extinguishment of obligations Flashcards
DOCTRINE OF SUBSTANTIAL PERFORMANCE (ART. 1234)
First exception of the rule ng ART. 1233
Considered na extinguish ang obligation kung merong:
- substantial performance of obligation
- debtor acted in good faith
GOOD FAITH
always presumed unless there is proof to contrary
When creditor accepts partial or irregular payment from debtor. He has two options:
a. Creditor may reject it
b. Creditor may accept it = law considers that he waives his right = extinguishment of obligation
Distinguish ART. 1234 from ART. 1235 in terms of DAMAGES
Art. 1235 walang damages kasi considered na full performance dahil inaccept na ni creditor kahit na partial/irregular ang payment. While Art. 1234 may damages kasi substantial ang payment at need icompensate ang kulang sa payment ng obligation.
creditor is bound to accept payment from:
- debtor
- debtor’s representative
- 3rd person who has interest in fulfillment of obligation (guarantor)
- 3rd person who has no interest in fulfillment of obligation when there is stipulation he can make a payment
ART. 1236 about creditor
If payment is made by the 3rd person without debtor’s consent. What is the effect?
- creditor CANNOT be compelled to accept the payment from a 3rd person
- the 3rd person has the RIGHT TO REIMBURSEMENT from the debtor to the extent/amount of the benefit received by the debtor & he can recover as well from creditor the excess from fulfillment ng obligation (in case na nakapagbayad na si debtor)
BUT does not have the right to subrogation
as a general rule, whoever pays in behalf of the debtor is entitled to right to subrogation UNLESS (ART.1237)
UNLESS the person paid the creditor WITHOUT debtor’s knowledge or consent
Under Art. 1237 In subrogation, does the obligation extinguished if a 3rd person paid for the obligation of the debtor and debtor has knowledge of it?
No, it’s is like a change of creditor lang. Kasi may obligation pa rin si debtor na mareimburse yung binayad ni 3rd person (new creditor) kay original creditor
ART. 1238
If the 3rd person, who does not intend to reimbursement, paid on behalf of the debtor, it is deemed as DONATION when
when the debtor consented on the donation
ART. 1238
If creditor accepts the payment of the 3rd person who does not intend to be reimbursed, the payment is
VALID and the obligation of debtor will be extinguished even if debtor did not give his consent as to the DONATION
Can debtor legally refuse to pay the payor who does not intend to be reimbursed and insist to pay on the creditor even if the 3rd person who does not intend to be reimbursed already paid for debtor’s behalf?
No
Art. 1239
Explain the meaning of “free disposal of the thing due” and “capacity to alienate”
Free disposal of the thing due - the thing due MUST NOT be subject to any claim or encumbrance (mortgage/pledge) of a third person
Capacity to alienate - person must not be incapacitated to enter into contracts
Exception under Art. 1427.
As a general rule, in obligation to give, payment by one person who does not have FDOTTD and CTA is NOT VALID and thing paid can be recovered (ART. 1239)
Kapag yung minor na nasa edad 18-21 years old na nag enter sa contract, voluntarily pays the creditor sum of money or deliver a fungible thing in fulfillment ng obligation and the creditor spent the thing in good faith, so si payor cannot recover and expect the same from the creditor
ART. 1240 Payment shall be made to these three people:
- creditor (person in whose favor obligation is constituted)
- successor in interest (heir/assignee)
- any person authorize to receive it
Under 1249 when does payment in good faith to a person who is not authorized to receive it valid?
when the debtor paid to a person who has a possession in credit
ART. 1241
How can a payment make to an incapacitated person deemed VALID?
- The incapacitated person kept the thing paid
2. the incapacitated person was benefited by the payment
ART. 1241
Assuming that debtor was not able to prove that the incapacitated person received a benefit from the permanent. What can he do to fulfill the obligation?
- Debtor shall pay again to the guardian/parent of incapacitated person
- Debtor shall pay to the incapacitated person AGAIN when the person acquires capacity
ART. 1241
It is NOT presumed that creditor has benefited from the payment to a WRONG PARTY unless there is PROOF. Assuming there is NO PROOF that the creditor has been benefited by the payment to the wrong party. What is the effect?
The payment is deemed as ERROR and the creditor has still right to demand payment from the debtor
ART. 1242 Define possession in credit and when will the obligation extinguished in this case?
Possession in credit is the right of person to receive payment of obligation.
When the payment is made in good faith to any person in possession of the credit.
ART. 1243 When will the payment of a third party (who has a debt to the debtor) be valid & will extinguish the debtor’s obligation to the creditor?
- When the payment of the third party who has a debt to the debtor made payment to the creditor assuming that the debtor is judicially ordered to retain the debt
- the third party who has debt to the debtor made payment AFTER the order of retention but BEFORE na malaman niya na mayroong order of retention si debtor
ART. 1244
Can either the debtor or creditor compel each other to deliver a thing different from the original presentation?
No. because the debtor must deliver the specific agreed thing DUE to the creditor and creditor must only accept the specific agreed thing DUE given by the debtor
ART 1244
When will substitution can be made?
When the creditor consented.
Which type of obligation is related to Art 1244
Facultative obligation (debtor may render a thing + substitute)
4 special forms of payment (ART. 1245)
- Dation of payment
- Application of payment (strictly speaking, not a special form of payment)
- Payment by cession
- Tender of payment & consignation
Art. 1245
What is a dation of payment?
DATION OF PAYMENT - is a special form of payment that extinguishes obligation NOT by payment of money but rather ALIENATION OF PROPERTY
art. 1245 give the other names for DATION OF PAYMENT
adjudication
dacion en pago
dation of payment is governed by ?
law of sales
ART. 1246 IS THE PRINCIPLE OF WHAT.
explain why
EQUITY because this article is about not having injustices between parties. if the obligation is to deliver A GENERIC things and there is no stipulation as to the quality of the thing, the creditor cannot demand superior quality while debtor cannot deliver an inferior quality
ART. 1247
If there is no stipulation, who will account for the extrajudicial expenses of payment? And why?
The DEBTOR will account for extrajudicial expenses of payment because it is deemed as tho he benefited by the payment since the obligation has been extinguished
ART. 1247 What is a judicial costs and who as a rule pays for it?
List the exception
Judicial costs - amounts allowed to a party for his expenses to his action
whoever is the LOSING PARTY will shoulder or pay the judicial cost.
except if the court adjudge either of the party to pay for the judicial costs OR the court decides to divide the costs to both parties as to equitability
ART. 1248
What are the 3 cases that partial performance is allowed?
- it is expressly stipulated
- the debt is partly liquidated (definitely computed) & partly unliquidated
- obligation requires distinct presentation and different terms & conditions (installment payment)
Joana is indebted to Jojo in the amount of P5,000 plus Jojo’s share in profit in their coffee shop business. The profit has not been liquidated. Jojo demanded the payment on Aug 1. How much should Joana pay? What is the implication of the case?
Joana can pay in the amount of liquidated which is P5,000. The unliquidated part of debt may be paid when the profit has been known/determined. The partial payment of obligation is VALID according to Art. 1248
ART. 1249 Define LEGAL TENDER
Legal tender is the currency w/c if debtor offers in right amount, shall creditor accepts in payment of a money debt
ART. 1249 What are the things that the creditor cannot be compelled to accept that are considered NOT legal tenders in the Philippines?
promissory notes, checks, bills of exchange, mercantile documents, etc
ART. 1249
What are the rights of the creditor in terms of payment of debtor using instruments of credits NOT considered legal tenders in the PH?
- to refuse the instrument
2. accept the instrument
ART. 1249
Does debtor paying instrument of credits to creditor extinguish the obligation right away? WHY?
NO , because they are NOT considered legal tenders & if the creditor accepts that instrument, it is deemed as if the demandability of obligation is SUSPENDED. thus, it is considered a CONDITIONAL PAYMENT. AND WILL NOT EXTINGUISH obligation until
- creditor cash the instrument
- the instrument has been impaired by the creditor (naexpire yung instrument bago mapaconvert sa cash)
ART. 1250
Distinguish inflation and deflation
inflation - pagtaas ng mga presyo at pagbaba ng value ng pera
deflation - opposite.
ART.1250
In case of extraodinary inflation or deflation, the basis of payment shall be
the purchasing value of the currency at the time when the obligation is established
ART. 1250
This is ONLY applicable to what source of obligation?
contractual obligation since at the time of perfection, parties selected a currency as a medium of payment
ART. 1251
Where are places that obligation shall be paid?
- If it is stipulated, so kung saan napag-usapan, doon mangyayari ang payment
- If it is stipulated, and prestation is to deliver a SPECIFIC thing, the payment shall take place to WHERE the specific thing was AT THE PERFECTION of the contract
- if there is no stipulation & thing to be delivered is A GENERIC THING, payment shall take place at the debtor’s domicile. si creditor mabuburden siya for expenses para makapunta at maaccept ang payment ni debtor
ART. 1251
What is venue? Domicile? Residence?
venue is the place where court action must be filed
domicile - permanent home, habitual residence
residence - requires bodily presence
ART 1251
Assuming that Dani owes Pia P10,000 and there is no stipulation as to place of payment. As a general rule, Pia shall incur incidental expenses as to collection of payment from Dani since she will need to go to Dani’s domicile. Assuming that Dani changed her domicile due to delay. What is the consequence?
Dani will be burdened of additional expenses incurred by the creditor since she showed BAD FAITH
ART. 1252
Define application of payments
it is the DESIGNATION ng utang ni debtor na pwedeng ma-apply sa kanyang MARAMING MARAMING UTANG basta yung utang is sa iisang creditor at same kind ang mga utang niya
ART. 1252
What are the 5 REQUISITIES of application of payments?
- there must be ONE DEBTOR and ONE CREDITOR ONLY
- must be two or more debts
- debts must be of the SAME KIND
- debts to w/c payment has been applied MUST DUE
- payment must NOT be sufficient to ALL utang
ART. 1252
Application of payments must not be applied to debts which are not yet due UNLESS
- stipulated sa contract
2. made by debtor or creditor (kung sinuman ang magbebenefit from the constituted period)
ART. 1252
WHAT ARE 5 RULES ON APPLICATION OF PAYMENTS
- si debtor ang may first choice. he must indicate at the time of making payment which debt ba yung kaniyang eextingusih thru the payment
> once na naapply na ni debtor ang payment niya sa specific utang, bawal niya ng iapply yung payment into another utang - once the right of application has been exercised, it is irrevocable UNLESS si creditor consented to the change
- if si debtor does not apply payment, creditor may designate the payment by RECEIPT & consent of debtor
- if both debtor and creditor have not made the application OR if application is NOT VALID, the debt which is MOST ONEROUS (or ang utang na pinakamabigat kay debtor) shall be deemed to have been extinguished
- if debts due are in the SAME NATURE & BURDEN, payment shall be applied to them PROPORTIONATELY
ART. 1253
What is the mandatory rule in ART. 1253?
Debtor shall pay interest first before the principal
ART. 1254
When is the debt most onerous than another?
when the debt is more burdensome to debtor
ART. 1254
Supreme Court rules to be followed in determining ONEROUS debt to debtor:
- INTEREST BEARING is more onerous than a non-interest bearing debt
- a debt as a SOLE debtor is more onerous than solitary debtor
- debts secured by MORTGAGE OR PLEDGE is more onerous than unsecured
- the one with HIGHER rates in a interest bearing notes
- obligation WITH A PENAL CAUSE is more onerous than obligation w/o
ART. 1254
When debts are subject to DIFFERENT BURDENS and it cannot be determined which is most onerous among them, what should debtor do?
debt shall be applied to ALLof the debts proportionately
ART. 1255
DEFINE PAYMENT BY CESSION
it is the ASSIGNMENT of all properties for the benefit of the creditors as to satisfaction of his credits
ART. 1255
What are the 4 requisities of payment by cession?
- must be 2 or more creditors
- debtor must be partially insolvent
- assignment musst involve ALL properties ni debtor
- cession must be accepted by creditors
ART. 1255 What are effects of payment by cession?
- assignment does not make creditors owners ng properties ni debtor (unless stipulated na ang creditors na ang owners)
- if the proceeds of properties ni debtor is not sufficient pa rin sa utang, liable pa rin si debtor na magbayad ng balance ng utang na natira (unless may stipulation that net proceeds from sale of debtor’s properties is deemed full satisfation of all his debts
Distinguish dation of payment and payment by cession.
Dation has only 1 creditor while in cession there are several creditors
Dation - does not presuppose insolvency of debtor
Cession - insolvent si debtor
Dation - does not extend to ALL properties ni debtor
Dation - creditor becomes the owner of the thing na binigay ni debtor
Cession- creditors are not owners and only have the right to sell the properties and generate proceeds from them as to satisfaction of debtor’s debts
Dation - act of novation
Cession - not act of novation
ART. 1256
Define consignation. Tender of payment
Tender of payment - act of debtor to offer a thing or amount due to creditor
Consignation - act of depostiing thing or amount due w/ proper court when creditor does not want or cannot receive it after complying w/ formalities required in law
ART. 1256
What are the 5 requisites of a valid cogsignation?
- existence of a debt w/c is due
- valid prior payment by debtor and refusal of creditor to accept it without justifiable reason
- previous notice of consignation to persons interested in fulfillment of obligation
- consignation of the thing/sum due
- subsequent notice of consignataion made to interested parties
ART. 1256
When will tender of payment not be required?
When the creditor informs si debtor na he wont accept the payment and waives payment on the due date of payment. from that, debtor can be excused not to make a tender of payment and he wont also incur any delay kahit na mag fail pa siya to make a tender of payment after creditor notified that creditor wont receive the payment
ART. 1256
Requirements of a VALID tender of payment
- must comply to the rules on payment or with terms required in the contract
- must be unconditional and for the whole amount due and in legal tender
- must be actually made. debtor must show present ability to perform by actual offer of thing/sum due
ART. 1257
In absence of prior notice to persons interested in fulfillment of obligation, what is the effect?
The consignation as a payment is void
ART. 1257
What is the purpose of notice?
It is to give the creditor ng chance to reasses yung previous refusal niya in accepting the payment of the debtor considering na siya ang mashoshoulder ng expenses of consignation at incase of loss of thing consigned, siya rin ang may risk for that
ART. 1258
tender of payment must precede consignation,thus tender mus be approved. what is the action to cases where tender is NOT required?
prior notice to interested persons in consignationm shall be proved.
ART. 1258
What is the purpose of the second notice?
so creditor has the chance to withdraw the thing/sum deposited in case he accepts the consignation
ART. 1259
As a general rule, consignation expenses are charged to creditor. When is the time that debtor will be charged to these expenses?
When the consignation is not properly made
ART. 1259
How to tell if the consignation is properly made?
- when creditor accepts thing/sum deposited without objection as payment ng obligation
- when creditor questions validity of the consignation and court declares that it is properly made
- when creditor neither accepts nor questions the validity of consignation, court orders cancellation ng oblgation
ART. 1260
If debtor chose to cancel the obligation by court and withdraws the thing/sum deposited
a) before creditor accepts consignation
b) before court declares that it has been properly made
what will happen?
debtor will remain the owner of the thing/sum deposited and obligation will remain in force. thus si debtor na ang magbabayad ng expenses
ART. 1262
Related Art. 1189 The thing is lost when:
- thing perishes
- it goes out of commerce
- it disappears (existence is unknown)
- its existence is known but it cannot be recovered
ART. 1262
What are the requisites that will tell if the loss of thing equates to extinguishment of obligation?
- the thing to be delivered is a SPECIFIC thing
- if the loss of the thing due is WITHOUT the fault of the debtor
- debtor must have not incurred delay
ART. 1262
When will the obligation NOT considered extinguished even tho a SPECIFIC thing is lost without fault of debtor and he does not incur delay?
- when law so provides
- when stipulation provides
- when obligation requires assumption of risk
- when obligation to deliver a specific thing arises from crime
ART. 1263
Discuss the principle behind the non-extinguishment of an obligation to deliver a generic thing if a generic thing was lost?
The obligation is NOT extinguished because it is based on principle that generic thing never perishes. thus, debtor can be compelled to deliver a generic thing with the same kind.
ART. 1263
When will a generic thing be considered a specific thing?
When the thing is under a particular class.
ART. 1264
When will the obligation be extinguished if the thing incurred partial loss?
If the court determined under circumstances that the partial loss is so important as to extinguish the obligation
Jojo obliged himself to deliver a specific horse to Bea that she will use for horse-riding on Sep 1. The horse got into an accident and had a broken rib and cannot be healed. Is the obligation extinguished?
Yes, because the partial loss is as important as to extinguish obligation.
Jojo obliged himself to deliver a specific horse to Bea that she will use for horse-riding on Sep 1. The horse got into an accident due to Jojo’s fault, had a broken rib and cannot be healed. Is the obligation extinguished?
Yes, obligation is extinguished because the partial loss is as important. But since it is Jojo’s fault, he needs to pay Bea monetary equivalent for the horse + any damages incurred.
ART. 1265
What is the disputable presumption in regard to the loss of thing due when the thing is in possession of the debtor?
Presumption is debtor is at fault of the loss of the thing due if thing is in his possession UNLESS there is proof to the contrary
ART. 1265
The debtor even tho it is NOT his fault that the thing due was lost while in his possession is still LIABLE when:
- he is guilty of delay
2. he promised to deliver the same thing to two or more people who do not have the same interest
ART. 1265
The presumption that the debtor is at fault while the thing due was lost during his possession is not applicable when?
When there are cases of natural calamities. hindi rin pwede na ipresume na may negligence sa part ni debtor when this happens
Jojo promised to deliver a Toyota car to Jaja on Aug 30. On June 11, the car shop delivered the car to Jojo’s domicile and on June 15, the car was stolen. Jojo argued that it is not his fault. What shall this imply? Is he liable?
Jojo is still liable because the car was in his possession and it is presumed under ART. 1265 unless he proves on the contrary
ART. 1266
In obligation to do, when will the obligation be considered extinguished?
When without the fault of debtor, the obligation has become legally and physically impossible to fulfill.
ART. 1266
TWO Kinds of impossibility that will extinguish the obligation
- if it is a purely personal obligation kung saan si debtor ang dapat na magperform ng obligation. so incase of death ni debtor or it has been deemed that debtor cannot physically perform his obligation, the obligation is deemed EXTINGUISHED
- it is legally impossible - if obligation is legally impossible to do under the provision of law (kahit na physically possible to perform the obligation) this obligation is deemed eXTINGUISHED
ART. 1257
When performance of obligation has been difficult, debtor may be released from the obligation, totally or partially. This rule is applicable to what obligation?
- personal obligation (to do)
2. real obligation (to deliver a thing)
ART. 1257
What is the element in extinguishment of obligation ni debtor if it has deemed difficult to comply with?
Element of fortuitous event
ART. 1268
Even if the loss of thing due is because of a fortuitous event, debtor is STILL LIABLE when
when obligation arises due to criminal offense
ART. 1268
Exception in the rule that debtor is liable for the loss of thing due despite when it is due to a fortuitous event (assuming obligation arises from a criminal offense)
When the creditor refuses to accept the performance of obligation (mora accipiendi)
ART. 1268
Exception in the rule that debtor is liable for the loss of thing due despite when it is due to a fortuitous event (assuming obligation arises from a criminal offense)
When the creditor refuses to accept the performance of obligation (mora accipiendi)
Jojo stole Joseph’s car. Thus he has obligation to return the car to Joseph. Assuming the car was destroyed due to an accidental fire in the neighborhood. Is obligation extinguished?
No, he is still liable despite the thing due was lost thru a fortuitous event. He can pay the monetary value of the car plus damages
Jojo stole Joseph’s car. Thus he has obligation to return the car to Joseph. Jojo offered to return the car after a week but Joseph refused to receive it.
Consignation is not needed. This is an exception in the rule under ART. 1268.
ART. 1269
From the moment obligation has been extinguished, what is the right of creditor to protect his interest from loss of obligation?
he has the right to proceed against third persons who caused the loss of the thing
Jojo obliged himself to deliver to Jaja a specific carabao on July 31. The carabao died on July 25. Jaja has no proof that Jojo was negligent. Is Jojo still liable to Jaja?
No, the obligation is deemed extinguished
Jojo obliges himself to deliver a specific thing to Jaja on a certain date. The thing was lost without Jojo’s fault and before he has incurred in delay. Is the obligation extinguished?
Yes
Suppose, the thing was lost due Jiji (a 3rd person). What is the effect of this?
Jaja can proceed against Jiji
ART. 1270 Define remission or condonation.
Remission or condonation is the gratuitous abandonment of creditor’s rights against the debtor
Give the 5 requisites of condonation/remission
- must be gratuitous
- must be accepted by the debtor
- parties must have capacity
- must NOT be inofficious
- if made expressly, it must comply with forms of donations
ART. 1270
Give the 3 kinds of remission and their subcategories
- as to extent
a. complete - covers ENTIRE obligation
b. partial - does NOT cover entire obligation - as to form
a. express - made either verbally or writing
b. implied - can only be inferred - as to date of effectivity
a. inter vivos - it will take effect during the lifetime of donor
b. mortis causa - will take effect upon death of donor
ART. 1270
What is the inofficious and what is the effect of it?
Inofficious remission - giving more than that w/c creditor can give by will; the excess shall be deemed INOFFICIOUS and shall be reduced by court
ART. 1270
What is legitime?
Legitime is the testator’s property na hindi niya pwede na i-dispose because law has reserved it to certain heirs (compulsory heirs)
ART. 1271
When creditor voluntarily delivers to debtor the document of indebtedness, it implies what?
It implies renunciation of his right as to the payment of the debtor of his obligation.
ART. 1271
What are the 4 presumptions in case of voluntary delivery of document of indebtedness by creditor?
- Presumption of implied remission
- Contrary evidence - presumption is it is prima facie or rebuttable by an evidence.
- extent of remission - if joint obligation, yung remitted lang is up to the extent ng share ng joint debtor na in possession yung document
> if solidary, total obligation ang remitted - presumption applicable only to a private document
When will the action of renunciation by creditor be nullified or void?
upon proof that remission is inofficious. so yung heirs can prove that the delivery of document is for virtue of payment and not for remission
ART. 1272
What is the presumption in case the document is in possession of the debtor?
The presumption is that the creditor VOLUNTARILY delivered the document evidencing debtor’s debt UNLESS creditor proves the contrary
thus, this signifies
A. PAYMENT of the debtor; thus extinguishes obligation
B. When it is only known that no payment has been made, saka lang nation iprepresume na may nangyaring REMISSION
ART. 1273
Discuss the relationship of principal and accessory obligations and the effect to each other once:
a) principal obligation has been renounced
b) accessory obligation has been renounced
Accessory ALWAYS follows the PRINCIPAL. Thus, if the principal obligation has been renounced, it also extinguishes the accessory obligation.
However, if the accessory obligation has been renounced, principal obligation is still enforceable. THUS, REMAINS
ART. 1274
What happens when the accessory obligation of pledge, the thing pledged is later found in possession of debtor or a thrid person who is the owner of that thing?
The presumption is that the accessory obligation is REMITTED but the PRINCIPAL IS NOT. And therefore, debtor is still liable to perform the principal obligation UNLESS there is a proof to the contrary
ART. 1275
Define confusion or merger.
Confusion/merger - meeting in one person, both characters of debtor and creditor with respect to the same obligation
ART. 1275
Two reasons of confusion/merger
- if debtor is his own creditor, one person cannot claim payment to from himself
- when there is confusion of rights, purpose of creation of obligation are deemed realised
ART. 1275
Requisites of Confusion
- must take place between principal debt and creditor
2. must be complete
ART. 1276
What is the effect of merger in person of principal debtor or creditor?
Extinguishes the obligation. In case of there is an accessory obligation, accessory obligation is also extinguished with the principal
ART. 1276
In case of merger in person of the guarantor, what is the effect?
It extinguishes the accessory obligation but principal obligation remains in force.
ART. 1277
In case of joint obligation, merger taking place in person of any debtor or creditor, does what to the obligation?
The obligation is NOT extinguished and will NOT affect others. The confusion will only extinguish the SHARE of corresponding to debtor/creditor in whom 2 characters can concur
ART. 1277
In case of solidary obligation, confusion taking place in one debtor or creditor shall what?
shall EXTINGUISH the entire obligation. he who pays for the entire obligation may reimburse to his co-debtors their share
ART. 1278
Define Compensation
Compensation - extinguishment of CONCURRENT debts of two persons who, in their own right are debtors & creditors of each other
ART. 1278
Distinguish compensation from confusion
- In confusion, only one debtor and one creditor; in compensation, there are two persons and each is a debtor and creditor to each other
- In confusion, there is only one obligation; in compensation there are two obligations
- In confusion, meron impossibility of payment; in compensation, there is an INDIRECT or simplified payment
ART. 1278
Give the 2 kinds of compensation and their categories
- By its effect or extent
a. total - both obligations are in the SAME amount and are entirely extinguished
b. partial - both obligations are in different amounts and only partial portion of obligation is extinguished - by its cause or origin
a. legal - it takes place by operation of law even w/o knowledge of parties
b. voluntary - takes place by agreement of parties
c. judicial - takes place by order from court in litigation
d. facultative - can be set up only by one of the parties
ART. 1279
Give the 5 requisities of LEGAL COMPENSATION
- parties are principal creditors & debtors of each other
- both debts consist in a sum of money or consumable things of same kind and quality
- two debts are due & demandable
- two debts are liquidated
- no retention/controversy commenced by a third person
ART. 1279
Define controversy and retention
Controversy - third person claims that he is the creditor of one of the parties
Retention - credit ng one parties ay subject sa satisfaction ng 3rd person
ART. 1280
This is the exception in the general rule that only principal debtor can set up against the creditor what the latter owes him. What is the reason for this exception?
Extinguishment ng principal obligation follows extinguishment ng accessory obligation
ART. 1282
When will the debt can be subject to compensation even if debts are still not yet due?
Voluntary or conventional compensation - nangyari due to agreement ng parties kahit na hindi na-meet lahat ng requisites ng isang legal compensation. basta ang contract ng parties (w/c nag declare ng compensation) is VALID
ART. 1283
Discuss judicial compensation.
Judicial compensation - declared by court in a suit. A party may set off his claim for damages against his obligation to another party by proving his right to said damages and the amount thereof
ART. 1284
When one or both debts are rescissible or voidable, what can be the action?
Compensated against each other before they are judicially rescinded/avoided.
ART. 1285
When compensation has taken place before assignment of debt, debtor can
debtor can defense extinguishment of his obligation thru compensation
ART. 1285
3 cases where compensation has taken place AFTER assignment
- assignment with consent of debtor
2. assignment with knowledge of debtor but without his consent
ART. 1286
Who shall pay the indemnity in terms of when debts are payable at different places
Whoever raises the defense of compensation shall pay the expense of transportation or expense of monetary exchange
