Engkings Pre Final Reviewer: Obligations and Contracts Defenses for Solidary Debtor (1222) 1. 2. 3. 4.

Those derived from Nature of the Obligation Personal defenses Defenses pertaining to his share Those Personal to other debtors

**Conjugal partnership is dissolved upon death of one spouse and the claims made against the conjugal be dismissed without prejudice to filing of claim against estate . **obligations that are indivisible and joint, demands must be made to all joint debtors . As for the damages, the creditor can go against each join debtor. Debtors shall deliver the indivisible object to all creditors, unless one was authorized to act on their behalf. ** In case of non compliance of joint indivisible obligation, Kinds of Indivisibility Conventional, Natural ,Legal Kinds of Divisibility Quantitative, Qualitative, Intellectual In divisible contract, a judgment for breach of a continuing contract is not a bar for subsequent breach. For indivislbe contract, judgement is conclusive as to all claims or demands of any parties. Penalty substitutes damages and interest unless otherwise provided. If obligor refuses to pay penalty, he will be liable for damages. Kinds of Penal Clause : Legal, conventional, subsidiary, jointly. (purpose is to insure pref) Penalty is an accessory obligation while condition is not. Condition is not demandable while penalty can be demandable in default in accordance to the provision of the Civil Code * Insistence upon receiving satisfaction of penal clause operate as renunciation Of right to other damages. *Forfeiture is valid when stipulated and is not iniquitous and unconscionable - Judge can reduce penalty when the principal has been partly of irregularly complied with or when such is iniquitous or unconscionable. -Penalty does not replace obligation so when debtor pays penalty, he is not excuse or he cant say he does not need to preform ob because he paid penalty unless such

right is given to him. Creditor on the other hand cannot also ask for the payment of penalty and performance of oblig at the SAME TIME. Extinguishment of Obligation A debt is not to be considered paid unless obligation has been completely delivered or rendered. -when obligee accepts performance knowing its incompleteness, without expressing protest . it is deemed completed or complied with. Payment shall be made to persons in who favor the credit is constituted, successor in interest and authorized persons. Payment of unthorized agent is at the risk of the payor. -Payments made to incapacitated person is not valid unless he kept the thing delivered to him and the it redounded to his benefit. So the risk of paying to an incapacitated person is born by the payor so that when incapacitate person enters or spends the money and lost it, payors obligation is not extinquiehed. Lesson : pay to a sane person and one that is authorized . Payment to third is valid when it redounded to the benefit of the creditor. In the following cases there is no need to prove benefit to creditor : 3rd person acquires creditors rights, creditor ratifies, if by creditors conduct debtor was led to believe the 3rd person had authority. Re RA 529 , those contracts entered into prior to said date, debts must be pain in phil peso nd exchange rate shall be from the time obligation incurred, those entered into after , exchange rate is based on at the time of payment. Subrogee can only recover the amount that is recoverable by the creditor. Example case, insrance company acting as subrogee, it cannot ask for more than what the creditor actually can recover sa Billl of laiding. Payment using checks does not extinguished the obligations exp: when check is enchased of impaired. GR, debtor cannot compel creditor to accept object of contract that is same value or more expensive than what was agreed upon . Applicable to oblig to do and not do and to give an. This provision is no application to: facultative obligation, dation in payment, novation or when creditor waives his rights. Dation of payment req: creditor agrees, not prejudicial to other creditors, debtor not insolvent. Difference of sale vs dation of payment = pre existing credit, extinguishment of ob, lesser freedom, consideration of sale is price while dation is extinguishment of payment. Obligations concerning generic thing, creditor cannot demand for superior quality and debtor cannot give inferior quality.. In application of payments, the debtor can declare to the creditor which debt he will apply payment. Application of payments shall not be made to those that are not yet

due unless stipulated. Acceptance of receipt froc cre to deb means latters okay with application. Preferential right in application of payment is to the debtor, except there is prior agreement or when he chooses to pay principal first before interest,. When cannot be applied or when 1252-1253 does not apply, 1254 applies . Application of payment to one that is more onerous or burdensome to the debtor. If debtor specifies which debt to apply payment, 1254 does not apply because the latter only applies when 1252-53 did not fix application. Cession is assignment of right to creditor to all his property. Proceeds will be used to pay up his debts againtas creditors , balance can be collected. If stipulated by both, debt can be fully complied with any net proceeds. DAtion vs Cession. Cession affects all properties of debtors, requires more than one creditor, requires the consent of all creditors, takes place during partial or full insolvency of debtor, does not tx ownership , not an act of novation. GR Interest ( due and future interest ) must be paid first exp when creditor agrees. Tender of payment, notice prior to consignation, consignation (it is always judicial) Consignation is not always what needs to be done when creditor refuses payment. This can be done when debtor has duty to pay. But if it is right to pay, he need not consign (eg. Right of repurchase). Reason for consignation is to release debtor from obligation. This only refers to debts.. *Check payments is not a legal tender however when creditor accepts a fully funded check after debtors manifestation that it had been given to settle the obligation , he is estopped from later on denouncing its efficiency as legal tender. When creditor refuses check payment not because its not a legal tender but other reasons and then the debtor consigns it to court, the interest will not run from date of tender coz the debtor here is in good faith. GR: Consignation is preceded by tender of payment. Except (6) creditor is absent, incapacitated, when he notified debtor that he will not accept payment, title is lost, creditor not goint to issue receipt, two or more persons claiming same right to collect. Not filing of MOR does not constitute waiver or abandonment of the right to file for Separate Civil Action