CONFUSION AND MERGER OF RIGHTS

SECTION 4
CONFUSION OR MERGER
 The obligation is extinguished from the time the
characters of the creditor and debtor are merged
in the same person. (ART. 1275)
EXAMPLE
EFFECT OF MERGER WHEN THERE IS A GUARANTOR

 1. Which takes place in the principal debtor or

creditor benefits the guarantors (ART. 1276)
 Example

 2. Confusion which takes place in the person of

the guarantor does not extinguish the obligation.
(ART. 1276)
 Example
 GUARANTOR – A person who promise to pay
back a loan if the original borrower does not pay
it back

 Guaranty – A formal promise to pay a debt

MERGER IN A JOINT OBLIGATION
 Confusion does not extinguish a joint obligation
except as regards the share corresponding to the
creditors and debtors in whom the two characters
concur (ART. 1277)

 Example
COMPENSATION

SECTION 5
COMPENSATION

 Compensation should take place when two

persons, in their own right, are creditors and
debtors of each other (ART. 1278)

 Example
KINDS OF COMPENSATION
 As to cause or origin
a. Legal
1. That each one of the obligation be bound
principally, and that he be the same time a
principal creditor of the other (ART. 1279)

Example
KINDS OF COMPENSATION
 Exception to the first requisite
A guarantor may set up compensation as
regards what the creditor may owe the principal
debtor. (ART. 1280)

Example
KINDS OF COMPENSATION

2. 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
3. That the two debts be due
4. That they be liquidated and demandable
5. That over neither of them there be any retention or
controversy, commenced by the third person and
communicated in due time to the debtor.
KINDS OF COMPENSATION

II. As to amount or extent

a. Total – where the debts are of the same
amount (ART. 1281)
b. Partial – when the debts are of different
amount (ART. 1281)
 Vince Montenegro
 Angela Faye Clarete
 Jennica Reyes
 Jonabel De Belen
 Jozza Medella