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Obligation & Contracts [2 Modes of Extinguishment

Obligation & Contracts [2 Modes of Extinguishment

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Published by Rachel Almadin

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Published by: Rachel Almadin on Sep 29, 2011
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MODES OF EXTINGUISHMENT (Art. 1231) Q: 6 Principal modes to extinguish an obligation? 1. Payment or Performance 2. Loss of the thing due 3.

Compensation 4. Confusion or Merger of Rights 5. Condonation or Remission of the debt 6. Novation Q: Additional Modes of Extinguishment of an obligation? 1. Annulment of the contract 2. Recission of the obligation 3. Fulfillment of a Resolutory Condition 4. Prescription Q: Does prescription extinguish an obligation? - In the case of Development Bank v. _______ - The Supreme Court said, No. prescription does not extinguish an obligation. What is extinguished by prescription is only the right of the creditor to enforce the obligation but the obligation remains. Hence, prescription becomes a defense against an action to enforce an obligation that has prescribed. Q: What is extinguished in prescription? - Only the civil nature or character of the obligation and not the obligation itself. The obligation is converted from its civil character (enforceable) to a natural obligation (unenforceable). - The prescription to bring an action is 10 years. Q: Proof that the obligation doesn’t extinguish even after prescription? - If the payment is accepted by the creditor even after the prescription. Q: PAYMENT?



Under the codal provision, Payment means not only the delivery of the money but also the performance of an obligation in any other manner. On that basis, Payment can apply to all kinds of obligation to give, to do or not to do.

Q: What are the requirements of Payments? 1. Payor – one who makes the payment 2. Payee – one who receives the payment 3. Thing to be paid – must always conform to the thing due 4. Time, Place, Manner of Payment Q: When must payment be made? - The law says, on its due date. Q: When is the due date of an obligation? - From the date or time that the creditor acquires the right to enforce or invoke the obligation. Q: At what time of the due date must an obligation be paid? - The debtor has 24 hours (the whole day) to pay the creditor; also the creditor has the right to demand within 24 hours. Q: Can the debtor compel the creditor to accept payment at 2:00 am? - Literally, YES. As long as it is within the 24-hour limit. - However, a day should be interpreted as within the Reasonable Hours of the due date (working day) Q: Where may payment be demanded? - The law is silent. However, when a creditor demands, he expects to be paid in the proper place. Q: What and where is the proper place of payment? - Art 1251 states that the following: 1. Payment shall be made in the place designated in the obligation
Page 1 of 3 OBLIGATIONS AND CONRACTS – Finals R.A. 2010-2011

VALID. Estoppel (waiver on the part of the creditor) – creditor accepts such performance.Requisites – matters which are necessary to the validity of payment .A.Means that what is performed must conform to the thing due. 2010-2011 . Q: XPN in Identity? Page 2 of 3 OBLIGATIONS AND CONRACTS – Finals R. Q: What is Identity? . The thing paid must not vary from the thing due.Characteristic – matters on how payment should be made Q: If payment is made by a 3rd party. But only to the extent of what had been beneficial to the debtor.1. if the creditor accepts the payment. Q: Payment by a 3rd person and Principal Debtor? Q: Rights acquired by the 3rd person? . the proper place of payment is the place where the thing was at the moment the obligation was constituted. the 3rd person becomes entitled to be reimbursed to what he paid. 2 rights are acquired by the 3rd person. 4.Integrity – performance of payment must be complete or full .Indivisibility – payment should not be partially made Q: XPNs in Integrity? . . If the thing due is generic. Indivisibility Q: Difference between the Requisites of Payment and Characteristics of payment? .Whether the payment redounded to the benefit of the debtor or not. Substantial Compliance . but the debtor changed his domicile in bad faith. where is the proper place of payment? . Q: Difference between domicile and residence? . If debtor changes his domicile in bad faith. When there is no agreement and the thing due is a specific thing.2. 3. a place where a person may be absent from but has intention to return Q: If the proper place of payment is the Debtor’s domicile. says DOMICILE and not - - If Payment if made by a 3rd person. consent of the principal debtor is NOT necessary. Q: CHARACTERISTICS OF PAYMENT? 1. Right to absolute reimbursement b. Identity 3. Integrity 2. a. the place of payment shall be the domicile of the debtor. NOTE: Law Residence. Right to subrogation (substitute) Q: What is absolute reimbursement? . the only right of the 3rd party is that he can seek reimbursement from the debtor for what he paid.Residence – characterized by temporariness . Q: Explain Integrity and Indivisibility? . if the payment made by the 3rd person was CONSENTED by the principal debtor.Domicile – characterized by permanence. what is the status of that payment? . being aware of the irregularity in the performance of the obligation. What is essential is the acceptance by the creditor.The place of payment will still be the domicile of the debtor.However. additional expenses shall be borne by him.2.If payment is made by a 3rd person against the will or without knowledge of the principal debtor.

Law says: NOT VALID (but it is not deemed void) .Only in Obligation to Give.If the benefit is redounded to the creditor. what the creditor receives is not the thing due. then the payment is valid .However.It becomes a Donation if the creditor accepted it. Q: What kind of benefit? .XPNs: 1. Page 3 of 3 OBLIGATIONS AND CONRACTS – Finals R.Gen. 3rd person acquires the right of the creditor (he becomes the new creditor) 2. . they are valid until set aside (Voidable) Q: What is the status of payment made to the incapacitated creditor? .VALID if it is redounded to the benefit of the creditor .- Dation in Payment. because capacity of the obligor is necessary since it involves transfer of ownership. Obligation is partly liquidated and partly unliquidated Q: What is the status of payment when it is made by an incapacitated person (debtor)? . Because in dation in payment.As long as the benefit involves feelings.It will be valid only if the payment made to a 3rd person redounded to the benefit of the creditor. (substitute thing) Q: XPNs to Indivisibility? 1.If he did not kept the payment but it redounded for his benefit – VALID. Rule shall apply that it should benefit the creditor . Q: Payment made by an incapacitated person is voidable. under RA 6809. 2010-2011 . that is deemed sexual benefit Q: What if the payment is made to a 3rd person. what is the status of the payment? . Creditor ratifies the Payment to the 3rd person 3.All kinds of benefit except sexual benefit . Q: Status of payment? . otherwise it is VOID.Benefit must be established because it is never presumed. . Creditor led the debtor to believe that the 3rd person was authorized to receive the payment. If the parties agree on partial performance 2.A. to what kind of obligation is the law referring to? .

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