EXTINGUISHMENT OF OBLIGATION:

1- PAYMENT-
a- Principle- integrity, identity
b- Who pays-
c- Third party payor- cannot legally compel creditor to accept
Except: has interest in fulfillment
Stipulation to the contrary
but if accepted- extinguished obligation
rights of third-party payor- with knowledge/without knowledge

d- Third party payee- valid if redounded to the benefit of C

If he is in possession of credit
e- Benefit presumed: third person acquires C’s right
C ratifies payment
C is in estoppel
f- When to pay-
g- Where to pay- place stipulated, where thing is, debtor’s domicile, cost of
payment borne by the debtor
h- How it is paid- Philippine peso, unless currency stipulated
Extra-ordinary inflaction/deflation of currency, value,
at the time of establishment of obligation shall be basis
(applies only in contractual obligation)
Payment by checks, etc., produce effect of payment
Only when encashed or impaired thru fault of C
Check not valid tender of payment, except in redemption
(Leticia Co vs PNB, 114 SCRA 842)

i- Special kinds of payment

-dation in payment
- payment by cession
- application of payment- elements, who makes application
- tender of payment and consignation
Tender of payment- must comply with the req. of valid payment
When consignation does not require tender:
- C absent or unknown, or does not appear at place of payment
- C incapacitated to receive payment
- C refuses to give receipt without just cause
- Two or more persons claim the same right to collect
- title of obligation has been lost
Notice to all parties interested
Expenses for consignation borne by C

II. LOSS THING DUE- perishes, goes out of commerce, disappears that its
Existence is unknown or cannot be recovered
- rule is res perit creditori, not res perit domino
- determinate obligation- loss extinguished obligation
- exceptions to loss due to fortuitous event
- thing lost in the possession of D, presumed at fault except loss due to calamity
- obligation to do- extinguish if service became so difficult to be manifesty beyond the
contemplation of the parties, becomes legally or physically impossible without fault of D.
- Ttheory of imprevisibility or Frustration of Enterprise in Contracts. Extreme difficulty in obligation
to do
III CONDONATION OR REMISSION:
- requires acceptance by the D
- express condonation must comply with the formality of Donation
- presumed condonation: delivery of document evidencing credit
Possession of instrument of credit
Property pledged in possession of pledger

IV. CONFUSION OR MERGER:

- personality of C and D are merged in the same person

V. COMPENSATION:
- Req: D and C of each other
Both debts in a sum of money
Both debts due
Both liquidated and demandable
No retention or controversy over any of them, commenced by
Third persons and communicated in time to the debtor
- extinguished to the concurrent amount
- takes place by operation of law
- no compensation: taxes
Debt arises from depositum
Obligation from commodatum
Support
Debt arising from crime
VI. NOVATION:
A- Change of object or principal condition
B- Substitution of party debtor
C- Subrogation of a third person in the rights of the C

SUBSTITUTION OF DEBTOR:
A- DELEGACION- at the instance of old debtor
If new debtor becomes insolvent, no recourse to old debtor unless
Insolvency was existing and of public knowledge, or known to the old D
At the time of substitution
B- EXPROMISSION- at the instance of new debtor
- if new debtor becomes insolvent, no recourse against the old D.
SUBROGATION OF THIRD PERSON IN RIGHTS OF THE CREDITOR
- legal or conventional
-legal subrogation not presumed, except:
C pays another C who is preferred
Third person, not interested in the obligation, pays with the consent of D
Person interested in the obligation pays the C.
- third person acquires the right to collect payment against the D, plus the
Accessory obligation arising from pledge or mortgage