Los países en desarrollo Miembros podrán determinar en forma global la pérdida de producción del o de los sectores o regiones afectados

CALTEX (PHILIPPINES), INC., vs. CA, G.R. NO. 72703, November 13, 1992

Dation in payment does not necessarily mean total extinguishment of the obligation but only up to the value of the thing given and the obligation is

totally extinguished only when the parties, by aG.R.eement, express or implied, or by their silence, consider the thing as equivalent to the obligation.

PNB vs. PINEDA, G.R. NO. L-46658 May 13, 1991

Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. The repossession of the machinery and equipment in question was merely to secure the payment of TCC's loan obligation and not for the purpose of transferring ownership thereof to PNB in satisfaction of said loan.

FILINVEST vs PHILIPPINE ACETYLENE, G.R. NO. L-50449 January 30, 1982

In the absence of clear consent of appellee to the proferred special mode of payment, there can be no transfer of ownership from appellant to appellee by mere delivery to and acceptance by him of the vehicle and should not be construed as actual payment or more specifically, dacion en pago.

CITIZENS SURETY vs. COURT OF APPEALS, G.R. NO. L-48958 June 28, 1988

In opposing the money claim, Respondent alleged that the surety bonds and the indemnity agreements had been extinguished by the execution of the deed of assignment, because this amounted to dation in payment whereby the former is considered to have alienated his property in favor of the latter in satisfaction of a monetary debt (Artide 1245). The transaction could not be dation in payment because the deed of assignment was executed on December 4, 1959, the obligation of the assignor to refund the assignee had not yet arisen, hence, there was no obligation yet on the part of the petitioner.

D. COMPENSATION

SOLINAP vs. DEL ROSARIO, G.R. No. L-50638 July 25, 1983

For compensation to take place, it is required that the amount involved be certain and liquidated. Compensation cannot take place where one's claim against the other is still the subject of court litigation.

ART 1980

BPI vs CA, G.R. NO. 136202, January 25, 2007

Petitioner, as a collecting agent, debited Salazar's account. The account was different from the original account to which the proceeds of the check were credited but both accounts belonged to Salazar. The debited account was the account of the sole proprietorship she owns. The other account was her personal account.

A bank generally has a right of set-off over the deposits therein for the payment of any withdrawals on the part of a depositor, because fixed, savings, and current deposits of money in banks and similar institutions are governed by the provisions concerning simple loan, hence, the relationship between banks and depositors is that of creditor and debtor. Legal compensation under Article 1278 of the Civil Code may take place when all the requisites mentioned in Article 1279 are present.

GAN TION vs. HON. COURT OF APPEALS, G.R. NO. L-22490, May 21, 1969

The award for attorney's fees is made in favor of the litigant, not of his counsel, hence, it is the litigant, not his counsel, who is the judgment creditor and who may enforce the judgment by execution, such credit, therefore, may properly be the subject of legal compensation.

ART 1278

PNB vs VDA. DE ONG ACERO, G.R. NO. L-69255, February 27, 1987 PNB's main thesis is that when it opened a savings account for ISABELA, it (PNB) became indebted to ISABELA, so that when ISABELA itself subsequently came to be indebted to it on account of ISABELA's breach of the terms of the Credit Agreement, ISABELA and PNB became at the same time creditors and debtors of each other, thus compensation automatically took place between them, in accordance with Article 1278 of the Civil Code.

Compensation shall take when two persons, in their own right, are creditors and debtors of each other and that compensation may transpire by operation of law, as when all the requisites therefor, set out in Article 1279, are present. Nonetheless these legal provisions can not apply if it has not proven by competent evidence that PNB is a creditor of ISABELA.

FRANCIA vs. IAC, G.R. NO. L-67649 June 28, 1988

Francia contends that his tax delinquency has been extinguished by legal compensation and claims that the government owed him when a portion of his land was expropriated, hence, his tax obligation had been set-off by operation of law.

The general rule based on grounds of public policy is well-settled that no set-off admissible against demands for taxes levied for general or local governmental purposes because taxes are not in the nature of contracts between the party and party but grow out of duty to, and are the positive acts of the government to the making and enforcing of which, the personal consent of individual taxpayers is not required.

SYCIP vs. HONORABLE COURT OF APPEALS, G.R. NO. L-38711, January 31, 1985

Petitioner contends that respondent Court of Appeals erred in not applying the provisions on compensation or setting-off debts despite evidence showing that Lapuz, an agent of Albert Smith and/or Dr. Dwight Dill, owed him. Compensation takes place only when two persons in their own right are creditors and debtors of each other, and that each one of the obligors is bound principally and is at the same time a principal creditor of the other.

MINDANAO PORTLAND CEMENT CORPORATION vs. CA, G.R. NO. L- 62169, February 28, 1983

It is clear from the record that both corporations, petitioner Mindanao Portland Cement Corporation (appellant) and respondent Pacweld Steel Corporation (appellee), were creditors and debtors of each other, their debts to each other consisting in final and executory judgments of the Court of First Instance in two (2) separate cases, ordering the payment to each other of the sum of P10,000.00 by way of attorney's fees. The two (2) obligations, therefore, respectively offset each other, compensation having taken effect by operation of law and extinguished both debts to the concurrent amount of P10,000.00, pursuant to the provisions of Arts. 1278, 1279 and 1290 of the Civil Code, since all the requisites provided in Art. 1279 of the said Code for automatic compensation "even though the creditors and debtors are not aware of the compensation" were duly present.

THE INTERNATIONAL CORPORATE BANK INC. vs. IAC, G.R. NO. L- 69560 June 30, 1988

Petitioner contended that, after extrajudicially foreclosing the mortgage, private respondent still owes the former an amount, by way of deficiency. Petitioner also claimed that it has the right to apply or set off private respondent's money market claim despite the fact that the validity of the extrajudicial foreclosure sale and petitioner's claim for deficiency are still in question.

Article 1279 of the Civil Code requires among others, that in order that legal compensation shall take place, "the two debts be due" and "they be liquidated and demandable", because compensation is not proper where the claim of the person asserting the set-off against the other is not clear nor liquidated.

MONDRAGON vs. SOLA, JR., G.R. NO. 174882 January 21, 2013 Respondent reneged on his promise to pay petitioner. Petitioner thereafter withheld the payment of respondent's service fees and applied the same as partial payments of the debt by way of compensation.

Compensation is a mode of extinguishing to the concurrent amount the obligations of persons who in their own right and as principals are reciprocally debtors and creditors of each other. Legal compensation takes place by operation of law when all the requisites are present, as opposed to conventional compensation which takes place when the parties aG.R.ee to compensate their mutual obligations even in the absence of some requisites.

MONTEMAYOR vs. MILLORA, G.R. NO. 168251. July 27, 2011 Jesus contends that offsetting cannot be made because the judgment of the RTC failed to specify the amount of attorney’s fees and maintains that for offsetting to apply, the two debts must be liquidated or ascertainable and the trial court merely awarded to Vicente attorney’s fees based on quantum meruit without specifying the exact amount thereof. A debt is considered liquidated, not only when it is expressed already in definite figures which do not require verification, but also when the determination of the exact amount depends only on a simple arithmetical operation.

E. NOVATION

LBP vs. ONG, , G.R. NO. 190755, November 24, 2010

Land Bank faults the CA for finding that novation given that substitution of debtors was made without its consent, thus, it was not bound to recognize the substitution under the rules on novation. Novation which

consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor.

BOYSAW vs. INTERPHIL PROMOTIONS, G.R. NO. L-22590, March 20, 1987

The assignment and transfer, first to Araneta, and subsequently, to appellant Yulo, Jr., of the managerial rights over Boysaw is without the knowledge or consent of Interphil. The consent of the creditor to the change of debtors, whether in expromision or delegacion is an, indispensable requirement , since substitution of one debtor for another may delay or prevent the fulfillment of the obligation by reason of the inability or insolvency of the new debtor, hence, the creditor should agree to accept the substitution in order that it may be binding on him.

CALIFORNIA BUS LINES, INC. vs. STATE INVESTMENT HOUSE, INC., G.R. NO. 147950. December 11, 2003

There was no change in the object of the prior obligations in the restructuring agreement since it merely provided for a new schedule of payments and additional security giving Delta authority to take over the management and operations of CBLI in case CBLI fails to pay installments equivalent to 60 days. With respect to obligations to pay a sum of money, this Court has consistently applied the well-settled rule that the obligation is not novated by an instrument that expressly recognizes the old, changes only the terms of payment, and adds other obligations not incompatible with the old ones, or where the new contract merely supplements the old one.

AJAX MARKETING vs. HON. COURT OF APPEALS, G.R. NO. 118585 September 14, 1995

In their interrelated first and second assignment of errors, petitioners argue that a novation occurred when their three (3) loans, which are all secured by the same real estate property were consolidated into a single loan of P1 million under Promissory Note, thereby extinguishing their monetary obligations and releasing the mortgaged property from liability. The well settled rule is that novation is never presumed and it will not be allowed unless it is clearly shown by express agreement, or by acts of equal import, thus, to effect an objective novation it is imperative that the new obligation expressly declare that the old obligation is thereby extinguished, or that the new obligation be on every point incompatible with the new one.

F. RESCISSION

UNIVERSAL FOOD CORPORATION vs. CA, G.R. NO. L-29155, May 13, 1970

Respondent patentee was dismissed as the permanent chief chemist of the corporation without any fault or negligence on his part after the execution of the Bill of Assignment, prompting him to rescind the contract. The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental breach as would defeat the very object of the parties in making the agreement.

ART 1191

DEL CASTILLO Vda. DE MISTICA vs. SPOUSES NAGUIAT, G.R. NO. 137909, December 11, 2003

In the present case, the failure of respondents to pay the balance of the purchase price within ten years from the execution of the Deed did not amount to a substantial breach. Under Article 1191 of the Civil Code, the right to rescind an obligation is predicated on the violation of the reciprocity between parties, brought about by a breach of faith by one of them however, rescission is allowed only where the breach is substantial and fundamental to the fulfillment of the obligation.

, PALAY vs. CLAVE , G.R. NO. L-56076 September 21, 1983

The contract agreed upon by the parties provided for automatic extrajudicial rescission upon default in payment without need of notice and with forfeiture of all installments paid. Upon default of the respondent, petitioner rescinded the contract. Respondent questioned the validity of the rescission. The judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions, however there should be at least a written notice sent to the defaulter informing him of the rescission.

SOLAR HARVEST, INC., vs DAVAO CORRUGATED CARTON CORPORATION, G.R. NO. 176868. July 26, 2010

The CA added that even assuming that the agreement was for respondent to deliver the boxes, respondent would not be liable for breach of contract as petitioner had not yet demanded from it the delivery of the boxes. Without a previous demand for the fulfillment of the obligation, petitioner would not have a cause of action for rescission against respondent as the latter would not yet be considered in breach of its contractual obligation, since the right to rescind a contract arises once the other party defaults in the performance of his obligation.