CHAPTER 4

EXTINGUISHMENT OF OBLIGATIONS

ARTICLE 1233-1235

Martel, Jessa Jean B.

Rivera, Joanne G.

AM 70 BUSINESS LAW
 ARTICLE 1233
“A DEBT SHALL NOT HAVE BEEN 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.” (1157)
WHEN DEBT IS CONSIDERED PAID
DEBT – AN OBLIGATION TO DELIVER MONEY/A THING/TO DO OR NOT TO DO AN
ACT
REQUISITES FOR THE APPLICATION OR ARTICLE 1233
1. INTEGRITY OF PRESTATION – A DEBT TO DELIVER A THING (INCLUDING MONEY)
OR TO RENDER SERVICE IS NOT UNDERSTOOD TO HAVE BEEN PAID UNLESS
THE THING/SERVICE HAS BEEN DELIVERED OR RENDERED COMPLETELY, AS THE
CASE MAY BE. PARTIAL/IRREGULAR PERFORMANCE WILL NOT EXTINGUISH
OBLIGATION AS A GENERAL RULE
2. IDENTITIY OF THE PRESTATION – THE VERY PRESTATION DUE MUST BE
DELIVERED/PERFORMED.(SEE ARTICLE 1244)
 ARTICLE 1234
“IF THE OBLIGATION HAS BEEN SUBSTANTIALLY
PERFORMED IN GOOD FAITH, THE OBLIGOR MAY
RECOVER AS THOUGH THERE HAD BEEN A STRICT AND
COMPLETE FULFILLMENT, LESS DAMAGES SUFFERED BY THE OBLIGEE.” (N)
RECOVERY ALLOWED IN CASE OF SUBSTANTIAL PERFORMANCE IN GOOD
FAITH
THIS ARTICLE IS THE FIRST EXCEPTION TO ARTICLE 1233 BECAUSE:
1. ADOPTED FROM AMERICAN LAW
2. IN CASE OF SUBSTANTIAL PERFORMANCE, OBLIGEE IS BENEFITED
3. OBLIGOR SHOULD BE ALLOWED TO RECOVER (AS IF THERE HAVE BEEN A
COMPLETE FULFILLMENT LESS DAMAGES SUFFERED BY OBLIGEE)
4. COMPENSATION FOR BREACH COMMITTED BY OBLIGOR
REQUISITES FOR THE APPLICATION OF ARTICLE 1234
1. THERE MUST BE SUBSTANTIAL PERFORMANCE
2. THE OBLIGOR MUST BE IN GOOD FAITH
 SUBSTANTIAL PERFORMANCE

WHEN IMPORTANT OR ESSENTIAL PART OF THE CONTRACT HAS

BEEN PERFORMED AND ONLY SMALL OR MINOR PART THEREOF HAS
NOT BEEN CARRIED OUT. IN THE FIRST SITUATION, THE CONTRACT IS
SUBJECT TO RESCISSION/CANCELLATION. (ARTICLE 1191); IN THE SECOND,
ARTICLE 1234 ALLOWS ONLY A PROPORTIONATE REDUCTION IN THE
AMOUNT RECOVERABLE BY THE OBLIGOR.

ARTICLE 1234 EMBODIES THE DOCTRINE OF SUBSTANTIAL

PERFORMANCE.

GOOD FAITH IS ALWAYS PRESUMED IN THE ABSENCE OF PROOF TO THE

CONTRARY.
 ARTICLE 1235
“WHEN THE OBLIGEE ACCEPTS THE PERFORMANCE,
KNOWING ITS INCOMPLETENESS OR IRREGULARITY, AND
WITHOUT EXPRESSING ANY PROTEST OR OBJECTION, THE
OBLIGATION IS DEEMED FULLY COMPLIED WITH.” (N)
RECOVERY ALLOWED WHEN INCOMPLETE OR IRREGULAR
PERFORMANCE IS WAIVED
THIS IS ANOTHER EXCEPTION TO ARTICLE 1233, AND FOUNDED ON THE PRINCIPLE OF
ESTROPPEL.
1. IF PAYMENT IS IRREGULAR/INCOMPLETE, CREDITOR MAY REJECT
2. IF CREDITOR ACCEPTS, THE RIGHT MUST BE WAIVED, THEN THE
OBLIGATION IS EXTINGUISHED
REQUISITES FOR THE APPLICATION OF ARTICLE 1235
1. THE OBLIGEE KNOWS THAT THE PERFORMANCE IS
INCOMPLETE/IRREGULAR
2. HE ACCEPTS PERFORMANCE WITHOUT EXPRESSING PROTEST/OBJECTION
THE END!
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