Extinguishment of

Obligations
 ART. 1231. Obligations are extinguished:

1. By payment or performance;

2. By the loss of the things due;

3. By the condonation or remission of the debt;

4. By the confusion or merger of the rights of

creditor and debtor;

5. By compensation;

6. By novation;

Other causes of extinguishment of obligations, such as

annulment, rescission, fulfillment of a resolutory condition, and
prescription, are governed elsewhere in this Code. (Art. 1231, NCC)
Causes of extinguishment of
obligations
In addition to those enumerated in Article 1231, other causes are:

1. Death of a party in case the obligation is a personal one; (Art. 1311,

par. 1)

2. Mutual desistance or withdrawal. Where after the approval of his

loan, the borrower, instead of insisting for its release, asked that the
mortgage given by him as security be cancelled and the creditor
(DBP) acceded thereto, the action thus taken by both parties was in
the nature of mutual desistance which is a mode of extinguishing
obligations. It is a concept that derives from the principle that since
mutual agreement can create a contract, mutual disagreement by
the parties can cause its extinguishment; (see Saura Import & Export
Co., Inc. v DBP., 44 SCRA 445; see Art. 1308)
Causes of extinguishment of
obligations
3. Arrival of resolutory period; (Art. 1193, par.
2)
4. Compromise; (Art. 2028, NCC)
5. Impossibility of fulfillment; (Art. 1266, NCC)
6. Happening of a fortuitous event. (Art.
1174, NCC)
These causes as well as those
enumerated in the second paragraph of
Article 1231 are governed under other
chapters of the Civil Code.
Payment or
Performance
 ART. 1232. Payment
means not only the
delivery of money but
also the performance, in
any other manner, of an
obligation. (Art. 1232,
NCC)
Meaning of Payment
In ordinary parlance, payment refers only
to the delivery of money. As a mode of
extinguishing an obligation, it has a much wider
meaning.
Payment may consist of not only in the
delivery of money but also the giving of a thing
(other than money), the dong of an act, or not
doing of an act. When a debtor pays damages or
penalty in lieu of the fulfillment of an obligation,
there is also payment in the sense used in Article
1232.
In law, payment and performance are
synonymous.
 ART. 1233. A debt shall
not be understood to have
been paid unless the thing
or service in which the
obligation consists has been
completely delivered or
rendered, as the case may
be. (Art. 1233, NCC)
When debt is considered paid
A debt may refer to an obligation to deliver
money, to deliver a thing (other than money), to do an
act, or not to do an act.
A debt to deliver a thing (including money) or to
render service is not understood to have been paid
unless the thing or service has been completely
delivered or rendered, as the case may be. Partial or
irregular performance will not produce the
extinguishment of an obligation as a general rule.