Extinguishment of Obligation

Art.1231
(1) BY PAYMENT OR PERFORMANCE

(2) BY THE LOSS OF THE THING DUE

(3) BY THE CONDONATION OR REMISSION OF THE DEBT

(4)BY THE CONFUSION OR MERGER OF THE RIGHTS OF

CREDITOR AND DEBTOR

(5) BY COMPENSATION

(6) BY NOVATION

OTHERS: ANNULMENT,RESCISSION,FULFILLMENT OF A
RESOLUTORY CONDITION AND PRESCRIPTION
Causes of Extinguishment of obligation
ADDED TO ART.1231

1. DEATH OF A PARTY in case an obligation requiring personal service (Art.1311)

2. MUTUAL DESISTANCE OR WITHDRAWAL (Art.1308)
3. ARRIVAL OF RESOLUTORY PERIOD (Art.1193,part 2)
4. COMPROMISE (Art.2028)
5. IMPOSSIBILITY OF FULFILLMENT (Art.1266)
6. HAPPENING OF FORTUITOUS EVENT (Art.1174)
 SECTION 1. PAYMENT OR PERFORMANCE

MEANING OF PAYMENT

- Deliver of Money, giving of a thing (other than money), doing of an act or not doing of an act.
(Art.1232)
- Debtor pays damage or penalty in lieu of the fulfillment of an obligation.

Art. 1233

Debt will be paid if the thing or service is COMPLETELY delivered or rendered.

Art. 1234

If the obligation is substantially performed in GOOD FAITH, the obligor may recover as though there
had been a strict and complete fulfillment,less damages suffered by the obligee.
Naperformed yung pinaka important part sa
contract kaso may small or minor part na
natanggal or di naperformed
Art. 1235

Obligee accepts the performance knowing its incompleteness and without expressing any protest or
objection, the obligation is deemed fully complied with.
kasunduan
Art. 1236
The creditor is not bound to accept payment or performance by a third person who has no interest in
the fulfillment of the obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if he paid without
the knowledge or against the will of the debtor, he can recover only insofar as the payment has been
beneficial to the debtor.

P E RSO N FROM W H O M T H E C R E D I TO R P E RSO N T O W H O M PAYMENT S H A L L BE

MUST A C C E P T PAYMENT M A D E (Art.1240)
(1) The debtor; (1) The creditor or obligee (person in whose
(2) Any person who has an interest in the favor obligation has been constituted)
obligation (like a guarantor) (2) His successor in interest (like an heir or
(3) A third person who has no interest in the assignee)
obligation when there is a stipulation (3) Any person authorized to receive it
that he can make payment.
Art. 1237

Whoever pays on behalf of the debtor without the knowledge or against the will of the latter cannot
compel the creditor to subrogate him in his rights, such as those arising from a mortgage,guaranty, or
penalty.
S U BROG AT IO N REIMBURSEMENT
-Put into the shoes of the -right to be refundable
creditor Only extent to the amount in
-become the new Art.1236 in paragraph 2.
creditor
Art. 1238

Payment made by a third person who does not intend to be reimbursed by the debtor is
deemed to be a donation which requires the debtor’s consent.
Art. 1239 The thing is is subject to claim and the person is not
suit to enter into contracts
In obligations to give, payment made by one who does not have the free disposal of the
thing due and capacity to alienate it shall not be valid without prejudice of Art.1427.
 Example: minor under
Art. 1241 guardianship

Payment to a person who is incapacitated to administer his property shall be valid if he has kept the
thing delivered, or insofar as the payment has been beneficial to him.

Art. 1242

Payment made in good faith to any person in possession of the credit shall release the debtor.

Example: Angelie is indebted to Javier with the amount of 1,000,000 which indebtedness is
evidenced by a promissory note signed by Angelie. Javier lost the promissory note and found by
Anansi who demanded payment to Angelie.

Explanation:
-The payment to Anansi is not VALID because He is a possessor of the document not
the credit itself.
-IF the pomi is payable to the holder or bearer, if angelie pays Anansi in good faith the
obligation is extinguished. (extinguished na ang obligation dahil ang magbabayad ka sa may hawak ng promissory note.)
-
Art. 1243

Example: A owes 1,500 to B. C in turn owes A 1,500.In an action by B against A,C, upon petition of B,may be ordered by the court
not to pay A and to retain the debt in the meantime,

Explanation: In this case, the debt of E is said to be “garnished” or is subjected to payment to C.The payment of C to B will
extinguished the obligation of A to B.

Art. 1244

The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as,
or more valuable than that which is due.

In obligations to or not to do, an act or forbearance cannot be substituted by another act or forbearance against the
obligee’s will.

Explanation:
(Paragraph 1) refers to real obligation to deliver specific thing.The debtor cannot compel
the creditor to receive another thing even though it is same value and more valuable
against the will of the creditor.
(Paragraph 2) refers to personal (positive or negative) obligation; which cannot
substitute another act against the will of the obligee.
Art. 1245

Dacion en pago or Dation in payment -property is alienated to the creditor in satisfaction of a debt in money
and the creditor will be the owner. (not all [property,only to the amount of credit)

Art. 1246

Obligation to deliver a indeterminate or generic thing.

Same thing but not same quality, either to deliver a superior or inferior thing.

Art. 1249
LEGAL TENDER- currency which if offered by the debtor in the right amount, the
creditor must accept in payment of a debt in money.

The legal tender must be the currency stipulated,if not in the currency stipulated and use a
notes or checks; the obligation will only be extinguished if the notes or checks has been cashed.
Art. 1250
In case an extraordinary inflation or deflation of the currency stipulated should supervene,the value of currency
at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to
the contrary.

Art. 1251
Payment shall be made in the place designated in the obligation.
(1) Payment made wherever the thing might be at the moment th obligation was constituted.
(2) Domicile of the debtor
(3) If the debtor change the place because of bad faith or delay ,any expense shall be borne by debtor.
 SUBSECTION 1: SUBSECTION 2: DIfference between Dation and
APPLICATION OF PAYMENT BY Cession:
PAYMENTS CESSION
Dation: 1 creditor
Cession: Many creditor
(1) There must be one -Special form of payment.
(1) debtor and one -assignment or
Dation: Does not presuppose the
abandonment of all the
(2) creditor. insolvency of the debtor
properties and sell; the
(3) There must be two proceeds satisfy the credits. Cession: debtor is insolvent at the
(2) or more debts (1) There must be two time of assignment
(3) The debts must be (2) or more
of the same kind creditors. Dation: does not involve all of the
(4) Must be due (3) The debtor must be
(partially) insolvent;
property
(5) Payment made Cession: extends to all properties
(4) The assignment
must not be of the debtor subject to execution
must involve all
sufficient to cover the properties of
all debts the debtor Dation: creditor becomes the
(5) The cession owner of the property
must be Cession: the creditor only has the
accepted by the right to sell and applied the
creditors. proceeds to their credit
proportionately.
 SUBSECTION 3:
TENDER OF
PAYMENT AND Requisites of valid consignation:
CONSIGNATION (1) Existence of a valid debt which
is due
(2) Tender of payment by the debtor
Tender of payment- and refusal without justifiable
is the act, on the part reason by the creditor to accept
of the debtor, of it.
offering to the (3) Previous notice of consignation
creditor the thing or to persons interested in the
amount due. fulfillment of the obligation
Consignation- act of (4) Consignation of the thing or
depositing the sum due
thing or amount (5) Subsequent notice of
due with the consignation made to the
proper court when interested parties
the creditor does
not desire or
cannot received it.
 SECTION 2. LOSS OF THE THING DUE

Art.
1262
An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred delay.

When by law or stipulated, the obligor is liable even for fortuitous event, the loss of the thing does not extinguished the obligation. And he shall be responsible for damages,The same rules
applies when the nature of the obligation requires the assumption of risk.

Requisites: When loss of thing will not extinguish liability

(1)when the law so provides
(1) To deliver specific or determinate thing (2) when the stipulation so provides
(2) Loss of the thing without the fault of the debtor (3)when the nature of the obligation requires assumption of risk
(3) The debtor is not guilty of delay (4)when the obligation to deliver a specific thing arises from crime

Art.
1263
In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.

(genus nunquam perit)

Art.
1264
The court shall determine whether, under the circumstances, the partial loss of the object of the obligation is so important as to extinguish the obligation

(the court will determine if the partial loss is equivalent to total loss)
Art. 1265

Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault,
unless there is proof to the contrary, and without prejudice to the provision of article of 1165. This presumption
does not apply in case of fortuitous events.
Guilty of delay or promised to deliver
the same thing to 2 or more people
Art. 1266 who do not have the same interest

The debtor in obligations to do shall also be released when the prestation becomes legally or physically
impossible without the fault of the obligor.
Death or
Impossible by law
incapaciatated

Art. 1267

When the service has become so difficult as to be manifestly beyond the contemplation of the parties,
the obligor may also be released therefrom, in whole or in part.

(both personal and real obligation shall released the obligor in the obligation)
Art. 1268

When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not
be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing
having been offered by him to the person who should receive it, the latter refused without justification to
accept it.
If the thing from criminal
offense is lost the value of the
thing shall be paid by the debtor.
Art. 1269

The obligation having been extinguished by the loss of the thing, the creditor shall have all the rights
of action which the debtor may have against third person by reason of the loss.

If the thing lost is due to third person, the

debtor will be extinguished from the
obligation but the third person is liable in
the obligation
SECTION 3.Condonation or Remission of the debt
SECTION 4. Confusion or Merger of Rights