EXTINGUISHMENT OF OBLIGATION

I. Modes of Extinguishment
Art 1231 Obligations are extinguished by:
A. Payment or performance most natural way of extinguishing an
obligation
B. Loss of the thing due or impossibility of performance
C. Condonation or remission of the debt
D. Confusion or merger of the rights of the creditor and debtor
E. Compensation
F. Novation
G. Others (e.g. Annulment, Rescission, Fulfillment of resolutory condition,
Proscription)
II. Payment or Performance
*Fulfillment of the prestation due means the fulfillment that extinguishes
the obligation by the realization of the purposes for which it is constituted.
- Juridical act which is voluntary, licit and made with the intent to
extinguish the obligation
Elements / Characteristics of a valid payment
1. Identity- what is to be paid; payment should be the very same
obligation/ prestation promised to be performed/ not performed
2. Integrity- how payment should be made; it should be complete (not
only the specific thing but all of its accessions and accessories)

WHO CAN PAY

a. In general (creditor cannot refuse valid tender of payment)
1. Debtor
2. Anyone acting on his behalf
b. Third person who is an interested party (e.g. co-debtors, sureties,
guarantors, owners of mortgaged property or plecge)
c. Third person who is not an interested party but with consent of debtor
d. Third person who is not an interested party and without the knowledge
or against the will of the debtor
Art 1236 par 1 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
Art 1236 par 2 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.
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 the rights, such as those arising from mortgage, guaranty or
penalty.
e. Third person who does not intend to be reimbursed; debtor must give
consent
Art 1238 Payment by third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires
the debtor's consent. But the payment is in any case valid as to the
creditor who has accepted it.
f. In obligation to give
Art 1239 In obligation to give, payment made by one who does not
have free disposal of the thing due and capacity to alienate it shall not
be valid
g. In case of active solidarity
Art 1214The debtor may pay any one of the solidary creditors, but if
any demand, judicial or extrajudicial has been made by one of them,
payment should be made to him.

TO WHOM PAYMENT CAN BE MADE

a. In general
1. Creditor
2. His successor in interest
 3. Any person authorized to receive it
b. Third person
Art 1241 par 2 Payment to a third person shall also be valid insofar as it
has redounded to the benefit of the creditor
c. In case of active solidarity
Art 1214 The debtor may pay one of the solidary creditors, but if any
demand. Judicial or extrajudicial has been made by one of them,
payment should be made to him.

WHAT IS TO BE PAID ("identity")

a. In general
- The very prestation (thing or service) due
b. In obligation to
- Give a specific thing
Art 1244 par 1 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 which is due
- Give a generic thing
Art 1246 When the obligation to give consists in the delivery of an
indeterminate thing whose quality and circumstances have not been
stated, the creditor cannot demand a thing of superior quality.
Neither can the debtor deliver a thing of inferior quality.

HOW PAYMENT IS TO BE MADE ("integrity")

Art 1233 A debt shall not be understood to have been paid unless the
thing or service in which the obligation consists has been completely
delivered or rendered as the case may be.

General rule: Partial payment is not allowed. Creditor cannot be

compelled to receive partial prestations. Debtor cannot be compelled
to give partial payments

III. Loss or Impossibility

Art 1189 par 2 If the thing is lost through the fault of the debtor, he shall
be obliged to pay damages; it is understood that the thing is lost when it:
a. Perishes
b. Goes out of the commerce of man
c. Disappears in such a way that its existence is unknown or it cannot be
recovered

EFFECTS OF LOSS OF THE THING DUE

a. In obligation to give a specific thing

Art 1262 Loss or destruction of determinate thing without fault of
debtor and before he incurs in delay extinguishes 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 of 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.
b. In obligation to give a generic thing
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
c. In case of partial loss
Art 1264 The courts shall determine whether, under the circumstances,
the partial loss of the object of the obligation is so important as to
extinguish the obligation
d. Action against third persons
Art 1269 The obligation having been extinguished by the loss of the
thing, the creditor shall have all rights of action which the debtor may
have against third person by reason of the loss.