Extinguishment-OF- Obligations PDF

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10 MODES OF EXTINGUISHMENT OF OBLIGATIONS Payment or performance 6. Fulfillment of resolutory condition Prescription 7. Annulment Compensation 8. Rescission Confusion/merger 9. Novation Condonation/remission 10. Loss of thing due 1. PAYMENT/PERFORMANCE-( Art. 1232) a mode of extinguishing an obligat...

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10 MODES OF EXTINGUISHMENT OF OBLIGATIONS 1. 2. 3. 4. 5.

Payment or performance 6. Fulfillment of resolutory condition Prescription 7. Annulment Compensation 8. Rescission Confusion/merger 9. Novation Condonation/remission 10. Loss of thing due

1. PAYMENT/PERFORMANCE( Art. 1232) a mode of extinguishing an obligation which consists of:  Delivery of money  Performance of obligation. Thus, if the obligation is to give a specific car, payment is made by delivering the thing. If the obligation is to repair a computer, payment is made by performing the service. 2 PLACE OF PAYMENT 1. At place agreed upon 2. If w/o agreement a. Object is indeterminate – paid at domicile of DEBTOR b. Object is determinate – place of thing at the time of constitution of obligation 4 SPECIAL MODES OF PAYMENT a. Dation in payment (Art. 1245) – the debtor alienates property in favor of the creditor to satisfy monetary obligation. b. Application of payment (Art. 1252) – the designation of the debt to which payment shall be applied when the debtor owes several debts in favor of the same creditor. c. Payment by Cession (Art. 1255) – abandonment or assignment by the debtor of all his properties in favor of his creditors so that the latter may sell them and recover their claims out of the proceeds. d. Tender of payment & consignation (Art. 1256) – (Tender of payment). The act of the debtor of offering to the creditor what is due him (Consignation).The act of disposing the sum or thing due with the judicial authorities whenever the creditor refuses without just cause to accept the same, or in cases when the creditor cannot accept it. a. APPLICATION OF PAYMENT - designation of debt to w/c payment must be applied when debtor has several obligations of same kind in favor of same creditor. 3 REQUISITES OF APPLICATION OF PAYMENT 1. 2. 3. 4.

Only 1 debtor & 1 creditor 2 or more debts, same kind All debts are due Insufficient payment to extinguish ALL debts

3 RIGHTS TO MAKE APPLICATION OF PAYMENT 1. Right belongs to CREDITOR. 2. If debtor does not avail, creditor can give him receipt designating the debt from which payment will be applied. 3. If debtor accepts the receipt, he cannot complain unless THERE IS just cause to invalidate the contract.

b. CESSION - debtor abandons ALL his property for creditor’s benefit to obtain payment from proceeds of his property 5 REQUISITES OF VALID CESSION 1. 1 debtor & 2 or more creditors 2. Debtor is in partial/total insolvency. 3. Debtor to deliver ALL his property to creditors 4. Debt is due & demandable. 5. Creditors must sell the properties & apply the proceeds to their respective credits proportionately. c. DACION IN PAYMENT (dacion en pago) - alienation of property to the creditor in satisfaction of debt 3 REQUISITES OF DACION IN PAYMENT 1. Consent of creditor 2. NOT prejudicial to another creditor 3. Debtor not insolvent declared by a judicial decree CESSION –  all properties  require more than 1 creditor  NOT act of novation,  NOT transfer ownership,  requires partial/total insolvency DACION IN PAYMENT NOT –     

all properties, NOT require all creditors, act of novation, transfer ownership and may happen during solvency of debtor

d. TENDER OF PAYMENT & CONSIGNATION TENDER OF PAYMENT – act of offering the creditor what is due to him w/ a demand that the creditor accept it CONSIGNATION – act of depositing thing due w/ the court when creditor cannot/refuses acceptance of payment 5 REQUISITES OF CONSIGNATION

1. Debt due. 2. Creditor refused the tender of payment w/o just cause 3. Notice of consignation already given to persons interested in fulfillment of obligation 4. Consignation of thing/amount due 5. Subsequent notice of consignation to interested persons 5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT 1. 2. 3. 4. 5.

Creditor is absent/unknown. Creditor is incapacitate to receive at time it is due. Creditor refused give a receipt, w/o just cause. 2 or more persons claim the right to collect. Title of obligation lost.

2. LOSS OF THING DUE - perishes, disappears, or goes out of commerce; existence is unknown; cannot be recovered 3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS 1. Determinate thing. 2. W/o debtor’s fault. 3. No delay. 3. CONDONATION/REMISSION - Gratuitous abandonment of right by the creditor 3 REQUISITES OF A VALID CONDONATION/REMISSION 1. It must be gratuitous. 2. Accepted by obligor. 3. Obligation is demandable. 4. CONFUSION/MERGER - meeting in 1 person of qualities of debtor & creditor w/ same obligation

3 REQUISITES OF VALID CONFUSION/MERGER 1. The merger of characters of debtor & creditor must be in same person. 2. Take place between principal debtor & creditor. 3. Clear & definite. 5. COMPENSATION - 2 persons are debtors & creditors of each other

6 ESSENTIAL REQUISITES OF COMPENSATION 1. 2. 3. 4. 5. 6.

Parties both principal debtors & creditors of each other. Compensation is not prohibited by law. No retention/controversy by 3rd person. 2 debts are due & demandable. 2 debts are liquidated. 2 debts both in money/consumable things.

(2) CLASSES OF COMPENSATION 1. As to effect a. TOTAL – obligations completely extinguished. b. PARTIAL – a balance remains 2. As to origin or cause a. LEGAL – by law b. VOLUNTARY/CONVENTIONAL – agreement of parties c. JUDICIAL – order from the court d. FACULTATIVE – 1 of parties can choose/oppose claiming compensation 6. NOVATION - Substitution/change of obligation - Substitution of debtor - Subrogation of creditor (3) OBLIGATIONS MAY BE MODIFIED BY:  



Changing object/principal conditions. (REAL NOVATION) Changing the person of debtor/creditor. (PERSONAL NOVATION) o Substitution – change of debtor o Subrogation – change of creditor Changing person of the parties & the objects of principal condition. (MIXED NOVATION)

4 REQUISITES OF NOVATION 1. 2. 3. 4.

Old valid obligation. Agreement of parties to new obligation. Extinguishment of old obligation. Validity of new obligation.

2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR  

EXPROMISION – w/ consent of creditor, NO consent of old debtor 2REQUISITES o Initiative of 3rd person. o Consent of creditor.

 

DELEGACION – all must agree (creditor, old debtor, new debtor) 3REQUISITES o Initiative from old debtor. o Consent of debtor. o Acceptance by creditor.

7. SUBROGATION - change of creditor 2 KINDS OF SUBROGATION CONVENTIONAL – consent of original parties & 3rd person LEGAL – by law o creditor pays another preferred creditor even w/o debtor’s knowledge o 3rd person pays the express approval of debtor o 3rd person pays even w/o knowledge of debtor...