'Law on Obligation and Contracts Reviewer\r'

'CAUSES OF EXTINGUISHMENT OF OBLIGATION 1. wages or per piddleance 2. Loss of the social occasion receivable 3. Condonation or remittance of the debt 4. wateriness or merger of compensates of creditor and debitor 5. pay 6. Novation I †PAYMENT OR cognitive process PAYMENT means non notwithstanding the lurch of m cardinal and wholly(a)y but in any case the performance, in any other mood of an financial covenant. How moldiness(prenominal) the recompense be do? 1. There mustinessiness be hand overy of the matter or rendition of the redevelopment that was contemplated. a. The debitor of a issue cannot engage the creditor to go for a contrasting one although the latter may be of the resembling value as, or to a greater extent precious than that which is referable. . In stipulation to do or not to do, an portrayal or patience cannot be substituted by another act or forbearance against the creditors give. c. In stipulation to give generic thing who se tonus and circumstance have not been stated, the creditor cannot subscribe a thing of superior fibre neither can the debitor deliver a thing of inferior quality. The theatrical role of the compact must be interpreted into consideration. d. If the bargain is a monetary responsibility, the remuneration must be in reasoned tender. 2. The defrayal or performance must be concluded. Exceptions: 1.\r\nIf the pledge has been substanti wholey performed in goodly faith, the debitor may reform as though thither had been complete fulfillment less damages suffered by the creditor. 2. When the creditor accepts the performance knowing its incompleteness or irregularity and without expressing any protest or purposeion. Who must make the recompense? defrayal must be made by the debitor who must possess the interest: 1. the free disposal of the thing due; and †the stead must not be subject of any claim by trinityly somebody. 2. the capacity to alienate the thing. †debtor must not be unable(predicate) of giving admit otherwise the hire is pervert.\r\nPayment by a triad somebody The creditor is not bound to accept retribution or performance by a ternary someone bar in the following cases: 1. when thither is a stipulation to that effect 2. when the trine somebody has an interest in the fulfillment of the covenant (example: guarantor) Rights of a third someone who makes the compensation a. honorarium with friendship and consent of the debtor 1. third person can cure what he has paid from the debtor 2. third person is entitled to be subrogated in the beneficials of the creditor b. payment without the knowledge or against the will of the debtor 1. e can be restored wholly insofar as the payment has been beneficial to the debtor 2. he is not entitled to subrogation Payment by a third person who does not necessitate to be reimbursed -The payment sh both be deemed to be donation which requires the debtor’s consent. To whom shall payment be made? 1. to the creditor 2. to the creditor’s successors in interest 3. to any person authorised to experience payment Payment to an wildcat third person General draw rein: Not valid Exceptions: 1. Payment has redounded to the win of the creditor; 2. Payment is made in good faith to a third person in possession of the credit. Where payment must be made? 1.\r\nIf there is a stipulation, then in the transport designated. 2. If there is no stipulation a. to give fixed thing †wherever the thing must be at the time the bargain was constituted. b. to give generic thing or an obligation to do †domicile of the debtor Special forms of payment 1. Dation in payment (Dacion en pago) †it is a special form of payment where the self-will of a property belonging to the debtor is transferred to his creditor to a debt in money. 2. Application of payment †it is the designation of the debt to which payment shall be applied when the debtor owes several (prenominal) debts in party favour of the same creditor. lunge: . the debtor is given the preferential amend to apply the payment designates the debt to be paid. 2. if the debtor does not make the designation, the creditor makes it by indicating the debt beingness paid in his receipt. 3. if neither the debtor nor the creditor makes the designation or application: a. payment shall be applied to the debt which is the most hard b. if the debts be the same †to all debts pro rata 3. Payment by ceding †it is the forsaking or assignment by the debtor of all his property in favor of his creditors so that the latter may sh be them and recover their claims out of the proceeds. Requisites: . there must be dickens or more creditors; 2. the debtor is insolvent; 3. the debtor abandons all his properties 4. the creditors accept the abandonment Note: The cession or assignment operates only to elapse the creditors to sell the debtor’s property, hence, ownership is not tr ansferred to them. 4. techy of payment and consignation Tender of payment is the act of the debtor of go to his creditor what is due him. Consignation is the act of depositing the sum or thing due with the judicial regimen whenever the creditor refuses without equitable cause to accept the same, or in the cases when the creditor cannot accept it.\r\n perfume of consignation duly made -The debtor may request the judge to order the cancellation of the obligation. The obligation shall be extinguished after the creditor has accepted the consignation or the judge has decl ard that the consignation has been properly made. When consignation, without a introductory tender of payment, will publish the same effect: 1. the creditor is absent or unknown or does not expect at the place of payment. 2. the creditor is incapacitated to receive the payment at the time it is due. 3. when, without just cause, he refuses to give receipt. 4. two or more persons claim the same right to collect.\r \nII †LOSS OF THE THING collectable A. concept A thing is considered befuddled when it perishes, or goes out of commerce, or disappears in such a way that its cosmos is unknown or cannot be recovered. B. personnel on the obligation 1. Loss of a determinate thing General approach pattern: obligation is extinguished. Exceptions: a. when the loss is due to the rift of the debtor. b. when the debtor has incurred in delay. c. when so provided by law. (ex. The debtor promised to deliver the same thing to two or more persons who do not have the same interest. ) d. when it is stipulated by the parties. e. hen the nature of the obligation requires the supposal of risk. 2. Loss of a generic thing †the loss of destruction of anything of the same var. does not extinguished the obligation. C. Creditor’s right if the loss is caused by a third person †if the obligation has been extinguished by the loss of the thing, the creditor shall have all the rights of act which the debtor may have against third persons by reason of the loss. III †CONDONATION OR REMISSION OF DEBT A. Concept Condonation or remission is the gratuitous abandonment by the creditor of his right. In plain language, this refers to the forgiveness of indebtedness.\r\nTo extinguish the obligation, it requires the debtor’s consent. B. Kinds of condonation or remission 1. as to the sum or extent a. marrow †when the total obligation is remitted. b. Partial †when only part of the obligation, or only the addition obligation is remitted. 2. as to form a. stub out †one made orally or in writing. b. Implied †one inferred from the conduct of the parties. C. Effect of condonation or remission 1. The remission of the read/write head debt extinguishes the accessory obligation. 2. the remission of the accessory obligation does not carry with it that of the question debt. IV †CONFUSION OR MERGER A. Concept\r\nConfusion or merger is the concussion in on e person the qualities or the character of creditor and debtor. B. Effect of merger when there is guarantor 1. Merger which takes place in the superstar debtor or creditor benefits the guarantors. both(prenominal) the principal obligation and the guaranty are extinguished. 2. Merger which takes place in the person of the guarantor does not extinguish the obligation, only the guaranty is extinguished. V- COMPENSATION A. Concept requital is a mode of extinguishing an obligation when two persons, in their own right, are debtors and creditors of each other. B. Kinds of compensation 1. as to kernel or extent a.\r\nTotal †when the debts are of the same amount. b. Partial †when the debts are of different amount. 2. as to cause or inception a. legal †it takes place by summons of law and extinguishes both debts to the concurrent amount even though the debts are collectible at different places and the creditors and debtors are not aware of the compensation. Requisites: 1 . That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other. 2. That both debts consist in a sum of money or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated. . That the two debts are due. 4. That both debts be liquidated and demandable b. impulsive or conventional redemption †takes place by agreement of the parties, such as when they agree to the compensation of debts which are not yet due. c. Judicial †compensation order by the court. d. Facultative †compensation that may be claimed or opposed by one of the parties (such as when not all the requisites for legal compensation cannot take place) VI †NOVATION A. Concept It is the modification or extinguishment of an obligation by another, either by: a. changing the object or principal considerateness; b. ubstituting the person of the debtor; or c. subrogating a third person in the r ights of the creditor. B. Requisites of novation 1. there must be a previous valid obligation. 2. there must be an agreement between the parties to modify or extinguish the obligation. 3. the extinguishment of the old obligation. 4. the validity of the freshly obligation. C. Kinds of novation 1. as to object or theatrical role a. Real or objective †novation by changing the object or principal condition. b. Personal or subjective †novation by wobble of the parties (debtor or creditor). a) substituting the person of the debtor (always with the creditor’s consent) 1.\r\nExpromision †third person initiates the substitution and assumes the obligation even without the knowledge or against the will of the debtor) 2. Delegacion †debtor initiates the substitution, which requires the consent of all parties ( pilot debtor, creditor and naked debtor) b) Subrogating a third person in the rights of the creditor. Kinds of Subrogation 1. Conventional subrogation †change of creditor by the agreement of the parties. 2. Legal subrogation †subrogation by operation of law. 3. Mixed subrogation †change of object and parties to the obligation. 2. as to form a.\r\nExpress †novation tell in unequivocal terms. b. Implied †when the old and fresh obligation are on every point incompatible with each other. 3. as to extent a. Total †the old obligation is totally extinguished. b. Partial †the old obligation still remains in force except as it has been modified. D. Effect if new obligation is void If the new obligation is void, the novation is void. In such case, the original one shall subsist. E. Effect if original obligation is void The novation is void if the original obligation is void. If the original obligation is void, there is no obligation to extinguish since it is non-existent.\r\n'