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: