Extinguishment of Obligations
Chapter 4
EXTINGUISHMENT OF OBLIGATIONS
Section 1 – PAYMENT OR PERFORMANCE
Payment
It is the fulfillment of a promise; the performance of an agreement. This consists of:
a. the delivery of money or its equivalent in specific property or services, or
b. doing a certain act or not doing a certain act.
How payment is made
a. The thing or service contemplated must be delivered or rendered.
1. The debtor of the thing cannot compel the creditor to accept a different one although the latter maybe of the same value as, or more valuable than that which is due.
2. In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the obligee’s will.
3. In obligations to give a generic thing whose quality and circumstances have not been stated, the debtor cannot deliver a thing of inferior quality.
4. In monetary obligations, the payment must be in the legal tender although the parties may stipulate that payment may be made in currency other than Philippine legal tender at the time of payment.
b. Fulfillment of the obligation must be complete.
Exceptions:
1. If the obligation has been substantially performed in good faith.
2. When the obligee accepts the performance knowing its incompleteness or irregularity, and without expressing any protest or objection.
Substantial performance in good faith
If the obligation has been substantially performed in good faith, it is considered as though there had been strict and complete fulfillment. The debtor is allowed to recover from the creditor less damages suffered by the latter.
Requisites:
1. There must be a substantial performance.
2. The obligor must be in good faith.
Acceptance of incomplete or irregular payment
If the obligee accepts the payment knowing that it is incomplete or irregular and without expressing any protest, the obligation is considered fulfilled and the whole debt is extinguished.
Requisites:
1. The obligee knows that the
EXTINGUISHMENT OF OBLIGATIONS
Section 1 – PAYMENT OR PERFORMANCE
Payment
It is the fulfillment of a promise; the performance of an agreement. This consists of:
a. the delivery of money or its equivalent in specific property or services, or
b. doing a certain act or not doing a certain act.
How payment is made
a. The thing or service contemplated must be delivered or rendered.
1. The debtor of the thing cannot compel the creditor to accept a different one although the latter maybe of the same value as, or more valuable than that which is due.
2. In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the obligee’s will.
3. In obligations to give a generic thing whose quality and circumstances have not been stated, the debtor cannot deliver a thing of inferior quality.
4. In monetary obligations, the payment must be in the legal tender although the parties may stipulate that payment may be made in currency other than Philippine legal tender at the time of payment.
b. Fulfillment of the obligation must be complete.
Exceptions:
1. If the obligation has been substantially performed in good faith.
2. When the obligee accepts the performance knowing its incompleteness or irregularity, and without expressing any protest or objection.
Substantial performance in good faith
If the obligation has been substantially performed in good faith, it is considered as though there had been strict and complete fulfillment. The debtor is allowed to recover from the creditor less damages suffered by the latter.
Requisites:
1. There must be a substantial performance.
2. The obligor must be in good faith.
Acceptance of incomplete or irregular payment
If the obligee accepts the payment knowing that it is incomplete or irregular and without expressing any protest, the obligation is considered fulfilled and the whole debt is extinguished.
Requisites:
1. The obligee knows that the