Article 1261 If the consignation having been made, the creditor should authorize the debtor to

withdraw the same, he shall lose every preference which he may have over the thing. The co-
debtors, guarantors and sureties shall be released. 

Effects of withdrawal with authority of creditor.

Since consignation is for the benefit of the creditor, he may authorize the debtor to withdraw the
deposit after he has accepted the same or after the court has issued an order cancelling the
obligation. As far as the debtor and the creditor are concerned, their relations will remain as they
were before acceptance or cancellation. However , the creditor shall lose every preference which
he may have over the thing, and the co-debtors (referring to the solidary debtors), guarantors, and
sureties shall be released.

The solidary debtors are released only from their solidary liability, but not from their shares of
the obligation, since unlike guarantors and sureties, they are also principal debtors.

Article 1262 An 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.

When a thing is considered lost.

It is understood that a thing is lost when it perishes, or goes out of commerce or disappears in
such a way that its existence is unknown or it cannot be recovered.

When loss of thing will extinguish an obligation to give.

In order that an obligation may be extinguished by the loss of the thing, the following requisites
must be present:

(1) The obligation is to deliver a specific or determinate thing;

(2) The loss of the thing occurs without the fault of the debtor; and

(3) The debtor is not guilty of delay

When loss of thing will not extinguish liability.

There are cases, however, when the loss of the thing even in the absence of fault and delay will
not exempt the debtor from liability. They are:

(1) when the law so provides;

(2) when the stipulation so provides;

(3) when the nature of the obligation requires the assumption of risk; and

(4) when the obligation to deliver a specific thing arises from a crime.

Article 1270 Condonation or remission is essentially gratuitous, and requires the acceptance by
the obligor. It may be made expressly or impliedly. One and the other kind shall be subject to the
rules which govern inofficious donations. Express condonation shall, furthermore, comply with
the forms of donation. 

Condonation or remission is the gratuitous abandonment by the creditor of his right against the
debtor. It thus a form of donation.

Requisites of condonation or remission.

(1) It must be gratuitous;

(2) It must be accepted by the obligor;

(3) The parties must have capacity;

(4) It must not be inoffficious; and

(5) It made expressly, it must comply with the forms of donation.

Article 1271 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.If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his
heirs may uphold it by proving that the delivery of the document was made in virtue of payment
of the debt.
Presumption in case of voluntary delivery of document of indebtedness by creditor.

(1) Presumption of implied remission.— this article gives an example of implied or tacit
remission. If the debt is not yet paid, the creditor would need the document to enforce payment.
In case he voluntarily delivers it to the debtor, the only logical inference is that he is renouncing
his right.

(2) Contrary evidence.— the presumption is prima facie or rebuttable by contrary evidence.
Evidence is admissible to show otherwise, as when a receipt signed by the creditor was delivered
only for examination by the debtor client (lawyer) of the amount of attorney’s fees to be paid by
the latter.

(3) Extent of remission.— if the obligation is joint, the presumption of remission pertains only to
the share of the debtor who is in possession of the document; if solidary, to the total obligation.

(4) Presumption applicable only to private document.— art.1271 speaks of a private document.
The legal presumption of remission does not apply in the case of a public document because it is
easy to obtain a copy of the same, being a public record.

Article 1275 The obligation is extinguished from the time the characters of creditor and debtor
are merged in the same person.

Confusion or merger is the meeting in one person of the qualities of creditor and debtor with
respect to the same obligation.

Requisites of confusion.

(1) It must take place between the principal debt and creditor; and

(2) It must be complete.

Article 1276 Merger which takes place in the person of the principal debtor or creditor benefits
the guarantors. Confusion which takes place in the person of any of the latter does not extinguish
the obligation.

Effect of merger in the person of principal debtor or creditor.

Merger in the person of the principal debtor or creditor extinguishes the obligation. Hence, the
accessory obligation of guaranty is also extinguished in accordance with the principle that the
accessory follows the principal.

Effect of merger in the person of guarantor.

The extinguishment of the accessory obligation does not carry with it that of the principal
obligation. Consequently, merger, which takes place in the person of the guarantor, while it
extinguishes the guaranty, leaves the principal obligation in force.

Article 1278 Compensation shall take place when two persons, in their own right, are creditors
and debtors of each other.

Compensation is the extinguishment to the concurrent amount of the debts of two persons who,
in their own right, are debtors and creditors of each other.

Compensation and confusion distinguished.

(1) In confusion, there is only one person who is a creditor and debtor of himself, while in
compensation, there are two persons involve, each of whom is a debtor and a creditor of the
other;

(2) In confusion, there is but one obligation, while in compensation, there are two obligations;
and

(3) In confusion, there is impossibility of payment, while in compensation, there is indirect

payment.

Kinds of compensation.

(1) By its effect or extent:

(a) Total.— when both obligations are of the same amount and are entirely extinguished;
or

(b) Partial.— when the two obligations are of different amounts and a balance remains.
The extinctive effect of compensation will be partial only as regards the larger
debt.

(2) By its cause or origin:

(a) Legal.— when it takes place by operation of law even without the knowledge of the
parties
(b) Voluntary.— when it takes place by agreement of the parties

(c) Judicial.— when it takes place by order from a court in a litigation.

(d) Facultative.— when it can be set up only by one of the parties.