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• Loss of the thing due


  Obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay
• When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk.
• Loss of the thing

  • It perishes
  • Goes out of commerce
  • Disappears in such a way that its existence is unknown or it cannot be recovered
• Requisites in order that an obligation to give may be extinguished by the loss of the thing


  • The obligation is to deliver a specific or determinate thing
  • The loss of the thing occurs without the fault of the debtor
  • The debtor is not guilty of delay
• Cases when loss of the thing does not extinguish liability


  • When the law so provides
  • When the stipulation so provides
  • When the nature of the obligation requires the assumption of risk
  • When the obligation to deliver a specific thing arises from a crime
• In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.
• Partial loss


  When only a portion of the thing is lost or destroyed or when it suffers depreciation or deterioration
• If the loss is due to the fault of Gloria, she shall be obliged to pay the value of the horse with indemnity for damages.
• If the horse to be delivered is to be slaughtered by Joseph, the injury is clearly not important. Even if there was fault on the part of Gloria, she can still deliver the horse with liability for damages, if any, suffered by Joseph.
• Presumption of fault


  Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault, unless there is proof to the contrary
• Legal impossibility


  Arises when the acts stipulated to be performed is subsequently prohibited by law
• Physical impossibility


  Arises when the act is supposed to be performed by the obligor due to reasons subsequent to the execution of the contract, could not be physically performed by the obligor
• Difficulty of performance


  When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part
• When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it.
• The obligation having been extinguished by the loss of the thing, the creditor shall have all the rights of action which the debtor may have against third person by reason of the loss.
• Condonation or remission of debt


  Gratuitous renunciation by the creditor of his right against the debtor resulting in the extinguishment of the latter's obligation in its entirely or in that part of the same to which the renunciation refers
• Requisites of condonation or remission


  • It must be gratuitous
  • It must be accepted by the obligor
  • The parties must have capacity
  • It must not be inofficious
  • If made expressly, it must comply with the forms of donation
• Remission, being an act of liberality, should be proved by clearer and more convincing evidence than what is required to establish payment.
• While a person may make donations, no one can give more than that which he can give by will, otherwise, the excess shall be inofficious and shall be reduced by the court accordingly.
• The delivery of a private document evidencing a credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action which the former had against the latter.
• Whenever the private document in which the debt appears is found in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved.
• The renunciation of the principal debt shall extinguish the accessory obligations; but the waiver of the latter shall leave the former in force.
• It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing.
• Principal debt


  The main obligation that must be fulfilled
• Accessory obligation


  An obligation that depends on the existence of the principal debt
• The waiver of the accessory obligation


  Leaves the principal debt in force
• If the obligation to pay P100M is condoned


  The accessory obligation, guaranty of Nov, is also condoned
• If the guaranty is condoned


  The obligation to pay P100M remains in force
• Condonation or remission of debt


  The extinguishment of an obligation by the creditor's voluntary relinquishment of his right
• It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing
• Confusion or merger of rights


  The meeting in one person of the qualities of creditor and debtor with respect to the same obligation
• The obligation is extinguished from the time the characters of creditor and debtor are merged in the same person
• Merger which takes place in the person of the principal debtor or creditor

  Benefits the guarantors
• Confusion which takes place in the person of the guarantor


  Does not extinguish the obligation
• Confusion does not extinguish a joint obligation except as regards the share corresponding to the creditor or debtor in whom the two characters concur
• Compensation


  The extinguishment to the concurrent amount of the debts of two persons who, in their own right, are reciprocally principal debtors and creditors of each other
• Kinds of Compensation


  • Legal
  • Voluntary/Conventional
  • Judicial
  • Facultative
• Compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation
• Requisites for compensation to be proper


  • Each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other
  • Both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated
  • The two debts be due
  • They be liquidated and demandable
  • Over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor
• Conventional or voluntary compensation


  Compensation agreed upon by the parties even for debts that are not yet due