MOCK BAR EXAMINATIONS

CIVIL LAW WITH ANSWERS

September 30, 2006 8:00 a.m. 12:00 noon I ICJ Construction Corporation (ICJ), a general contractor, advertised in Banati News that it planned to bid on the construction of new building located near the Cebu International Convention Center at Mandaue Reclamation Area. The advertisement welcomed bids from subcontractors to perform various functions, such as plumbing, electrical work, and masonry. The lowest electrical bid came from LPG Electrons Inc. (LPG) at P500,000. The lowest plumbing bid was submitted by Mango Plumbers Inc. (MPI) at P300,000. ICJ used LPGs and MPIs bids in preparing its general bid. At 1:00 PM on September 9, 2006, ICJ submitted its general bid. At 3:00 PM, MPIs President called up the ICJs President telling the latter that his firm made a mistake on their bid; that it can do plumbing work for not less than P400,000. In answer, the ICJ President told MPI that it cannot anymore do anything about it since ICJ has already submitted its general bid. ICJ was ultimately awarded the contract on September 29, 2006. (A) Assume for purposes of this question only that after receiving the contract, ICJ hired another plumber to do the plumbing work on the building at a cost of P400,000.00. ICJ now sues MPI for damages. How much ICJ is entitled to recover? Select from below the best proposition as your answer and explain. (2%) a) P300,000 which represents the amount of bid submitted by MPI. b) P100,000 which represents the difference between MPIs bid and the amount ICJ had to pay for the plumbing work c) Nothing, because the P400,000 represents the reasonable amount to pay for the work performed d) Nothing, because ICJ did not accept MPIs bid before it was withdrawn. ANSWER: b) ICJ is entitled to recover P100,000 because MPIs offer will be deemed irrevocable for a reasonable length of time on the theory of promissory estoppel. By promissory estoppel, it renders an offer binding as an option contract even without consideration if the offeror should reasonably expect it to induce action or forbearance of a substantial character by the offeree before acceptance, and such action or forbearance is in fact induced. In the problem, MPI offered to do the work for P300,000 if ICJ was awarded the contract. MPI should have expected that ICJ would use this figure to prepare its bid and that if it was awarded the contract it would be bound by it. This is what happened. The measure of ICJs damages is the amount it reasonably paid for a substitute performance, less the amount saved as a consequence of the breach, i.e. the P400,000 paid to another plumber minus the P300,000 not paid to MPI, or the equivalent of P100,000. (B) Assume for purposes of this question only that ICJ used LPGs P500,000 electrical bid to prepare its general bid, but after being awarded the contract, it decided to hire JPG instead to perform the electrical work. JPG had submitted a bid of P600,000. LPG sues ICJ for damages. Will LPG prevail? Select from below the best proposition as your answer and explain. (2%) a) Yes, because there was implied acceptance that ICJ would use the lowest bid for electrical contracting.

b) Yes, because LPGs bid was an offer for an option contract that was accepted upon acceptance of the general contract. c) No, because ICJ never communicated an acceptance of LPGs offer. d) No, because ICJ advertisement for bids did not constitute an offer. ANSWER: c) LPG will not prevail because ICJ never communicated an acceptance of LPGs offer. ICJ did not accept LPGs bid even thought it used it to prepare its bid. ICJs advertisement constituted an invitation for subcontractors to make offers. LPGs bid constituted an offer. The general rule is that acceptance of an offer must be communicated to the offeror, and here ICJ did not communicate any acceptance to LPG. (C) In contract law, what is meant by estoppel in pais? Distinguish it from estoppel by deed and promissory estoppel. (3%) ANSWER: In contract law, estoppel in pais is that which arises where one, by his acts, representations or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, as a consequence of which he would be prejudiced if the former is permitted to deny the existence of such facts. It is distinguished from estoppel by deed in that in the latter type of technical estoppel, a party to a deed and his privies are precluded from asserting as against the other party and his privies any right or title in derogation of the deed, or from denying any material fact asserted therein. It is further distinguished from promissory estoppel in that in the latter, an offer will be binding as an option contract even without consideration if the offeror should reasonably expect it to induce action or forbearance of a substantial character by the offeree before acceptance, and such action or forbearance is in fact induced II On April 1, 2006, Levi, a law graduate agreed to sell his prized possession a Nokia cellular phone model N90 to Bart for P15,000 in order for him to be able to pay for his bar review course at Recoletos Review Center. Since he is not required to pay for his course until April 30, 2006, the written contract of sale that Levi and Bart executed provided that the cellular phone would not be delivered to Bart until April 29, 2006. Thus, Levi has some few extra days to use the cellular phone. On the night of April 25, Levis rented apartment was destroyed by fire, including the cellular phone. Fortunately for Levi, he had insurance covering for the loss and damage of the cellular phone. After investigation, the Bureau of Fire Protection determined that the blaze started from the adjacent room rented by another tenant who dropped his cigarette onto his paperwork. On April 26, 2006, Levi was able to claim for the insurance of the cellular phone. On April 28, 2006, Levi informed Bart about the fire and the loss of the cellular phone but still demanded payment of the P15,000 from Bart. He claims that Bart was the equitable owner of the cellular phone when it was destroyed. Levi further explains that Bart could have obtained separate insurance on the cellular phone had he wanted to since he had insurable interest in the cellular phone as soon as the contract was executed. Bart refused to pay. (A) Levi brings an action against Bart for the sum of P15,000. Who will prevail? Select from below the best proposition as your answer and explain? (2%) a) Bart, because Levi was fully compensated for the loss of the cellular phone and making him pay would result to unjust enrichment on the part of Levi. b) Bart, because the destruction of the cellular phone avoids the contract and discharges his duty to pay Levi. c) Levi, because when he contracted with Bart, the risk of loss passed to Bart. d) Levi, because of the doctrine of equitable conversion.

ANSWER: b) Bart will prevail because the destruction of the cellular phone avoids the contract and discharges his duty to pay Levi. At the time of the loss or destruction of the thing subject in the contract, the risk of loss was still with Levi. As the contract pertains for the sale of goods between non-merchants, it is governed by the law on sales where the rule is that if a contract requires for its performance particular goods identified when the contract is made, and, before risk of loss passes to the buyer, the goods are destroyed without the fault of either party, the contract is avoided. (B) What do you understand by the principle of unjust enrichment? (2%) ANSWER: Under Article 22 of the Civil Code, there is unjust enrichment when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or with damages to another. (HL Carlos Construction, Inc. v. Marina Properties Corporation, GR No. 147614; January 29, 2004) (C) State the rules involving loss of a thing subject in a contract of sale? (3%) ANSWER: Under Art. 1493, NCC, the general rule is that if at the 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. But if the thing should have lost in part only, the vendee may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon. III Freddie owns a fleet of air-conditioned school buses for hire. He was fortunate enough to have been recently awarded contracts with almost all the exclusive schools in Cebu City to ferry their schoolchildren. Thus, he purchased a number of new vehicles to expand his fleet. Previously, Freddie farmed out the maintenance of his buses to different repair shops. As he now desires to have consistent results obtainable only by dealing with just one repair and maintenance shop, he contracted Santos in writing for the latter to undertake exclusively all general maintenance and extraordinary repairs require for his buses. Now, it happens that Freddies wife, Ara owned and operated a small advertising agency. Freddie wants Aras business to succeed so he included a clause in their written agreement with Santos for the latter to place his ads for his repair shops through Aras agency during the one-year term of their agreement. (A) Assume for purposes of this question only that for six months Santos dutifully placed all his ads through Aras agency and informed her of his agreement with Freddie. During that time, Ara turned down work from two prospective clients in order that she can devote her time designing and disseminating the ads from Santos. Thereafter, Santos discovered that Freddie was having some of his buses repaired and maintained by other shops. Santos immediately stopped placing his ads through Aras agency and instead employed another agency. Can Ara successfully bring an action against Santos to enforce the agreement? Select the best proposition from below as your answer and explain. (2%) a) Yes, because Ara has partially performed her obligation by placing the ads for Santos during the first six months of the latters agreement with Freddie. b) Yes, because she detrimentally relied on Santos promise to place ads when she refused other client just to accommodate him. c) No, because Ara provided no consideration for the agreement between Freddie and Santos. d) No, because Freddies exclusive use of Santos repair shop was a condition for Santos to dutifully purchase ads through Aras agency, and Freddies breach excused Santos duty to Ara.

ANSWER: d) No. Ara cannot successfully bring an action against Santos to enforce the agreement because Freddies exclusive use of Santos repair shop was a condition for Santos to dutifully purchase ads through Aras agency and Freddies breach excused Santos duty to Ara. In the problem, Ara is an intended third-party beneficiary because (i) she was expressly designated in the contract, (ii) some performance is to be made directly to her, and (iii) she stands in such a relationship to the promisee (Freddie) that an intent to benefit her can be inferred. In contract law, however, when the third-party beneficiary sues the promisor on the contract, the latter may assert any defense to formation or performance that he would have been able to assert against the promisee, including failure of a condition. Santos promise to perform by placing all of his ads with Aras agency during the term of the agreement was dependent on the condition that Freddie will have all his buses repaired in his shop. The failure of Freddie to fulfill the condition excused Santos duty to continue to place ads with Aras agency, and Santos will be able to assert his defense to performance against Ara. (B) Assume for purposes of this question only that Freddie dutifully sent all his buses to Santos for repair and maintenance. However, six months into the agreement, Freddie was able to get a decree for nullity of his marriage to Ara. Although Santos was placing all his ads through Aras agency, Freddie instructed Santos in writing to stop availing of Aras agency, to which Santos promptly transferred to another advertising agency. Thereafter, Ara learned of the agreement between Freddie and Santos. Freddie continued to send all his buses to Santos. Can Ara enforce the agreement in her favor? Select the best proposition from below as your answer and explain. (2%) a) Yes, because she was the intended beneficiary of the agreement between Freddie and Santos. b) Yes, because Ara had an enforceable contract with Santos concerning the advertisement of the latters shop. c) No, because Freddie and Santos has the right to modify their agreement without Aras permission. d) No, because Ara was a gratuitous beneficiary whose rights depended on her status as Freddies wife. ANSWER: c) No. Ara cannot enforce the agreement in her favor because Freddie and Santos has the right to modify their agreement without Aras permission. A contract pour autri may confer rights on that party if she is an intended beneficiary rather than merely an incidental beneficiary. Although in the problem, Ara is the intended beneficiary, she can enforce the contract only after her rights have already vested. Vesting of rights will occur when the beneficiary (i) manifests assent to the promise n a manner invited or requested by the parties, (ii) brings suit to enforce the promise, or (iii) materially changes position in justifiable reliance on the promise. In the problem, there is no indication of any action on the part of Ara that would have caused her rights to vest before the change in the contract extinguished her rights. (C) What is a stipulation pour autrui? In order to be valid, is it necessary that such stipulation must have valuable consideration? (3%) ANSWER: A stipulation pour autrui is stipulation in favor of a third person conferring a clear and deliberate favor upon him, and which stipulation is merely a part of a contract entered into by the parties, neither of whom acted as agent of the third person, and such third person may demand its fulfillment provided that he communicates his acceptance to the obligor before it is revoked. (Art. 1311, par. 2, NCC). It is not necessary that such stipulation must have valuable consideration since it is merely a part of duly executed contract. IV

There is co-ownership where two or more persons have the right of common dominion in a spiritual part or ideal portion of a thing which is not materially or physically divided. When can there be co-ownership in hidden treasure found? (2%) ANSWER: There is deemed co-ownership in the hidden treasure found when the discovery is made on the property of another, or of the State or any of its subdivision by chance where one-half thereof shall be allowed to the finder and the other half the owner of the property. (Art. 438, par. 2, NCC) V Bunny and Claudine were living together as husband and wife without the blessings of marriage. Both however were single and eligible. A baby boy was to born to them. Bunny wanted to register their baby boy who they christened as Tiger before the Local Civil Registrar. But the latter refused on the ground that the child, being illegitimate must follow the surname of the mother. Was the Registrars refusal justified? Explain. (4%) ANSWER: No. Republic Act 9255, in amending Art. 176 of the Family Code, now allows illegitimate children to use the surname of their father if his filiation has been expressly recognized by his father through the record of birth as appearing in the civil register or when an admission in a public document or handwritten instrument is made by his father. VI Oman and Doreena married in 1992. They did not execute any ante-nuptial agreement. A year after, the spouses were released P1,000,000.00 by the Liquid Bank of Cebu to build their conjugal house on the lot owned by Omans father. The Lot, which was inherited by Oman from his father who died in 1987 was valued at P800,000.00. In year 2002, the couple was able to fully pay the bank. In year 2003, Oman died, survived by his spouse Doreena and his brother Jordan. He left nothing but the lot he inherited from his father and their conjugal house erected thereon. (A) Who are the heirs of Oman and why? (3%) ANSWER: The heirs of Oman are Doreena and his brother Jordan by virtue of Art. 1001 which states thus: Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half. (B) How much each heir may receive after settlement of the estate? (7%) ANSWER: Doreena and Jordan shall share the estate equally. The estate of Oman consists of his share in the absolute community he has with Doreena and his exclusively property. As he and Doreena did not execute an ante-nuptial agreement, their regime of property relations was absolute community property. The lot Oman inherited from his father during the marriage is his exclusive property as well as the house built therein being an accession. Article 120 of the Family Code does not apply because said Article applies only to conjugal partnership of gains. The estate of Oman, however, shall reimburse his community property with Doreena the value of the house at the time it was built. Half the value reimbursed shall be the share of Oman in his community with Doreena which shall also form part of his estate. Hence, the total estate shall be half of the value of the house at P500,000 plus the value of the lot at P800,000 or a total of P1,300,000. Half of the estate of P650,000 shall entitle Doreena while the remaining P650,000 will go to Jordan. VII

Lavina died without legal issue, survived by her brother Niko and her sister Barbara. After the death of Niko, Keeanu, the son of Niko and Barbara divided between them the estate of Lavina. One year after, Maki, who is the illegitimate son of Niko filed an action to set aside the partition between Keeanu and Barbara to claim his share over the estate of thereof. Keeanu and Barbara opposed the action on the ground that Maki is barred to inherit by virtue of Article 992. Is the contention correct? (5%) ANSWER: No, Article 992 does not apply. Maki does not inherit from Lavina, the legitimate sister of Niko, his illegitimate father. He inherits by his own right over the estate of his father as his illegitimate son. VIII Marie was married to John in 1999. During their marriage, they bore two (2) children, Jack and Georgia. In 2000, John died. A little over a year thereafter, Marie married Bruce. Out of their marriage were born Wendell and Betty. In her will, Marie instituted Wendell and Betty as the exclusive heirs to her estate. (A) Is the institution valid? (5%) ANSWER: No. There is preterition of Jack and Georgia, who are all compulsory heirs of Marie in the direct line. Under Art. 854, the effect would be annulment of the institution of Wendell and Betty. As there are no devises and legacies to be protected, the will itself insofar as distribution of the hereditary estate is concerned becomes useless. Total intestacy therefore results. (B) Upon the death of Marie, how will her estate be divided? (5%) ANSWER: In accordance with Art. 999 of the NCC, the estate of Marie shall be divided equally between her surviving spouse, Bruce and her four (legitimate children) who shall each receive 1/5 of the value of the entire estate. IX Osama died of a plane crash while in a military mission. He is survived by his two (2) sons: Janjan, who repudiated his inheritance from his father Osama and Waki, who predeceased his father Osama. Janjan has a daughter named Trixie; while Waki is survived by Anna, Trevor and Connie. The net estate of Osama is P9,000,000. (A) How do you divide the estate? Explain (5%) ANSWER: Trixie will get nothing from the estate of Osama as she is not allowed to represent her father Janjan, being a renouncer. Hence, the estate of Osama will go to the children of Waki, namely: Anna, Trevor and Connie by their respective right of representation. Each is entitled to P3,000,000. (Art. 977, NCC) (B) Assume for purposes of this question only that both Janjan and Waki repudiated their inheritance from Osama, how will you now divide the estate of Osama? Explain (5%) ANSWER: As both Janjan and Waki repudiated their inheritance from Osama, all the latters heirs in the next degree, namely: Trixie, Anna, Trevor and Connie shall inherit in their own right as they all cannot represent their predecessors. Hence, each of them will receive P2,250,000 each. (See Arts. 969 & 977, NCC) X Josh leased his commercial property to Kris. The lease contract was for a period of ten (10) years with the standard proviso on non-sublease or non-assignment without the express consent from the lessor. One year later, Kris assigned all her rights and

interests over the leased property in favor of Boy. Josh learned of the assignment and wrote Kris that he interposes no objection to her assignment to Boy. Thereafter, Josh has been accepting the rent from Boy instead of Kris. This arrangement subsisted for five years until Boy defaulted due to insolvency. Josh now sued Kris for the arrears. (A) If Josh loses in the case, it will be because of: (2%) a) b) c) d) Laches on the part of Josh Prescription of the action Estoppel on the part of Josh Novation of the contract

ANSWER: c) If Josh loses to Kris, it will be because there was a novation in their contract. A novation occurs when a new contract substitutes a new party to receive benefits and assume duties that had belonged to one of the original parties under the terms of the old contract. All the parties must agree to the substitution to be effective. (B) When does laches operate adversely against a plaintiff? prescription set in over an action enforcing a written contract? (3%) When does

ANSWER: Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. It operates adversely against the plaintiff if the latter, through negligence or omission fails to assert his right within a reasonable period of time, warranting a presumption that he either has abandoned it or declined to assert it. The defense of laches is an equitable one and does not concern itself with the character of the defendants title, but only with whether or not by reason of plaintiffs long inaction or inexcusable neglect, he should be barred from asserting his claim at all, because to allow him to do so would be inequitable and unjust to defendant. On the other hand, prescription may set in over an action to enforce a written contract if it is filed beyond ten (10) years from its execution. XI Atong and Nicole had been living together without the benefit of marriage. During their cohabitation, they begot five children. Atong operated a lucrative business of providing manpower and manning services to his clients based in the Philippines and abroad while Nicole tended to their childrens needs and schooling. After fifteen years of their union, Atong died. He left an estate worth over P50,000,000. (A) Assume for purposes of this question only that both were capacitated to marry each other and were living exclusively as husband and wife at the time of their live-in relationship. a) What is the property regime between Atong and Nicole? Explain (3%) ANSWER: The property relations between Atong and Nicole during their union without the benefit of marriage is co-ownership since both of them were not incapacitated to marry each other during their cohabitation. However, only the properties that are acquired by both of them through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. (Art. 147, F.C.) b) Who inherits the estate of Atong? Explain (2%)

ANSWER: Only the children of Atong with Nicole shall inherit his estate as the latter is not a compulsory heir to her live-in partner, Atong. (B) Assume for purposes of this question only that Atong, at the time of his livein relationship with Nicole, was separated in fact with Tara, to whom he had two (2) children. c) What property regime existed between Atong and Nicole during their union without the benefit of marriage? Explain (2%) ANSWER: Their property regime is still co-ownership. However, the share of Atong shall accrue to the absolute community or conjugal partnership existing in his valid marriage with Tara. (Art. 148, F.C.) d) How will the estate of Atong be divided? Explain (3%) ANSWER. The estate of Atong will be divided between his legal heirs: Tara, his legal spouse and their (2) legitimate children and his five (5) illegitimate children with Nicole, who will each receive of the share of the legitimate child of Atong with Tara. Nicole is excluded being not his compulsory heir. XII Allan owns a big tract of land comprising of twenty hectares covered under a homestead patent. In 1998, he mortgaged the said property to the Rural Bank of Sulawesi for a sum of P2,000,000. The deed stipulated the condition that if mortgagor fails to pay off his principal obligation after five (5) years, the mortgagee bank is authorized to sell by public auction the same property as security under Act 3135. Allan defaulted in his obligation to the bank. In 2004, the mortgaged property was sold in a public auction for P5,000,000, which price represented the total obligation of Allan inclusive of interests and surcharges. The mortgagee bank emerged as the winning bidder. In 2005, the certificate of sale was registered in the Register of Deeds in TawiTawi. You are retained by the Rural Bank of Sulawesi and the Manager asked you when the bank could validly consolidate its ownership over the property. Your answer would be: (2%) a) b) c) d) After 1 year from date of the public auction After 1 year from date of registration of the certificate of sale After 5 years from date of registration of the certificate of sale After 7 years from date of registration of the certificate of sale

ANSWER: d) The rural bank can validly consolidate ownership over the homestead property only after seven (7) years from the date of the registration of the certificate of sale. As held in Belisario vs. IAC, 165 SCRA 101, the two-year redemption period in Section 5 of the Rural Banks Act should yield to the period prescribed in Section 119 of C.A. 141 or the Public Land Act, giving a five-year repurchase period to the homesteader over his mortgaged land. The five-year period under C.A. 141 shall begin to run only from the expiration of the expiration of the two-year period under the Rural Banks Act. XIII Constancia, Benjamin and Elenita, and Pedro are the children of the late Eulogio. Eulogio was one of the children and heirs of Andres. Andres is the only brother of Estanislao, the original owner of the disputed lot who died without issue on April 1942 and left an estate consisting of four (4) parcels of land. Eulogio died in April, 1944. At that time, Lazara and Ciriaca, Eulogios sisters, had already died without having partitioned the estate of the late Estanislao. On December 5, 1946, the heirs of Lazara, Ciriaca and Eulogio executed a deed of extrajudicial partition. Since the children of

Eulogio, with the exception of Constancia, were then all minors, they were represented by their mother and judicial guardian, Catalina who renounced and waived her usufructuary rights over the parcels of land in favor of her children in the same deed. Meanwhile, Benjamin constructed the family home on Lot A which is adjacent to Lot B. A portion of the house occupied an area of twenty (20) square meters, more or less, of Lot B. Benjamin also built a concrete fence and a common gate enclosing the two (2) lots, as well as an artesian well within Lot No. B. Sometime in December, 1982, Benjamin discovered that Lot B was registered in the name of his brother, Pedro. Believing that the lot was co-owned by all the children of Eulogio, Benjamin demanded his share of the lot from Pedro. However, Pedro asserted exclusive ownership thereof pursuant to the deed of extrajudicial partition whereby their mother, representing his brother and sisters, waived Lot B in his favor. (A) What juridical relationship was created between Pedro and his brother and sisters? Select from below the correct answer and explain. (2%) a) b) c) d) Express Trust Constructive Trust Resulting Trust Negotiorum Gestio

ANSWER: c) The juridical relationship created is known as constructive trust. As held in Esconde vs. CA, G.R. No. 103635, February 1, 1996, If, as petitioners insist, a mistake was committed in allotting Lot B to Pedro, then a trust relationship was created between them and him. However, Pedro never considered himself a trustee. Where Pedro allowed his brother Benjamin to construct or make improvements on Lot B, it appears to have been out of tolerance to a brother. Consequently, if indeed, by mistake, Pedro was given the entirety of Lot B, the trust relationship between him and his brother and sisters was a constructive, not resulting, implied trust. Constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. (B) In its technical sense, is constructive trust really a trust? Explain (3%) ANSWER: No. In Philippine National Bank v. Court of Appeals, G.R. No. 97995, January 21, 1993, it was held that: A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. XIV What do you understand by the juridical relationship of attornment? Under what specific nominate contract in civil law where attornment arises? (3%) ANSWER: Attornment is a juridical relationship that arises when the tenant agrees to a substitution of a new landlord. It arises under the nominate contract of lease. XV On May 2, 1988 and June 5, 1988, spouses Leonilo and Maria purchased a total of 8,326 sacks of rice from Bartolome. A total of 4,437 sacks were paid by the spouses

through a number of checks they issued, leaving unpaid the remaining 3,889 sacks. When the checks were encashed, all bounced due to insufficiency of funds. Criminal and civil cases were thereafter filed against the spouses. During their pendency, Bartolome died. His heirs were substituted in the cases. In their defense, the spouses denied having purchased rice from Bartolome; that there was no sales invoice, official receipts or like evidence to prove the purchase; and that they were merely agents and should not be held answerable. (A) Can agency be presumed? Why (2%) ANSWER: No. As the basis of agency is representation, there must be, on the part of the principal, an actual intention to appoint, an intention naturally inferable from the principals words or actions. In the same manner, there must be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is generally no agency. (Tuazon v. Heirs of Bartolome Ramos, G.R. No. 156262, July 14, 2005) (B) What are the elements that would give rise to the relationship of agency? (3) ANSWER: The elements giving rise to an agency are: (1) the parties consent, express or implied, to establish the relationship; (2) the object, which is the execution of a juridical act in relation to a third person; (3) the representation, by which the one who acts as an agent does so, not for oneself, but as a representative; (4) the limitation that the agent acts within the scope of his or her authority. (Ibid) XVI Mario, Ruben and Dino are partners engaged in real estate business. Their respective contribution to the partnership is P100,000 each. Trevor was recently admitted as new partner with the consent from all the partners and contributed P40,000. At the time of the admission of Trevor, the partnership has an outstanding obligation to Luis in the amount of P400,000. Its total assets is worth the total contributions of the partners in the amount of P340,000. (A) Assume for purposes of this question only that Luis was able to win judgment for the P400,000 obligation of the partnership. How much each of the partners is personally liable to Luis after exhaustion of partnership funds: (2%) a) P20,000 each b) P15,000 each with Trevor having the right of reimbursement for the excess of his proportionate share c) Mario, Ruben, and Dino to share equally at P20,000 each with Trevor being without obligation d) Maria, Ruben, and Dino to share equally at P18,000 each and Trevor to share P6,000. ANSWER: c) Mario, Ruben and Dino shall be liable to the net obligation of the partnership in the amount of P60,000 jointly or pro rata out of their personal property at P20,000 each. Trevor cannot be held accountable out from his personal property. (Art. 1816, NCC) (B) Assume for purposes of this question only that the P340,000 obligation of the partnership was incurred after the admission of Trevor. All other facts of the problem remain the same. How much each of the partners is personally liable to Luis after exhaustion of partnership funds: (2%) a) P20,000 each

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b) P15,000 each with Trevor having the right of reimbursement for the excess of his proportionate share c) Mario, Ruben, and Dino to share equally at P20,000 each with Trevor being without obligation d) Mario, Ruben, and Dino to share equally at P18,000 each and Trevor to share P6,000. ANSWER: b) In the obligation was incurred by the partnership subsequent to the admission of Trevor, all of them shall be personally liable of their personal property to Luis at P15,000 each. However, Trevor shall be entitled to a proportional reimbursement from Mario, Ruben, and Dino for the excess amount he has paid of his share. (Art. 1816) XVII Jonald executed a notarial will whereby he instituted his wife, Elma as his universal heir on condition that she too will institute him as well as his brother, Junnie as her universal heir in her will. (A) The foregoing condition is known as: a) Caucion muciana b) Disposicion captatoria c) Reserva Troncal d) Institucion sub modo (2%) ANSWER: b) The condition in Jonalds will is known as disposicion captatoria under the Roman Law. (C) The effect of the foregoing condition is: a) b) c) d) Valid in all respects Valid in respect to the institution of Jonald only Invalid in respect to all testamentary dispositions Invalid in respect to the condition only. (2%) ANSWER: c) The effect of the foregoing condition invalidates not only the condition but the entire testamentary disposition as provided under Art. 875 of the New Civil Code. The rationale for this is that succession is an act of liberality and not a contractual agreement. - Nothing Follows -

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