Law on Obligation and Contracts Reviewer

1936 Words Jan 13th, 2012 8 Pages
CAUSES OF EXTINGUISHMENT OF OBLIGATION
1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of the debt
4. Confusion or merger of rights of creditor and debtor
5. Compensation
6. Novation

I - PAYMENT OR PERFORMANCE

PAYMENT means not only the delivery of money but also the performance, in any other manner of an obligation.

How must the payment be made?
1. There must be delivery of the thing or rendition of the service that was contemplated.
a. The debtor of a thing cannot compel the creditor to accept a different one although the latter may be of the same value as, or more valuable than that which is due.
b. In obligation to do or not to do, an act or forbearance cannot be substituted by another act or
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if the debts are the same – to all debts proportionately

3. Payment by cession
- it is the abandonment or assignment by the debtor of all his property in favor of his creditors so that the latter may sell them and recover their claims out of the proceeds.

Requisites: 1. there must be two or more creditors; 2. the debtor is insolvent; 3. the debtor abandons all his properties 4. the creditors accept the abandonment

Note: The cession or assignment operates only to authorize the creditors to sell the debtor’s property, hence, ownership is not transferred to them.

4. Tender of payment and consignation Tender of payment is the act of the debtor of offering to his creditor what is due him. Consignation is the act of depositing the sum or thing due with the judicial authorities whenever the creditor refuses without just cause to accept the same, or in the cases when the creditor cannot accept it.

Effect of consignation duly made
- The debtor may ask the judge to order the cancellation of the obligation. The obligation shall be extinguished after the creditor has accepted the consignation or the judge has declared that the consignation has been properly made.

When consignation, without a previous tender of payment, will produce the same effect:
1. the creditor is absent or unknown or does not appear at the place of payment.
2. the creditor is incapacitated to receive the payment at the time it is due.
3. when, without just cause, he refuses to give receipt.
4.

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