Other Modes of Extinguishing An Obligation

OTHER MODES OF EXTINGUISHING AN OBLIGATION
1. Rescission
2. Annulment
3. Prescription
4.Fulfillment of Resolutory Condition.
5. Death of a Party if the Obligation is PERSONAL in Character
6. Waiver / Renunciation
7. Arrival of the Resolutory Period
8. Mutual Dissent
9. Compromise
A. Rescission (Art. 1191)
It is a relief to protect one of the parties or a third person from all injury
and damages which the contract may cause, to protect some preferential right
(Aquino vs. Tanedo, 39 Phil. 517). It is a form or legal remedy intended to restore
things back to their original conditions prior to the making of the contract which is
defective because primarily of economic injury.
ILLUSTRATION:
Mr. Sal Vaje owes Tina K. Buhan P100,000. To avoid payment, Sal
transferred all his remaining properties to Miss Tina Go and declared himself
insolvent. Should Tina later discover the said transfer, she can have it rescinded
and once, the transfer is rescinded. Tina K. Buhan could have the said Sal Vaje
sold so that she could be paid out of its proceeds. Whatever obligations created
by the transfer made between Sal and Tina Go is extinguished by rescission.
B. Annulment (Art.1397)
It is a legal remedy the purpose of which is to make a voidable contract
void and thus, ineffective.
ILLUSTATION:
Malou Co. Deceived Nilo Co. into buying a fake gold ring for P10,000.
Should Nilo discovered the fraud, he can have the contract of sale annulled.
Once annulled, whatever obligations created by the said contract of sale are
extinguished by annulment.
C. Prescription (Art. 1106. 1139 – 1149)

Extinguishments of obligations thru lapse of time. The law provides for a
time limit within which a party can sue in court to enforce an obligation. If the said
party does not Sue within the period provided for by law, he can no longer sue
because the obligation by then is already extinguished by prescription.
ILLUSTRATION:
Mr. Cascasero drove his car recklessly and injure Mr. Sugatan who was
then crossing the street. If the incident happened on January 1, 2000, Mr.
Sugatan has 4 years counting from January 1, 2000 within from January 1,
2000, within which to recover damages against Mr. Cascasero by filing a suit in
court. If Mr. Sugatan delays the filing if the case and the 4 year period elapses,
he can no longer sue in court because Mr. Cascasero's obligation to pay
damages arising from quasi-delict is already extinguished by prescription. (See
Art. 1146).
PRESCRIPTIVE PERIODS - Examples:
Obligations arising from
a. Written contract such as loan - 10 years from the time the right of action accrues
( Art. 1144)
b. Verbal contract - 6 years
c. Quasi - Contract - 6 years
d. Defamation - 1 year
e. Obligation created by law - 10 years
1. That the law provides for a time-limit or period during which a party can sue in court
to enforce an obligation;
2. That the said period elapses without the said party suing in court.
Art. 1144. The following actions must be brought with ten years from the time the right
of action accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment
Art. 1145. The following actions must be commenced within years:
1. Upon an oral contract;
2. Upon a quasi-contract;
Art. 1146. The following actions must be instituted within four years;
1. Upon an injury to the right of the plantiff;
2. Upon a quasi-delict.
Art. 1147. The followinng must be brought with ten years from the time the right
of action accrues;
1. Upon a written contract:
2. Upon an obligation created by law;
3. Upon a judgment
Art.1145. The following actions must be commended within six years;
1. Upon an oral contract;
Art. 1156. The following actions must be instituted within four years;
1. Upon an injury to the right of the plantiff;
Art. 1147. The following action must be filled within one year;
1. For forcible entry and detainer;
2. For defamation.
D. FULFILLMENT OF RESOLUTORY CONDITION
1. That the obligation is subject to a condition.
2. That the condition is resolutory in character.
3. That the condition had been fulfilled.
E. DEATH OF A PARTY IF THE OBLIGATION IS PERSONAL IN CHARACTER
*Death (not absolute) – refers to the
death of the debtor; may be applied
only if the obligation is personal to the
obligor. Under the Law on Succession,
the estate of the deceased includes all
the rights, and oblis of that person
which are not extinguished by death
Refers to the death of the debtor; may be applied only if the
obligation is personal to the obligor. Under the Law on Succession, the estate of
the deceased includes all the rights, and oblis of that person which are
not extinguished by death
Illustration:
A met minds with B to have the former's house and lot sold to the latter.
The contract was perfected. However, A died the following day. Is B still bound to
pay the house and lot? Not anymore
F. WAIVER / RENUNCIATION
The meaning of this term depends on the context in which it is used:
 In the context of a rights issue, the act of renouncing the right to subscribe for
shares (when the shares are in nil paid form) or the right to be entered in the
company’s share register (when the shares are fully paid).
 In the context of the right to probate or administration of an estate, the act of
either an executor or an administrator of a deceased's estate, by which he
relinquishes the right to act in the administration.
 In the context of a contract, a renunciation occurs when one party, by words or
conduct, evinces an intention not to perform, or expressly declares that they will
be unable to perform their obligations under the contract in some essential
respect. The renunciation may occur before or at the time of performance. Short
of an absolute refusal to perform, the test is to ascertain whether the actions of
the defaulting party would lead a reasonable person to conclude that the other
party no longer intends to be bound by the contract and whether the non-
performance of that obligation would entitle the innocent party to treat the
contract as discharged.
F. ARRIVAL OF THE RESOLUTORY PERIOD

1
EXTINGUISHMENT OF OBLIGATIONS
*Enumeration is non-exclusive
Principal modes of extinguishing relationship
ART. 1193. Obligations for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon
arrival of the day certain.
A day certain is understood to be that which must necessarily come,

although it may not be known when.
If the uncertainty consists in whether the day will come or not, the
obligation is conditional, and it shall be regulated by the rules of the
preceding Section.
G. MUTUAL DISSENT
An agreement between the parties to mutually withdraw from the

contract. This should not be confused with rescission. Rescission
requires the existence of either of the two grounds: lesion or fraud, while
mutual dissent requires none because its basis is the agreement of both
parties to withdraw. Rescission always results in abrogation and, usually, in
mutual restitution, except in cases where the law does not allow such,
while in mutual dissent, the only effect produced is abrogation; restitution
depends upon the agreement of the parties. Rescission may be available
to 3rd persons who suffer injury because of the contract sought to be rescinded,
while mutual dissent is not available to 3rd persons.
an agreement bet.
the parties to mutually withdraw from
the contract. This should not be
confused with rescission. Rescission
requires the existence of either of the
two grounds: lesion or fraud, while
mutual dissent requires none because
its basis is the agreement of both
parties to withdraw. Rescission always
results in abrogation and, usually, in
mutual restitution, except in cases
where the law does not allow such,
while in mutual dissent, the only effect
produced is abrogation; restitution
depends upon the agreement of the
parties. Rescission may be available to
Illustration:
A and B perfected a contract to sell. They, however, later on, both agreed
to cancel the contract.
H. COMPROMISE
An agreement between opposing parties to settle a dispute or reach a
settlement in which each gives some ground, rather than continue the dispute or
go to trial. Judges encourage compromise and settlement, which is often
economically sensible, since it avoids mounting attorneys' fees and costs. To
reach a settlement in which each party gives up some demands.
Illustration:
A bound himself to give B a parcel of land. They, however, agreed and
entered into a compromise that A would instead give half of the promised land.
A's obligation to completely deliver the parcel of land had already been
extinguished.

Other Modes of Extinguishing An Obligation

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OTHER MODES OF EXTINGUISHING AN OBLIGATION

C. Prescription (Art. 1106. 1139 – 1149)

F. ARRIVAL OF THE RESOLUTORY PERIOD

A day certain is understood to be that which must necessarily come,

An agreement between the parties to mutually withdraw from the

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