oblicon midterm exam coverage

8/9/2019 Oblicon Midterm Exam Coverage

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CIVIL LAW MIDTERM EXAM COVERAGE

JAN 19 2015

CLASSIFICATION OF OBLIGATIONS:(a) PRIMARY classification of the Civil Code:

1.

PURE vs. conditional2. PURE vs. w/ period/term3. ALTERNATIVE / FACULTATIVE vs. conjunctive

4. JOINT vs. solidary

5. DIVISIBLE vs. indivisible6. w/ a penal clause vs. w/o

(b)SECONDARY classification of the Civil Code:1. UNILATERAL vs. bilateral

2. Real and personal

3. Determinate and generic

4.

Positive and negative5. Legal, conventional, penal6. Civil and natural

(c) Accdg. to Sanchez Roman, IV, 20-24

A. Accdg. to juridical quality and efficaciousness1. Natural accdg. to natural law2. Civil accdg. to civil law3. Mixed

B. Parties / subjects

1. Unilateral, bilateral2. Individual, collective

3.

Joint, solidaryC.Object of the obligation

1. Specific, generic

2. Positive, negative3.

Real, personal

4. Possible, impossible

5. Divisible, indivisible6. Principal, accessory

7.Simple, *compound(may be (a) conjunctive demandable at the same time or (b)distributive either alternative or facultative

(d)

Classification by the Code accdg. to defects1. No defect valid2. Defective

a.

Rescissibleb.

Voidable

c.

Unenforceable

d. Void


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ART. 1179. Every obligation whose performance does not depend upon a future or uncertainevent, or upon a past event unknown to the parties, is demandable at once.

Every obligation which contains a resolutory condition shall also be demandable, withoutprejudice to the effects of the happening of the event.

Pure obligation w/o condition / term, demandable at onceConditional obligation

Suspensive the happening will be awaitedResolutory ends upon a happening

Condition uncertain event which wields an influence on a legal relationshipClassification:(a) suspensive happening gives rise to obligation

- Resolutory happening extinguishes obligation(b) potestative depends upon will of debtor

- Casual upon chance / hazard / will of a third person-

Mixed partly will of one of the parties, partly on chance / will of athird person

Term/period that which necessarily must comeDemandable at once (a) pure, (b) resolutory condition

ART. 1180. When the debtor binds himself to pay when his means permit him to do so, theobligation shall be deemed to be one with a period, subject to the provisions of Article

1197.

Similar:

when my means permit to do sowhen I can afford itwhen I am able towhen I have money

ART. 1182. When the fulfilment of the condition depends upon the sole will of the debtor,

the conditional obligation shall be void. If it depends upon chance or upon the will of athird person, the obligation shall take effect in conformity with the provisions of this

Code.

ART. 1183. Impossible conditions, those contrary to good customs or public policy and those

prohibited by law shall annul the obligation which depends upon them. If the obligationis divisible, that part thereof which is not affected by the impossible or unlawful

condition shall be valid.The condition not to do an impossible thing shall be considered as not having been

agreed upon.

Classification:


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1. Impossible physically2. Illegal prohibited by good customs, public policy; prohibited by law

Effects:a. Condition=impossible/illegal both condition and obligation are void

b.

Condition=negative + impossible disregard condition, obligation remainsc. Condition=negative + illegal both condition and obligation are valid

ART. 1186. The condition shall be deemed fulfilled when the obligor voluntarily preventsits fulfilment.

CONSTRUCTIVE / PRESUMED fulfilment:Req: (a) voluntarily made intent to prevent must be present; (b) actually prevents

**ART. 1187. The effects of a conditional obligation to give, once the condition has beenfulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless,

when the obligation imposes reciprocal prestations upon the parties, the fruits andinterests during the pendency of the condition shall be deemed to have been mutually

compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and

interests received, unless from the nature and circumstances of the obligation it shouldbe inferred that the intention of the person constituting the same was different.

In obligations to do and not to do, the courts shall determine, in each case, theretroactive effect of the condition that has been complied with.

General rule:Obligation becomes effective, retroacting to the day the obligation was constituted.

No retroactivity with reference only to:1.

Fruits or interests

a.Unilateral obligations debtor gets the fruits and interest unless there is acontrary intent

b.

Reciprocal obligations fruits and interests during the pendency of thecondition shall be deemed to compensate each other

2. Period of prescription (where period runs from the day the condition wasfulfilled)

**ART. 1189. When the conditions have been imposed with the intention of suspending the

efficacy of an obligation to give, the following rules shall be observed in case of the

improvement, loss of deterioration of the thing during the pendency of the condition:(1)

If the thing is lost without the fault of the debtor, the obligation shall be

extinguished;(2)

If the thing is lost through the fault of the debtor, he shall be obliged to pay

damages; it is understood that the thing is lost when it perishes, or goes out of

commerce, or disappears in such a way that its existence is unknown or it cannotbe recovered;


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(3) When the thing deteriorates without the fault of the debtor, the impairment is to

be borne by the creditor;(4) When the thing deteriorates through the fault of the debtor, the creditor may

choose between the rescission of the obligation and its fulfilment, with indemnityfor damages in either case;

(5)

If the thing is improved by its nature, or by time, the improvement shall inure tothe benefit of the creditor;

(6) If it is improved at the expense of the debtor, he shall have no other right than

that granted to the usufructuary.

Applies only if:

1. The suspensive condition is fulfilled2. Object is specific

3 things that may happen to the object of obligation pending the fulfilment:

1. May be lost when it perishes, go out of commerce, disappears in such a way thatits existence is unknown or cannot be recovered

a.

w/o fault of debtorb. w/ fault

c. partly w/ or w/o fault

partial loss amount to a loss important enough to be considered a complete loss- merely considered a deterioration = rules on deterioration apply

2. may deterioratea. w/o fault of debtor

b. w/ fault

c. partly w/ or w/o3.

may be improved

a.

by nature or timeb.

through expense of debtor

c. partly through nature/time and partly by the debtor

genus nunquam peruit genus never perishes

Usufruct the right to the enjoyment of the use and the fruits of a thing

ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one ofthe obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfilment and the rescission of the obligation,

with the payment of damages in either case. He may also seek rescission, even after hehas chosen fulfilment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing thefixing of a period.

This is understood to be without prejudice to the rights of third persons who have

acquired the thing, in accordance with Art.1385&1388 and the Mortgage Law.


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Power to rescind right to cancel or resolve the contract / reciprocal obligations incase of non-fulfilment on ones part (breach of faith violative of the reciprocity

between parties)

Reciprocal obligations where two parties are reciprocally obliged to do/give something

ART. 1192. In case both parties have committed a breach of the obligation, the liability ofthe first infractor shall be equitably tempered by the courts. If it cannot be determined

which of the parties first violated the contract, the same shall be deemed extinguished,and each shall bear his own damages.

ART. 1193. Obligations for whose fulfilment a day certain has been fixed, shall bedemandable only when that day comes.

Obligations with a resolutory period take effect at once, but terminate upon arrival of

the day certain.A day certain is understood to be that which must necessarily come, although it may not

be known when.If the uncertainty consists in whether the day will come or not, the obligation is

conditional and it shall be regulated by the rules of the preceding Section.

Period a certain length of time which determines the effectivity/extinguishment ofobligations

ART. 1196. Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of both the creditor and the debtor, unless from the tenor ofthe same or other circumstances it should appear that the period has been established in

favor of one or of the other.

ART. 1197. If the obligation does not fix a period, but from its nature and the

circumstances it can be inferred that a period was intended, the courts may fix theduration thereof.

The courts shall also fix the duration of the period when it depends upon the will of

the debtor.In every case the courts shall determine such period as may under the circumstances have

been probably contemplated by the parties. Once fixed by the courts, the period cannot bechanged by them.

ART. 1198. *The debtor shall lose every right to make use of the period:1.

when after the obligation has been contracted, he becomes insolvent, unless he

gives a guaranty or security for the debt;2.

when he does not furnish to the creditor the guaranties or securities which he

has promised;


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3. when by his own acts he has impaired said guaranties or securities after their

establishment, and when through a fortuitous event they disappear, unless heimmediately gives new ones equally satisfactory;

4. when the debtor violates any undertaking, in consideration of which the creditoragreed to the period;

5.

when the debtor attempts to abscond.*IFIVA*

*Term is extinguished, obligation demandable at once

ART. 1199. A person alternatively bound by different prestations shall completely perform

one of them.The creditor cannot be compelled to receive part of one and part of the other

undertaking.

Alternative/facultative obligation out of 2 or more prestations, only one is due.

ART. 1200. The right of choice belongs to the debtor, unless it has been expressly granted

to the creditor.

The debtor shall have no right to choose those prestations which are impossible, unlawfulor which could not have been the object of the obligation.

General rule right of choice belongs to the debtor except when expressly granted tocreditor.

Limitation: debtor has no right to choose prestations that are (a) impossible, (b) unlawful,or (c) which could not have been the object of the obligation.

ART. 1201. The choice shall produce no effect except from the time it has been

communicated.

Notification must be made in order to give the creditor opportunity to express his

consent or to impugn the lection made by the debtor.

The purpose is to inform creditor that the obligation is now a simple one, no longeralternative, and if already due, for the creditor to receive the object being delivered,

if tender of the same has been made.

Req:

a.

made properly so that the creditor/his agent will knowb.

made with full knowledge that a selection is indeed being made

c. made voluntarily and freelyd.

made in due time, before or upon maturity

e.

made to all the proper persons

f.

made without conditions unless agreed to by the creditorg.

may be waived


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ART. 1202. The debtor shall lose the right of choice when among the prestations wherebyhe is alternatively bound, only one is practicable.

ART. 1205. When the choice has been expressly given to the creditor, the obligation shall

cease to be alternative from the day when the selection has been communicated to thedebtor.

Until then the responsibility of the debtor shall be governed by the ff. rules:

1. if one of the things is lost though a fortuitous event, he shall perform theobligation by delivering that which the creditor should choose from among the

remainder, or that which remains if only one subsists;

2. if the loss of one of things occurs through the fault of the debtor, the creditormay claim any of those subsisting, or the price of that which, through the fault

of the former has disappeared, with a right to damages;

3. if all the things are lost through the fault of the debtor, the choice by thecreditor shall fall upon the price of any one of them, also with indemnity for

damages.The same rules shall be applied to obligations to do or not to do in case one, some or all

of the prestations should become impossible.

ART. 1206. When only one prestation has been agreed upon, but the obligor may render

another in substitution, the obligation is called facultative.The loss or deterioration of the thing intended as a substitute, through the negligence

of the obligor, does not render him liable. But once the substitution has been made, the

obligor is liable for the loss of the substitute on account of his delay, negligence orfraud.

Facultative obligation where only one prestation has been agreed upon but the obligormay render another in substitution

Alternative obligations Facultative obligationsVarious things are due, but the giving ofone is sufficient

Only one thing is principally due, and itis that one which generally is given, butthe other substitute may be given to renderpayment of fulfilment easy

If one of the prestation is illegal, theothers may be valid and the obligationremains.

If the principal obligation is void, andthere is no necessity of giving thesubstitute (nullity of principal carrieswith it the nullity of the

accessory/substitute)If it is impossible to give all except one,

that last one must still be givenIf it is impossible to give the principal,

the substitute does not have to be given; ifthe substitute is impossible to give, theprincipal must still be given

The right to choose may be given either todebtor or creditor

Right of choice only given to the debtor


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ART. 1207. The concurrence of two or more creditors or of two or more debtors in one and

the same obligation does not imply that each one of the former has a right to demand, orthat each one of the latter is bound to render, entire compliance with the prestation.

There is a solidary liability only when the obligation expressly so states, or when thelaw or the nature of the obligation requires solidarity.

Joint obligations to each his own- each obligor answers only for a part of the whole liability and to each

obligee belongs only a part of the correlative rights- synonyms: (1) mancomunada, (2) mancomunada simple, (3) proportionate, (4) pro rata

- we promise to pay + 2 or more signaturesSolidary obligations (joint and several obligation) one for all, all for one

- the relationship between the active and the passive subjects is so close that

each of the former or of the latter may demand the fulfilment of or must

comply with the whole obligation- synonyms: (1) joint and several, (2) in solidum, (3) mancomunada solidaria, (4)

juntos o separadamente, (5) individually and collectively, (6) each will pay thewhole value

- I promise to pay + 2 or more signatures

Where there are two or more debtors/creditor, the obligation is:

General rule jointExceptions:

(a) when there is a stipulation in the contract that the obligation is solidary

(b) when the nature of the obligation requires liability to be solidary(c)

when the law declares the obligation to be solidary

Instances where the law imposes solidarity:

(1) obligations arising from tort

(2)

obligations arising from quasi-contracts(3)

legal provisions regarding the obligations of devisees and legatees

(4)

liability of principals, accomplices, and accessories of a felony

(5)bailees in commodatum

ART. 1208.

Liabilities of partners:

(a)

If it arises out of a contract, the liability is joint or pro rataException if the dependents of an employee claim compensation fot the employeesdeath in line of duty

(b)

If it arises out of a crime or a quasi-delict, the liability is solidary

ART. 1214. The debtor may pay any of one of the solidary creditors; but if any demand,judicial or extrajudicial, has been made by one of them, payment should be made to him.


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ART. 1215

Novation modification of an obligation by changing its object or principal conditions,or by substituting the person of the debtor, or by subrogating the person of the debtor,

or by subrogating a third person in the rights of creditor.

Compensation takes place when two persons in their own right, are creditors anddebtors of each other.

Confusion / Merger takes place when the characters of creditor and debtor are mergedin the same person

Remission / Waiver act of liberality whereby a creditor condones the obligation of thedebtor

ART. 1217.

Nature of liability for reimbursement:

When a solidary debtor becomes entitled to reimbursement, remaining debtors become jointdebtors. The law provides that he who made the payment may claim from his co-debtors

only the share which corresponds to each, with the interest for payment already made.

ART. 1218. Payment by a solidary debtor shall not entitle him to reimbursement from his

co-debtors if such payment is made after the obligation has prescribed or become illegal.

ART. 1223. The divisibility or indivisibility of the things that are the object ofobligations in which there is only one debtor and only one creditor does not alter or

modify the provisions of Chapter 2 of this Title.

Divisible obligation capable of partial performanceIndivisible obligation not capable of partial performance

INDIVISIBILITY distinguished from SOLIDARITY:

SOLIDARITY INDIVISIBILITYRefers to tie between the parties Refers to nature of obligationNeed atleast two debtors/creditors May exist even if there is only one

debtor/creditorThe fault of one is the fault of the others The fault of one is not the fault of others

ART. 1225. For the purposes of the preceding articles, obligations to give definite things

and those which are not susceptible of partial performance shall be deemed to be

indivisible.


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When the obligation has for its object the execution of a certain number of days of work,

the accomplishment of work by metric units, or analogous things which by their natureare susceptible of partial performance, it shall be divisible.

However, even though the object or service may be physically divisible, an obligation isindivisible if so provided by law or intended by parties.

In obligations not to do, divisibility or indivisibility shall be determined by thecharacter of the prestation in each particular case.

Obligations that are deemed indivisible:a.To give definite things

b. Not susceptible of partial performance

c. May be physically divisible, but provided by law to be indivisibled. May be physically divisible, but indivisible due to intention of the parties

involved

Obligations that are deemed divisible:a.Object of obligation is the execution of a certain number of days of work

b.

Object of obligation is the accomplishment of work by metrical unitsc. Purpose of the obligation is to pay a certain amount in instalments

d.Object of obligation is the accomplishment of work susceptible of partial

performance

ART. 1226. In obligations with a penal clause, the penalty shall substitute the indemnityfor damages and the payment of interests in case of non-compliance, if there is not

stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to

pay the penalty or is guilty of fraud in the fulfilment of the obligation.The penalty may be enforced only when it is demandable in accordance with the

provisions of this Code.

Penal clause coercive means to obtain from the debtor compliance-

An accessory undertaking to assume greater liability in case of breach-

Attached to obligations in order to insure their performance

Kinds:

First classification:a.

Legal penal clause imposed by lawb.

Conventional penal clause agreed upon by partiesSecond classification:

a.

Subsidiary only the penalty may be askedb.

Joint both principal contract and penal clause can be enforced

Exceptions to the general rule that the penalty takes the place of indemnity for damagesand for the payment of interest / instances when additional damages may be recovered:

(a)

When there is express stipulation to the effect that damages or interest may still

be recovered, despite the presence of the penalty clause;(b)

When the debtor refuses to pay the penalty imposed in the obligation;


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(c) When the debtor is guilty of fraud or dolo in the fulfilment of the obligation.

ART. 1227. The debtor cannot exempt himself from the performance of the obligation by

paying the penalty, save in the case where this right has been expressly reserved forhim. Neither can the creditor demand the fulfilment of the obligation and the

satisfaction of the penalty at the same time, unless this right has been clearly grantedhim. However, if after the creditor has decided to require the fulfilment of theobligation, the performance thereof should become impossible without his fault, the

penalty may be enforced.

General rule debtor is not allowed to just pay the penalty instead of fulfilling theobligation, unless such right has been expressly reserved.

General rule the creditor does not have this right to demand fulfilment of theobligation and the penalty at the same time, except when such right has been clearly

granted.

ART. 1229. The judge shall equitably reduce the penalty when the principal obligation has

been partly or irregularly complied with by the debtor. Even if there has been no

performance, the penalty may also be reduced by the courts if it is iniquitous orunconscionable.

Penalty may be reduced by the court:

a. When the obligation has been partly complied with by the debtor

b. When the obligation has been irregularly complied with by the debtorc.

When penalty is iniquitous (unfair) or unconscionable (unreasonable, excessive),

even when there was no performance

ART. 1230. The nullity of the penal clause does not carry with it that of the principal

obligation.The nullity of the principal obligation carries with it that of the penal clause.

ART. 1231. Obligations are extinguished:(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 of creditor and debtor;

(5)

By compensation;

(6)

By novation.

Other causes of extinguishment of obligations, such as annulment, rescission, fulfilmentof a resolutory condition, and prescription, are governed elsewhere in this Code.

*PA-LO-CON-CON-COM-NO

Obligations are EXTINGUISHED by:


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1. Payment or performance

2. Loss of the thing due3. Condonation or remission of the debt or waiver

4. Confusion or merger of the rights of creditor and debtor5. Compensation

6.

NovationOther causes mentioned in the art.:

1. Annulment

2. Rescission3. Fulfilment of a resolutory condition

4. Prescription

Still other causes:1. Death of a party in case the obligation is a personal one

2. Resolutory term

3. Change of a civil status4. Compromises

5.

Mutual dissent6. Impossibility of fulfilment

7.Fortuitous event

LAMBERTO TORRIJOS v. CA

Facts: Torrijos purchased a lot from Diamnuan who later sold it to De Guia. Torrijosinitiated an estafa complaint and seller was convicted. During appeal, Diamnuan died.

Lawyer alleged that the death of his client extinguished both the personal and the

pecuniary penalties.Issue: w/n the civil liability is also extinguished?

Held: civil liability is not extinguished, because independently of criminal case, theaccused was civilly liable to Torrijos. There is no question of his civil liability thru

an action by Torrijos either for specific performance plus damages or rescission plus

damages. Death is not a valid cause for the extinguishment of a civil obligation. UnderArts. 19, 20, and 21 of the Civil Code, the accused would be civilly liable independently

of the criminal liability for which he can be held liable. And this civil liability

exists despite death prior to final judgment of conviction.

ART. 1232. Payment means not only the delivery of money but also the performance, in anyother manner, of an obligation.

Payment mode of extinguishing obligations which consists of:(a)

The delivery of money; or

(b)The performance in any other manner of an obligation.

ART. 1233. A debt shall not be understood to have been paid unless the thing or service

in which the obligation consists has been completely delivered or rendered, as the casemay be.


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Requisites for valid payment:a.The very thing or service contemplated must be paid

b. Fulfilment must be completeHow payment/performance is made:

a.

If the debt is a monetary obligation, by delivery of the money, which must be infull unless otherwise stipulated.

b. If the debt is the delivery of a thing or things, by delivery of the thing or

thingsc. If the debt is the doing of a personal undertaking, by the performance of said

personal undertaking

d. If the debt is not doing of something, by refraining from doing the action

ART. 1236. The creditor is not bound to accept payment or performance by a third person

who has no interest in the fulfilment of the obligation, unless there is a stipulation tothe contrary.

Whoever pays for another may demand from the debtor what he has paid, except that if hepaid without the knowledge or against the will of the debtor, he can recover only

insofar as the payment has been beneficial to the debtor.

General rule creditor can refuse payment by a stranger (3rdperson)Except:

(a) If there is a stipulation allowing

(b) If said third person has an interest in the fulfilment of obligation

Third person may pay:

(a)

With the knowledge and consent of the debtor payor is entitled to reimbursementand subrogation to such rights as guaranty, penalty clause, or mortgage.

(b) Without the debtors knowledge or against his will payor is not entitled tosubrogation; moreover, he is allowed only beneficial reimbursement

*Other instances when recovery can be had from the creditor and not from the

innocent debtor:

a. when the debt had prescribedb. when the debt had been completely remitted

c. when the debt has already been paidd. when legal compensation had already taken place

ART. 1237. Whoever pays on behalf of the debtor without the knowledge or against thewill of the latter, cannot compel the creditor to subrogate him in his rights, such as

those arising from a mortgage, guaranty, or penalty.

Subrogation the act of putting somebody into the shoes of the creditor, hence, enablingthe former to exercise all the rights and actions that could have been exercised by thelatter.


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- Transfers to the person subrogated the credit with all the rights thereto

appertaining, either against the debtor or against third persons, be theyguarantors or possessors of mortgages, subject to stipulation in a conventional

subrogation

ART. 1238. Payment made by a third person who does not intend to be reimbursed by thedebtor is deemed to be a donation, which requires the debtors consent. But the payment is

in any case valid as to the creditor who has accepted it.

ART. 1239. In obligations to give, payment made by one who does not have the free

disposal of the thing due and capacity to alienate it shall not be valid, without

prejudice to the provisions of Art.1427 under the Title on Natural Obligations.

Payment made by an incapacitated person:

General rule if person paying has no capacity to give:(a) Payment is not valid if accepted;(b)

Creditor cannot even be compelled to accept it;(c)The remedy of consignation would not be proper.

Exception - when a minor bet. 18-21 y.o. enters into contract w/o parental consent and

voluntarily pays or delivers a fungible thing in fulfilment of obligation, there shallbe no right to recover the same from the obligee who has spent or consumed it in good

faith.

ART. 1240. Payment shall be made to the person in whose favor the obligation has been

constituted, or his successor in interest, or any person authorized to receive it.

Payment must be made to:a.

person in whose favor the obligation has been constituted (the creditor)

b. successor-in-interest (heirs)

c.

any person authorized to receive it*authorization may be by agreement/by law

*if not authorized payment is generally not valid.

ART. 1241. Payment to a person who is incapacitated to administer his property shall be

valid if he has kept the thing delivered, or insofar as the payment has been beneficialto him.

Payment made to a third person shall also be valid insofar as it has redounded to the

benefit of the creditor. Such benefit to the creditor need not be proved in the followingcases:

1. if after the payment, the third person acquires the creditors rights;2.

if the creditor ratifies the payment to the third person;

3. if by the creditors conduct, the debtor has been led to believe that the thirdperson had authority to receive the payment.


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ART. 1243. Payment made to the creditor by the debtor after the latter has been judicially

ordered to retain the debt shall not be valid.Garnishment the proceeding by which a debtors creditor is subjected to the payment ofhis own debt to another. It consists in the citation of some stranger to the litigation,who is the debtor of one of the parties to the action. By this means such debtor-stranger

becomes a forced intervenor, and the court, having acquired jurisdiction over his personby means of the citation required of him to pay his debt, not to his former creditor, butto the new creditor, who is the creditor in the main litigation.

Interpleader - action in which a certain person in possession of certain property wants

claimants to litigate among themselves for the same.

- Whenever conflicting claims upon the same subject matter are or may be madeagainst a person who claims no interest whatever in the subject matter, or an

interest which in whole or in part is not disputed by the claimants, he may

bring an action against the conflicting claimants to compel them to interpleadand litigate their several claims among themselves

Injunction judicial process by virtue of which a person is generally ordered torefrain from doing something.

Preliminary injunction if the prohibition is during the pendency of certainproceedings.

ART. 1245. Dation in payment, whereby a property is alienated to the creditor in

satisfaction of a debt in money, shall be governed by the law of sales.

Dation in payment mode of extinguishing an obligation whereby the debtor alienates in

favor of the creditor, property for the satisfaction of monetary debt.Synonyms: (a) datio in solutum (b) adjudicacion en pago

SALE DATION IN PAYMENTNo pre-existing credit Pre-existing credit

Gives rise to obligations Extinguishes obligationsCause or consideration is price (POV ofseller) / obtaining object (POV of buyer)

Extinguishment of debt (debtor)Acquisition of object offered in credit

Greater freedom in the determination ofprice

Less freedom

Giving of price generally end theobligation of buyer

Giving of object in lieu of the credit mayextinguish completely/partially the credit(depends on agreement)

ART. 1251. Payment shall be made in the place designated in the obligation.

There being no express stipulation and if the undertaking is to deliver a determinatething, the payment shall be made wherever the thing might be at the moment the

obligation was constituted.In any other case the place of payment shall be the domicile of the debtor.


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If the debtor changes his domicile in bad faith or after he has incurred in delay, the

additional expenses shall be borne by him.These provisions are without prejudice to venue under the Rules of Court.

Where payment must be made:

a.

If there is stipulation in the place DESIGNATEDb. No stipulation:

1) Obligation to deliver a determinate specific thing in the place where thething might be (usually/habitually) at the time the obligation was constitutedTemporarily there domicile of debtor

2) Obligation is any other thing (generic, money, personal obligation) at thedomicile of debtor

ART. 1252. He who has various debts of the same kind in favor of one and the same

creditor, may declare at the time of making the payment, to which of them the same must

be applied. Unless the parties so stipulate, or when the application of payment is madeby the party for whose benefit the term has been constituted, application shall not be

made as to debts which are not yet due.If the debtor accepts from the creditor a receipt in which an application of the payment

is made, the former cannot complain of the same, unless there is a cause for invalidating

the contract.

4 special forms of payment:a. Application / imputation of payments

b. Dation in payment / adjudicacion en pago/ datio in solutum

c. Assignment in favor of creditors / cessiond.

Tender of payment and consignation

Application of payment the designation of the debt to which should be applied apayment made by a debtor who owes several debts in favor of the same creditor

Requisites for application of payment to be made use of:

(a)

There must be two or more debts / severalty of debt

(b) Must be of the same kind(c)

Debts are owed by the same debtor in favor of the same creditor / only one debtor

and one creditor(d)

All the debts must be due

(e)

Payment is not enough to extinguish all debts

Rule when debts are not yet due:

There may be application of payments(a)

If the parties so stipulate

(b)

When the application of payment is made by the party for whose benefit the term

has been constituted


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It is the debtors rightto select which debts he is paying, but such right is not absolute(a) If there was a valid prior but contrary agreement(b)The debtor cannot choose to pay part of the principal ahead of the interest unless

creditor consents

How application is made:(a) Debtor makes the designation(b) If not, creditor makes, by so stating in the receipt, unless there is cause for

invalidating the contract(c) If neither makes the application, or if application is not valid, then application

is made by operation of law

*If the creditor makes the application without the knowledge and consent of the debtor,

the application is not valid.

*once an application of payment is made, it may not be revoked unless both parties agree.Still, such will not be allowed if third persons will be prejudiced.

*application must be made at the time when payment by the debtor is made, not after.

ART. 1254. When payment cannot be applied in accordance with the preceding rules, or if

application cannot be inferred from other circumstances, the debt which is most onerousto the debtor, among those due, shall be deemed to have been satisfied.

If the debts due are of the same nature and burden, the payment shall be applied to allof them proportionately.

ART. 1255. The debtor may cede or assign his property to his creditors in payment of hisdebts. This cession, unless there is stipulation to the contrary, shall only release the

debtor from responsibility for the net proceeds of the thing assigned. The agreementwhich, on the effect of the cession, are made between the debtor and his creditors shall

be governed by special laws.

Cession assignment in favor of creditors-

Process by which a debtor transfers all the properties not subject to execution

in favor of his creditors so that the latter may sell them, and thus apply theproceeds to their credits

Kinds or classes:

a.

Legal governed by Insolvency Law (majority of creditors must agree)b.

Voluntary all creditors must agree

Requisites of voluntary assignment:(a)

More than one debt

(b)

More than one creditor

(c)

Complete/partial insolvency


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(d) Abandonment of all debtors property not exempt from execution in favor ofcreditors

(e) Acceptance/consent of creditors

Effects:

(a)

Creditors do not become owners, just merely assignees with authority to sell(b) Debtor released up to the amount of net proceeds, unless there is contrary

stipulation. Balance remains collectible

(c) Creditors will collect credits in the order of preference agreed upon, or indefault of agreement, in the order ordinarily established by law

Some properties should not be assigned:

1. Family home2.amount needed to support himself and his dependents

CESSION distinguished from DATION

DACION EN PAGO CESSIONDoes not affect all the properties In general, affects all properties

Does not require plurality of creditors Requires more than 1 creditorOnly specific/concerned creditors consentis required

Requires consent of all creditors

May take place during solvency Requires full/partial insolvencyTransfers ownership upon delivery Does not transfer ownershipReally an act of novation Not an act of novation

TENDER OF PAYMENT act of offering the creditor what is due together with a demandthat he accepts the same.

CONSIGNATION act of depositing the thing due with the court or judicial authorities

whenever the creditor cannot accept/refuses to accept payment, which generally requires aprior tender of payment.

ART. 1256. If the creditor to whom tender of payment has been made refuses without justcause to accept it, the debtor shall be released from responsibility by the consignation

of the thing or sum due.

Consignation alone shall produce the same effect in the ff. cases:(1) when the creditor is absent/unknown, or does not appear at the place of payment;

(2) when he is incapacitated to receive the payment at the time it is due;(3) when, without just cause, he refuses to give a receipt;

(4)

when 2 or more persons claim the same right to collect;(5) when the title of the obligation has been lost.

ART. 1257. In order that the consignation of the thing due may release the obligor, itmust first be announced to the persons interested in the fulfilment of the obligation.

The obligation shall be ineffectual if it is not made strictly in consonance with the

provisions which regulate payment.


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Essential requisites:

(a) existence of a valid debt(b) valid prior tender, unless tender is excused

(c) prior notice of consignation (before deposit)(d)actual consignation (deposit)

(e)

subsequent notice of consignation

ART. 1260. Once the consignation has been duly made, the debtor may ask the judge to

order the cancellation of the obligation.Before the creditor has accepted the consignation, or before a judicial declaration that

the consignation has been properly made, the debtor may withdraw the thing or the sum

deposited, allowing the obligation to remain in force.

Effects of consignation duly made:

(a) debtor may ask judge to order cancellation of obligation(b) running of interest is suspended

(c)

it should be observed that before the creditor accepts, or before the judgedeclares that consignation has been properly made, the obligation remains.

LOSS IMPOSSIBILITY OF PERFORMANCE(a) when object perishes

(b)goes out of commerce(c) disappears in such a way that

-existence is unknown

-cannot be recovered

Impossibility of performance:(a)

physical impossibility

(b) legal impossibility

1.

directly caused as when prohibited by law2.

indirectly caused as when the debtor is required to enter a military draft

(c)

moral impossibility / impracticability

ART. 1262. An obligation which consists in the delivery of a determinate thing shall be

extinguished if it should be lost or destroyed without the fault of the debtor, andbefore he has incurred in delay.

When by law or stipulation, the obligor is liable even for fortuitous events, the loss of

the thing does not extinguish the obligation, and he shall be responsible for damages.The same rule applies when the nature of the obligation requires the assumption of risk.

Obligations to give:a.

a generic thing

b.

a specific thing


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Effect of loss on an obligation to deliver a specific thing:

General rule obligation is extinguished. Except:1. if debtor is at fault

2. debtor is made liable for fortuitous events due to:a. provision of law

b.

contractual stipulationc. nature of obligation requires assumption of risk

Ex. of instances when the law requires liability even in case of fortuitous events:

(a) debtor is in default(b) debtor has promised to deliver the same thing to 2 or more persons who do not

have the same interest

(c) when obligation arises from a crime(d)borrower has lent the thing to another who is not a member of his own household

(e) when the thing loaned has been delivered with appraisal of the value, unless

there is a stipulation exempting the borrower from responsibility in case of afortuitous event

(f)

payee in solutio indebiti is in bad faith

ART. 1263. In an obligation to deliver a generic thing, the loss or destruction of

anything of the same kind does not extinguish the obligation.

Loss of a generic thing obligation continues to existGenus nunquam perit genus never perishes

Exceptions:(a)

Delimited generic thing (i.e. 50kg of sugar from my 1999 harvest)

(b)

If the generic thing has already been segregated or set aside, in which case, ithas become specific

ART. 1270. Condonation or remission is essentially gratuitous, and requires the acceptanceby the obligor. It may be made expressly or impliedly.

One and the other kinds shall be subject to the rules which govern inofficious donations.

Express condonation shall, furthermore, comply with the forms of donation.

Remission / condonation the gratuitous abandonment by the creditor of his right

Effect if remission is not accepted by the debtor:

This would not be remission; however debt may be extinguished by prescription if notcollected within the Statute of limitations

LUANSING v. people of the Phil. & CA

Facts: criminal action for seduction // offended party partly reserved the right to file

a separate civil action. CFI finds accused guilty and imposed civil liabilities.Issue: was the imposition of civil liability proper, despite reservation?


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Held: not proper because:

a.There was the reservation as to the civil aspectb. Mere failure to file a motion for reconsideration does not necessarily result in

waiver or abandonment.c. Proof should be given with respect to amt.

ART. 1271. The delivery of a private document evidencing a credit, made voluntarily bythe creditor to the debtor, implies the renunciation of the action which the former had

against the latter.If in order to nullify this waiver it should be claimed to be inofficious, the debtor and

his heirs may uphold it by providing that the delivery of the document was made in

virtue of the debt.

ART. 1272. Whenever the private document in which the debt appears is found in the

possession of the debtor, it shall be presumed that the creditor delivered it voluntarily,unless the contrary is proved.

ART. 1278. Compensation shall take place when two persons, in their own right, are

creditors and debtors of each other.

Compensation sort of balancing between two obligations; it involves a figurativeoperation of weighing two obligations simultaneously in order to extinguish them to theextent in which the amount of one is covered by the other

- The extinguishment in the concurrent amount of the obligations of those who

are reciprocally debtors and creditors of each other.

ART. 1279. In order that compensation may be proper, it is necessary:(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 consists is 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 they be liquidated and demandable;

(5)

That over neither of them there be any retention or controversy, commenced bythird persons and communicated in due time to the debtor.

ART. 1291. Obligation may be modified by:(1)

Changing their object or principal conditions;

(2)Substituting the person of the debtor;(3)

Subrogating a third person in the right of the creditor.

Novation the substitution or change of an obligation by another, which extinguishes ormodifies the first, either changing its object or principal condition, or substituting


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another in place of the debtor, or subrogating a third person in the right of the

creditor.Kinds:

a. Accdg. to object/purpose1. Real/objective changing the object/principal conditions of the obligation

2.

Personal /subjective change of personsA.Substituting the person of the debtor expromision / delegacion

B.Subrogating a third person in the rights of the creditor

3. Mixedb. Accdg. to the form of its constitution

1. Express

2. Impliedc. Accdg. to extent/effect

1. Total / extinctive novation old obligation is completely extinguished2. Partial / modificatory (imperfect / improper novation) merely modified; thus,

still remains in force except insofar as it has been modified.

Requisites of valid novation:

a.Existence of valid old obligation

b. Intent to extinguish / modify the old obligation by a substantial differencec. Capacity and consent of all the parties

d. Validity of new obligation

ART. 1293. Novation which consists in substituting a new debtor in the place of the

original one, may be made even without the knowledge or against the will of the latter,but not without the consent of the creditor. Payment by the new debtor gives him the

rights mentioned in Art.1236&1237.

Personal / subjective novation:

(a)

passive change of debtor1.

expromision

req: a. where the initiative comes from a third person

b.new debtor and the creditor must consentc.

essential that old debtor be released from his obligation

*old debtors consent/knowledge not required2.

delegacion

req: a. the initiative comes from the debtor

b.

the three parties concerned must all agreeconsent of the creditor: 1) may be given in any form, 2) may be

express/implied from his acts, 3) may be before or after the new debtorgave his consent, 4) may be conditional, but the condition has to be

fulfilled.

parties:delegante original debtor


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delegatario creditordelegado new debtorART. 1294. If the substitution is without the knowledge or against the will of the debtor,

the new debtors insolvency ornon-fulfilment of the obligation shall not give rise toany liability on the part of the original debtor.

ART. 1295. The insolvency of the new debtor, who has been proposed by the original debtorand accepted by the creditor, shall not revive the action of the latter against the

original obligor, except when said insolvency was already existing and of publicknowledge, or known to the debtor, when he delegated his debt.

(b)active change of creditor

ART. 1300. Subrogation of a third person in the rights of the creditor is either legal or

conventional. The former is not presumed, except in cases expressly mentioned in thisCode; the latter must be clearly established in order that it may take effect.

Subrogation extinctive subjective novation by change of the creditor- is the transfer to a third person of all the rights appertaining to the

creditor, including the right to proceed against guarantors, or possessors ofmortgages, subject to any legal provision or any modification that may be

agreed upon.Kinds of subrogation:

(a) from the viewpoint of cause or origin:

1. conventional / voluntary subrogation requires an agreement and the consentof the original parties and of the creditor

2.

legal subrogation takes place by operation of law(b)

from the viewpoint of extent:

1. total subrogation

2.

partial subrogation 2 or more creditors

ART. 1301. Conventional subrogation of a third person requires the consent of the original

parties and of the third person.

All parties: (a) debtor, (b) old creditor, (c) new creditor

Distinctions between conventional subrogation and assignment of credit:

ASSIGNMENT OF CREDIT CONVENTIONAL SUBROGATIONMere transfer of the same right of credit(transfer did not extinguish the credit)

Extinguishes the obligation, creates a newone

Doesnot require the debtors consent (merenotification is sufficient)

Requires debtors consent

Defect in credit or right is not curedsimply by assigning the same (debtor

generally still has the right to present

Defect of old obligation may be cured insuch a way that the new obligation becomesentirely valid (there is no right to


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against the new creditor any defenseavailable as against old creditor)

present against the new creditor anydefense which he could have set up against

the old creditor)

ART. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred, even without the debtorsknowledge.

(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

fulfilment of the obligation pays, without prejudice to the effects of confusion

as to the latters share.

ART. 1304. A creditor, to whom partial payment has been made, may exercise his right for

the remainder, and he shall be preferred to the person who has been subrogated in his

place in virtue of the partial payment of the same credit.

*the original creditor should be preferred inasmuch as he is granted by law

preferential right to recover the remainder, over the person subrogated in his place by

virtue of the partial payment of the same credit.

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