Continuation of the lecture-

Art. 1231. Obligations are extinguished by the following:

1. By payment or performance
2. By loss of the thing due
3. By condonation or remission of the debt
4. By confusion or merger of the rights of the debt and the creditor
5. By compensation
6. By novation

Other grounds cited in other Chapters of the New Civil Code:

1. Annulment
2. Rescission
3. Fulfillment of a resolutory condition
4. Prescription
5. Death of a party in case the obligation is a personal one
6. Resolutory term
7. Change of civil status
8. Compromise
9. Mutual dissident
10. Impossibility of fulfillment
11. Fortuitious event

Art. 1232. Define payment- means not only delivery of money but also performance of
the obligation. It may consist of : (a) delivery of money; or (2) performance in any
manner of the obligation.

 There must be a pre-existing obligation. If there is no such pre-existing

obligation, there is no payment.

Requisites of a valid payment:

1. The very thing or service contemplated must be paid.

2. Fulfillment must be complete. The debt is a monetrary obligation- by delivery
money
3.

PROBLEM: : James was given the option or to buy the car of Mary within one
week. What if he decided not to buy the car? Can he be held liable?

How payment or performance be made:

1. If the debt is a monetary obligation- by delivery of money in full payment

unless there is a stipulation to the contrary.
2. If the debt is delivery of an object or thing- delivery of said object or thing.
3. If the debt is performance or doing a personal undertaking- by said
performance or undertaking
4. If the debt is the not doing of something- by refraining the doing of the action.

Parties to an obligation –
 Burden of proof:-

Creditor- has the burden to prove that a valid obligation or debt exists.

Debtor- has the burden to prove that the obligation or debt has been fully paid lr

the services has been rendered or performed.

Proof that the debt or obligation has been paid- Acknowledgment receipt of payment

PROBLEM: – Jerry borrowed money from Albert, payable in installment basis. There
were several receipts, each of which acknowledged the payment of certain installments.
Albert filed a complaint against Jerry for installments not covered by the receipts. As his
defense, Alberto claimed that he has paid the whole debt but he could not show all the
receipts for all the installments since there are instances when his dealing with Jerry, no
receipts were issued in his favor. Is Albert’s testimony sufficient to establish or prove
that the debt has been fully paid? Explain.

PROBLEM: – Rose borrowed money from Mr. Yang at a usurious rate of interest
secured by a mortgage as collateral. When asked for payment, Rose alleged that his
obligation is extinguished because the interest is usurious. Is Rose correct? Can Mr
Yang foreclosed the mortgage for failure of Rose to pay the debt. Why?

Art. 1235. Doctrine of qualified acceptance. When the oblige accepts the performance,
knowing its incompleteness or irregularity, and without expressing any protest or
objection, tne obligation is deemed complied with. Reason – Waiver or estoppel.

Art. 1236. The creditor has the right to refuse payment from a third person except when:

1. When there is a stipulation allowing this.

2. If the said person has an interest in the fulfillment of the obligation, Ex. Co-
debtor, co-guarantor

NOTE: Whoever pays for another may demand from the debtor what he has paid,
heonly recover insofar as payment is beneficial to the debtor.

Whoever paid in behalf of the debtor without his knowledge or against his
will,cannot compel the creditor to subrogate him in his rights such as those arising from
guaranty, mortgage or penalty.

Subrogation defined.- the act of putting somebody into the shoes of the creditor, thus,
enabling the former to exercise all the rights and actions that could be exercised by the
creditor,
Rights that could be exercised by another in place of the creditor- guaranty, mortgage,
penalty or penal clause.

Payment made by a person who intended not to be reimburse by the debtor is called a
donation which requires the debtor’s consent. But the payment in any case shall be
valid in case the creditor accepts it.

Reason for the debtor’s consent- one should not forced to accept the generosity of
another.

Art. 1239. Payment made to an incapacitated person:

Gen. rule- person paying has no capacity to give-

 1. Payment is not valid if accepted.
2. The creditor cannot be even compelled to accept it.

PROBLEM : Michael, who is sixteen (16) years of age and without the knowledge
and consent of his parents, entered into a contract with Mario. Under the said
contract, Michael was supposed to pay Mario Php 10,000.00. Mario did not know
Michael is a minor when he entered into a contract with him. When Michael
voluntarily paid the said amount, Mario voluntarily accepted it. Mario did not know
Michael is a minor. Mario has already spent Php 8,000.00. Later, upon learning
of Michael’s transaction, his parents sued Mario to recover the Php 10,000.00
paid by Michael. How much can Michael’s parents recover from Mario? Explain.

Art. 1240 To whom may payment be made.-

1. To the perso it has been fjully paid. China Banking Corporation refused hn to
whom the obligation is constituted- CREDITOR
2. To his successor-in-interests- spouse, children, grandchildren, (HEIRS)
3. To any person authorized to receive it.- authorization is usually by agreement
or by law (Execution of a Special Power of Attorney authorizing the attorney-
in-fact to receive payment)

SOLVE THE PROBLEM

Haw Pia owed China Banking Corporation (CBC) a sum of money in Philippine
currency (Philippine peso) before World War II. During the Japanese occupation, the
Bank of Taiwan was authorized by the Japanese Military Administration to liquidate the
assets of enemy banks. Haw Pia paid off his mortgage loan not to China Banking
Corporation BUT to the Bank of Taiwan. After World War II and during the liberation,
Of Manila, Haw Pia is now asking for the cancellation of the mortgage on the ground
that it has been fully paid. China Banking Corporation refused and asked for payment of
the debt.

The issues raised are the following:

1. Has the Japanese Military Administration has the right to liquidate and
freeze assets of enemy banks during World War II?
2. Did the payment of Haw Pia to the Bank of Taiwan extinguished the
debt?
3. Was Japanese money legal tender?
4. Does the obligation to pay in Philippine peso makes it an obligation to
pay on a specific specie or currency
Please study and analyze the facts carefully before you
answer.Remember that cited in the are two currencies involved in the instant
case.
Also solve the problems mentioned in the preceding articles. Submit your answers on
Wednesday as arranged last time.