Articles 1231-1238

OBLIGATIONS AND
CONTRACTS
MODULE 3
ATTY. REBECCA S. OFALSA

WHAT ARE THE MODES OF
EXTINGUISHING OBLIGATIONS?
ARTICLE 1231
Obligations are extinguished:

1. By payment or performance;
2. By the loss of the thing due;
3. By the condonation or remission of the debt;
4. By the confusion or merger of the rights of creditor and debtor;
5. By compensation;
6. By novation.
ARTICLE 1231
 Other causes of extinguishment of obligations, such as

annulment, rescission, fulfillment of a resolutory
condition, and prescription, are governed elsewhere in
this Code.
ARTICLE 1231 IS NOT EXCLUSIVE
Other modes of extinguishing obligations

 Waiver by the creditor
 Compromise
 Death of one of the contracting parties in purely
personal obligations
PAYMENT OR PERFORMANCE
Articles 1232 - 1251
CONCEPT OF PAYMENT
ARTICLE 1232
Payment means not only the delivery of money but also the performance, in
any other manner, of an obligation.
Note:
 The GR is that the burden rests on the defendant to prove payment rather
than the plaintiff to prove non-payment.
 Well-settled is the rule that a receipt of payment is the best evidence of the
fact of payment.
WHEN IS DEBT
CONSIDERED PAID?
ARTICLE 1233
A debt shall not be understood to have been paid unless the thing or service
in which the obligation consists has been completely delivered or rendered,
as the case may be.
- Also known as Integrity of prestation (Principle of Integrity of payment)

- Article 1233 is the general rule
ARTICLE 1233 : SAMPLE APPLICATION
Example:
S obliged himself to deliver 100 sacks of rice to B. S delivered only 90 sacks
of rice.
Under Article 1233,

 there is no payment by S
 B can refuse to pay for the 90 sacks if S does not deliver what is lacking
Example:
D promised to pay C P10k. D is only giving P9k.
Under Article 1233,

 C can refuse to accept P9k because the fulfillment is not complete.
IF ART. 1233 IS THE GR, ARE
THERE EXCEPTIONS?
ARTICLE 1234 (FIRST EXCEPTION TO 1233)
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
damages suffered by the obligee.
Thus:
Substantial Compliance in Good Faith = Fulfillment or Payment
ARTICLE 1234
Requisites for Article 1234 to apply:
1. There must be substantial compliance; and

2. The obligor must be in good faith.
S obliged himself to deliver 500 bags of cement to B for a certain price.

Despite his best diligent efforts, S was able to deliver only 400 bags because
of global cement shortage.
Under Art. 1234

1. S can recover as though there had been complete delivery less the price
of the 100 bags.
2. S must show that he attempted in good faith to comply with his
obligation.
ARTICLE 1235 (SECOND EXCEPTION OF
1233)
When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation
is deemed fully complied with.
Thus
 Creditor is in estoppel.
 Estoppel = the principle which precludes a person from asserting
something contrary to what is implied by a previous action or statement of
that person or by a previous pertinent judicial determination.
REQUISITES OF ARTICLE 1235
1. The obligee knows that the performance is incomplete or irregular;

2. He accepts the performance without expressing any protest or objection.
WHO MAY PAY THE
OBLIGATION?
WHO MAY PAY
1. The debtor himself or his legal representative;

2. Any person who has an interest in the obligations (example, a
guarantor); or
3. A third person who has no interest in the obligation when there is a
stipulation that he can make payment (Par. 1 Art. 1236).
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.
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.
ARTICLE 1237
Whoever pays on behalf of the debtor without the knowledge or against the
will of the latter, cannot compel the creditor to subrogate him in his rights,
such as those arising from a mortgage, guaranty, or penalty.
EFFECT OF PAYMENT BY THIRD PERSON
Scenarios:
1. If made without the knowledge or against the will of the debtor.

2. If made with the knowledge of the debtor.
IF MADE WITHOUT THE KNOWLEDGE OR AGAINST THE WILL OF THE DEBTOR
1. The payer can recover from the debtor only in so far as the payment has
been beneficial to the debtor.
2. Otherwise said, the recovery is only up to the extent or amount of the
debt at the time of payment.
Example
In 1972, D executed a promissory note to pay C Php10k within a period of 4
years. C condoned ½ of the obligation in 1975. In 1976, P, a stranger to the
obligation, unaware of the partial remission of the indebtedness, paid the
entire amount of Php10k without the knowledge and consent of D. C
accepted the payment.
What are the rights and obligations of the parties?

Answer
 Rights/obligations of P
 Can recover from D only Php5k as this is only the extent that D was benefitted by the
payment of P.
 Can proceed against C for the recovery of Php5k
 Rights/obligations of D
 Reimburse P the amount of Php5k
 Rights/obligations of C
 Return Php5k to P
IF MADE WITH THE KNOWLEDGE OF THE DEBTOR
1. The payer can recover what he has paid; and

2. The payer acquires all the rights of the creditor.
EXAMPLE
In 1972, D executed a promissory note promising to pay to C P10k within a

period of 4 years. The payment of the debt was guaranteed by G. In 1976, O,
a third person, paid the entire amount of the indebtedness with the
knowledge and consent of D.
What are the respective rights and obligations of the parties?

ANSWER
1. O shall be subrogated to all the rights of C, not only against D, but also
against G. Thus:
 O can demand reimbursement from D the P10k
 If D cannot pay because of insolvency, he can proceed against G for the
recovery of the amount.
ARTICLE 1238
Payment made by a third person who does not intend to be reimbursed by

the debtor is deemed to be a donation, which requires the debtor's consent.
But the payment is in any case valid as to the creditor who has accepted it.
ARTICLE 1238 – EFFECT OF GRATUITOUS
PAYMENT
1. The presumption arises that the payment is a donation. Thus, debtor’s
consent is necessary. Once the debtor’s consent is secured, then the
rules on ordinary donations will apply.
2. If consent is not secured, Articles 1236 and 1237 will still apply.
3. As far as the creditor who has accepted the payment is concerned, the
debtor’s consent is immaterial. The payment is valid in any case.
ARTICLE 1238
D owes C Php10k. Without intention of being reimbursed, S paid D’s obligation. D

accepted S’s generosity.
Effects
 Since D accepted the donation, D is not liable to S and his obligation is
extinguished.
 What if D did not consent to the donation ? S may recover from D since there has
been no donation,
 But the obligation of D to C is extinguished because the payment is valid as to C
who has accepted the payment.
CAPACITY TO MAKE PAYMENT

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OBLIGATIONS AND

ATTY. REBECCA S. OFALSA

Obligations are extinguished:

 Other causes of extinguishment of obligations, such as

Other modes of extinguishing obligations

- Also known as Integrity of prestation (Principle of Integrity of payment)

Under Article 1233,

Under Article 1233,

Requisites for Article 1234 to apply:

1. There must be substantial compliance; and

S obliged himself to deliver 500 bags of cement to B for a certain price.

Under Art. 1234

1. The obligee knows that the performance is incomplete or irregular;

1. The debtor himself or his legal representative;

The creditor is not bound to accept payment or performance by a third

1. If made without the knowledge or against the will of the debtor.

What are the rights and obligations of the parties?

1. The payer can recover what he has paid; and

In 1972, D executed a promissory note promising to pay to C P10k within a

What are the respective rights and obligations of the parties?

Payment made by a third person who does not intend to be reimbursed by

D owes C Php10k. Without intention of being reimbursed, S paid D’s obligation. D

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