Modes of Extinguishment

4. Consignation (Subsection 3.)

Art. 1231
1. Payment or Performance Art. 1256. If the creditor to whom tender of payment has been
2. Loss of the Thing Due made refuses w/o just cause to accept it, the debtor shall be
3. Condonation or Remission of Debt released fr. responsibility by the consignation of the thing or
sum
4. Confusion or Merger of the rights of the debtor and
due.
creditor
5. Compensation (Conventional/ Legal) Consignation alone shall produce the same effect in the
6. Novation following
cases:
Other Modes (Codal) 1. When the creditor is absent or unknown, or does not
- Annulment appear at the place of payment;
- Rescission 1380 2. When he is incapacitated to receive the payment at the
- Resolution 1191 time it is due;
- Fulfillment of a resolutory condition 3. When, w/o just cause, he refuses to give a receipt;
- prescription 4. When two or more persons claim the same right to
collect;
Other Modes 5. When the title of the obligation has been lost.
- Death
- Renunciation by the creditor
- Compromise
- Arrival of Resolutory Period LOSS OF A THING DUE
- Mutual Desistance
- Unilateral Withdrawal (Partnership) Art. 1262. An obligation w/c consists in the delivery of a
determinate thing shall be extinguished if it should be lost or
- Change of Civil Status (Marriage = obligation to
destroyed w/o the fault of the debtor, & before he has incurred
support)
in delay.
- Rebus Sic Stantibus *(Unforseen Event Art 1267)
- Want of Interest When by law or stipulation, the obligor is liable even for
- Abandonment of a Thing (Party Wall 662/ of a vessel) fortuitous events, the loss of the thing does not
- Insolvency when judicial Declared extinguish the obligation, & he shall be responsible for
damages. The same rule applies when the nature of the
obligation requires the assumption of risk.
PAYMENT
Balane:
Art. 1232. Payment means not only the delivery of money but Art. 1262 is the same as fortuitous event in Art. 1174. The
also effect is the same:
the performance, in any other manner, of an obligation. The Ø is extinguished if the Ø is to deliver a determinate thing.
If the Ø is to deliver a generic thing, the Ø is not extinguished.
Four Kinds of Payment [GR] Genus nunquam perit ("Genus never perishes." )

1. Dacion en pago (Art. 1245.) CONDONATION/ REMISSION

Dation in payment is the delivery & transmission of
ownership of a thing by the debtor to the creditor as an [Balane]
accepted equivalent of performance of obligation. • Condonation or remission is an act of liberality by
virtue
2. Application of payments (Subsection 1.)
Application of payment (Imputacion in Spanish) is of w/c, w/o receiving any equivalent, the creditor
the renounces enforcement of an obligation w/c is
designation of a debt w/c is being paid by the debtor who has extinguished in whole or in part.
several obligations of the same kind in favor of the creditor to This has four (4) requisites:
whom the payment is made. 1. Debt that is existing. You can remit a debt even
before it is due.
3. Payment by cession (Subsection 2.) 2. Renunciation must be gratuitous. If renunciation is
Property is turned over by the debtor to the creditor
for a consideration, the mode of extinguishment
who
acquires the right to sell it & divide the net proceeds may be something else. It may be novation,
among themselves. compromise of dacion en pago.
3. Acceptance by the debtor
Q: Difference between dacion en pago & payment by cession: 4. Capacity of the parties.
In dacion en pago, there is a transfer of ownership fr. the debtor
to CONFUSION OR MERGER
the creditor.
In payment by cession, there is no transfer of ownership. The [BALANE]
creditors simply acquire the right to sell the properties of the Confusion is the meeting in one person of the qualities
debtor & apply the proceeds of the sale to the satisfaction of
of the creditor & debtor w/ respect to the same
their
credit. obligation.
Art. 1275. The obligation is extinguished fr. the time the
characters of creditor & debtor are merged in the same
person.

There are two (2) requisites:

1. It must take place between the creditor & the
principle debtor (Art. 1276.)
2. The very same obligation must be involved.
Rationale à You become your own creditor or you
become your own debtor. So how can you sue yourself.

What may cause a merger or confusion?

(1) Succession, whether compulsory, testamentary or
intestate;
(2) Donation;
(3) Negotiation of a negotiable instrument.

• Because of its nature, confusion/ merger may overlap

w/ other causes of extinguishment.

COMPENSATION

NOVATION