6 WAYS TO EXTINGUISH OBLIGATION

1. By payment or performance

2. By the loss of the things due

3. By the condonation or remission of the debit

4. By the confusion or merger of the rights of creditor and debtor

5. By compensation

6. By novation

There is only one person or the same person as the confusion or merger.

An example of confusion or a merger is when creditor and debtor are merged in the same person, for
example, A owes B $5,000. B dies and, in his will, he makes A his only heir.

CASE

 G.R. No. 177921 

 METRO CONCAST STEEL CORPORATION, SPOUSES JOSE S. DYCHIAO AND TIUOH YAN, SPOUSES
GUILLERMO AND MERCEDES DYCHIAO, AND SPOUSES VICENTE AND FILOMENA DYCHIAO,
Petitioners,vs. ALLIED BANK CORPORATION, Respondent.
 Civil Case No. 00-1563, thereby ordering petitioners Metro Concast Steel Corporation (Metro
Concast), Spouses Jose S. Dychiao and Tiu Oh Yan, Spouses Guillermo and Mercedes Dychiao,
and Spouses Vicente and Filomena Duchiao to pay respondent Allied Bank Corporation (Allied
Bank) the sum of P51,064,094.28, plus any interest and penalty costs, in full.
 Metro Concast, a corporation lawfully constituted and existing under and by virtue of Philippine
laws and engaged in the business of producing steel, acquired multiple loans from Allied Bank
through its officials, hereby individual petitioners. A promissory note and separate letters of
credit/trust receipt were used to secure these loans.
 They had 1 promissory note and 12 trust receipts
 The interest rate under Promissory Note No. 96-21301 was set at 15.25% per YEAR/annum
(p.a.), with a penalty charge of 3% per month in the event of default; whereas the twelve (12)
trust receipts were set at 14% PER YEAR/ p.a. plus a 1% penalty fee Individual petitioners
completed multiple Continuing Guaranty/Comprehensive Surety Agreements in favor of Allied
Bank as collateral. Petitioners had failed to fulfill their obligations under the stated promissory
note and trust receipts, therefore Allied Bank, through counsel, wrote them demand letters, all
dated December 10, 1998, requesting payment of the entire sum of 51,064,093.62, but they
were unsuccessful to collect the money.
  They also claimed that the Philippine economy's economic crisis in 1998, as well as the peso's
depreciation against the US dollar, contributed significantly to the steel industry's collapse,
directly harming Metro Concast's operations and finally contributing to its closure.
 To solve their obligations with Allied Bank, petitioners offered to sell Metro Concast's remaining
assets, which included machinery and equipment, to Allied Bank, which declined. Allied Bank
instead recommended them to sell the equipment and apply the earnings to their existing
liabilities. As a result, petitioners offered the equipment for sale, but because no one bought it,
it degraded into ferro scrap or scrap metal over time.
 Peakstar Oil Corporation (Peakstar), represented by Crisanta Camiling (Camiling), showed
interest in purchasing scrap metal in 2002. Petitioners stated that during discussions with
Peakstar, Allied Bank's legal department member Peter Saw (Atty. Saw) functioned as the
latter's agent. Eventually, with Allied Bank's claimed conformity, through Atty. Saw, on
November 8, 2002, a Memorandum of Agreement25 (MoA) was signed between Metro Concast,
represented by petitioner Jose Dychiao, and Peakstar, through Camiling, under which Peakstar
agreed to purchase the scrap metal for a total amount of 34,000,000.00, payable as follows:
 (a) ₱4,000,000.00 by way of earnest money – ₱2,000,000.00 to be paid in cash and the other
₱2,000,000.00 to be paid in two (2) post-dated checks of ₱1,000,000.00 each;and
 (b) the balance of ₱30,000,000.00 to be paid in ten (10) monthly installments of ₱3,000,000.00,
secured by bank guarantees from Bankwise, Inc. (Bankwise) in the form of separate post-dated
checks.

RTC – REGIONAL TRIAL COURT

RTC RULING

Regional Trial Courts have appeal authority over all cases resolved by Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts in their respective territorial jurisdictions.

The CA Ruling

Court of Appeals

The Court of Appeals has the authority to evaluate all final judgments, decisions, resolutions, orders, or
judgments.