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What Are The Causes of Extinguishment of Obligation?

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What are the causes of extinguishment of obligation?

Art. 1231 provides obligations are extinguished by:

a. Payment or performance
b. Loss of the thing due
c. Condonation or remission of the debt
d. Confusion or merger of the rights of creditor and debtor
e. Compensation
f. Novation

Other causes of extinguishment of obligations, such as annulment, rescission,


fulfillment of a resolutory condition, and prescription, are governed elsewhere in this
Code. (1156a)

In addition to those enumerated in Article 1231, other causes of extinguishment of


obligations are:

(1) Death of a party in case of an obligation requiring personal service (Art. 1311,
par. 1);

(2) Mutual desistance or withdrawal;

(3) Arrival of resolutory period (Art. 1193, par. 2);

(4) Compromise (Art. 2028);

(5) Impossibility of fulfillment (Art. 1266);

(6) Happening of a fortuitous event. (Art. 1174)

What is the legal meaning of payment?

Article 1232 provides that payment means not only the delivery of money but also the
performance, in any other manner, of an obligation.

What is the effect of substantial performance by the debtor, without entirely completing
his obligation? 

“The above rule (Art. 1234.) is adopted from American Law. Its fairness is evident. In
case of substantial performance, the obligee is benefited. So the obligor should be allowed to
recover as if there had been a strict and complete fulfillment less damages suffered by the
obligee. This last condition affords a just compensation for the relative breach committed by the
obligor.” (Report of the Code Commission, p. 131.)
If a person pays the obligation of the debtor without the latter's consent, will there be
subrogation?

None. If the payment is without the knowledge or against the will of the debtor, the third
person cannot compel the creditor to subrogate him in the latter’s accessory rights of mortgage,
guaranty, or penalty. Since the provision of Article1237 is for the benefit of the debtor, the
subrogation can only take place with his consent. The third person who without necessity paid
under such condition is amply protected by his right to reimbursement.

What is the effect of the payment to person who is incapacitated to administer his
property?

Payment to a person incapacitated to administer or manage his property is not valid


unless such incapacitated person kept the thing paid or delivered (so that it is not necessary that it
should have been invested in some profitable venture) or was benefited by the payment.

In the absence of this benefit, the debtor may be made to pay again by the creditor’s
guardian or by the incapacitated person himself when he acquires or recovers his capacity. Proof
of such benefit is incumbent upon the debtor who paid.

What are the four special forms of payment?

The four special forms of payment under the Civil Code are:

a. Dation in payment (Art. 1245);


b. Application of payments (Art. 1253);
c. Payment by cession (Art. 1255); and
d. Tender of payment and consignation. (Arts 1256-1261)

What is dacion en pago?

Dation in payment (adjudication or dacion en pago) is the conveyance of ownership of a


thing as an accepted equivalent of performance. (8 Manresa 314)

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