TITLE

Janet Hacutina
Mark John Hollon
Under Article 1231 of the Civil Code, an obligation is extinguished
by the following:

1.Payment or Performance

2.Loss of the Thing Due

3.Condonation or Remission of the Debt

4.Confusion or Merger of Rights

5.Compensation

6.Novation

7.Other causes specified by law, such as:

A.Annulment

B.Rescission

C.Fulfillment of a Resolutory Condition

D.Prescription
1. Payment or Performance (Articles 1232 - 1251)
Payment or performance is the most common
method of extinguishing an obligation. It involves
the fulfillment of the prestation (the act,
forbearance, or thing promised by the debtor) as
agreed in the obligation. Key concepts under this
mode include: Who Pays or Performs: The
obligation can be fulfilled by the debtor or by a
third party, as long as the creditor consents or
does not object. To Whom Payment is Made:
Payment should be made to the creditor, the
creditor’s legal representative, or any authorized
person. Where and When Payment is Made: The
place and time of payment should follow the terms
of the obligation, or in their absence, general rules
in the Civil Code apply.
• Special Forms of Payment: Dation in Payment (Dación en Pago): The debtor
gives a property instead of money to satisfy the debt. Application of Payments:
When a debtor has multiple debts with the same creditor, the debtor has the
right to specify which debt the payment will apply to. Tender of Payment and
Consignation: If the creditor unjustly refuses payment, the debtor may deposit
the payment in court through consignation to extinguish the obligation. 2. Loss
of the Thing Due (Articles 1262 - 1269) Loss of the thing due extinguishes the
obligation when the object of the obligation is lost or destroyed without fault
on the part of the debtor and before the debtor has incurred delay. This mode
applies only to obligations to deliver a specific thing and is governed by the
following conditions: When Loss Extinguishes the Obligation: The loss
extinguishes the obligation if: The thing is specific and determinate.
The thing is destroyed or lost without fault of the debtor. The thing is lost before the
debtor incurs delay. Cases When Loss Does Not Extinguish the Obligation: If the loss is due
to the debtor’s fault. If the debtor is in delay. If stipulated otherwise by the parties. 3.
Condonation or Remission of the Debt (Articles 1270 - 1274) Condonation or remission is
the gratuitous abandonment by the creditor of his right to demand payment. This mode of
extinguishment is akin to a donation and, therefore, requires the creditor’s intent to
forgive the debt and, in some cases, compliance with formal requirements: Requirements
for Condonation: The intention to forgive the debt must be clear. If the debt is already
documented, the remission must be in writing to be valid. Presumption of Remission:
Possession by the debtor of the document of credit, if it appears to have been voluntarily
delivered by the creditor, is presumptive evidence of remission. 4. Confusion or Merger of
Rights (Articles 1275 - 1277) Confusion or merger happens when the qualities of the
debtor and creditor are combined in the same person. For instance, if the debtor inherits
the credit from the creditor, the obligation is extinguished because no person can be both
debtor and creditor simultaneously. Scope of Confusion: The obligation is extinguished
only to the extent of the merger. Confusion can be total or partial depending on the extent
of the rights acquired. 5. Compensation (Articles 1278 - 1290) Compensation is a mode of
extinguishment where two parties are creditors and debtors of each other. It operates
automatically under certain conditions and eliminates the need for payment when mutual
obligations cancel each other out. Types of Compensation: Legal Compensation: Occurs by
operation of law when requirements are met. Conventional Compensation: Established by
agreement between the parties. Judicial Compensation: Ordered by the court in cases
where there is a dispute on the debt. Requisites for Legal Compensation: Both obligations
must be due. Both must consist in a sum of money or if in goods, these must be of the
6. Novation (Articles 1291 - 1304) Novation
extinguishes an obligation by replacing it with a
new one, which may involve a change in the
object, the principal conditions, the debtor, or the
creditor. Types of Novation: Objective Novation:
Change in the object or principal conditions of the
obligation. Subjective Novation: Change in the
persons involved (substitution of debtor or
subrogation of creditor). Mixed Novation: Change
in both the object or conditions and the persons
involved. Requisites of Novation: A previous valid
obligation. The parties’ intention to extinguish the
old obligation. A new valid obligation to replace the
old one. Other Causes of Extinguishment Aside
from the primary modes, obligations can also be
extinguished through: Annulment: Declared invalid
from inception due to factors like incapacity or
illegality. Rescission: Nullification of an obligation
due to damage to one of the parties or a third
person. Fulfillment of a Resolutory Condition: A
condition that, once fulfilled, terminates the ob
1. Definition of Payment (Article 1232)
•Payment refers to the execution of an obligation, whether it involves giving something, doing something,
or refraining from doing something.

2. Who Can Pay? (Articles 1234-1236)

•The debtor or any third party can make the payment.
•A third party paying on behalf of the debtor has rights against the debtor unless they acted voluntarily.

3. Who Should Be Paid? (Articles 1237-1239)

•Payment must be made to the creditor or a person authorized to receive it.
•If payment is made to someone not authorized, it may not release the debtor unless the creditor benefits
from it.

4. What Must Be Paid? (Articles 1240-1242)

•The debtor must pay exactly what was agreed upon.
•Partial payments may not be accepted unless agreed by the creditor.

5. When and Where to Pay? (Articles 1243-1244)

•The time and place of payment depend on the contract.
•If no time is specified, payment is due immediately.
6. Mode of Payment (Articles 1245-1247)
•Payment must be made in legal tender unless otherwise agreed.
•Payment by alternative means (such as compensation or set-off) is possible under specific conditions.

7. Proof of Payment (Articles 1248-1250)

•The burden of proof of payment falls on the debtor.
•A receipt or other written acknowledgment serves as proof.

8. Special Cases (Articles 1251-1254)

•Certain payments can be invalidated if made under coercion or mistake.
•Subrogation (when a third party steps into the creditor's place after payment) is
allowed under some conditions.