Recitation:

1. A filed an action against B for a recovery of sum of money. May there be an issue in that case whether the
obligation is joint or solidary? Yes.
a. Who would claim that the obligation is solidary? A.
2. 2001 Bar, No. 7: Four foreign medical students rented the apartment of Thelma for a period of 1 year. After
one semester, 3 of them returned to their home country and the 4 th transferred to a boarding house. Thelma
discovered that they left unpaid telephone bills in the amount of P80,000.00. The lease contract provided that
the lessees shall pay for the telephone services in the leased premises. Thelma demanded that the 4 th student
pay the entire amount of the unpaid telephone bills, but the latter is willing to pay only ¼ of it. Who is
correct? Why? (Note: If you use the disputable presumption that the obligation is joint, you should
point out that the facts were not able to counter such presumption.)
3. Give an example of an obligation which by its nature is solidary?
4. Give an example of an obligation which by law is solidary?
5. Give an example of an obligation which by its terms is solidary?
6. Ronquillo v. CA?
7. Malayan Insurance v. CA?
a. Who were held liable?
b. San Leon was held under what principle?
c. As far as Sio Choy was held liable under what principle?
i. Is Art. 2184 really applicable? No. 1st, he was not in the vehicle. 2nd, 2180 will still not be
liable since Sio Choy is not the employer of the driver.
8. PNB v. Independent Planters Association, Inc?
a. Did the SC hold that the subject Rule is contrary to law?
9. A and B creditors while X, Y and Z are debtors. 360K. A filed an action as against X. The action was
dismissed on the ground of prescription. After the decision attained finality, B filed a case against X. Will the
case prosper?
a. Assuming the obligation is joint and the debtors are subjected to the same terms and conditions,
will the suit of B suffer the same fate?
b. Assuming the obligation is joint, A demanded the whole P360,000.00 from X which the latter paid,
can B compel X to pay? No.
i. Is there an exception? To the extent that B benefited from the payment.
c. In a solidary obligation, X paid A the entire P360,000 last year. Today, X claimed reimbursement
from Y? P120,000.
i. Can Y be liable for interest? Depends upon whether the debt was before or after maturity.
d. Solidary obligation, A demanded payment from X. Then B demanded from X. X paid B. May A
still hold X liable?
10. 1984 Bar, No. 11: A, B and C solidarily promised to pay D the amount of P3,000.00. Unfortunately, C
became insolvent.
a. What recourse does D have against A and B? He can demand fulfillment from one or both of them.
b. What are the rights of A and B as against each other? To contribute
11. 1998 Bar, No. 15: Joey, Jovy and Jojo are solidary debtors under a loan obligation of P300,000.00 which has
fallen due. The creditor has, however condoned Jojo’s entire share in the debt. Since Jovy has become
insolvent, the creditor makes a demand on Joey to pay the debt.
a. How much, if any, may Joey be compelled to pay? P50,000.00.
b. To what extent, if at all, can Jojo be compelled by Joey to contribute to such payment?
12. A and B creditors while X, Y and Z are debtors in the amount of P360,000.00:
a. What if the action of A against X was dismissed. A then filed an action against Y, would the action
prosper? The answer would depend on why the action against X was dismissed.
13. 2003 Bar, No. 14: A, B, C, D and E made themselves solidarily indebted to X for the amount of P50,000.00.
When X demanded payment from A, the latter refused to pay on the following grounds:
a. B is only 16 years old.
b. C has already been condoned by X.
c. D is insolvent.
d. E was given by X an extension of 6 months without the consent of the other four co-debtors.
(Tricky-dicky)
State the effect of each of the above defenses put up by A on his obligation to pay X, if such defenses are
found to be true.
14. Is minority a total or partial defense? It depends on who the minor is. Also consider whether the obligation is
solidary or joint.
15. X promised to pay P100,000.00 to A OR B. A demanded payment from X. Latter on B demanded payment
from X. X paid B. Can A still validly demand payment from X? It would depend on the intention of the
 parties as to whether who has the right to choose upon whom payment should be made. However, the view of
Tolentino on this question is not in accordance with law. It would be a better position to apply the rules on
alternative obligations.
16. An obligation to deliver 1000 sacks of rice, is it divisible or indivisible? It depends on whether the parties
agreed on the partial fulfillment of the prestation.
17. Are there obligations which are divisible by their nature as the law would actually recognize even without
stipulation.

12/02/09

Remedies

The first thing that should be in your mind as to whether or not an action will prosper is whether the plaintiff is the
aggrieved party. Remedies are only granted to the aggrieved party.

You can classify remedies into:

1. extra-judicial; and
2. Judicial.

Extra-judicial remedies.

Among those expressly recognized by law are the remedies of the unpaid seller:
1. the right to retain;
2. stoppage in transitu; and
3. resale, among others.

The favorite remedy is rescission.

There is this misconception that recession is a judicial remedy. This is both judicial and extra-judicial under 1191. 1191
is in relation to reciprocal obligations.

As a principal remedy as distinguished from a subsidiary remedy.

Rescission under 1191 is just a result of an erroneous translation. It should have been called resolution. Under 1191,
this power to rescind is given because there is a substantial breech. If there is only a slight breach only an action for
damages. 1381 is based on economic prejudice that is why the right to rescind is given. So in a decision of Natura, an
action for rescission was filed after 4 years from contract. It will depend on which it depends. If (1191), 4 years. But in
that case the action was based on breach of obligation so 10 years.

Rescission under 1191 is a principal remedy. It may be invoked even if other remedies are present. 1381 is only a
subsidiary remedy. It can only be invoked when there is no other legal remedies.

URC v. CA – The main issue in the case is whether the action for rescission is proper? Basically 3 defenses of UFC:
1. Magdalo Francisco has not performed his obligation. – If the plaintiff himself has not complied with his
obligation, he has no cause of action. He must be an aggrieved party. However, according to SC, he had no
obligation. Sir may not agree. Read two paragraphs, all the rights would be transferred, including
ownership. Also there is a condition of reverting back. But at any rate it is just a matter of fact. But on law he
agrees.
2. Is there substantial breach? – Yes. Magdalo Francisco was to be appointed chief chemist of the company. He
was terminated from that position.
3. Rescission will not prosper because Magdalo has not exhausted his available remedies. – Read opinion of
JBL Reyes. 1191 is a primary remedy. Magdalo filed under 1191. In 1381, there need not be breach, only an
economic damage is necessary.

UP v. de los Angeles – The question is if rescission may be invoked extra-judicially, why the need to file an action?
There would be a need to file an action if the aggrieved party is praying for the return of what was delivered. If that is
the case you cannot do extra-judicial rescission. But the extra-judicial rescission is subject to the question of the other
party of the act.
When does extra-judicial rescission take effect? From the time notice is given to the other party. Even if it is questioned
but it is upheld, it is dated to notice.
If fulfillment is resorted to as a remedy, may the aggrieved party still rescind? If fulfillment should become impossible
due to the fault of the offending party, rescission is still a remedy.

If a party asks for rescission, can he later on ask for fulfillment? Read Magdalena case. Rescission extinguishes the
obligation. There is nothing more to be fulfilled. But look at 1181, although rescission is a remedy, the court may not
grant it and fixes a judicial period.

As far as judicial remedies are concerned, Bar Exam Question, possible judicial remedies are (1) specific performance
or (1) for the aggrieved party to ask another person to perform the obligation or (3) damages. But the first two may be
with damages.

A obliged himself to deliver a 2009 29 inch Sony Bravia and a 9 cubic feet refrigerator with motor number ABC123
and to repair the piano of A. None of these were complied with. Can A be compelled to perform them? What are the
remedies?

Classify the obligations first as to give to do or not to do.

Obligation to repair the piano – (answer questions in seriatim, huwag labo labo, in order dapat, this is only for
conveniece) – this an obligation to do. It may not be compelled otherwise it is involuntary servitude.

Deliver Sony TV and refrigerator – determine whether the thing is generic or determite. The TV is generic. The remedy
therefore is to ask somebody to deliver such. Specific performance is not a remedy because it may be performed by
anybody. Plus damages.

With regard to the refrigerator – it is a determinate thing, the remedy is to demand fulfillment or specific performance
with damages. It may only be performed by the debtor. It will be proper for so long as it is possible for him to perform.

With obligations to do – what is the remedy? As to the repair of the piano, the personal qualifications of the debtor may
not have been considered. Others are available, so the remedy is to have it repaired at the expense of the debtor.

But if the personal qualifications have been taken into consideration, e.g. singing of Regine, substitute performance
cannot be made. So determine if personal qualifications have been taken into consideration.

Subsidiary Remedies.

1177, the law itself recognizes two subsidiary remedies:

1. Bring all the rights of the debtors against 3rd persons – accion subrogatoria
 There are 3 persons involved, the creditor, the debtor and the debtor of the debtor. Take note that the court
clearly provides that rights which are inherent in his person cannot be exercised.
 If the debtor is an agent of a 3 rd person, can the creditor exercise the rights of the debtor? It depends. If in
agency, the right of the agent is just to be compensated, it can be exercised by the creditor.
 Legal support cannot be the subject of a subrogatory action. Otherwise Ok lang.
 Syet, di ko nakuha.
2. Accion pauliana (also recognized in rescissible contracts)

To what extent may a debtor be held liable?

Present and future?

Present property. The law is clear, it is only subject to exemptions provided by law.

The most common is the family home. Take note in FC, a family home is not exempt in certain situations. Taxes on the
property, debts prior to institution, etc. Also when the family home is in excess of a certain amount.

Rules of court – madami dito. Example 2 carrbaos. It depends. Is he a farmer.

Future property. As a rule they are, subject to exemptions. If there was a judicial declaration of insolvency, and the
obligation is discharged by the courts, there can be no liability.
Modes of extinguishment.

Are the modes of extinguishment exclusive? No. Note that insolvency in itself does not extinguish.

1231 mentions 10.

Annulment, rescission, fulfillment of a resolutory condition, and prescription.

Bear that in mind when we discuss loss of the thing and prescription.

There are many other modes. Fulfillment of a resolutory period.

Is death a mode of extinguishing obligation? Tolentino says yes. Sir agrees only in so far as contracts are concerned.
For example, if it arises from law it depends upon the law. Exception is the obligation is purely personal in character.

The unilateral act of one of the parties? In contracts no. It would violate the mutuality of contracts. As a rule contracts
bind the parties subject to exceptions. But the law may grant the right to revoke. Ex. agency. Any of them may
terminate the agency. Partnership also is subject to unilateral act.

Compromise? Is this mode of extinguishment other than those enumerated? No. It would fall under condonation up to a
certain extent. (Ronquillo v. CA) However, there are those which cannot be classified as condonation because it is
different. Example, delivery of a specific horse. Then it was changed into a car. The obligation is extinguished but it
falls under novation.

Renunciation by the creditor? This is not independent. The civil code recognizes gratuitous and onerous renunciation.
Condonation and novation. Divah? Chos!

Happening of an unforeseen event? SC, it is not a mode of extinguishment. Under the law, the mode of extinguishment
is the effect of the unforeseen event. Example loss. Note that if the obligation is to deliver an indeterminate thing, a
fortuitous event shall not extinguish the obligation. Also, in delivering a determinate car, it might not have been
affected by the fortuitous event.

Nullity of contracts? If the contract is null and void, no obligation will arise. Therefore there is nothing to extinguish.

Change in civil status? Yes. Obligation to support may be terminated by nullity of marriage.

Sara v. DBP – pertains to a mode of extinguishment which is the mutual desistance of the parties. The rationale is if a
contract may be created by the aggrement of the parties it may be terminated by the disaggrement of the parties.

Payment.

May this mode of extinguishment be invoked in all kinds of obligations? Yes. Payment is considered synonymous to
performance or fulfillment of the obligation.

Is this a good coverage to include all other kinds of obligations. Yes. It has basis in our culture. It is translated to
“Bayad na ko sa iyo.” It is not limited to monetary obligations.

Classify the rules into four.

1. To the person who pays.
2. In relation to the person to whom payment is made.
3. The prestation to be performed or thing to be delivered.
4. Date, time, place and manner of payment.

All of these rules must be considered in order to determine whether the payment is valid.

1. To the person who pays (not necessarily the debtor).

a. Free disposal - If the person who paid is suffering civil interdiction, there is a right to recover,
payment is not valid.
b. Capacity to alienate - Payment by a 12 year old kid (only a voidable contract, may also arise from
quasi-delicts) is not valid.
 If A is indebted to B secured by a mortgage executed by X, X offered to pay, would the obligation be
extinguished? It depends on whether B accepted the offer. Tender is not a mode, it is only preliminary to
payment. Note that as a rule a creditor cannot be compelled to accept performance from a 3 rd person. Of
course there are exceptions. (1) stipulation of the parties; (2) the 3 rd person has an interest in the
performance of the obligation (ex. guarantor).

What if A and X are joint creditors? Does a co-debtor have an interest in the fulfillment of the entire
obligation. SC, yes. X may not be compelled to perform the entire obligation but his reputation is at
stake.

What is X paid B and B accepted payment. The payment extinguishes the obligation. Consent and
interest in the performance would only be important only between the 3 rd person and the debtor. If there
is interest, subrogation. If no interest, depends.

If without knowledge or against the will (no consent), X can only demand reimbursement to the extent
that the original debtor was benefited (A might have already made partial payments). What is upon
demand of A cannot give anything, can X foreclose? No, no subrogation.

If X paid with the consent of A, X can recover the entire amount paid. He consented. He can also
foreclose the mortgage. It is a misconception to consider that the mortgage was constituted in favor of B
or that the obligation was extingiusihed. You must consider the effects of subrogation. X will be able to
exercise all the rights that B would have been able to exercise.

The other rules here are not that important.

Example, donation. By express provision of the law, even if the donation was without consent, B can
still retain. What is the effect of the void donation? It will depend upon the rules of succession. If
inofficious, it can be recovered from A.

2. In relation to the person to whom payment is made (not necessarily the creditor).

Example, A is indebted to B. Payment was made to a 3rd person.

1240 enumerates that for payment to be valid it should be made: to a person in whose favor the obligation
was constituted (not necessarily a party to the contract). If not to this person, to the successors in interest of
that person (these may be the heirs or assignees). Finally, payment was made to a person authorized to
receive payment (the authority need not come from the creditor; the law may grant the authority; e.g. sheriff,
agents, executors, administrators).

If payment is given to person not in 1240, it is an invalid payment. As a rule it does not extinguish the
obligation. But there are exceptions to that rule. Under the law you can classify it into 3:

a. The payment redounded to the benefit of the creditor (burden of the payor or creditor to prove
benefit) But there are instances when benefit need not be proven, it is conclusive:

i. Ratification
ii. By the conduct of the creditor he led the debtor to believe that a 3 rd person has authority
to receive (estoppel)
iii. The 3rd person acquired the rights of the creditor after the payment. (Even the rights were
acquired before payment, it is not payment under this rule but payment to a successor in
interest)

b. The payment was made in good faith to a person in possession of the credit.

Ex. A indebted to B. A executed and delivered a promissory note to B. The note was negotiated to
X. On due date, X was paid. The premise is that X is wrong party. Possession of credits is different
from possession of the evidence of credit. For example, possession of a bearer instrument is title.
But possession of an order instrument without indorsement is not title.

c. Assignment of credit. Payment was made to the assignor. If there was no knowledge of the
assignment, the payment is valid. Otherwise it is payment to a 3 rd person.
 3. The prestation to be performed or thing to be delivered.

A very important rule in payment is that partial payment is non-payment. As a rule the creditor cannot be
compelled subject to exceptions. Ex. Stipulation; the debt is partly liquidated;

1234 and 1235

1234 – substantial performance in good faith.

A obligated himself to deliver 100 sacks of rice to B for P1000 per sack. A delivered 65 sacks of rice. B may
or may not accept. He accepted. But the remaining sacks could not be delivered. Could B have the right to
rescind? Yes. The right to rescind can only be withheld when there has been substantial performance.

Read the cases.

75% is substantial performance.

What is the effect is the performance was substantial?

The aggrieved party has no right to rescind. But he is entitled to damages. So pano na? Deduct the amount of
damages from what would have been paid.

Take note of failure to object to partial payment. The right to question it might be waived.

Payment of debts in money; monetary obligations.

May there be a valid obligation where the currency agreed upon is not Ph currency? Yes. A good example is
in the law on sales. Note, Ponce was decided prior to allowing the payment of obligations in foreign currency.
RA 8183.

Can a creditor be compelled in checks?

New Pacific Timber – SC, if it is a certified, manager’s check it is deemed as cash. But in latter cases, SC
said that checks have no legal tender power. Sir thinks that this is a good developments. Payment through
check cannot be compelled but it can be accepted.

But may a check produce an effect of payment? Yes, when it is encashed. What if the check becomes stale?
Can the creditor ask for another check. No, unless it became stale due to debtor. The check can be used as an
evidence of the indebtedness. But it is only a rebutable presumption.

1250 – the scenario is the debt may have been due already as early as 1968. (Commissioner v. Burgos) In
1998 the Court decided in favor of the plaintiff. But a prayer was made to reflect the amount of the debt from
the time it was due. Should the motion be granted? (Phil Foundry). 1250 cannot be invoked for the
adjustment because there was no extra-ordinary inflation or deflation.

1250 was included to adress scenarios similar to WWII. But even assuming that there is such a senario,
should the motion be granted? Not necessarily. Only applied to obligations arising from contract. 1250 says
currency is STIPULATED. In Burgos, the obligation arose from law, not contract.

Read del Rosario v. Shell.

4. Date, time, place and manner of payment.

It is subject to stipulation.

For delivery of thing:

If determinate – where it was located at the constitution of the obligation.
If indeterminate – domicile of the debtor.

Special forms of payment.

Madalas objective ang questions.

Is consent of the parities required for an obligation to be extinguished by the special forms of payment? The problem
pertains to the consent of the creditors.

In dation in payment, yes.

In consignation, consent is not necessary.
Application of payments? Consent is not required as a rule. The debtor is given the right to apply.
Payment by cession? Consent of the creditors is necessary. The creditors will only be constituted as agents to sell the
properties and apply the proceeds to the debts.

Whether or not there will be transfer of ownership?

Dation – yes.
Application – yes.
Cession – no.
Consignation – not necessarily, the consignation may be void. But if the consignation is valid because it was upheld by
the court or accepted by the creditor, it retroacts to the date of consignation.

Extent of extinguishment.
Application of payments. It is always partial payments.
In cession – the rule is clear, it extinguishes to the extent of the proceeds except when it is agreed upon that there is to
total extinguishment.
Consignation – rules are applicable. Ex, if what is consigned is not full payment, there is no payment. But if
consignation is held valid it extinguishes the debt.
Dation – for Sir. payment only up to the extent of the value of the property unless there is an agreement that the
obligation is totally extinguished.

Individual rules.

Dation

Shall it be governed by the law on sales? 1245, only if the debt is in money. Otherwise it will not be governed by the
law on sales.

Citizen’s surety case.

Dation requires a pre-existing debt.

Application of payments:
There is practically only one question – to what debt should payment be applied? The premise is that debtor has two or
more debts of the same kind. The creditor may be 1 or more. The important thing to note is the multiplicity of debts.

1. As a rule the debtor has the right of application. But there are limitations: (Ex. 100, 50, 30 debt; payment of
30)
a. Rules on partial payment are applicable.
b. Rules on debts not yet due where the period is for the benefit of the creditor.
c. Cannot be applied to the principal prior to interest.
d. Cannot vary agreements as to where to apply first.
2. Creditor may designate. But is consent of debtor needed? Yes. The creditor will issue a receipt and only when
such receipt is accepted that there is a valid application.
3. What if there was no designation by the parties? Apply to onerous? Wrong! First look at whether all the debts
are of the same nature or burden, if so, pro rata. If not of the same nature, apply to most onerous. (There is no
hard and fast rule to determine which is more onerous.)

Ex.

Debt 1: Sole debtor (more onerous)

Debt 2: Solidary

Debt 1: interest bearing (more onerous)

Debt 2: no interest

Debt 1: secured (more onerous)

Debt 2: unsecured
Debt 1: Principally bound (more onerous) (but note, the premise the guarantor is already liable. Not that he is
secondariliy liable. It becomes more onerous because the person subsidiarily bound has a recourse against the person
primarily liable)
Debt 2: Subsidiarilly bound

With regard to older or newer debts, there can be no basis to say which one is more onerous.

Payment by Cession

A property which is exempt may be ceded but in case of a family home, the consent of all beneficiaries are needed.

Is insolvency needed? No. This is an agreement of the parties. Insolvency is not important.

Financial difficulty is the normal scenario but it is not required.

What if the debtor is willing to abandon his property to his creditors but the creditors refuse? What is the next best
remedy? File a petition for declaration of insolvency.

Note that cession does not extinguish the entire obligations but in judicial declaration, obligations may be extinguished.

Tender of payment and consignation

Tender of payment is not a mode of extinguishing obligations. It is a mere offer to pay.

Is tender of payment required as a rule prior to consignation? Look at 1256. There are 6 grounds. But in 5 of them,
tender is not required. Tender of payment is required only when the creditor refuses to accept without just cause.

Soto case – SC, tender of payment maybe extra-judicial. So it may be judicial. But this is wrong. By its very nature
tender of payment is extra-judicial. It is made prior to the case for consignation.

If the debtor wrote 3 letters to the debtor that he is willing to pay, is it a valid tender? No. There must be an actual
offering of payment.

Dimculata v. Navarro. Note that consignation requires the existence of an obligation to be extinguished. Otherwise,
there is no need for consignation.

Grounds:
1. When the creditor is unknown – note that there may be an agent.
2. Without just cause refuses to issue a receipt – receipt does not extinguish, but a receipt is a proof of payment,
so to protect the debtor, consignation is granted.
3. 2 or more persons claim the same right – Note that the debtor should first determine who has the right. There
mere claim of multiple parties is not sufficient.

Another issue is notice, notice before and after is needed. Is it required that the debtor himself sends them? Only the
first notice should be given by the debtor. The second notice may be in the form of a summons.

What if there are multiple debts like lease? SC – still give the notices to the creditor for every obligation or installment.
Sir agrees with Tolentino that lack of notice gives rise to damages, but still take note of the case.

Effect of withdrawal – can the debtor withdraw as a matter of right? Yes, if the creditor has not yet accepted AND the
court has not yet declared the consignation is valid. Afterwards, withdrawal can be made, but not as a matter of right. It
must be done with consent.

Ex. debt secured by mortgage.

If withdrawn as a matter of right – the obligation exists, mortgage subsists.
If withdrawn not as a matter of right – the obligation is revived, but not the mortgage.

The obligation to pay interest:

A is indebted to B.
Due on 1/1/01.
Tender of payment of 1/2/01.
Consignation on 1/1/04.
Court rendered a decision on 1/1/09.

If the court declared the consignation to be void, the obligation has interest IF the debtor is in delay.
If the court declared the consignation to be valid:
the intervening period from consignation up to judgment, no interest.
The intervening period from due date to tender – yes if there is delay.
During tender to consignation – SC, justice and equity, no interest; View of Sir, Compensatio morae. Both
parties are in delay from the time of tender. If both are in delay, there is no delay.

Civ 2: 1/05/10

Loss

Q: May Loss be invoked in relation to extinguishment of obligations to do?

A: Yes. Even if the law says “loss of the thing due.” A better name for this mode is impossibility of
performance.

Q: May an obligation to give a generic thing be extinguished by loss?

A: Yes.

Q: How? When?

A: The law may render the performance illegal. Ex, obligation to deliver carabaos was prohibited by a law
which prohibited the transfer of carrabaos.

Q: How else (other than law)?

A: As when the thing went out of commerce.

Q: In relation to obligations to deliver determinate things, will the loss of the thing extinguish the
obligation?

A: 1262.

Q: If the thing is lost due to the fault of the debtor, is the obligation extinguished?

A: Yes. The obligation to give is converted to a monetary obligation.

Q: Is prescription a mode of extinguishment?

A: Yes.

Q: What is the effect in relation to performance of obligations?

A: Converts a civil obligation to a natural obligation. When there is a conversion, there is an extinguishment.
The same should be the effect of the conversion of an obligation due to the loss of the thing due to the fault
of the debtor.

Q: In a case filed by A against B for damages, based on the loss of the determinate thing to be
delivered, what is the better question (other than whether the

A: Whether he can be held liable for the loss.

Q: Who has the burden of proof?

A: The burden is on the creditor. However, when the thing is in possession of the debtor at the time of the
loss, the burden shifts to the debtor. However, when loss occurs ON THE OCCASION of a calamity, the
presumption does not apply. Art. 1265.
Q: Even if the loss is due to a fortuitous event, the debtor may still be liable. Give an example.

A: 1165.

Q: What is this concept?

A: Delay.

Q: Any other case?

A: Promise of the thing to 2 or more persons with different interests.

Q: If the performance of the obligation becomes so difficult, is the obligation extinguished?

A: Note that difficulty is not the same as impossibility.

Q: Occena vs. Jabson.

A:

Q: If the prayer in the case was for release, would it prosper?

A: No. Just like in Laguna case.

Q: A obliged himself to deliver a house and lot to B. What contract could have been entered into?

A: Sale.

Q: Before the delivery, the house was burned. Can B still compel A to deliver the land.

A: It depends on the intention of the parties.

Q: Condonation is also known as?

A: Remission or donation of credit.

Q: A was the son of B. A was indebted to his father in the amount of 500k. He paid a check in 300k.
The executor demanded the payment of 200k. The son claimed that the 200k obligation was
extinguished as seen on the annotation on the back of the check that it is in full payment of the
debt?

A: Note that there is no condonation. If it is implied, no form is required. If it is express, there must be a form.
Sir believes that this is not an implied condonation. It is express.

There is one basic factual circumstance needed to answer the question. Who wrote the annotation on the
check. No showing of acceptance on the check. The condonation is thus not valid.

Q: A borrowed money from B. A issued a PN in favor of B. However, 5 days after the delivery of the
PN, it was found in possession of A.

A: Determine first whether or not the PN is public instrument or not. If it is private, there is a presumption of a
voluntary delivery of the creditor.

Q: Since there is a presumption, is it right to say that the obligation is condoned?

A: No. It might have been extinguished by payment or condonation.

Q: A borrowed from B. A watch was delivered as a security. Thereafter, the watch was found in
possession of X. Was the obligation extinguished?

A: If X is the owner of the watch, the accessory obligation will be presumed extinguished. Only then.
Merger

Q: Can merger happen by contract?

A: Yes.

Q: What is this contract?

A: Merger agreement.

Q: Can this happen by operation of law?

A:

Q: Confusion results in the total extinguishment of the obligation. True or false?

A: Not always. In a joint obligation, there is no total extinguishment.

Q: A is indebted to B. X executed a mortgage to secure fulfillment. X and B merged. Was any

obligation extinguished?

A: The accessory contract.

Q: A indebted to B in the amount of PB in 1992. In 1999, there was a merger. In 2008 there was a
rescission of the merger. In 2010, B sued for the amount. Will the action prosper?

A: Yes. The action has not yet prescribed.

Compensation

Q: A deposited P1M with B in a savings account. Thereafter, A obtained a loan of P800k from B.
Thereafter, A wanted to withdraw the P1M. B claimed that he cannot because of compensation. A
claimed it was a contract of deposit. Was he correct?

A: No. The contract was a simple loan.

Q: A delivered to B P1M to be placed in a safety deposit box. Same facts. A wanted to get the P1M. B
refused to give the entire amount because of compensation.

A: A is correct. There can be no compensation.

Q: B wanted to get the P800k. A claimed compensation.

A: A is correct, facultative compensation.

Q: Support, another facultative compensation scenario. Can there never be compensation?

A: Only support in arrears and contractual support may be compensated.

Q: Another scenario of facultative compensation?

A: Obligations arising from crimes.

Q: Who can invoke?

A: The offended party.

Q: May there be legal compensation involving reciprocal obligations?

A: No. It is absurd.
Q: The law expressly recognizes two kinds of compensation as to extent.

A: Partial and total.

Q: In partial compensation, will there be at least one debt which will be totally extinguished.

A: Yes.

Q: Can there be 100 debts extinguished?

A: Yes. As many as needed.

Q: In legal compensation, what is the most important requirement?

A: Mutual debtors and creditors. (Don’t add “of each other.”) (Also, the parties are not “reciprocally” obliged.)

Q: Francia case.

A:

Q: PNB case.

A:

Q: A is a debtor of B. G is a guarantor. B is indebted to G.

A: Is there compensation. No, unless and until G becomes the principal debtor of B.

Q: A told B to sell shares. B told C to sell. C sold them. B demanded payment. C invoked
compensation because of B’s indebtedness to C. Correct?

A: No. Sycip vs. CA.

Q: For legal compensation to take place, the debts must arise from contracts. True or false?

A: False. Cia Maritima. Attorney’s fees. Also Mindanao Portland case.

Q: Not all monetary obligations can be the subject of legal compensation. Which ones?

A: Taxes, customs duties, etc. Francia case.

Q: For legal compensation to take place, both debts must become due on the same time. True or
false?

A: False. One of the debts can be due last year while the other debt only now.

Q: In that case, when will compensation take place?

A: Today.

Q: Intenational Corporate Bank vs. IAC.

A:

Q: A was indebted to B. This became due on 1993. P100k. B was also indebted to A which became
due on 2001. P100k. Today, A filed an action against B. What possible defense could B invoke?

A: Compensation.

Q: What possible argument could A have against compensation?

A: Prescription.
Q: What if one of the debts is interest bearing. After compensation, would there still be an obligation
to pay interest.

A: It depends on whether there is total or partial compensation. In total compensation, there will be no
obligation to pay interest. If it were partial compensation, it depends on which debt is extinguished. If the
bigger debt was the interest bearing debt, there is still interest. Otherwise, there is no interest.

Q: A indebted to B P100k. B indebted to A P40k/30k/10k. B assigned his credit to X. How much can X
demand?

A: It depends on whether at the time of assignment, compensation already took place. Assuming
compensation already took place, X can only demand P20k.

Q: Assuming the due date of P100k is June 30, 2009; P40k June 30, 2009; P30k is July 30, 2009; P10
is one Dec 30, 2009. Assigned on May 1, 2009 and immediately demanded payment. Can he demand?

A: No. No debt is due.

Q: May 1, 2009 the debt was assigned. Demand was made July 15, 2009. How much could be
claimed?

A:

Q: When could P100k be claimed?

A: A had knowledge of the assignment, consented and did not reserve the right to compensate.

Q: What if A had knowledge and consented but reserved compensation, how much could X demand?

A: P60k.

Novation

Q: What is interesting about it?

A: It has a dual function of extinguishing an obligation and creating a new one.

Q: What are the kinds of novation as to the effect of novation according to one author?

A: Modificatory and extinctive.

Q: Is this correct?

A: No. It is misleading. Modification does not always result in novation.

Q: What is the better classification?

A:

I. Subjective/personal.
a. Active.
b. Passive.
II. Objective/Real.
a. Change in the object of the obligation.
b. Change in the principal condition of the obligation.
III. Mixed.

Q: Is there another?

A: Express and implied.

Q: If A was indebted to B in 1995. B died in 2003. Today the heirs of B sued A, will the action
prosper?

A: No. Prescription.

Q: Was there no novation from the change of the creditor?

A: No. A mere change will not result in novation. There must be subrogation. If there was an express
agreement to subrogation, there is an active subjective novation.

Q: If there was novation, would the action prosper?

A: Yes.

Q: In 1302, what are the instances of novation?

A:

Q: A was the owner of an apartment unit which he would lease to persons. He applied for a
telephone line with PLDT. But when A entered into a lease contract with B, it was stipulated that B
would pay for the utilities. Thereafter, B surreptitiously left the premises. There was a debt to PLDT
in the amount of P20k. Can A be compelled to pay?

A:

Q: X and B had an agreement that X will pay the debt of A to B. Was there a novation?

A: No. X was not a substitute to A. He only promised to pay. X only acted as a co-debtor.

Q: Assuming there is a substitution. X paid. Can X validly demand reimbursement from A? If the
obligation is secured, can X go after the security?

A: Determine whether or not expromission or delegacion.

Q: Assuming there was substitution and X did not pay. Can B still demand from A?

A:

Q: Fua vs. Yap case.

A: