OBLIGATIONS & CONTRACTS Chapter 4 Extinguishment of Obligations I. Modes of Extinguishment (Art. 1231) A. Payment or Performance B. Loss or Impossibility C.

Condonation or Remission D. Confusion or Merger E. Compensation F. Novation G. Other Causes II. Payment or Performance A. Concept-Art. 1232 B. Requisites 1. Who can pay a. in general b. third person who is an interested party i. meaning of "interested party ii. effects-Art. 1302 [3] c. third person who is not an interested party but with consent of debtor i. effects - Art. 1236 par. 2, 1237, 1236 par. 1 d. third person who is not an interested party and without knowledge or against the will of the debtor i. effects - Art. 1236 par. 2, 1237, 1236 par. 1 e. third person who does not intend to be reimbursed -Art. 1238 f. in obligation to give - Art. 1239, 1427 i. effect of incapacity g. in case of active solidarity - Art. 1214 2. To whom payment may be made a. in general - Art. 1240 b. incapacitated person - Art. 1241 par. 1 i. requisites c. third person-Art. 1241 par. 2 i. requisites ii. when proof of benefit not required - Art. 1241 par. 3 d. in case of active solidarity 3. What is to be paid ("Identity") a. in general b. in obligations to: i. give a specific thing - Art 1244 ii. give a generic thing - Art. 1246 iii. pay monthly - Art. 1249, 1250, R.R. 529, R.A. 4100 Cases: Arrieta vs. NARIC, (GR No. L-15645, Jan 31, 1964) Kalalo vs. Luz, 34 SCRA 377 (1970) St. Paul Fire and Marine Insurance vs. Macondray, 70 SCRA 122 (1976) Papa vs. A.V. Valencia, et al., 284 SCRA 643 (1998) PAL vs. CA, 181 SCRA 557 (1990) c. payment of interest-Art. 1956 4. How is payment to be made ("Integrity") a. in general-Art. 1233. General Rule: Partial payment is not allowed - Art. 1248 Exceptions: - Art. 1248 b. substantial performance in good faith -Art. 1234 c. estoppel - Art. 1235 d. presumptions in payment of interests and installments-Art 1176 5. When payment is to be made a. in general - Art. 1169 b. see Chapter 2: Delay 6. Where payment is to be made - Art. 1251 par. 1 a. if no place is expressly designated - Art. 1251 par. 2 to par. 4 7. Expenses of making payment - Art. 1247 C. Application of Payments 1. Concept-Art 1252 Cases: Reparations Commission vs. Universal Deep Sea Fishing, 83 SCRA 764 (1978) Paculdo vs. Regalado, 345 SCRA 134 (2000) 2. Requisites 3. Rules in application of payments - Art. 1252, 1253 a. if rules inapplicable and application cannot be inferred - Art. 1254 i. meaning of "most onerous to debtor D. Payment by Cession 1. Concept-Art. 1255 2. Requisites 3. Effects E. Dation in Payment

1. Concept-Art. 1245 a. distinguished from Payment by Cession Case: DBF vs. CA, G.R. No. 118342, January 5, 1998. 2. Requisites 3. Effects Case: Filinvest Credit /Corporation vs. Philippine Acetylene, G.R. L-50449, January 30, 1982 F. Tender of Payment and Consignation 1. Tender of Payment a. Concept b. Requisites 2. Consignation a. Concept i. purpose b. Requisites i. when tender and refusal not required - Art. 1256 par. 2 ii. two notice requirement - Art. 1257 par. 1, 1258 par. 2 effects of noncompliance c. Effects-Art. 1260 par. 1 d. Withdrawal by debtor before acceptance by creditor or approval by court; effects - Art. 1260 par. 2 e. Withdrawal by debtor after proper consignation - Art. 1261 i. with creditor's approval; effects ii. without creditor's approval; effects f. Expenses of consignation - Art. 1259 Cases: De Guzman vs. CA, 137 SCRA 730 (1985) TLG International Continental Enterprising, Inc. vs.Flores,47SCRA437(1972) McLaughtia vs. CA, 144 SCRA 673 (1986) Soco vs. Militante, 123 SCRA 160 (1983) Sotto vs. Mijares, 28 SCRA 17 (1969) Meat Packing Corp. vs. Sandiganbayan, G.R. NO. 103068, June 22, 2001 Pabugais vs. Sahijwani, G.R. No. 156846, February 23, 2004 III. Loss or Impossibility A. Loss of Thing Due 1. Concept-Art. 1189 [2] 2. Kinds a. As to extent i. Total ii. Partial 3. Requisites-Art. 1262 4. Presumption-Art. 1265, 1165 a. when not applicable 5. Effects a. in obligation to give a specific thing - Art. 1262, 1268 b. in obligation to give a generic ting - Art. 1263 c. in case of partial loss - Art. 1264 d. action against third persons - Art. 1269 B. Impossibility of Performance 1. Concept-Art. 1266, 1267 2. Kinds a. As to extent i. Total ii. Partial b. As to source i. legal ii. physical 3. Requisites-Art. 1266 4. Effects a. in obligations fo do -Art. 1266, 1267, 1262 par. 2 (by analogy) i.impossibility" distinguished from difficulty cases: Occena vs. CA, 73 SCRA 637 (1976) p. 381 Naga Telephone Co. vs. CA, 230 SCRA 351 (1994) p. 375 PNCC vs. CA, G.R. No. 116896, May 5, 1997 b. in case of partial impossibility - Art. 1264 IV. Condonation or Remission A. concept B. Kinds 1. As to extent a. Total b. Partial 2. As to form -Art. 1270 par. 1 a. Express b. Implied C. Requisites a. when formalities required - Art. 1270 par. 2 case: Yam vs. CA, G.R. No. 194726, Feb. 11.1999 D. Presumptions -Art. 1271, 1272, 1274 E. Effects 1. in general 2. in case of joint or solidary obligations F. Governing Rules-Art. 1270

G. Renunciation of Principal or Accessory Obligation 1. effects-Art. 1273 2. rationale V. Confusion or Merger of Rights A. Concept B. Requisites C. Effects 1. in general-Art. 1275 2. in case of joint (Art. 1277) or solidary obligations D. Confusion in Principal or Accessory Obligation - Art. 1276 VI. Compensation A. Concept-Art. 1278 1. Distinguished from Confusion B. Kinds 1. As to extent a. Total b. Partial 2. As to origin a. Legal b. Conventional c. Judicial-Art. 1283 d. Facultative C. Legal Compensation 1. Requisites-Art. 1279, 1280 a. "due" distinguished from "demandable" Cases: Gan Tion vs. CA, 28 SCRA 235 (1969) Silahis Marketing Corp. vs. IAC, G.R. No. 74027, December 7, 1989 p.409 BPE vs. Reyes, 255 SCRA 571 (1996) PNB vs. Sapphire Shipping, 259 SCRA 174 (1996) BPI vs. CA, G.R. No. 116792, March 29, 1996 Mirasol vs. CA, G.R. No. 128448, February 1,2001 2. Effects-Art. 1290, 1289 D. When Compensation is Not Allowed - Art. 1287, 1288 E. compensation of Debts Payable in Different Places - Art. 1286 F. Effect of Nullity of Debts to be compensated - Art. 1284 G. Effects of Assignment of Credit 1. with consent of debtor - Art. 1285 par. 1 2. with knowledge but without consent of debtor - Art. 1285 par.2 3. without knowledge of debtor - Art. 1285 par. 3 a. rationale VII. Novation A. Concept-Art. 1291 B. Kinds 1. As to form a. Express b. Implied 2. As to origin a. Conventional b. Legal 3. As to object a. Objective or Real b. Subjective or Personal C. Requisites-Art. 1292 Cases: Millar vs. CA, 38 SCRA 642 (1971) Dormitorio vs. Fernandez, 72 SCRA 388 (1976) Magdalena Estate vs. Rodriguez, 18 SCRA 967 (1966) Reyes vs. Secretary of Justice, 264 SCRA 35 (1996) Couchingyan vs. RB Surety and Insurance, G.R. No. L-47369, June 30, 1987 Broadway Centrum Condominium Corp. vs. Tropical Hut, G.R. No. 79642, July 5, 1993) California Bus Line vs. State Investment, G.R. No.147950, Dec.11,2003 D. Effects 1. in general-Art. 1296 2. when accessory obligation may subsist - Art. 1296 E. Effect of the Status of the Original or New Obligation 1. nullity or voidability of original obligation - Art. 1298 2. nullity or voidability of new obligation - Art. 1297 3. suspensive or resolutory condition of original obligation - Art. 1299 F. Objective Novation 1. meaning of "principal conditions" G. Subjective Novation 1. By change of debtor a. Expromision i. requisites-Art. 1293 ii. effects - Art. 1295 Cases: Garcia vs. Llamas, 417 SCRA 292 (2003) Quinto vs. People, G.R. No. 126715, April 14, 1999. 2. By change of creditor: Subrogation of a third person in the rights of the creditor - Art. 1300 a. Conventional subrogation i. requisites-Art 1301

ii. distinguished from Assignment of Credit iii. effects-Art 1303, 1304 Case: Licaros vs. Gatmaitan, G.R. No. 142838, August 9, 2001 b. Legal subrogation i. requisites ii. when presumed - Art. 1302 iii. effects-Art. 1303, 1304 Case: Astro Electronics Corp. vs. Philippine Export and Foreign Loan Guarantee Corporation, G.R. No. 136729, September 23, 2003. ###