Extinguishment REQUISITES EXAMPLES KINDS

PAYMENT (Art. 1232) 1. Payor or the person who pays Repaying a loan in full or delivering goods as specified in a 1. Application of Payment (Art. 1252)
means not only the delivery of 2. Payee or the person to whom payment is made contract. Designation of the debt to which the payment must be applied when the debtor has several
money, but also the 3. Thing to be paid obligations of the same kind in favor of the same creditor
performance, in any other 4. Manner, time, and place of payment
(A owes B money)
manner, of an obligation 1. There must only be one debtor and only one creditor
A, the debtor, fully repays B, the creditor, the loan amount as 2. There must be two or more debts at the same time
specified in their agreement. Upon fulfillment, 3. All debts must be due
The obligation is now extinguished. Exceptions:
I. when there is a stipulation to the contrary
II. The application of payment is made by the party for whose
benefit the term or period has been constitutd
2. Dacion of Payment (Art. 1245)
Property is alienated to the creditor in satisfaction of a debt in money
-Delievery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation

1. Existence of money obligation

2. Alienation to the creditor of a property by the debtor with the consent of the former
3. Satisfaction of the money obligation of the debtor

3. Cession (Art. 1255)

The debtor may cede or assign his property to his creditors in payment of his debts.

1. Plurality of debts
2. Partial or relative insolvency of the debtor
3. Acceptance of the cession by the creditors
4. Tender of Payment
Consists in the manifestation made by the debtor to the creditor of his decision to comply
immediately with the prestation

Consignation (Art. 1256)

If the creditor to whom tender of payment has been made refuses without just cause to accept
it, the debtor shall be released from responsibility by the consignation of the thing or the sum
due.
-Amount or the thing due placed at the disposal of the court

1. Existence of a valid debt which is due

2. Tender of payment made by the debtor
 1. Merger of the characteristics of the When the positions of creditor and debtor are merged into one 3. Creditor’s refusal to accept payment is without just cause or any of the causes provided in Art.
creditor and debtor must be in the same person, such as in a merger of two companies. 1256
a. Tender must precede consignation
person
(A and B merge) b. It must have been unconditional
2. Must take place in the person of either the
c. Refusal must be made without just cause
principal creditor or the principal debtor
3. Whether the merger refers to the entire A, the debtor, owes money to B, the creditor. However, A and B 4. Previous notice of consignation to person interested in the fulfillment of the obligation
obligation or only part thereof, there must decided to merge their companies, forming a new entity, C. as a 5. Consignation
6. Subsequent notice of consignation
be complete and definite meeting of all qualities result, the positions of debtor and creditor merge into the new
LOSS OF THE THING DUE (ART. If a specific
entity, hence Item or property
extinguished thatprevious
their is the subject of the obligation Loss in Determinate Obligation to Give
obligations.
of debtor and creditor
1262) is destroyed or lost, the obligation may be extinguished 1. The thing lost must be determinate
An obligation which consists in 2. The thing is lost without any fault of the debtor
the delivery of a determinate 3. The thing is lost before the debtor has incurred in delay
(A sells Property to B) General Rule: Loss of determinate thing through fortuitous event shall extinguish the obligation
thing shall be extinguished if it
should be lost or destroyed A sells a unique painting to B, and if the painting is accidentally
without the fault of the debtor, destroyed, the obligation to deliver it is extinguished. Exception: Art. 1262, 1165
and before he has incurred in
delay

Loss of Generic Things

Rule: Loss of generic thing does not extinguish the obligation. The genus never perishes (Genus
nunquam periut)

Exception: Delimited Generic Thing- Particular class or group with determinate or specific
qualities
Impossibility of Performance

When the obligation becomes legally or physically impossible without the fault of the debtor,
obligor is released from the obligation (Art. 1266)
CONDONATION OR REMISSION OF 1. It must be gratuitous A Lender forgiving a portion of the debt owed by the borrower 1. As to Form
DEBT 2. It must be accepted by the obligor a. Express- made win accordance with the formalities prescribed by law for donations
3. The obligation must be demandable b. Implied- although not made in accordance with the formalities prescribed by law for
(A forgives part of B’s debt)
An act of liberality by virtue of 4. Parties must have the capacity donations, it can be deduced from the acts of the oblige or creditor
which the oblige without 5. It is not inofficious
receiving any price or equivalent, 6. Must comply with the forms of donation A, the lender, decides to forgive a portion of the debt that B 2. As to Extent
should it be express owes, demonstrating condonation. a. Total- when the entire obligation is extinguished
renounces the enforcement of the
obligation, as a result of which it b. Partial- when it refers only to the principal or to the accessory obligation or to an
is extinguished in its entirety or in aspect thereof which affects the debtor
that part or aspect of the same to
which the remission refers 3. As to Constitution
a. Inter vivos- when it is constituted by agreement of the oblige or the obligor
b. Mortis Causa- constituted by last will and testament

CONFUSION OR MERGER (ART.

1275)

It is the merger of the characters

of the creditor and debtor in one
and the same person by virtue of
which the obligation is
extinguished
COMPENSATION (ART. 1276- 1. There must be two parties, who in their Offestting one obligation with another, as in the case of mutual 1. As to Cause
1277) own right, are principal creditors and debts between two parties. a. Legal- takes effect by operation of law from the moment all of the requisites are
principal debtors of each other present
Mode of extinguishing in the 2. Both debts must consist in sum of money, (A and B have mutual debts) b. Voluntary- when parties who are mutually creditors and debtors agree to
concurrent amount of the or if the things due are fungibles, they must compensate their respective obligations, even though all of the requisites for
obligation of those persons who are be of the same kind and quality compensation may not be present
reciprocally debtors and creditors of 3. Both debts must be due A owes B P500.00, and simultaneously, B owes P400.00. both c. Judicial- takes effect by judicial decree
each other agree to offset the debts, and A pays the remaining P100.00 d. Facultative- Compensation which can be set up only at the option of the creditor when
4. Both debts must be liquidated and
demandable legal compensation cannot take place because of want of some legal requisites for the benefit
5. There must be no retention or controversy of the creditor. The latter can renounce his right to oppose the compensation and he himself
commenced by third persons over wither of can set it up.
the debts and communicated in due time to
the debtor 2. As to Effect
6. Compensation must not be prohibited by a. Total-debts to be compensated are equal in amount
law b. Partial- debts to be compensated are not equal in amount
NOVATION (ART. 1291) 1. Previous valid obligation Substituting an old obligation with a new one, with the 1. As to Essence
2. Agreement of the parties to the new consent of all parties involved. a. Objective or Real (Art. 1291)
It is the substitution or change of obligation (intent to extinguish/modify by i. Changing the cause of the obligation
an obligation by another, resulting substantial difference) (A, B and C negotiate terms) ii. Changing the object of the obligation
in its extinguishment or 3. Extinguishment of the old obligation iii. Changing the principal or essential conditions of the obligation
modification, either by changing 4. Validity of the new obligation
A and B enter a contract, and later, C steps in with the Requisite:
its object or principal conditions,
consent of A and B, substituting A’s obligation with C’s new 1. New obligation expressly declares that the old is extinguished
or by substituting another in place
terms. 2. New obligation is on every point incompatible with the old one
of the debtor, or by subrogating a
third person in the rights of the
creditor b. Subjective/Personal- consists in the substitution of a new debtor in place of the original
debtor

Novation by Substitution of Debtors

i. Expromision- effected with the consent of the creditor at the instance of the new
debtor even without the consent or even against the will of the old debtor
 1. 2. Initiative for substitution must emanate from the new debtor
3. Consent of the creditor the substitution
4. Old debtor must be released from obligation

ii. Delegacion- effected with the consent of the creditor at the instance of the old
debtor with eh concurrence of the new debtor

1. Initiative for substitution must emanate from the old debtor

2. Consent of the creditor the substitution
3. Acceptance by the creditor
4. Old debtor must be released from obligation

Parties:
1. Delegante- original debtor
2. Delegatorio- the creditor
3. Delegado- new debtor

Novation by Subrogation (Art. 1300)- personal novation effected by subrogating a

third person in the rights of the creditor

i. Conventional- takes place by agreement of the original creditor, the 3rd

person substituting the original creditor and the debtor
ii. Legal- takes place by operation of law. Not presumed.
Except:
a. When the creditor pays another creditor who is preferred, without debtor’s
knowledge
b. When a third person, not interested in the obligation, pays with the express or
tacit approval of the debtor
c. When even without the knowledge of the debtor, a person interested in the
fulfilment of the obligation pays, without prejudice to the effects of confusion as
to the latter’s share

c. Mixed- change in the object or principal condition and change in the persons of either
creditor and debtor of an existing obligation

2. As to Form/Constitution
a. Express- when it is declared in equivocal terms that the old obligation is
extinguished by a new on which substitutes the same
b. Implied- when the old and new are incompatible with each other on every point

3. As to Extent/Effect
a. Total
b. Partial
Hence, all information stated above are excerpts from the book of Obligations and Contracts by Elmer T. Rabuya, 2009 edition – REY CARIAS, JD1-B