CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!

1"
CHAPTER 4
EXTINGUISHMENT OF OBLIGATIONS
GENERAL PROVISIONS
ART. 1231. #$li%ations are e&tin%'is(e) *
1. +y ,ayment or ,erformance-
2. +y t(e loss of t(e t(in% )'e.-
3. +y t(e con)onation or remission of t(e )e$t-
4. +y t(e conf'sion or mer%er of t(e ri%(ts of cre)itor an) )e$tor-
5. +y com,ensation-
6. +y no/ation.
#t(er ca'ses of e&tin%'is(ment of o$li%ations, s'c( as ann'lment, rescission,
f'lfilment of a resol'tory con)ition, an) ,rescri,tion, are %o/erne) else0(ere in t(is Co)e.
SECTION 1 PAYMENT OR PERFORMANCE
(Arts. 1232-1261)
STUDY GUIDE :
1.ART. 1232. Conce,t of ,ayment as a mo)e of e&tin%'is(in% an o$li%ation.
(a) 1eli/ery of money- an)2or
(b) Performance of t(e ,restation.
In la0, ,ayment an) ,erformance are synonymo's.
It also em$races 0it(in its terms t(e ,ayment of )ama%es or ,enalty in lie' of
t(e f'lfilment of an o$li%ation. (See Arts. 1134 5 122!"
2.Ho0 m'st ,ayment $e ma)e6
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
Payment m'st $e C#7P8ETE. (Art. 1233) As a %eneral r'le, ,artial or
irre%'lar ,ayment or ,erformance 9I88 :#T ,ro)'ce t(e e&tin%'is(ment of an o$li%ation.
3.9(at are t(e e&ce,tions to t(e )irecti/e in Art. 12336
T(e o$li%ation 0ill $e )eeme) ,ai) or f'lly com,lie) 0it( if *
(a) T(ere is (a.1.) s'$stantial com,liance (a.2) in %oo) fait(. In s'c( case, t(e
)e$tor may reco/er as t(o'%( t(ere (a) $een strict an) com,lete f'lfillment, less
)ama%es s'ffere) $y t(e cre)itor. (Art. 1234)
(b) T(e cre)itor acce,ts ,ayment (b.1.) ;no0in% its incom,leteness or irre%'larity,
an) (b.2) 0it(o't e&,ressin% any ,rotest or o$<ection. (Art. 1235)
4.9(o are t(e ,ersons from 0(om t(e cre)itor is $o'n) to acce,t ,ayment or
,erformance6 (Art. 1236, par. 1)
(a) T(e )e$tor.
(b) Any ,erson 0(o (as an interest in t(e o$li%ation (li;e a %'arantor".
(c) A t(ir) ,erson 0(o (as no interest in t(e o$li%ation, 0(en t(ere is a sti,'lation
t(at (e can ma;e ,ayment.
5.S',,ose a t(ir) ,erson ,ays for t(e )e$tor, (o0 m'c( can (e reco/er from t(e
)e$tor $y 0ay of reim$'rsement6
It )e,en)s.
(a) If ma)e 0it(o't t(e consent or a%ainst t(e 0ill of t(e )e$tor, t(e t(ir) ,erson can
reco/er only insofar as t(e )e$tor (as $een $enefite) $y t(e ,ayment. In ot(er 0or)s, t(e
t(ir) ,erson,ayor is entitle) only to REI7+=RSE7E:T. (Art. 1236, par. 2)
(b) If ma)e 0it( t(e consent of t(e )e$tor, t(e t(ir) ,erson can reco/er 0(ate/er
amo'nt (e (as ,ai). In a))ition, t(e t(ir) ,erson 0ill $e S=+R#>ATE1 to t(e ri%(ts of
t(e cre)itor (e.g., ri%(ts arisin% from a mort%a%e, %'aranty or ,enalty". Here, t(e t(ir)
,erson,ayor is entitle) to REI7+=RSE7E:T ? S=+R#>ATI#:. (Art. 1237)
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
(b.1.) S=+R#>ATI#: means t(e act of ,'ttin% a ,erson into t(e s(oes of t(e
cre)itor- (ence, ,ermittin% t(at same ,erson to e&ercise all t(e ri%(ts an) actions t(at
co'l) (a/e $een e&ercise) $y t(e cre)itor.
6.9(o are t(e ,ersons to 0(om t(e )e$tor is $o'n) to ma;e ,ayment6 (Art. 1240)
(a) T(e cre)itor.
(b) T(e cre)itor.s s'ccessorininterest (li;e an (eir or assi%nee".
(c) Any ,erson a't(ori@e) $y t(e cre)itor or $y la0 to recei/e it.
7.9(en is ,ayment to a t(ir) ,erson /ali)6
In t0o cases*
(a) T(e ,ayment 0ill $e /ali) only in so far as it (as re)o'n)e) to t(e $enefit of t(e
cre)itor (e.g., t(e ,ayment, or a ,art t(ereof, is )eli/ere) $y t(e t(ir) ,erson to t(e
cre)itor". (Art. 1241)
(b) T(e ,ayment is ma)e in %oo) fait( to a ,erson in ,ossession of t(e cre)it.
(Art. 1242)
8.9(at s(o'l) $e t(e o$<ect of ,ayment6
It )e,en)s on t(e nat're of t(e o$li%ation.
(a) In a specific real obligation an personal obligation. T(e /ery t(in% or
ser/ice )'e. T(e cre)itor cannot $e com,elle) to recei/e a ,restation )ifferent from t(at
0(ic( is )'e. (Art. 1244)
(b) In a generic real obligation. T(e t(in% m'st $e of t(e A'antity an) A'ality
s,ecifie). If no A'ality is s,ecifie), t(e cre)itor may not )eman) a t(in% of s',erior
A'ality, an) t(e )e$tor may not )eli/er a t(in% of inferior A'ality. T(is is Bt(e r'le of t(e
me)i'm A'ality.C (Art. 1246)
9.9(en is ,artial ,ayment allo0e)6
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
As a %eneral r'le, t(e cre)itor cannot $e com,elle) to acce,t, an) t(e )e$tor
cannot $e reA'ire) to ma;e, ,artial ,ayment or ,erformance. (Art. 124!, par. 1) T(e
e&ce,tions to t(is r'le are *
(a) 9(en t(ere is an e&,ress sti,'lation or ,ro/ision of la0 to t(at effect.
(Art. 124!, par. 1)
(b) 9(en t(e )e$t is in ,art liA'i)ate) an) in ,art 'nliA'i)ate). (Art. 124!, par. 2)
(c) 9(en t(e )ifferent ,restations in 0(ic( t(e o$li%ation consists are s'$<ect to
)ifferent ,erio)s or con)itions 0(ic( affect some of t(em. (e.g., 9(ere " o0es #
P14,444, an) P!,444 of t(e )e$t is )'e to)ay an) PD,444 is )'e 34 )ays after- or in case
t(e ,ayment of PD,444 is s'$<ect to t(e f'lfilment of a s's,ensi/e con)ition."
10. In 0(at c'rrency s(all ,ayment of )e$t in money $e ma)e6 (Art. 124$, par. 1)
(a) In t(e c'rrency sti,'late).
(b) If t(ere is no sti,'late) c'rrency, in P(ili,,ine c'rrency.
11. Commercial )oc'ments are :#T le%al ten)er. T(e cre)itor, t(erefore, cannot $e
com,elle) to acce,t t(em as ,ayment for a )e$t. S',,osin%, (o0e/er, t(e cre)itor
)eci)es to acce,t a commercial )oc'ment (s'c( as a c(ec;" in ,ayment of a )e$t,
0ill t(e )e$t $e e&tin%'is(e)6 (Art. 124$, par. 2)
Acce,tance of t(e c(ec; 0ill $e eA'i/alent to ,ayment only (i.e., t(e )e$t 0ill
$e e&tin%'is(e) only" 0(en *
(a) T(e c(ec; (as $een encas(e).
:ote* It is only 0(en t(e c(ec; is )is(ono're) t(at t(e cre)itor can $rin% an
action for non,ayment of t(e )e$t (Art. 124$, par. 3).
(b) T(e c(ec; (as lost its /al'e $eca'se of t(e fa'lt of t(e cre)itor.
12. >i/e t(e R=8ES re%ar)in% t(e ,lace 0(ere ,ayment s(all $e ma)e.
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
(a) If t(ere is a sti,'lation, ,ayment s(all $e ma)e in t(e ,lace )esi%nate).
(Art. 1251, par. 1)
(b) If t(ere is no sti,'lation *
(b.1) 1eli/ery of a s,ecific or )eterminate t(in% ,ayment s(all $e ma)e at t(e
,lace 0(ere t(e t(in% 0as at t(e time of t(e ,erfection of t(e contract.
(Art. 1251, par. 2)
(b.2.) 1eli/ery of an in)eterminate t(in% )eli/ery or ,ayment m'st $e ma)e at
t(e )omicile of t(e )e$tor. (Art. 1251, par. 3)
13. 9(at are t(e fo'r (D" s,ecial mo)es or forms of ,ayment 'n)er t(e Ci/il Co)e6
(a) 1ation in ,ayment, or adjudicacion en pago, or datio in solutum (Art. 1245)
(b) A,,lication of ,ayment or im,'tation of ,ayment (Art. 1252)
(c) Payment $y cession or assi%nment in fa/or of cre)itors (Art. 1255)
(d) Ten)er of ,ayment A:1 consi%nation (Arts. 1256%1261)
14. 9(at is )ation in ,ayment6
It is t(at e&traor)inary mo)e of e&tin%'is(in% an o$li%ation 0(ere$y t(e )e$tor
transmits (is o0ners(i, o/er a ,ro,erty in fa/o'r of t(e cre)itor for t(e satisfaction of a
monetary )e$t. In ot(er 0or)s, an e&istin% )e$t in money is satisfie), not $y t(e ,ayment
of money (Art. 12DD", $'t $y t(e alienation of ,ro,erty. (Art. 1245)
E&am,le * " o0es # P244,444. #n mat'rity )ate, if " )oes not (a/e eno'%(
money to ,ay off (is o$li%ation to #, (e may as; # to acce,t (is ("&s) mo'ntain $i;e 0ort(
P224,444 as ,ayment for t(e o$li%ation. If # consents, "&s o$li%ation is e&tin%'is(e) $y
)ation in ,ayment.
15. 9(at is a,,lication of ,ayment6 (Art. 1252, par. 1)
In t(is s,ecial mo)e of ,ayment, t(e )e$tor in)icates 0it( ,artic'larity t(e
s,ecific )e$t to 0(ic( t(e )e$tor.s ,ayment s(o'l) $e a,,lie), t(ere $ein% se/eral )e$ts
o0in% to t(e cre)itor, an) t(e )e$tor.s ,ayment $ein% ins'fficient to co/er all t(e )e$ts.
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
A,,lication of ,ayment can, t(erefore, $e ma)e 'se of only 0(en t(e follo0in%
reA'isites conc'r *
(a) T(ere m'st $e t0o or more )e$ts-
(b) T(e )e$ts m'st $e of t(e same ;in)-
(c) T(e )e$ts are o0e) $y t(e same )e$tor in fa/o'r of t(e same cre)itor-
(d) All t(e )e$ts m'st $e )'e- an)
(e) T(e ,ayment m'st not $e eno'%( to e&tin%'is( all t(e )e$ts.
16. Ass'min% all t(e reA'isites a$o/e are ,resent, 0(at are t(e r'les to $e o$ser/e)
in a,,lication of ,ayment6
(a) =n)er t(e first ,ara%ra,( of Art. 12E2, it is t(e )e$tor 0(o is %i/en t(e
,referential ri%(t to c(oose 0(ic( amon% t(e )e$ts )'e (e is ,ayin%.
(b) If t(e )e$tor )oes not c(oose, t(e cre)itor may ma;e t(e )esi%nation $y
s,ecifyin% in t(e recei,t 0(ic( )e$t is $ein% ,ai). (Art. 1252, par. 2)
(c) If neit(er t(e )e$tor nor t(e cre)itor (as ma)e t(e a,,lication, or if t(e
a,,lication is not /ali), t(en a,,lication is ma)e as follo0s *
(c.1.) A,,ly t(e ,ayment to t(e most onero's )e$t amon% t(ose )'e. (Art. 1254, par. 1)
(c.2.) If t(e )e$ts are of t(e same nat're an) $'r)en, a,,ly t(e ,ayment to all t(e )e$ts
,ro,ortionately. (Art. 1254, par. 2)
17. Art. 1253 man)ates t(at, 0(en interest is )'e on t(e )e$t, a,,lication of
,ayment s(o'l) $e ma)e first to t(e interest $efore t(e ,rinci,al. Hence, t(e )e$tor
cannot insist t(at (is ,ayment $e cre)ite) to t(e ,rinci,al first, instea) of t(e interest.
18. Ill'strati/e e&am,le on a,,lication of ,ayment.
" o0es # t(e )eli/ery of t(e follo0in% o$<ects *
(a) P144,444 )'e on Fan'ary 1E, 2413-
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
(b) P144,444 )'e on 7arc( 1E, 2413 to $ear interest at 3G ,er mont(-
(c) A 7its'$is(i mini motor$i;e 0ort( P144,444 )'e on 7ay 1E, 2413- an)
(d) P244,444 )'e on F'ne 34, 2413.
#n F'ly 1E, 2413, # 0ent to t(e (o'se of " to )eman) t(e f'lfillment of "&s
o$li%ation. 9(ile " 0as 0illin% to ma;e ,ayment to #, all t(at " (a) 0as P144,444.
A,,lyin% t(e r'les on a,,lication of ,ayment *
(a) " 0ill ,ay # t(e P144,444, an) inform (er t(at t(e sai) ,ayment 0ill s,ecifically
$e a,,lie) to t(e P144,444 )e$t )'e on 7arc( 1E, 2413. " cannot insist t(at # acce,t
t(e ,ayment for t(e P244,444 )e$t )'e on F'ne 34 $eca'se it 0o'l) amo'nt only to a
,artial ,ayment. =n)er Art. 124!, # cannot $e com,elle) to recei/e ,artial ,ayments.
:eit(er can " a,,ly t(e P144,444 ,ayment to t(e motor$i;e, t(o'%( of t(e same /al'e,
$eca'se it is not of t(e same ;in) (Art. 1252).
(b) If " )oes not in)icate to 0(ic( of t(e )e$ts (e 0ill a,,ly (is ,ayment of
P144,444, # (after recei/in% ,ayment" may in)icate in t(e recei,t %i/en to " t(at* BI
(ere$y ac;no0le)%e recei,t from " of t(e amo'nt of P144,444, 0(ic( is (ere$y a,,lie) to
t(e P144,444 )e$t of " 0(ic( $ecame )'e on Fan'ary 1E, 2413.C If " recei/es t(e
recei,t 0it(o't A'estion, (e cannot later on com,lain t(at t(e P144,444 ,ayment s(o'l)
(a/e $een a,,lie) first to t(e P144,444 )e$t )'e on 7arc( 1E, 2413, $eca'se t(e same
$ears an interest.
(c) If " or # )oes not ma;e any )esi%nation, t(en t(e ,ayment 0ill $e ma)e to a,,ly
first to t(e most onero's )e$t. Amon% t(e )e$ts 0(ic( are of t(e same ;in), t(e most
onero's is t(e P1E4,444 )'e on 7arc( 1E, 2413, $eca'se it is t(e one t(at $ears interest
at t(e rate of 3G ,er ann'm. In t(is case, as of F'ly 1E, 2413, 0(en ,ayment 0as
ten)ere), t(e P144,444 )e$t )'e on 7arc( 1E, 2413 0ill (a/e alrea)y earne) interest for
fo'r mont(s eA'i/alent to P12,444. Hence, a,,lyin% Art. 1253, t(e P144,444 ,ayment
0ill $e a,,lie) first to t(e interest of P12,444. T(e remainin% PHH,444 0ill $e a,,lie) to
t(e ,rinci,al o$li%ation lea/in% an o'tstan)in% $alance of P12,444 on t(e ,rinci,al
o$li%ation )'e for ,ayment to #.
(d) 8et 's ass'me t(at in t(e e&am,le %i/en in :o. 1H, t(e only )e$ts o0in% from t(e
)e$tor to t(e cre)itor are *
a. P144,444 )'e on Fan'ary 1E, 2413- an)
b. P244,444 )'e on F'ne 34, 2413-
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
P344,444 (total )e$t )'e"
0(ic( are $ot( of t(e same ;in), nat're an) $'r)en. In t(is case, if neit(er t(e )e$tor nor
t(e cre)itor ma;es a )esi%nation, t(e r'le in t(e 2n paragrap' of Art. 1254 0ill a,,ly.
T(e ,ayment of P144,444 0ill $e a,,lie) ,ro,ortionately to t(e t0o (2" )e$ts. Hence,
P33,333.33 (P144,4442P344,444 I P144,444" 0ill $e )e)'cte) from t(e P144,444 )e$t,
an) P!!,!!!.!3 (P244,4442P344,444 I P144,444" 0ill $e )e)'cte) from t(e secon). T(e
first )e$t 0ill (a/e a remainin% $alance of P!!,!!!.!3. #n t(e ot(er (an), t(e secon)
)e$t 0ill (a/e a remainin% $alance of P133,333.33. T(e ratio (ere of t(e first )e$t to t(e
secon) )e$t is t('s ,reser/e), namely, 1 is to 2.
19. 9(at is ,ayment $y cession6 (Art. 1255)
In t(is s,ecial mo)e of ,ayment, t(e )e$tor transfers all (is ,ro,erties, not
s'$<ect to e&ec'tion, in fa/o'r of (is cre)itors, so t(at t(e latter may sell t(em an) a,,ly
t(e ,rocee)s to t(eir res,ecti/e cre)its.
20. 9(at are t(e reA'isites of ,ayment $y cession6
(a) T(ere m'st $e more t(an one )e$t-
(b) T(ere m'st $e more t(an one cre)itor-
(c) T(e )e$tor m'st $e insol/ent-
(d) T(e )e$tor m'st a$an)on all (is ,ro,erties not e&em,t from e&ec'tion in fa/o'r
of t(e cre)itors- an)
(e) T(e cession m'st $e acce,te) $y t(e cre)itors.
21. 9(at are t(e effects of ,ayment $y cession6 (Art. 1255)
(a) =nli;e in )ation in ,ayment, t(e cre)itors )o not $ecome t(e o0ners of t(e
,ro,erties ce)e) $y t(e )e$tor as ,ayment for t(e )e$ts. T(e cre)itors merely $ecome
assi%nees of t(e )e$tor 0it( a't(ority to sell t(e ,ro,erties.
(b) T(e )e$tor is release) from (is o$li%ations $'t only to t(e e&tent of t(e net
,rocee)s of t(e sale, 'nless t(ere is a sti,'lation to t(e contrary. T(e $alance, t(erefore,
remains collecti$le from t(e )e$tor.
22. Ill'strati/e e&am,le of ,ayment $y cession.
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
" is in)e$te) to #1, #2 an) #3 in t(e total amo'nt of P27. 8ater, " $ecame
$an;r',t an) 0as left 0it( no ot(er assets $'t t(e follo0in% *
(a) A farm lot 0ort( P1.E7- an)
(b) A Toyota Altis car 0ort( P1.17.
9it( t(e consent of #1, #2 an) #3, " can assi%n t(e a$o/e ,ro,erties in fa/o'r
of t(e sai) cre)itors, so t(at t(ey may $e sol). T(e ,rocee)s from t(e sale of t(e
,ro,erties 0ill t(en $e 'se) to satisfy t(e res,ecti/e claims of t(e cre)itors. If t(e net
,rocee)s from t(e sale of t(e ,ro,erties amo'nt only to, let 's say, P1.H7, t(en " is still
lia$le for t(e $alance of P244,444 to t(e cre)itors.
23. 9(at is ten)er of ,ayment6
It is t(e act, on t(e ,art of t(e )e$tor, of offerin% to t(e cre)itor t(e t(in% or
amo'nt )'e. T(e )e$tor m'st, t(erefore, s(o0 t(at (e (as in (is ,ossession t(e t(in% or
money to $e )eli/ere) at t(e time of t(e offer. Ten)er of ,ayment is e&tra<')icial.
24. 9(at is consi%nation6
Consi%nation is t(e act of )e,ositin% t(e t(in% or amo'nt )'e 0it( t(e ,ro,er
co'rt 0(en t(e cre)itor )oes not )esire or cannot recei/e it, after com,lyin% 0it( t(e
formalities reA'ire) $y la0 (Art. 1256, par. 1). Consi%nation is essentially <')icial an),
t(erefore, ,res',,oses t(e e&istence of a case file) in co'rt $y t(e )e$tor a%ainst t(e
cre)itor to com,el t(e latter to acce,t t(e ,ayment. 9it(o't a co'rt case, t(ere can $e
:# consi%nation an) t(e )e$tor 0ill not $e release) from (is o$li%ation.
25. 9(at are t(e reA'isites of a /ali) consi%nation6
(a) E&istence of a /ali) )e$t 0(ic( is )'e. (Art. 1256, par. 1)
(b) Ten)er of ,ayment $y t(e )e$tor an) ref'sal, 0it(o't <'stifia$le reason, $y t(e
cre)itor to acce,t it. (Art. 1256, par. 1)
(c) Pre/io's notice of consi%nation to ,ersons intereste) in t(e f'lfillment of t(e
o$li%ation (s'c( as %'arantors, mort%a%ors, soli)ary )e$tors an)2or soli)ary cre)itors".
(Art. 1257, par. 1)
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
(d) Consi%nation ()e,osit in co'rt" of t(e t(in% or s'm )'e. (Art. 125!, par. 1)
(e) S'$seA'ent notice of consi%nation ma)e to t(e intereste) ,arties.
(Art. 125!, par. 2)
26. 9(at is t(e effect of a ten)er of ,ayment ma)e 0it(o't consi%nation6
A ten)er of ,ayment ma)e, e/en if t(e cre)itor 'n<'stifia$ly ref'ses to acce,t
,ayment or ,erformance, if not follo0e) $y a s'$seA'ent consi%nation in co'rt of t(e
o$<ect of t(e o$li%ation, s(all ()T e&tin%'is( t(e o$li%ation.
27. If a ten)er of ,ayment 0it(o't consi%nation )oes not e&tin%'is( t(e o$li%ation, t(e
re/erse is also tr'e. In ot(er 0or)s, a consi%nation 0it(o't a ,re/io's ten)er of
,ayment 0ill not li;e0ise e&tin%'is( t(e o$li%ation an) release t(e )e$tor. T(ere are,
(o0e/er, cases 0(en consi%nation A8#:E, 0it(o't nee) of a ,rior ten)er of
,ayment, 0ill ,ro)'ce t(e effect of ,ayment an), conseA'ently, e&tin%'is( t(e
o$li%ation. 9(at are t(ese e&ce,tional cases6 (Art. 1256, par. 2)
(a) 9(en t(e cre)itor is a$sent or 'n;no0n, or )oes not a,,ear at t(e ,lace of
,ayment-
(b) 9(en t(e cre)itor is inca,acitate) to recei/e t(e ,ayment at t(e time it is )'e-
(c) 9(en 0it(o't ca'se, t(e cre)itor ref'ses to %i/e a recei,t-
(d) 9(en t0o or more ,ersons claim t(e same ri%(t to collect t(e o$li%ation- an)
(e) 9(en t(e title of t(e o$li%ation (as $een lost.
28. 9(at are t(e effects if t(e consi%nation is ,ro,erly ma)e6
(a) T(e )e$tor may as; t(e co'rt to or)er t(e cancellation of t(e o$li%ation.
(Art. 1260, par. 2)
(b) T(e e&,enses of consi%nation s(all $e c(ar%e) a%ainst t(e cre)itor.
(Art. 125$)
29. After (a/in% )es,osite) t(e t(in% or s'm )'e 0it( t(e co'rt, may t(e )e$tor still
0it()ra0 t(e same6 (Art. 1260, par. 2)
JES, $'t t(e 0it()ra0al m'st $e ma)e *
(a) $efore t(e cre)itor acce,ts t(e consi%nation- or
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
(b) $efore t(e co'rt )eclares t(at t(e consi%nation (as $een ,ro,erly ma)e $y t(e
)e$tor, an) or)ers t(e cancellation of t(e )e$tor.s o$li%ation.
In s'c( a case, t(e o$li%ation s(all contin'e in force, an) t(e e&,enses for t(e
consi%nation s(all $e $orne $y t(e )e$tor.
30. 9(at 0ill $e t(e effect if t(e cre)itor (imself a't(ori@es t(e )e$tor to 0it()ra0 t(e
)e,osit (a) after t(e cre)itor (as acce,te) t(e consi%nation, or (b) after t(e co'rt (as
iss'e) an or)er cancellin% t(e )e$tor.s o$li%ation6 (Art. 1261)
(a) T(e )e$tor.s o$li%ation to t(e cre)itor s(all contin'e to s'$sist.
(b) T(e cre)itor s(all lose e/ery ,reference 0(ic( (e may (a/e o/er t(e t(in%.
(c) T(e co)e$tors, %'arantors an) s'reties s(all $e release).
31. Ill'strati/e e&am,le on ten)er an) consi%nation.
#n Fan'ary 1E, 2412, " $orro0e) PE44,444 from # ,aya$le on Fan'ary 1E,
2413. It 0as a%ree) ',on $y t(e ,arties t(at s(o'l) " )efa'lt in t(e ,ayment of t(e loan,
" 0ill ,ay a ,enalty interest of 14G or PE4,444. #n Fan'ary 1E, 2413, " ten)ere)
,ayment to # in t(e amo'nt of PE44,444. #, (o0e/er, ref'se) to acce,t t(e ,ayment
from " an) ne/er informe) " of t(e reason for (is ref'sal. To ma;e s're t(at (e 0ill not
$e c(ar%e) for t(e ,enalty on acco'nt of )elay for fail're to ,ay on )'e )ate, " file) an
action for consi%nation 0it( t(e co'rt, an) )e,osite) t(e amo'nt of PE44,444 0it( t(e
co'rt. If t(e co'rt fin)s t(e consi%nation to (a/e $een ,ro,erly ma)e ,'rs'ant to t(e
reA'irements of la0, t(e co'rt may or)er t(e cancellation of t(e o$li%ation. At t(is ,oint,
t(e o$li%ation of t(e )e$tor 0ill $e consi)ere) e&tin%'is(e). In ot(er 0or)s, 0(ile t(e
cre)itor may not (a/e act'ally recei/e) ,ayment of t(e o$li%ation on t(e mat'rity )ate
a%ree) ',on $y t(e ,arties, t(e )e$tor is )eeme) to (a/e com,lie) 0it( (is o$li%ation $y
,ro,erly ma;in% a ten)er of ,ayment, an) $y consi%nation of t(e t(in% or s'm )'e 0it(
t(e co'rt.
APPLICATION/PROBLEMS :
1. #n Fan'ary 1E, 2412, An)re0 $orro0e) money from Solo in t(e amo'nt of P17
)'e for ,ayment on Fan'ary 1, 2413 at 2EG interest ,er ann'm. +y en) of #cto$er,
2412, An)re0 s'ffere) financial re/erses so (e 0ent to /isit (is colle%e $est frien) Fo(n.
An)re0 as;e) Fo(n if (e co'l) $orro0 from Fo(n 0it(o't interest to ,ay (is P17 )e$t 0it(
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
Solo 0(ic( 0as to $e )'e on Fan'ary 1E, 2413. Fo(n ,romise) to (el, An)re0. T(ree
)ays after (e sa0 Fo(n, An)re0 l'c;ily 0on in t(e +in%o %ames at S7, an) ,artially ,ai)
Solo t(e amo'nt of PHE4,444. =n;no0n to An)re0, (o0e/er, on t(e /ery )ay t(at (e sa0
Fo(n, Fo(n imme)iately 0ent to Solo an) ,ai) An)re0.s )e$t in t(e amo'nt of P17 ,l's
t(e 2EG interest )'e in t(e amo'nt of P2E4,444. Can Fo(n later on reco/er from An)re0
t(e entire P1,2E4,444 t(at (e ,ai) to Solo6 Art. 123!
2. #n 7arc( 1E, 2412, F'n $orro0e) from C(ris t(e amo'nt of P3E4,444 ,aya$le
on 7arc( 1E, 2413. As sec'rity for t(e loan, F'n mort%a%e) (is K4sA'are meter lot in
1asmarinas, Ca/ite, 0(ic( 0as /al'e) at PE44,444, to C(ris. #n Le$r'ary 2H, 2413,
F'n.s co'sin, 8'cille, ,ai) C(ris P3E4,444 0it(o't cons'ltin% F'n a$o't it. 9(en t(e
o$li%ation, (o0e/er, fell )'e on 7arc( 1E, 2413, F'n 0as alrea)y insol/ent. Ar/in, t(e
('s$an) of 8'cille, no0 see;s to foreclose F'n.s K4sA'are meter mort%a%e) ,ro,erty, so
(e an) (is 0ife can reco/er t(e P3E4,444 ,ayment a)/ance) $y 8'cille to C(ris. Can
Ar/in foreclose t(e mort%a%e) ,ro,erty6 Art. 1233
3. +al)o o$li%e) (imself to )eli/er to Rao'l a Jaguar car. :ot (a/in% $een a$le to
o$tain a Jaguar, +al)o con/ince) Rao'l to acce,t instea) a Rolls Royce car 0(ic( 0as a
more e&,ensi/e car. Rao'l, (o0e/er, ref'se) to acce,t a Rolls Royce, an) insiste) t(at
+al)o )eli/er to (im a Jaguar. Is Rao'l le%ally <'stifie) in ref'sin% to acce,t t(e Rolls
Royce car consi)erin% t(at t(e same is e/en more e&,ensi/e t(an t(e Jaguar car6
4. R'$en o0es E) PE4,444. #n mat'rity )ate, R'$en offere) to ,ay E) t(e
amo'nt of PDE,444, 0(ic( 0as t(e only money (e t(en (a). E), (o0e/er ref'se) to
acce,t t(e ,ayment. T(ereafter, R'$en $'m,e) into t(e 34year ol) son of E), Fos('a,
to 0(om R'$en %a/e t(e PDE,444 0it( a reA'est t(at Fos('a t'rn o/er t(e money to (is
fat(er. Instea) of )eli/erin% t(e money to (is fat(er, (o0e/er, Fos('a imme)iately 0ent to
t(e casino, an) sA'an)ere) t(e entire amo'nt in t(e slot mac(ines.
(a) 9as E) <'stifie) in ref'sin% to acce,t t(e ,ayment offere) $y R'$en6
(b) 7ay E) still reco/er t(e f'll amo'nt of PDE,444 from R'$en after t(e sai) amo'nt
0as sA'an)ere) in its entirety $y (is son Fos('a6 Arts. 12DE 5 12D4
5. 7arissa o0es Retc(el P144,444 )'e on 1ecem$er 1E, 2413. #n mat'rity )ate,
7arissa ,resente) to Retc(el a )ate) 7+TC c(ec; in t(e amo'nt of P144,444 0it( a
certification from t(e $an; mana%er t(at 7arissa 0as a client in %oo) cre)it stan)in% 0(o
(as $een $an;in% 0it( 7+TC for almost 34 years. 1es,ite t(e ten)er of ,ayment an) t(e
certification iss'e) $y t(e $an; mana%er, Retc(el, (o0e/er, ref'se) to acce,t t(e
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CHAPTER IV, SEC. 1 Payment or Performance (Articles 123212!1"
,ayment an) insiste) t(at 7arissa ,ay (er in cas(. Is Retc(el <'stifie) in re<ectin% t(is
ten)er of ,ayment ma)e $y 7arissa, it $ein% certain t(at t(e amo'nt of t(e c(ec; 0ill later
on $e cleare) for s'fficiency of f'n)s in (er (Retc(el.s" fa/or6 Art. 12DK
6. Ric;y is a tenant of an a,artment o0ne) $y >eor%e. #n F'ne 34, 2413, >eor%e
%a/e Ric;y fifteen )ays, or 'ntil F'ly 1E, 2413, 0it(in 0(ic( to lea/e t(e lease) a,artment
on t(e %ro'n) t(at Ric;y (a) not $een ,ayin% (is rental for t0o mont(s alrea)y. In (is
)efense, Ric;y state) t(at e/ery mont(, >eor%e.s collector 0ent to t(e (o'se of Ric;y an)
collecte) t(e rents, an) iss'e) a recei,t t(erefor. Lor t(e ,ast t0o mont(s, (o0e/er,
Ric;y 0as rea)y an) 0illin% to ,ay t(e rents an) 0aite) for t(e collector as 's'al. +'t t(e
collector ne/er s(o0e) ',. Hence, Ric;y.s rental arrears amo'nte) to t0o mont(s. 1oes
Ric;y.s ar%'ment (a/e le%al $asis6 Art. 12E1 (3r) ,ar."
7. +en o0es F')e PE4,444 0it( 2EG interest. #n t(e )'e )ate, +en ten)ers
,ayment to F')e $'t only for PE4,444 0(en it s(o'l) $e P!2,E44. Ho0 0ill yo' a,,ly t(e
,ayment6 Art. 12E3
*** END ***
50