Professional Documents
Culture Documents
Gonzales Finals
1 Cessy Ciar -1AA 20112-2012
Art. 1219. The remission made by the
creditorofthesharewhichaffectsoneof
thesolidarydebtorsdoesnotreleasethe
latter from his responsibility towards the
co-debtors, in case the debt had been
totallypaidbyanyoneofthembeforethe
remissionwaseffected.(1146a)
Art. 1223.Thedivisibilityorindivisibilityof
the things that are the object of
obligations in which there is only one
debtor and only one creditor does not
alter or modify the provisions ofChapter
2ofthisTitle.(1149)
Chapter 4: Extinguishment of
Obligations
General Provisions
Art. 1231.Obligationsareextinguished:
(1) Bypaymentorperformance;
(2) Bythelossofthethingdue;
(3) By the condonation or remission of
thedebt;
(4) By the confusion or merger of the
rightsofcreditoranddebtor;
(5) Bycompensation;
(6) Bynovation.
OBLIGATIONS and CONTRACTS / Atty. A. F. Gonzales Finals
3 Cessy Ciar -1AA 20112-2012
Other causes of extinguishment of
obligations, such as annulment,
rescission, fulfillment of a resolutory
condition,andprescription,aregoverned
elsewhereinthisCode.(1156a)
Art. 1233.Adebtshallnotbeunderstood
to have been paid unless the thing or
service in which the obligation consists
has been completely delivered or
rendered,asthecasemaybe.(1157)
Art. 1237.Whoeverpaysonbehalfofthe
debtorwithouttheknowledgeoragainst
the will of the latter, cannot compel the
creditor to subrogate him in his rights,
such as those arising from a mortgage,
guaranty,orpenalty.(1159a)
Art. 1239.Inobligationstogive,payment
madebyonewhodoesnothavethefree
disposalofthethingdueandcapacityto
alienate it shall not be valid, without
prejudicetotheprovisionsofArticle1427
under the Title on "Natural Obligations."
(1160a)
Art. 1242.Paymentmadeingoodfaithto
any person in possession of the credit
shallreleasethedebtor.(1164)
4specialformsofpayment:
1. Dation in payment
2. Application of payment
3. Cession
4. Tender of payment and
consignation
Thedeliveryofpromissorynotespayable
to order, or bills of exchange or other
mercantiledocuments shallproduce the
effect of payment only when they have
been cashed, or when through the fault
ofthecreditortheyhavebeenimpaired.
Inthemeantime,theactionderivedfrom
theoriginalobligationshallbeheldinthe
abeyance.(1170)
[Tibajia v. CA:Sec.3ofRA265checks
are not legal tender; Sec. 1 of RA 529
obligations x x x shall be discharged
upon payment of any coin or currency
(considered as legal tender for public
andprivatepurposes).]
[Papa v. Valencia & Co., Inc. & Padilla v.
Paredes:Checksareconsideredonlyas
payment only when they have been
cashedorthroughthecreditor'sfaulthas
been impaired. A check is not legal
tender; acceptance of check implies an
undertaking of due diligence in
presenting it for payment, and if he for
whomitisreceivedsustainslossbywant
of such diligence, it will be held to
operate as actual payment of debt for
which the check was given (in the first
case, the creditor did not encash the
checkfor10years,presumptionisthatit
wasencashed).
AsregardsthePadillacase:RA8183all
monetary obligations shall be settled in
thePhilippinecurrencywhichisthelegal
tender in the Philippines. However, the
parties may agree that the obligation or
transaction shall be settled in any other
currencyatthetimeofpayment.]
[Hydro Resources v. NIA: In the past,
foreign currency was not deemed as
legal tender even if such was stipulated,
except if there are foreign bodies
involved.]
Art. 1255.Thedebtormaycedeorassign
his property to his creditors in payment
ofhisdebts.Thiscession,unlessthereis
stipulation to the contrary, shall only
release the debtorfrom responsibilityfor
the net proceeds of the thing assigned.
The agreements which, on the effect of
the cession, are made between the
debtor and his creditors shall be
governedbyspeciallaws.(1175a)
Cession/Assignment in favor of
creditorstheprocessbywhich
debtor transferall the properties
not subject to execution infavor
ofcreditorsisthatthelattermay
sell them and thus, apply the
proceeds to their credits;
extinguish up to amount of net
proceeds (unless with contrary
stipulation)
Kinds:
1. Legal governed by the
insolvencylaw
2. Voluntary agreement of
creditors
Requisites for voluntary
assignment:
a. Morethan1debt
b. Morethan1creditor
c. Complete or partial
insolvencyofdebtor
d. Abandonmentofalldebtors
property not exempt from
execution
e. Acceptance or consent on
thepartofthecreditors
Effects:
a. Creditors do not become
the owner; they are merely
assignees with authority to
sell
b. Debtor is released up to the
amount of the netproceeds
ofthesale,unlessthereisa
stipulationtothecontrary
c. Creditors will collect credits
in the order of preference
agreedupon,orindefaultof
agreement, in the order
ordinarily established by
law
Ifdebtorisonlyinsolventinfact,
creditors may not accept
payment by cession from him.
His remedy is to have himself
declared as insolvent according
to our insolvency law, and after
that he may enforce cession
already.
If he also was able to get a
certificate of discharge, his debt
maybetotallyextinguished.
Art. 1258.Consignationshallbemadeby
depositingthethingsdueatthedisposal
of judicial authority, before whom the
tender of payment shall be proved, in a
proper case, and the announcement of
theconsignationinothercases.
Theconsignationhavingbeenmade,the
interested parties shall also be notified
thereof.(1178)
Art. 1259.Theexpensesofconsignation,
when properly made, shall be charged
againstthecreditor.(1178)
Art. 1262.Anobligationwhichconsistsin
the delivery of a determinate thing shall
be extinguished if it should be lost or
destroyedwithoutthefaultofthedebtor,
andbeforehehasincurredindelay.
Whenbylaworstipulation,theobligoris
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
requirestheassumptionofrisk.(1182a)
Art. 1266.Thedebtorinobligationstodo
shall also be released when the
prestation becomes legally or physically
impossible without the fault of the
obligor.(1184a)
REQUISITES:
o It must take place between
principal debtor & principal
creditoronly
o Merger must be clear &
definite
o The obligation involved
must be same & identical
oneobligationonly
o Revocable, if reason for
confusion ceases, the
obligation is revived
Section 5: Compensation
Kindsofcompensation:
a. Legal compensation by
operation of law; as long as
the 5 requisites in Art. 1279
concurevenifunknownto
parties & if payable in diff
places; indemnity for
expenseofexchanges;even
if not equal debts only up
toconcurringamount
b. Conventional
compensationagreement
of parties is enough, forget
other requirement as long
asbothconsented
c. Facultative compensation
one party has choice of
claiming/opposing one
who has benefit of period
maychoosetocompensate
o notallrequisitesare
present
o depositum;
commodatum;
criminal offense;
claim for future
support;taxes
d. Judicial compensation
set off; upon order of the
court; needs pleading &
proof;allrequirementsmust
concurexceptliquidation
e. Total compensation
when 2 debts are of the
sameamount
f. Partial compensation
when 2debtsare not of the
sameamount
Art. 1280.Notwithstandingtheprovisions
of the preceding article, the guarantor
may set up compensation as regards
what the creditor may owe the principal
debtor.(1197)
Art. 1281.Compensationmaybetotalor
partial. When the two debts are of the
same amount, there is a total
compensation.(n)
Art. 1285.Thedebtorwhohasconsented
to the assignment of rights made by a
creditorinfavorofathirdperson,cannot
set up against the assignee the
compensation which would pertain to
him against the assignor, unless the
assignorwasnotifiedbythedebtoratthe
time he gave his consent, that he
reservedhisrighttothecompensation.
Ifthecreditorcommunicatedthecession
to him but the debtor did not consent
thereto, the latter may set up the
compensation of debts previous to the
cession,butnotofsubsequentones.
Facultative compensation:
when only one of the parties
have the right to set up
compensation.
o In case of deposit, the
depositor (owner of the
thing deposited) may
setupcompensation.
o In case of
commodatum, the
owner of the thing
(he/she who lent said
thingtoanotherperson)
may set up
compensation
o Incasesofsupport,the
one entitled to support
may set up
compensation.
o In case of obligations
arising from penal
offense, only the
offended party may set
upcompensation
EXAMPLE: Sarahwasrapedbyaperson
(hereinafter the offender) whom she
owes P50000, and subsequently, she
wontherapecaseagainstsaidoffender,
awardingherP50000indamages.