MODES OF EXTINGUISHMENT (Art.

1231)
Q: 6 Principal modes to extinguish anobligation?
1.Payment or Performance
2.Loss of the thing due
3.Compensation
4.Confusion or Merger of Rights
5.Condonation or Remission of the debt
6.Novation
Q: Additional Modes of Extinguishment of anobligation?
1.Annulment of the contract
2.Recission of the obligation
3.Fulfillment of a Resolutory Condition
4.Prescription
Q: Does prescription extinguish an obligation?
-In the
case of Development
Bank
v. _______
The Supreme Court said, No.prescription does not extinguish anobligation. What is extinguished by
prescription is only the right of the
creditor
to
enforce
the
obligation
but
the obligation remains. Hence, prescription becomes a defense against an action to enforce an
obligation that has prescribed.
Q: What is extinguished in prescription?
-Only the civil nature or character of the obligation and not the obligation itself. The obligation is
converted from its civil character (enforceable) to a natural obligation (unenforceable).
-The prescription to bring an action is10 years.
Q: Proof that the obligation doesntextinguish
even
after
If the payment is accepted by thecreditor even after the prescription.

prescription?-

Q: PAYMENT?
-Under the codal provision, Paymentmeans not only the delivery of themoney
but
also
the
performance of an obligation in any other manner.-On that basis, Payment can apply to all kinds of
obligation to give, to do or not to do.
Q: What are the requirements of Payments?
1.Payor one who makes the payment
2.Payee one who receives the payment
3.Thing to be paid must always conform to the thing due
4.Time, Place, Manner of Payment
Q: When must payment be made?
-The law says, on its due date.
Q: When is the due date of an obligation?
-From the date or time that the creditor acquires the right to enforce or invoke the obligation.
Q: At what time of the due date must an obligation be paid?
-The debtor has 24
hours
(the
creditor has the right to demand within 24 hours.

wholeday) to pay the creditor; also the

Q: Can the debtor compel the creditor to accept payment at 2:00 am?
-Literally, YES. As long as it is within the 24-hour limit.-However, a day should be interpreted as
within the Reasonable Hours of the due date (working day)

Q: Where may payment be demanded?

-The law is silent. However, when acreditor demands, he expects to bepaid in the proper place.
Q: What and where is the proper place of payment?
-Art 1251 states that the following:
1.Payment shall be made in the place designated in the obligation
2.When there is no agreement and the thing due is a specific thing, the proper place of payment
is the place where the thing was at the moment the obligation was constituted.
3.If the thing due is generic, the place of payment shall be the domicile of the debtor.
4.If debtor changes his domicile in bad faith, additional expenses shall be borne by
him.NOTE: Law says DOMICILE and not Residence.
Q: Difference between domicile and residence?
-Residence characterized bytemporariness-Domicile characterized bypermanence; a place
where a person may be absent from but has intention to return
Q: If the proper place of payment is theDebtors domicile, but the debtor changedhis domicile in bad faith,
where is the proper place of payment?
-The place of payment will still be the domicile of the debtor
.Q: CHARACTERISTICS OF PAYMENT?
1.Integrity
2.Identity
3.Indivisibility
Q: Difference between the Requisites of Payment and Characteristics of payment?
-Requisites matters which are
necessary
to
the
validity
Characteristic matters on how payment should be made

of

payment-

Q: If payment is made by a 3rd party, what is the status of that payment?

-VALID, if the creditor accepts thepayment.
Q: Payment by a 3rd person and Principal Debtor?
-If Payment if made by a 3rd person,consent of the principal debtor is NOT necessary.What is essential is the acceptance by the creditor.
Q: Rights acquired by the 3rd person?
-If payment is made by a 3rd person against the will or without knowledge of the principal debtor,
the only right of the 3rd party is that he can seek reimbursement from the debtor for what he paid.
But only to the extent of what had been beneficial to the debtor.-However, if the payment made
by the 3rd person was CONSENTED by the principal debtor, 2 rights are acquired by the 3rd
person. a.Right to absolute reimbursement
b.Right to subrogation(substitute)
Q: What is absolute reimbursement?
-Whether the payment redounded to the benefit of
person becomes entitled to be reimbursed to what he paid.

the

debtor

or

not,

the

3 rd

Q: Explain Integrity and Indivisibility?

-Integrity performance of payment must be complete or full-Indivisibility payment should not
be partially made
Q: XPNs in Integrity?
-1. Substantial Compliance-

2. Estoppel (waiver on the part of the creditor) creditor accepts such performance, being aware of their
regularity in the performance of the obligation.
Q: What is Identity?
-Means that what is performed must conform to the thing due. The thing paid must not vary from
the thing due.
Q: XPN in Identity?
-Dation in Payment. Because in dation in payment, what the creditor receives is not the thing due.
(substitute thing)
Q: XPNs to Indivisibility?
1.If the parties agree on partial performance
2.Obligation is partly liquidated and partly unliquidated
Q: What is the status of payment when it ismade by an incapacitated person (debtor)?
-Law says: NOT VALID (but it is not deemed void)
-However, under RA 6809, they are valid until set aside (Voidable)
Q: What is the status of payment made to the incapacitated creditor?
-VALID if it is redounded to the benefit of the creditor-Gen. Rule shall apply that it should benefit
the creditor-If he did not kept the payment but it redounded for his benefit VALID.
Q: Payment made by an incapacitated person is voidable, to what kind of obligation is the law referring
to?
-Only in Obligation to Give, becausecapacity of the obligor is necessarysince it involves transfer
of ownership.
Q: What kind of benefit?
-All kinds of benefit except sexualbenefit-If the benefit is redounded to thecreditor,
then
payment is valid-As long as the benefit involves feelings, that is deemed sexual benefit

the

Q: What if the payment is made to a 3rd person, what is the status of the payment?
-It will be valid only if the payment made to a 3rd person redounded to the benefit of the creditor.Benefit must be established because it is never presumed, otherwise it is VOID.
-XPNs:1.3rd person acquires the right of the creditor (he becomes the new creditor)
2.Creditor ratifies the Payment to the3rd person
3.Creditor led the debtor to believe that the 3rd person was authorized to receive the payment.
Q: Status of payment?
-It becomes a Donation if the credit or accepted it