D.
OBLIGATIONS
35. Sources of obligation; solutio indebiti:
Solutio indebiti applies only where no
binding relation exists between the payor
and the person who received the payment.
Stated otherwise, solutio indebiti is not
applicable if the parties are bound by a
contract, i.e., a contract of lease.
PROBLEM NO. 12: DOMESTIC
PETROLEUM RETAILER CORP. V.
MIAA (2019)
DPRC leased a portion of the property of
MIA. Thereafter, MIAA increased the
rentals to be paid by DPRC. DPRC paid the
increased rentals under protest.
Subsequently, the court nullified the
resolution of MIÄA increasing the rate of
rents for failure to observe the requirements
of the Administrative Code. DPRC sued for
recovery of the overpayments. When the
case reached the CA, the appellate court
ruled that the claim of DPRC, being in the
nature of a claim based on the quasi-
contract of solutio indebiti, had already
prescribed because the same must be filed
within a period of six years.
PROBLEM NO. 12: DOMESTIC
PETROLEUM RETAILER CORP. V.
MIAA (2019)
Q: is the CA correct in holding that the
claim of DPRC for overpayment is a case of
solution indebiti?
ANSWER: No, because there is a juridical
relationship of lessor and lessee between the
parties. Solutio indebiti applies only where
no binding relation exists between the payor
and the person who received the payment.
Stated otherwise, solutio indebiti is not
applicable if the parties are bound by a
contract, i.e., a contract of lease. As such,
the cause of action against MIAA for
recovery of overpayment is deemed to be
based on the violation of a contract instead
of a quasi-contract. Such being the case, the
cause of action is based on a contract, and
the prescriptive period is ten, not six years.
36. Natural Obligation: Cannot be
compelled in court; performance must be
voluntary. It produces the following legal
consequences: () if performed voluntarily,
the creditor is authorized to retain the
payment; (if) it can be novated and
converted into civil obligation; and (ili) it
can be secured by a contract of guaranty,
suretyship, mortgage, antichresis and
contracts of security involving personal
property. Examples of natural obligation:
(®) when a debt has already prescribed - it is
no longer civil, but converted into natural
obligation; and (in) when the agreement for
the payment of monetary interest is made
verbally - it is not a civil obligation but case
of natural obligation.
37. Potestative, Casual and Mixed: Affects
the validity of the obligation. But pursuant
to Article 1182, the obligation becomes only
when the condition is potestative on the part
of the debtor and it is at the same time
suspensive in nature. If potestative on the
part of the debtor but resolutory, the
obligation is valid. If potestative on the part
of the creditor, the obligation is valid. If
condition is casual, obligation is valid.
When condition is mixed, obligation is valid
even if it is partly dependent upon the
debtor's will.
38. Doctrine of constructive fulfillment of
suspensive condition: If the condition is
dependent partly upon the debtor's will and
partly upon chance or will of a third person,
the obligation is valid. In this situation, if the
debtor intentionally and actually prevents
the fulfillment of the condition dependent on
him and the condition is also suspensive, the
entire condition is deemed constructively
fulfilled under the "doctrine of constructive
fulfillment of suspensive condition" in
Article 1186. On the other hand, if it is the
debtor who did all in power to comply with
the condition but the entire condition is not
fulfilled because of the third person, the
entire condition is also deemed constructive
fulfilled under the "rule on constructive
fulfilment of a mixed conditional obligation.
38. Power of court to fix period: Applicable
only when the obligation is one with a
period, in the following instances: (i) the
parties failed to fix the period; (ii) duration
of period is dependent upon the sole will of
the debtor; and (iii) in reciprocal obligations,
when there is just cause for fixing of period.
Court cannot fix the period in the following:
(i) when obligation is payable on demand
because it is a pure obligation; and (ii) when
the obligation is to be performed within a
reasonable time because the period is
already fixed - all the court has to determine
is whether such reasonable time has already
lapsed.
Joint and solidary obligation: In joint
obligation, each of the debtors is responsible
only for his share in the indebtedness and
each of the creditors is entitled only to
collect his share in the credit; each share
being considered separate and distinct from
the other shares, Example: A, B and C
borrowed P1.8 Million from X, and Y, how
much can X collect from A? Answer is
P300,000 only. This is because X is entitled
only to P600,000 which he must collect
from A, B and C, in equal shares.
In the same example, if A, B and C are
solidary debtors but X and Y are merely
joint creditors, X is entitled to collect only
his share of P600,000, but this time he can
collect the entire P600,000, either from A, B
or C; or from all of them, or from a
combination of them. in the same example,
if A, B and C are solidary debtors and X and
Y are also solidary creditors, X may now
collect the entire P1.2 Million either from A,
B or C; or from all of them, or from a
combination of them.
41. Divisible and Indivisible Obligation:
Under Article 1225, even though the object
or service may be physically divisible, an
obligation is indivisible if so provided by
law or intended by the parties.
PROBLEM NO. 13: LAM V. KODAK
PHILIPPINES (2016) (J. LEONEN CASE)
Q1: Are the obligations of the parties
divisible or indivisible?
ANSWER: The Letter Agreement contained
an indivisible obligation. Under Article
1225,
Even though the object or service may be
physically divisible, an obligation is
indivisible if so provided by law or intended
by the parties.
Here, the intention of the parties is for there
to be a single transaction covering all three
(3) units of the Minilab Equipment. Kodak’s
obligation was to deliver all products
purchased under a “package,” and, in turn,
the spouses’ obligation was to pay for the
total purchase price, payable in installments.
The intention of the parties to bind
themselves to an indivisible obligation can
be further discerned through their direct acts
in relation to the package deal. There was
only one agreement covering all three (3)
units of the purpose for the buyer, which
was to obtain these units for three different
outlets. If the intention of the parties were to
have a divisible contract, then separate
agreements could have been made for each
Minilab Equipment unit instead of covering
all three in one package deal.
Q2: Are the parties entitled to recover what
they delivered to each other?
ANSWER: Yes, since they mutually
cancelled the contract. When rescission is
sought under Article 1191 of the Civil Code,
it need not be judicially invoked because the
power to resolve is implied in reciprocal
obligations. The right to resolve allows an
injured party to minimize the damages he or
she may suffer on account of the other
party's failure to perform what is incumbent
upon him or her. When a party fails to
comply with his or her obligation, the other
party's right to resolve the contract is
triggered. The resolution immediately
produces legal effects if the non-performing
party does not question the resolution. Court
intervention only becomes necessary when
the party who allegedly failed to comply
with his or her obligation disputes the
resolution of the contract. Since both parties
in this case have exercised their right to
resolve under Article 1191, there is no need
for a judicial decree before the resolution
produces effects.
Legal tender: Applicable only when the
obligation is to pay a sum in money. If the
problem involves payment of the price, the
following rules should be applied: (i) if the
payment of the price can be compelled by
way of an action for collection of the price,
i.e., payment of the purchase price in a
contract of sale, it is an obligation to pay a
sum of money, hence, the rule on legal
tender applies; (ii) on the other hand, if the
payment of the price is merely incidental to
the exercise of a right, i.e., payment of
redemption price, repurchase price in pacto
de retro sale, payment of price in exercise of
right of refusal or option contract, such
payment is not an obligation to pay a sum of
money because the right may not be
exercised. In the latter, the rule on legal
tender does not apply. Instead, the tender of
the price in the form of manager's check or
cashier's check is sufficient to preserve the
right. If the tender is not accepted, the
remedy is to compel redemption or
repurchase by depositing the payment in
court; the remedy is not consignation
because there is no obligation to be paid.
43. On fortuitous event and loss: If the
obligation is to deliver a determinate thing
and thing is lost by reason of fortuitous
event, the debtor's obligation is extinguished
because the loss is without his fault provided
the following requisites concur: (i) at the
time of loss, the debtor is not yet in delay:
(ii) the event is either unforeseeable or
inevitable; (iii) the event is independent of
the will of the debtor; (iv) the event rendered
the normal fulfillment of the obligation
impossible; and (v) the debtor has no
participation in, or aggravation of the injury,
suffered by the creditor. If the obligation, on
the other hand, is to deliver a generic thing,
it cannot be extinguished by reason of loss
of the thing due because the genus of a thing
never perishes.
44. Doctrine of unforeseen event in Article
1267: The doctrine is applicable only to
obligation to do and the obligation is
extinguished if the following requisites are
satisfied: (i) prior to the fulfillment of the
obligation and prior to the debtor incurring
delay, an unforeseen event occurred; (ii) the
event is extra-ordinary; (iii) such event
rendered the performance of the obligation
to do extremely difficult; and (iv) and such
event and its effects are manifestly beyond
the contemplation of the parties.
PROBLEM NO. 14:
Dr. No, a dentist, leased a commercial unit
in Pergola Mall for two years. The contract
was entered into prior to the pandemic.
Several months after the execution of the
contract, a world-wide pandemic occurred
brought about by the Covid-19 virus. As a
consequence of the pandemic, several
lockdowns were ordered by the government
which affected the operations of Dr. No's
dental clinic. Subsequently, Dr. No was
unable to pay monthly rents for seven
consecutive months. When the economy re-
opened again, the lessor made a demand
upon Dr. No for the payment of the unpaid
rentals. Dr. No claimed, however, that his
obligation to pay rentals was already
extinguished pursuant to the doctrine of
unforeseen event under Article 1267 of the
Civil Code.
Q1: May the pandemic caused by the Covid-
19 virus qualify as an unforeseen event that
may result into the extinguishment of
obligation under Article 1267 of the Civil
Code?
ANSWER: Yes, because the pandemic
caused by the Covid-19 virus satisfies the
requirements of Article 1267 based on
prevailing jurisprudence, as follows: (i) it is
an unforeseen event: (ii) it is an extra-
ordinary event; (iii) it may render the
performance of an obligation to do
extremely difficult; and (iv) the event and its
effects are manifestly beyond the
contemplation of the parties.
Q2: Is the obligation of Dr. No to pay rentals
extinguished under the doctrine of
unforeseen event under Article 1267 of the
Civil Code?
ANSWER: No, because such doctrine is
applicable only to an obligation to do. It
does not apply to an obligation to give. The
obligation of Dr. No to pay rentals is an
obligation to give and not an obligation to
do.
Q3: May the obligation of Dr. No. to pay
rentals be considered extinguished by reason
of fortuitous event?
ANSWER: No, because the obligation of
Dr. No to pay a sum of money in the form of
rents is an obligation to deliver a generic
thing. Hence, such obligation may not be
extinguished by reason of loss because the
genus of a thing never perishes.
15. Conventional subrogation vs. assignment
of credit: (i) CS is a mode of
extinguishment; while AC is not. In other
words, in CS, the credit transferred to the
third person is no longer the same obligation
of the debtor to the previous creditor, it is a
new one; while in AC, the credit transferred
to the third person is the very same
obligation of the debtor to the previous
creditor. (ii) In CS, consent of debtor is
necessary because it is a contract involving
the parties to the original obligation and the
third person; while in AC, the consent of the
debtor is not necessary, because it only a
contract between the creditor (assignor) and
the third person (assignee). (iii) in
determining whether it is CS or AC, the
intention of the parties must be looked into.
If they intended that the transfer of rights to
the third person does not become effective
without the debtor's consent, it is a case of
CS; otherwise, it is simply AC.
E. CONTRACTS
46. Option vs. Right of First Refusal: (i) in
option, there is already a definite offer, what
is lacking is acceptance of the offer; in RFR,
only the object is definite while the price
and other terms are still to be fixed in the
future; (ii) in option, the period for the
exercise of the privilege is always a definite
period; while in RFR, the period may either
be definite or indefinite; and (iii) in case of
breach of contract of option, the remedy is to
recover damages; in case of violation of
RFR, the contract in violation of such right
can be rescinded if the third party acted in
bad faith.
47. Annulment of voidable contract
requisites on the ground of fraud: The
requisites for annulment of contract on the
ground of FRAUD: (1) it must have been
employed by one contracting party upon the
other: (2) it must have induced the other
party to enter into the contract; (3) it must
have been serious; and (4) it must have
resulted in damage and injury to the party
seeking annulment.
PROBLEM NO. 15: POOLE-BLUNDEN V.
UNION BANK (2017) (J. LEONEN CASE)
48. Statute of Frauds: A contract in violation
of the Statute of Frauds is not void, but
merely unenforceable. However, the defense
of the Statute of Frauds applies only to
executory contracts and not to those which
have been executed either fully or partially.
PROBLEM NO. 16: HEIRS OF SOLIDAD
ALIDO V. CAMPANO (2019)
Alido owned a parcel of land. In 1978,
Campano was able to take possession of the
land and the owner's duplicate of OCT No.
F-16558, and paid its realty taxes. Allegedly,
Alido had sold the property to her. In 1996,
Alido died. His heirs executed a deed of
extrajudicial settlement over the property
and demanded from Campano the surrender
of the title. The heirs filed an action before
the RTC for the surrender of the title. The
RTC ruled that the purported sale between
Alido and Campano was void because it was
an oral sale. On appeal, the CA ruled that an
oral sale of real property is not void, but
only unenforceable under the Statute of
Frauds. Nevertheless, it elucidated that it
was only applicable to executory contracts
and not to partially or completely executed
contracts. The CA highlighted that the oral
sale of the subject parcel of land between
respondent and Alido had been executed.
The appellate court noted that respondent
possessed the owner's duplicate of title, she
had paid the realty taxes, and was in
peaceful possession of the land since 1978.
O: Is the CA correct?
ANSWER: Yes, the CA is correct. While a
contract of sale over a parcel of land is
required to be in writing under the Statute of
Frauds, failure to comply with said
requirement does not render the contract
void but merely unenforceable. In this case,
however, the oral contract of sale is both
valid and enforceable because the defense of
Statute of Frauds may no longer be invoked
because there was already performance of
the contract. It is the rule that the defense of
Statute of Frauds applies only to executory
contracts and not to those which have been
executed either fully or partially.
49. Two Kinds of Interest: There are two
types of interest - monetary interest and
compensatory interest. Interest as a
compensation fixed by the parties for the use
or forbearance of money is referred to as
monetary interest; while interest that may be
imposed by law or by courts as penalty for
damages is referred to as compensatory
interest. Right to interest therefore arises
only by virtue of a contract or by virtue.
50. Monetary Interest: The interest referred
to in Article 1956 of the Civil Code is
monetary interest. Monetary interest under
Article 1956 serves as compensation fixed
by the parties for the use or forbearance of
money. As can be gleaned from the
foregoing provision, payment of monetary
interest is allowed only if (i) there was an
express stipulation for the payment of
interest; and (ii) the agreement for the
payment of interest was reduced in writing.
The concurrence of the two conditions is
required for the payment of monetary
interest. If both conditions are satisfied, the
payment of monetary interest becomes a
case of civil obligation which can be
compelled in court. On the other hand, if the
requisites are not complied, the payment of
interest is not civil obligation but only a case
of natural obligation.
51. Compensatory Interest: On the other
hand, compensatory interest (i.e., interest
awarded as damages under Articles 2209 to
2213 of the Civil Code) is that which is
"allowed in actions for breach of contract or
tort for the unlawful detention of money
already due." As the governing provisions
indicate, compensatory interest may be
imposed by law or by the courts as penalty
or indemnity for damages. The obligation to
pay compensatory interest need not be
stipulated in writing because from the
moment a debtor incurs in delay in the
payment of a sum of money, the creditor is
entitled to the payment of interest as
indemnity for damages arising out of that
delay (compensatory). Article 2209 of the
Civil Code provides that: "If the
obligation consists in the payment of sum of
money, and the debtor incurs in delay, the
indemnity for damages, there being no
stipulation to the contrary, shall be the
payment of the interest agreed upon, and in
the absence of stipulation, the legal interest,
which is six percent (6%) per annum."
PROBLEM NO. 17: ABELLA V. ABELLA
(2015) (J. LEONEN CASE)
There is written contract w/c stipulated that
with interest, but no rate specified.
Q1: is the CA correct?
ANSWER: No. Jurisprudence is clear about
the applicable interest rate if a written
instrument fails to specify a rate. According
to jurisprudence, if the parties failed to
specify the rate, what will apply is the legal
rate. In loan or forbearance of money, the
applicable legal rate is 12% per annum prior
to July 1, 2013 and 6% per annum beginning
July 1, 2013.
Q2: Is the Creditor correct?
ANSWER: No, because Article 1956 of the
Civil Code, read in light of established
jurisprudence, prevents the application of
any interest rate other than that
specifically provided for by the parties in
their loan document or, in lieu of it, the
legal rate. Here, as the contracting parties
failed to make a specific stipulation, the
legal rate must apply.
PROBLEM NO. 18: HUN HYUNG PARK
V.EUNG WON CHOI (2019)
On June 28, 1999, Park, who was engaged in
the business of lending money,
extended a loan to Choi in the amount of
P1,875,000.00. As payment for the loan,
Choi issued PB Check No. 0077133 in the
same amount dated August 28, 1999 in
favor of Park, On October 5, 1999, Park
attempted to deposit the check to his bank
account but the same was returned to him
dishonored for having been drawn against
a closed account. The agreement did not
provide for the payment of interest.

53. As to legal rate for compensatory
interest for loan or forbearance of money,
the rate is still 12% p.a., for interest accruing
until June 30, 2013; but beginning July 1,
2013, the rate of interest is reduced to 6%
p.a, pursuant to a BSP circular.
PROBLEM NO. 19: PNB V. REYES (2016)
J.LEONEN CASE)
Lilia obtained a loan from PB, without the
consent of her husband, Venancio, She also
mortgaged three parcels of land belonging to
the conjugal partnership, also without the
consent of her husband. When the loan was
not paid, PB foreclosed the mortgage.
Venancion questioned the validity of the
mortgage on the ground that he did not give
his consent to the same. The bank argued,
however, that since the loan redounded to
the benefit of the family, the validity of the
mortgage should be upheld.
O: Is the Bank correct?
ANSWER: No, the fact that the debt
contracted by the wife without the consent
of the husband redounded to benefit of the
family will only make such debt chargeable
to the conjugal partnership. With respect to
the mortgage of the conjugal properties
without the consent of the husband, the same
is void. In order for the encumbrance of a
conjugal property to be valid, it must be
made with the consent of both spouses or
there must be court authorization if the
consent of one cannot be obtained;
otherwise, the encumbrance is void even if
the debt had redounded to the benefit of the
family.
PROBLEM NO. 20: VILLALUZ V. LAND
BANK (2017)
Mother requested her daughter to borrow her
land and mortgage it as collateral for the
mothers loan in behalf of their cooperative.
June 21, 1996 agreed with the bank, but the
proceed was released June 25, 1996.
Contract of loan?
Q1: is the trial court correct that the contract
of loan was perfected on June 21, 1996, at
the same time with the contract of mortgage
was executed?
ANSWER: The trial court is not correct
when it ruled that the contract of loan was
perfected on June 21, 1996 because a
contract of loan is a real contract which can
only be perfected upon the delivery of the
object of the contract. In the problem, the
contract of loan was perfected only on June
25, 1996 when the proceeds of the loan were
released to the borrower. What may be
considered perfected on June 21, 1996 is the
accepted promise to deliver something by
way of simple loan, which is a consensual
contract, but not the contract of loan itself.
On defective contracts: A. Rescissible: (1) it
is valid, enforceable, therefore obligatory
between the parties until it is rescinded by
the court; (ii) the defect cannot be used as
defense without judgment of rescission,
hence, cannot be subjected to collateral
attack; (iii) the only way to raise the defect
is to file an action for rescission; (iv) In
Article 1381, paragraphs (1) and (2), the
contract must not involve disposition or
encumbrance of real property of the ward or
absentee without judicial authorization;
otherwise, the contract is unenforceable
under Article 1403 (1) of the Civil Code; (v)
In Article 1381 (3), the contract in fraud of
creditor must not be absolutely simulated;
otherwise, the contract is void and
inexistent.
C. Unenforceable: it is valid but cannot be
enforced in court unless the defect is
ratified, hence, it is not obligatory; (i)
however, the defect may be ratified and if
ratified, the contract becomes obligatory:
(ili) the defect can only be raised as a matter
of defense, hence, the concept of
prescription does not apply: (iv) In Article
1403 (1), if the contract is not authorized by
the principal it is generally unenforceable
and the defect is subject to ratification; (v)
however, if the contract entered into by the
agent without authority of the principal is
the sale of parcel of land of the principal, the
contract is void applying Article 1874 of the
Civil Code which requires the authority of
the agent to be in writing, otherwise the sale
is void.
D. Void and Inexistent: (1) the contract is
invalid from the very beginning, hence, not
obligatory; (ii) the defect is permanent and
not susceptible of ratification; (iii) the defect
can be raised as a matter of defense only if
the contract is still purely executory; but if
the contract is already performed and a
contracting party wants to recover what was
delivered, an action to declare the contract
void may be filed, with a prayer for
recovery; (iv) the defense or the action is
imprescriptible, but the recovery may be
barred by laches; (v) ordinarily, the party to
a void contract is entitled to recovery except
when the principle of in par delicto is
applied or when he is guilty of laches; (vi) in
pari delicto rule is applicable only when the
contract is void because it is illegal (the
object, cause or purpose is contrary to law,
morals, good customs, public order or public
policy) and both parties are equally at fault;
(vii) if the rule of in pari delicto is
applicable, the court cannot aid any of the
parties and will simply leave them where
they are.
E. TORTS (QUASI-DELICT)
55. Requisites for Employer'» Vicarious
Liability Under Article 2180 of the Civil
Code: In order for the vicarious liability of
the employer to attach, Article 2180 requires
proof of two things: (i) existence of
employer-employee relationship; and (ii)
that the employee acted within the scope of
his or her assigned tasks. It is only after
proving such requisites that the employer
may find it necessary to interpose the
defense of due diligence in the selection and
supervision of the employee.
56. Registered-owner rule: Under the
registered owner rule, the registered owner
of
a motor vehicle is liable for death or injuries
caused by the operation of the vehicle. The
principle upon which this doctrine is based
is that in dealing with registered motor
vehicles, the public has the right to assume
or presume that the registered owner is the
actual owner thereof, for it would be
difficult for the public to enforce the actions
that they may have for injuries caused to
them by the vehicles being
negligently operated if the public should be
required to prove who the actual owner is.
The registered-owner rule only requires the
plaintiff to prove that the defendant is the
registered owner of the vehicle.
PROBLEM NO. 21: CARAVAN TRAVEL
& TOURS INTERNATIONAL, INC. V.
ABEJAR (2016) J. LEONEN CASE)
Ql: is Caravan's contention that Abejar has
no personality to file the action meritorious?
ANSWER: No, because Abejar exercised
substitute parental authority over Mary when
the latter was still below 18. Thus, she
suffered actual loss and is, therefore, a real
party in interest in thin case. The fact that
Mary was already emancipated when the
accident occurred does not preclude Abejar
from recovering damages for the death of
Mary because, in principle, anybody who
suffers any damage from culpa aquiliana,
whether a relative or not of the victim, may
recover damages from the person
responsible therefor.
Q3: Is Abejar entitled to recover damages
considering that under Article 2206(3), in
case of death arising from crime or quasi-
delict, only the spouse, legitimate and
illegitimate descendants, and ascendants of
the decease, may recover moral damages?
********* ANSWER: Yes, because for the
purpose of recovering moral damages under
Article 2206(3), persons exercising
substitute parental authority are to be
considered "ascendants." They are intended
to stand in place of a child's parents in order
to ensure the well-being and welfare of a
child. Given the policy underlying Articles
216 and 220 of the Family Code as well as
the purposes for awarding moral damages, a
person exercising substitute parental
authority is rightly considered an ascendant
of the deceased, within the meaning of
Article 2206(3) of the Civil Code. Hence,
Abejar is entitled to moral damages.
57. Articles 1170, 20 and 2176 on
negligence: (i) In Article 1170, the
negligence is called "culpa contractual. In
culpa contractual, the source of obligation is
contract and not the negligence. In culpa
contractual, the negligence occurred only
duringithe performance of the obligation.
(if) In Article 20, there is no contract
between the parties but the negligence is
contrary to law or a breach of an existing
provision of law. (iii) In Article 2176, the
negligence is called "culpa aquiliana or
culpa extra-contractual. In Article 2176, as a
rule there must be no contract between the
parties and the negligence is not a breach of
an existing provision of law. (iv) However,
the existence of a contract between the
parties may not prevent recovery under
culpa aquiliana or quasi-delict when the
reason for the breach of the contract is
negligence itself (or "when the act that
breaks the contract is also a tort”).
PROBLEM NO. 23:
P rode on a taxi, driven by D and owned by
O. Because of the recklessness of D, the taxi
collided with another vehicle resulting to
serious injuries to P. Discuss the possible
sources of obligations, the person/s liable,
nature of liability and possible defenses.
ANSWER:
1) Breach of contract is one of the sources
of obligation here. For breach of
contract, only O is liable to P because D
is not a party to the contract of carriage.
Hence, under contract, it is not possible
for the driver and the employer to be
solidarily liable because only the
employer is liable. If the cause of action
is breach of contract, the defense that the
employer exercised due diligence in the
selection and supervision of his
employee is not applicable.
2) Delict is another source of obligation.
Under delict, the driver (D) is primarily
liable while the employer (O) is
subsidiarily liable. Hence, under delict, it
is not possible for the driver and the
employer to be solidarily liable because
only one of them is liable. The
 subsidiary liability of the employer will
attach only if the employee is convicted
and turns out to be insolvent. If the cause
of action is delict, the defense that the
employer exercised diligence in the
supervision and selection of employee is
not a defense.
C. DAMAGES
58. Moral damages in case of death in delict
or quasi-delict: (a) Rule: In case of death
caused by delict or quasi-delict, moral
damages may be recovered by only the
following: spouse, legitimate and
illegitimate descendants and ascendants of
the deceased [Art, 2206(3), Civil Code]. (b)
brothers and sisters and other collateral
relatives are not allowed to recover (Sulpicio
Lines, Inc. v. Curso (2010)]. (c) However,
given the policy underlying Articles 216 and
220 of the Family Code as well as the
purposes for awarding moral damages, a
person exercising substitute parental
authority is rightly considered an ascendant
of the deceased, within the meaning of
Article 2206(3) of the Civil Code. [Caravan
Travel & Tours International, Inc. v. Abejar
(2016)]
PROBLEM NO. 24:
Q: What are the recoverable damages when
death occurs as a result of crime or quasi-
delict?
ANSWER: The following may be
recovered:
1) indemnity for the death of the victim - in
the amount of P50,000 under existing
jurisprudence, without need of any
evidence or proof of damages;
2) indemnity for loss of earning capacity,
which is recoverable in addition to
indemnity for the death of the victim in
the amount of P50,000;
3) moral damages, which can be recovered
in addition to indemnity for the death of
the victim in the amount of P50,000 and
loss of earning capacity;
4) exemplary damages – when the crime is
attended by one or more aggravating
circumstances, the same to be considered
separate from fines;
5) attorney's fees and expenses of litigation
- the actual amount thereof, (but only
when a separate civil action to recover
civil liability has been filed or when
exemplary damages are awarded); and
6) interest in proper cases. [Torreon v.
Aparra (2017)]
59. Loss of earning capacity: Testimonial
evidence is allowed to prove loss of earning
capacity. The testimony of the deceased's
widow as basis to estimate his earning
capacity is allowed by the Court. The Court
also accepted testimony from co-workers of
the deceased to establish his income before
his death. With more reason, the employer
should be deemed competent to testify on
the compensation that the deceased was
receiving. [Torreon v. Aparra (201 7)]
PROBLEM NO. 25: TORREON V.
APARRA (2017) (J. LEONEN CASE)
At the time of the victim's death, he was 48
years old and was earning P1 5,000.00
monthly. Compute the loss of earning
capacity,
ANSWER:
First, subtract 48 from 80, which gives 32
years as answer.
Next, multiply 32 by 2/3, which results into
21.33 which is the life expectancy.
Then, determine his annual gross income by
multiplying the monthly income of P15,000
by 12. Hence, the annual gross income is
P180,000.00.
After getting the annual gross income, get
50% of it. Here it is P90,000.
To arrive at the loss of earning capacity,
multiply P90,000 by 21.33. Hence, the loss
of earning capacity is P1,919,700.
PROBLEM NO. 25: TORREON V.
APARRA (2017) (J. LEONEN CASE)
Simolde operated a truck. The official truck
driver was Caballes. However, Caballes
allowed Aparra, the truck's mechanic to
drive the vehicle. Due to Aparra's
negligence, the truck fell into the wharf
killing several passengers and injuring
others, Vivian and Abella filed criminal and
civil action for damages against Simolde,
Caballes and Aparra for the death of her
husband, Rodolfo, who was one of the
passengers of the truck. The trial court found
the defendants solidarily liable for the
commission of quasi-delict, which decision
was affirmed by the CA. However, the CA
deleted the award of damages for Rodolfo's
loss of earning capacity. The CA concluded
that documentary evidence should be
presented to substantiate a claim for loss of
earning capacity. In this case, it was the
employer who testified on the earning
capacity of Rodolfo.
O: Is the CA correct?
ANSWER: No. In civil cases, Vivian is only
required to establish her claim by a
preponderance of evidence. Allowing
testimonial evidence to prove loss of earning
capacity is consistent with the nature of civil
actions. The Court has previously accepted a
competent witness' testimony to determine
the deceased's income. In one case, the
Court used the testimony of the deceased's
widow as basis to estimate his earning
capacity. In another case, the Court also
accepted testimony from co-workers of the
deceased to establish his income before his
death. If co-workers were deemed
competent to testify on the compensation
that the deceased was receiving, all the more
should an employer be allowed to testify on
the amount she was paying her deceased
employee.
61. Disrespect to the dead: Under Article
309 of the Civil Code, any person who
shows disrespect to the dead, or wrongfully
interferes with a funeral shall be liable to the
family of the deceased for moral damages.
PROBLEM NO. 27: TABUADA V.
TABUADA (2018)
Loreta Tabuada died in 1990. She left a
parcel of land registered in her name. She
was survived by her son and only heir,
Simeon Tabuada. In 1994, Eleonor Tabuada,
the sister-in-law of Simeon, misrepresented
herself as the deceased Loreta Tabuada and
mortgaged the property without the
knowledge of Simeon and the latter's wife,
Sofia Tabuada. The mortgage was in favor
of the Spouses Certeza. In 1997, Simeon
died, leaving Sofia and their children as his
heirs. Äfter the death of her husband, Sofia
learned of what Eleanor did. Hence, she
filed an action against Eleanor and the
Spouses Certeza for the nullification of the
mortgage. The trial court declared the
mortgage void on the ground that the
mortgagor was not the absolute owner of the
property. The TC also ruled that moral
damages were proper under Article 309 of
the Civil Code based on the showing of
disrespect to the dead.
O: is the award of moral damages under
Article 309 of the Civil Code proper?
ANSWER: No, the RTC committed an error
in awarding moral damages based on Article
309 of the Civil Code. The Civil Code
provision under Article 309 on showing
disrespect to the dead” as a ground for the
family of the deceased to recover moral and
material damages, being under the title of
"Funerals", obviously envisions the
commission of the disrespect during the
period of mourning over the demise of the
deceased or on the occasion of the funeral of
the mortal remains of the deceased. Neither
was true herein. Hence, the act of Eleanor
Tabuada of fraudulently representing the late
Loreta Tabuada did not amount to disrespect
to the dead as basis for the recovery of moral
damages.
63. In an action for breach of contract of
carriage, moral damages may be awarded
only in case (1) an accident results in the
death of a passenger; or (2) the carrier is
guilty of fraud or bad faith, pursuant to
Article 1764, in relation to Article 2206(3)
of
the Civil Code, and Article 2220 thereof.
[Darines v. Quinones (2017)]