Chapter 4

Article 1231

Obligations are extinguished: 1] By payment or performance; 2] By the loss of the thing due; 3] By the condition or remission of the debt

Article 1231
Obligations are extinguished: 4] By the confusion or merger of the rights of creditor and debtor; 5] By compensation; 6] By novation

Article 1231
Other causes: *> annulment *> rescission *> fulfillment of resolutory condition *> prescription

Chapter 4
Section 1 Payment or Performance
By: Group 4

Article 1232

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

Meaning of Payment

1] ORDINARY PARLANCE - refers only to the delivery of money 2] IN LEGAL MODE OF EXTINGUISHING OBLIGATION may refer to a thing or doing / not doing an act
Art. 1232

Meaning of Payment

PAYMENT = PERFORMANCE
Art. 1232

Article 1233

A debt shall not be understood to have been paid unless te thing or service in which the obligation consist has been completely delivered or rendered, as the case may be.

Debt

- an obligation to deliver money, a thing (other than money), to do an act, or not to do an act

Art. 1233

When debt is considered paid

1] INTEGRITY OF PRESTATION - complete payment / performance 2] IDENTITY OF THE PRESTATION - the prestation very

Art. 1233

Article 1234

If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment less damagees sufferesby the obligee.

Reasons for exception to Art. 1233

1] adopted from American Law 2] in case of substantial performance, obligee is benefited 3] compensation for breach committed by obligor
Art. 1234

Requisites for Application

1] there must be substantial performance 2] the obligor must be in good faith

Art. 1234

Article 1235

When the obligee accept the performance knowing its incompleteness or irregularity and without expressing any protest or objection, the obligation is deemed fully complied with.

Principle of Estoppel

- where this article is founded - creditor has the right to reject irregular / incomplete payment, in case of acceptance, the law considers that he wives his right, thus whole obligation is extinguished
Art. 1235

Requisites for Application

1] obligee knows that the performance is incomplete or irregular 2] he accepts the performance without expressing any protest or objection
Art. 1235

Article 1236

The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

Article 1236

Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

Persons form whom creditor must accept payment

1] Debtor 2] any person who has an interest in the obligation (like guarantor) 3] third person who has no interest in the obligation when there is stipulation that he can make payment

Art. 1236

What old Civil Code say:

- creditor cannot refuse payment by a third person, but he has also given the right to insist on the liability of the debtor - creditor should not be compelled to accept payment from a third person whom he may dislike or distrust
Art. 1236

Effect of Payment by Third Person

1] if made without the knowledge or against the

will of the debtor

RIGHT :

reimbursement

2] if made with the knowledge of the debtor RIGHT : reimbursement subrogation

Art. 1236