Chapter 4 Extinguishment of obligations
(inferior quality)
General provisions
1231: obligations are extinguished
 Payment/performance (already made)
 Loss of the thing due (during maturing
obligation)
 Condonation/remission (forgive or cancel
the debt)
 Confusion/merge rights of both parties (lack
of understanding and both parties agreed to
unite into one decision
 Compensation
 Novation (extinction of old obligation and
enter a new contract/new obligation
Other causes of extinguishes:
 Annulment (restoring the things)
take note: when the other parties do not restore the
things, the other cannot compelled to restitution
(restoration of something lost or stolen to its proper
owner.
 Rescission (cancellation of the obligation
which results extinguishment)
 Fulfillment of resolutory condition
Resolutory condition where both parties are obliged
to return to the other the prestation he has received
pursuant to the obligation (as if it had never existed)
 Prescription
Prescription cannot extinguish the obligation
Only the right of the creditor to enforce the
obligation but the obligation remains
The prescription becomes defense against an action
to enforce an obligation that prescribed.
Section 1: Payment or performance
1232: payment means not only means delivering of
money but it can also be performance in any other
manner of an obligation
In legal mode, the extinguishment of obligation is
giving (money or a thing), doing (delivery or
performance) or not doing.
 If the obligation is to give a specific
– payment is made by the thing (car)
 If the obligation is to repair a computer
- Payment is made by performing the
service.
1233: a debt has been paid once the thing or
service has been completely delivered or rendered)
 The debtor cannot compel creditor to
accept different thing from the original
(stated on their contract or agreement)
Even if it is the same value or more valuable
 An act of forbearance cannot be substituted
by another against the obligee’s will
 Obligations to give (generic thing) and the
quality and circumstances have not been
stated – therefore he cannot deliver
 Monetary obligations – the payment must
be in legal tender
-Although the parties may demand (stipulate)
that exact payment made in currency other than
Philippine legal tender at the time of payment
Payment to extinguish, except:
 The obligation substantially performed in
good faith
 It accepts the oblige (creditor) even though
it is incomplete or irregularity or without
protest and objection of the creditor the
payment will be extinguish
1234: if the obligation has been substantially
performed in good faith, it is considered as
though there had been strict and complete
fulfillment.
 The obligation therefore extinguishes and
the debtor is allowed to recover from the
creditor less damages suffered by the
creditor.
 > the right of the debtor to recover is based
on the benefit derived by the creditor from
the substantial performance, while the
damages which the creditor is allowed to
deduct gives him a just compensation for
the slight breach committed by the debtor
Situation:
>D is obliged to deliver 30 units of an imported two-
way (balikan transpo) radio to C for use by the
latter(creditor) in his security agency.
>after having imported 28 units and delivered them
to C, there are no more stocks available.
>He wants to complete the delivery but unable to do
so because the manufacturers have stopped making
the product.
>D can recover from C as if there had been strict and
complete fulfillment (as if 30 units had been
delivered), less damages (2 units not delivered plus
other consequential damages) suffered by C
Situation:
>S obliged himself to deliver 500 bags of cement to
B for a certain price.
>However, despite diligent efforts of the debtor, S
was able to deliver only 450 bags of cement because
of shortage
>S wants to comply with his obligation to deliver 500
bags but he could not do for reasons beyond his
control
>S can recover as though there had been complete
delivery less the price of the 50 bags
>S must show, however that he attempted in good
faith to comply with his obligation