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2012 CLASS 4C | Page 1 of 5

CIVIL LAW SAMPLEX

CIVIL LAW
Oliver Cachapero | Chyrs Anne Rosalejos | Maria Theresa Tan Prepared by: CA Rosalejos 1. A and B entered into a contract of sale of As lot. B delivered an earnest money evidenced by a receipt which stated that the same shall be forfeited if the buyer failed to pay on or before January 31, 2005 and the seller can sell it to another. Possession remained with A. What is the nature of the contract? Explain. ANSWER: A contract of sale is a consensual contract. A contractual contract is perfected by mere consent. Hence, by the mere agreement of the parties over the object of the contract and over the price or consideration, the contract of sale is deemed to be perfected. Such contract of sale may be a conditional obligation because of the imposition of conditions for the efficacy of the obligation to pay or deliver the object of sale of the consideration. In the given case, although earnest money had already been delivered by B, yet the possession of the lot still remained with A, the contract of sale still remains a valid contract of sale. The actual delivery of the subject matter or payment of the price agreed upon are not necessary components to establish the existence of a valid contract of sale; and their nonperformance do not also invalidate or render void a sale taht has began to exist as a valid contract at perfection. 2. In a Contract of Sale, there was a failure to pay the consideration. Upon request of the buyer, the seller granted an extention to pay, but the buyer failed to pay within the extended period, hence, the seller availed of the rights of rescission. Is rescission proper? Why? ANSWER: It depends. If it is a sale of an immovable property, under Art. 1592 of the Civil Code, 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 vendee may pay, even after the expiration of the period, as long as no demand for rescission of contract has been made upon the vendee judicially or by a notarial act. As such, demand for rescission by suit or notarial act must first be made by the vendor. With respect to movable property, Art. 1593 provides that the vendor can rescind the contract, as a matter of right, if the vendee, without any valid cause, does not (1) accept delivery; or (2) pay the price. 3. Explain the effects of implied renewal of a contract of lease. ANSWER: In case of implied new lease, as provided in Art. 1670 of the Civil Code, it is understood that it is not for the period of the original contract, but for the time established in Art. 1682 and 2012 - CLASS 4C SAMPLEX COLLECTION TAXATION LAW Antonio, Payumo, Quilates, Santos, Zulueta | COMMERCIAL LAW :Calingasan, Calvan, Madridijo, Panganiban, Quinto, Sta. Ana | REMEDIAL LAW: Cardino, Cayaban, Galvez, Lambino, Sandoval | CIVIL LAW: Cachapero, Rosalejos, Tan

2012 CLASS 4C | Page 2 of 5

CIVIL LAW SAMPLEX

1687. The other terms of the original contract shall be revived. Also, as provided under Art. 1672, obligation contracted by a third person for the security of the principal contract shall cease with respect to the new lease. 4. A and B entered into a Contract of Lease over a house and lot. With the consent of A, B, the lessee improved the premises. Before the expiration of the contract, A notified B that he was not renewing the contract, but manifested his intentio to appropriate the improvements. a. How much is B entitled to by way of compensation? Why? ANSWER: As provided in Art. 1678 of the Civil Code, if the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessee is entitled to one-half of the value of the improvements made at that time. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental object provided that no damage is caused to the principal thing. However, the lessor may also choose to retain them, and in such case, the lessee is entitled to the value of the ornamental expenses at the time the lease is extinguished. b. Can A eject B without first paying compensation? Why? ANSWER: There is an instance where A can eject B without paying compensation. And that would be when the lessee is a builder in bad faith or when improvements were made in bad faith. Since the improvements were made in bad faith, the lessor or the owner of the property is allowed by law not to reimburse the lessee or the builder. c. If A decides not to appropriate the improvements, what are the rights of B? Explain. ANSWER: Should the lessor refurse to reimburse any useful improvement made, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. However, he shall not cause any more impairment upon the property leased than is necessary. As regards ornamental expenses, he may remove the ornamental objects, provided no damage is caused to the principal thing. 5. A and B entered into a Contract of Loan in the amount of P1M. They stipulated that in case of non-payment, B shall pay interest/penalty equivalent to 12% per month. When B failed to pay despite demand, A sued B where after trial, the RTC rendered a judgment ordering B to pay P1M plus interest/penalty of 12% per month. The CA affirmed on appeal. If you were the ponente, how would you decide? Explain. ANSWER: Since there is an express stipulation on the Contract of Loan, i will apply the interest/penalty of 12% per month. For interest to be recovered, the following are the requisites: (1) the payment of interest must be expressly stipulated; (2) the agreement must be in writing; and 2012 - CLASS 4C SAMPLEX COLLECTION TAXATION LAW Antonio, Payumo, Quilates, Santos, Zulueta | COMMERCIAL LAW :Calingasan, Calvan, Madridijo, Panganiban, Quinto, Sta. Ana | REMEDIAL LAW: Cardino, Cayaban, Galvez, Lambino, Sandoval | CIVIL LAW: Cachapero, Rosalejos, Tan

2012 CLASS 4C | Page 3 of 5

CIVIL LAW SAMPLEX

(3) the interest must be lawful. And as provided in Art. 2212 of the Civil Code, interest due shall earn interest from the time it is judicially demanded although the obligation may be silent upon this point. However, it can also be seen that this interest/penalty of 12% per month can be considered as iniquitious, nconscionable and exorbitant. Thus, the same must be equitably reduced. (guys im sorry, i dont really know how to answer this question. ) 6. May a surety be liable beyond its assumed obligation? ANSWER: A contract of surety is not presumed. As such, it cannot extend to more than what is stipulated. The extent of the suretys liability is determined only by the clause of the contract of suretyship as well as the conditions stated in the bond. It cannot be extended by implication beyond the terms of the contract. (Trade & Investment Dev. Corp. Of the Phils. vs. Roblett Industrial Construction Corp., 474 SCRA 510 [2005]) 7. X borrowed money from Metrobank with Y s guarantor. X failed to pay, hence, demand was made for them to pay. If you were the counsel for Y, what would be your defense? Explain. Is your defense absolute? Why? ANSWER: As the counsel of Y, I would use as a defense what is provided under Art. 2058 of the Civil Code, which states that the guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor, and has resorted to all the legal remedies against the debtor. This defense is not absolute in the sense that the creditor may, prior thereto, secure a judgment againts the guarantor. The guarantor can implead the guarantor as a co-defendant since the Rules of Court on permissive joinder of parties explicitly allows it. However, the guarantor is entitled to a deferment of the execution of said judgment against him, until after the properties of the principal debtor shall have been exhausted, to satisfy the latters obligation. (Tupaz vs. CA, 475 SCRA 398 [2005]) Prepared by: Oliver Cachapero X entered into a Contract of Loan with Y. As security for the payment of his obligation, he delivered the car of his father who was then in the USA. When X failed to pay, he sold the car to Z. When Xs father arrived in the Philippines, he learned that his son, X, used his car as security for the payment of his obligation by way of pledge, so he sought your advice. Would you advice him to file an action for declaration of nullity of the sale? Why? ANSWER: In the case of Kalibo vs CA, the SC said that you cannot deliver something which you do not own by way of pledge because there must be ownership or some form of authority to deliver it by way of pledge. Hence, the sale by X to Z is void, the father of X can then file an action for declaration of nullity of the sale. (Reference: Civil Law Pre-Bar Review by Albano, 2004) X is the owner of a house and lot located in Tagaytay City. While in the USA, he called up Y that he was in need of money, so he offered the sale of his house to him for an agreed price. Y accepted the 2012 - CLASS 4C SAMPLEX COLLECTION TAXATION LAW Antonio, Payumo, Quilates, Santos, Zulueta | COMMERCIAL LAW :Calingasan, Calvan, Madridijo, Panganiban, Quinto, Sta. Ana | REMEDIAL LAW: Cardino, Cayaban, Galvez, Lambino, Sandoval | CIVIL LAW: Cachapero, Rosalejos, Tan

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CIVIL LAW SAMPLEX

offer. Since X was short for money at that time, he asked Y if he could use his house in the USA for one week instead of renting a hotel room. When he came back to the Philippines, he informed Y that he was no longer selling his house and lot, hence, Y filed a complaint for specific performance to compel him to sell the property. If you were the judge, how would you decide? Explain. ANSWER: Article 1479 provides that a promise to buy and sell a determinate thing for a price certain is reciprocally demandable. Y, then, has the right to demand fulfilment although there is no transfer of title or dominion yet. It requires no consideration distinct from the selling price. (Reference: Memory Aide) State the requirements of a mortgage in possession to be valid. 1. It can cover only the fruits of an immovable property; 2. Delivery of the immovable is necessary for the creditor to receive the fruits and not that the contract shall be binding; 3. Amount of principal and interest must be specified in writing; 4. Express agreement that debtor will give possession of the property to creditor and that the latter will apply the fruits to the interest, if any, then to the principal of his credit. NOTE: Mortgage in possession is more popularly known as antichresis. (Reference: Memory Aide) X is the owner of a car with Y as his driver. While on the other way to the office, the car hit a pedestrian injuring the latter. Discuss the nature of their liability assuming that a civil or a criminal action would be filed. State your reasons. ANSWER: In case of a criminal action, the owner is only subsidiarily liable, the driver being the one primarily liable. In case of a civil action, the owner is direct and primarily liable. See also Article 2184 of the Civil Code. (Personal answer) May the parents of an unborn child recover damages in case of death of the child due to a vehicular accident? Explain. ANSWER: The parents cannot recover actual damages since the child is still unborn, hence, it still has no personality, neither can it be argued that there is a loss of earning capacity. But moral damages may be claimed, but this must be proved. (Personal answer) What is the doctrine of delectus personam in partnership? Explain. ANSWER: Under the principle, it is required that for a partner to associate another with him in his share in the partnership, the consent of all the partners is necessary. This is because of the mutual trust among the partners and that this is a case of subjective novation. There is subjective novation when there is a change in the parties to a contract. Their consent thereto is necessary in order to bind them. (Reference: Civil Law Reviewr, Albano, 2004) A is the manager of PCI Bank in Pasay City. To increase the deposits in the branch he contacted B, his friend and offered to give him 15% interest of his deposit if he could deposit P50M. Hence, he deposited such amount. The interest has even been given in advance without PCI Bank managements objection. After two years of paying interest, the bank notified B that he should refund the excess interest of 10% because the manager exceeded his authority. B refused, hence, a suit was filed. If you were the judge, how would you decide? Explain. 2012 - CLASS 4C SAMPLEX COLLECTION TAXATION LAW Antonio, Payumo, Quilates, Santos, Zulueta | COMMERCIAL LAW :Calingasan, Calvan, Madridijo, Panganiban, Quinto, Sta. Ana | REMEDIAL LAW: Cardino, Cayaban, Galvez, Lambino, Sandoval | CIVIL LAW: Cachapero, Rosalejos, Tan

2012 CLASS 4C | Page 5 of 5

CIVIL LAW SAMPLEX

ANSWER: I think estoppel on the part of the bank comes into play here. A, being the manager, has the authority to impose such interest rate. And assuming that he does not have such authority, the bank is estopped to question it since it did not make any objection when the interest was given in advance. Also, two years have already passed, hence, it presupposes that the bank has already reaped benefits from the deposit. (Personal answer)

2012 - CLASS 4C SAMPLEX COLLECTION TAXATION LAW Antonio, Payumo, Quilates, Santos, Zulueta | COMMERCIAL LAW :Calingasan, Calvan, Madridijo, Panganiban, Quinto, Sta. Ana | REMEDIAL LAW: Cardino, Cayaban, Galvez, Lambino, Sandoval | CIVIL LAW: Cachapero, Rosalejos, Tan