BAR QUESTIONS - ObliCon

A. Mr. ZY lost P100,000 in a card game called Russian

poker, but he had no more cash to pay in full the winner at

the time the session ended. He promised to pay PX, the

winner, two weeks thereafter. But he failed to do so despite

the lapse of two months, so PX filed in court a suit to

collect the amount of P50,000 that he won but remained

unpaid. Will the collection suit against ZY prosper? Could

Mrs. ZY file in turn a suit against PX to recover the

P100,000 that her husband lost? Reason. (5%)

A. 1. The suit by PX to collect the balance of what he won

from ZY will not prosper. Under Article 2014 of the Civil

Code, no action can be maintained by the winner for the

collection of what he has won in a game of chance.

Although poker may depend in part on ability, it is

fundamentally a game of chance.

2) If the money paid by ZY to PX was conjugal or

community property, the wife of ZY could sue to recover it

because Article 117(7) of the Family Code provides that

losses in gambling or betting are borne exclusively by the

loser-spouse. Hence, conjugal or community funds may not

be used to pay for such losses. If the money were exclusive property of ZY, his wife may also sue to
recover it under

Article 2016 of the Civil Code if she and the family needed
the money for support.

Pedro promised to give his grandson a car if the latter will

pass the bar examinations. When his grandson passed the

said examinations, Pedro refused to give the car on the

ground that the condition was a purely potestative one. Is

he correct or not? (2%)

No, he is not correct. First of all, the condition is not purely

potestative, because it does not depend on the sole will of

one of the parties. Secondly, even if it were, it would be

valid because it depends on the sole will of the creditor (the donee) and not of the debtor (the donor).

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Original

A. Mr. ZY lost P100,000 in a card game called Russian

poker, but he had no more cash to pay in full the winner at

the time the session ended. He promised to pay PX, the

winner, two weeks thereafter. But he failed to do so despite

the lapse of two months, so PX filed in court a suit to

collect the amount of P50,000 that he won but remained

unpaid. Will the collection suit against ZY prosper? Could

Mrs. ZY file in turn a suit against PX to recover the

P100,000 that her husband lost? Reason. (5%)

A. 1. The suit by PX to collect the balance of what he won

from ZY will not prosper. Under Article 2014 of the Civil

Code, no action can be maintained by the winner for the

collection of what he has won in a game of chance.

Although poker may depend in part on ability, it is

fundamentally a game of chance.

2) If the money paid by ZY to PX was conjugal or

community property, the wife of ZY could sue to recover it

because Article 117(7) of the Family Code provides that

losses in gambling or betting are borne exclusively by the

loser-spouse. Hence, conjugal or community funds may not

be used to pay for such losses. If the money were exclusive property of ZY, his wife may also sue to
recover it under

Article 2016 of the Civil Code if she and the family needed

the money for support.

Pedro promised to give his grandson a car if the latter will

pass the bar examinations. When his grandson passed the

said examinations, Pedro refused to give the car on the

ground that the condition was a purely potestative one. Is

he correct or not? (2%)

No, he is not correct. First of all, the condition is not purely

potestative, because it does not depend on the sole will of

one of the parties. Secondly, even if it were, it would be

valid because it depends on the sole will of the creditor (the donee) and not of the debtor (the donor).

Are the following obligations valid, why, and if they are

valid, when is the obligation demandable in each case?

a) If the debtor promises to pay as soon as he has the

means to pay;

b) If the debtor promises to pay when he likes;

c) If the debtor promises to pay when he becomes a

lawyer;

d) If the debtor promises to pay if his son, who is sick

with cancer, does not die within one year. 5%

(a) The obligation is valid. It is an obligation subject

to an indefinite period because the debtor binds himself to

pay when his means permit him to do so (Article 1180,

NCC). When the creditor knows that the debtor already has

the means to pay, he must file an action in court to fix the

period, and when the definite period as set by the court

arrives, the obligation to pay becomes demandable 9Article 1197, NCC).

(b) The obligation "to pay when he likes" is a

suspensive condition the fulfillment of which is subject to

the sole will of the debtor and, therefore the conditional

obligation is void. (Article 1182, NCC).

(c) The obligation is valid. It is subject to a suspensive

condition, i.e. the future and uncertain event of his

becoming a lawyer. The performance of this obligation does not depend solely on the will of the debtor
but also on other factors outside the debtor's control.
(d) The obligation is valid. The death of the son of

cancer within one year is made a negative suspensive

condition to his making the payment. The obligation is

demandable if the son does not die within one year (Article

1185, NCC).

In two separate documents signed by him, Juan Valentino

"obligated" himself each to Maria and to Perla, thus -

'To Maria, my true love, I obligate myself to give you my

one and only horse when I feel like It."

- and -

'To Perla, my true sweetheart, I obligate myself to pay you

the P500.00 I owe you when I feel like it."

Months passed but Juan never bothered to make good his

promises. Maria and Perla came to consult you on whether

or not they could recover on the basis of the foregoing

settings. What would your legal advice be?

I would advise Maria not to bother running after Juan for

the latter to make good his promise. [This is because a

promise is not an actionable wrong that allows a party to

recover especially when she has not suffered damages

resulting from such promise. A promise does not create an

obligation on the part of Juan because it is not something

which arises from a contract, law, quasi-contracts or quasidelicts (Art, 1157)]. Under Art. 1182, Juan's
promise to

Maria is void because a conditional obligation depends upon the sole will of the obligor.

As regards Perla, the document is an express

acknowledgment of a debt, and the promise to pay what he

owes her when he feels like it is equivalent to a promise to

pay when his means permits him to do so, and is deemed to

be one with an indefinite period under Art. 1180. Hence the

amount is recoverable after Perla asks the court to set the

period as provided by Art. 1197, par. 2.

In 1997, Manuel bound himself to sell Eva a house and lot

which is being rented by another person, if Eva passes the

1998 bar examinations. Luckily for Eva, she passed said

examinations.

(a) Suppose Manuel had sold the same house and lot to

another before Eva passed the 1998 bar examinations, is

such sale valid? Why? (2%)

(b) Assuming that it is Eva who is entitled to buy said

house and lot, is she entitled to the rentals collected by

Manuel before she passed the 1998 bar examinations? Why?

(3%)

(a) Yes, the sale to the other person is valid as a sale with a
resolutory condition because what operates as a suspensive condition for Eva operates a resolutory
condition for the buyer.

FIRST ALTERNATIVE ANS WER:

Yes, the sale to the other person is valid. However, the

buyer acquired the property subject to a resolutorycondition of Eva passing the 1998 Bar Examinations.

Hence, upon Eva's passing the Bar, the rights of the other

buyer terminated and Eva acquired ownership of the

property

(b) No, she is not entitled to the rentals collected by Manuel because at the time they accrued and were
collected, Eva was not yet the owner of the property.

FIRST ALTERNATIVE ANSWER:

Assuming that Eva is the one entitled to buy the house and

lot, she is not entitled to the rentals collected by Manuel

before she passed the bar examinations. Whether it is a

contract of sale or a contract to sell, reciprocal prestations

are deemed imposed A for the seller to deliver the object

sold and for the buyer to pay the price. Before the

happening of the condition, the fruits of the thing and the

interests on the money are deemed to have been mutually

compensated under Article 1187.

The sugar cane planters of Batangas entered into a longterm milling contract with the Central Azucarera
de Don Pedro Inc. Ten years later, the Central assigned its rights to the said milling contract to a
Taiwanese group which would take over the operations of the sugar mill. The planters filed an action to
annul the said assignment on the ground that the Taiwanese group was not registered with the Board of
Investments. Will the action prosper or not? Explain briefly. (5%)

(Note: The question presupposes knowledge and requires the application of the provisions of the
Omnibus Investment Code, which properly belongs to Commercial law)

The action will prosper not on the ground invoked but on

the ground that the farmers have not given their consent to

the assignment. The milling contract imposes reciprocal

obligations on the parties. The sugar central has the

obligation to mill the sugar cane of the farmers while the

latter have the obligation to deliver their sugar cane to the

sugar central. As to the obligation to mill the sugar cane, the sugar central is a debtor of the farmers. In
assigning its

rights under the contract, the sugar central will also transfer

to the Taiwanese its obligation to mill the sugar cane of the

farmers. This will amount to a novation of the contract by

substituting the debtor with a third party. Under Article

1293 of the Civil Code, such substitution cannot take effect

without the consent of the creditor. The formers, who are

creditors as far as the obligation to mill their sugar cane is concerned, may annul such assignment for
not having given

their consent thereto.

ALTERNATIVE ANSWER:

The assignment is valid because there is absolute freedom

to transfer the credit and the creditor need not get the
consent of the debtor. He only needs to notify him.

TX filed a suit for ejectment against BD for non-payment

of condominium rentals amounting to P150,000. During the

pendency of the case, BD offered and TX accepted the full

amount due as rentals from BD, who then filed a motion to

dismiss the ejectment suit on the ground that the action is

already extinguished. Is BD's contention correct? Why or

why not? Reason. (5%)

BD's contention is not correct. TX can still maintain the

suit for ejectment. The acceptance by the lessor of the

payment by the lessee of the rentals in arrears even during

the pendency of the ejectment case does not constitute a

waiver or abandonment of the ejectment case. (Spouses

Clutario v. CA, 216 SCRA 341 [1992]).

Stockton is a stockholder of Core Corp. He desires to sell

his shares in Core Corp. In view of a court suit that Core

Corp. has filed against him for damages in the amount of P

10 million, plus attorney's fees of P 1 million, as a result of

statements published by Stockton which are allegedly

defamatory because it was calculated to injure and damage

the corporation's reputation and goodwill.

The articles of incorporation of Core Corp. provide for a

right of first refusal in favor of the corporation.

Accordingly, Stockton gave written notice to the

corporation of his offer to sell his shares of P 10 million.

The response of Core corp. was an acceptance of the offer

in the exercise of its rights of first refusal, offering for the

purpose payment in form of compensation or set-off

against the amount of damages it is claiming against him,

exclusive of the claim for attorney's fees. Stockton rejected

the offer of the corporation, arguing that compensation

between the value of the shares and the amount of damages demanded by the corporation cannot
legally take effect. Is Stockton correct? Give reason for your answer. (5%)

SUGGESTED ANSWERS:

Stockton is correct. There is no right of compensation

between his price of P10 million and Core Corp.'s

unliquidated claim for damages. In order that compensation

may be proper, the two debts must be liquidated and

demandable. The case for the P 10million damages being

still pending in court, the corporation has as yet no claim

which is due and demandable against Stockton.

ANOTHER MAIN ANSWER:

The right of first refusal was not perfected as a right for the

reason that there was a conditional acceptance equivalent to a counter-offer consisting in the amount of
damages as

being credited on the purchase price. Therefore,

compensation did not result since there was no valid right

of first refusal (Art. 1475 & 1319, NCC)

Define compensation as a mode of extinguishing an

obligation, and distinguish it from payment. [2%]

COMPENSATION is a mode of extinguishing to the

concurrent amount, the obligations of those persons who in

their own right are reciprocally debtors and creditors of

each other (Tolentino, 1991 ed., p. 365, citing 2 Castan 560

and Francia vs. IAC. 162 SCRA 753). It involves the

simultaneous balancing of two obligations in order to

extinguish them to the extent in which the amount of one is

covered by that of the other. (De Leon, 1992 ed., p. 221,

citing 8 Manresa 401).

PAYMENT means not only delivery of money but also

performance of an obligation (Article 1232, Civil Code). In

payment, capacity to dispose of the thing paid and capacity

to receive payment are required for debtor and creditor,

respectively: in compensation, such capacity is not

necessary, because the compensation operates by law and

not by the act of the parties. In payment, the performance

must be complete; while in compensation there may be

partial extinguishment of an obligation (Tolentino, supra)

X, who has a savings deposit with Y Bank in the sum of

P1,000,000.00 incurs a loan obligation with the said Bank in

the sum of P800.000.00 which has become due. When X

tries to withdraw his deposit, Y Bank allows only

P200.000.00 to be withdrawn, less service charges, claiming

that compensation has extinguished its obligation under the

savings account to the concurrent amount of X's debt. X

contends that compensation is improper when one of the

debts, as here, arises from a contract of deposit. Assuming

that the promissory note signed by X to evidence the loan

does not provide for compensation between said loan and

his savings deposit, who is correct? [3%]

Y bank is correct. An. 1287, Civil Code, does not apply. All

the requisites of Art. 1279, Civil Code are present. In the

case of Gullas vs. PNB [62 Phil. 519), the Supreme Court

held: "The Civil Code contains provisions regarding

compensation (set off) and deposit. These portions of

Philippine law provide that compensation shall take place

when two persons are reciprocally creditor and debtor of

each other. In this connection, it has been held that the

relation existing between a depositor and a bank is that of

creditor and debtor, x x x As a general rule, a bank has a

right of set off of the deposits in its hands for the payment

of any indebtedness to it on the part of a depositor." Hence, compensation took place between the
mutual obligations of X and Y bank.

Arturo borrowed P500,000.00 from his father. After he had

paid P300,000.00, his father died. When the administrator

of his father's estate requested payment of the balance of

P200,000.00. Arturo replied that the same had beenArturo borrowed P500,000.00 from his father. After
he had

paid P300,000.00, his father died. When the administrator

of his father's estate requested payment of the balance of

P200,000.00. Arturo replied that the same had been condoned by his father as evidenced by a notation
at the

back of his check payment for the P300,000.00 reading: "In

full payment of the loan". Will this be a valid defense in an

action for collection? (3%)

SUGGESTED ANSWER:

It depends. If the notation "in full payment of the loan" was

written by Arturo's father, there was an implied

condonation of the balance that discharges the obligation.

In such case, the notation is an act of the father from which

condonation may be inferred. The condonation being

implied, it need not comply with the formalities of a

donation to be effective. The defense of full payment will,

therefore, be valid.

When, however, the notation was written by Arturo himself.

It merely proves his intention in making that payment but in

no way does it bind his father (Yam v. CA, G.R No. 104726.

11 February 1999). In such case, the notation was not the act
of his father from which condonation may be inferred.

There being no condonation at all the defense of full

payment will not be valid.

ALTERNATIVE ANSWER:

If the notation was written by Arturo's father, it amounted

to an express condonation of the balance which must

comply with the formalities of a donation to be valid under

the 2nd paragraph of Article 1270 of the New Civil Code.

Since the amount of the balance is more than 5,000 pesos,

the acceptance by Arturo of the condonation must also be

in writing under Article 748. There being no acceptance in

writing by Arturo, the condonation is void and the

obligation to pay the balance subsists. The defense of full

payment is, therefore, not valid. In case the notation was

not written by Arturo's father, the answer is the same as the

answers above.

On July 1, 1998, Brian leased an office space in a building

for a period of five years at a rental rate of P1,000.00 a

month. The contract of lease contained the proviso that "in

case of inflation or devaluation of the Philippine peso, the

monthly rental will automatically be increased or decreased depending on the devaluation or inflation of
the peso to the dollar." Starting March 1, 2001, the lessor increased the rental to P2,000 a month, on
the ground of inflation proven by the fact that the exchange rate of the Philippine peso to the dollar had
increased from P25.00=$1.00 to P50.00=$1.00. Brian refused to pay the increased rate and an action for
unlawful detainer was filed against him. Will the action prosper? Why? (5%)
The unlawful detainer action will not prosper. Extraordinary

inflation or deflation is defined as the sharp decrease in the

purchasing power of the peso. It does not necessarily refer

to the exchange rate of the peso to the dollar. Whether or

not there exists an extraordinary inflation or deflation is for

the courts to decide. There being no showing that the

purchasing power of the peso had been reduced

tremendously, there could be no inflation that would justify

the increase in the amount of rental to be paid. Hence,

Brian could refuse to pay the increased rate.