PAYMENT; SPECIAL FORMS OF ● OTHERS HAS not been agreed by the man nimo gi accept.

PAYMENT ➥ Arrival of resolutory period parties. ART 1239

ART 1231 The obligation will also be EFFECT OF PAYMENT BY
modes of extinguishing obligations extinguished. WHO SHALL PAY? INCAPACITATED PERSON
● PRIMARY ➥ Death of a party, in personal ● Debtor (or his representative) ● NOT VALID
obligations ⤷ If minor voluntarily pays, he
➥ Payment/Performance personal obligation to do something ● The one who has interest in the cannot recover from someone who
cannot be transmitted to other fulfillment of an obligation has spent or consumed it in good
- Dation in payment/ Dacion en person because of personal - like a guarantor faith.
pago qualification
● Person Stipulated in the ● CREDITOR CANNOT BE
- Application of payments ➥ Compromise contract to make the payment. COMPELLED TO ACCEPT IT
It is a settlement to solve an issue.
- Cession What if a stranger who pays? ART 1240
➥ Fortuitous event TO WHOM SHALL IT BE PAID?
- Tender and Consignation PAYMENT EFFECT OF PAYMENT BY THIRD ● CREDITOR
it also includes other manner of PERSON
➥ Loss performing any kinds of perfomance ● With Debtor’s knowledge and ● SUCCESSOR IN INTEREST
➥ Condonation/Remission to fulfill an obligation. consent - Assignees or transferees
➥ Confusion/Merger ⤷payment is valid
➥ Compensation HOW PAYMENT IS MADE? ⤷Full reimbursement + subrogation ● PERSON AUTHORIZED TO
➥ Novation ● To give (Money) - pwede pa refund si third person RECEIVED PAYMENT
● To give (Thing) niya pwede ka exercise si third - authorized by agreement or by
● SECONDARY ● To do person ra rights ni debtor. law.
➥ Annulment by performing the service
Once a contract is annulled the ● Without Debtor’s knowledge or EFFECT OF PAYMENT TO A
obligation is extinguished. ● Not to do against his will THIRD PERSON
by refraining yourself ⤷Payment is valid ● VALID
➥ Rescission ⤷Beneficial reimbursement only
Cancellation of a contract so the REQUISITES: - he can only claim beneficial ● BENEFIT PRESUMED IN THE
obligation will also extinguished ➜ Complete reimbursement there is no right of FF. CASES:
⤷in good faith subrogation. - If 3rd person acquires Creditor’s
➥ Fulfilment of resolutory condition ⤷Accept with knowledge of rights
The effect will also be incompleteness and without protest ● Without the intention of being
extinguishment of obligation ⤷When partial payment is allowed reimbursed - If creditor ratifies payment to 3rd
- Express stipulation ⤷ Payment is Valid person
➥ Prescription - Divisible obligation ⤷Deemed to be a donation;
if the time has lapsed, you cannot - Share in joint obligation requires acceptance; in any case, - If by creditor’s conduct, debtor
anymore demand for the obligation ➜ In good faith valid insofar as Creditor was led to believe that 3rd person is
but if it is voluntarily fulfilled then ➜ Prestation as agreed upon - this is not a valid donation, maong authorized to receive payment.
pwede gihapon makuha ni creditor - cannot perform obligation which pwede siya ka collect nimo kay wa
 Kung cents pud like 1 cents, 5 ● To do/Not to do
cents, 10 cents, and 25 cents, 100 GENERAL RULE: the value of the - debitor CANNOT SUBSTITUTE
ART 1241 pesos ang max. currency at the time of the another act/forbearance against
EFFECT OF PAYMENT TO PAYMENT BY DELIVERY OF establishment of the obligation. Creditor’s will
INCAPACITATED PERSON COMMERCIAL INSTRUMENTS EXAMPLE: Year 1990 borrowed pero kung mo agree si creditor, ma
● VALID if (Checks, PN, BOE) 100,000. valid but not thru payment but
⤷he has kept the thing delivered - creditor can refuse through novation
⤷ if the payment is beneficial to In the promissory note: 10 years
him ● Not legal tender ang prescriptive period. Novation
- a mode to extinguish obligation by
WHERE TO PAY? ● Creditor cannot be compelled Niya naningil pag year 1999, tapos substituting
● if there is a stipulation - at the to accept sa kani nga year ang value niya sa
place designated 1999 kay 400,000 NOT APPLICAPLE TO:
● Even if accepted, will only ● Facultative obligation
● If none, produce the effects of payment question: pilay ibayad. - one prestation but allows for
⤷ Deliver of determinate thing when: substitution
- “specific” at the time of ⤷ Encashed Answer: 400,000
perfection Ordinary inflation siya kay 9 years ● Cases of dation in payment and
basta pag promise ⤷ Impaired through Creditor’s fault na ang nilabay so dugay na kaayo. novation

⤷ Delivery of indeterminate thing
- “not specific” at the place of the
debtor.
ART 1249
FORM OF PAYMENT
● If there is an agreement - in the
currency stipulated
● If non - in the currency which is
legal tender in the Philippines.
Legal tender
- when the creditor is compelled to
accept the payment.
LIMITATIONS:
kung sinsilyo ang ibayad like 1
peso, 5 peso, and 10 peso coins..
1,000 ang max.
⤷ Creditor is in estoppel or he had
previously promised that he would
accept a check
- ma estop si creditor kung ni ingon
si creditor nga mo accept lagi daw
siyag check.
Stale checks
- ma lapse, kung wala na present
sa bank for payment after 6 months.
ART 1250
EXTRAORDINARY INFLATION OR
DEFLATION - BASIS OF
PAYMENT
NOTE: if ordinary inflation ra gani,
you just pay the value at the time of
payment
ART 1243
INVALID PAYMENT
● Payment made to the creditor
by the debtor after the latter has
been judicially ordered to retain
debt - VOID
NOTE: dapat naay court order
ART 1244
PRESTATION AS AGREED UPON
● To give
- dili pwede ma compel ni debtor si
creditor nga mo dawat og different
thing bisan pa og same ang amount
if willing mo accept si creditor, then
goods pero kung dili then debtor
cannot compel creditor different
thing.
● Waiver by the creditor
SPECIAL FORMS OF PAYMENT
● Dation or dacion en pago
● Payment by cession
● Application of payment
● Tender and consignation
● DATION IN PAYMENT
⤷Property is alienated to the
creditor in satisfaction of a debt in
money
⤷ Concept: payment in kind -
creditor is really buying the property
of the debtor, but the payment is to
be charged against the obligation of
the debtor to creditor
-mo palit unta si creditor sa property
ni debtor, niya kay may utang mans
debtor ni creditor maong dili nalng
mo bayad si creditor.
⤷Governed by: Law on sales
EXAMPLE: ang utang kwarta kay
ilisan og cellphone, ok rani
Dation - naay pre existing debt
Sales - there is no pre existing debt
Dation - Obligation is extinguished
Sale - gives rise to an obligation
Dation - Lesser freedom in
determining the price
Sale - Greater freedom
Dation - giving the object or money
will totally or partially extinguish the
obligation
Sale - payment of the price will as a
rule, extinguish totally the obligation
ART 1246
RULES IF QUALITY NOT
SPECIFIED
● Creditor cannot demand a thing
of superior quality
● debtor cannot deliver a thing of
inferior quality
● The purpose of the obligation
and other circumstances shall be
taken into consideration
ART 1247
COST AND EXPENSES
● EXTRAJUDICIAL EXPENSES
⤷GENERAL RULE: for the account
of the debtor
⤷EXCEPTION: si creditor ang mo
shoulder if it is stipulated
● JUDICIAL COSTS
- governed by the rules of court
ART 1252
● REQUISUTES
⤷there is 1 debtor and 1 creditor
⤷ there are 2 or more debts
⤷ the debts are of the same kind
⤷ all debts are due
EXCEPTIONS:
- when the parties so stipulates
- when application of payment is
made by the party for whose benefit
the term or period has been
constituted
⤷the payment being tendered is
not sufficient to extinguish all
obligations
WHO HAS THE RIGHT TO
CHOOSE
GENERAL RULE: debtor
EXCEPTION: unless otherwise
agreed upon
⤷ EFFECT IF PROPERLY MADE
but creditor refuses to accept -
default in debtor
HOW APPLICATION IS MADE?
● Debtor makes the designation
● If he fails, creditor will indicate
int his receipt
●if none, apply Art. 1254
⤷Most onerous
kung kinsa toy most burdensome
- older debt in case of running
accounts
- interest bearing debt
- debt with penalty
-debt secured by mortgage or
pledge
⤷If same silang nga nag burden,
bahinon proportionate meaning
depende sa amount sa debt.
WHEN APPICATION IS TO BE
MADE?
● At the time of payment
Effect: once made, it cannot be
revoked
EXCEPT with the consent of both
parties
ART 1253
INTEREST FIRST BEFORE
PRINCIPAL
ART 1255
PAYMENT BY CESSION
debtor transfers all the properties
not subject to execution to creditors
so they can sell them and apply the
proceeds to their credits
KINDS:
● LEGAL
governed by insolvency Law;
majority of creditors must consent
● VOLUNTARY
all creditors must agree,
REQUISITES:
⤷ More than one debt
⤷ More than one creditor
⤷ complete or partial insolvency
on the part of the debtor
- no need for declaration of
bankruptcy or insolvency
⤷abandonment of all properties of
the debtor except those exempt
from execution
EFFECTS
● creditors do not become the
owners, they are considered
assignees with power to sell
property
● debtor is released from his
obligation to the extent of the net
proceed of the sale
-kung pila ray halin
 WHEN THE DEBTOR CAN
WITHDRAW THING CONSIGNED
● creditors will collect credits in ● As a matter of right
the order of preference as agreed ⤷before acceptance of the creditor
upon, or else in the order ⤷ Before judicial declaration
established by law - co-debtors, guarantors and
sureties cannot object

● As a matter of privilege
EFFECTS: ⤷After acceptance of the creditor
⤷After judicial declaration
● TENDER WITHOUT - Co-debtors, guarantors and
CONSIGNATION sureties released
⤷ does not extinguish the
obligation ART 1261
⤷ bec. It is only a preparatory act EFFECTS OF WITHDRAWAL
⤷ rule is absolute ● Obligation remains
● Co- debtors, guarantors, and
● CONSIGNATION WITHOUT sureties are released
ART 1256 TENDER ● Creditor loses preference over
TENDER AND CONSIGNATION ⤷ does NOT extinguish the the thing
TENDER obligation
- to offer, ⤷ GENERAL RULE: there must be
-preparatory act an OFFER to pay
- extrajudicial ⤷ Upon refusal without cause,
consign
CONSIGNATION
- to Deposit, EXCEPTION:
- principal act WHEN CONSIGNATION ALONE
- judicial WILL SUFFICE TO EXTNGUISH
OBLIGATION
exception: ● Creditor is unknown
authorizing banks to receive ● Creditor is incapacitated to
consignation but only with respect receive the payment
to money matters ● Creditor refuses
● 2 or more persons claim the
same right to collect
● when the title of the obligation
has been lost