Powerpoint Obligations And Contracts.pptx

OBLIGATIONS AND CONTRACTS NEW CIVIL CODE OF THE PHILIPPINES ARTS. 1156-1304 (OBLIGATIONS) ARTS. 1305-1422

GENERAL PROVISIONS

OBLIGATIONS (CIVIL OBLIGATIONS) A juridical necessity To give, to do or not to do.

JURIDICAL NECESSITY • CONNOTE THAT IN CASE OF NON-COMPLIANCE , THERE WILL BE LEGAL SANCTIONS

SOURCES OF OBLIGATIONS

2 (LACQ )

1.LAW 2.CONTRACTS 3. QUASI-CONTRACTS 4.ACTS OR OMISSIONS PUNISHED BY LAW 5. QUASI-DELICTS (ART. 1157, NCC)

LAW • A RULE OF CONDUCT, JUST AND OBLIGATORY, LAID DOWN BY LEGITIMATE AUTHORITY FOR THE COMMON OBSERVANCE AND BENEFIT.

CONTRACT • IS A MEETING OF THE MINDS • BETWEEN TWO PERSONS • WHEREBY ONE BINDS HIMSELF • WITH RESPECT TO THE OTHER • TO GIVE SOMETHING • OR TO RENDER SOME SERVICE (ART. 1305, NCC)

QUASI-CONTRACTS • REFER TO CERTAIN, LAWFUL, VOLUNTARY AND UNILATERAL ACTS • GIVING RISE TO A JURIDICAL RELATION • TO THE END THAT NO ONE SHALL BE UNJUSTLY ENRICHED • AT THE EXPENSE OF ANOTHER UNJUST ENRICHMENT - RETAINS A BENEFIT TO THE LOSS OF ANOTHER

TWO TYPES OF QUASI-CONTRACT 1. NEGOTIORUM GESTIO - REFERS TO THE VOLUNTARY ADMINISTRATION OF THE PROPERTY, BUSINESS OR AFFAIRS OF ANOTHER - WITHOUT HIS CONSENT OR AUTHORITY 2. SOLUTIO INDEBITI - REFERS TO PAYMENT BY MISTAKE OF AN OBLIGATION WHICH WAS NOT DUE WHEN PAID.

ACTS OR OMISSIONS PUNISHABLE BY LAW • THESE ARE CRIMES OR FELONIES. THE COMMISSION OF THE CRIME MAKES THE OFFENSER CIVILLY LIABLE.

QUASI-DELICTS (ALSO KNOWN AS ”TORT/CULPA-AQUILIANA” ) • ACTS OR OMISSIONS THAT CAUSE DAMAGE TO ANOTHER THERE BEING FAULT OR NEGLIGENCE BUT WITHOUT ANY PRE-EXISTING CONTRACTUAL OBLIGATION

ESSENTIAL REQUISITES OF AN OBLIGATION (JAPP) 1. JURIDICAL OR LEGAL TIE/ EFFICIENT CAUSE/VINCULUM JURIS 2. ACTIVE SUBJECT/CREDITOR/OBLIGEE 3. PASSIVE SUBJECT/DEBTOR/OBLIGOR 4. PRESTATION/OBJECT

ESSENTIAL REQUISITES OF AN OBLIGATION 1. JURIDICAL OR LEGAL TIE/ EFFICIENT CAUSE/VINCULUM JURIS - Which binds the parties to an obligation. - It may be any of the five sources of obligation

ACTIVE SUBJECT • KNOWN AS THE CREDITOR/OBLIGEE • WHO CAN DEMAND THE FULFILLMENT OF THE OBLIGATION

PASSIVE SUBJECT • KNOWN AS THE DEBTOR/OBLIGOR • FROM WHOM THE OBLIGATION IS JURIDICALLY DEMANDABLE

PRESTATION/FACT/SERVICE • WHICH CONSTITUTES THE OBJECT OF THE OBLIGATUIN • IT MAY BE AN OBJECT • IT MAY CONSIST OF GIVING, DOING OR NOT DOING SOMETHING

PRESTATION 1.OBLIGATION TO GIVE - consists in the delivery of a movable or immovable thing to the creditor. EXAMPLES: OBLIGATIONS TO DELIVER THE THING IN SALE, DEPOSIT, PLEDGE AND DONATION

PRESTATION 2.OBLIGATION TO DO - Covers all kinds of works or services whether physical or mental EXAMPLES: CONTRACT FOR PROFESSIONAL SERVICES LIKE PAINTING , MODELLING, SINGING

PRESTATION 2.OBLIGATIONS NOT TO DO - CONSISTS IN REFRAINING FROM DOING SOME ACTS

KINDS OF OBLIGATIONS • (A) AS TO JUDICIAL ENFORCEABILITY • (B) AS TO THE SUBJECT MATTER • C AS TO THE NUMBER OF PERSONS BOUND TO PERFORM • D. AS TO THE CAPABILITY OF FULFILLMENT • E. AS TO SUSCEPTIBILITY OF PARTIAL FULFILLMENT • F. AS TO THEIR DEPENDENCE UPON ONE ANOTHER • G. AS TO THE EXISTENCE OF A BURDEN OR CONDITION • H. AS TO THE NATURE OF PERFORMANCE

• I. AS TO THE NATURE OF CREATION OF THE OBLIGATION • J. AS TO THE CHARACTER OF RESPONSIBILITY OR LIABILITY • K. AS TO THE GRANT OF RIGHT TO CHOOSE ONE PRESTATION OUT OF SEVERAL OR TO SUBSTITUTE THE FIRST ONE. • L. AS TO THE IMPOSITION OF PENALTY

NATURE AND EFFECTS OF OBLIGATION 1. DETERMINATE OR SPECIFIC THING - IS SOMETHING WHICH IS SUSCEPTIBLE OF PARTICULAR DESIGNATION OR SPECIFICATION - PARTICULARLY DESIGNATED OR PHYSICALLY SEGREGATED FROM ALL OTHERS OF THE SAME CLASS EXAMPLE; A MERCEDES BENZ CAR, MODEL 2000, CHASSIS NO.232323 WITH PLATE NO. AAA 999

2. INDETERMINATE THING OR GENERIC THING - IS SOMETHING WHICH IS NOT PARTICULARIZED OR SPECIFIED BUT HAS REFERENCE ONLY TO A CLASS OR GENUS - EXAMPLE: A CAR, AN OUNCE OF GOLD

• GENUS NEVER PERISHES (GENUS NUNGUAM PERIT)

IN OBLIGATIONS TO GIVE • IF THE OBLIGATION IS DETERMINATE, DUTIES WHICH ARE IMPOSED UPON THE DEBTOR ARE: 1. TO DELIVER THE THING WHICH HE HAS OBLIGATED HIMSELF TO GIVE; 2. TO TAKE CARE OF THE THING WITH THE PROPER DILIGENCE OF A GOOD FATHER OF A FAMILY; 3. TO DELIVER ALL ACCESSIONS AND ACCESSORIES 4. TO PAY DAMAGES IN CASE OF BREACH OF OBLIGATION

OBLIGATIONS IS GENERIC: • 1. TO DELIVER A THING WHICH MUST BE NEITHER OF SUPERIOR NOR INFERIOR QUALITY • 2. TO PAY DAMAGES IN CASE OF BREACH OF THE OBLIGATION

PROBLEM: MR. A bound himself to deliver to B a (1) 21-inch 1983 model TV set, and (2) the 13 cubic feet White Westinghouse refrigerator with Motor No.WERT-385 , which B saw in A’s store, and (3)to repair B’s piano. A did none of these things.

May B compel A to deliver the TV set and the refrigerator and repair the piano?

OBLIGATION TO GIVE QUESTION: IF THE OBJECT OF THE OBLIGATION TO GIVE IS LOST OR DESTROYED THROUGH A FORTUITOUS EVENT, CAN THE DEBTOR OR OBLIGOR STILL BE HELD LIABLE FOR DAMAGES?

ANSWER:

IT DEPENDS.

• OBLIGATION IS DETERMINATE General Rule: The obligor or debtor cannot be held liable for damages provided there is no delay or fault on the part of obligor. REASON: DESTROYED BY FORTUITOUS EVENT • OBLIGATION IS INDETERMINATE • DEBTOR/OBLIGOR CAN STILL BE LIABLE FOR DAMAGES REASON: GENUS NUMQUAM PERUIT (GENERIC THING CAN NEVER PERISH)

CAUSES OF BREACH OF OBLIGATION

CAUSES OF BREACH OF OBLIGATION 1. 2. 3. 4.

DEFAULT OR MORA FRAUD OR DOLO NEGLIGENCE OR CULPA CONTRAVENTION OF THE TENOR OF THE OBLIGATION

CAUSES OF BREACH OF OBLIGATION 1. DEFAULT OR MORA - DELAY IN THE FULFILLMENT OF AN OBLIGATION - NON-FULFILLMENT OF AN OBLIGATION WITH RESPECT TO TIME

CAUSES OF BREACH OF OBLIGATION

KINDS DEFAULT OR MORA 1.MORA SOLVENDI - DELAY OF OF THE OBLIGOR/DEBTOR TO PERFORM HIS OBLIGATION

CAUSES OF BREACH OF OBLIGATION

KINDS DEFAULT OR MORA 2. MORA ACCIPIENDI - DELAY OF OF THE OBLIGEE/CREDITOR TO ACCEPT THE DELIVERY OF THE THING W/C IS THE OBJECT OF THE OBLIGATION

CAUSES OF BREACH OF OBLIGATION

KINDS DEFAULT OR MORA 3. COMPENSATIO MORAE - DELAY OF THE PARTIES/OBLIGORS IN RECIPROCAL OBLIGATIONS

DEFAULT OR MORA

QUESTION: IN OBLIGATIONS TO GIVE OR TO DO, WHEN DOES THE OBLIGOR/DEBTOR INCUR DELAY?

ANSWER: NON-FULFILLMENT OF OBLIGATION DESPITE DESPITE OF DEMAND. • DEBTOR INCURS IN DELAY FROM THE TIME THE CREDITOR JUDICIALLY OR EXTRAJUDICIALLY DEMANDS FROM HIM THE FULFILLMENT OF HIS OBLIGATION • AND IN SPITE OF SUCH DEMAND

• HE IS UNABLE TO COMPLY WITH THE OBLIGATION

DEFAULT/MORA

WHEN IS DEMAND BY THE CREDITOR NOT NECESSARY IN ORDER THAT DELAY MAY EXIST?

DEMAND BY CREDITOR IS NOT NECESSARY: TROUL 1. OBLIGATION OR THE LAW EXPRESSLY SO DECLARES 2. TIME IS OF THE ESSENCE - THE NATURE AND THE CIRCUMSTANCES OF THE OBLIGATION IT APPEARS THAT THE DESIGNATION OF THE TIME WAS A CONTROLLING MOTIVE FOR THE ESTABLISHMENT OF THE CONTRACT 3. DEMAND WOULD BE USELESS 4. RECIPROCAL OBLIGATIONS

DEFAULT/MORA • RECIPROCAL OBLIGATIONS WHERE THE OBLIGATIONS ARISE OUT OF THE SAME CAUSE AND MUST BE FULFIILED AT THE SAME TIME.

- FROM THE MOMENT ONE OF THE PARTIES FULFILLS HIS OBLIGATION, DELAY BY THE OTHER BEGINS, DESPITE THE ABSENCE OF DEMAND

EFFECTS OF DELAY • ON THE PART OF THE DEBTOR 1. LIABLE FOR DAMAGES 2. OBLIGATION CONSISTS IN THE DELIVERY OF DETERMINATE THING -RESPONSIBLE FOR ANY FORTUITOUS EVENT UNTIL HE EFFECTED THE DELIVERY.

EFFECTS OF DELAY • ON THE PART OF CREDITOR 1. BEAR THE RISK OF LOSS 2. SHOULDER THE PRESERVATION OF THE THING 3. DEBTOR MAY RESORT TO CONSIGNATION OF THE THING DUE.

CAUSES OF BREACH OF OBLIGATION

2. FRAUD/DOLO - DELIBERATE/INTENTIONAL EVASION BY THE DEBTOR OF NORMAL COMPLIANCE OF HIS OBLIGATION

KINDS OF FRAUD/DOLO • FRAUD IN OBTAININNG CONSENT

1. CAUSAL FRAUD/DOLO CAUSANTE - FRAUD W/OUT W/C CONSENT WOULD NOT HAVE BEEN GIVEN. EFFECT: CONTRACT IS VOIDABLE.

KINDS OF FRAUD/DOLO • FRAUD IN OBTAININNG CONSENT

1. CAUSAL FRAUD/DOLO CAUSANTE EXAMPLE: B BOUGHT A RING FROM S WHO TOLD HIM THAT THE RING WAS EMBELLISHED WITH BLUE DIAMOND WHICH IS NOT TRUE.

KINDS OF FRAUD/DOLO • FRAUD IN OBTAININNG CONSENT

2. INCIDENTAL FRAUD/DOLO INCIDENTE - FRAUD WITHOUT WHICH CONSENT WOULD HAVE STILL BEEN GIVEN BUT THE PERSON GIVING IT WOULD HAVE AGREED ON DIFFERENT TERMS. - EFFECTS: CONTRACT IS VALID, GUILTY PARTY LIABLE FOR DAMAGES

KINDS OF FRAUD/DOLO • FRAUD IN THE PERFORMACE OF THE OBLIGATION - DELIBERATE ACT OF EVADING FULFILLMENT OF AN OBLIGATION IN A NORMAL MANNER - PRESUPPOSES AN EXISTING OBLIGATION EFFECT: FRAUD NO EFEFCT ON THE VALIDITY OF THE CONTRACT SINCE IT WAS EMPLOYED AFTER PERFECTION. GUILTY PARTY LIABLE FOR DAMAGES.

BREACHES OF AN OBLIGATION 3. NEGLIGENCE/CULPA - OMISSION OF THAT DELIGENCE - WHICH IS REQUIRED BY THE NATURE OF THE OBLIGATION; - AND CORRESPONDS WITH THE CIRCUMSTANCES OF THE PERSON , OF THE TIME AND OF THE PLACE

KINDS OF NEGLIGENCE 1. CULPA CONTRACTUAL/CONTRACTUALL NEGLIGENCE - NEGLIGENCE IN THE PERFORMANCE OF A CONTRACT 2. CULPA AQUILIANA/ CIVIL NEGLIGENCE/TORT/QUASI-DELICT - ACTS OR OMISSION THAT CAUSE DAMAGE TO ANOTHER, NO CONTRACTUAL RELATION BETWEEN PARTIES. 3.CULPA CRIMINAL/ CRIMINAL NEGLIGENCE - NEGLIGENCE THAT RESULTS IN THE COMMISSION OF A CRIME.

BREACHES OF AN OBLIGATION 3. NEGLIGENCE/CULPA

TEST OF NEGLIGENCE: WHETHER THE DEFENDANT IN DOING THE ALLEGED ACT USED THAT REASONABLE CARE AND CAUTION WHICH AN ORDINARY PERSON WOULD HAVE USED IN THE SAME SITUATION

BREACHES OF AN OBLIGATION 3. NEGLIGENCE/CULPA WHAT KIND OF DILIGENCE ? GEN. RULE:DILIGENCE OF A GOOD FATHER OF A FAMILY. IF THE LAW OR CONTRACT DOES NOT STATE THE DILIGENCE TO BE OBSERVED IN THE PERFORMANCE OF THE OBLIGATION

FORTUITOUS EVENTS

•ARE THOSE EVENTS THAT COULD NOT BE FORESEEN OR WHICH, THOUGH FORESEEN, ARE INEVITABLE.

ELEMENTS OF F.E 1. CAUSE MUST BE INDEPENDENT OF THE DEBTOR’S WILL 2. UNFORSEEABLE/UNAVOIDABLE - THERE MUST BE IMPOSSIBILITY OF FORESEEING/AVOIDING THE EVENT IF CAN BE FORESEEN. 3. RENDERS IT IMPOSSIBLE FOR THE DEBTOR TO PERFORM HIS OBLIGATION IN A NORMAL MANNER

LIABILITY FOR F.E • GENERAL RULE: NO PERSON SHALL BE LIABLE FOR FORTUITOUS EVENT. OBLIGATION WILL BE EXTINGUISHED. • PROVIDED: DEBTOR COMMITTED NO NEGLIGENCE/MISCONDUCT

LIABILITY FOR F.E: LAS EXCEPTIONS : 1. LAW EXPRESSLY PROVIDES 2. STIPULATION OF THE PARTIES 3. NATURE OF THE OBLIGATION REQUIRES THE ASSUMPTION OF RISK REASON: NO WRONG IS DONE TO ONE WHO CONSENTS ( VOLENTI NON FIT INJURIA)

EXCEPTIONS: 4. OBJECT OF THE OBLIGATION IS LOST AND THE LOSS IS DUE PARTLY TO THE FAULT OF THE DEBTOR. 5. OBJECT OF THE OBLIGATION IS LOST AND THE LOSS OCCURS AFTER THE DEBTOR HAS INCURRES DELAY 6. DEBTOR PROMISED TO DELIVER THE SAME THING TO TWO OR MORE PERSONS WHO DO NOT HAVE THE SAME INTERESTS;

EXCEPTIONS: 7. OBLIGATION TO DELIVER ARISES FROM A CRIMINAL OFFENSE 8. OBLIGATION IS GENERIC

QUESTION:

WHAT ARE THE REMEDIES WHICH ARE AVAILABLE TO THE CREDITOR IN ORDER TO PROTECT HIS RIGHTS AGAINST THE DEBTOR?

ANSWER: THERE ARE 3 GENERAL REMEDIES. 1. EXHAUST THE PROPERTY IN POSSESSION OF THE DEBTOR 2. ACCION SUBROGATORIA - TO BE SUBROGATED TO ALL OF THE RIGHTS AND ACTIONS OF THE DEBTOR SAVE THOSE WHICH ARE INHERENT ON HIS PERSON 3 . ACCION PAULIANA - TO IMPUGN THE ACTS WHICH THE DEBTOR MAY HAVE DONE TO DEFRAUD HIM. - REMEDY OF LAST RESORT

TRANSMISSIBILITY OF RIGHTS

GENERAL RULE: ALL RIGHTS ACQUIRED IN VIRTUE OF AN OBLIGATION ARE TRANSMISSIBLE.

EXCEPTIONS: 1. LAW PROHIBITS THE TRANSMISSION OF THE RIGHT 2. STIPULATION OF PARTIES 3. RIGHT IS BY NATURE NOT TRANSMISSIBLE EXAMPLE: SCHOLARSHIP GRANT, LOVE,

KINDS OF OBLIGATIONS

MODES OF EXTINGUISHING OBLIGATIONS

CAUSES OF EXTINGUISMENT 1. 2. 3. 4.

2 3 (P LC N-

PARF)

PAYMENT OR PERFORMANCE LOSS OF THE THING DUE CONDONATION OR REMISSION OF DEBT CONFUSION OR MERGER OF THE RIGHTS OF THE CREDITOR AND DEBTOR 5. COMPENSATION 6. NOVATION 7. ANNULMENT 8. RESCISSION 9. FULFILLMENT OF A RESOLUTORY CONDITION 10. PRESCRIPTION

CAUSES OF EXTINGUISHMENT 1.PAYMENT OR PERFORMANCE - DELIVERY OF MONEY - PERFORMACE OF OBLIGATION

CAUSES OF EXTINGUISHMENT 1.PAYMENT OR PERFORMANCE - DELIVERY OF MONEY - PERFORMACE OF OBLIGATION

HOW PAYMENT MUST BE MADE? 1. DELIVERY OF THE THING OR RENDITION OF SERVICE KEY POINTS TO REMEMBER: A. DEBTOR CANNOT COMPEL THE CREDITOR TO ACCEPT AN ACT (IN OBLIGATIONS TO DO OR NOT TO DO) OR THING DIFFERENT FROM AGREED UPON BY PARTIES.

HOW PAYMENT MUST BE MADE? 1. DELIVERY OF THE THING OR RENDITION OF SERVICE KEY POINTS TO REMEMBER: B. CREDITOR CANNOT DEMAND A THING OF SUPERIOR QUALITY NOR THE DEBTOR DEMAND A THING OF INFERIOR QUALITY. - IN OBLIGATIONS TO GIVE A GENERIC THING, QUALITY AND CIRCUMSTANCES WERE NOT STATED,

HOW PAYMENT MUST BE MADE? C. IF OBLIGATION IS A MONETARY OBLIGATION - PAYMENT MUST BE IN LEGAL TENDER

HOW PAYMENT MUST BE MADE? 2. PAYMENT OR PERFORMACE MUST BE COMPLETE. EXCEPTIONS: IN THE FF. CASES, OBLIGATION IS DEEMED FULLY COMPLIED A. SUBSTANTIAL PERFORMACE OF OBLIGATION IN GOOD FAITH B. ACCEPTANCE OF PERFORMANCE/PAYMENT , WITHOUT OBJECTION, KNOWING ITS INCOMPLETENESS/IRREGULARITY

PARTIAL PAYMENTS GEN. RULE: CREDITOR CANNOT BE COMPELLED TO RECEIVE AND DEBTOR CANNOT BE COMPELLED TO MAKE PARTIAL PAYMENT. EXCEPTIONS: A. AGREEMENT B. DEBT IS IN PART LIQUIDATED AND UNLIQUIDATED

WHO MUST MAKE THE PAYMENT?

PAYMENT MUST BE MADE BY THE DEBTOR WHO MUST POSSESS THE FOLLOWING:

1. FREE DISPOSAL OF THE THING DUE 1. CAPACITY TO ALIENATE THE THING

QUESTION:

MAY A THIRD PERSON COMPEL THE CREDITOR TO ACCEPT PAYMENT OR PERFORMACE OF AN OBLIGATION?

ANSWER: NO. • EXCEPTIONS: 1. MADE BY A THIRD PERSON WHO HAS AN INTEREST IN THE FULFILLMENT OF THE OBLIGATION E.G: GUARANTOR/ CO-DEBTOR 2. THERE IS STIPULATION TO THE CONTRARY

PAYMENT OF PERFORMANCE

QUESTION: IF A THIRD PERSON PAYS AN OBLIGATION, WHAT ARE THE RIGHTS WHICH ARE AVAILABLE TO HIM?

ANSWER: RIGHTS OF THIRD PERSON WHO MAKES THE PAYMENT 1. WITH KNOWLEDGE/CONSENT OF DEBTOR REIMBURSEMENT SUBROGATED IN THE RIGHTS OF CREDITOR 2. W/OUT KNOWLEDGE/AGAINST THE WILL OF DEBTOR • RECOVER: IF PAYMENT HAS BEEN BENEFECIAL TO THE DEBTOR

TO WHOM SHALL PAYMENT BE MADE?

TO WHOM PAYMENT BE MADE: 1. CREDITOR (PERSON IN WHOSE FAVOR THE OBLIGATION HAS BEEN CONSTITUTED) 2. SUCCESSOR’S INTEREST SUCH AS HEIRS OR ASSIGNS 3. ANY PERSON AUTHORIZED TO RECEIVE PAYMENTS

GEN. RULE: PAYMENT TO AN UNAUTHORIZED PERSON IS NOT VALID EXCEPTIONS : 1. PAYMENT HAS REDOUNDED TO THE BENEFIT OF CREDITOR 1. PAYMENT IS MADE IN GOOD FAITH TO A PERSON IN POSSESSION OF THE CREDIT

WHERE PAYMENT MUST BE MADE? 1. PLACE DESIGNATED IN THE STIPULATION 2. NO STIPULATION: A. DETERMINATE THING (OBLIGATION TO GIVE)

- PLACE OF THE THING AT THE TIME OF CONSTITUTION OF OBLIGATION. B. GENERIC THING/ OBLIGATION TO DO - DOMICILE OF DEBTOR

SPECIAL FORMS OF PAYMENT (DAPAT) 1. DATION IN PAYMENT 2. APPLICATION OF PAYMENT 3. PAYMENT BY CESSION 4. TENDER OF PAYMENT AND CONSIGNATION

SPECIAL FORMS OF PAYMENT (DAPAT) 1. DATION IN PAYMENT/DACION EN PAGO - A special form of payment where the ownership of property is transferred to his creditor to pay a debt in money.

SPECIAL FORMS OF PAYMENT (DAPAT) 1. DATION IN PAYMENT/DACION EN PAGO Example: Mr. S owes Mr. T P5M. On due date, S proposes to T to accept a house and lot as payment of his Debt. T agreed to D’s proposal and accepts the house/lot.

SPECIAL FORMS OF PAYMENT (DAPAT) 2.APPLICATION OF PAYMENT - designation of the debt to which payment shall be applied when the debtor owes several debts in favor of the same creditor.

SPECIAL FORMS OF PAYMENT (DAPAT) REQUISITES OF APPLICATION OF PAYMENT: 1. TWO OR MORE DEBTS 2. DEBTS MUST OF THE SAME KIND 3. DEBTS OWED BY THE SAME CREDITOR & DEBTOR 4. ALL DEBTS ARE DUE

SPECIAL FORMS OF PAYMENT (DAPAT) REQUISITES OF APPLICATION OF PAYMENT: 4. ALL DEBTS ARE DUE

EXCEPTIONS: 1. STIPULATION TO APPLY TO A DEBT NOT YET DUE 2. APPLICATION MADE BY PERSON IN WHOSE FAVOR THE TERM IS CONSTITUTED

APPLICATION OF PAYMENT KEY POINTS: 1. DEBTOR IS GIVEN PREFERENTIAL RIGHT TO DESIGNATE DEBT TO BE PAID. 2. IF HE DOES NOT MAKE DESIGNATION, CREDITOR MAY EXERCISE THE SAME. 3. NEITHER DEBTOR NOR CREDITOR MAKES DESIGNATION, THEN PAYMENT BY OPERATION OF LAW WILL APPLY. A. PAYMENT APPLIED TO ONEROUS DEBTS. B. DEBTS OF THE SAME NATURE, APPLIED PAYMENTS PROPORTIONATELY.

SPECIAL FORMS OF PAYMENT (DAPAT) 3. PAYMENT BY CESSION - ABANDONMENT OR ASSIGNMENT BY THE DEBTOR OF ALL HIS PROPERTY IN FAVOR OF HIS CREDITORS, SO THE LATTER MAY SELL THEM AND RECOVER THEIR CLAIMS OUT OF THE PROCEEDS.

SPECIAL FORMS OF PAYMENT (DAPAT) REQUISITES OF PAYMENT BY CESSION 1. TWO OR MORE CREDITORS 2. DEBTOR IS INSOLVENT 3. DEBTOR ABANDONS ALL HIS PROPERTIES EXCEPT THOSE WHICH ARE EXEMPT FROM EXECUTION 4. CREDITORS ACCEPT ABANDONMENT

SPECIAL FORMS OF PAYMENT (DAPAT) 4. TENDER OF PAYMENT - CONSISTS IN MANIFESTATION MADE BY THE DEBTOR TO THE CREDITOR OF HIS DECISION TO COMPLY IMMEDIATELY WITH HIS OBLIGATION. CONSIGNATION - ACT OF DEPOSITING THE SUM OR THING DUE WITH THE JUDICIAL AUTHORITIES

SPECIAL FORMS OF PAYMENT (DAPAT) 4. TENDER OF PAYMENT & CONSIGNATION EXAMPLE: D BORROWED P5M FROM C. ON DUE DATE, D TENDERED PAYMENT IN P100 BILLS TOTALLING 5M. C REFUSED TO ACCEPT PAYMENT. HERE: PAYMENT TENDERED BY D WAS LEGAL TENDER, HENCE C WAS NOT JUSTIFIED IN REFUSING TO ACCEPT IT.

SPECIAL FORMS OF PAYMENT (DAPAT) 1. 2. 3. 4. 5. 6.

REQUISITES OF CONSIGNATION DEBT IS DUE. VALID TENDER OF PAYMENT CREDITOR REFUSES W/OUT CAUSE TO ACCEPT PAYMENT NOTICE OF CONSIGNATION THING/AMOUNT DUE PLACED IS DEPOSITED W/ JUDICIAL AUTHORITIES AFTER CONSIGNATION, NOTICE TO PERSONS INTERESTED IN THE FULFILLMENT OF OBLIGATION.

SPECIAL FORMS OF PAYMENT (DAPAT) EFFECTS OF CONSIGNATION: EXTINGUISHES THE OBLIGATION IF CREDITOR ACCEPTED CONSIGNATION OR DECLARATION FROM JUDGE THAT CONSIGNATION HAS BEEN PROPERLY MADE

SPECIAL FORMS OF PAYMENT (DAPAT)

WHAT ARE THE EXCEPTIONS TO THE RULE THAT BEFORE CONSIGNATION SHALL PRODUCE THE EFFECTS OF PAYMENT, IT IS ESSENTIAL THAT THERE MUST BE A PREVIOUS TENDER OF PAYMENT?

ANSWER: 1. CREDITOR IS ABSENT/UNKNOWN/DOES NOT APPEAR AT THE PLACE OF PAYMENT 2. INCAPACITATED 3. W/OUT JUST CAUSE, REFUSES TO GIVE RECEIPT 4. TWO OR MORE PERSONS CLAIM THE RIGHT TO COLLECT 5. TITLE OF THE OBLIGATION HAS BEEN LOST

CAUSES OF EXTINGUISHMENT: LOSS OF THE THING DUE - THAT THE THING WHICH CONSTITUTES THE OBJECT OF THE OBLIGATION PERISHES, - OR GOES OUT OF COMMERCE OF MAN - OR DISAPPEARS IN SUCH A WAY THAT ITS EXISTENCE IS UNKNOWN OR IT CANNOT BE RECOVERED

CAUSES OF EXTINGUISHMENT: REQUISITES OF LOSS OF THE THING DUE

1. THING WHICH IS LOST IS DETERMINATE 2. THING IS LOST W/OUT ANY FAULT OF THE DEBTOR 3. THING IS LOST BEFORE THE DEBTOR INCURRED DELAY

CAUSES OF EXTINGUISHMENT: LOSS OF THE THING DUE EXCEPTIONS: 1. LIABLE FOR FORTUITOUS EVENTS 2. ASSUMPTION OF RISK 3. PARTLY DUE TO THE FAULT OF THE DEBTOR 4. LOSS OCCURS AFTER DEBTOR INCURRED DELAY 5. DEBTOR PROMISES TO DELIVER TO 2 MOR MORE PERSONS 6. OBLIGATION IS GENERIC

CAUSES OF EXTINGUISHMENT: REMISSION - Gratuitous abandonment by the creditor of his right - Forgiveness of an indebtedness

CAUSES OF EXTINGUISHMENT: REQUISITES OF REMISSION A. GRATUITOUS B. MUST BE ACCEPTED BY THE OBLIGOR C. OBLIGATION MUST BE DEMANDABLE

CAUSES OF EXTINGUISHMENT: KINDS OF REMISSION/CONDONATION 1. AS TO AMOUNT/EXTENT 2. AS TO FORM 3. AS TO CONSTITUTION

CAUSES OF EXTINGUISHMENT: KINDS OF REMISSION/CONDONATION 1. AS TO AMOUNT/EXTENT a) TOTAL – PRINCIPAL & ACCESSORY OBLIGATION a) PARTIAL 2. AS TO FORM a) EXPRESS – ORALLY/WRITING b) IMPLIED - INFERRED BY CONDUCT

CAUSES OF EXTINGUISHMENT: KINDS OF REMISSION/CONDONATION 3. AS TO CONSTITUTION a) INTER VIVOS - CONSTITUTED BY AGREEMENT OF BOTH PARTIES (PARTAKES OF A DONATION) b) MORTIS CAUSA - CONSTITUTES BY LAST WILL & TESTAMENT

CAUSES OF EXTINGUISHMENT: KINDS OF REMISSION/CONDONATION 3. AS TO CONSTITUTION a) INTER VIVOS - CONSTITUTED BY AGREEMENT OF BOTH PARTIES (PARTAKES OF A DONATION) b) MORTIS CAUSA - CONSTITUTES BY LAST WILL & TESTAMENT

CAUSES OF EXTINGUISHMENT: CONFUSION/MERGER - MEETING IN THE SAME PERSON OF THE QUALITIES OF CREDITOR AND DEBTOR WITH RESPECT TO ONE AND THE SAME OBLIGATION.

CAUSES OF EXTINGUISHMENT: MERGER IN A JOINT OBLIGATION MERGER EXTINGUISHES ONLY THE SAHRE OF THE JOINT CREDITOR/DEBTOR IN WHOM THE CHARACTERS FO DEBTOR/CREDITOR CONCUR.

CAUSES OF EXTINGUISHMENT: MERGER IN A JOINT OBLIGATION EXAMPLE: A, B and C are joint debtors of X P9K. The promissory note evidencing the debt is assigned by X to Y, Y to Z and Z and A.

CAUSES OF EXTINGUISHMENT: MERGER IN A JOINT OBLIGATION EFFECTS: - A’S SHARE OF P3K IS EXTINGUISHED BY THE MERGER - B AND C ARE STILL LIABLE ON THE NOTE WITH A NOW AS THE CREDITOR FOR 6K

CAUSES OF EXTINGUISHMENT: MERGER IN A SOLIDARY OBLIGATION MERGER IN ONE OF THE SOLIDARY DEBTORS/SOLIDARY CREDITORS EXTINGUISHED THE WHOLE OBLIGATION

CAUSES OF EXTINGUISHMENT: MERGER IN A SOLIDARY OBLIGATION EXAMPLE: A, B AND C are solidary debtors of X for P9K. The promissory note evidencing the debt is assigned by X to Y, Y to Z and Z to A.

EFFECTS: - WHOLE OBLIGATION IS EXTINGUISHED BY CONFUSION WITH ALL THE DEBTORS NOW BEING THE CREDITORS - A MAY DEMAND REIMBURSEMENT FROM B AND C P3K EACH.

CAUSES OF EXTINGUISMENT:

COMPENSATION - MODE OF EXTINGUISHING IN THEIR CONCURRENT AMOUNT THOSE OBLIGATIONS OF PERSONS WHO IN THEIR OWN RIGHT ARE CREDITORS AND DEBTORS OF EACH OTHER.

ESSENTIAL REQUISITES OF COMPENSATION 1.

TWO PARTIES , PRINCIPAL CREDITORS AND PRINCIPAL DEBTORS;

2.

BOTH DEBT CONSISTS IN MONEY/FUNGIBLE THINGS, SAME KIND & QUALITY

3.

BOTH DEBTS ARE DUE

4.

LIQUIDATED AND DEMANDABLE DEBTS

5.

NO RETENTIO/CONTROVERSY COMMENCED BY THIRD PERSON

6.

COMPENSATION NOT PROHIBITED BY LAW

KINDS OF COMPENSATION a) AS TO CAUSE 1. LEGAL – WHEN IT TAKES EFFECT BY OPERATION OF LAW FROM THE MOMENT ALL OF THE REQUISITES PRESCRIBED BY LAW ARE PRESENT. 2. VOLUNTARY 3. JUDICIAL B) AS TO EXTENT 1. TOTAL – DEBTS COMPENSATED ARE EQUAL IN AMOUNT 2. PARTIAL – DEBTS ARE NOT EQUAL

NOVATION • IS THE SUBROGATION OR CHANGE OF AN OBLIGATION BY ANOTHER, RESULTING IN ITS EXTINGUISMENT OR MODIFICATION, EITHER BY; CAUSES OF NOVATION: 1. CHANGING ITS OBJECT OR PRINCIPAL CONDITION 2. SUBSTITUTING ANOTHER IN PLACE OF THE DEBTOR 3. SUBROGATING A THIRD PERSON IN THE RIGHTS OF THE CREDITOR

EXAMPLE:

REQUISITES OF NOVATION 1. PREVIOUS VALID OBLIGATION 2. AGREEMENT BETWEEN THE PARTIES TO MODIFY OR EXTINGUISH THE OBLIGATION 3. EXTINGUISHMENT OF OLD OBLIGATION 4. VALIDITY OF NEW OBLIGATION

KINDS OF NOVATION

A.ACCDG. TO PURPOSE B.ACCDG., TO FORM C.ACCDG; TO EXTENT

KINDS OF NOVATION

A.ACCDG. TO PURPOSE 1. REAL/OBJECTIVE 2. PERSONAL/SUBJECTIVE

KINDS OF NOVATION

2 FORMS OF NOVATION BY SUBSITUTION OF THE PERSON OF THE DEBTOR : 1. EXPROMISION - IS EFFECTED W/ CONSENT OF CREDITOR AT THE INSTANCE OF THE NEW DEBTOR EVEN W/OUT KNOWLEDGE/WILL OF DEBTOR

KINDS OF NOVATION TWO FORMS OF NOVATION BY SUBSITUTION OF THE PERSON OF THE DEBTOR : 2. DELEGACION - EFFECTED WITH THE CONSENT OF THE CREDITOR AT THE INSTANCE OF THE OLD DEBTOR W/ CONCURRENCE OF THE NEW DEBTOR

CONTRACTS