PAYMENT AND LOSS (Extinguishment of Obligations) Flashcards
Means not only the delivery of money but also the
performance, in any other manner, of an obligation.
PAYMENT
Physical Loss or Destruction or Illegality of the thing.
LOSS
It is the gratuitous abandonment by the creditor of his
right.
REMISSION OR
CONDONATION
It is the meeting in one person of the qualities of creditor and debtor with respect to the same obligation.
CONFUSION OR MERGER
It is the extinguishment in the concurrent amount of the obligations of those persons who are reciprocally debtors
and creditors of each other.
COMPENSATION
The replacement of an old contract with a new one, by
changing the object or principal conditions; substituting the person of the debtor; and subrogating a third person in the right of the creditor.
NOVATION
Payment means not only the delivery of money
but also the performance, in any other manner, of an
obligation.
ARTICLE 1232
Article 1232 talks about ways by which “Payment” is
enforced or accomplished. It could either be?
A, Delivery of Money (ORDINARY PARLANCE)
B. Performance of the Obligation in the manner agreed upon(TO GIVE, TO DO, NOT TO DO)
In law payment is?
SPECIFIC PERFORMANCE
sample question:
If Danny is obligated to give Eve a specific car, how is
payment made?
PAYMENT is made by DELIVERING THE CAR
sample question:
If Charles is obligated to repair the computer of Faith, how is
payment made?
PAYMENT is made by PERFORMING THE SERVICE (repairing the
computer).
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 case may be.
ARTICLE 1233
may refer to an obligation to deliver money, to deliver
a thing (other than money), to do an act or not to do
an act.
DEBT
ART. 1233
Completeness of the
performance. The prestation must be completely rendered. Partiality or irregularity will not lead to
extinguishment.
INTEGRITY OF PRESTATION
ART. 1233
The thing or the act agreed upon must be the one delivered or performed, as the case may be.
No substitutes are allowed and the delivery of this will not lead to extinguishment, unless agreed upon.
IDENTITY OF PRESTATION
Burden of payment belongs to the DEBTOR.
There is substantial compliance by the
debtor when in good faith he has attempted to perform the contract or
prestation but through excusable neglect or oversight, he failed to make
full and complete performance for which the other party may be
indemnified. (Doctrine of Substantial Performance)
SUBSTANTIAL COMPLIANCE
When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or
objection, the obligation is deemed fully complied with.
ARTICLE 1235
requisites of article 1235?
- The OBLIGEE KNOWS that the PERFORMANCE is
INCOMPLETE AND IRREGULAR; and - HE ACCEPTS THE PERFORMANCE WITHOUT expressing
any PROTEST OR OBJECTION.
The creditor is not bound to accept payment or
performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.
ARTICLE 1236 (1st paragraph)
A borrowed 10k from B. On due date, D, a philanthropist tried paying the debt of A.
B declined. Is B’s refusal proper?
YES, because D has nothing to do with the
obligation.
Whoever pays for another may demand from the
debtor what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover only
insofar as the payment has been beneficial to the debtor.
ARTICLE 1236 (2nd paragraph)
From article 1236:
Payer has the right to
reimbursement and subrogation, and to acquire all rights of the
creditor against the debtor.
PAYMENT WITH DEBTOR’S CONSENT
From article 1236:
The payer can
recover only the amount that benefited the debtor, or only the
amount of the debt at the time of payment.
PAYMENT AGAINST THE WILL OF THE DEBTOR
Whoever pays on behalf of the debtor without
the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those
arising from a mortgage, guaranty, or penalty.
ARTICLE 1237
ART. 1237:
whoever pays on behalf of the debtor is entitled to subrogation if the payment is with the consent of the
______?
LATTER
true or false?
Whoever pays on behalf of the debtor is entitled
to subrogation if the payment is with the consent of the
debtor.
FALSE (payment is only allowed if it was consented by the Latter)
true or false?
If the payment is without the knowledge or against the will of the debtor, the third person cannot compel the creditor to subrogate him in the latter’s accessory rights of mortgage, guaranty, or penalty.
TRUE
Payment made by a third person who does not
intend to be reimbursed by the debtor is deemed to be a donation, which requires the debtor’s consent. But the payment is in any case valid as to the creditor who has accepted it.
ARTICLE 1238
Article 1238 “embodies the idea that no one should be
____________________________________________________.”
compelled to accept the generosity of another
If the paying
third person does not intend to be reimbursed the payment is
deemed a _______?
DONATION
a donation requires the ____________ ____________ to be
valid.
DEBTOR’S CONSENT
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 Article 1427 under the Title on “Natural Obligations.”
ARTICLE 1239
article 1239 with obligation ________?
TO GIVE
The payor must have the free disposal of the thing paid, otherwise the payment is _____________?
NOT VALID
thing is not subject to any claim, lien, or encumbrance
from a third person.
FREE DISPOSAL
the person making the transfer or disposal has
the capacity to do so.
CAPACITY TO ALIENATE
The creditor cannot be compelled to accept payment from an
____________ person.
INCAPACITATED
Sisa, 89 years of age, transferred the title of her land to Crisostomo, her creditor, for the satisfaction of her debt. The time
the transfer was made, Sisa often goes out of the house, naked, and runs back in again. Is the transfer valid?
it is not valid since Sisa no longer has legal capacity
Sisa, 89 years of age, transferred the title of her land to Crisostomo, her creditor, for the satisfaction of her debt. The time
the transfer was made, Sisa often goes out of the house, naked, and runs back in again.
How can this scenario be valid?
Only if the transaction is done during Sisa’s lucid intervals
state of an insane person where that person is
in possession of his mental faculties. It is also referred to as temporary/periodic sanity.
LUCID INTERVALS
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.
ARTICLE 1240
Andy owes Calvin P10,000. Instead of paying Calvin directly, Andy deposited the money in a bank in the name and for the credit of Calvin. All these were done without Calvin’s permission. Was Andy’s debt extinguished?
NO. Payment should be made directly to Calvin or his assigns.
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 beneficial to him.
ARTICLE 1241
Article 1241. 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 following cases:
(1) If after the payment, the third person acquires the creditor’s
rights; (Subrogation)
(2) If the creditor ratifies the payment to the third person;
(Ratification)
(3) If by the creditor’s conduct, the debtor has been led to believe
that the third person had authority to receive the payment.
(Estoppel)
If after the payment, the third person acquires the creditor’s rights
SUBROGATION
If the creditor ratifies the payment to the third person
RATIFICATION
If by the creditor’s conduct, the debtor has been led to believe that the third person had authority to receive the payment
ESTOPPEL
Payment made in good faith to any person in
possession of the credit shall release the debtor.
ARTICLE 1242
Payment made to the creditor by the debtor
after the latter has been judicially ordered to retain the debt shall not be valid.
ARTICLE 1243
The proceeding by which a debtor’s creditor
is subjected to the payment of his own debt to another.
GARNISHMENT
The payment made to the creditor after the credit has been
_________ or _________ is void as to the party who obtained
the attachment or garnishment, to the extent of the amount
of the judgment in his favor.
ATTACHED
GARNISHED
The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable than that which is due. In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the obligee’s
will. (General Rule on Prohibition of Substitute Performance) (Emphasis supplied)
ARTICLE 1244
Article 1244 does not apply if:
- Creditor Gives Consent to substitution;
- Facultative Obligations;
- Stipulation to Substitution
Dation in payment whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed
by the law of sales. (Dation is a special form of payment)
ARTICLE 1245
a special form of payment?
DATION
ARTICLE 1245:
Andy owes Benny P100,000. Instead of delivering cash which he does not yet have, with the consent of Benny, Andy gave the Benny a diamond jewelry set instead. Does this transaction extinguish the obligation?
IT DEPENDA
explanation: If the value is equal to or higher than the debt in money, then it is extinguished since the delivery of the jewelry set in lieu of the cash was made with the consent of the creditor. If not, then only the portion for the value shall be extinguished.
When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot
demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. The purpose of the obligation
and other circumstances shall be taken into consideration.
ARTICLE 1246
When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality, but is also not to deliver inferior quality. Why?
to ensure the PRINCIPLE OF EQUITY (fairness)
The debtor cannot
be compelled to deliver a thing of superior quality, not can the
creditor be compelled to accept something of inferior quality.
RULE OF MEDIUM QUALITY
(this is a principle of equity)
Unless it is otherwise stipulated, the
extrajudicial expenses required by the payment shall be
for the account of the debtor. With regard to judicial costs,
the Rules of Court shall govern.
ARTICLE 1247
an agreement, a bargain, proviso, or condition
STIPULATION
the costs in order to cover those spent in litigation
JUDICIAL COSTS
No costs shall be allowed against the Government, unless
otherwise provided by ______.
LAW
Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations
in which the obligation consists. Neither may the debtor be required to make partial payments. However, when the debt is in
part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter.
ARTICLE 1248
ART. 1248
This article talks about completeness of the performance. Where
can there be partial performance?
- If expressly agreed upon;
- If debt is partly liquidated and partly unliquidated;
- Prestations are governed by separate terms or conditions.
It is that currency which a debtor may compel a creditor to accept in payment of the debt in money.
LEGAL TENDER
The payment of debts in money shall be
made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines
ARTICLE 1249
In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary.
ARTICLE 1250
________________ or deflation exists when there is a decrease or increase in the purchasing power of the Philippine
currency
EXTRAORDINARY INFLATION
