IV. Focus Questions: Name: Dome, Jay Ann Processor:Atty. Jose T. Yayen Section: Bsa - 12

NAME: Dome, Jay Ann PROCESSOR:ATTY. JOSE T.
YAYEN
SECTION: BSA – 12
IV. Focus Questions
A. Define the following:

1. Compensation – is the total cash and non-cash payments that you
give to an employee in exchange for the work they do for your
business. It is typically one of the biggest expenses for businesses with
employees. Compensation is more than an employee’s regular paid
wages. It also includes many other types of wages and benefits. This
may include hourly wages or salary, overtime, bonuses, stock options,
health insurance, pension plans, vacation and sick time, and all other
benefits received from an employer.
2. Legal Compensation – A mode of extinguishment

of obligation wherein there is simultaneous balancing or weighting of
two obligations of two persons who are reciprocally debtors and
creditors of each other. It extinguishes to the extent in which the
amount of one is covered by that of the other. The compensation takes
effect by operation of law, and extinguishes both debts to the
concurrent amount, even without the consent of the parties.
3. Facultative Compensation – In the sense of regulation §81 and

following Act No. 435/2004 Coll. of employment, any employer with
more than 25 employees in permanent employment must employ 4%
of people with disabilities. If you do not meet the required percentage,
it is the duty of the employer to compensate this regulation for the
considerable amount of transfer to state budget. Another solution to
deal effectively with this issue is taking in products or services from a
company that employs more than 50% of employees with disabilities.
Prevent Service Company Ltd., therefore offers you services and can
effectively solve the problem of facultative compensation.
4. Novation – Ordinarily arises when a new individual assumes an
obligation to pay that was incurred by the original party to the
contract. It is distinguishable from the situation that occurs when
another individual makes a guarantee that a debtor will pay what he or
she owes to a creditor. In the case of a novation, the original debtor is
totally released from the obligation, which is transferred to someone
else. The nature of the transaction is dependent upon the agreement
between the parties. A novation also takes place when the original
parties continue their obligation to one another, but a new agreement
is substituted for the old one.
5. Expromission – Civil law. The act by which a creditor accepts a new

debtor, who becomes bound instead of the old, the latter being
released. It is a species of novation. which, when a third person
initiatively takes place the obligation even without the consent or
against the will of the original debtor but with the consent of the
creditor.
6. Delegacion – Is when the debtor offers and the creditor accept a third
person to take place for the satisfaction of the original debtors
obligation. In this agreement they are called as a Delegante (debtor),
Delegatario (creditor) and delegado (third person).
B. Discussions:
1. When there is subrogation, what rights are acquired by the new creditor?
In Article 1303 stated that Subrogation transfers to the person
subrogated the credit with all the rights thereto appertaining, either
against the debtor or against third persons, be they guarantors or
possessors of mortgages, subject to stipulation in a conventional
subrogation. The effect of legal subrogation is to transfer to the new
creditor the credit and all the rights and actions that could have been
exercised by the former creditor either against the debtor or against
third persons, be they guarantors or mortgagors. Simply stated,
except only for the change in the person of the creditor, the obligation
subsists in all respects as before the novation. The effect of legal
subrogation as provided in Article 1303 may not be modified by
agreement. The effects of conventional subrogation are subject to the
stipulation of the parties.
2. Give the requisites of (a) novation. Article 1291. Obligations may be
modified by:
 Changing their object or principal conditions;
 Substituting the person of the debtor;
 Subrogating a third person in the rights of the creditor.
3. May there be compensation although the things due are not consumable?
Explain.
There will be no compensation to the things due does not consumable.
Whereas, in Article 1279, gives us the requisites of how the
compensation will be proper mannered and it consists of some that
can prove all the things due are not for consumable, 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 and That over neither of them there be any retention or
controversy, commenced by third persons and communicated in due
time to the debtor.
C. Problems
1. D borrowed P50,000 as character loan (no security) from a bank. Despite

demands for payment after the loan fell due, D did not pay the bank. D
has a savings deposit of P40,000 with the bank. Has the bank the right to
apply the deposit to the payment of D’s debt? Why? (5 PTS)
 According to Article 1283 If one of the parties to a suit over an

obligation has a claim for damages against the other, the former may
set it off by proving his right to said damages and the amount thereof.
Therefore, I agree that they have the right to seize accounts. This will
lead to a financial peril on the side of the borrower as he will have no
money left on his account. Compensation may also take place when so
declared by a final judgment of a court in a suit. A party may set off
his claim for damages against his obligation to the other party by
proving his right to said damages and the amount thereof.
2. After contracting a debt in the amount of P10,000 in favour of C, D
succeeded through fraudulent means to make C liable to him in the same
amount. Assuming that both obligations are now due, may the two debts
be compensated against each other? What is the effect if the debt of C is
later annulled in court at the instance of D? Explain (5 PTS)
 It can be compensated against each other. If it is later annulled, D has

to pay C, because the compensation has been annulled. Article 1284
indicated, says that When one or both debts are rescissible or
voidable, they may be compensated against each other before they
are judicially rescinded or avoided.
3. T (THIRD PERSON) tells C (creditor) that T will the pay the debt of D
(debtor). C agrees. Is D released from his obligation to C? Why? (5 pts)
 Yes, because C the creditor accepted the payment of T on behalf of D.

C is not obliged to accept the payment of T but if he accepts it, it is
paid. The Article that holds im this kind of case was in Art. 1293.
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.
Payment by the new debtor gives him the rights mentioned in Articles
1236 and 1237. In Articles 1236 and 1237 there will be no application
of the debtor and the creditor between the person on whose behalf the
payment was made and the payee.
V. Exercises / Learning Activities
A. Problem Analysis:
1. Sarah had a deposit in a savings account with Filipino Universal Bank in
the amount of P5,000,000. To buy new car, she obtained a loan from the
same bank in the amount of P1,200,000, payable in twelve monthly
instalments. Sarah issued in favour of the bank post-dated checks, each
in the amount of P100,000 to cover the twelve monthly installment
payments. On the third, fourth and fifth months, the corresponding
checks bounced. The bank then declared the whole obligation due, and
proceeded to deduct the amount of one million from Sarah’s deposit after
notice to her that his a form of compensation allowed by law. Is the bank
correct? Why?
 Yes, the bank is correct. Under the law when the person is deposited
from the bank, creditor/debtor relationship was created. Since the
bank and Sarah's in the given case was creditor and debtor with
respect to each other and considering that the debt are already due
and demandable, compensation takes place. To prove that
compensation takes place here's the Article 1278 that explains the
statement Compensation shall take place when two persons, in their
own right, are creditors and debtors of each other. Compensation is
the extinguishment to the concurrent amount of the debts of two
persons who, in their own right, are reciprocally principal debtors and
creditors of each other. It involves the simultaneous balancing of two
obligations in order to totally extinguish them if they are of the same
amount or to the extent in which the amount of one is covered by that
of the other, if of different amounts.
(2) A, B, and C are jointly liable to D in the amount of P15,000.
Subsequently, D assigned his credit to C in consideration for goods sold by C
to D. (a) Give the effect of the assignment. (b) What if the obligations of
the debtors is solidary, will your answer be the same? Why? (10 pts)
A. A and B still has to pay C, but C's debt will be deducted to the amount A
and B has to pay.
B. Since it is passively solidary, A and B may reason that C is also indebted
therefore A and B may not pay anymore.
(3) Mr. A is indebted to Mr B. Mr C is the guarantor of Mr A in the latter’s
obligation to Mr. B. Mr C is an heir of Mr B. When Mr B died, Mr C inherited
all the properties and credits of Mr B including his liability. What happens? Is
the obligation of Mr. B extinguished by confusion? Why? (5pts)
 No, because according to article 1276, confusion which takes place in
the person of the guarantor does not extinguish the obligation. ART.
1276. Merger which takes place in the person of the principal debtor or
creditor benefits the guarantors. Confusion which takes place in the
person of any of the latter does not extinguish the obligation.

IV. Focus Questions: Name: Dome, Jay Ann Processor:Atty. Jose T. Yayen Section: Bsa - 12

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NAME: Dome, Jay Ann PROCESSOR:ATTY. JOSE T.

IV. Focus Questions

A. Define the following:

2. Legal Compensation – A mode of extinguishment

3. Facultative Compensation – In the sense of regulation §81 and

5. Expromission – Civil law. The act by which a creditor accepts a new

1. D borrowed P50,000 as character loan (no security) from a bank. Despite

 According to Article 1283 If one of the parties to a suit over an

 It can be compensated against each other. If it is later annulled, D has

 Yes, because C the creditor accepted the payment of T on behalf of D.

V. Exercises / Learning Activities

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