When is obligation

extinguished?
It’s over!
Article 1231
• Obligations are extinguished:
• (1) By payment or performance;
• (2) By the loss of the thing due;
• (3) By the condonation or remission of the debt;
• (4) By the confusion or merger of the rights of creditor and
debtor;
• (5) By compensation;
• (6) By novation.
Payment

• Correct and complete amount due;

• Correct party to receive the payment;
• It has been accepted by the creditor;
What if the creditor refuses the payment?

• Consignation- consign or deposit the correct amount due

before judicial authorities for the creditor to collect.

• Consignation is equivalent to payment.

• Action for specific performance- a case filed before the
court for the court to order a party to actually perform its
promise as closely as possible.
ARTICLE 1256

If the creditor to whom tender of payment has been

made refuses without just cause to accept it, the
debtor shall be released from responsibility by the
consignation of the thing or sum due.
Article 1231
• Obligations are extinguished:
(2) By the loss of the thing due;

“An obligation which consists in the delivery of a specific thing, shall be

extinguished if it should be lost or destroyed without the fault of debtor, and
before he incurred in delay.”

Loss of generic thing, obligation is NOT extinguished.

Article 1231
• Obligations are extinguished:
(3) By the condonation or remission of the debt-

(4) By the confusion or merger of the rights of creditor and debtor-

(5) By compensation- Always consists in a sum of money; Also,

compensation shall take place when two persons, are creditors and
debtors to each other (Art. 1278).
Article 1231
• Obligations are extinguished:
(6) By novation- It transpires when:
• Change of object or principal conditions;
• Substituting the debtor
• Subrogating a third person in the rights of creditor