. Such transmission ts subject to the cain of gdtiistration and the property may Be taken from the Reis for the purpose of paying debts and expends, But this does not prevent an immediate passage ofthe tile, upon the Geath ofthe intestate, from himself to his heirs. Without some showing that a judicial administrator had been appointed in proceedings-to settle the estate, the right of the heirs to maintain this action is established. ‘The fact that C was not judicially dectared as heir is of no moment, for there was no nead for a prior declaration of heirship before heirs may commence an action arising from any right of thelr predecessor, such as one for annulmant of morigage (Payduaniv. Gullders' Savings and Loci Association In. Gu No. 202524, ‘June 4, 2018, Covered Case). . Discuss the effects of preterition, imperfect disinheritarice and after-acquired properties on institution of heir, devisee and legatee. In cases of preterition (CIVIL CODE, Art, 854), it totally annuls the institution of heir, but the devises and legacies shall be valid insofar as they are not inofficious. In cases of imperfect or defective disinheritance (CIVIL CODE, Art. 918), it partially annuls the institution of heirs only insofar as it may prejudice the person disinherited, but the devises and legacies shall be valid to such extent as will not impair the legitime.. In cases of after-acquired properties (CIVIL CODE, Art. 793), property acquired during the interval between the execution of the will and the death of the testator are not, as a rule, included among the properties disposed Of, unless it should expressly appear in the will itself that such was the intention of the testator. This only logically applies to logatees and devisees, and not to the institution of heirs because in the latter Avts. 776 and 781 state that inheritance of a person includes all the property and the transmissible rights and obligations of ‘person existing at the time of his death, , 2018 SAN GEDA LAW CENTRALIZED BAR OPERATIONS | 272019 PRE-WEEK NOTES 88. Boxeciited an Affidavit of Adjudication under Rule 74, Section lof the Rules of Court fr tho ownership of the entire estate of A. C emerged and filed a petition for the probate of the will of A alleging that the testatrix was an American citizen at tho time of her death and was a permanent resident of Pennsylvania, USA. It was admitted in tho trial that the laws of Pennsylvania do not have the concept of leaitimes. The wilt preterited 8, hence, the latter opposed the same. Decide. Although on its face; the will appeared to have preterited B and thus, the probate should have been denied outright, it-was sufficiently established that A was, at the' time of her death, an American citizen and a permanent resident of Pennsylvania, USA. Under Arts. 16 and 1039 of the Civil Code, the following are ‘governed by the national law of the decedent: order of succession and to.the amount of successional rights and to the intrinsic validity of testamentary provisions and capacity to succeed. Thus; the law which governs, 5 wil is the law of Pennsylvania, USA which does not provide for legitimes and that all the estate may be given away by the testatrix to.a complete stranger. The issue of preterition is included in the intrinsic validity of the will thus B's opposition on the ground of preterition is untenable (Cayetano v. Leonidas, G.R. No. 54919, May 30, 1984) 89. What are:the formalities of a will? a. Connon Feralas "mus Belnwrting fs. Sy ji, It must be execytéd ‘YangUiage-or diale |to the testator . aes cdo b. notaranwa <> cir De: * 1. Subscription-st lenis atthe end theraot by the chisel or by testator's name written by some. heF-person ig his. presence ‘and by his express difécticr i. Attestod and sybserited by 3or more credble Witnest9q/y ho presence of th testator and of one gnother) a ii, Mcrginalsfgnature Al ofthe pages are signed, cept past helt margin by: TNS » pUTNE testator orth person rau st y him owe Msnarey and (2) The insfumental witness: 1 Iv. Page numbering — Atha pages arborea viol iefters placed on the upper pait of eachy } ¥ ArosanSetalas See iy ti wiinestnd loving: (1)-The lumber of pages used, (2) ‘The fact that the testatér signed. ieee obey pad thereat or causa sono oer person ta write Nik.parhe under RIS as digeGtion, in He presence of the instrumental witnessed; and >“ oe (8) That the inStcunfehial withesses- witnéeed ‘ands presence of tfie.testatot and of one\another ".."” vi. Acknowledgment — Properly acknowledged 'beforé a notary public by the testator and the said witnesses “ fed the will and all the pages in the ©. Hologriphic Will |. Itmust be entirely written by the hand of the testator himself, ii. Itmust be entirely dated by the hand of the testator himself, and il, It must be signed by the hand of the testator himself 4d. Special Cases i. Ifthe testator be deaf, ora deaf-mute, he must personally read the will, ifable to do so; otherwise, he shall designate two persons to read it and communicate to him, in some practicable manner, the contents thereof. Ifthe testator is blind, the will shall be read to him twice; once, by one of the subscribing witnesses, and again, by the notary public before whom the will is acknowledged Related Jurisprudence on Formalities of Notarial Wills Sia MOS jubseription [wit subscribed by the thumbmark ofthe] Valid [The requirement ot “the statute that the will shall be testator 28 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS.CIVIL LAW i i aca cone oF CAN CNTRALZED BAR OPERATIONS 3059 |Will subscribed by two different persons-| first name by the testator while sumame| lby another person Valid Ithumbmark (Dolar v. Diancin, “GR. No. L-33365, December 20, 1930) if writing a mark simply upon a willis sufficient indication] lof the intention of the person to make and execute a will then certainly the writing of a portion or al ofthe testator's name ought to be accepted. as a clear indication of hisfher intention to execute the will, as in this case where| Ithe name and surname have been written by aifferent Ipersons (Yap Tua v. Yap Ca Kuan, G.R. No. 6845 September 1, 1914). [wit consists only of two pages: page contains the dispositions of the| testator, duly signed by her representative| (in the name and under the direction of the| testator) and the three witnesses, l2"* page contains only. the-attestation| |clause duly signed by the three witnesses| INeither page is signed on the left-hand] lmargin by the testator Valid in requiring that each and every sheet of the wil should also be signed on the left margin by the testator and three lwitnesses in. the presence of each other, the law levidently has for its object to avoid the substitution of any| lof said “sheets, thereby changing the testators| ldispositions. But’ when these dispositions are wholly luriten on only one sheet signed at the bottom by the| Nestator and three witnesses, their signatures on the le Imargin of said sheet would be completely purposeless| |(Abangan.v. Abangan, G.R. No: L-13431, November 12, 1919). Marginal signatures appeared on the right instead of left : ere be signed at the left margin is complied with even if {protectod by o|n, signed in tho lo margin (Avora v. lar. 805 which requires that every page, except the last, ie a Ts bao ode autnention guarded from possible alteration in| jarcia, G.RJNo, 18966, September 14, 1921). iin nee a ae Iwill paged with Arabic numerals: ard not letters ‘Valid | [White tt -racoiesitat the will must be paged with! letters, mae nimorte and ovens er [within the-spiritof the law and is just as valid as paging setters (Nayvev. Mojal, G.R. No. L-21755, lpesémber.20, 1924), sheet is not paged in elther letters, of |Arabic numerals “ae [Will consists of only two pages, bi the 1") Valid [Will signed by the witness on the left-hand] Imargin but no signatures appear after the| lattestation clause ‘Attestation by Witnessés | Void |which starts at the bottom of the preceding page. As page| |The unnumbered page is clearly identified as the first| lpage by the intemal sense of its contents considered in relation to the contents of the second page. By their| meaning and coherence, the first and second lines on the| lsecond page are undeniably a continuation of the last [sentence of the testament, before the attestation clause, {two contains only the two lines above mentioned, the| lattestation clause, the mark of the testator and’ the| signatures of the witnesses, the other sheet cannot by lany possibilty be taken for other than page one (Lopez| \v. Liboro G.R. No. L-1787, August 27, 1948). [An unsigned attestation clause cannot be considered as| jan act of the witnesses, sinco the omission of their lsignatures at_ the bottom thereof nogatives their] lparticipation (Cagro v. Cagro, G.R. No, L-8826, April 29, 1953) [The will was signed in this manner: |The three witnesses and the testator were!| all together when the testator signed the| wil. Afterwards, Witness A signed, again| in the presence of all. Witness 8 also| Valid lsigned in the same manner. At that [The testator and the witnesses need not actually seq| leach other signing. Itis sufficient that they were in such] position that they could have seen each other sign if they Ichoose to do 50, and without any physical obstruction to} lprevent his doing so (Jaboneta v. Gustilo, GR. No. 1641, |January 19, 1906). This is called the test of presence BOIS SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 292019 PRE-WEEK NOTES “an SED COLE OF LAW CENTGZED BA CPERATONS 2019 moment Witness A being in a. hurry to| leave, took his hat and left the room. As he| lwas leaving the house Witness C took the| -¥ lpen in his hand and put himself in position! 5 ito sign the will as a witness, but did net i signin the presence of Witness A ‘Attestation Clause. The allestation clause felled to ste the] Valid |f the allestation clause falied to stale the number of Sie ena iB inuriber of pages but the number of pages| lpages used, the will is not valid unless the number of is mentioned in the acknowledgement or [pages is stated in the wil tslforin the acknowledgment in other parts of the will |(Taboada v. Rosal, G.R. No. L-36033, November 5, 1982). [The attestation clause falled to slate the| Void |That the wil actually consists of 8 pages including its lnumber of pages but there is a statement lacknowiedgment, such discrepancy cannot be explained in the Acknowledgment portion that i lby mere examination of the will itself but through the| f consists of 7 pages including the page on resentation of evidence aliunde (In the Matter of the] : lwhich the. raification and Petition for the Probato ofthe Last Wil and Testament of | lacknowledgmont are writen’. [Enrique S. Lopez Richard B. Lopez v. Lopez et.al, G.R, 1 Ino. 189984, November, 12, 2012) | IThe wil actually consists of 8 pages| . including its acknowledgment. [The attestation clause failed To I aanetee a get 8 eared — Fai Sg epoca declare Vat he winestes haeasba tives oxocton cei hore olny oe powowiepatuch inten tn al Sino aalbny Gh ie tetor {Canoe v. OA CR No gs Mey 9 999). “YFaltre to ciate clnber of winerees may be ‘established by th8\nurfiaer of signatures inthe wil tse frost Eat of ted Abn, GR No. 147106 LO [The attestation clausé fall8W}6 state the number of witnesses The notary ‘public Sheree will hinigelt}. ed [nenen babe foot pf a instrumental witness las. the third instru a Wrret an en 1 ho eannot ackrwledge before himself his having Jscknowiedge tho a Mol. fro aa, cexnowtedgorert ears Bee vor agsent, asd before means in front or lptebsting In space ahead of. Consequenty, he cannot [admishis having siongd the wil before himself, since he| cant st hpgrepfalty ino two andthe nccnaiktoncy ~lothis duties 5 arfawyer and his personal act (Cruz ¥. 7 - Viteon\ RING. 1-32219, November 26, 1973), IThe will was notarized outside thal. Void” JA: nblary-Public is authorized to. perform notarial acts territorial jurisdiction of the notary public .| “~*~ Within his territorial jurisdiction only. Outside the place of lhis commission, he is bereft of power to perform any) notarial act, hence not a competent officer (Guerrero ¥. L Binis, G.R. No. 174144, April 17, 2007). 90. _In a petition for probate of a will, oppositor A moved for the dismissal of the petition alleging that the will is void for non-compliance with the formalities required by the law, particularly, the last page of the will which contained only the Acknowledgment that was not signed by any of the instrumental witnesses and by the testator. He also alleges that the attestation clause did not state the number of pages in the will, although admittedly it is in the acknowledgment. Are the grounds for dismissal tenable? No, as to the first ground, because the signature on the last page which dogs net contain testamentary disposition is not essential for the validity of the will. When Art. 805 of the Civil Code requires the testator to subscribe at the end of the will, it necessarily refers to the logical end thereof, which is where the last testamentary disposition ends. In this case, the last page of the will contained only the Acknowledgment. Hence, the last page of the will does not contain any testamentary disposition; itis but a mere continuation of the Acknowledgment. Therefore, the first ground is untenable. No also as to the second ground, In Taboada v. Rosal, the Court allowed the probate of a will notwithstanding that the number of pages was stated not in the attestation clause, butiin the Acknowledgment What is imperative for the allowance of a will despite the existence of omissions is that such omissions must 30 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS91. 92, 93, : CIVIL LAW be supplied by an examination of the wil itself, without the need of resorting to extrinsic evidence. However, those omissions which cannot be supplied except by evidence allunde would result in the invalidation of the attestation clause and ultimately, of the wil itself. Hence, the second ground is also untenable. Consequently, the motion for dismissal must be denied (Mitra v. Sablan-Guevarra, G.R. No. 213994, April 18, 2018, Covered Case), In another petition for probate, oppositor B moved for the dismissal of the petition alleging that the will is void for non-compliance with the formalities required by the law, particularly, that the attestation clause did not state the number of pages in the will. It is admitted that the’ will actually consists of 8 pages. It is also admitted that there is a statement in the Acknowledgment portion of the subject wil that it “consists of 7 pages including the page on which the ratification and acknowledgment are written.” Is the will valid? No, as the defect cannot be cured by an examination of the will. While Art. 809 of the Civil Code allows substantial compliance for defects in the form of the attestation clause, the will fails in this respect. The statement in the Acknowledgment portion of the subject last will and testament that it "consists of 7 pages including the page on which the ratification and acknowiedgment are written” cannot be deemed substantial compliance. The will actually consists of & pages including its acknowledgment which discrepancy cannot be explained by mere examination of the wil itself but through the presentation of evidence aliunde (Inthe matter of the petition for the probate of the last will and testament of Lopez v. Lopez, G.R. No. 189964, November 12, 2012, Perlas-Bernabe J). ‘Sydney, during hor lifetime, was a successful lawyer. By her own choice, she remained unmarried and ‘dovoted all her time to taking care of her nephew and two (2) nieces: Socrates, Saffinia, and Sophia. She wrote a will giving all her properties remaiing upon her death to the three (3) of them. The will was admitted to probate during her lifetime. Later, she decided to make a new will giving all her remaining properties only to the two (2) Qifigy Saffinia and Sophia. She then tore up the previously probated will. The second will was presented for probate only after her death. However, the probate court found the Second will to be void for falire to.comply with formal requirements. (2018 Bar) 2 EY wae a. Will the doctrine of dependént relative révocation apply? . Will your answer be the same ifthe Segond will wac fend to be valid but both Saffinia and ‘Sophia renounce their inhetitance? git ‘a. Yes, the doctrine wil’apply, The doctrine of dependent cat rehpcation applies if testator revokes 2 will with a presentinlentosiof making a few one Immediately anid. as a substitute, and the new one fs nol mado, or fthade afb etl for By rosso BapRBbumed thatthe testator prefered the old will-to intestacy,"and the did oneWill be admitted t6 probate in the absence of evidence overcoming the presififtion, provided ils contents can be ascertained. The failure of a new testamentary disposition upon, whose validitysthe. revocation. depends, is equivalent to the non- fulfilment of a suspensivaisondition, and: hente préventsithe revocation of the original will (Testate Estato of the Decoased Molo v. 'No. L-2538, September 21, 1951). In the instant caso, the following facts are admitted: 4) tHe first will for the nephew and nieces was revoked by tearing, 2) a new will was made, and 3) thé ew will failed to comply with formal requirements which makes it invalid, Hence, the doctrine falls squarely on the facts. . No, in this case the doctrine will not apply anymore. For the doctrine to apply, a substitute will must be intended to be made but is actually not made, or, if made, falls of effect for any reason. It must be noted that in Art. 841 of the Civil Code, a wills stil valid even though it should not contain an institution of an heir, or such institution should not comprise the entire estate, and even though the person so instituted Should not accept the inheritance or should be incapacitated to succeed. Here, the will was, valid according to the formalities prescribed by the law but the heirs did not accept the inheritance. Hence, the doctrine of dependent relative revocation will not apply In a petition for probate of a will filed by M, the testator named and appointed M as his sole and only executor of his estate. It is clearly stated in the Will that the testator was legally married to W by whom. he had two legi ildren, A and B, but since 1952, he had been estranged from his lawfully ‘wedded wife and had been living with M as husband and wife. In fact, on December 5, 1952, the testator and M married. The testator devised some properties to his forced heirs, his legal wife and his children, ‘While his ontire estate and the free portion thereof to M. The RTC, while declaring the will validly drawn as to formalities, it went on to pass upon the intrinsic validity of the testamentary provision in favor of M and invalidated it. Did the court act in excess of its jurisdiction? No, the Court in this case can pass upon the intrinsic validity of the will. As a general rule, the testator's. testamentary capacity and the compliance with the formal requisites or solemnities prescribed by law are the ily questions that should be: presented for the resolution of the court for probate proceedings. The rule, however, is not inflexible and absolute, When on the face of the will, itis invalid as when separaie or latter 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 312019 PRE-WEEK NOTES proceedings to determine the intrinsic validity of the testamentary provisions would be superfluous, then it Could pass upen that issue. Here, the very wordings of the will invalidate the provisions because the testator Scmitted he was disposing the properties to a person with whom he had been living in concubinage (Nepomuceno v. CA, G.R, Nd.L-62952, October 9, 1985). INSTITUTION OF HEIRS 94. died in 1962, single and without descendants. Surviving were her parents, X and Y and siblings, B, aI ©, D, Eand F. F then filed a petition for probate of the will of A which instituted her as universal heir of the deceased. X and Y opposed the petition on the ground that X and Y who are compulsory heirs of the deceased in the direct ascending line — were illegally preterited and that in consequence the | institution is void. The court then declared that the will is invalid. Is the will valid? { cite Sate Nee ae opt al cl da BR No. 123445, lune 23, 1966). eer em, - eh NED - /BoRSRTUHONGE HERE. oN fn, - a 95. Raymond, single, named tis’sjstor Ruta in-his wil. ag.a dovisedot Nparcel of land which he owned. The will imposed upory Ruffa thé obligation of preserving the fan and transferring it, upon her death, toner llogitimate daughter Scarletwho wes then only one year old: Raniond later died, leaving behind his widowed mothe Ruta gnd Searet. : VoDy 1. Isthe conditiorrimposed upon Ruta, oscar paid? | bee xtinguishéd whep the party who may exercise that option categorically-and unequivocally makes his or her cha'>e knowl this case, the contract provides ‘that APP, after recejving the raw materials from D| would eithef pay him the. price of the raw materials or, in the alterative, delivort6 Nim the-finished prodicts/of sce When APP tehdered a check to, a respondent in partial paymeht for thé serap:papers; they exercised their option t8 pay the price. D’s receipt of thé check and his subsequent act of depositing it cbnstiluted his tatice of APRs Bption to pay. This choice was also shown by the torrie of tho MOA. which was’ exéeutsd onthe shme day. The MOA declared that the delivery of AP's finished products would be:to a third, pérsonthereby extinguishing the option to deliver the finished products of equivalent value to D (Arco Pulp’ arid Peper Gé., Inc. vLim, G.R. No. 206806, June 25, 2014). Sa, SOCTERTTID KS ee CCC, a corporation engagell, inthe busititss-of prodiicing ‘c¢ { obtained the services of ABB and BBC to repair its Kin Drive Motor. ‘CCC and}ABB /e nten {ito’a contract for the repair of Kiln Drive Motor with a orm that a penalty of one half ofone percent of the total cost or POBT.25 per day of delay. Due to the repeated failure of ABB to repair the Kilry Dive Motor, CCC filed complaint for sum of money ‘and damages against respondent. Is CGC is entitled to the penalty of P987.25 per day of delay? ‘Yes, CCC is entitled. The penalty clause takes the place of indemnity for damages and the payment of ‘interests in case of non-compliance with the obligation, unless there Is a stipulation to the contrary. CCC is. entitled to penalties per the contract of repair. In this case, since there is no stipulation to the contrary, the penalty in the amount of P987.25 per day of delay covers all other damages (Continental Cement Corporation v. Asea Brown Boveri Inc., G.R. No. 171660, October 17, 2011). X owns a condominium unit. As payment for monthly charges and real-estate taxes, X sent several checks to Y, his agent, through FedEx. However, Y allegedly did not receive said checks resulting it the non-payment of the charges and taxes and the subsequent foreclosure of the unit. Y promptly inquired about the nen-delivery but FedEx claimed that the package was delivered to Y's neighbor, but there was no signed receipt. FedEx’s responses were ambiguous and evasive. Y followed up ardently but to no avail. X and ¥ filed a complaint for damages against FedEx. FedEx claimed that X and Y did not have a cause of action because they failed to comply with the condition precedent of filing a written. notice of a claim for non-delivery or misdelivery within 45 days from acceptance of the shipment, aS provided in the Air Way Bill. Do X and Y have a cause of action against FedEx? ‘Yes, X and Y have a cause of action against FedEx. Art. 1186 of the Civil Code provides that "the condition shall be deemed futfiled when the obligor voluntarily prevents its fulfilment.” Here| X and Y complied with the requirement for the immediate fling of a formal claim for damages as required inthe Air Waybill or, at least,ee ee a 19. 4120. 121. there was substantial compliance therewith. FedEx gave them a run-around through ambiguous and evasive responses, nonchalant handling of X and Y's concems, and these bogged down X and Y's actions and impaired their compliance with the required 45-day period. For substantially complying with the requisite 45-day period for filing a formal claim, X and Y have a cause of action against FedEx (Federal Express Corp. v. Antonino, GR. No. 199455, June 27, 2018, Covered Case). PunPawnshop paid their delinquent contributions and accrued penalties with different branches of the SSS. Congress thereafter, enacted R:A. No, 9903, otherwise known as the Social Security Condonation Law of 2009. The law offered delinquent employers the opportunity to settle, without penalty, their accountabilities or overdue contributions within six months from the date of its effectivity. PunPawnshop seeks reimbursement from different SSS branches invoking the said law. PunPawnshop claimed that the benefits of the condonation program extend to all employees who have settled their arrears or unpaid contributions even prior to the effectivity of the law. SSC denied the reimbursement claims and stated that there was no provision in the said law allowing reimbursement before its effectivity. Is PunPawnshop entitled to condonation of its obligations before the affectivity of the law given? No, PunPawnshop is not ented to eondonation since there was no provision in the said law-allowing condonation before the law's effectivity. Condonation or remission of debt isan act of liberality, by vitue of ‘which, without receiving eny equivalent, the creditor renounces the enforcement ofthe obligation, which is extinguished in its entirety or in that part or aspect of the same to which the remission refers. Here, the State stands to lose its resources in the form of receivables whenever it condones the collection ofits receivables or "unpaid penalties. Since a loss of funds utimately results in the Government being deprived of its means to pursue its objectives, all monetary claime based on condonation should be construed stricly against the applicants. Sec. 4 of R.A. No; 9903 shows thatyifidoes not give employers who have already settled their delinquent contributions as well as their corfesparding penalties the ight to refund of the penalties paid What was waived here was the amount of adertieg peates that have not been paid prior tothe law’ effectivity itdoes not include those that have already ei 2 Hence, PunPawnshop’s obligations are not condoned (H: Vilarica Pawnshop v. Social Security C EN. 20g°" anny 24 2018, Covered Case) ry ee In 1995, spouses AB entered into s’Contract to Sell with © Pr Properties Inc: (CPI) for the purchase of a 400-square mete” lot owned and developed’ by:CPL Despite the full payment of the purchase price in rue 2 an sbaesuen ade, CP ef ene dan and t dla in ie and physical possession ofthe subjoct lok Thus, spouses AB fled.a Complaint for specific performance, or rescission of contract with damages against CPI. Do. thebpogeod AB have the right to rescind and ths may recover the toa payment made oe ss mw ‘Yes, spouses AB have the ig roscing! and pov too ayments made. Under Art 1191 of the Chul Code, the power to resellgtligeipns If IrelEdinrecprocal ones, ioare ore f the asigore shold not comply with what is incumbent, upatt him. The i fly may choose between the fulfilment and the rescission of thé obligation, wit. the payment of, dantag ither case. He may also seek rescission, even after he has chosen fulfilmant,f the fattor should become impossibie. n this case, rescission does not merely terminate the contract and release thejpafies from further obigations to each other, but abrogates the contract from its inception and restores tho: Barties to thelr orginal positions as i no contract has been made. Consequently, mutual restitution, which entals the retum of the benefits that each party may have received as a result of the contrac, is thus required. The effects of rescission provided in Art. 1388 are equally applicable to cases under Art. 1191, In this light, it cannot be denied that only CPI benefted from the contract, having received full payment of the contract price plus interests, while spouses AB remained prejudiced by the persisting non-delivery ofthe subject lot despite full payment. As a necessary consequence, considering the propriety of the rescission due tothe long delay, spouses AB must be able to recover the pice ofthe property pegged at its prevailing market value (Gotesco Properties v. Spouses Eugenio, G.R. 201167, February 27, 2013, Perlas-Bernabe, J.) A Co. sub-contracted to B Co. its underground open-trench work for the Network Project of Globe Telecom in Mindanao. As required, B Co. gave surety and performance bonds which it secured from C Co. which bound itself jointly and severally liable with ® Co. The bonds will answer for the loss and damage to A Co. if B Co. fails to perform its obligations under the subcontract. The excavation and restoration works by B Co. was later stopped by the government after it found B Co.'s work unsatisfactory. Eventually, A Co. terminated the subcontract and demanded from C Co, insurance company indemnification in the amount of P1.04 Million. C Co. denied A Co.’s claim arguing that the liability of its principal, B Co., should first be determined before C Co. can be held liable. Thus, A Co. sued C Co. for specific performance and breach of contract. C Co. claimed that the suit should be dismissed because A Co. failed to implead B Co. as an indispensable party. Is B Co. an indispensable party in this case? No, 8 Co, is not an indispensable party In this allows petitioner, as creditor, to proceed again case, Art. 1216 of the Civil Code on solidary obligations any of the solidary debtors, in this case, the term “jointly and 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 4412019 PRE-WEEK NOTES Sepa COLECE OF AW CENTRALED AAR OPERATIONS 2099 ceveraly’ expresses a solidary obligation granting A Co., as creditor, the right to proceed against its dabiors, sere Co. The nature of the solidary obligation under the surety does not make one an indispensable party ‘Sindlepensable party fsa party-innterest without whom no final determination can be had of an action, sha ana Shalt be joined mandatorlly ether as plaintiffs or defendants. in this case, B Co. fs not an indispensable Buty Because C Co. can claim indemnity directly from © Co., having made iself jointy and severaly "abe eet Go. for the obligation under the bonds. Hence, B Co. is not an indispensable party (Living @Sense v. Malayan Insurance, G.R. No, 193753, September 26, 2012, Perlas-Bernabe, J) 422. A and B entered into a logaing agreement under which the latter is granted exclusive rights to cut, Collect and remove timber for five (5) years and extendable for another five (5) years from the property cox it consideration of payment of royalties and forest fees. Four (4) years from the date of agreement, B had incurred an unpaid account of P220,000, which, despite repeated demands, it failed to pay. A Sent a notice. of rescission or termination of the logging agreement. In response, B executed an instrument entitled “Acknowledgment of Debt and Proposed Manner of Payments” which was approved by A. The said instrument stipulated that B promises to pay A the balance at the end of the Sth year of the agreement and that in the event that B fails to pay by that time A may rescind the contract without the necessity of any judicial suit. —— Cn the Sth year, B failed to pay the total unpaid balance. A informed B that he considered the contract rescinded and filed a civil case for the collection of money. In the meantime, A advertised an invitation to bid to take over the logging operation which was granted to C. B filed an injunction on the new Jogging agreement between A and C, contending that itis only after a final court decree declaring the Contract reseinded for violation of its terms'that’-could disregard B’s rights under the contract and a feat the agreement as breached, arid of no Forde or. effect-Can A treat Its contract with B rescinded before any judicial pronouné fee NPP nt to'that ef pence LD Yes. A may teat its opfiract With B'S rescinded befoTe-any ud the fae that profit the at onarsopenmenitingnigyg eerste aaa vad, Shin cmetatn hea wat tevontan. The Ran eu toe wes oy Consider t resolved orrescinded, ang act accordingly, shout pfoviots gourt action, but it proceeds its own Fisk as only the final jédgment of the; corresponding court which wil conclusively and finally settle whether the faction taken was “pees titan Bute aw defintely doesnt req thatthe contracting party ynouncement. There is nothing in iho believes itself injured must first file sultiand.walt for’ajudgment before taking extrajudicial steps to protect, its interest. Otherwige, the party injured by the-other’s breach will have tojpassively sit and watch its damages ‘accumulate during the pndency ofthe suit until the final judgmentofroseission if rendered when the law itselt seeses hat he hobs exerciee dus cigence te tirimize-te-onm damguo (U.P. v. De los Angeles, GR. No 128602, Soptember, 29; 1970). ‘&-and.B had expressly stipulated id thewAEKnowledgment of Debt and Proposed Manner of bayments” that-apen, default by the etter B, the creditor A has the right and the power to consider, the Logalrig Agreelyent && fesclnded Without the riecessiy of any uicial suit. Hence, A may treat its contract with B rescinded. Sy \ } XS SSicieyT \ ZIETINGUISHMENT. ye 423. Constante and Corazon authorized Artigo to act’as real éstate’broker in the sale of four (4) lots for the ‘mount of P23 Million, 5% of which Will be given to the latter as commission. Artigo then entered into 4 contract of sale with TT Gorp. over two (2) oF the four (4) lots for the price of 7,050,000. After the Sale was consummated, Artigo received from Constante and Corazon P48,893. However, feeling Sggrioved because his total commission should be P352,500.00 which is 5% of the agreed price of the wo (2) lots, he sued Constante and Corazon. Citing Art. 1235 of the Civil Code, Constante and Corazon Contonds that Artigo's inaction as well as fallure to protest estops him from recovering more than what {was actually pald him. Was the contention of Constante and Corazon correct? de No, the contention of Constante and Corazon is not correct, Artigo's acceptance of partial payment of his commission neither amounts to a waiver of the balance nor puts him in estoppel. This is the import of Art. 1235 Which was explained in this wise: "The word ‘accept’, as used in Art. 1235 of the Civil Code, means to take as ‘satisfactory oF sufficient, or agree to an incomplete or irregular performance. Hence, the mere receipt of & partial payment is not equivalent to the required acceptance of performance as would extinguish the whole Bpligaton,” There is thus a clear distinction between accoptance and mere receipt. In this case, itis evident that Artigo merely receive .d the partial payment without waiving the balance (De Castro v. Court of Appeals, GR. No. 115838, July 18, 2002). 424. LSW deposited with ABC Bank a money market placement. Thereafter, a person claiming to be LSW instructed an officer of ABC Bank to pre-terminate the money market placement, and issue a check representing the proceeds. ABC bank issued a manager's check in the name of LSW, as payee. The check was eross-checked "For Payee's Account Only” and given to S. S in turn deposited the check to FCC's account. Is the obligation of ABC Bank to pay LSW extinguished? {42 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS125. 126. "CIVIL LAW : oe ne VE DAW, crcssoy cr cg err med by au of a ose Fo a Cl Ce, Sa payment GR. No. 133179, March 27, 2008). 1111901, A obtained a loan from Company B, represented by C. As security for the payment of the leat, Th gave twe open-dated checks, both payable to the order of Company B. From she ste the checks A ave ea frey were held in a safe, Kept together with other documents and papers of the compat By, father-in-law of C, until D's death in 2004. When the checks wore discovered: demand was made by D father atte pay. c thus dated then deposited said checks on December 22, 2004, The checks ee ered A was charged with Violation of BP 22 before the MeTC. Among other defenses, & were dishonor ot, that his obligation is deemed paid since the check delivered to the respondent had been impaired. . ‘a. Has prescription set in in the instant case? oH ereetigation to pay the loan evidenced by the checks deemed fulfiled by operation of law? a. Yes, prescription has set in. A check sa bil 6f exchange drawn of a bank ‘payable on demand. t's yee este insrumont- witten and signed by a drawer containing an unconeitional order to Pay ce a megotia inetai in money. Sec. 1199f the Negotiable Instruments Law states that a negotiable irae nea check ay be dschigeey any fetal hich wl chorea, Sree co for the payment of money. A check thet@fore fs abject to prescription of actions upon 2 written contract Tre ereaenbes in 10 years from the time jne right of action accrues under Art. 1144 of the Civ} cece Ff the check fe undated, as In this Gasexile,cause,af,action is reckoned from the date of the co nt he check. As more than 10,jears had'liéady lapsed, the cause of action on the checks , HS . b. Yes, te obligation to pay théjoan was deemed futiled By operation of law and Ais absolved from any liability to pay tha,amount.of the loans Art 1249 of the Civil Code ‘specifically provides that the delvery of promiss6hy notes: payable‘to offer, or bls Af exchange, or other mercantile documents shal proaute th efecto ayent ont wl ‘cashed, or when, through the fault of the creditor, they hiave beef iitipairedisThe payee of 8 ‘be a creditor under this provision avait nonpaymantjseamesby bg cob gaye ss idence, payment will bo deemed effected ar hb obigation for Wich the, check was/given as conditional payment will be discharged. In this creatine dolvory of the checks by A, despilettsizubsequent failure to encesh them within a period ‘of 10 years or more, had the’étect of payment ‘Dis atbofkeeping the checks in a safe and forgetting fo demand the payment of A's loaf either by encashing the checks or demanding from A, constitute + eeretnnent of the checks\fugtion ae security or conditional payment of te loan ammount. Hence, Re eetidored cischarged fot his obligation to pay (Evangelista v. Soreenex,Inc., G.R. No. 241564, November 20, 2017, Covered Case). DELTA is a domestic corporation owned by R. R and his wife obtained a Pa Mi forthe development of Delta Subdivision, To secure the loan, the spouses executed a real stale. tor oage of Lot4 property. Thereafter, DELTA executed a Contract to Sell with E over the house and Tete ret 4. DELTA defaulted on its loan obligation. The bank, instead of foreclosing the real estate ree Mtgage, agreed to a dation in payment. The dation states that “That, the assignee doos hereby accept This aocignment in payment of the total obligation owing to him by the assignor as above-stated.” ion loan from a bark E then filed a complaint against DELTA and the bank alleging that DELTA violated the terms of fs ccnen dt ts Sol The Bank contends that should the dacfon en pago over Lot 4 be invalidated and the cronerty ordered to be delivered to E, DELTA should pay the corresponding value of Lot 4to the bank, Freee reine that the loan obligation extinguished by the dacfon en pago only extends to the value of Hoenn ainon delivered; if Lot 4 cannot be delivered to the bank, then the loan obligation of DELTA roe rae to the extont of Lot 4's value. Did the dacion en pago extinguish the loan obligation, such that DELTA has no more obligations to the bank? ‘Yes, the dacion en pago extingulshes the loan obligation. The Contract to Sell did nat transfer ownership of Lota tee, said ownership remained with DELTA. DELTA could then validly transfer such ownership to Shatter person (the bank), However, the transferee Dank is bound by the Contract to Sell and has to respoct ere ign thereunder. Like in al coniraets, the intention of the patos to the dation in payment 's paramos sy ae caling, The contractual intention determines whether the property subject of the, dation wit be Re aout ine fll equivalent of the debt and wil therefore serve as fll satisfaction for the debt, The dalon 2018 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 432019 PRE-WEEK NOTES “tn PDA COLE OF a CENTRALIZED ba OPERATIONS 209 i in payment extinguishes the obligation.to the extent of the value of the thing delivered, elther.as agreed upon by the parties or as may be proved, unless the parties by agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished. In this case, without any reservation or condition, the dacion stated that the assigned properties served as full payment of DELTA's "total obligation” to:the bank. Hence, the’ obligation. is now extinguished (Luzon Development Bank v. Enriquez, G.R. Nos. 168646 and 168666, January 12, 2017). 427. Sps. C purchased a parcel of land from Kalikasan Homes, ownedideveloped by AFPMBAI, to be pald from the proceeds of the PAG.IBIG loan extended to the former by the Rural Bank. AFPMBAI executed ‘Deed of Absolute Sale and caused the transfer of the land tite to Sps. C’s names but the PAGBIG Joan facility did not push through. Meanwhile, AFPMBAI made several demands against the Sps. C to pay the price. The Sps. C aro confused as to whom between the Rural Bank through PDIC or AFPMBAI tender of payment should be made. Thus, they filed a complaint for consignation of loan payment before the RTC. Does the complaint filed by the Sps. C against AFPMBAI make out a case for consignation? Yes. Under Art. 1256 of the Civil Code, he debtor shal be released from responsibilly by the consignation ofthe thing or sum due, without need of prior tender of payment, when the-creditor is absent or unknown, of ‘when he is incapacitated to recelve the payment atthe ime tis due, or when two of more persons claim the Same right to collect, or when the tite to the obligation has been lost. The allegations in the complaint present 2 situation where the creditor is unknown, or that two or more entities appear to possess the same right to collect from petitioners. Sps. C are ready 16 pay the loan in full however, under the circumstances, they do not know which ofthe two should receive fl payment oF the-purchase price, orto whom tender of payment must ~ nay be made thus mating cu rot fer estan Spouae Cecayeinv. Amed Fores and Poles 2 ‘Mutual Benefit Association, Incyek at Non 471288. Apel 45, 2019)... 428. 8, and B, entered in og Got of 'ace with SPUTaPthg Gon fs bulsing as premises forthe irate oso, mye nerme eae Sheer ale ety on the basis that SPFaid-not deliver the Isased premises ta condition it fr intended use thus they were constrained t6 incurfexpenses for necessary repaits as well/as expenses for the repair of Miuctoral defo, igh $91 ate antrefaced tert Se! ads submited ay estimated statement of accolint‘of, uch expens . Can the-unpaid rentals ke"jUcicially compensated against expenses by the lessee fof repairs and structural defects? / p-4 : are more than that of a,lessoMléssee. (ASSOciated? Marine” Officers and Seamen's Union of the Philippine v. seer dan at ol fone esol Nae AN 4152. Ima contract to self the gale des not hap; Ba be returned by tha seller? AO ak 3 without thp sell faut, should the earnest money 7 yesh t\ ine | Vy No, the eamest money should pot be:retumed.-Eamest money, under-Arf. 1482 of the Civil Code, Is ordinary given in aiperfected contiaet of sale Hoxiéver, eargest money may also be given in a contract to sellIn.a contract to ell, the payment of eamest monay Feprssents the seller's ppportunity cost of holding in abeyance the search for other buyers or toler deals: Eamnesh;toney, therefore] is paid for the sellers benefit Itis part ofthe purchase price whit athe bare tne proof of cSmimitment by he potential buyer. Absent proof ofa clear agreement tothe contrary, it should be forfeited f the sale does not happen without the sellers fault. The potential buyer bears the burden of proving thatthe earnest monoy was inlended other than as part ofthe purchase price and obo fexted if hagale dacs rsebor wld the segs au (Racal v. Spouses Javier, GR, No, 189609, January 29, 2018,-Gdvered Case) > Bee eee nea ean In a case pending before the Supreme Court, the party litigant sold one of the properties. in litis Pendentia to her lawyer's son. By. reason of the purchase, a complainant instituted a disbarmeuit ‘complaint against the lawyer for violation of Art. 1491 of the Civil Code for having acquired an interest in the land involved in a litigation in which a lawyer had taken part in by reason of his profession. The lawyer admitted the purchase but maintained that he did not violate the said article as he had absolutely no interest in the property purchased by his son; and that the proscription in the said article does not extend to the relatives of the enumerated persons mentioned therein. Is the contention of the lawyer correct? Yes, the lawyer's contention is correct. The prohibition in Art. 1491 (5) of the Civil Code does not extend to their respective immediate families or relatives. As worded, Art. 1491 (5) of the Civil Code covers only (1) justices; (2) judges; (3) prosecuting attomeys; (4) cletks of court; (5) other officers and employees connected ‘with the administration of justice; and (6) lawyers. The enumeration cannot be stretched or extended to Include Tolatives of the lawyer — in this case, son of the lawyer. If the members of the immediate family or relatives of ‘the lawyer laboring under disqualification is to be included within the purview of the law, it would in effect be amending the law. The old and familiar Latin maxim expressio unius est exclusio alferius should apply, which ‘means that the express mention of one person, thing, act, or consequence excludes all others. Undeniably, Art. 1491 (5) of the Civil Code prohibits the purchase by lawyers of any interest in the subject matter of the ‘tigation in which they participated by reason of their profession. Here, however, the lawyer was not the purchaser or buyer of the property or rights in litigation. For, in point of fact, it was his son and not the lawyer, ‘82 | 2019 SAN EDA LAW CENTRALIZED BAR OPERATIONS:"paar VIL LAW. a FAN COTERIZE BAR OPERATION 2019 154, 156. ‘who purchased the Subject property (Santos v. Arrojando, A.C. No. 8502, June 27, 2018, Perlas-Bernabe, J. Covered Case). C.Effects of the Contract when: ds beeniLost i What are the effects of the contract when the thing sold has been lost at the time of the perfection of the contract? If atthe time the contract of sale is perfected, the thing which is the object of the contract has.been entirely lost, the contract shall be without any effect. Butif the thing should have been lost in part only, the vende may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to th toll sum agreed upon (CIVIL CODE, art 1493) SON) DObligations 6F the Vendor eI As the owner of Lot Ain Albay. Her afomey infact, B entered into a contract with X for the sale of the property. 8 showed X the metes and bound ofthe property and represented that Lot Aas an area of more or less 6,200 sq. m, per the tax declaration covering it. They executed a deed of absolute sale ver the property in Xs favor. The deed described the property, ae: “A parcel of land Lot A, situated at Albay, with an avoa of he thousand two hundred (6,200) sq, metore-more or loss.” Subsequently, X Caused the property to be surveyed and discovered that Lot A hae an aroa of 12,000 sqm. Upon foarning of the actual area of the property, B allegedly Insleted that tho difference of 5,600 sq, m. romaine uneeld This was opposed by X who clams that she owe the whole lt by viru ofthe sale 's X entitled to the excess of 5,800 sq. m.? 7 No. X|siot ented tothe excoss Ths a AltA ump sum. na ump dum corract, endo is gendaly ‘obligated to dave al the and covered within eae assis of wate real ana to greater or smaller than that recited in the de¢ a However, in case there is conflict between the area actually covered by the’ mae fates RG NaGall fod area staan te contact of ele, halsho shal do So only wn the exces or dfclecy between the fre andthe arf reasonable, The Gferenco of 6 800 6a, mis too Substantial 1.66 ponsidred rersaruble. Declaring X as the owner of the ‘whole 12,000 sq. m. on the premise this 16 the actual area ingiv'4ea in the boundaries would be ordering the delivery of almost twice thesaréa staied in the deeds of sale. A. 1642 does not contemplate such an unfit situation fo befall a vendor — that fe/she would Bp compeli¢d tol deliver doublo the amount that helshe originally sold without a corfeéponkiis increase Ee ‘Avent en itis sold in gross or with the scription more or less’ dove not.thereby take all Fl iy in the land, The use of ‘more or lessor simiar words n design dani covers aly a reasonable excess or deficiency. Hence, X's enliled ont 6,20 sm, ofthe roy. A arent 54009, m. more than the ses rine To be sald sro ‘easonable oxcass that can be déemed included ih The Sale (Areaina v. Ingram, G.R. No. 196444, February 45, 2017, Covered Case). ‘An advertisement was placed oyundhik for public auction of a condominium unit with an area of 95 sq.m. Thinking that it was sufficient and spacious enough and after inspecting the unit, PB decided to register for the sale and bid on the unit. He eventually won the bid and entered into a Contract to Sell with UB Bank. A few years after, while constructing 2 additional bedrooms, PB discovered that the floor area was just about 70 sq.m, not 95 sq.m. as advertised by UB Bank. He asked for a rescission of the Contract fo Soll, along with a refund of the amounts he had paid. UB Bank later on informed PB that the Unit, according to the appraisers, was confirmed to be 95 square meters, inclusive of the terrace and the common areas surrounding it. Not satisfied, PB filed for a Complaint for Rescission of Contract and Damages. Will PB’s action prosper? Does Art. 1542 of the Civil Code on sale fora lump sum apply here? b. ‘Yes, the actioir will prosper. The significance of the Unit's area as a determining cause of the Contract to Sell is readily discernible. Falsity on its area is attributable to none but to UB Bank. A seller is, generally responsible for warranty against hidden defects of the thing sold. Art. 1566, par. 2 of the Civil Code states that the seller's liablty for hidden defects shall be inapplicable if there is a stipulation, made to the contrary. However, a mere stipulation does not sulfice. To be fully absolved of liability, ‘Att, 1566, par. 2 also requires a seller to be unaware of the hidden defects in the thing sold. Here, UB, Bank fully know that the Unit's area, reckoned strictly in accordance with the Condominium Act, did not total 95 sq. m. UB Bank admits that the only way the Unit's area could have amounted to 95 square meters was if some areas for common use were added to its interiar space. It acknowledged knowing this fact through the efforts ofits appraisers and even conceded that their findings were documented in their reports. As there is fraud on the part of UB Bank, as it orchestrated a situation tif for defrauding 2019 SAN BEDA LAW CENTRALIZED SAR OPERATIONS | 532019 PRE-WEEK NOTES "2 ea COLLEGE OF La CRAZED A OPERATIONS 2019 . buyers of the advertised unit, the Contract to Sell must be annulled, and PB be refunded ail the ‘amounts he paid. b. . No, Art 1542 does not apply. Art. 1542 of the Civil Code states that in the sale of real estate, made {or @ lump sum and not at the rate of a certain sum for a unit of measure ar number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the contract. Here, PB does not seek a reduction of the purchase price. He seeks judicial relief to have the entirety of his purchase annulled, his consent having been fraudulently obtained. While itis true that PB did not buy the unit on a per-square-meter basis, it remains that what he bought was a condominium unit. A condominium unit's bounds are reckoned by “the interior surfaces of ts perimeter walls, floors, ceilings, windovis and doors," excluding common areas.” Thus, when PB agreed to Purchase the Unit at a lump-sum price, he never consented to including common areas as part of his Purchase (Poole-Blunden v. Union Bank of the Philippines, G.R. No. 208838, November 29, 2017, Covered Case). ercimes ara camunccane a ee A discovered that the Register of Deeds issued a new certificate over a plot of land he owns in the name of P by virtue of a falsified deed of absolute sale purportedly executed by him (A) and his wife. | P maintained that he Is an Innocent purchaser for value, having purchased the lot from X, who Possessed a special power of attorney (SPA) to sell the Same. The SPA however contained flaws in its i notarial acknowledgment. Is P an innocent purchaser for value? No, Pi not an innocent purchaSer for valug, TH eral irl that every person dealing wit registered. | land may safely rely on the comréatress Bf tho ceniicate oft 1grefor and the law will in no way oblige q him to go beyond the cerfiéate to.defenine the conidia ofthe property. Where there is nothing in the Geren of eto nea oy sae er enn te cura he propery. o any encumbrance hereon, Beh Tie in the purchaser is not reqirad toidblore'farther than what theo on its face indicates in quest for any hidden defécts or jichoaip right that masubsequéitty defeat his Tight thereto, However, the buijer is epected.to.examiné nat only the certificate of tile but all factual circumstances necessary for him taldatefmine if thére are, any flaws in, the title Of the transferor, The buyer also has the duty. {o ascertain the identity ofthe persn with- whom he'is dealing ivth andthe latter's legal authority to convey the property. In the: ase, P, purchased the subject pfeperty tronrx;on the strength of the lator’ ‘ostensible authority fo sdllincer the Subject iment, However, indicates flaws in its notarial acknowledgment. Despite this ie Conducted an investigation beyond the subject SPAVar eh a ence, P cannot be clpsiera a nice . 6 (Hops of Sal v. Legrosa, GR. No. 193547, January 18, 2014, Perla / / rf 7 A; ots ~ REMEDIES|: 158. Does failure to pay the balance of the purchase price in a sale of a land entitle the seller to rescind the contract even after the subject land was mortgaged and re-sold in a foreclosure sale? ‘Yes. A contract of sale, being a reciprocal obligation, can be rescinded under Art, 1191 of the Civil Code which provides that the power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. As to rescission of the sale of an immovable property such as a parcel of land, Art. 1592 of the Civil Code further provides that in the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vende may pay, even after the expiration of the period, {as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term, ‘The right of rescission of a party to an obligation under Art. 1101 of the Civil Code is predicated on a breach of faith by the other party who violates the reciprocity between them. The failure to pay the balance of the purchase price for the subject property entitled the seller to rescind the Deed of Sale. When there is a finding that the mortgagee is in in bad faith, the subsequent transfer in its favor by way of foreclosure on the ‘mortgage and purchase of the subject property at the public auction sale did not and cannot bar rescission j (Games and Garments Developers, Inc. v. Allied Banking Corporation, G.R. No. 181426, July 13, 2015). ‘54 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS; CIVIL LAW ‘sw ca CoueGE OF AW CBURATEED O48 OPERATIONS 2019 159. 160. 2a eS See 161. RECTO AND MACEDA LAW P purchased a Hyundai Starex car through a loan granted by & Bank in the amount of P41 Million. In Connection therewith, P executed a Promissory Note with Chattel Mortgage in favor of E Bank, and ‘Stipulated that P will pay the amount in 36-monthly installments. P then defaulted prompting E Bank to send a demand letter. As the demand went unheeded, E Bank filed a Complaint for Recovery of Possession with Replevin. P admitted the default in payment and that she spoke to a bank officer who consented to delayed payment. Pursuant to this, P paid P103,000 which was accepted by E Bank. The RTC confirmed E Bank's right and possession over the subject vehicle. On appeal, the CA ruled that E Bank should not have accepted P's late partial payments and opined that by choosing to recover the Subject vehicle via a writ of replevin, E Bank already waived its right to recover any unpaid installments, pursuant to Art. 1484 of the Civil Code. Is the CA correct? No, the CA is net correct, Art. 1484 of the Civil Code provides that in cases of a contract of sale of personal property the price of which is’ payable in instalments, “the vendor may exercise: (1) exact fulfillment of the Bhtigation, should the vendee fall to pay; (2) cancel the sale, should the vendee's failure to pay cover two or more installments; and (8) foreclose the chattel mortgage on the thing sold if one has been constituted, should the vendee’s fare to pay Cover two or more installments. In this case, he shall have no further action against the purchaser fo recover any unpaid balance of the price. Any agreement to the contrary shall be void.” In the present case, there was no vendor-vendee relationship between E Bank and P as P never bought the car from E Bank but merely sought financing from the latter. A loan contract with the accessory chattel mortgage ‘contract - and not & contract of sale of personal property in installments - was.entered into by the parties with P standing as the debtor-mortgagor and E Bank as the crediior-morigagee. Therefore, the conclusion of the CA that Art 1484 finds application in this case is,misplaced (Equitable Savings Bank v. Palces, G.R. No. 214752, March 09, 2016, Perlas-Bernabe, Dae ‘entered into a éontract with PH Compaity ff the purchase of a residential house and lot, undertaking to pay equal monthly installments for ten ( ‘ars. PH Company assigned all its rights, title and interest in the Contract to Soll in favor of B thfough'a Beed of Assignment. On April 10, 2006, B issued 2 notarized notice of delinquency to°A for failure to pay his monthly installments. When it was Unheeded, on May 25, 2008, Bent a final demand letter for A\to vacate the premises, which also remained unheeded. This prompted B to file a complaint for unlawful detainer on November 3, 2006. Was there a valid and effective éanelation of the contract tose sr it ‘Yes, there was a validflind effegive cancBlatah of the cghtract to tell. Sec. 4 of R.A. No. 6552 or the “Realy insite Syer Brtecten Act pres fr 3 rata eer car may aay, cance te able contact: (1), he seller sali g\e the puyol & 60-day 1B pot to be reckoned from the date the instalment becarve duo; (2) "tha geet must give te buyer a notice of cancelaiontdemand for rescission by rotarial act if the buyer fails to pay the ingtallments'due at the expiration of the said grace period; and (3), the Seller may actualy cancel the configcuonl ater Kaye rom ho buyors rovspt ofthe said notco of Sanceltonidemane for resccsion by nota iv the presence, to 60-day grace peod automaticaly Gporatei favor ofA. and took effet rote time that te maturly datas of he instalment payments lapsed With the sald grace period having éxbired bereft of any installment payment on the part of A, PH Company Thon ieved cnotarbed Note of Delfquency and Cancoiation of Contract on April 10, 2008, Final, in rrecaseing ttn he actual cancelation ofthe contract (0 eel, PH Company gave A an additonal thity (20) cree wa unig to cote hcl sears end rnstate the contract, or eel or assign thelr rg fo another. Thus, thro waa vid and effecve cancaation ofthe Contract to Sel in accordance with Soc. 4 of R.A. No. 6552 {Optmum Dovelopment Bank v. Spouses Jovelancs, G.R. No. 189748, Decomber 4, 2013). Alls an agent authorized to sell ten (10) parcels of land. He offered to sell these to National Housing ‘Authority (NHA) for a housing project. NHA approved the acquisition of the said lands with a total purchase price of P25Million. The parties executed a Deed of Absolute Sale, covering the subject lands. However, only seven (7) of the ten (10) lands were paid by NHA becatise according to the Department of Environment and Natural Resources (DENR), the remaining lands were located at an active landslide area. NHA issued a resolution rescinding the sale of the remaining three (3) parcels of land. Does the issued resolution have any legal basis? Yes, the resolution rescinding the sale was based on the negation of the cause arising from the realization that the lands, which were the object of the sale, were not suitable for housing. The cause is the immediate, direct and proximate reason which justifies the. creation of an obligation through the will of the contracting parties. Cause, which is the essential reason for the contract, should be distinguished from motive, which is the particular reason of a contracting party which does not affect the other party. In a contract of sale of a piece of land, such as in this case, the cause of the vendor in entering into the contract is to obtain the price. For the vendes, NHA, itis the acquisition of the land, The motive of the NHA, on the other hand, is to use said lands 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 55.2019 PRE-WEEK NOTES enn nnn nent for housing. Ordinarily, a party's motives for entering into the contract do not affect the contract. However, when the motive predetermines.the cause, the motive may be regarded as the cause. In this case, itis clear that NHA would not have entered into the contract were the lands not suitable for housing. The quality of the land was an implied condition for the NHA to enter into the contract, On the part of the NHA, therefore, the motive was the cause for its being a party to the sale. The finding of DENR is a sufficient-basis for the Cancellation of the sale thus the realization of the mistake as regards the quality of the larid resulted in the regation of the motive/cause thus rendering the contract inexistent pursuant to Art. 1318 of the Civil Cade (Uy v. CA, GR. No. 120465, September 9, 1999). 462. When S became ill and needed money for his hospitalization, he sold his undivided share of a property, ‘co-owned by him and his sons, X, Y, and Z to B for P1Million. S and B agreed that deed of sale shall ‘state that the purchase price is P250,000, to avold the payment of higher capital gains taxes. Simultaneously with the execution of the deed of sale, the parties executed a joint affidavit declaring the actual purchase price payable by installments. Only X and Y knew of the said transaction. When Z learned of the transaction, he immediately wrote a letter to the Register of Deeds saying that S did not form her of the said transaction, nor did he give his consent thereto. In the meantime, there were partial payments made by B. S then wrote a letter to B stating that not all of his sonsico-owners knew of the transaction and that he is withdrawing all his obligations to B until 4 the validity of the sale is decided. When S died intestate and was survived by his sons, the latter filed a complaint against B for nullity of the sale, alleging that it is only an equitable mortgage. table mortgage apply? Is the sale valid? 5 3 3 2 z 3 Yes, the sale is valid“altholgh a simulated-coniraét. Ah, 1345 of the Civil Code provides that the simulation of a contract may eitiér be absolute or félatV6. In absolute simulation, there is a colorable without Spy eee i contract but sdbstance; BECAUSE the. parties “have mf, intention to be bound by it. An Sbeolutly sin le Vald. Othe, other Handnf Ins parties stato @ false cause in the Contract to cqnceal Yeir real agroemont/ such a.contractis Felaively simulated. In the present case, ‘the partes infended 16 be bund by the, contract, even fit did'pat rect the actual purchase price of, the property as-revéaled by the-partial payment-made)| on the,basis of the Deed of Absolute Sale. There was an-‘fitention to transfer the.ownership:of over the provefly.’Since the Deed of Absolute Sale was merely relatively simulated, it remains valid Vand f ea “Th ee iis i y No, there iso eaitabid tuage-ForAis. 1602 anid 166% of the ChilCade to apply, two requisites must concur: (1 th partie “entered ilo a contract dehomninated ada fontractof sale and, (2), thee. ruatconal Outi pre ie nr Grated he etc noe), Pe Circumstances, ehumerated in’ Alt °1802 sulficés-togive sie to the presumption that a contract purporting to b&.an absolute sale is actually in équitdble mértgage. Here, however, the contract does otmerely purport to be afvabsolite sale, The! Contracts, indeed,/one of absolute sale. There is no ‘lear and convincing evidence'thal the palties agieed Upotta mortgage of the subject property. There is nothing doubtful about the toms of or the-ifCumeteitces sufrounding, the Deed of Sale that would call for the application of Art..1802. The Jbicit Affidavit indisputably confirmed that the transaction between the parties was a sale. (Heirs of Balite ¥ LinvG-R. No. 152168, December 10, 2004). 5H Assignment of Credits: ea 163. A, a representative of SS Ltd., approached Y for credit accommodation. A requested N, thru Y, to grant SS. Ltd. discounting privileges which N had with BA Corp. Y acquiesced. Following the discounting process agreed upon, N thru Y endorsed the SS Ltd.'s post-dated check in favor of BA Corp. Thereafter, BA Corp issued a check payable to N which endorsed it in favor of SS Ltd. SS Ltd. then made use of and/or negotiated the check. Accompanying the exchange of checks was a Deed of Assignment . executed by N in favor of BA Corp. with the conformity of SS Ltd. Under the said Deed, the subject of the discounting was the aforecited check. At the back thereof and of every deed of assignment was the Continuing Suretyship Agreement whereby A unconditionally guaranteed to BA Corp. the full, faithful and prompt payment and discharge of any and all indebtedness of N. The check however was. dishonored. A substitute check was given but was likewise dishonored. Despite repeated demands, N and A failed to settle the obligation with BA Corp., prompting the latter to file an action In court. Is 'N, ‘as assignor liable to BA Corp as its assignee for the dishonored checks? Yes, the assignor is liable to its assignee for its dishonored checks. An assignment of credit is the process of transferring the right of the assignor to the assignee, who would then be allowed to proceed against the debior. It may be done either gratuitously or generously, in which case, the assignment has an effect similar to that of a sale. According to Art. 1628 of the Civil Code, the assignor-vendor warrants bath the credit itself and the person of the debtor, if'so stipulated, as in the case here. Consequently, if there be any breach of the above warranties, the assignor-vendor should be held answerable therefor. Indeed, the assignor-vendor is '56 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS2019 PRE-WEEK NOTES {and B had no intention of purchasing, R wrote to inform them that he had decided to terminate the Iease agreement and in the same letter demanded that the spouses vacate the property. The spouses refused to vacate and pay the rentals, thus R caused the disconnection of the electrical service over the property. Spouses A and B invoke their right to suspend the payment of rent after R caused the temporary disconnection of electrical service. Are Spouses A and B correct? No, spouses A and B are incorrect, Art. 1658 of the Civil Code allows a lessee to postpone the payment of rent ifthe lessor fails to either (1) make the necessary repairs on the property or (2) maintain the lessee in peaceful and adequate enjoyment of the property leased. This provision implements the obligation imposed bh lessors under Art. 1654 (3) of the Civil Code. The failure to maintain the lessee in the peaceful and adequate Enjoyment of the property leased does not contemplate all acts of disturbance. Lessees may suspend the payment of rent under Art. 1658 of the Civil Code only if their tegal possession is disrupted. The duty ‘to fnaintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract’ nentioned in Arl. 1654 (3) is merely a warranty that the lessee shall not be disturbed in his legal, and not physical, possession." Here, the’ disconnection of electrical service over tie leased premises was not just an act of physical disturbance but one that is meant to remove respondents from the leased premises and disturb their legal posseseion as lessees. Ordinary, this would have entitled respondents to invoke the right accorded by Art. 1658 of the Civil Code. However, this rule will not apply in the present case because the lease had already expired when R requested forthe temporary disconnection of electrical service. R demanded the spouses to Vacate and instead of surrendering the premises, the spouses unlawfully withheld possession ofthe property nd continued to stay thereat. At that paint Revias'no-tonger obligated to maintain Spouses A and B in the “feacetl anc adoquate enoyrant ip onsite dan ot he cnt” Tetefoe, Spouses A ‘2nd B cannot use the disconnection. elscirical seniicd ausiication to suspend the payment of rent (Racelis v. Spouses Javier, G.R. No. 189609, Yanuany 20,2016). Covered, Case), " eres Sash in oe ans? ae 168. A dnd B entered into ale: capi over'a plaiitation. owhed'by A.,B, complained of being pestered by squatters who clairhed po: ye payments, A filed a complaint for damages. B sof the land as their own proper 8 defaulted in his month "B asserted that A committed breach of contract for his fre to maintain him m psacetul possession and enjoyment of he [eased premises, which entitled him to suspend payment of rentals: Is B entitled to suspension of payment No, B Is not enjtiod i buspension of payment. B:had not been aistubed ip his legal possession of the property so as to suspend payment pursuant to-At. 1654 of the Civil Code. Whien he was being pestered and harassed by the Shi 13: he had all the right to sue the intruders who Had distyrbed his physical possession 2a provided for in Art, 1664. Hence, MrxB had ho valid reasbrfo, Suspend the payment of rentals under Art. 41658 (Chua Tee Deelys: CA, G.R. NOC 135; Bh Mey 20 2008) rr "y ‘entered into a Contract of Lease with PNI ‘SAFA Law continued to occupy the premises without paying its monthly rentals. PNB demands for ‘SAFA to pay its outstanding rental obligations. S, in his capacity as managing partner of SAFA Law Office, filed a complaint for accounting and/or recomputation of unpaid rentals. PNB filed a motion praying that S be ordered to amend anew his complaint to include SAFA Law Office as principal plaintiff. S filed his motion to dismiss such claims asserting that SAFA Law Office is only a relationship ‘or association of lawyers in the practice of law and a. single proprietorship on the basis of the Memorandum of Understanding (MOU) executed by the partners of the firm. The MOU provide: xxx That partners REA, FLF and ADA shall not in any way be liable for any loss or liability that may be incurred by the law firm in the course of its operation; xxx That all remaining assets upon dissolution shall accrue exclusively to S and all liabilities shall be solely for his account. xxx Is SAFA Law Office a partnership? ‘Yes, SAFA Law Office is a partnership and not a single proprietorship. Art. 1767 of the Civil Code provides that by & contract of parinership, two or more persons bind themselves to contribute money. property, or Industry to a common fund, with the intention of dividing the profits among themselves, Two or more persons may also form a partnership for the exercise of a profession. A partnership may be constituted in any form, '58 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS470. 1 172, CIVIL LAW except as those provided in Art. 1771. A partnership begins from the moment of the execution of the contract, unless itis otherwise stipulated (CIVIL CODE, Art. 1784). 7 Here, absent evidence of an earlier agreement, SAFA Law Office was constituted as a partnership at the time its partners signed the Articles of Partnership wherein they bound themselves to establish a partnership for the practice of law, contribute capital and industry for the purpose, and receive compensation and benefits in the course of ts operation. S asserts that SAFA Law Office is a sole proprietorship on the basis of the MOU executed by the partners of the firm, The MOU evinces the parties’ intention to entirely shift any liability that may be incurred by SAFA Law Office in the course ofits operation to S, who shall also receive all tho remaining assets of the firm upon its dissolution, This MOU, however, does not serve to convert SAFA Law Office into a sole proprietorship, SAFA Law Office was manifostly established as a partnership based on the Articles of Partnership. The MOU, from its tenor, reinforces this fact. It did not change the nature of the organization of SAFA Law Office but only excused the industrial partners from ljability (Seludo v. PNB, G.R. No. 193438, August 20, 2018). A partner cannot demand the return of his share (contribution) during the existence of a partnership. Do you agree? (2012 Bar) Yes | agree, he is not entitled to the return of his contribution to the capital of the partnership, but only to the net profits from the partnership business during the life of the partnership. As held in Villareal v. Ramirez, (G. R. No. 144214, July 14, 2003), a share in a partnership can be returned only after the completion of the latter's dissolution, liquidation and winding up of the business. However, if he is a limited partner, he may ask for the retum of his contributions as provided in Arts. 1856 and 1857 of the Civil Code. Is an oral partnership valid? (2009 Bar) Yes, an oral partnership, though not in| vntifgilis valid. A partnership may be constituted in any form, ‘xcept were immovable property or real rights af gohiributed thereto in which case a public instrument shal be necessary (CIVIL CODE, Art. 1771). li, A.B, and C were partners, the first’éne being ap industrial partner. the firm made a profit of P3 milion. During the'second year, a lgesiof P1.5 million was sustained. Thus, the net profit for the two years of operation was only P1.5 mil the Articles of Partnership it was stipulated that A, the Industriel partner would got 1/3 ofthe profile, but would not patilpate In the iosees. at eee During the first year of operation, a. Is the stipulation valid? Why? s b. How much will A be. ended to receive? 2. Yes, tho stipulation is Valid. Th law exolitsba Indusval partner trom losses. Inthe absence of Supuaon ne sharo of ede Parnor jn tne AKG Mfalesses shal bein proporion to what they may have contributed, but the Gpustaglparner ‘shall not be liable for the losses (C/VIL CODE, Art. 1797). bs Awill get only 1/3 of P1.5 millidh'the net profit and not 1/3 of P3 milion. While it is true that he does nt share in the losses, this only moans that he will not share in the net l6sses. It is understood that ho shares in the losses insofar as these can be accommodated in the profits. It's but fair to compute all the various transactions in determining the net profits or losses (Criado v. Hermanos, G.R. No. L- 12871, March 23, 1918). bligatigns ofthe bertners G bought from QS Corporations (QSC) 2 new transreceivers. Due to major defects, G returned the transrecelvers and requested QSC to have them replaced. Despite several demands, G was never given a replacement ot a refund, prompting him to file a complaint for damages against QSC. A judgment ‘was rendered in favor of G. During the execution stage, G learned that QSC was not a corporation, but ‘was in fact a general partnership registered with the Securities and Exchange Commission (SEC). In the Articles of Partnership, Y was appointed as General Manager of QSC. G instructed the sheriff to proceed with the attachment of one of the motor vehicles of Y. The sheriff then attached Y's vehicle. Is. resort to Y's properties to answer for QSC's liabilities proper? No, resort to Y's properties is improper. Art. 1816 of the Civil Code states that, ist, the partners’ obligation with respect to the partnership liabilities is subsidiary in nature. it provides that the pariners shall only be liable with their property after all the partnership assets have been exhausted. The subsidiary nature of the partners’ liability with the partnership is one of the valid defenses against a premature execution of judgment directed to a pariner. In this case, had Y been properly impleaded, Y's liability would only arise after the properties of QSC would have been exhausted. The records, however, failed to show that the partnership's properties were exhausted. 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 59474. +475. 176. 477. 2019 PRE-WEEK NOTES Sse FDA CULEGE OF LAW CENTRALIZED BAP OPERATIONS 2019 ‘Second, Art. 1816 provides that the partners’ obligation to third persons with respect to the. partnership liability is pro rata or joint. The joint liability of the partners is a defense that can be raised by @ partner iimpioaded in a complaint against the partnership. Only in exceptional circumstances shall the partners! liability bo solidary in nature, as in Arts. 1822, 1823 and 1824 of the Civil Code. In this case, it was not shown that ¥- of the other pariners did a wrongful act or misapplied the money or property he or the partnership received from G. G's claim stemmed from the alleged defective transrecelvers he bought from QSC, It was for a breach of warranty In.a contractual obligation entered into in the name and for the account of QSC, not due to the acts Of any of the partners. For said reason, its the general rule under Art. 1816 that governs the joint liability of such breach, and not the exceptions under Arts. 1822 to 1824. Thus, it was improper to hold Y solidarily liable for the obligation of the partnership (Guy v. Gacott, G. R. No. 206147, January 13, 2016) and G, as partners, mortgaged to M. two (2) lots in Tacloban City, Including the improvements thereon, all belonging to the partnership, to secure the payment of a loan. The partnership failed to pay the loan. The mortgage was foreclosed and the properties were sold at public auction to M. Before the expiration of the one-year period of redemption, C, on his own behalf, redeemed the properties with his private funds. The Sheriff issued the corresponding certificate of redemption in favor of C. Did C become the absolute owner of the property by reason of the redemption he effected? No, C did not become the absolute owner of the property upon making the redemption. A partner is an agent of the partnership as provided in Art, 1818 of the Civil Code. Art. 1807 futher provides that every pariner Becomes a trustee for his co-partner with regard to any benefits or profits derived from his act as pariner. ‘Consequently, when © redeemed the properties in question, he became a trustee and held the same in trust for is eo-parther G, subject to his right to demane! fem the fate his contribution to the amount of redemption Henco, C did not become the absoluté owner gf the "edcemas property (Catalan v. Gatchalian, G.R..No. L- 11648, Apri 22, 1959). et fa NYT Vers LEDS VScom LD D, K and U are general pirtner$,in-aerchandising firm, Having tentributed equal amounts to the a ancy slo saree ortequatdetrbutioi of whatever itt prot is realized per fiscal period. After ‘two (2) years of operatigiy-howevef, U conveys her whole'interest.is the partnership to J, without the knowledge and consént ofDiand K. SN ¢ . a lets parmpein fasorrbar——Sg>———-]_ \U?\ B. What are therighfs of Jf anyj’should she'desirg to partiéipatolin the management of the ae a erate atatnbclgn ot aot ott of P360.000,00 hich was realized after her purchase grUreintrest (4990 aH) To a. No, the parthefsfid tp 5k didssived. A’ponvevance,By/acpartnet GF NS ynole interest in a partnership Goss not of eh dioseve the ptgerh (IVIL CODE, Ar. 1919). / b. In the absencd'of agresment, thé ebnveyandé bf interest does not ght J to interfere or participate in the management or administiation oF the partnership bGsiness of affairs, or require any information Gr account of partnership tzansaciions, orto inepectné paltnership books. The conveyance of interest merely entitles the @asignés;to rBcelve-in-aCcordatite ilirhis contract the profits to which the assigning partner would otherwise be entitled: J may-réceive the net profits to which U would have sthonvise been entitod, wrichin this case, is 120,000 (CIVIL CODE, Art. 1813) ‘What is the liability of the partners, including industrial partners for partnership contracts entered into fs name and for its account, when all partnership assets have been exhausted? ‘The liability is pro rata. All partners, including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership (CIVIL CODE, Art. 1816). The plaintiff sued a partnership composed of five (5) general partners for payment of a promissory note. Later, the plaintiff filed a motion to dismiss the case against one of the partners. The motion was, granted. If the defendants lose the case, how much will each of the four (4) remaining defendants pay 115 oF 1/4 of the debt? Each of the four will pay 1/5 of the debt. Under Art. 1816 of the Civil Code, the partners are liable “pro rata,” meaning Joint’, Originally, each of the five (5) partners was liable for 1/5. The discharge from the complaint of one of them did not mean that said discharged defendant is no longer a partner. So each of the remaining four should pay 1/5. They must not be made liable for the share of the fifth partner. When plaintiff ‘moved to dismiss the complaint against said fifth partner, it was merely condoning or remitting his individual liabilty to the plaintf. Said condonation or remission will not benefit the other “joint” debtors or partners (Island Sales Inc. v United Pioneers General Construction Co., et al, G.R No. L-22493, July 31, 1975) 60 | 2019 SAN BEDA LAW CENTRALIZED SAR OPERATIONS179. 180. 181. A, B and C formed a partnership engaged in the fishing industry. In 1986, B decided to leave the partnership thus they agreed to dissolve the latter. The partnership had an estimated asset amounting fo P30 Million at that time. However, rio accounting was made or rendered even until the death of C in 1994. A reneged on his promise to turn over C’s share over the latter's heirs. This caused C’s heirs to file a complaint against A but the latter argued that the heirs are already barred by prescription because the partnership was already dissolved in 1986 which was the period when the partners or the heirs had the right to inquire into the partnership's business affairs. It means that their rights had already expired in 1990 or 4 years after dissolution. Is A’s contention correct? No, A's contention is incorrect. The" partnership, although dissolved, continues to exist and’ its legal personaly is retained, at which time it completes the winding up of its affairs, including the partitioning and Gistribution of the net partnership assets to the partners. For as long as the partnership exists, any of the partners (or legal representative ~ in this case the heirs of C) may demand-an accounting of the partnership's business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accountings done. In the instant case, no final accounting has been made, and thats precisely what the heirs are seeking in their action, since A has failed or refused to render an accounting of the partnership's business and.assets. Hence, the said action is not barred by prescription (Emnace v. Court of Appeals, G.R. No, 126334, November 23; 2001) Simmer an sear tiatennraagipirsercrepen wn apo : — 4 oar al fo ented ie b. What are the creditors’ recourse! Si 2 a a. Only the two remaining parineté’ A arid B, are fiableeWhen any partner dies and the business is continued without any sefflement of ageguhts ae between As estate and the person continuing the business, his legal fepresentative has thes right to have jhq value of his interest in the partnership ascertained and paid (CIVIL CODE, Art. 1841). The usejby thelperson or partnership continuing the business of he parinerShip tos or he nano of thea éocgased pariner as part here, shal not of itself make the individual’broperty of the’ deceased pattner liable, for any debts contracted by such person or parinership (CIVIL CODE, Art. 1840). Th: tea Broperty of a deceased partner shall be liable only for the obligations of thé parthigrship incurred while-he was a partner (CIVIL CODE, Art. inership’s obligations? Explain. 10 Bar), 1835). ot, 2 Tho creditors of the now partnership can Bea Bien opine collection of sum of money against the partnership and aiter all thé partnefstilp ase jefi exhausted, the creditors may go after the private properties of A aff B (CIVIL CODE, At. 1816). The creditors of the partnership shall be preferred as regards the pattigrhip property (CIVIL CODE, Art. 1827). Mand R executed their Articlés of Co-Partnership called EDE with only the two (2) of them as partners. Because of the difficulties encountered, M and R decided to avail of the services of P as industrial partner. Thus, M, R, and P executed their Articles of Co-Partnership under the same firm name EDE. Aside from the slight difference in the purpose of the second partnership which is to hold and secure renewal of timber license instead of to secure the license as in the first partnership and the term of the ‘second partnership Is fixed to thirty (30) years, everything olse is the same. Thereafter, the second partnership was dissolved by common consent and M and R bought the interest of P. The partnership was then continued by M and R. However, R took funds from the partnership more than his contribution. Thus, in a letter, M notified R that he dissolved the partnership. Can M unilaterally dissolve the partnership? - ‘Yes, M can unilaterally dissolve the partnership. As there are only two parties when M notified R that he dissolved the partnership, itis in effect a notice of withdrawal. Under Art. 1830, par. 2 of the Civil Code, even I there is a specified torm, one partner can cause its dissolution by expressly withdrawing even before the expiration of the period, with or without justifiable cause. Of course, ifthe cause is not justified or no cause was given, the withdrawing partner is liable for damages but in no case can he be compelled to remain in the firm ‘With his withdrawal, the number of members is decreased, hence, the dissolution (Rojas v. Maglana, G.R. No. 30616, December 10, 1990). What is a charging order? A charging order is @ judgment secured by a creditor subjecting the interest of the debtor-partner in the partnership. By virtue of the charging order, any amount or portion thereof which the partnership would 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 642019 PRE-WEEK NOTES A ‘otherwise pay to the debtor-partner should instead be given to the judgment creditor. This remedy is, however, Svithout prejudice to the preferred rights of partnership creditors under Art. 1827 of the Civil Code. it means That the claims of partnership creditors must be salisfied first before the separate creditors of the partners can be paid out of the interest charged (CIVIL CODE, Art, 1839 (8); Art. 1814). THORS ERR eer) Limited Partnership 482. Texecuted a Memorandum of Agreement (MOA) with K seting up a business venture covering three (8) fastfood stores known as "Hungry Toppings” that will be established at Mall Uno, Mall Dos, and Mall Tres, The pertirent provisions of the MOA provides: ree a. T shall be considered a partner with thirty percent (30%) share in all of the stores to be Set up by K: : b. The proceeds. of the business, after deducting expenses, shall be used to pay the principal amount of P500,000.00 and the interest therein which is to be computed based’on the bank rate, representing the bank loan secured by c. The net profits, if any, after deducting the expenses and payments of the principal and interest shall be divided as follows: seventy percent (70%) for K and thirty percent (30%) for Ts d. K shall have a free hand in running the business without any interference from T, his agents, representatives, or assigns, and should such interference happen, K has the right to buy back the share of T less the amounts already paid on the principal and to dissolve the MOA; and K shall submit his monthly sales,report.in.connection with the business to T. P LR What is the contractual lation between T dnd Fanitoen ‘The contiactual relationship BetvlesnT’and Kis a contact bt Papen, By the contract of partnership. two or more persons bing/themicetves to contrbute-money, pfbperty.o dustry t6 a common fund, with the Menton of dicing the pratt aang trémesives (CIVIL CODE. A. 1767).In ths case, there is an amount ‘of P500, 000.00 obtainéd'by T through a babk logh andan inte wion 4e gvide:the profits, 70% for K and 30% for a odoncad he Méiforandum of Agreamnent AL bs L—_ yh Tobe sore spatifior the contrattis.a limited parinership which Art {843\of the Civil Code deseri.as as one formed by two of More dersons, having’as members One or more gerleral partners and one or more lirited partners. The limited partiare as such shalfnat be bound by the obligatiohsof the partnership. Here, T does het takepart nto Golo th bios pursuant fo A. 1848 Neveraose, i eniled fo monthly sales reports in eonnecticn ty the busigessia right provided in Apt A851. mc" f 4 = Pa ~ Snes tN Nf 483. A regularly purchased sugar trot evidenced by s6yetal Shipping Lists/Delivery receipts issued by the latter. A subsequently sold ofie-of its rights evidenced. by a receipt to C for P15 Million. C wrote to B informing the laitor that it was auiHorized-by Arto withdraw the sugar covered by such recoipt. Enclosed in the letter was a copy of the receipt and a letter of authority from A authorizing © to Wwithdravr for and in its behalf the sugar covered by sald receipt inthe total quantity of 25,00¢ bags. A then Issued checks payable to B covering 50,000 bags which included those under C's receipt. C was able to withdraw 2,000 before B refused to allow further withdrawals. B stated that A had already withdravin all the bags covered by the cleared checks the later previously Issued. Ithad also reasoned that C only represented A ints transactions with B. ls C considered an agent of A? No, C is not an agent A. It is clear from Art, 1868 of the Civil Code that the basis of agency is representation. On the part ofthe principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency. One factor, which most clearly distinguishes agency from other legal concepts, is control; one person — the agent — agrees to act lnder the control or direction of another ~ the principal. Indeed, the very word “agency” has come to connote rontrol by the principal. Here, it appears that C was a buyer and not an agent of A. C was not subject to A's control thus not an agent of A (Victorias Millings Co. v. Court of Appeals, G.R. No. 117356, June 19, 2000). 184. A instituted a complaint for sum of money against B corporation. As manager of B Corporation, he Sought to recover the amount of money he pald out of his personal money in settling the claims filed by the B Corporation's clients. The Special Power of Attorney submitted as evidence shows that A has the authority to conduct insurance business, accept, underwrite and subscribed cover notes, demand, sue, collect, deposit, enforce payment, deliver and transfer for and receive receipts and discharge for 62 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS,TN & sf ton ust AN CEARLEED AR OPERATIONS 209 185. 186. all money which may become due or payable to B Corporation. B Corporation denied any liability to A and averred that as per their management agreement, A’s authority in settling the clfents’ claim shall ‘come from A's revolving fund or collection. Did A act within his authority as agent of B Corporation? No, A did not act within his glven authority. A perusal of the Special Power of Attorney would show that A ‘and B Corporation intended to enter into a principal-agent relationship. Despite the word “special” inthe title of the document, the contents reveal that what was constituted was actually a general agency. The agency comprises all the business of the principal, but, couched in general terms, it is limited only to acts of administration. The payment of claims is not an act of administration; neither is it of a character similar to the cts enumerated in the Special Power of Attomey. Although A was authorized to pay the claim of the clients, the payment shall come from the revolving fund or collection in his possession. Having deviated from the instructions of the principal, the expenses that A incurred in the settlement of the claims of the clients may not be reimbursed from B Corporation pursuant to Art. 1918 of the Civil Code (Dominion insurance Corp. v. Court of Appeals, G.R. No. 129919, February 6, 2002). {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 bought back by the manufacturor at the:samo 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? (2000 Bar) Te contacts one of agency not sale In an agency, he principal retains ownership and contol over the propery and ihe agent merely acs onthe principals behalf and under his Instructions i furtherance ofthe Erte forubic te agency wos oteiched. Off cor hand, the cotratie sae the partes intended that the delivery of the property wil effect a felinquishment of ttie, control-arid ownership in such a way that the recipient may do with the property e2 he, Pees “The primordial dfferentaling consideration between the two (2) contracts is the transfer of ownership or fle Byer the property subject of the contract. Here, the notion of sale Is negated by the following indicia; SIRE Etat copeer tae anutecurer wi te 103% mericup ergy tee cnt Ulin pe rere a, cate (3) warranty for the units was borne:bY the manufacturer. Since the,fereign manufacturer retained ownership of the goods, even as it delivered possession untorthe dealeridistribitoy for resale to customers, the price and terms stumich were subject othe fpafslacture?s Cento, thus’ theelaionship between the manufacturer and the distibutor Is one of agengytSpe, Fempande v Gontinontal Anes; ies GR. No. 18628, January 16, 2012). ‘4 oo a 4 : s i tn cm re Niet teed Bay fF Yes, the agent may appoint'a eae or wae Fifithe principal has not prohibited him from doing so. aaa) but he shall be responsible forthe #318 ofthe subs Hiershe was not given the power to appoint ene; (2) when he was given such power, but‘without designating the person, and the person appointed was A dint a subagent and if he does, Notoriously incompetent or insolvent, All ts of the substitute appointed against the prohibition of the principal shall be void (CIVIL CODE, Art. 1892)."" Broker A was granted authority by B to sell his lot for P1000 per sq. m. Ais entitled to 5% commission on the total price in caso the property is sold. C was later introduced to A as a prospective buyer of the lot. Negotiations ensued between the parties that resulted in B agreeing to C’s price offer of P500 per sq.m. C subsequently gave A P100,000 as gift for successfully persuading B to accept his offer to purchase the lot at a lower price. A did not disclose such matter to B. a. Is Acntitled to his commission? b, Supposing A acted only as a middleman, does he have the same duty as the agent to render accounts? No, Ais not entitled to his commission. Art. 1891 of the Civil Code provides that every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal. The law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his principal of all his transactions and other material facts relevant to the agency. An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage, Cf custom allows it as provided in Arts, 1891 and 1909 of the Civil Code. 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 632019 PRE-WEEK NOTES | ‘The fact that the’principal may have been benefited by the valuable ‘services of the.said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy. Here, A as the broker, received a gift from C, without the knowledge and consent of his principal. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal. As a necessary consequence of such breach of trust, A must forfeit his right to the commission and must return the part of the commission he received from his principal. b. No. The duty embodied in Art. 1891 of the Civil Code will not apply ifthe agent or broker acted.only as a middleman with the task of merely bringing together the vendor and vendee, who themselves thereafter will negotiate on the terms and conditions of the transaction (Domingo v. Domingo, G.R. No. L-30573, October 29, 1971). 188. When may an agent sue or be sued in his own namo? Explain. ‘An agent may sue of be sued soley in its own name and without joining the principal wien the following laments concur (a) the agent acted in his own name during the transaction; (2) the agent acted forthe benefit ‘of an undisclosed principal; (3) the transaction did not involve a property ofthe undisclosed principal. Art. 1803 of the Civil Code provides that if an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neithér have such pérsons against the principal. In such case, the agent isthe one directly bound in favor ofthe person with whom he has contracted, as ifthe transaction were his own except when the contract involves things belonging to the principal. The provisions of ths article 489. § purchased an airiind ticket Hom-Séa ‘Airis GALyeaw oN ticket was exclusively endoréable to Slam Alriney (SMA), The‘contrac of alr ansportation was between S and SAL, with the latter endorsing fo SMA the Hanol-Manilasegment of the journey. All her flights were confined by SAL before she left Manila. S took {he flight from Manila to Bangkok on board SAL using the ticket. Wr 20 she arrived in Bangkok, she went to the SALticket counter and confirmed her return trip from Haiioi to Manila on be Flight No; SA 888, On the date of her return trip, she Checked in for SMA Bight No, SA 988, Uoutde thy plana, ad beter'ais Could even sete on her assigned seat, sho Jodided and treated rudely by thie erew. She lost her liggage and missed an important business meeting. Ski the od a.c nplaint solely against SAL and argued that it was Solari lable with SMA forthe damnages she suffered since the later was only an agent ofthe former. (2018 Bar) ‘ DN A / / \ ‘y \ mpl o A ‘a. Should either, by both, SAL ahd SMA‘bs held liable for damaggé that S suffered? Fthelother, is the.aGency couipled with interest? b. Assuming that one is an agent a. Only SAL should be hid liaklé foy damages suffers b)'S, UFder a general pool partnership, SAL as the licketiseuing arine is the, prircipal in a eantract of caftiage, while SMA as the endorsee-aitine, Is the agent. The principal must comply. with, all the-dbiigations which the agent may have contracted within the scope of his authority (CIVIL CODE, Art. 1910), In this case, the contract of carriage was between S an SAL with the latter endorsing to SMA the Hanoi-Nanila segment ofthe joumey. SMA, by constituting iiself as an agent of SAL, the undertaking should be taken as a part of a single operation. As the principal in the contract of carriage, SAL should be held liable, even when the breach of contract had occurred, not on its own fight, but on that of SMA. The obligation of the ticket-issuing airine remained and did not cease, regardiess ofthe fact that another ane had undertaken to carry the passengers to one of thei destinations (China Airlines v. Chiok, G.R. 152122, July 20, 2003). SMA cannot be held liable here as the court has no jurisdiction over it. In accordance with due process and fair play, SMA should have been impleaded first as a party in the proceedings before the court can make a ruling against it. ‘Yes, the agency was one coupled with interest. An agency is deemed as one coupled with an interest where itis established for the mutual benefit of the principal and of the agent. The agent's interest ‘must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. SMA, as the agent of SAL and as an endorsee-airina, had acquired an interest in the business. Ithad assumed a personal obligation for the operation of the airine. Members of the IATA are under a goneral pool partnership agreement wherein they act as agent of each other in the issuance of tickets to contracted passengers to boost ticket sales worldwide land at the same time provide passengers easy access to alines which are otherwise inaccessible in some patts of the world, In the instant case, the known duty of SMA was to transport passengers from Hanoi to Manila, Its interest extends to the very subject matter of the contract of carriage for i 64 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS,| E CIVIL LAW & 4 08 CORTE FLAN CENTRED CAR PEATE 2079 = 190. 191. 192. 193. undertakes to transport passengers from one destination to another (Sevilla v. Court of Appeals, G.R. No. L-41182-3, April 16, 1988; China Airlines v. Chiok, G.R. 152122, July 30, 2003). R, an Acting Manager of C Bank, persuaded T to open an account and to place her money in some high interest rate mechanism, to which T agreed. R would then deliver to,her the interest earned while she handed her passbook for updating. Later, R offered to sign-up T to a'back-to-back scheme where the bank is authorized by depositors to use their deposits and invest the same in business ventures that yield high interest. T agreed and signed the documents without reading them and invested P1.8 Million Yo C Bank. R later failed to remit to T the interest as scheduled. R refused to return the investment despite demands from T. Thus, T filed a complaint for sum of money and damages. Is C Bank, as the principal, solidarily liable with R? ‘Yes, © Bank is solidaiy lable with R. Even when the agent has exceeded his author, the prinéipal is sotidariy habe with the agent the former allowed the latte to act as though he had full powers (CIVIL CODE, ‘rt 1911) A banking corporation is lable to innocent third persons where the representation is made in the course offs business by an agent acting within the general scope of his authorlly even though, in the particular eee, the agontis secretly abusing his authorly and attempting to perpetrate a fraud upon his principal or some Sther person, for his own ultimate benefit. nthe case, R as branch manager was “clothed” and “held out” as having the power to enter into the subject agreements with T. The existence of apparent or implied authority estopped C Bank rom denying F's authority, thus, asthe employer, C Bank is solidally Hable to T for damages Gaised by the acts of R (Citystate Savings Bank v. Tobias, ©.R. No. 227990, March 7, 2018; Covered Case) RDC is a domestic corporation engaged in renting out real estate. S, as president of RDC, took out a oan from X secured by a real estate mortgage over RDC's property, To prove her authority to execute the mortgage contracts in RDC’s behalf, § presénted a Board Resolution. However, RDC failed to pay its loan. Thus, X initiated foreclosure’ proceedings on the real estate mortgage. To prevent the foreclosure, RDC filed a complaint to annul thé. real estate mortgages alleging that ROC’s former President S (who was removed after the|ex of the mortgage contracts) did not have sufficient proof of authority to bind RDC. Do the acts of Sin.obtalning the loan anc securing it by a real estate 5 i ee mortgage over RDG’s property bind the latter? | Yes, the acts of S bind RDC! Apparent adthofity is based ony/tha principle of estoppel. The doctrine of apparent aunonty provides that oven na aca aihorty nas begh Gatfered on an agen, his o her aco, as iong os they aro within his or het anpatent scope bf authority, bind the\principal. As the former president of RDG, it wos within S's scope of author to act fof and enter io cgniraets in ROC's behalf. X could not be faulted for continuing to tasaet vil’ because RBC clatly. cath ‘apparent authority (Calubad v. Ficercen Develooment Corp. CHa) 202364, Aight 90, 2047 Case) Ss auton iy meas 38 ‘Sptblai PaUBPot Atomey by his client to sell a parcel of land for the amount of P3 Mii iGe the client owed the lawyer P1 Million in attorney's fees in a prior case he handled, the client 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? (2015 Bar) No, as the agency in the case presented Is one which is coupled with an interest. As a rule, agency is revocable at will except if it was established for the common benefit of the agent and the principal. Art. 1927 of the Civil Code provides that an agency cannot be revoked if a bilateral contract depends upon it, or if itis the means of fulflling an obligation already contracted. An agency is deemed as one coupled with an interest where itis established for the mutual benefit of the principal and of the agent. The agent's interest must’be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it eentiles him to compensation (Lim v. Saban, G.R. No. 163720, December 16, 2004). In this case, the interest Of the lawyer is not merely limited to his commission for the sale of the property but extends to his right to collect his unpaid professional fees. Hence, itis not revocable at wil. A entered into a financing agreement with B in order to finance the former's imports. A also granted B ‘Special Power of Attorney (SPA) which authorized the latter to represent A and engage in business transactions. A was later surprised by a service of an alias writ of execution to enforce judgment obtained by XYZ Bank against him despite having submitted already an amortization plan to settle his. account. He learned that the execution has been produced due to a derogatory information received by XYZ Bank from B. A also learned of the several acts of disloyalty done by B. These caused A to revoke the SPA previously given to B. May tho principal validly revoke an agency coupled with interest 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 65:-2019 PRE-WEEK NOTES ae ‘Yes, the principal may validly revoke an agency even if coupled with interest. The power of attorney can be made irrevocable by contract only in the sense that the principal may not recall itt his pleasure; but coupled snith interest or not, the authorily certainly can be revoked for a just cause, such as when the attomey-in-fact betrays the interest of the principal, as happened in this case. It is not open to serious doubt that the inrevocabilty of the power of attorney may hot be used to shield the perpetration of acts in bad faith, breach of Confidence, or betrayal of trust, by the agent for that would amount to holding that a power coupled with an interest authorizes the agent to commit frauds against the principal (Coleongco v. Claperols, G.R. No. L-18616, March 31, 1964). 494, CMS is a forest concessionaire engaged in the logging business, while D is engaged in the business ‘of exporting and selling logs and lumber. In 1957, CMS and D entered into a contract of agency whereby the former appointed the latter as its exclusive export and sales agent for all logs that the former may produce, fora period of five (5) years. About six (6) months prior to the expiration of the agreement, CMS discovered that D had used S as agent, representative or liaison officer in selling CMS's logs in Japan. After this discovery, CMS sold and shipped logs directly to several firms in Japan without the aid of intervention of D. Does the act of CMS in selling its logs constitute revocation of agency? ‘Yes, the act of CMS constitutes an implied revocation ofthe contract af agency. The principal may revoke a contract of agency at wil, and such revocation may be express, or implied, and may be availed of even if the porlod fred in the pontract of agency has not yet expe. As the principal has his absclue right o revoke the gency, the agent cannot objec! thereto; neler may he Gaim damages arsing from such revocation, unless ils shown that such was done In order to evade the payment of agents commission. Art. 1924 ofthe Civil Cove provides that the agency Is revoked ittherpnipatdiraclly manages the business enrusted to lhe agent, dealing directly with third persons. ete, CMS @ppointed-D ails agent for the sale of its logs to Japanese: firms, Yet during the existence ofthe cabtract of agency EMS colt logs directly to several Japanese firms ‘Iie act conatted an impijed revobatonofnereonrach of agency (CMS Logging, In. v CA, G.R. No. L- 4142), dy $0, 1992). fo, Ne aN i, 495. In 1930, P authorized/a‘to-séil’a fiarticular lot, This. sae ‘was annotated on the original certificate of the titlefof the lat. In. 1934, P.died, In 1939, P's\childref sold the land to B. This sale was not registered. in 1944, A, without knowing the death of P, sold the sam¢ lotto C, an innocent purchaser for value. This salo wae duly registered. le the sale-of the sane loto'€ ia? vot mee the ale ot enersae ote Ys, the sale is Walid 2s the death of the principal n this cae did nck endjte authori ofthe agent. Art. 1931 of the Civil Code-prévides that anything dane by'tHe agent, without knowledge ofthe death of the principal ‘or of any other cause which extinguishes. the agenoy; is valid/2nd shal be fully effective with respect to third persons who may hay@ gohiacted withim it good faith. Henc2;/the gale Made by A after the death of P is Vals and efecto (adon vPantyas, Qi Na, 1415; May 25. 1859). : RUGSe Me kA DB inguish commodatum from muituum, (2047 Bar) = a. As fo what rmust be returned: In mutuum, the debtor shall return to the creditor an equivalent amount Of the subject matter, while in commodatum, the same thing that was delivered should be returned; ; b. As fo cause: Mutuum may be gratuitous or cnerous, while commodatum is gratuitous; {As fo transmission of ownership: The bortower in mutuum acquires ownership, while in commodatum, ‘one does not acquire ownership (CIVIL CODE, Art. 1933) As to object: Mutuum refers to personal property, while commadatum may refer to real and personal property (CIVIL. CODE, Arts, 1937 and 1953) 197. What is a contract of precarium? A contract of precarium is a contract of commodatum where the bailor has the right to demand the return of the thing which is the object of the contract at will. This takes place in the following cases: ‘a. If neither the duration of the contract nor the use to which the thing loaned should be devoted has been stipulated; or b. Ifthe use of the thing should be merely tolerated (CIVIL CODE, Art. 1947). 198. Cand E executed a Kasunduan or agreement. C, as owner of the house, allowed E to live there for free provided E would maintain the cleanliness and orderliness of the house. E promised that he would voluntarily vacate the premises on C's demand. Years later, C informed E of his need of the house and demanded that E vacate the house. E refused thus © filed an eject ment case. The trial court held that the Kasunduan between C and E created a legal tie akin to that of a landlord and tenant relationship, 66 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS,199. 200. 201. CIVIL LAW & ‘The CA ruled that the Kasunduan is not a lease contract but a commodatum because the agreement is not for a price certain. Is the CA correct? No, the CA is not correct. In a contract of commodatum, one of the parties delivers to another something not consumable so that the latter may use tho same for a certain time and retum it. The features of ‘commodatum is that its gratuitous and that the use of the thing belonging to another is for a certain period. ‘Thus, the bailor cannot demand the return of the thing loaned until after expiration of the period stipulated, or after accomplishment of the use for which the commodatum is constituted. If the bailor should have urgent need of the thing, he may demand its return for temporary use. If the use of the thing is merely tolerated by the bailor, he can demand the return of the thing at will, in which case the contractual relation is called a precarium. Under the Civil Code, precarium is a kind of commodatum. ‘The Kasunduan reveals that the accommodation accorded by C to E was not essentially gratuitous. While the Kasunduan did not require E to pay rent, it obligated him to maintain the property in good condition. The position of this abligation makes the Kasunduan a cantract different from a commodatum. The effects of the ‘Kasunduan are also different from-that of a commadatum, Case law on ejectment has treated relationship based on tolerance as one that is:akin to a landlord-tenant relationship where the withdrawal of permission ‘would result in the termination of the lease. Even assuming that the relationship between C and E is one of commodatum, E as bailee would stil have the duty to tum over possession of the property to.C, the bailor. The Obligation to deliver or to return the thing received attaches to contracts for safekeeping, or contracts of commission, administration and commodatum (Pajuyo v. Court of Appeals, G.R. No. 146364, June 3, 2004). X obtained a loan from Bank ¥ for which promissory notes were execiited with varying intorest rates of 20% to 30% per interest period. X failed to pay alleging that he tried to religiously comply with his Obligation but the exorbitant interest rates prevented him from doing so. ‘The interest rates were later fon declared void but the court required X te pay Bank Y interest at the rato of 12% per annum. X ‘objected stating that since the interest a boen declared vold, he should not be held fable to ¢2_ If $0, what rate of interest should be imposed? Yes, X can be held liable for interest, cleat traf loan between X and Bank ¥ that X, as a borrower, agreed to the peymentfitlrest ff Hs oblgaton Thglsipuationrequtng payment of intrest ‘on the loaned amount remains valid and binding: Hence, he is stil lable to pay interest based on the legal rate prescribed by the Bangko Sentral hg iipinas.” FV : a ie i Z\N Pursuant to Circular Not799, series ‘of 201s of the Bangkg S t Galery Frames (G.R, Now #80871. Agus! 1, effective At forbearance of any money, goods of credits find the rate all contrat as to such rato of itagst shal bo ogre per ant A borrowed a P300,000.00 héusing loan from tHe"bank at 18% per annum interest. However, the promissory note contained a proviso that the bank "resefvesithe right to Increase interest within the mits allowed by law," By virtue,of su@Wy proviso, over the objections of A, the bank increased the Interest rate periodically until it reached 48% per annum. Finally, A filed an action questioning the right of the bank to increase the intorest Fate up to 48%. The bank raised the defense that the Central Bank of the Philippines had already suspended the Usury Law. Will A’s action prosper or not? Why? (2001 Bar) Pilipinas and in case of Nacar v. 32 rate of interest for the loan or in the absence of an express ‘Yes, A’s action will prosper. While itis true that the interest cellings set by the Usury Law are no longer in force, ithas been held that PD No. 1684 and CB Circular No. 905 allow contracting parties to agree to adjust, upward or downward, the interest previously stipulated. However, the said law and circular did not authorize elther party to unilaterally raise the interest rate without the othe'’s consent (PNB v. CA, G.R. No. 107569, Nov. 8 1994). itis basic that there can be no contract in the true sense in the absence of the element of ‘agreement, or of mutual assent of the parties. In the case of loan contracts, it canriot be gainsaid that the rate of intorest is always a vital. component, for it can make or break a capital venture. Thus, any change must be ‘mutually agreed upon, otherwise, itis bereft of any binding effect. Here, the bank cannot unilaterally upwardly adjust the interest on the loan. That would completely take away from A the right to assent to an important ‘modification in their agreement, and would negate the element of mutuality in contracts under Art, 1308 of the Civil Code (Sps. Sifos v. PNB, G.R. No. 181045, July 2, 2014). F granted a loan to G in the amount of P 540,000.00. Such agreement was not reduced to writing. G demanded interest which was paid by F in cash and checks. The total amount F pald accumulated to P 1,200,000.00. Upon advice of her lawyer, F demanded for the return of the excess amount of P {660,000.00 which was ignored by G. Is the payment of interest valid? Explain. (2012 Bar) No, the payment of interest is not valid. Art. 1956 of the Civil Code explicitly provides that “no interest shall be due unless it has been expressly stipulated in wriling.” Hera, the agreement of the loan between F and 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 67202. 203. 204, 208. 207. 2019 PRE-WEEK NOTES “Su 3208 COLLEGE OF LAW CENTALZED BAR OPERATIONS 2319 Gand the obligation to pay interest was not deduced in writing, thus G cannot demand interest payment from F Is a contract of loan consensual or real? ‘The contract of loan is net a consensual contract but a real contract which is perfected only upon the delivery of the object of the contract (CIVIL. CODE, Arts. 1934; Naguiat v.-Court of Appeals, G.R. No. 118375, October 3, 2003) : What are the two kinds of interest? a. Monetary interest — refers to the compensation set by the parties for the use or forbearance of money. No such interest shall be duo unless it has been expressly stipulated in writing (CIVIL CODE, Art 1956; Odiamar v. Valencia, G.R. No. 213882, September 12, 2018, Perlas-Bernabe, J.) b. Compensatory interest — refers to the interest paid as penalty or indemnity for damages imposed by law arby the courts. Art. 2208 of the Civil Code states that If the obligation consists in the payment of ‘a sum of money, and the debtor incurs delay, a legal interest of 12% per annum may be imposed as indemnity for damages if no stipulation on the payment of interest was agreed upon. Likewise, Art 2212 provides that interest due shall earn legal interest from the time” itis judicially demanded, although the obligation may be sllent on this point. These two instances apply only to compensatory interest (Callung v. Paramount Insurance Corporation, G.R. No. 195641, July 11, 2016). ‘Aro credit card arrangements considered stinpl gai arrangements between the card issuer-and the card holder? POPS. JAN fos, ror ay tie oan anaeanonie Cop Yes. Credit card arrangépientSara-sfnple foan arrangaiiionts Betweeh the card issuer and the card holder. Every creit card transaction valves three- contre, namely (8) the Sales contract between the credit card hole andthe merch gn ne xaentwhicn aceon et cat) thelomn agreement between the credit card issuer dnd the creditcard folder; and lastly, (¢) the pramise to pay between the credit ess establishment (Bankatd v. Alarte/G.R. No. 202573, April 19, 2017). cari issuer and the merchant bus " = ngs deposit and cure aecount deposits, contracts;of depesitufy-or muti is i gepgattute anim pO. 5 xi atigsttutions. suét 3'savingb deposiis and currant account deposits are contracts of mutuuin (The Metropolitan: hs. OFthé,Givil Code gghcerning simple loan. Zr ne bank was declared insolvent. During the.insolvency-proceedings, X intervened claiming the P20,000 ‘re depoats of many iain al WANN s. i Doss of monehin bans and he politan-Bank and’Trast Company v: Rosales, G.R. No. 183204, January 13, 2014). Art. 1980 of the Civil Code provides:thal fixed, savings,and current deposits of money in banks and similar institutions shall be'governed by. the pros X deposited P20,000 pesos with Bank. The money wad blaced in a box, properly sealed and marked ‘and identified as X’s property, and_suh box was found jn the vault of the Bank. Subsequently, the deposited does not constitute a part of the assets of the Bank that will be placed in the possession of the receiver or assignee because he is still the owner. 1s X the owner of the money? Yes, X is the owner of P20,000, Art, 1962 of the Civil Code provides that deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. Here, the contract that was perfected is a contract of deposit and the relationship that was established between X and Y Bank is that of a depositor and depositary. Consequently, as the purpose of the contract Is for safekeeping, the ownership of the amount placed in the box was not transmitted to the Banik when the deposit was constituted. Therefore, X can properly claim that the amount cannot constitute a part of the assets of the Bank that will be placed in possession of the receiver or assignee, because he is still the owner thereof. ‘Suppose in the above problem, the P20,000 was deposited in the current account of X In Y Bank and ‘was not placed in a box. Would that make any difference in your answer? ‘Yes, as this time the contract is a simple loan. Art. 1980 of the Civil Code provides that fixed, savings, and current deposits of money in banks and similar institutions shall be govemed by the provisions conceming simple loan. There is a debtor-creditor relationship between the bank and its depositor. The bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor ‘on demand, The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties (Central Bank of the Philippines v. Citytrust Banking Corporation, G.R. No, 141835, February 4, 2009). Here, when X deposited the P20,000 in his cufrent account with Y Bank, the 68 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS208. 209. 7 CIVIL LAW contract that was perfected was a contract of simplé loan; consequently, the ownership of the amount deposited was transmitted to the Bank upon the perfection of the contract. Thus, X cannot, in this case claim ownership over the money deposited. A contered into a contract with B to purchase a parcel of land. They agreed that the title will pass upon full payment of the price and meanwhile the certificate of title would be deposited in a safety deposit box of X Bank. When A and B rented from X Bank they signed a stipulation that X Bank is not a depositary of the contents of the safety deposit box and has neither control nor possession of the same. The stipulation added that the bank assumes absolutely no liability in connection therewith. X Bank gave 2 different keys to A and B, and it retained another. The safety deposit box would not be opened without the 3 keys. Consequently; G wanted to purchase the land from A which prompted A ‘and B to open the safety deposit box. However, when A, B and employee of X Bank opened the safety deposit bank, the certificate of title cannot be found. a. is the contract of A, B, and X Bank, that of a lease? b._ Is the stipulation made by X bank as signed above, void? '2. No, itis not a contract of lease. The contract was a special Kind of deposit. It cannot be characterized as an ordinary contract of lease under Art. 1643 because the full and absolute possession and control of the safety deposit box vas not given to-the joint renters. The guard key of the box remained with the Bank; without this key, neither of the renters could open the box. On the other hand, the Bank could not likewise open the box without the renter’s key. In this case, the said key had a duplicate which was made so that both renters could have access to the box. The consensus of authority is that the relationship between A, B and X Bank is that of bailor and bailee under a bailment contract for hire and mutual benefit. ff b. Yes, the stipulation made by X Bar “The truth is that the safety deposit box is located within the bank. Ithas possession and no said box. As to spulion that X Bank assumes no liability, Art. 1306 of the Civil. Cog fepsthat the parties in a contract may establish such Sipultions; causes, tome angeeonUipr ee abemaibem convertors proved they are not conttary to law, morale ggad tors, pubic order or publicpotcy. The deposkans responsi or the safekeeping of the objets deposit this case is goyerried by Tile |, Book IV ofthe Civil Code. Aecoringy: he dopsetey-voutsoe ole n poten obigeton ts found gully of fous, negligence, dolay of gonitavetign of he fgner of ho aprogmen In the absence of any spulaion proceting he aggro ditjonesraquf ota: of a gad iqhort a tami isto be observed. ence, Shy sttulaton eslipetng ite gopagtn Ham ony faiizad gad te oss of io hing dopostiod Gm account of ait regigeleb oc Slay lla be vale ISEB Agar ola and pub pooy (OA ‘grotto op BR GF. No 90027 MAE 3, 1880) D stays at XYZ Hotel while he isin the PhilipinesfHlalmet E who befriended him and convinced him to transfer from XYZ to ABC Hotel with perc E’ {fe:of;D’s booking at ABC Hotel. D rented the hotel’s safety deposit box and he signed an undertaking that ABC Hotel would not be liable for loss of guest's belongings contained in ths deposit box. The safety deposit box can be opened through the use of 2 Hoye simultaneously he fs given to the guest and the ether fe In custouy of the hotel management, He deposited $2,500 dollars and a diamond necklace in the sald safety deposit box tefore he went ie Heng Kong fora businowe tp, Alor ore day he retard tothe hotel and found out that he lost $500 dollare and the diamond necklace. Upon reporting fo the management of the sald loss, Fa hotel employee whe had custody over the mastar Key ofthe management, Confirmed that she helped € opened the Safety deposit box several times, Is the Hotel lablo forthe lost efecis of D? ‘Yes, the hotel is liable for the lost effects of D. ABC Hotel should be held responsible for the damage suffered by D by reason ofits employee's negligence. Under Art. 2180 of the Civil Code, owners and managers, of an establishment or enterprise are likewise responsible for the damages caused by their employees in the service of the branches in which the latter are employed or on occasion of their functions. Here, there are two keys required to open the safety deposit boxes of ABC Hotel. One key is assigned to the guest and the other remains in the possession of the management. The guest alone cannot open the safety deposit box without the assistance of the management or its employees. With all the more reason that access to safety deposit box should be denied if the one requesting to open the same is a stranger. F, who had custody of the master key of the management, admitted that she helped E to open the keys in several occasions yet the management failed to notify D of the incident and waited for him to discover the laking before they disclosed the matter to him. Given the fact that the loss of D's effects was consummated through the negligence of ABC Hotel's employee in allowing E to open the safety deposit box without the D's consent, ABC Hotel is thus made liable under the aforementioned article (YHT Realty Corp.v. Court of Appeals, G.R. No. 126780, February 17, 2008). 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 69,240. ant. 2019 PRE-WEEK NOTES ‘A and B entered into’ sub-contracting agreement for construction of a transmission line. A then ‘obtained loans from foreign banks- B| Bank and PC Bank which was secured by several Letters of Guarantee issued by TD Corp, which guaranitee the full payment of A’s loan obligations in the event of default by the latter. As a condition to TD Corp's issuance of Letters of Guarantee, A, B and A's President had to execute several Deeds of Undertaking binding themselves solidarily to pay TD Corp for damages or liabilities it may incur. A (as principal debtor) also entered into Surety Agreements with four (4) bonding companies which hold themselves solidarily liable to TD Corp (as creditor) for damages of liabilities it may incur under the Letters of Guarantee. ‘Adefaulted on its obligations to BI Bank and PC Bank, prompting them to demand payment from TD Corp. in turn, TD Corp demanded payment from the bonding companies but to no avail. Later, by virtue of the moratorium of the Minister of Finance, TD.Corp, BI Bank and PC Bank forged a Restructuring ‘Agreement extending the maturity dates of the Letters of Guarantee. The four (4) bonding companies were not privy to the Restructuring Agreement and, hence, did not giye their consent to the payment ‘extensions granted by BI Bank and PC Bank. Affer TD Corp settled its obligations under the Letters of - Guarantee to Bl and PC banks, It fled a collection case against the bonding companies on account of their obligations under the Surety Bonds. a. Distinguish suretyship (curt) from guaranty (guarantor). B. Wil TD Corp's action prosper? a. “A suretyship is en undetaking thatthe det st be pave guaranty, an undertaking that the debtor Chal'pey A surety tare eth dB anafoad a Busan fs on inure ofthe solvency of tho Sheek surety aaderSkes eect for tie payment dnd is sb,cesponsible at once if the principal blr makes cfu tuaranioccontactal PN, ef se of due diigence, the debt cannot bbe made out ofthe pringsal debior AN guaranty, pravides tHat “an extension gfantéd to the debtor roditor without the consent of the Sterno ecplhoe gory is eigen tw asic ho agai he contingency ihe pip yer ie demirs becoming solve uring the extended pelo In the inslapt casel the payment exténeisns granted by. ll Bank ané'RC Bank to TD Corp under the Restructuring mpreemedt gl not have tne effect of ext Binh tne Echaing companies obligations to TD Corp under the Surety Bonds, notwithstanding the.fact that'said extensions were made without that consent Tie cacas es 3079 eles to payient ghtensioy granted by the creditor othe Prnepal devi wih he corsencoFthe coarasororsury ‘, \, \ Nn LL AS / Here, therelare two transactions: the Létlers of Guararilee conegining TD Corp's debtto the banks and the Surety Bonde congorainy As debt T0-Corf. The Surly Bonds are surelysip contracts Sinich secure the dob, ot & the pineal detion,urer ne Deeds of Undertaking to pay TO Corp, the Creaitor, tho damages-¢na' abies. may jeu ander the Letters of Guarantee. No payment extension was granted by TO, Corp in fay of inthis ead: hence, Ar. 2079 should not be applied trth respect fo the bonding companies" labilties to 7D Corp under the Surety Bonds. The payment extensions granted by BI Bank and PC Bank pertain to TD Corp's own debt under tho Lotfors of Guorantoe wherein i (TD Corp) guaraniced ful payment of A's loan ebligations to the banks inthe Gventof A's default. Thus, the Bonding companies bites to TD Corp under the Surety Bonds have not been extinguished (Trade and Investment Dev. Corp of the Phlippines v. Asia Paces Corp. G.R. 187408, February 12, 2014, Perlas-Bemabe, a7 Rex NN b. Yes, TD Corp's aciigh will prosper. Art, 2075 of the Givil Cade..which applies to both surety and ote In order to help A obtain a loan, his friend B wrote to C (a friend of B) a letter of this tenor: “I take pleasure in introducing to you my friend A. He badly needs P2,000 and | believe you can help him. | ‘assure you that he is a very good man; he religiously complies with his obligations and is solvent far In excess of the amount he asks for. | shall highly appreciate the favor that you may grant him. Sincerely yours. (Sgd.) B.” In consideration of this letter, C gave A a loan for P2,000 and A executed and delivered to C the corresponding note. A suffered reverse of fortune and lost all of his properties. At the maturity of sald note, there was nothing left of A’s properties with which to make it effective. Now C wants B to pay the note. Has C any right of action against B? No, © has no right against 8. Art. 2047 of the Civil Code provides that by guaranty a person, called the guarantor, binds himself to the créditor to fulfll the obligation of the principal debtor in case the latter should fall to do so. A guaranty is not presumed; it must be express and cannot extend to more than what is stipulated therein (CIVIL CODE, Art. 2055). Here, B only introduced his friend A and did not bind himself to fulfil the latter's abligation, thus no contract of guaranty was formed. At most, the only obligation is moral, not civil 70 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS242. 243. 214. 215. CIVIL LAW 1 signed a loan agreement with ABC Bank. To secure payment, K executed a document entitled ‘Continuing Guaranty Agreement” whereby she expressly agreed to be solidarily liable for the obligation of J. a. What is a Continuing Guaranty Agreement? : b. Can ABC Bank proceed directly against K upon J's default even without proceeding against J first? .. Under Art. 2083 of the Civil Code, a guaranty may be given to secure even future debts, the amount of which may not be known at the time the guaranty is executed. This is the basis for contracts denominated as a continuing guaranty or suretyship. A continuing guaranty is not limited to a single transaction, but contemplates a future course of dealing, covering a series of transactions, generally for an indefinite time or until revoked. It is prospective in its operation and is generally intended to Provide security with respect to future transactions within certain limits, and contemplates. a Succession of fabilties, for which, as they accrue, the guarantor becomes liable (Bank of Commerce v. Sps. Fiores, G.R. No. 174006, December 8, 2010). ©. Yes, ABC Bank can directly proceed against K upon J's default. Notwithstanding the nomination of the contract as a “Continuing Guaranty Agreement,” it is the actual terms of the agreement in the document that shall govem. The contract is not a guaranty but is actually a suretyship, K having expressly agreed to her being solidarily, and thu, directly and primarily lable to the ABC Bank to fulfill the obligation of the principal debtor, J (CIVIL CODE, Art, 2047). K ig not a guarantor, but a surety. AS Such, she does not enjoy the benefit of exoussion. the cost of materials and supplies whi undertake the construction works for the amount of 300,000. B secured a performance bo} amount of P459,000 from FGU to pay jointly and severally A and C and PT Bank in the over performance by B. ‘i ‘and C entered into a Contract of Building a truction with B and PT Bank. The latter was to finance A and C failed to make payments to,’ on agre i8/)B’ stbpped construction work and filed a complaint against PT Bank and A.for non- payment. PT Bank sefit demand letters to FGU to pay under thelr surety bond for B's non:performance:but FGU refused. FGU argued that the P450,000 only indicates the maximum amountifiat.can be Fecoyered and thaf they, should only be liatie for the actual damages sustained by A andi€ of the cost In by them to fihish the work. FGU alleged that it ‘should not be held to pay'the liabilities incurred, by A owing to B and that such liabilities be set off ‘against FGU's liability. A anid C claimed that th ¥ are entitléd to the fill, amount of the bond, Deci adh, on, fa ae Liabitty under a surety Bond ified tthe alnbunt of the BoHUY dh 's determined sticlly in accordance with the particular terms and condions set ot in this bond. Here, the terms of the bond were clean, hence, {he literal meaning ofits stipulaionsshould contrl. Thelsfaic condition in ho FOU Surely Bond did not oor State the limitation of FGU's liability’ From the;terthisy EGU gularanised to pay the amount of P450,000.00 in the event of B's breach of his contfactual udertaking. Hence, FGU was bound to pay the stipulated Indemnity ‘upon proof of B's default without theinetessity of proof on the measure of damages caused by the brew, FU, on the other hand, has the righ tbe indemnified for any payments made, both under the law and the indemnity agreement. Even as the surety is soidarily bound with the principal debtor tothe ereditor, the surety who does pay the creditor has the right to recover the full amount paid, and not just any proportional share, {rom the principal debtor or debtors. Such right to full reimbursement fails within the other rights, aedone arel benefits which pertain to the: surety by reason of tho subsidiary obligation assumed by te surely (rod Insurance Corporation v. Spouses Roxas, G.R. No. 189626 and 189656, August 09, 2017, Covered Case) What is meant by the benefit of excussion in favor of guarantors? ‘The benefit of excussion in favor of the guarantor refers to the right by which such guarantor cannot be compelied to pay the creditor untess the latter has exhausted all the property of the principal debtor, and has resorted to all of the legal remedies against such debtor (CIVIL CODE, Art. 2058), What is meant by the benefit of division in favor of guarantors? Should there be several guarantors of only one debtor and for the same debi, the obligation to anewer for {he same fs divided among all. The creditor cannot claim from the guarantors except the shares which they are respectively bound to pay, unless solidarity has been expressly stipulated (CIVIL CODE, Art. 2085) | B eas the owner of @ parcel of agricultural land. 8 obtained from the € sisters a loan as evidenced by 2 Kasulatan ng Ukol sa Utang. Under the Kasulatan, the C sisters shall have the right to receive and apply the fruits of the subject land or the an/ as payment to the loan for a period of six (6) years or until 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 71247. 218. 2019 PRE-WEEK NOTES the loans fully paid. The C sisters, under the Kasulatan took possession of the subject tand, cultivate itand assure the return of the property upon full payment of B's loan. What kind of contract did B and C sisters enter into? “The contract involved in this case is a ‘contract of antichresis. Antichresis involves an express agreement between parlies whereby: (a) the creditor will have possession of the debtor's real property given as security; (0) such creditor will apply the fruits of the said property ta.the interest owed by the debtor, if any, then to the principal amount; (c) the creditor retains enjoyment of such property unti the debtor has totally paid what he Owes: (d) should the obligation be duly paid, then the contract is automatically extinguished proceeding from the accessory character of the agreement. Here, based from the facts, the contract entered into is one of antichresis (Spouses Reyes vs. Heirs of Malance., G.R. No. 219071, August 24, 2016, Perlas-Bernabo, J.) Differentiate usufruct from antichresis. (2017 Bar) fa. Aso constitution: An antichresi is evays created by a contract (accessory);-while a usuifruct may be Constitutod by contract (principal, las, the willof private persons expressed in acts Inter Vivos or in a last will and testament, and by preseription (GIVIL CODE, Art: 663). b. As fo the rights acquired: n antichresis, the creditor acquires real right to receive the fruits of an immovable (always a roa property) of his debtor, while a usufruct gives real right tothe usuifructuary to enioy the property (ethor real or personal) of another ini usulruet but the ownership of the fruits Bolong tothe usufructuary (CIVIL. CODE, Art. 2132). ©. Ast thoir respective obligation: in antichresis, the creditor has the obligation to apply the fruits to the payment of the interes, ifoving, and theraaftera the payment of his credit (CIVIL CODE, Art. 2132). In usufruct, the usutructuary Has the objigalion\of préBerving the form and substance of the property, Unless the ile constituting itor the law oiberdish provides (CIVIL CODE, Art. 562), 1d. Asto the form requifeai,The ampunt-ofthe-pitcipal and’the,interest shall be specified in writing: otherwise the coptfatt of\entictiresis shall be volth(GIVIL,CQDE, Art. 2134). No specific form is, prosrons oct aa aura eee. Lyf ; 1 Le In 1975, A allegedly mortgaged the subject property for the sum of P12,500 to B who immediately took possession ofthe lahd. The transaction was not reduced into reel ‘died, his heirs expressed their intention to redeom the property from B but the-tatter refused, claiming, that the transaction between him and A waé ove of sale. A’s heirs then filed a complaint for annulment of deed of sale and declaration of the purported contract of sale a8 antichresis against B..During the trial, B failed to prove the existence of the sale Hetweer IB. What is the nate of thé contract between A and B, was i antichresis or mortgage?) = SIS 4 ub Us SON 1. ZS f) ‘Tho contract is btanichyosts bulerely a moitdae/esotdet. the esskice of antichresis is that there rat a ar naroes agri aos She el eee recat ths Tye of the inmovebte wh the Corresponding obligation to apply the saree tie dayne Othe inferest, Tosfing, and othe principal amount Here, thro no such agkeomeont Assunta areca Wet he rdnsacionsanichrei, for tobe vals, At 2134 of the Civil Code requires that”ieamourt of the principal andhof the'ihterest shall be specified in writing; ctherwise the contract of antichrésis’ shall Be-void Ir this case,:the' principal amount and interest of the ‘mortgage loan was not put ino niin by A and'B. Absefitan)-showing of a written document in suppor that the contract between A\and B was arvaniichresis) the contention that the contract is an antichresis must not lie (Bangis v. Heirs of Adolfo, G.R. No. 190875;"Jane-13, 2012, Perlas-Bernabe, J). A is engaged in the selling of coca-cola products. Coca-Cola Bottlers required security for the continuation of A’s business and as compliance, A gave two (2) certificates of title over his property. ‘Awas made to sign a document with the assurance that the signed document will never be notarized. When A decided to stop selling Coca-cola products , he verbally demanded the roturn of his titles over the property but such was not given back. A found out that his land was already mortgaged and foreclosed in favor of Coca-Cola Bottlers. A questioned the validity of the REM deed on the basis that twas notarized without authority by a Clerk of Court of the RTC who is not allowed by law to notarize private documents not related to their functions as clerk of court. Coca-Cola Bottlers on the other hand averred that the defect in the notarization of the REM deed does not in any way affect its validity. a. What are the requisites of a valid mortgage? b. Does defect in the notarization of the REM deed affect its validity? 1a, Art, 2085 of the Civil Code provides for the following requisites: (1) That they be constituted to secure the fulfilment of @ principal obligation; (2) That the pledgor or morigagor be the absolute owner of the thing pledged or mortgaged; (3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. ‘Third persons who are not parties to the principal obligation may secure the latter by pledging or ‘72 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS,220. 221, 222. 223. CIVIL LAW mortgaging their own property. In relation, Art, 2125 provides that in addition to the requisites stated in Art. 2085, iis indispensable, in order that a mortgage may be validly constituted, that the document in which it appears be recorded in the Registry of Property. If the instrument is not recorded, the mortgage is nevertheless binding between the parties. b. No, defect in the notarization of the REM deed does not atfect its validity. Although notarization of documents that have no relation to the performance of official functions of the clerk of courts is now considered to be beyond the scope of their authority as notaries public ex officio, nonetheless, the defective notarization of the REM agreement merely strips it ofits public character and reduces it to a private document, Although Art. 1358 of the Civil Code requires that the form of a contract transmitting (oF extinguishing real rights over immovable property should be in a public document, the failure to ‘observe such required form does not render the transaction invalid. The necessity of a public document for the said contfacts. is only for convenience; it is not essential for its validity or enforceability (Coca-Cola Bottlors Phils., Inc, v. Spouses Soriano, G.R. No. 211232, April 11, 2018, Covered Case). Discuss the prohibition against pactum commissorium. Pactum Commissorium takes place when in @ mortgage contract, itis stipulated that the ownership of the property would automatically pass to the vendee in case no redemption is made within a given period, thus enabling the mortgagee to acquire ownership of the mortgaged property without need of foreclosure (Olea v. Court of Appeals, G.R. No. 109696, August 14,-1995). The prohibited act being contemplated as pactum commissorium is the automatic vesting of ownership without the need of further action. P leased a residential [ot and house in favor,of R with a monthly rental rate of P13,500. Thereafter, R Pen tet it hin neg hx oh eof C180, eae, foreclosed with Y as the purchaser. R later. on Bought the property from Y. It was clear between the parties that the property was still subject right of redemption. Meanwhile; P sent a letter demanding R to pay the rentals which are diié and to, vacate the leased premises. Is P still entitled to the rentals of the subject property? 0/1) NSS: | Yes, P, as morigagor and ovis sit ented to the rentsedthings and income ofthe disputed house ‘and lt. Under Act. No. 3135, the purghaser ina fafpctosure sele has, during the redemption period, only an inchoate right and not the absoluf right the property wih al the accompanying incidents. He only becomes an absolute owner of the properly if itis nat redeemed during the redemption period. Here, at the time that R Burchasod Y's fais ove he sublet property. Ps ht of tedanplin.28.2,morgagor hs no yl exoed Since the demand of rentals was made at the.ime the subject peapetty is si as tnd cosoed iG a eebthizod princlo that person dealing On @ registered land need not g@ beyalid its certificate of tle. This however is subject tothe rule that where there are circumstances which would a pay on guard and prompt him to investigate or inspect the property being sold to him, itis expected that he should inquire into the nature of the possession of {he occupants therein, This is true specifically when the vendor is notin possession ofthe property. In this case, the possession of CC ofthe land and the improverients already built therein should have ULDD on guard on the status of AA's ownership. As DD cannot be considered to be a buyer in good faith, he cannot lean on the indefeasibilty of the TCT, as the defense of indefeasibily ofa torrens title does not extend to transferees who take the certificate of ttle in bad faith (Vallido v. Pono, G.R. No. 200173, April 15, 2013). In 1983, A agreed to-sell a parcel of land in Antipolo to B on installment basis and evidenced by a Contract to Sell. Subsequently, B caused an annotation of an adverse claim based on the said contract to sell. Upon payment of the full purchase price, A and B executed a Deed of Sale and the same was registered a year after. In 1985, a notice of levy on execution was annotated at the back of the title of the subject land ‘emanating from failure to settle of A's obligation to a certain X. This anriotation on the notice of levy on execution was carried. over to the new title given in favor of B. B demanded X to cause the cancellation of the notice of levy on execution arguing that the time the notice of levy was annotated by X; A, the debtor of X, has already transferred, conveyed and assigned all thelr title, rights and interests to B and there was no more title, rights or interests therein which X could levy upon. X on the other hand averred that the annotated notice of adverse claim ceases to be valid 30 days after its registration. Is the adverse claim of B still effective when the notice of levy in favor of X was annotated, thus, charging the latter of knowledge of a pre-existing interest over the land? 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 77.236. the action fled by M beingiet one E a oe 2019 PRE-WEEK NOTES eS ‘Yes, the adverse claim was stil in effect having X charged with knowledge of pre-existing interest over the subject property, Sec. 70 of P.D. 1529 provides that "the adverse claim shall be effective for a period of thirty (20) days from the date of registration, After the lapse of sald period, the annotation of adverse claim may be Cancelled upon filing of @ verified petition therefor by the parly in-interest.” The law employs the phrase "may be cancelled", which indicates that the court may or not order the cancellation of an adverse claim, otwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. To interpret the effectivity period of the adverse claim as absolute and without qualification limites to thirty days defeats the very purpose for which the statute provides fer the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over & piece of real property, and serves @s a warning to third parties dealing with said property that someone is. Claiming .an interest oF the same or a better right than the registered owner thereof, Here, despite the lapse of 30 days from the registration of the adverse claim, there was no petition filed for the cancellation thereof, thus the adverse claim was still in force when the notice of levy in favor of X was annotated. As the adverse claim is stil effective, X is charged with knowledge of pre-existing interest over the Subject property and thus, B is entitled to the cancellation of the notice of levy attached to the certificate of tite (Sps. Sanojas v. CA, G.R. No. 102377, July 5, 1996) M sold his house and lot to C for P1 million payable in five (5) equal annual installments. The sale was registered and title was issued in C’s name. C falled to pay the last three (3) installments and M filed ‘an action for collection, damages and attorney's fees against her. Upon filing of the complaint, M ‘caused a notice of lis pendens to be annotated on C's title. Is the notice ‘of lis pendens proper? (2001 Bar) — po No, the notice of is pondensSnotlbraper. The easé filed by; ht against C is only for collection, damages, ‘and attomey's fees. Annotatioh of a Jis peldens-carronly, bé done in Cases involving recovery of possession ‘of real property, oF 0 quiel file, oF fo fetfiove cloud thereor ot {r parton or any other proceeding affecting title to the land or the use OmGcepation-therSot7 SBt~76. of P1529 Ae ‘that “no action to recover possession of real estate, Grio geet lle thereto, oF to-remove elouds upon the tie thereof, oF for partion, or other proceedings of ahy kind if cout directly affecting the tile to lant of the ise oF occupation thereof or the bulge thereon, anf re ugha and no raed voce ‘of tevefse any judgment, shall have any effect upon registered land-a6 againét persons other thar the paites thereto, unless a memorandum or notice sisting the insttutiog of aime is pending, as well as the Eyph action br proceeding and the-court whereld date ofthe nsitutlon thereof, together with areferehce fa the numberof the cericate of tile, and an adequate description ofthe lapd-tlected andthe registered Gwe theres shel have bh fled and registered.” Thus, ne Soses toremertionei is pends \ ge Z 4J, a resident of Spain and without any administrator in the Philippines of his property, owns a ploce of iand as evidenced by TCT 11111, the duplicate of which rerhained inJ's possession. A forged a deed of sale and presented this to the register of deeds. On October 9, 1995, the Register of Deeds, without Fequiring the surrender of the owner's duplicate of TCT 11411, issued TCT 22222 in A’s name, cancelling TCT 11111. My a we ‘A mortgaged the land to R. A defaulted. R foreclosed the mortgaged and caused cancellation of TCT 22222 and the issuance of TCT 33333 in hor (R) name on July 19, 2001. R then sold the land to C. J discovered these transactions only on January 28, 2008, prompting him to file a complaint for recovery of title on March 18, 2009, praying for damages against A, R, and C and that, should A, R, and C be unable to pay, the register of deeds and national treasurer, through the Assurance Fund, be ordered to pay his claims. The RTC ruled (which decision has become final) that R and C are innocent purchasers for value. The RTC also held that A is liable for damages. Assuming A Is unable to pay, may J recover from the Assurance Fund? Has the right to recover from the Assurance Fund prescribed? b, Does constructive notice rule on registrat Assurance Fund cases? n apply in reckoning the prescriptive period for Yes, J may recover. The conditions to recover from the Assurance Fund under Sec. 96 of P.D. 1529, are: i. The individual must sustain loss or damage, or the individual is deprived of land or any estate or interest; ji, The individual must not be negligent; ii, The loss, damage, or deprivation is the consequence of either (a) fraudulent registration under the Torrens system after the land's original registration, or (b) any error, omission, m misdescription in any certificate of title or in any eF and ke, oF ‘or memorandum in the registration book; 7B | 2019 SAN EEDA LAW CENTRALIZED BAR OPERATIONSCIVIL LAW a oes Iv, “The individual must be barred or otherwise precluded under the provision of any law from bringing {an action for the recovery of such land or the estate or interest therein. Hore, all these are present. 1) After the registration of the innocent purchaser for value's title, J cffectively “sustains Joss or damage, or is deprived of land or any estate.or interest therein in ‘consequence of the bringing of the land under the operation of the Torrens System.” 2) J is not negligent as he had the right to rely on his owner's duplicate certificate of tile and the concomitant protection afforded thereto by the Torrens System. 3) There was fraudulent registration by A which he acquired by forging a deed of sale; 4) J is barred from bringing an action to recover the land because the ttle thereto has already been registered in the name of an innocent purchaser for value, C. ‘The action to claim from the assurance fund has not prescribed. Under Séc, 102 of P.D. 1529, an ‘action for compensation against the Assurance Fund by reason of deprivation of land or interest therein shall be instituted “within a period of shcyears from the time the right to bring such action first ‘occurred.” AS such, prescription, for purposes of determining the right to bring an action against the ‘Assurance Fund, should be reckoned from the moment the innocent purchaser for value registers his cor her title and upon actual knowledge thereof of the original title holder/claimant. Here, J-discoverdd the transactions on January 28, 2008. He filed his petition on March.18, 2009. Hence, the 6-year prescriptive period, counted from January 28, 2008, has not yet elapsed: ». No, constructive notice rule on registration should not be made to apply to tis holders whe have boon Unjusly deprived of thelr land without their negigence. The actual tile holder canvot be deprived of his or her rights twice — first, by fraudulent registration of the title in the name of the usurper and ‘second, by opefation of the constructive notice rule upon registration of the title in the name of the innocent purchaser for valuo. As such, scription, for purposes of determining the ight to bring an faction agsinst he Assurance Fund, aia yo reckoned om ine mormon tne nocant purcnacer tr value registers his or her tile and up 1 knowledge thereof of the original ttle holder/claimant (Seouses Stiancpcuos v.Roitlf Brace. 224670, dy 08 2018, Perla Borabe, J) ebkiteat sc e NERS i" hy ELEMENTS bes 228. . Whon the Tricking Serviog Agrifent (TBAY tahwesn Kata Ered on Decomber 31,2001, KE executed an In-House Brokerage Service Agreement for M's PEZA export operations and KE continued to retain the services of Orient, which sub-contracted its work to ST Brokerage Corporation. M called K's Sales Manager about a coldipninatblols whieh tatated that there wae a stolen truck filled with a shipmeht of video monitors ai cong stems owned by M in Caloocan. When contacted by KE about this news, Orient stated that the fabloid report was not true. They claimed that the incident simply involved the breakdown and towind’of the truck, which was driven by D, with truck helper, R. KE directed Orient to investigate. At the same time, KE independently investigated the incident. When confronted with KE’s findings, Orient admitted that its previous report was erroneous and that pilferage was proven. M terminated the agreement with KE and cited loss of confidence due to the fact of nondisclosure of this incident’s relevant facts which "amounted to fraud and signified an utter disregard of the rule of law.” a: May a person be held liable for quasi-delict or tort despite the existence of a contract? b. Can Orient be held liable under Art. 2176 of the Civil Code? a. Yes, @ person may be held liable for quasi-delict or tort despite the existence of a contract. if a ‘contracting party's act that breaches the contract would have given rise to an extra-contractual liability had there been no contract, the contract would be deemed breached by a tort, and the party may be held lable under Art. 2176 of the Civil Code and its retated provisions. However, ifthe act complained of would not give rise to a cause of action for a quasi-delict independent of the contract, then the provisions on quasi-celict or tort would be inapplicable. 'No, Orient cannot be held liable under Art. 2176. Orient denies that it was obliged to disclose the facts regarding the hijacking incident since this was nat among the provisions of its TSA with KE. There being no contractual obligation, KE had no cause of action against Orient, Further, Orient’s negligence Of its obligation to report is not based on a quasi-delict. Orient's negligence did not create the vinculumn Juris or legal relationship with KE, which would have otherwise given rise to a quasi-delict. Orient's duty to KE existed prior to its negligent act, When KE contacted Orient regarding the news report ang asked it to investigate the incident, Orient’s obligation was created. Thereafter, Orient was alleged to have performed its obligation negligently, causing damage to KE. 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 79‘The doctrine “the act that breaks the contract may also be @ tort," on which the lower coutts relied, is inapplicable here. Orlent’s negligence, arising as it does from its performance of its obligation to KE, is dependent on this obligation. Neither do the facts show that Art, 21 of the Civil Code applies, there being no finding that Orient’s act was a conscious one fo cause harm, or be of such a degree as to approximate fraud of bad faith. To be sure, there was inaction on the part of the Orient which caused damage to KE, but there, Is nothing to show that Orient intended to conceal the truth or to ‘avoid liability. When the facts became apparent to Orient, the latter readily apologized to KE and M for its mistake. Consequently, Arts. 1170, 1172, and 1173 of the Civil Code on negligence in the performance of an obligation should apply and not Art. 2176 (Orient Freight Intemational, inc., v. Keihin-Everett Foriarding Co., Inc., G.R. No: 191937, August 9, 2017). 239. X bought a Ford Expedition from a car dealer, As payment, T issued a check drawn against his current account with P Bank. Sincehe has a good reputation, the car dealer allowed him to immediately drive the vehicle merely on his assurance that his check is sufficiently funded. When the car dealer deposited the check, it was dishonored on the ground of “Account Closed.” After an investigation, it was found out that an employee of the bank misplaced T's account ledger. Thus, the bank erroneously assumed that his account no longer exists. Later it turned out that T’s account has more than sufficient funds to cover the check. The dealer however, immediately filed an action for recovery of possession of the vehicle against T for which he was terribly humiliated and embarrassed. Does T have acause of ion against P Bank? Explain. (2006 Bar) Yes, T may file an action against,P Bank for damages under Art. 2176 of.the Civil Code. Even.if there exists 2 contractual relationship’ betweon J-and’P*Bankr-an,action for quasi-delict may nonetheless prosper. ‘The Supreme Court has consistently-led that fhe Act that breaks the contract. may alsorbe a tort. There isa ‘iduciaty relationship between the-bank and the depositor imposing utmost dligence in managing the accounts athe depostor. Tho dishonor fhe theck adversul-affetd the credit standing of. Hence, hes ented to damages (Consolidated Bahirv, Ch, GiR. No; L-70766, Noverber 9;1998) PCy TOTES. No (OA 3 me OO CULPA AQUILIANA VE" CULPA: CONTRACTUADYS:CULPA CRIMINAL 1d. Culpa Crimi f Effistence of a law clearly Srishing the act damage or injury to ariother \ praise ES Direct, substantive, and | Negligefice:is: moraly.incidental to the'| Direct, substantive, and independent.” \. | peHfarmahes Bftn'eNting Cbigation,” | independent E eee ee Necessary, iminal intent’ +) Not necossary Notrebossar), | / tae oe [TAs 86 Glantum of Proof Required) Preponderance of evidence | Preponderance of evidence (RULES OF | Proof beyond reasonable (RULES OF COURT, Rule 133, | COURT, Rule 133, Section 1). doubt (Barredo v. Garcia, G.R. Section 1) No, L-48006, July 8, 1942). st SWAG 1s Existenies of PrecContractoal Obligation N Exists ESREEDAS to Betensel6f “Good Father of a Family | A complete and proper defense | Not a complete and proper defense inthe | Not a proper defense. | insofar as parents, guardians, | selection and supervision of employees | and employers are concemed | but can mitigate lability for damages | (Cangco v. Manila Raliroad Co., | (Cangco v. Manila Railroad Co., supra). G.R. No. L-12191, October 14, 1918). aa AR to Bras aiption St Negligence : None. Injured party must prove | Presumption of negligence immediately | Innocence of the accused Is the negligence of the defendant | attaches by a fallure of a covenant or its | presumed until contrary Is (Cangeo v. Manila Railroad Co,, | tenor (FGU insurance Corp. v. GP. | proven supra) Sarmiento Trucking Corp. GR. No 141910, August 6, 2002) 80 | 2015 SAN BEDA LAW CENTRALIZED BAR OPERATIONS:241. 242. CIVIL LAW. Es i ARs Nature of Right Wi [Private Richt ~ [Private Right. _ “a As to Governing Law z g ‘Att 2176 of the Civ Code | Ats. 11701174 ofthe Civil Code ‘Aft. 365 of the Revised Penal Code. - 1 _ é VICARIOUS LIABILITY J, while driving 4 truck owned by BTC, saw a Nissan with its headlights oncoming froin the opposite direction. J lost control of the wheels and the truck swerved to the left invading the lane of the Nissan ramming and dragging it to the left shoulder of the road. The Nissan was damaged and its two (2) passengers died instantly. An information charging J with reckless imprudence resulting in double homicide and damage to property was filed. The offended parties made a reservation to file a separate civil action against J arising from the offense. charged. Thereafter, the offended parties filed a ‘complaint against BTC, as employer of J, based on quasi delict. They then withdraw the reservation to filo a separate civil action against J and manifested that they would prosecute the civil aspect ex delicto in the criminal action, However, they did not withdraw the separate civil action based on quasi delict, against BTC as employer arising from the same act or omission of the accused driver. 5 was found guilty in the criminal case. The offended partios moved for amendment of the dispositive portion of the decision to hold BC subsidiarily lable for the damages awarded to them in the event of, Insolvency of the accused, Gan BTC be held subsidarily lable for the damages awarded tothe offended parties despite the separate civil action?» gee ; ‘No, BTC canna be nl subir il A elves ha asia who has ena an 3 the criminal case for reckléss imprudence|. jt i)be held subsidiarily liable because of the filing of the soparale cil action based on quai delet agains o ation to file, and the subsequent filing with the criminal action. Such separate Cods, arising from the same act or fst (1A view of the res of the civil action for recovery of civillabiltyrthe samme Was rotinstt Chil action was for recovery of damagés under An. 2176 of the Ch ‘omission of the accused. JN Pursuant to the Rules of Court whélnthe Sorts parties, as ¢ontplainants in the criminal action, reserved the right to file the separate.civil action, they waive poe available civil aetions predicated on the same act or omission of the aocused-dfiver. Such.civil action’ inéludes the récovery of indemnity under the Revised Penal Code, and damages under the Civil Code atising from the safieia ai eemison of the accused. The intention of the offended partes to proceed iftanly and disely agains} BTC-as émployer of J became clearer when they did not ask for the dismissal-of thé lvl action against the latter based on quasi delict. Consequently, fling of the separate civil action based on quasi dolict résullsin:tho waiver of the cull action ex delicto, thus BTC ‘may not be held subsidiaily liable for'démagos. arising tisinicrime (ex delicto)in.the criminal action (Rafae! Reyes Trucking Corp. v. People, G.R. No.f29029, Api! 3; 2000). A was’ scheduled for her third“8eéarean section. Being cleared after a preoperative. phy: examination by.Dr. Z of RBC Hospital, she gave birth to a healthy baby boy. 13 hours after her ‘operation, A complained of headache, chilly sensation, restlessness, and shortness of breath. As the nurses failed to check on A, A initiated to ask for oxygen as she was already becoming cyanotic (bluish) for lack of oxygen. The oxygen arrived almost 20 minutos later. It was then found out that she was suffering from pulmonary edema and was subsequently transferred to the Incentive Care Unit. Since her condition did not improve, she was transferred to WBC Hospital. Here, she was fouind to be suffering from Rheumatic Heart Disease which resulted to a cardiopulmonary arrest and subsequenth brain damage. A lost the use of her speech, eyesight, hearing, and limbs. She was discharged, but still in vegetative stats. A case was filed against RBC Hospital along with its health personnel for negligence on the basis of an expert witness testimony that there was a delay in the admi n of oxygen caused by the delayed response of the nurses in RBC Hospital. a. Are the nurses negligent for the delay of administration of oxygen to patient A? ‘Assuming that the nurses are negligent, Is REC Hospital liable for the negligence on tho part of the nurses? Yes, the nurses are negligent based on Art. 2176 of the Civil Code which provides that whoever by ‘act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Here, there was a delay in the administration of oxygen to the patient, caused by the delayed response of the nurses of RBC hospital. They committed a breach of their duty to respond, immediately to the needs of A. considering her precarious situation and her physical manifestations, of oxygen deprivation. ‘The nurses’ failure to check on A and to refer her to the resident doctor and, thereafter, to immediately provide oxygen - was clearly the proximate cause or that cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and 1019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 81243: 244. . 245. 2019 PRE-WEEK NOTES without which the result would not have occdrred, that led to the brain damage suffered by patient A. Hence, the nurses are liable under Art, 2180 in relation to Art 2176 of the Civil Code. b. Yes, REC Hospital is liable. Under Art, 2180, an employer like RBC hospital ray be held liable for the negligence of its employees based on its responsibility under a relationship of patria potestas. The liablity of the employer under this provision Is “direct and immediate; It is not conditioned upon a prior recourse against the negligent employee oF a prior showing of the insolvency of that employee.” The employer may only be relieved of responsibilty upon a showing that it exercised the diligence of @ good father of a family in the selection and supervision of its employees. The rule is that once negligence of the employee is shown, the burden is cn the employer to overcome the presumption of negligence on the latter's part by proving observance of the required diligence. In the instant case, there is no dispute that RBC Hospital was the employer of the nurses who have been found to be negligent in the performance of their duties. Hence, it had the burden of showing that it exercised the diligence of a good father of a family not only in the selection of the negligent nurses, but also in their ‘supervision, which in this case, they failed to do. Thus, RBC Is directly lable for the negligence of its nurses under Art 2180 in relation to Art. 2176 of the Civil Code (Our Lady of Lourdes Hospital v. Sps. Capanzana, G.R. No. 189218, March 22, 2017). RES IPSALOQUITUR What is the doctrine of res ipsa foquitur? =, Res ipsa loqultur erally means "Ihe tif; Ts Pasatiion speaks for ite tis maxim for the rule that the fact ofthe occurrence of amu, taken with the sirauiling crcumstances, may permit an inference or aise @ presumption of negigépee, of fake oul. plaibtifsprifna face case, and present a question of fact for defendant to meet with aq explanation (BJDC Constuation v Lanuze, G.R. No. 161751, March 24, 2014), ff vee eee “ey YS ‘The conditions usualy sted fof guerspilcaton of Bis doch ner ag fellows: a. The accident ig ofa’ kind whith ordinarily doessnot happen in, thie absence of someone's negligence; B.” !tmust be caused BY n insttumentaly seine exclusive Sorrel ofthe defendant, ©. The posebllly of contnbuting conduct which the pail Yebponsibie is eliminated (Cantre v. Sps. Go, RNa) 160889, Apri 27, 2007). io 8 joe aoa |<] CROSTeREARSHAN fo Cap ae What is the Doctrine ofiLast cléar chance? The Doctrine of Last Clear Chanée otherwise: kfawn as thé. doctrife of discovered perl or the humanitarian doctrine, States that where, Bath parties“areiegligent.in such away that it would be impossible ig dotomine woos nadigence ag te plete of tp“scisontine party wy ha hele lear ‘chance or opportunity to agid the accident by:the use. bt proper care butfailed to do So.is considered in law olay responsibie for the cBngequenses tha. accidont (LBC\A Cargo v. CA, G.R. 101689, Fobruary 23, 1995) oy Noo . 7 DAMNUMABSQUEINJURIA ‘What is she concept of damnum absque injuria? ‘The principle of damnun absque injuria pertains to situations where there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duly (Spouses Custodio v. Court of Appeals, G.R. No. 116100, February 9, 1996) 'B Proximate Cause R, Wand J rode a tricycle driven by E. W and J were inside the sidecar of the vehicle, while R rode at the back of the tricycle driver. The car, driven by Z, hit the back portion of the tricycle where R was, ing. R was thrown out of the tricycle, suffered injuries and together with W and J were brought to the hospital. R’s leg was amputated from below the knee. R and W filed a civil case for damages against Z. Zwas alleged to be drunk on that fateful night, to which he denied and claimed that the proximate cause of the accident was the fault of E, the tricycle driver who drove without license. Z likewise imputed contributory negligence on the part of R in riding at the back of the driver in violation of a ‘municipal ordinance limiting the number of passengers of a tricycle to three (3) persons including the a. What is proximate cause? b. Is there contributory negligence in the instant case? 82 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS 7]CIVIL LAW a. Proximate cause is "that which, in natural and continuous sequence, unbroken by any new cause, produces an event, and without which the event would not have occurred.” (Dela Cruz v. Octaviano, GR. No, 219649, July 26, 2017, Covered Case). t ‘More comprehensively, the proximate legal cause is that acting first and producing the injury, either E immediately or by setting other events in motion, all constituting a natural and continuous chain of ‘events, each having a close causal connection with its immediate predecessor, the final event in the ‘chain immediately effecting the injury as @ natural and probable result of the cause which first acted, under such circumstances that the person responsible forthe first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom (Spouses Latonio v. McGeorge Food Industries, G.R. No. 206184, December 6, 2017, Covered Case) b. No, there is no contributory negligence here. Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which hie is required to conform for his own protection. To hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in disregard of |wamning oF signs of an impending danger to health and body. To prove contributory negligence, itis stil necessary to establish @ causal link, although not proximate, between the negligence of the party and the succeeding injury. In a legal sense, negligence Is contributory only when it contributes, proximately to the injury, and not simply a condition for its occurrence. In this case, the causal link between the alloged negligence of the tricycle driver and R was not established. Negligence per se, arising from the mere violation of a traffic statute, need not be sufficient in itself in establishing liablity for damages (Dela Cruz v. Octaviano, G.R. No. 219649, July 26, 2017, Covered Case). pe ite : 247. Spouses M and C accompanied! ht month-old child D to-a’ birthday party at McDonalds Restaurant. During the party and as partof:the birthday package, McDonald's presented two (2) ~"Birdie® and "Grim ntertain and dance forthe quests. O was the person inside the i D's phofa taken with the mascots, C (D's mother) placed D on front of the mas¢6t “Birdie.” The mascat positionéd itself behind the child and extended its ice le ew aoa gbaneg ee cesar care al were about to be taken, C released Her hold of c Into the floor. The Spousesifiled a complaint for damages a jeDonalds. Is MeDonalds liable for oe a Dis fall? No, Medonalds is notable for brs al. The-nealigenes élthe:mother C for placing the child on a chair and expecting a bird mascot to ensure his safely is the proximate cause of tho child's fall. Proximato cause Is. ; efined as that cause, which, in natural_and continuous sequence, unbroken by any efficient intervening cause, produces the injury. and without which'the resutt would not have occurred. Here, Its beyond dispute thatthe Eause of D's falls sraveablo to the nogligont act of C of leaving him inthe "hands" of O who was wearing the : Birdio mascot suit. tis responsio or a mother to entrust the safety, even momentarily, of her eight-month old child toa mascot, in thick leather euit that had no arms to hold the child and whose diminished ability to i See, hear, feel, and move freely was readily apparent. Releasing her grasp of the baby without waiting for any indication that the mascot heard and understood her Is just plain negligence. Even if she already informed and told the mascot that she was leaving the baby to his hold she should not have let go of her grip because as mother she ought fo exercise the commensurate prudence and care taking info consideration the fact that the ‘mascot could not possibly hold D as the Birdie mascot suit does not even have hands or fingers to be able to hold of grasp firmly (Spouses Latonio v. McGeorge Food Industries, G.R. No. 206184, December 6, 2017, Covered Case) LMV is engaged in the business of recruiting Filipino workers for deployment to Saudi Arabia. On the other hand, SM Polyclinic is authorized to conduct medical examinations of prospective applicants for ‘overseas employment. As an LMV applicant, B wont to SM Polyclinic for pre-deployment medical ‘examination on January 10, 2008. B was found “fit for employment” and was then deployed to Saudi. Unfortunately, when B underwent ansther medical examination with the General Care Dispensary of Saudi Arabia on March 24, 2008, he purportedly tested positive for HCV or the hepatitis C virus. This. resulted to B's repatriation to the Philippines. Claiming that SM Polyclinic was reckless in issuing its Medical Report stating that B is “fit for employment", LMV filed a Complaint for sum of money and damages against the former. It averred that it relied on SM Polyclinic’s declaration and incurred expenses as a consequence. SM Polyclinic argued that the complaint failed to state a cause of action as the Medical Report issued had already expired and that there was no negligence on their part when | | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 83249, 250. 2019 PRE-WEEK NOTES "2 BFA COLE OF LAW CENTRALIZED On OPERATIONS 35 they release the report two (2) months before the medical examination in Saudi. Was SM Polyclinic negligent in issuing the Medical Report? No, 8M Polyclinic cannot be adjudged negligent in the absence of proot. Negligence is defined as the failure to observe for the protection ofthe interests of another person, that degree of ate, precaution and Vigilance which tne circumstances justly demand, whereby such other percon Suffers injury. The negligence or {aul should be dearly estabished and the burden of proof i upen the plain. The examination conducted by the General Care Dispensary, which was later affirmed by the Ministry of Heath, was conducted only on March 24, 2008, oF at least two (2) months after SM Polyclinic issued its Medical Report on January 11, 2008. Even aséuming that B's diagnosis for HCV was correct, the fact that he later tested positive forthe same does. net Gorvincingly prove that he was already under the same medical state at the tme SM Polyclinic issued the Mouical Report on January 11,2008, I was incumbent upon LWV to-show that there was already negligence Al the time the Medical Repoit was issued, may it be thal standard medical procedures were not carefully abserved of that there wore already palpable signs that exhibited B's unfitness for deployment at that time ‘Thoro is a reasonable possiblity that & became exposed to the HCV oniy after his medical examination with [SM Palyalnic.B was net daployed to Saudi Arabla Immediately after SM Polyinic's medical examination and could have possibly contracted the same only when he rived thereat. There being no negligence proven by LWW through credible and admissible ovidence, SM Polyclinie cannot be held liable under Art. 2176 of the Civil Code (St Martin Polyeinie, Inc. v. LWW Coristrucion Corporation, GLR. No. 217426, December 4, 2017, Covered Case). ’ PRESUMPTIONS. - a ea * What are the disputable presumptions, of neGlighnge provided under ‘the Civil Code? fos Pre AN fT is isnt rogue a) ders ReBtoen. Yo ad)en found quty of reckless ding or YViolating-trafic regulations a feast twice..within the next préceding two nionths (CIVIL CODE, Art 2184), bo Vf po BN ON b.. itis prosumedthabis pefeon riving’a motor veticie has Beerrnediigent if at the time of the mishap, he was violating any’yatfic regulation (CIVIL CODE, Art, 2185)! c.’ There is prima facie presuinption of negligence of fesults, from his possession of danger t a except heh therpbesession oF tke ergot teh part fe Uafendant if the death or injury 5} substances,,suich as firearms and pcison, pehsable in fis occupation or business (C/I. 5 Common ifiors dre prebjmed to|have been at fault or prove that they ohssived extraordinary dligence as prescribed (CODE, Aad oy S/ po ™ j M, the’ bus driver of DG Bus Ine., collided with the. vehicle of BC:Wwhile traversing the national highway near a bridge resulting to BC's death, LG, the wife of BC; alleged that the car was hit by the bus due to M's negligence when it tried to swerve to the épposite larie to avoid the pile of boulders on the shoulder of the road placed by DV'Construction making the, road narrow: LC further averred that M was over ‘speeding at the tima of the incident’ On the ther hand, Mi deriied the allegations and claimed that he was on ful sop at the time ofthe incident. L@filed a case for damages. Will the ease prosper? tohave acted papldenty GR Inaricios 17asane 756Cl Yes, the case will prosper. It can be presliniéd that M was negligent under Art 2185 of the Civil Code, hich provides: "unless there is proof to the contrary, itis presumed that‘ person driving a motor vehicle has been negligent i atthe time of the mishap, he was in violation of any trafic regulation.” Based on the placo and time of the accident, M was actually vioaling a traffic rule found in R.A. No. 4136, otherwise known as the Land Transportation and Traffic Code which provides that "any person driving a motor vehicle on a highway shall dive the same ata careful and prudent speed, not greater or less than is reasonable and proper, having due regard for the traffic, the width of the highway, and of any other condition then and there existing” Considering that the bus wes already approaching the bridge, M should have already slowed down a few meters avay from the bridge. He should have stopped farther away from the bridge because he would have been able 10 see that BC's car was already crossing the bridge. An experienced and competent bus driver ‘would be able to know how to properiy react upon seeing another vehicle ahead that is about to exit a narrow bridge. Obviously, M failed to do 80 (Cacho v. Manahan, G.R. No. 203081, January 17, 2018, Covered Case). 84 | 2019 SAN BEDALAW CENTRALIZED BAR OPERATIONS:251. 252 253. cIVIL LAW GENERAL PROVISIONS Define injury, damage and damages. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury; land damages are the recompense or compensation awarded for the damage suffered (Spouses Custodio v. Court of Appeals, G.R. No. 116100, February 9, 1996). KINDS OF DAMAGES A passenger bus owned by Philippine Rabbit Bus, Lines, Inc. (PRBL!) had a collision with another Vehicle along the national highway in Pangasinan. E was a passenger of the said bus, and due to the aceident, his right arm was amputated. E sued PRBLI and its driver S for damages. E claimed for moral damages purely on the fact that E lost his right arm, arguing that while in a strict sense, E incurred ‘Actual damages through the amputation of his right arm, such loss may rightly be considered as falling under moral damages. This is because a right arm is beyond the commerce of man and loss thereof necessarily brings physical suffering, mental anguish, besmirched reputation, social humiliation and ‘similar injury to a person. Is E’s contention correct? » No, E's contention is incorect. Since breach of contrac is ot one ofthe items enumerated under Art 2210.01 the Civ Code, moral damages, as a ggneral rule, aro nol recoverable in actions for damages precicated on breach of contract ike inthis casey excepion to Art. 2279, such damages are recoverable in an action for breach of contract: (1) in cases if which the mishap results in the death of a passenger; and (2) im-casos in which tho caries guy of ra) GE-BaHl ath In this caso, € aid pot die nthe mishap but meroly Suffered an injury. Further, the fraud or bad lst be convincingly proved by E should be one which was committed by PRBLI in breaching its contfs afiaga wih 2 Unfortunately, there was no persuasive Phiippine Rab proof of such fraud or bad faith here (Estfada Us Lines, Inc., G.R. No. 203902, July 19, 2017, Covered Case). 2 , \ snt-cuistomer of R Bar ard Restaurant. EM went to R Bar and Restaurant and ordered two:(2) bottles. of beer. Thereafter, he grdered pizza and a bottle of “Sprite”. EM then took a bite of pizza and,drank fromthe straw the ‘ofthe Sprite bottle. He noticed that the taste of the softdrink was-not one of, Sprite but of'a ibstance repulsive to taste. The substance smelled of kerosene. He then felt a butning sen § throat and stomach and could not control the urge to voit. Usion medical examination, the doctor stated that his ingestion of th "'Sprite” had some “adverse effect on his Body.” With the opened “Sprite” bottle allegedly containing kerosene as evidence, EM filed a complaint for damiages against Coca-Cola Bottlers Phils. Inc. (CCBPI). Research scientist EM was a freqii ve No, EM is not entitled to moral damages. The cases when moral damages may be awarded are specific. Unless the case falls under the enumeration provided in Art, 2219, which is exclusive, and ‘Ad 2220 of the Civil Code, moral damages may not be awarded. Apparently, the only ground which could sustain an award of moral damages in favor of EM and against CCBPI is Art, 2218 (2) — quasi-delict under Art. 2487 causing physical injuries. Unfortunately, EM has not presented competent, credible and preponderant evidence to prove that he suffered physical injuries when he allegedly ingested kerosene from the "Sprite" bottle in question. The statements of the doctors who tended to the medical needs of EM were equivocal: "Physical effects, fn the body" and "adverse effect on his Body" are not very clear and dofinite as to whether or not EM suffered physical injuries and if these statements indicate that he did, what their nature was or how extensive they were, Consequently, in the absence of sufficient evidence on physical injuries that EM sustained, he is not entitled to moral damages. No, EM is likewise not ented to exemplary damages. Exemplary or corrective damages may be gfanted in quasi-dolicts if the defendant being sued acted with gross negligence pursuant to Art. 2231 of the Civil Code. EM has failed to establish that CCBP! acted with gross negligence. Other than the ‘opened "Sprite" bottle containing pure kerosene allogedly served to him at the R Bar and Restaurant, EM has not presented any evidence that would show CCBPI's purported gross negligence. There was re on the part of EM to categorically establish the chain of custody of the "Sprite" battle which was the very core o the evidence in his complaint for damages and that, considering thatthe "Sprite" bottle allegedly contained pure Kerosene, it was quite surprising why the employees of R Bar and Restaurant did not notice its distinct, characteristic smell, Thus, EM is not entiled (0 exemplary damages absent 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 85' 2019 PRE-WEEK NOTES 284, 255. 256, the required evidence (Coca-Cola Bottlers Phils. inc. v. Mofiez, G.R. No. 209908, November 22, 2017, Covered Case). X and Y signed a construction contract where X will build a 4-storey building for Y on a parcel of land in Makati City. Y engaged the services of Z to undertake excavation work. The excavation resulted in erosion, which caused damage to the adjacent property owned by W. After 878 days of delay, Y domanded that X pay the damages pursuant the construction contract. As per their contract, Y said ‘that X is liable for liquidated damages for the amount of P8,780,000 plus P10,000 per additional day of delay until the project is completed. X refused to pay as the completion period was suspended due to the fold order issued in favor of W. He further answered that his liability does not extend to excavation ‘works done by the subcontractor Z. Is X liable for the liquidated damages? If yes, should the liquidated damages be lowered? . Yes, X is liable for liquidated damages but ‘the same must be reduced for being iniquitous or unconscionable. Art. 2226 of the Civil Code allows the parties fo a contract to stipulate on liquidated damages to be paid in case of breach. Itis attached to an obligation in order-to insure performance and has a double function: (1) to provide for liquidated damages; and (2) to strengthen the coercive force of the obligation by the threat of groater responsibilty in the event of breach. Liquidated damages are identical to penalty, In-so far a8 legal results are concemed. In either case, the injured party need not prave the damages suffered by him, Under Art. 2227 of the Civil Code, liquidated damages, whether intended as an indemnity or a penalty, ‘shall be equitably reduced If they are iniquitous or unconscionable, Moreover, the fact that X was not able io perform substan arount of work on the pre's immaterial because tis also expresly provided under Art. 1229 ofthe Civil Code that, "even there has lesthng performance, the penalty may also be reduced by ‘te cours if it i iniquitous ables Herd, the stipulated daily rate, tho totally of recoverable liquidated damages‘ al am unttormore-thanta lamoeg P 43,800,000.00, which sum even Surpassos he toll conraat pie, is ednrot be decreed witout unin afoul of th spi and exoressleters Of the law (Ka Kuen Chia bepyiia, Meck COG 193969-70 & 194027-28, July 5, 2017, Covered C259): AQ, [op xt 3% fF [INCASE OR DEATH) R with his two (2) datightars and 4 frisiiF, boarded &¢arad truck ouimed By S. F was seated in front, while R and daughters, wore at the back.of the truck. X was the officiaktaick driver but ¥, the chief sel mechanic, slatted driving the truck. ¥ lost Control of the truck and they fell off the wharl. Rand one of his daughters diod while the eter daughter at Fw yeni ijiured. R's wife fled a complaint for.damagge against §, % ana: \ EF testified that R was the General Manager of her businesses in Butuan City and earhing moré,6F less P15,000.00,F claimed that she could not present her accounting books to.the ¢ourt becalise, she had already disposed of them. The RTC ruled in favor of R's wife Tho GA afinied the decision but deleted the award of actua damages fr R's loss of eaming capacity reascning that documentary éyidefice should’be presented to substantiate the same.Is the CA correct? Wy p en Sy No, the CA is not correc in deleligthe.award ot acluardBimages for loss of eaming capacly. Nothing in the Rules of Court requires that only documentary evidence Is ellowed in cv cases. A that is requlred le he satisfaction ofthe quantum of evidenco, thats, preponderance of evidence. In addition, the Civil Code does not prohibit a claim for css of eaming capacity onthe basis tnt tis not proven By documentary evidence ‘Testimonial evidence, if not questioned for credibility, bears the same weight as documentary evidence. ‘Testimonies given by the deceased's spouse, parent, or child should be given weight because these individuals are presumed to know the income of their spouse, child, or parent, If the amount of income testified to seem incredible or unrealistic, the defense could always raise their objections and discredit the witness or, better yet, Present evidence that would outweigh the evidence of the prosecution, Failure to present dacumentary evidence to support’a claim for loss of eaming capacity of the deceased need not be fatal to its cause. Testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of eaming capacity. There is no rule disqualifying competent officers of the corporation, as in this ‘case F, from testifying on the compensation of the deceased (R) as an officer of the same corporation (Torreon v. Aparra, G. R. No. 188493, December 13, 2017, Covered Caso). Supposing a pregnant woman who is passonger of a bus suffers an abortion following a vehicular accident due to the gross negligence of the bus driver, may she and her husband claim damages from the bus company for the death of their unborn child? Explain. Yes, but only for the damages directly inflicted upon them by the death of their unborn child, Since an action for pecuniary damages on account of personal injury or death pertains primarily to the one injured, if no action for such damages could be instituted on behalf of the unborn child on account of the injuries itreceived, 86 | 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS, a| CIVIL LAW iv aron cOLECE OF LAW GBURATIZED BARRA 299 1no such right of action could derivatively accrue to its parents or heirs. In fact, even if a cause of action did ‘accrue on behaif of the unborn child, the same was extinguished by its pre-natal death, since no transmission to anyone can take place from on that lacked juridical personality (or juridical capacity as distinguished from capacity to-act). Itis no answer to invoke the provisional personality of a conceived child (conceptus pro nato rabetur) under Art. 40 of the Civil Code, because that same article expressly limits such provisional personality by imposing the condition that the child should be suesequently bor alive: "provided it be born later with the condition specified in Art. 41". Here, there is no dispute that the child was dead when separated from its mother’s womb. ‘This Is not to say that the parents are not erilitled to collect. any damages at all. But such damages must be those inficted directly upon them, as distinguished from the injury or violation of the rights of the deceased, his right to life and physical integrity. Because the parents cannot expect either help, support or services from an unborn, child, they would normally be limited to moral damages for the illegal arrest of the normal development of the spes hominis that was the felus on account of distress and anguish attendant to its loss, land the disappointment of their parental expectations (Geluz v. CA, G.R. No. L-16439, July 20,1961). 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | 87