MCQ

1.

ESSAY:

1. General Agency vs. Special Agency (1992)

A as principal appointed B as his agent granting him general and unlimited management over

A’s properties, stating that A withholds no power from B and that the agent may execute such
acts as he may consider appropriate.

Accordingly, B leased A’s parcel of land in Manila to C for four (4) years at P60,000.00 per year,
payable annually in advance.

B leased another parcel of land of A in Caloocan City to D without a fixed term at P3,000.00 per
month payable monthly.

B sold to E a third parcel of land belonging to A located in Quezon City for three (3) times the
price that was listed in the inventory by A to B.

All  those  contracts  were  executed  by  B  while  A  was confined due to illness in the Makati
Medical Center. Rule on the validity and binding effect of each of the above contracts upon A
the principal. Explain your answers.

 SUGGESTED ANSWER:

The agency couched in general terms comprised only acts of administration (Art. 1877, Civil
Code). The lease contract on the Manila parcel is not valid, not enforceable and not binding
upon A. For B to lease the property to C, for more than one (1) year, A must provide B with a
special power of attorney (Art. 1878. Civil Code).

The lease of the Caloocan City property to D is valid and binding upon A. Since the lease is
without a fixed term, it is understood to be from month to month, since the rental is payable
monthly (Art. 1687, Civil Code).

The sale of the Quezon City parcel to E is not valid and not binding upon A. B needed a special
power of attorney to validly sell the land (Arts. 1877 and 1878, Civil Code). The sale of the land
at a very good price does not cure the defect of the contract arising from lack of authority.

2. Commodatum (2005)

Before he left for Riyadh to work as a mechanic, Pedro left his Adventure van with Tito, with the
understanding that the latter could use it for one year for his personal or family use while Pedro
works in Riyadh. He did not tell Tito that the brakes of the van were faulty. Tito had the
van tuned up and the brakes repaired. He spent a total amount of P15,000.00. After using the
vehicle for two weeks, Tito discovered that it consumed too much fuel. To make up for the
expenses, he leased it to Annabelle.
Two months later, Pedro returned to the Philippines and asked Tito to return the van.
Unfortunately, while being driven by Tito, the van was accidentally damaged by a cargo truck
without his fault.

a) Who shall bear the P15,000.00 spent for the repair of the van? Explain.

ALTERNATIVE ANSWER:

Tito must bear the P15,000.00 expenses for the van. Generally, extraordinary expenses for the
preservation of the thing loaned are paid by the bailor, he being the owner of the thing loaned.
In this case however, Tito should bear the expenses because he incurred the expenses without
first informing Pedro about it. Neither was the repair shown to be  urgent.  Under Article  1949 
of  the  Civil  Code,  bailor generally bears the extraordinary expenses for the preservation  of
the  thing  and  should  refund  the  said expenses if made by the bailee; Provided, The bailee
brings the  same to the  attention of the  bailor before  incurring them, except only if the repair is
urgent that reply cannot be awaited.

ALTERNATIVE ANSWER:

The P15,000.00 spent for the repair of the van should be borne by Pedro. Where the bailor
delivers to the bailee a non-consummable thing so that the latter may use it for a certain time
and return the identical thing, the contract perfected is a Contract of Commodatum. (Art. 1933,
Civil Code) The bailor shall refund the extraordinary expenses during the contract for the
preservation of the thing loaned provided the bailee brings the same to the knowledge of the
bailor before incurring the same, except when they are so urgent that the reply to the notification
cannot be awaited without danger. (Art. 1949 of the Civil Code)

In the given problem, Pedro left his Adventure van with Tito so that the latter could use it for one
year while he was in Riyadh. There was no mention of a consideration. Thus, the contract
perfected was commodatum. The amount of P15,000.00 was spent by Tito to tune up the van
and to repair its brakes. Such expenses are extra-ordinary expenses because they are
necessary for the preservation of the van Thus, the same should be borne by the bailor, Pedro.

b)  Who shall bear the costs for the van’s fuel, oil and other materials while it was with Tito?

Explain.

SUGGESTED ANSWER:

Tito must also pay for the ordinary expenses for the use and preservation of the thing loaned.
He must pay for the gasoline, oil, greasing and spraying. He cannot ask for reimbursement
because he has the obligation to return the identical thing to the bailor. Under Article 1941 of the
Civil Code, the bailee is obliged to pay for the ordinary expenses for the use and preservation of
the thing loaned.

c)    Does Pedro have the right to retrieve the van even before the lapse of one year? Explain.

ALTERNATIVE ANSWER:
No, Pedro does not have the right to retrieve the van before the lapse of one year. The parties
are mutually bound by the terms of the contract. Under the Civil Code, there are only 3
instances when the bailor could validly ask for the return of the thing loaned even before the
expiration of the period. These  are  when:  (1)  a  precarium  contract  was  entered (Article
1947); (2) if the bailor urgently needs the thing (Article 1946); and (3) if the bailee commits acts
of ingratitude  (Article  1948).  Not  one  of  the  situations  is present in this case.

The fact that Tito had leased the thing loaned to Annabelle would not justify the demand for the
return of the thing loaned before expiration of the period. Under Article 1942 of the Civil Code,
leasing of the thing loaned to a third person not member of the household of the bailee, will only
entitle bailor to hold bailee liable for the loss of the thing loaned.

ALTERNATIVE ANSWER:

As a rule, Pedro does not have the right to retrieve the van before the lapse of one year. Article
1946 of the Code provides that “the bailor cannot demand the return of the thing loaned till after
the expiration of the period stipulated, or after the accomplishment of the use for which the
commodatum has been constituted. However, if in the meantime, he should have urgent need
of the thing, he may demand its return or temporary use.”

In the given problem, Pedro allowed Tito to use the van for one year. Thus, he should be bound

by the said agreement and  he  cannot  ask  for the  return  of  the car before the expiration of
the one year period. However, if Pedro has urgent need of the van, he may demand for its
return or temporary use.

d) Who shall bear the expenses for the accidental damage caused by the cargo truck, granting

that the driver and truck owner are insolvent? Explain.

SUGGESTED ANSWER:

Generally, extraordinary expenses arising on the occasion of the actual use of the thing loaned
by the bailee, even if incurred  without  fault  of the  bailee,  shall be  shouldered equally by the
bailor and the bailee. (Art. 1949 of the Civil Code).  However,  if  Pedro  had  an  urgent  need
for  the vehicle, Tito would be in delay for failure to immediately return the same, then Tito would
be held liable for the extraordinary expenses.

3.

4.

5. Damages (1994)

On   January   5,   1992,   Nonoy   obtained   a   loan   of Pl,000,000.00 from his friend Raffy.
The promissory note did not stipulate any payment for Interest. The note was due on January 5,
1993 but before this date the two became political enemies. Nonoy, out of spite, deliberately
defaulted in paying the note, thus forcing Raffy to sue him.

1)   What actual damages can Raffy recover?
2)   Can Raffy ask for moral damages from Nonoy?

3)  Can Raffy ask for nominal damages?

4)   Can Raffy ask for temperate damages?

5)   Can Raffy ask for attorney’s fees?

SUGGESTED ANSWER:

1)   Raffy may recover the amount of the promissory note of P1 million, together with interest at
the legal rate from the date of judicial or extrajudicial demand.    In addition, however, inasmuch
as the debtor is in bad faith, he is liable for all damages which may be reasonably attributed to
the non-performance of the obligation. (Art. 2201(2). NCC).

2)   Yes, under Article 2220, NCC moral damages are recoverable in case of breach of contract
where the defendant acted fraudulently or in bad faith.

3)   Nominal damages may not be recoverable in this case because Raffy may already be
indemnified of his losses with the  award  of  actual  and  compensatory  damages. NOMINAL
DAMAGES are adjudicated only in order that a right of the plaintiff, which has been violated or
invaded by the defendant may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. (Article 2231. Civil Code)

4)  Raffy  may  ask  for,  but  would  most  likely  not  be awarded temperate damages, for the
reason that his actual damages may already be compensated upon proof thereof with the
promissory note.      TEMPERATE DAMAGES may be awarded only when the court finds that
some pecuniary loss has been suffered but its amount cannot, from  the  nature  of  the  case, 
be  proved  with  certainty. (Article 2224, Civil Code)

5)  Yes, under paragraph 2, Article 2208 of the Civil Code, considering that Nonoy’s act or
omission has compelled Raffy to litigate to protect his interests. Furthermore. attorneys’ fees
may be awarded by the court when it is just and equitable. (Article 2208(110) Civil Code).

6. Liability; owner who was in the vehicle (1998)

A Gallant driven by John and owned by Art, and a Corolla driven by its owner, Gina, collided

somewhere along Adriatico Street. As a result of the accident, Gina had a concussion.
Subsequently. Gina brought an action for damages against John and Art. There is no doubt that
the collision is due to John’s negligence. Can Art, who was in the vehicle at the time of the
accident, be held solidarily liable with his driver, John?

SUGGESTED ANSWER:

Yes. Art may be held solidary liable with John, if it was proven   that   the   former   could   have   
prevented   the misfortune with the use of due diligence. Article 2184 of the Civil Code states:
“In motor mishaps, the owner is solidary liable with his driver, if the former, who was in the
vehicle, could have, by the use of due diligence, prevented the misfortune, x x x”
ALTERNATIVE ANSWER:

1. It depends. The Supreme Court in Chapman vs. Underwood (27 Phil 374),held: “An owner

who sits in his automobile, or other vehicle, and permits his driver to continue in a violation of
law by the performance of negligent acts, after he has had a reasonable opportunity to observe
them and to direct that the driver cease therefrom, becomes himself responsible for such acts, x
x x On the other hand, if the driver, by a sudden act of negligence, and without the owner having
a reasonable opportunity to prevent  the  act  or  its  continuance,  injures  a  person  or violates
the criminal law, the owner of the automobile, although present therein at the time the act was
committed is not responsible, either civilly or criminally, therefor. The act complained of must be
continued in the presence of the owner for such a length of time that the owner, by his
acquiescence, makes his driver’s act his own.”

7. Vicarious Liability (2006)

Arturo sold his Pajero to Benjamin for P1 Million. Benjamin took the vehicle but did not register

the sale with the Land Transportation Office. He allowed his son Carlos, a minor who did not
have a driver’s license, to drive the car to buy pan de sal in a bakery. On the way, Carlos driving
in a reckless manner, sideswiped Dennis, then riding a bicycle. As a result, he suffered serious
physical injuries. Dennis filed a criminal complaint against Carlos for reckless imprudence
resulting in serious physical injuries.

Assuming Dennis’ action is tenable, can Benjamin raise the defense that he is not liable
because the vehicle is not registered in his name? Explain.

SUGGESTED ANSWER:

No, Benjamin cannot raise the defense that the vehicle is not registered in his name. His
liability, vicarious in character, is based on Article 2180 because he is the father of a minor who
caused damage due to negligence. While the suit will prosper against the registered owner, it is
the actual owner of the private vehicle who is ultimately liable (See Duavit v. CA, G.R. No. L-
29759, May 18, 1989).The purpose of car registration is to reduce difficulty in identifying the
party liable in case of
accidents (Villanueva v. Domingo, G.R. No. 144274, September 14, 2004).

8. MORAL DAMAGES FOR DEATH OF FETUS

A bus hit a pedestrian, who was four (4) months pregnant, while she was crossing the street.
Although the pedestrian survived, the fetus inside her womb was aborted.

Can the pedestrian recover damages on account of the death of the fetus? (1%)

(A) Yes, because of Article 2206 of the Civil Code that allows the surviving heirs to demand
damages for mental anguish by reason of the death of the deceased.
(B) Yes, for as long as the pedestrian can prove that she was not at fault and the bus driver was
the one negligent.
(C) No, because a fetus is not a natural person.
(D) No, if the fetus did not comply with the requirements under Article 41 of the Civil Code.
Correct Answer is letter D – Article 41 of the Civil Code requires that to be considered a
person, a fetus with an intrauterine life of less than seven months must survive for the full
twenty-four hours from complete separation from the mother’s womb.

9.

10. Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees
and expenses of litigation should be recovered.

11.