CHAPTER 4 - EXTINGUISHMENT OF OBLIGATION (ART. 1231 - 1304) Flashcards
1
Q
Obligations are extinguished by:
A
(1) By payment or performance
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt
(4) By the confusion or merger of the rights
(5) By compensation;
(6) By novation
2
Q
Requisites of Payment or Performance
A
There should always be a pre-existing obligation. Because when there is no obligation, there is no payment.
3
Q
When does a debt considered paid? What are the two requisites?
A
- Integrity of the prestation
- Identity of the prestation
4
Q
Pertains to the prestation be fulfilled completely
A
Integrity of the prestation
5
Q
What are the exceptions to the integrity of the prestation?
A
Substantial compliance in good faith (Art. 1234)
Waiver (Art. 1235)
Application of payment if the debts are equally onerous (Art. 1254)
6
Q
Pertains to the very prestation must be delivered or performed
A
Identity of the prestation
7
Q
Who has the burden of proving payment between debtor and creditor?
A
Debtor
8
Q
What should the creditor prove in terms of payment?
A
If there is an existing obligation
9
Q
P obliged himself to sell 1,000 bags of cement to G for certain price. P is willing to deliver 1,000 bags however, P can only deliver 950,000 bags of cement due to shortage of cement. What would be the effect of payment?
A
P may recover as though there had been a strict and complete fulfillment, less damages. (Art. 1234)
And creditor will enforce his right to damages for failure of P to deliver the remaining sacks of cement. (Cost of the remaining sacks of cement)
10
Q
When the obligation is fulfilled by the debtor even without following the agreement, and creditor accepts it without complaining. What will happen to the obligation?
A
The creditor is now estop to question. The obligation is now extinguished.
11
Q
Is there a required protest or rejection by the creditor if he is not satisfied with the fulfillment of the obligation?
A
No required protest or rejection, as long as the creditor acts that he is not satisfied with the performance, the obligation will not be deemed or extinguished.
12
Q
When there is a payment by a third person, the creditor is bound to accept payment by whom?
A
Debtor
Any person who has an interest in the obligation such as guarantor or co-debtor
13
Q
What is the exception when there is a payment by a third person and the creditor is bound to accept the payment
A
When there is a stipulation that he can make payment
14
Q
Effect of payment by a third person/ stranger with the debtor’s knowledge and consent
A
- Reimbursement
- Subrogation
15
Q
What is subrogation?
A
The payor steps into the shoes of the creditor. Third person can foreclose the accessory of what he had paid.
16
Q
Effect of payment by a third person/ stranger without the debtor’s knowledge and consent
A
Beneficial Reimbursement
17
Q
What is Beneficial Reimbursement?
A
If there is a payment without the knowledge and consent of the debtor, the third person can only recover only so far as the payment has been beneficial to the debtor. He is not entitled to subrogation
18
Q
Effect when payment by a third person does not want to be reimbursed
A
- The payment shall be deemed to be a donation which requires the debtor’s consent.
19
Q
Effect when payment by a third person does not want to be reimbursed is without the consent of the debtor?
A
If the debtor does not consent, the payment shall nevertheless be valid to the creditor who has accepted it. (Art. 1238)
In such a case, the third person can only recover insofar as the payment has been beneficial to the debtor; he is also not entitled to subrogation. (Arts. 1236 and 1237)
20
Q
Payment must be made by the debtor who must possess the following:
A
- The free disposal of the thing due
- The capacity to alienate the thing
21
Q
What is the free disposal of the thing due?
A
The property delivered should not be subject to any claim by, or encumbrances in favor of, third persons.
22
Q
What will happen to the payment if a property mortgaged is used as payment by the debtor to a creditor other than the mortgagee?
A
The payment will not be valid
The said property can be made to answer for the debt secured in case of foreclosure of the mortgage
23
Q
What is the capacity to alienate the thing?
A
The debtor must not be incapable of giving consent
24
Q
Effect on payment in obligations to give if debtor does not have free disposal and capacity to alienate
A
The payment shall not be valid except in cases provided by law (Art. 1239).
25
D owes C P50,000.00. On due date, C demands payment but D cannot pay. C, however, learns that D has a receivable from X so he files a court action against D and asks the court to order X not to make any payment to D. The court issues the order. What will happen to the payment if X pays D?
The payment will not be valid because there is an order of retention from the court.
Should the court favor C in its judgment in the case filed by C against D, X can be required to pay again, this time to C
26
To whom payment must be made?
Obligee or creditor (obligation has been constituted; incase there has been subrogation)
Creditor's successor in interest, such as his heirs or assigns
Any person authorized to receive it (e.i. bank, utility companies)
Authorized by the creditor
Authorized by law
27
Is the payment valid when it is given in the wrong person even if debtor acted in good faith?
As a general rule, No
28
Is the payment to a person who is incapacitated to administer his property is valid?
No, except when he has kept the thing delivered and if payment has been beneficial to him
29
P owes G 1M. When P will pay G, G was already insane. However, the money was never spent, and it is still in the possession of G. Is the obligation extinguished?
Yes, even when G became incapacitated to administer his property, but he has kept the thing delivered therefore the payment is valid. (Art. 1241, 1st parag)
30
Suppose that there was a fraud commit by E, E sold a ring to G worth 1,000,000 even if the ring was only 500,000. Does the payment remains to be valid?
Yes, the payment is still valid, but only up to an amount of 500,000 because this is only the amount which G was benefitted from P’s payment. (Art. 1241, 1st paragraph)
31
Who has the burden of proving that the payee benefited?
THE DEBTOR, because he was the one who made the payment. Debtor has the burden of proving that the payment benefitted the incapacitated payee.
32
Exception to the General Rule of payment to an unauthorized third person
a. If the payment has redounded to the benefit of the creditor. Such benefit is not presumed; hence, it must be proven by the debtor.
b. If the payment is made in good faith to a third person in possession of the credit.
33
Exception to the first exception of payment to an unauthorized third person
1) If after the payment, the third person acquires the creditor's rights (such as when the third person becomes the assignee of the instrument evidencing the credit).
2) If the creditor ratifies the payment to the third person
3) If by the creditor's conduct, the debtor has been led to believe that the third person had the authority to receive payment
34
M makes a note payable to bearer and delivers it to P. The note, however, is lost by P and is picked up by A. A goes to M to collect on the note. M pays A believing in good faith that A is the intended bearer. Is the obligation of M already extinguished?
Yes, M is released from liability
35
What is the effect of payment made to the creditor by the debtor after the debtor has been judicially ordered to retain the debt?
Thee payment will not be valid. The court order is known as garnishment
36
P owes G 1M. G also owes B 1M. B files action against G to get the 1M however, G claims insolvency but P has a debt to G amounting to 1M. Before P pays G 1M. P was asked by the court to retain the money in the meantime (the debt is garnished). During this time, the decision was pending. What is the effect of payment when P paid G?
The payment will not be valid
37
How must payment be made in Art. 1244?
1. There must be delivery of the thing or rendition of the service that was contemplated.
38
D is obliged to give C a Seiko wristwatch. D compelled C to accept a Rolex wristwatch that is more valuable than a Seiko. Is the payment valid?
No, D cannot compel C to accept a Rolex wristwatch even if the latter is more valuable than a Seiko. (Art. 1244)
39
D is obliged to paint C's house. D proceeds to substitute it with an obligation to paint C's car. Is the payment valid?
No, he cannot substitute it with an obligation to paint C's car.
40
D borrowed 10,000 from C. C gave D one year to pay provided D must not enter a casino before he has paid the debt. D ask C that the obligation not to enter a casino be substituted with not to drink and smoke during the term of the loan. Is the payment valid?
No
41
What are the exceptions in the general rule on how payment must be made in Art. 1244?
1. Facultative Obligation
2. Other agreement resulting in
a. Dation of payment (Art. 1245)
b. Novation (Art. 1291)
3. Waiver of creditor
42
What are the special forms of payment?
1. Dation in payment
2. Application of payment
3. Payment by cession
4. Tender of payment and consignation
43
Also known as dacion en pago, adjudicación en pago or datio in solutum
Dation in payment
44
It is a specjal form of payment where the ownership of property is transferred to his creditor to pay a debt in money. (Art. 1245)
Dation in payment
45
D owes C P10,000.00. On due date, D proposes to C to accept a ring in payment of D's debt of 10,000.00. C agrees to D's proposal and accepts the ring. Is D's obligation extinguished? And in what special form of payment?
Yes, D's monetary obligation is extinguished by dation in payment.
46
When the obligation consist in the delivery of a indeterminate or generic thing, whose quality and circumstances have not been stated, what would be the general rule?
Creditor cannot demand a thing of superior quality
Debtor cannot deliver a thing with inferior quality
47
Exceptions to the general rule when the obligation consist in the delivery of a indeterminate or generic thing, whose quality and circumstances have not been stated
When both of them insist to accept (creditor) and deliver (debtor) a thing
48
When quantity and kind is not yet determined in the contract. What would be the effect of the obligation?
The contract is void, there will be no obligation
49
General rule in payment of extrajudicial expense
The payment shall be for the account of the debtor
50
Exception in the general rule in payment of extrajudicial expense
If there is a stipulation that the creditor will pay for the extrajudicial expenses for the payment
51
General Rule when partial payments may be made
The creditor cannot be compelled to receive, and the debtor cannot be compelled to make, partial payments
52
Exceptions to the general rule when partial payments may be made
a. When there is an agreement to that effect. (Art. 1248)
However, the payment must still be made in full at some future time in accordance with the agreement, to extinguish the obligation
b. When the debt is in part liquidated (e.i, the amount is fixed)
and in part unliquidated or not yet fixed, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter. (Art. 1248)
The unliquidated part, once it is finally determined, must also be paid, to extinguish the obligation
53
Partial payment or performance is allowed when;
1. There is a stipulation for that effect
2. When debt is in part liquidated and in part unliquidated
54
P owes G 1M due today. What are the rules?
P cannot compel G to pay 500,000 G cannot compel P to only pay 500,000
55
P owes G 1M due today. P cannot compel G to pay 500,000 G cannot compel P to only pay 500,000. What are the exceptions to the general rule in partial payment?
Unless, there is an agreement
When the debt is in part liquidated (e.i, the amount is fixed)
56
P owes G 1M plus damages. The 1M is already known and liquidated and already due but the damages is not yet fixed. What would be the rule?
G can demand payment and P can pay the 1M
The amount of damages can be paid later on in order to extinguish the obligation.
57
The currency which if offered by the debtor in the right amount, the creditor must accept in payment of the debt in money.
Legal Tender
58
Coins in denomination of 1 peso, 5 peso and 10 pesos shall be legal tender in an amount not exceeding in what amount?
1,000
59
Coins in denomination of 1 cent, 5 cents, 10 cents, 25 cents, shall be legal tender in an amount not exceeding in what amount?
100
60
All bills are legal tender up to any amount of how many?
20,50,100,200,500,1,000
61
General rule in accepting legal tender
You cannot COMPEL the creditor to accept the payment that is not under the legal tender HOWEVER if the creditor ACCEPTS the payment then the payment is still valid.
62
Exceptions in the general rule in accepting legal tender
When the creditor accepts the payment then the payment is still valid.
63
In Art. 1249 payment may be either;
(1) Currency stipulated
(2) If not possible, Philippine Legal Tender
64
Can the creditor be compelled to accept the payment in mercantile documents?
NO, mercantile documents are not legal tender. Therefore creditor cannot be compelled to accept the payment.
65
P owes G 10,000 pesos, payable on Dec 25, 2023. P is paying a PN of 10,000. Can G refuse to accept?
Yes, because it is not a legal tender
66
P owes G 10,000 pesos, payable on Dec 25, 2023. P is paying a PN of 10,000. Can G accept?
Yes, it is the creditor’s option to accept the payment
67
P owes G 10,000 pesos, payable on Dec 25, 2023. P is paying a PN of 10,000. If she accepts, does this mean that payment has been effected?
Not yet, it shall produce the effect of the payment only if it had been cashed.
68
P owes G 10,000 pesos, payable on Dec 25, 2023. P is paying a PN of 10,000. Supposing, G consented that P’s payment is a PN payable 2 months later. Now, during the intervening period, may G bring an action to recover from P?
NO, the action derived from the original obligation shall be held abeyance – temporary suspension (Art. 1249 3rd parag)
69
D owes C P20,000.00 which is already due. May D compel C to accept 20,000 pieces of P1.00 coin in payment of his debt?
No. because P1.00 coins are legal tender only up to P1,000.00.
70
D owes C P20,000.00 which is already due. May D compel C to accept 1,000 pieces of P20.00 bill in payment of his debt?
Yes, because P20.00 bills are legal tender up to any amount.
71
Sharp sudden increase of money of credit or both without corresponding increase in business transactions. A drop in the value of money, resulting in the rise of the general price level
Inflation
72
Reduction in volume and circulation of the available money or credit, resulting in a decline of the general price level
Deflation
73
Requisites of extra-ordinary inflation and deflation
1. There is an official declaration of extra ordinary inflation or deflation from the Banko Sentral ng Pilipinas (BSP)
2. The obligation is contractual in nature
73
D borrowed 1,000,000 from C payable at the end of 10 years. Suppose that before maturity of the loan, an extraordinary inflation supervened causing the value of the debt to fall to P500,000.00 on the date of maturity, how much must D pay C at maturity?
2,000,000
74
D borrowed 1,000,000 from C payable at the end of 10 years. Suppose that before maturity of the loan, an extraordinary deflation supervened causing the value of the debt to rise to P4,000,000.00 on the maturity date of the loan, how much must D pay C at maturity?
250,000
75
Exception in extra-ordinary inflation and deflation
If there is an agreement between the parties that the amount will still be the same at the time the obligation was created, then the payment is still valid.
76
General Rule in terms of place where the obligation must be paid
When there is a stipulation or agreement
77
Place where the obligation must be paid if there is no stipulation and the thing is specific
Payment shall be made at the place where the thing was at the time of the perfection
78
Place where the obligation must be paid if there is no stipulation and the thing is generic
Delivery or payment must be made at domicile of the debtor
79
Place where the obligation must be paid if the debtor changes his domicile in bad faith or he has incurred the delay
The additional expenses shall be borne by him
80
Designation of the debt to which should be applied when payment is made by a debtor who owes several debts favor of the same creditor
Application of payment or imputation of payment
81
Requisites of application of payment
There must be one debtor and one creditor
There must be two or more debts
The debts must be of the same kind
All the debts must be due
The payment is not enough to extinguish all the debts
82
How application of payment is made?
a. The debtor who is given the preferential right to apply the payment, designates the debt to be paid.
b. If the debtor does not make the designation, the creditor makes it by indicating the debt being paid in his receipt. If the debtor accepts the receipt from the creditor, the debtor cannot complain unless there is a just cause of invalidating the contract.
C. If neither the debtor nor creditor makes the designation, or application cannot be inferred from the circumstances, payment shall be applied by operation of law
83
How payment shall be applied by operation of law
1) Payment shall be applied to the debt, among those due, which is the most onerous to the debtor
2) If the debts are of the same nature and burden, payment shall be applied to proportionately. (Arts. 1252, 1254)
[Note: In all instances, if the debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered. (Art. 1253). The rules on application of payment do not apply if there is only one debt which is payable in installments.]
84
D owes C the following distinct debts: P1,000.00 due on May 1, P1,000.00 due on May 5, P1,000.00 due on May 10, P1,000.00 due on May 15, and P1,000.00 due on May 20.
If today is May 16, and D has only P1,000.00 but wants to pay C. How will the application of payment be made?
D may apply the payment to any of the debts due on May 1, May 5, May 10 or May 15.
He cannot apply the payment to the debt due on May 20 because it is not yet due unless he is allowed by stipulation with C or the benefit of the period was given to him (D).
85
D owes C the following distinct debts: P1,000.00 due on May 1, P1,000.00 due on May 5, P1,000.00 due on May 10, P1,000.00 due on May 15, and P1,000.00 due on May 20.
If today is May 16, and D has only P1,000.00 but wants to pay C however D does not apply the payment, How will the application of payment be made?
The right to apply it is shifted to C.
C may apply the payment to any of the debts due on May 1, May 5, May 10 or May 15. He cannot apply the payment to the debt due on May 20 because it is not yet due unless he is allowed by stipulation with D or the benefit of the period was given to him (C).
86
D owes C the following distinct debts: P1,000.00 due on May 1, P1,000.00 due on May 5, P1,000.00 due on May 10, P1,000.00 due on May 15, and P1,000.00 due on May 20.
If today is May 16, and D has only P1,000.00 but wants to pay C however both D and C does not apply the payment, How will the application of payment be made?
If neither D nor C applies the payment, payment shall be applied proportionately to the debts due on May 1, May 5, May 10 and May 15 at P250.00 each, since all such debts have already become due as of May 15 when the payment is being made.
In case the debt due on May 5 is secured by a pledge or it is interest-bearing, then payment shall be applied to such debt because it is the most onerous to D.
87
D owes C P7,000.00 due on May 1, 5 sacks of rice worth P5,000.00 due on May 5; and P5,000.00 due on May 8. If none of the debts have been paid as of May 8 and D has P5.000.00. How application of payment be made?
D cannot apply the payment to the debt consisting of 5 sacks of rice because it is not payable in money, i.e., it is of different kind.
D may not apply the payment to the debt due on May I because the payment would not be complete unless C consents.
D may. however, apply the payment to the debt due on May 8.
88
Examples of more onerous debts
1. An interest bearing debt than non – interest bearing debt
2. A debt as a sole debtor than as solidary debtor
3. Older debts
4. Debts secured by a mortgage or by pledge
5. An obligation with a penal clause
89
It is the assignment or abandonment of all the properties of the debtor for the benefit of his creditors in order that the latter may sell the same and apply the proceeds thereof to the satisfaction of their credits
Cession of payment or assignment
90
2 Kinds of payment by cession
1. Voluntary or conventional
2. Legal
91
Requisites of cession by payment
1. There must be two or more creditors
2. The debtor must be insolvent
3. The assignment must involve all the properties of the debtor
4. The cession must be accepted by the creditors
92
D owes X, 50,000; Y, P20,000.00; and Z, P30,000.00 All the obligations are due but D has assets worth P80,000.00 only. D offers to assign his assets to X, Y and Z so that they may sell them and apply the proceeds to their respective claims. X, Y and Z accept the offer. If the assets are sold for 70,000.00. What will happen to the obligation by payment in cession?
D will be released from his obligations only up that amount, unless the creditors agreed to release him completely of his debts.
93
1. There must be two or more creditors
2. The debtor is insolvent
3. Affects all the debtor's properties, except those exempt from execution.
4. The creditors are authorized to sell only the debtor's properties.
5. The debtor is not released as a rule.
Payment by cession
94
1. Plurality of creditors is not required.
2. The debtor may not be insolvent.
3. Does not affect all the debtor's properties.
4. The creditor becomes the owner of the properties given as payment.
5. The debtor is released as a rule.
Dation in payment
95
The act, on the part of the debtor, of offering to the creditor the thing or amount due
Tender of payment
96
The act of depositing the thing or amount due with the proper court when the creditor cannot accept or refuses to accept payment.
Consignation
97
D borrowed P50,000.00 from C. On due date, D tendered payment in P20.00 bills totaling P50,000.00 to C. C refused to accept the payment demanding that he be paid in higher denominations. Can D consign the payment?
YES, since the payment tendered by D was legal tender, C was not justified in refusing to accept it. D may thus consign the payment.
98
Tender of payment without consignation will extinguish the obligation
True of False?
False, tender of payment without consignation does not extinguish the obligation
99
Refusal of creditor may be justified in tender of payment if;
1. When tender of payment is not in legal tender
2. When tender of payment is not full amount, does not include the interest
3. When there is a condition
100
Consignation alone shall produce the same effect in what following cases
1. When the debtor is absent or unknown or does not appear in the place of payment
2. When he is incapacitated to receive payment at the time it is due
3. When, without the cause, he refuses to give a receipt
4. When two or more persons claim the same right to collect
5. When the title of the obligation has been lost
101
In order that the debtor may be released in his obligation, there should be prior notice to persons interested, if there are no persons interested, the consignation is void.
True or False
True
102
Requisites of Consignation
1. Existence of valid debt
2. Valid prior tender, unless tender is excused
3. Prior notice of consignation (PRIOR TO PERSONS INTERESTED)
4. Actual consignation
5. Subsequent notice of consignation
103
How consignation is actually made?
It shall be made by depositing the things due at the disposal of judicial authority. There must be proved that the tender had been previously made and there should be prior notice within the interested persons that consignation has been made
104
Who will be charged in the expenses of consignation, when properly made?
Creditor
105
What is the effect once the consignation has been duly made?
1. The debtor may ask the judge to order the cancellation of the obligation (so as the running interest is suspended)
In this case, the expenses will be borne by the debtor
106
Can the debtor withdraw the consignation when the creditor already accepted the consignation or the court has already declared it to be proper?
No, however debtor can still withdraw but with the consent of the creditor
107
How can the creditor prevent the debtor from exercising the right to withdraw?
By immediately accepting the consignation
108
What if the consignation has been improperly made? What are the effects?
1. The obligation remains
2. If case is dismissed by court, consignation will produce no effect
109
P is indebted to G in the sum of 10,000. B is the guarantor. On the due date of the obligation, P tendered the payment but G refuses to accept. P made a proper consignation. After the court cancelled the obligation
P withdrew the deposit after securing the consent of G. Later on, P becomes insolvent. Can G now proceeds to B, the guarantor for payment of 10,000?
NO, the guarantors and sureties are released unless they consented to the withdrawal of the thing considered
If there are several debtors and the obligation is solidary, such obligation will become joint
110
When does loss of a thing considered?
1. When the object perishes
2. Goes out of commerce
3. Disappears in such way that its existence is unknown
4. Cannot be recovered
111
There is also a loss when
There is physical or legal impossibility of the service in which the obligation consist
112
General Rule in loss of a determinate thing
The loss of a determinate thing extinguishes the obligation (Art. 1262)
113
Exception in the general rule in loss of a determinate thing
a. When the loss is due to the fault of the debtor
b. When the debtor has incurred in delay
c. When so provided by law, as when the debtor has promised to deliver the same thing to two or more persons who do not have the same interest.
d. When it is stipulated by the parties.
e. When the nature of the obligation requires the assumption of risk (insurance)
f. When the debt proceeds from a criminal offense (unless the person who should receive it refuses to accept it without just cause.
114
General rule in loss of a indeterminate thing
The loss or destruction of anything of the same kind does not extinguish the obligation
115
Exceptions in general rule of loss of indeterminate thing
Delimited Generic Thing
Ex: 100 cavans of rice from my harvest this year
116
When is partial loss considered as total loss?
When the loss is so material and the remaining portion of the object is insignificant or immaterial, partial loss of the thing may be considered as total
NOTE: It is the court who will give the decision
117
Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault, unless there is proof to the contrary. This presumption does not apply in case of earthquake, flood, storm or other natural calamity.
Art. 1165
118
The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor.
True or False?
True
119
P will construct a commercial building for G. However, P dies and cannot do the obligation
What is this kind of obligation?
Physically Impossible
120
P will construct a building for G. However, the area has been declared by law as a residential zone.
What is this kind of obligation?
Legally Impossible
121
Situation when construction is needed however there is an earthquake and it changed the condition of the land. The construction itself is possible but when the construction will continue, it is very dangerous to life and properties. It is something that is not contemplated by both parties to happened. Is the obligation extinguished?
Yes, when the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. (Art. 1267)
122
If the thing is loss by criminal offense, what will happen to the obligation?
The debtor will not be exempt in his obligation whatever may be the cause of his lost, either with or without his fault
123
Exception in the general rule if the thing is loss by criminal offense
If creditor is in delay (mora accipiendi)
124
What are the remedies of the debtor incase creditor is in delay in terms of loss of thing in criminal offenses?
Debtor can consign to the court
Debtor can have the specific thing but should exercise the diligence of a good father of a family
125
D is obliged to give a specific carabao to C. X steals the carabao and slaughters it. What will happen to D's obligation?
It will be extinguished
126
D is obliged to give a specific carabao to C. X steals the carabao and slaughters it. Can C proceeds to X?
Yes, C has the right to proceed against X. Assignment of the right by D to C is not required since it is the law that gives C the right.
127
It is a gratuitous abandonment by the creditor of his right
- Condonation/ Remission
128
P owes G 1 million pesos payable on December 5, 2024. When Dec 5 2024 has come, G says to P that he doesn’t need to pay anymore. G was condoning it. What will happened to the obligation?
Here, the obligation was extinguished through condonation or remission.
129
Requisites of Remission
1. It must be gratuitous (dapat walang kapalit)
2. It must be accepted by the obligor (must be bilateral act)
3. The parties must have capacity
4. It must not be inofficious (excessive - no one can give more than what which she can give by will)
5. If made expressly, it must comply with the forms of donation.
130
What are the kinds of condonation or remission
1. As to amount or extent
2. As to form
3. As to its date of effectivity
131
Two kinds of amount or extent in condonation
Total and Partial
132
Two kinds of forms in condonation
Express and Implied
133
Two kinds of date of effectivity in condonation
1. Inter vivos
- will take effect while donor is still alive
2. Mortis causa
- will take effect when donor died
134
What is the effect of the delivery of private document evidencing the credit?
Creates presumption of implied remission
It should be made voluntarily
Since it is only a presumption, creditor can show a proof of contrary that there is no condonation of the credit.
135
P issues a promissory note in favor of G in an amount of 1M. Later on, G delivered the promissory note to P without collecting the 1M. What will happened to the obligation?
In this case, there is a presumption that G has condone the debt
Note: It is just a presumption, pwede paring iprove ni creditor ang ibang dahilan kung bakit dineliver nya yung promissory note sa debtor
136
What is the effect when private document of the debt appears in the possession of the debtor?
It shall be presumed that the creditor delivered it voluntarily
Note: Still an presumption, there is a need of contrary to prove
137
If there is a renunciation to the principal debt, what will happened to the accessory obligation?
It will also be extinguished
138
If there is a renunciation to the accessory debt, what will happened to the principal obligation?
The principal obligation shall still exist even without the accessory obligations
139
P owes G 1M, B is the guarantor. If G remits the obligation of P to pay 1M, what will happened to the obligation?
B’s obligation as a guarantor will also extinguish the obligation.
140
P owes G 1M, B is the guarantor. If G only remits the obligation of B as guarantor of P, what will happened to the obligation?
The obligation of P to pay 1M still exist.
141
Is the meeting in one person of the qualities of the creditor and debtor with respect to the same obligation.
Confusion or Merger of the rights
142
What are the requisites of confusion?
1. It must take place between the principal debtor and creditor
2. It must be complete and definite
3. The very obligation involved must be the same or identical
143
P owes G 100,000 with a promissory note. G endorsed the promissory note to B, later on B bought foods in the store of P. B doesn’t have cash that’s why he endorsed the promissory note to P which is from G. What will happen to the obligation?
It will be extinguished by confusion or merger. P owes himself and become the creditor and debtor at the same time.
144
What are the usual causes of confusion?
1. Succession
2. Donation
3. Negotiation of a negotiable instrument
145
P owes G 1M, and B is the guarantor. G assigned the credit to M, and M to P. What will happen to the obligation?
It will be extinguished
146
P owes G 1M, and B is the guarantor. G assigned the credit to M, and M assigned it to B. What will happen to the obligation?
The contract of guarantee is extinguished, however the principal obligation is not extinguish. P’s obligation to pay 1M is still existing.
147
What is the effect of merger and confusion?
1. Obligation is extinguished
2. If there is a guarantor and the merger is in the principal debtor, the obligation is extinguished and the guarantor is released.
3. If there is a guarantor and the merger is not the principal debtor but only the guarantor, the principal obligation is not extinguished but the accessory is extinguished.
Accessory follows the principal
148
P and G jointly owes B 1M and evidenced by a promissory note. B endorsed the promissory note to M, and M to G. What will happen to the obligation?
G’s obligation is extinguished however P’s obligation still exist.
149
P and G are solidary liable to B 1M and evidenced by a promissory note. If B endorsed the promissory note to M, and M to G, what will happen to the obligation?
The whole obligation is extinguished. However, G has the right to demand reimbursement from P.
150
Is the extinguishment to the noncurrent amount of the debts of two persons who, in their own right, are reciprocally principal debtors and creditors of each other.
Compensation
151
D owes C 5,000. C owes D 5,000. Both debts are due and demandable. What will happen to the obligation?
The obligation will be extinguished by compensation
152
D bought office supplies on credit amounting to 5,000 from the store of C. C on the other hand, bought construction materials on credit from the store of D amounting to 5,000. Both debts are already due. What will happen to the obligation?
The obligation will be extinguished by compensation
153
Difference between confusion and compensation
In confusion, there is only one person and one obligation
In compensation, there are two persons and two obligations
154
Difference between payment and compensation
In payment,
* Takes effect by act of parties
* Parties must have the free disposal of the thing due and capacity to alienate
* It is necessary that it be complete
In compensation
* Takes effect by operation of law
* It is not requires that the parties have the capacity to give or to receive, as the case may be
* The law permits partial extinguishment of the obligation
155
Two Kinds of Compensation
1. By its effect or extent
2. By its cause or origin
156
Two kinds of effect or extent in compensation
1. Total
2. Partial
157
Four kinds of cause or origin in compensation
1. Legal
2. Voluntary or Conventional
3. Judicial (set off)
4. Facultative
158
This takes place by operation of law and extinguishes both debts to the concurrent amount (Art. 1279) even though the debts are payable at different places (Art. 1286) and the creditors and debtors are not aware of the compensation.
Legal Compensation
159
Requisites of Legal Compensation
1. That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other.
2. That both debts consist in a sum of money or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated
3) That the two debts be due
4) That both debts be liquidated and demandable.
5) That over neither of them there be any retention or controversy commenced by third persons and communicated in due time to the debtor.
160
D owes C P5,000.00. C owes D P5,000.00. What kind of compensation is this? What will happen to the obligation?
Legal Compensation, the obligation will be extinguished because D and C are principal debtors and creditors of each other.
161
D owes C P5,000.00 with G as guarantor. C owes G P5,000.00. Can legal compensation takes place?
No, because while D is a principal debtor of C, C is not even a debtor of D. Legal compensation may not take place between G and C because although C is a principal debtor of G, G is only a subsidiary debtor of C.
162
Exception to the first requisite of legal compensation which is;
That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other.
A guarantor may set up compensation as regards what the creditor may owe the principal debtor. (Art. 1280)
163
D owes C 5,000 and G as guarantor. C owes D 4,000. On due date, C demands payment from D but D no longer has any assets. Can C goes to G, D's guarantor?
Yes, G may set up compensation up to P4,000.00 so C can collect from him P1,000.00 only
164
Refers to things that are fungible or capable of substitution.
Consumable
165
D is obliged to give C a fountain pen and C is obliged to give D a fountain pen. Can there be legal compensation?
Yes, since the objects, being generic, are fungible although not consumable.
166
D is obliged to give C a specific Parker fountain pen and C is obliged to give D a specific Cross fountain pen. Can legal compensation takes place?
No, because the objects are not capable of substitution
167
P owes G 1M payable on Dec 25, 2020. G also owes P 1M payable on Dec 30, 2020. Can there be legal compensation on Dec 25?
No, because one of the debt is not yet due however, there can be a voluntary compensation if both parties agreed. This is only by operation of law
168
Means the amount of the debts has already been determined or is easily determinable.
Liquidated
169
Means both debts must be enforceable, so if one of them has prescribed, legal compensation cannot take place.
Demandable
170
P owes G 10,000 and G owes P an amount that P will share in their business. The amount cannot be ascertained. Can legal compensation takes place?
No, because it is still unliquidated
171
D owes C P10,000.00. C owes D P10,000.00. C also owes X P10,000.00. X sues C and asks the court to order D not to pay C (garnishment proceedings) so that in the event the court renders judgment in favor of X, D will have to pay X. The court issues the order to D. Can there be legal compensation?
No, because there is an order of retention to D with respect to his debt to C.
172
This takes place by agreement of the parties, such as when they agree to the compensation of debts which are not yet due.
Voluntary or Conventional
173
D owes C P5,000.00 due on September 20, 2023, while C owes D P5,000.00 due on September 30, 2023. If both parties agreed that their debts be compensated on Sept 1 although both debts are not yet due as of such date. Can it still be valid?
Yes, because it is a kind of conventional or voluntary compensation
174
This is compensation ordered by the court. In Art. 1283, if one of the parties to a suit over an obligation has a claim for damages against the other, the former may set it off by proving his right to said damages and the amount thereof.
Judicial (set - off)
175
T, a travel agent, sued P for collection ofP10,000.00 representing the balance of P for a guided tour in Bangkok which T arranged. In his answer, P claimed that T owed him damages amounting to P10,000.00 which he (P) and his family sustained as a result of the substandard hotel accommodations that T booked for them. P was able to prove his right to said damages and the amount thereof. What kind of compensation will take place?
Judicial Compensation
176
This is compensation that may be claimed or opposed by one of the parties (such as when not all the requisites for legal compensation are present).
Facultative Compensation
177
D owes C 5,000 which is due and payable on September 1, 2023, while C owes D 5,000 which is due and payable on or before September 30, 2023. Can C claim compensation on Sept 1?
Yes, On September 1, 2023, C may claim compensation because he was given the benefit of the period, i.e., he may choose to pay on or before September 30, 2023.
178
D owes C 5,000 which is due and payable on September 1, 2023, while C owes D 5,000 which is due and payable on or before September 30, 2023. Can D claim compensation on Sept 1?
No, C has the right to oppose it because he cannot be compelled, although he may opt to pay, before September 30,2023.
179
What are the debts that are valid until annulled?
Rescissible or voidable debts
180
P owes G 1M. Subsequently, P through fraud was able to make G sign a promissory note that G has a debt to him amounting to 1M. Is P's obligation valid or voidable?
P’s obligation to pay G 1M is valid
181
P owes G 1M. Subsequently, P through fraud was able to make G sign a promissory note that G has a debt to him amounting to 1M. Is G's obligation to pay P valid or voidable?
G’s obligation to pay P is voidable because G’s consent was through fraud
182
P owes G 1M. Subsequently, P through fraud was able to make G sign a promissory note that G has a debt to him amounting to 1M. When G file a case to annul the payment, and the court annulled the debt of G, what will happened to P's obligation?
P is still liable to pay G 1M, considering that the effect of the annulment is retroactive, as if there had been no compensation
183
D owes C 20,000 due on March 15. C owes D 8,000 due on March 10. On March 12, C assigned his credit right to T with the consent of D. How much can T collect from D on March 15? And D can collect?
On March 15, T can collect from D 20,000 but D can collect 8,000 from C.
184
D owes C 20,000 due on March 15. C owes D 8,000 due on March 10. On March 12, C assigned his credit right to T with the consent of D. If D reserved his right to the compensation that would pertain to him against C amounting to 8,000 when he consented to the assignment, how much can T collect from D?
T can collect only P12,000.00 from him (D).
185
D owes C 20,000 due on March 15. C, on the other hand, owes D the following debts: 8,000 due on March 1; P3,000.00 due on March 8; and P5,000.00 on March 14. On March 12, C assigned his credit right to T with notice to D but D did not give his consent to the assignment. How much can T collect from D?
In this case, T may collect from D 9,000 because D can set up compensation with respect to the debts due on March 1 (P8,000.00) and March 8 (P3,000.00) both of which had already matured at the time of the assignment (before MARCH 12)
186
D owes C 20,000 due on March 25. C, on the other hand, owes D the following debts: 8,000 due on March 1; 3,000 due on March 8, 5,000 due on March 14; and P2,000.00 due on March 31. On March 12, C assigned his credit right to T without the knowledge of D. On March 16, D learned of the assignment. How much T can collect from D?
In this case, T may collect from D P4,000.00 because D may set up compensation with respect to the debts due on March I (P8,000.00), March 8 (P3.000.00), and March 14 (P5,000.00), which debts have become due as of Mar 16 when D learned of the assignment.
187
P owes G 1,000 dollars payable in New York and G owes P 100,000 payable in Manila. If P claims compensation, who will shoulder the expenses?
P must pay for the expenses of exchange. Whoever claims for compensation will pay for the expenses of exchange or transportation. Art. 1286
188
What are the following instances of facultative compensation (because legal compensation cannot take place)
1) When one of the debts arises from a deposit.
2) When one of the debts arises from the obligations of a bailee in commodatum.
3) When one of the debts arises from a claim for support by gratuitous title.
4) When one of the debts consists in civil liability arising from a penal offense.
189
Is a contract where a person receives a thing belonging to another for safely keeping it and of returning the same.
Deposit
190
P deposited with G 100 sacks of rice valued at 100,000. P also owes G 1,000,000. When P claims to withdraw the 100 sacks of rice to G, G refuses to deliver. She is claiming compensation. Is G allowed to compensate?
No, because this is an obligation arising from deposit, compensation shall not be proper
191
P deposited with his bank, ABC Bank for 100,000. Later on P had a loan to the bank for 10,000. Can the bank set up compensation?
Yes, deposits in bank are actually governed by a contract of loan, not contract of deposit. The depositor is actually the creditor and the bank is the debtor. So, the bank therefore can set-up compensation.
192
Is a gratuitous contract whereby one of the parties delivers to another something not consumable so that the latter may use the same for a certain time and return it. (Art. 1933).
Commodatum
193
G borrowed the car of P. P owes G 1M. Can G claim that she will not return the car?
G cannot claim that she will not return the car of P, no compensation can take place when one of the debt arises from a commodatum
194
H, husband, was ordered by the court in a case of legal separation to give a monthly support of P20,000.00 to W, his wife. H has not yet given the amount to W for the present month. On the other hand, W owes H P20,000.00 by way of loan. Can H may claim compensation?
No, but if the support being claimed by W, however, is her support for the previous month, H may claim compensation since the support is support in arrears.
W may claim compensation but not H. If the support being claimed by W, however, is her support for the previous month, H may claim compensation since the support is support in arrears.
195
P is the father of B, a minor, who under the law is entitled to be supported by P. Now, B owes P 50,000. Can P compensate?
P cannot compensate his obligation to support B by what B owes him because the right to receive support cannot be compensated
196
D owes C 50,000 by way of loan. One day, C intentionally rammed his jeep on the fence of D, causing damages thereon amounting to P50,000.00. C was charged and convicted of the crime of malicious mischief. He was ordered to pay D P50,000.00 for the damages on the fence. If D demands the payment of such damages, can C claim compensation on the ground that D owes him P50,000.00 by way of loan?
No
C cannot claim compensation on the ground that D owes him P50,000.00 by way of loan. However, if C demand the payment of the loan from him, D may claim compensation by offsetting it against his claim for damages against C.
197
D owes C 50,000 by way of loan. One day, C intentionally rammed his jeep on the fence of D, causing damages thereon amounting to P50,000.00. C was charged and convicted of the crime of malicious mischief. He was ordered to pay D P50,000.00 for the damages on the fence. If C demand the payment of the loan from him, can D claim compensation?
D may claim compensation by offsetting it against his claim for damages against C.
Here, we should apply the principle “a person criminally liable is civilly liable”
198
D owes C the following debts on account of various merchandise purchases which he made from the store of C: 3,000, due on March 1; 3,000, due on March 15; P3,000.00 due on March 31; and P3,000.00 due on April 15. C, on the other hand, C owes D P3,000.00 due on April 5. Can D set up compensation on April 5?
Yes
199
D owes C the following debts on account of various merchandise purchases which he made from the store of C: 3,000, due on March 1; 3,000, due on March 15; P3,000.00 due on March 31; and P3,000.00 due on April 15. C, on the other hand, owes D P3,000.00 due on April 5. If D does not designate the debt to which compensation shall apply, who has the right to apply?
C
200
D owes C the following debts on account of various merchandise purchases which he made from the store of C: 3,000, due on March 1; 3,000, due on March 15; P3,000.00 due on March 31; and P3,000.00 due on April 15. C, on the other hand, owes D P3,000.00 due on April 5. If both D and C does not designate the debt to which compensation shall apply, what rule of application of payment will be followed?
Compensation shall be applied proportionately to the three debts due at P1,000.00 each
201
What is the amount when one debt has larger amount than the other debt, therefore the balance will subsist (still remains)
Concurrent amount
202
When all the requisites mentioned in Article 1279 are present, compensation takes effect by where?
Operation of Law and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation. (1202a)
203
A is indebted to X, Y and Z, solidary creditors, for P30,000.00 due on June 1, 2023. X in turn owes A P30,000.00 due on June 1, 2023, Both obligations being due, Are they extinguished by compensation?
Yes, However, X has to give Y'and Z their respective shares at P10,000.00 each because compensation made by any of the solidary creditors shall render him liable to the others for the share in the obligation corresponding to them. (See Art. 1215.)
204
Is the modification or extinguishment of an obligation by another, either by changing the object or principal condition substituting the person of the debtor, or subrogating a third person in the rights of the creditor. (Art. 1291)
Novation
205
What two functions do novation serves?
To extinguish an existing obligation
To substitute a new one in its place
206
D owes C 10,000.00. If the parties later agree that D should will instead a ring to C, what is the novation?
Novation by changing the object or prestation.
207
D owes C 10,000.00. If the parties agree that T shall take the place of D as the new debtor, what is the novation?
Novation by substituting the person of the debtor
208
D owes C 10,000.00. If the parties later agree that X shall take the place of C as the new creditor, what is the novation?
Novation by subrogating a third person in the rights of the creditor
209
This is novation declared in unequivocal terms. Here, the parties disclose that their object in the new contract is to extinguish the old one.
Express
210
When the old and the new obligation are on every point incompatible with each other.
Implied
211
D and C entered into a whereby D would construct a 3-storey building for C on a certain lot. Later however, D and C entered into a contract whereby they expressly agreed that D would not be constructing anymore a 3-storey building on the lot but a bungalow.
Express or Implied Novation?
Express Novation
212
P owes G 500,000 evidenced by a promissory note. Later on, P again owes another 500,000 to G. Both parties agreed to make it only in one promissory note amounting to 1M.
Express or Implied Novation?
Express Novation
213
If D and C entered into the second contract whereby D agreed to construct a bungalow on the lot but without the parties expressly stipulating that D would no longer construct a 3-storey building, what is the subject of novation?
Implied Novation, because construction of the two structures on the same lot would not be possible.
214
What are the instances were the court has held that there was no EXTINCTIVE NOVATION
1. Merely clarified the total sum owed by the would-be buyer to the would-be seller with the view that the former would find it easier to comply with his obligation under the contract to sell does not novate said contract to sell.
2. If the change consists only in the time or place of payment, or in the mode or manner of payment, or rates of interest.
3. When the new contract merely contains supplementary agreement
4. When additional security is given
5. When a public instrument is executed to confirm a valid contract
6. Mere extension of the term (period) for payment or performance
215
In substituting the person of the debtor (always with the creditor's consent). Here, a third person initiates the substitution and assumes the obligation even without the knowledge or against the will of the debtor but not without the consent of the creditor
Expromision
216
If the substitution was without the knowledge or against the will of the original debtor, what happens to the obligation?
The new debtor can only recover insofar as the payment has been beneficial to the debtor.
217
Can the new debtor's insolvency or non- fulfillment of the obligation give rise to any liability on the part of the original debtor?
No, the original debtor is released from liability. This is true whether the substitution was without the knowledge of the debtor or against his will or it was consented to by him.
218
Novation by changing their object or principal conditions
Real or Objective
219
P obliged himself to give G his Toyota Vios car. Later, both parties agreed that instead of giving the Toyota Vios, P will just give G the Toyota Fortuner. What is the subject novation?
Real or Objective
Here, the original obligation is extinguished and a new obligation was created
220
Novation by change of the parties (debtor and creditor)
Personal or Subjective
221
P owes G 10,000. Later on, P, G and B agreed that B will pay G instead of P. What is thee subject novation?
Personal or Subjective
Here, the original obligation is extinguished, where in P’s obligation to pay G
New obligation is created where in B, the third party will pay G, the creditor
Note: All parties must agree
222
Combination of objective and subjective novation
Mixed
223
P promise to deliver his Vios Car to G. Later on, P,G and B agreed that instead of delivering the Vios Car of P to G, B will be the one to deliver her Vios Car to G. What is the subject novation?
Mixed
Here, there is a mixed novation because the object was changed and the person was also changed
224
What are the requisites of novation?
1. The existence of a previous valid obligation
2. The intention or capacity of the parties to extinguish or modify the obligation
3. The extinguishment of the obligation
4. The creation or birth of a valid new obligation
225
P owes G 10,000 and due on December 25. Later on, B goes to G saying that she will be the one paying the 10,000 and she will be the new debtor. G then proceeds to agree. Is the obligation extinguished?
Yes, because G, the creditor consented to the novation
226
P owes G 10,000 and due on December 25. Later on, B goes to G saying that she will be the one paying the 10,000 and she will be the new debtor. G then proceeds to agree. If B will become insolvent, can G proceeds against P to collect the 10,000?
No, because novation is already made. In novation, the moment the creditor consented to the novation, the obligation is totally extinguished.
227
What are the requisites of expromision?
1. The initiative must come from a third person
2. The new debtor and creditor must CONSENT
3. The old debtor must be released from his obligation
228
Substituting the person of the debtor (always with the creditor's consent). Here, it is the debtor who initiates the substitution, which requires the consent of all parties (original debtor, creditor, new debtor).
Delegacion
229
P owes G 10,000 and due on December 25. Later on, P goes to G saying that B will be the one paying the 10,000 and she will be the new debtor. G then proceeds to agree. Is the obligation extinguished?
Yes, because all parties agreed
230
What are the requisites of a valid delegacion?
1. The initiative comes from the old debtor
2. All parties concerned must consent or agree
3. The old debtor must be released from his obligation
231
Rights of the new debtor if he makes payment in delegacion
He can recover what he has paid and is entitled to subrogation.
232
General rule if new debtor is insolvent in delegacion
The creditor's right to proceed against the original debtor is not revived
233
Exception in the general rule if new debtor is insolvent in delegacion
(1) When the insolvency of the new debtor was already existing and of public knowledge when the original debtor delegated his debt
2) When the insolvency of the new debtor was already existing and known to the original debtor at the time he delegated his debt
234
P owes G 1M. P proposed to G that B will substitute him as a debtor and G agreed to the proposal. If at the time of the delegation, B was already insolvent but B’s insolvency was neither of public knowledge and not known by P. Is P still liable for the obligation?
Here, P will not be liable for the obligation
P is also not liable if the insolvency of B took place after he delegated his debt.
235
General Rule in novation on accessory obligation
When the principal obligation is extinguished in of a novation, obligations shall also be extinguished
236
P owes G 1,000,000 and B as a guarantor. P was substituted by M. Are both P and B released from the obligation?
Yes, P is released from his obligation and so as G as her guarantor
237
Exception in the general rule in novation on accessory obligation
1. When the obligation was established for the benefit of third persons who did not give their consent. (Art. 1296)
2. When there was a stipulation that the accessory obligation will subsist the novation
3. When the novation is one where a third person is subrogated in the rights of the creditor
238
D borrowed 50,000 from C. The obligation is secured by a chattel mortgage on D's car and bears interest at 10% per annum which the parties would be paid by D to T, a student whom C is sending to school. , D and C agreed that D would give C a diamond ring instead of money. What happens to the obligation?
The novation here extinguishes the accessory of chattel mortgage. However, the accessory to pay interest to T will subsist unless T gave his consent to the novation.
239
What is the effect if new obligation is void? (general rule)
If the new obligation is void, the original one shall subsist
240
Exception to the general rule if the new obligation is void
The parties intended that the former relation should be extinguished in any event
241
What is the effect if original obligation is void? (general rule)
If the original obligation is void, there is no valid novation
242
P obliged himself to deliver 1 kilo of drugs to G. Later on, P and G agreed that instead of delivering the drugs, P will just give G 10,000. Is there a valid novation?
Here, there is no novation
The giving of 10,000 is void because the original obligation is void.
243
Exception in the general rule if original obligation is void? (general rule)
When the original obligation is voidable
244
Effect if the original obligation is voidable
The novation is valid provided that annulment may be claimed only by the debtor or when ratification extinguishes acts which are voidable. (Art. 1298.) The novation here cures whatever defects that existed in the original obligation.
245
G was forced by P through fraud that G will execute a promissory note worth 10,000 in favor of P payable in Dec 25. However, after the fraud, P and G novate to make a change on their previous transaction such that instead of giving 10,000, G will just give P specific car. Is the obligation valid?
Here, the obligation of G to give P a specific car is valid because the first obligation is voidable, valid until annulled in court
246
Effect if original obligation is subject to a suspensive or resolutory condition (general rule)
The new obligation shall be subject to the same condition
247
Exception in the general rule if original obligation is subject to a suspensive or resolutory condition
There is a stipulation by the parties
248
D promised to give C a specific ring if C finishes his degree in Accountancy with honors. Later, the parties agreed that D would give C a specific bracelet instead of a specific ring. Is there a valid novation?
Yes, here, the obligation to give a specific bracelet is subject to the same condition that C must finish his Accountancy degree with honors, unless they stipulate otherwise.
249
P owes G 10,000 with B as guarantor. If M paid G 10,000 with the consent of P and G. Is M subrogated in the rights of G?
Yes, M is subrogated in the rights of G
250
P owes G 10,000 with B as guarantor. If M paid G 10,000 with the consent of P and G. M is subrogated by the rights of G. If P cannot pay M 10,000, what will happen to the obligation?
M can proceed against the guarantor which is B
251
P owes G 10,000 secured by a property mortgage. If M paid G 10,000 with the consent of P and G. M is subrogated by the rights of G. If P cannot pay M 10,000, what will happen to the obligation?
M has the right to foreclose the mortgage property. After all, P consented to the payment
252
Kind of subrogation where there is a change of creditor by the agreement of the parties (the original debtor , the new creditor and the third person who’ll become the new debtor)
Conventional subrogation
253
Subrogation by operation of law.
Legal Subrogation
253
It is presumed that there is legal subrogation when?
(1) When a creditor pays another creditor who is preferred, even without the debtor's knowledge;
(wether there is a debtor’s knowledge or not, it shall apply the same)
(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor;
(3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation. pays, without prejudice to the effects of confusion as to the latter's share. (1210a)
254
D owes C 50,000. The debt is secured by a real mortgage. D also owes X P40,000.00 which is unsecured. If X pays D's debt to C amounting to P50,000.00, what will happen to the obligation?
X is subrogated in the rights of C. D will now pay X as his new creditor
255
D owes C 50,000. The debt is secured by a real mortgage. D also owes X P40,000.00 which is unsecured. If X pays D's debt to C amounting to P50,000.00, X is subrogated in the rights of C. If D cannot pay the debt of P50,000.00, what will happen to the obligation?
X can foreclose the mortgage
256
D owes C P100,000.00. The debt is secured by a mortgage on D's lot. If T pays C with D's consent, what will happen to the obligation?
T is subrogated in the rights of C. Thus, T can collect the amount he had paid to C from D,
257
D owes C P100,000.00. The debt is secured by a mortgage on D's lot. If T pays C with D's consent, T is subrogated in the rights of C. If D cannot pay, what will happen to the obligation?
T can foreclose the mortgage on the lot.
258
D owes C P10,000.00 with G as guarantor. If G pays C, what will happen to the obligation?
G is subrogated in the rights of C. G is now the new creditor of D
However, G's guaranty is extinguished because the qualities of debtor and creditor are merged in his person
Confusion take place in the person of the guarantor
259
Subrogation in change of object and parties to the obligation.
Mixed
260
D owes C P50,000.00. Later, the parties agree that a ring will be used to pay the debt with X making the payment. What kind of subrogation?
Mixed
261
D owes C 100,000. With the consent of both, T, a third person pays C. Thus, C and T are now creditors of D at 50,000 each. If D has only 50,000, who will be preferred?
C will be preferred over T
262
A is indebted to X, Y and Z solidary creditors, in the amount of 30,000. Thereafter, X, without the knowledge of Y and Z , agreed with A that instead of A paying P30,000.00, A would instead give a specific ring to the creditors. What will happen to the obligation?
The obligation of A to give P30,000.00 is extinguished by the obligation to give a specific ring.
However, X has to give Y and Z their respective shares at each
Because executed by any of the solidary creditors shall render him liable to the others for the share in the obligation to then. (See Art. 1215.)
