XII.

EXTINGUISHMENT OF OBLIGATIONS

12.a) PAYMENT DELIVERY OF MONEY OR PERFORMANCE OF AN OBLIGATION (ART. 1232)

- ACCEPTANCE OF THE CREDITOR IS REQUIIRED FOR VALIDITY. GENERAL RULE DEBTOR HAS BURDEN OF PROVING.

WHEN PAYMENT IS PRESUMED: EXCEPTIONS: (a) RECEIPT OF PRINCIPAL W/O RESERVATION AS TO INTEREST (ART. 1176).
(b) RECEIPT OF LATER INSTALLMENT W/O RESERVATION AS TO PRIOR INSTALLMENT (ART. 1176).

PERSONS AUTHORIZED TO MAKE PAYMENT: DHPIS (i) DEBTOR OR HIS AGENT. (ii) DEBTORS HEIR OR SUCCESSOR IN INTEREST.

(iii) PERSON INTERESTED IN FULFILLMENT OF OBLIGATION (CO-DEBTOR, GUARANTOR) W/ OR W/O DEBTORS CONSENT OR KNOWLEDGE (ART. 1302).

(iv) A THIRD PERSON/ STRANGER (ART. 1236, PAR.1)

RIGHTS OF THIRD PERSON/ STRANGER WHO PAYS:

(i) W/O KNOWLEDGE OF DEBTOR CAN RECOVER IN SO FAR AS PAYMENT HAS BEEN BENEFICIAL TO DEBTOR. (ii) W/ KNOWLEDGE OF DEBTOR CAN DEMAND WHAT WAS PAID.

PAYMENT CAN BE MADE TO: SPANC

(i) CREDITOR (ii) SUCCESSOR IN INTEREST OF CREDITOR (iii) PERSON AUTHORIZED TO RECEIVE PAYMENT (ART. 1241). (iv) PERSON NOT AUTHORIZED BUT CREDITOR WAS BENEFITTED. (v) PERSON IN POSSESSION OF CREDIT AND PAYMENT MADE IN GOOD FAITH (ART. 1242)

IN WHAT CURRENCY SHOULD PAYMENT BE MADE?R.A. 529, UNIFORM CURRENCY ACT REPEALED BY R.A. 8183 WHICH PROVIDES THAT ALL MONETARY OBLIGATIONS SHALL BE SETTLED IN PHILIPPINE CURRENCY BUT ALLOWS PARTIES TO AGREE THAT IT BE PAID IN ANOTHER CURRENCY AT THE TIME OF PAYMENT.

RATE? EXTRAORDINARY INFLATION/ DEFLATION, VALUE AT TIME OF ESTABLISHMENT OF OBLI. AS DECLARED BY COMPETENT AUTHORITIES.

LEGAL TENDER SEC. 52, RA 7653 NEW CENTRAL BANK ACT CEBU INTL. FINANCE VS. CA, G.R. NO. 123031. October 12, 1999 - In a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check. A check is not a legal tender, and therefore cannot constitute valid tender of payment.

In the case of Philippine Airlines, Inc. vs. Court of Appeals, this Court held: XXX a negotiable instrument is only a substitute for money and not money, the delivery X X X does not, by itself, operate as payment (citation omitted). A check, whether a managers check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment X X X (Art. 1249, Civil Code, par. 3).

SPECIAL FORMS OF PAYMENT: 1. APPLICATION OF PAYMENT ART. 1252 REQUISITES: (i) SEVERAL DEBTS ARE OWED. (ii) THEY ARE OWED BY THE SAME DEBTOR TO SAME CREDITOR. (iii) DEBTS ARE OF THE SAME KIND. (iv) DEBTS ARE DUE. (v) PAYMENT NOT SUFFICIENT TO COVER ALL DEBTS.

HOW IS APPLICATION MADE?

1.

BY DESIGNATION OF DEBTOR AT TIME OF PAYMENT. (ART. 1252, PAR. 1).

2. APPLICATION BY THE CREDITOR 3. BY OPERATION OF LAW TO THE MOST ONEROUS (ART. 1254) OR IF OF THE SAME NATURE AND BURDEN, SHALL BE APPLIED TO ALL IN PROPORTION.

2. PAYMENT BY CESSION- ART. 1255 REQUISITES: (i) PLURALITY OF DEBTS. (ii) PLURALITY OF CREDITORS. (iii) PARTIAL INSOLVENCY OF DEBTOR. (iv) ABANDONMENT OF DEBTORS PROPERTIES FOR THE BENEFIT OF CREDITORS. (v) ACCEPTANCE BY CREDITORS. NOTE: LIBERATES DEBTOR UP TO THE AMOUNT OF NET PROCEEDS OF THE SALE.

3. DACION EN PAGO ART. 1245, GOVERNED BY LAW ON SALES. DACION EN PAGO PACTUM COMMISORIUM

DACION EN PAGO PAYMENT BY CESSION (i) OWNERSHIP (ii) NUMBER OF CREDITORS (iii) INSOLVENCY (iv) NOVATORY

4.TENDER OF PAYMENT & CONSIGNATION ART. 1256 - RACIT GEN. RULE : NO TENDER OF PAYMENT, NO VALID CONSIGNATION. EXCEPTIONS: (i) CREDITOR IS ABSENT OR UNKNOWN. (ii) CREDITOR INCAPACITATED TO RECEIVE PAYMENT.

(iii) W/O JUST CAUSE, CREDITOR REFUSES TO ISSUE RECEIPT. (iv) TWO OR MORE PERSONS CLAIM SAME RIGHT TO COLLECT. (v) TITLE OF OBLIGATION HAS BEEN LOST.

RA 9653 NEW RENT CONTROL LAW SEC. 9 (b) XXX That in the case of refusal by the lessor to accept payment XXX, the lessee may either deposit, by way of consignation, the amount in court, or with the city or municipal treasurer, XXX, or barangay chairman, or in a bank in the name of and with notice to the lessor, within one (1) month after the refusal of the lessor to accept payment. The lessee shall thereafter deposit the rent within ten (10) days of every current month. Failure to deposit the rent for three (3) months shall constitute a ground for ejectment.XXX.

12.b) LOSS ART. 1262

NO CONCURRENT FAULT ON PART OF DEBTOR.

GENERIC THING ART. 1263

PRESTATION TO DO LEGALLY/PHYSICALLY IMPOSSIBLE W/O FAULT OF DEBTOR ART. 1266.

THEORY OF IMPREVISIBILITY (ART. 1267) SERVICE HAS BECOME SO DIFFICULT BEYOND THE CONTEMPLATION OF ALL PARTIES.

12.c) CONDONATION OR REMISSION

FORMALITY FORMS OF DONATION IF AN EXPRESS CONDONATION.

REQUISITES: (i) GRATUITOUS (ii) ACCEPTED BY OBLIGOR (iii) OBLIGATION IS DEMANDABLE

12.d) CONFUSION OR MERGER ART. 1275

REQUISITES: (i) MERGER OF THE CHARACTERS OF THE CREDITOR AND DEBTOR IN THE SAME PERSON. (ii) MUST TAKE PLACE IN THE PERSON OF PRINCIPAL CREDITOR OR DEBTOR. (iii) MUST BE COMPLETE AND DEFINITE. CONFUSION DOES NOT EXTINGUISH A JOINT OBLIGATION ART. 1277

12.e) COMPENSATION ART. 1278

REQUISITES OF LEGAL COMPENSATION: (ART. 1279) (i) BOTH ARE PRINCIPAL DEBTORS AND PRINCIPAL CREDITORS OF EACH OTHER.
(ii) BOTH DEBTS ARE SUM OF MONEY OR IF CONSUMABLE, SAME KIND/QUALITY (FUNGIBLE)

(iii) BOTH DEBTS ARE DUE.

(iv) BOTH ARE LIQUIDATED AND DEMANDABLE. LIQUIDATED DETERMINED AND CERTAIN. (v) NEITHER BE SUBJECT TO RETENTION OR CONTROVERSY COMMENCED BY THIRD PERSON. CODE: PriMoDLS

NOTE: TAKES EFFECT BY OPERATION OF LAW, EVEN IF PARTIES ARE NOT AWARE OF IT (ART. 1290).

CASES WHEN COMPENSATION IS PROHIBITED:

1. OBLIGATIONS ARISING FROM DEPOSIT; 2. COMMODATUM; 3. SUPPORT BY GRATUITOUS TITLE; 4. LIABILITY ARISING FROM DELICT. (ARTS. 1287, 1288) 5. DAMAGE CAUSED TO THE PARTNERSHIP BY A PARTNER (ART. 1794). 6. OBLIGATIONS IN FAVOR OF GOVERNMENT LIKE TAXES.

EFFECTS ON COMPENSATION IF CREDITOR ASSIGNS HIS CREDIT TO THIRD PERSON (ART. 1285)

1.

DEBTOR CONSENTED TO THE ASSIGNMENT DEBTOR CANNOT SET UP COMPENSATION UNLESS HE RESERVES THE RIGHT AT THE TIME HE GAVE CONSENT. DEBTOR DID NOT CONSENT - DEBTOR CAN SET UP COMPENSATION PREVIOUS TO ASSIGNMENT.
3. MADE WITHOUT KNOWLEDGE OF DEBTOR MAY SET UP COMPENSATION PRIOR AND AFTER ASSIGNMENT UNTIL HE HAS KNOWLEDGE.

2.

3.

 12.f) NOVATION ART. 1291

(i) CHANGE OF OBJECT OR PRINCIPAL CONDITION;

(ii) SUBSTITUTION OF DEBTOR; (iii) SUBROGATING THIRD PERSON IN THE RIGHTS OF CREDITOR.

REQUISITES OF NOVATION:

1.

AN OLD VALID OBLIGATION.

2. A NEW VALID OBLIGATION.

3. SUBSTANTIAL DIFFERENCE BETWEEN OLD AND NEW OBLIGATIONS.

4. CAPACITY OF PARTIES. 5. INTENTION TO EXTINGUISH OR MODIFY OLD OBLIGATION.

NOTE: EXTINCTION OF OLD OBLIGATION BE DECLARED IN UNEQUIVOCAL TERMS OR OLD AND NEW OBLIGATIONS BE ON EVERY POINT INCOMPATIBLE. PERSONAL NOVATION: a.) CHANGE OF DEBTORS (a.1) EXPROMISSION- W/O KNOWLEDGE AND CONSENT OF DEBTOR. (a.2) DELEGACION WITH KNOWLEDGE AND CONSENT OF DEBTOR.

NOTE: INSOLVENCY OF NEW DEBTOR REVIVES OLD OBLIGATION IF INSOLVENCY WAS ANTERIOR AND PUBLIC.