Time, manner & place the payment should be made Time

When payment should be made?

When may an obligation be demanded? -on the due date

When can we say that an obligation has become due?

-The moment the creditor acquires the right to demand the obligation -When that time comes, that is the DUE DATE

If the due date falls on a Sunday or a holiday?

-The general rule is that obligation must be paid on the date if fells due Exception

When there is a law that provides otherwise Example: Negotiable Instrument Law

-falls on a Sunday or Holiday, that instrument must be presented on the succeeding day

-if it does not fall under any of the obligation, the obligation must be paid on that day even if it is on a Sunday or a holiday

-payment must be paid on a reasonable hour of a business hour What do you understand with the manner of payment?

Can payment be made in any currency? RA 529 Uniform Currency Act

-provides that any stipulation in a contract which authorizes the creditor to demand payment in gold or currency other than Philippine legal tender is void

-only the stipulation is void, said obligation must be discharged in Philippine legal tender or currency

What is Legal Tender?

-That currency which when offered in payment of a debt, the creditor cannot refuse to accept

-Whether public or private

Is the Uniform Currency Act still in effect? -It has been repealed by RA 8183

What does RA 8183 provide? -Payment on monetary

-When the parties have so agreed

-In the absence of an agreement, the debt must always be discharged in legal tender -so that the debtor cannot compel the creditor to accept payment in other currency, or that the creditor cannot demand payment from the debtor in other currency

When may demand be made? -the proper place of payment

-the law is silent in the place of demand, but in as much as you make a demand, you expect to be paid, then it must be made in the proper place of payment

Where is the proper place of payment? 1st _Rule

Follow the terms of the contract

If the contract is silent on the proper place of payment 2nd _Rule

Make a distinction between specific & generic thing If Specific

Then in the place where the thing is located at the time of the constitution of the contract.

If the thing is in motion or transit, then in the domicile of the debtor If Generic

The proper place of payment will be the domicile of the debtor -the law says domicile and not residence

What is the difference?

-Domicile is always permanent; residence may be temporary or permanent -Domicile is a place where a person may be absent from but has the intention of returning to

What is the effect of changing one’s domicile?

-If an obligation is payable in the debtor’s domicile, the proper place will be the new domicile of the debtor, but he becomes liable to the creditor for all the expenses incurred in tracking down his whereabouts

20 February 2012 What are the Characteristics of Payment

1. Identity of Payment

-the thing that is offered must be the same as the thing due Exception

A. Dation in Payment- the property is alienated to the creditor in satisfaction of a debt in money

In Dation in Payment, is the debtor free to give everything he wants?

So that if the thing valued is not equal to the thing due, it cannot be made? -The creditor cannot be compelled to receive what is not due

-The creditor’s consent is indispensable

-In Dation in Payment, there must ALWAYS be consent of the creditor

-There can never be Dation in Payment without the consent of the creditor because the debtor offers a different thing than what is due

Alienation= sale

-the act of selling property to the creditor in settlement of a debt in money

Is Dation in Payment applicable only to monetary obligation? If there is no money involved, is Dation in Payment still available?

-YES

-Despite the fact the law’s definition on Dation in Payment, even if the obligation does not involve payment of money, Dation in Payment is still

available to goods to goods, although that is not a SALE anymore but BARTER, but BARTER is still governed by the Law on Sale

Debtor= seller Creditor= buyer

Dation in Payment will be governed by the Law on Sale

What is the remedy of the creditor (buyer) in case of eviction? -remedy will be under the Law on Sale

Dation in Payment is one of the special form of payment Give me another form of payment

Application of Payment

-The designation of the payment to which the debtor wants it to apply When does it take place?

-Application of Payment is proper when the debtor has several debts of the same kind due in favor of the same creditor but the payment of the debtor is not enough

Is that absolutely dependent on the debtor?

-Primarily the right to make an Application of Payment is vested by law to the debtor, but if he does not make an Application of Payment, the creditor may suggest how he has applied the payment in which case, when the debtor agrees, the obligation is extinguished.

If both did not apply

-The payment shall then be applied in accordance with law

What do you understand with “the most burdensome to the debtor”? What if all are of the same burden?

-It will be divided to as many debts equally Basis of Law- EQUAL DISTRIBUTION

When is an Application of Payment made? -at the time of payment

Is there an absolute right on the part of the debtor to choose how the payment should be made?

-It is not an absolute right because the exercise of this right is subject to limitations by law

What are the LIMITATIONS?

Art. 1254 Legal application of payment of the law

1. The debtor cannot make an application of payment in such a manner as to compel the creditor to accept partial payment, so as not violate

integrity of payment as to indivisibility

2. It should be applied to interest first, should there be excess, such excess can be applied to the principal

3. It cannot be applied to obligations that are not yet due or liquidated 4. If the parties have stipulated on how payment should be applied

Payment by Cession

-cession means to cede, to surrender, to give to another

What is it that the debtor is ceding when he makes a payment in cession? -Only the right to sell, but insofar as the property is concerned, it is not being ceded to the creditor, ownership remains to the debtor.

Why is it necessary?

-because with out it, the creditors will not have the power to sell, what does not belong to them cannot be sold by them

In making a Payment by Cession, what does the law require?

-The consent of all the creditors is necessary, there must be unanimity What will be the remedy of the debtor if one creditor objects?

-The remedy is for the debtor to resort to Insolvency Proceedings Insolvency may take place in two ways

Voluntary- it is the debtor who is the one who goes to court and asks the court to declare him insolent

Involuntary- it is not the debtor but any one of his creditors who goes to court and asks the court to declare the debtor insolvent

Tender of Payment & Consignation

-The only form of payment that consists of two acts -One is a prelude to the other

Tender of Payment- offering of payment -always precede the Consignation

-it does not extinguish an obligation because it is merely an offer Can Consignation be made without Tender of Payment?

-Yes

Five Insatances

1. When the creditor is absent or unknown or does not appear at the place of payment

2. When he is incapacitated to receive the payment at the time it is due 3. When without just cause, he refuses to give a receipt

4. When two or more persons claim the same right to collect 5. When the title of the obligation has been lost

What kind of proceeding is Consignation?

1.Judicial – when consignation is made pursuant to the Civil Code 2. Extra Judicial- when consignation is made pursuant to BP 25 Is that a matter of choice on the part of the debtor?

-Consignation under BP 25 is allowed only when the things due are rentals in arrears

If the debtor resorted to Judicial Consignation, is deposit to the court necessary? -

-1. The obligation is extinguished when the creditor claims the thing due that is deposited to the court

-2. When the court makes a declaration that consignation was properly done, the debtor will be discharged of the obligation

If the debtor consigns the thing due to the court, and the creditor wants to claim the thing, can the debtor prevent the creditor from claiming the thing due?

-the debtor can prevent the creditor if the creditor is withdrawing the thing with reservation, meaning, that the thing consigned is not equal to extinguishment of obligation

=WITHDRAWAL with RESERVATION

-the debtor can ask the court to settle first how much is the total amount due After consigning, can the debtor be prevented by the creditor to withdraw? -Yes he can, by claiming the thing consigned

-because the debtor, pending the consignation, still owns the thing When is consignation not proper?

-The Court in Vda de Quirino v. P said that Consignation is not proper in two things, if what is involved is the right of redemption or right of option.

-Because there is no debt due, there is nothing to pay, consignation will never lie -What is involve in those two instances is merely the exercise of a right

-Consignation is a form of payment Where should it be made?

-must always be made in the proper place of payment

-in as much as it is a form of payment, it is subject to the rules of payment What will be the effect if it was made in the wrong place?

21 February 2012 Characteristics of Payment

-these has nothing to do with the validity of payment 1. Integrity of Payment

Exceptions:

a. Substantial Performance Is there a total performance? -There is none

Is there a claim for damages? -There is

Why?

-Because of the absence of the total performance, the debtor is not relieved of the entire obligation

b. Estoppel

Is there a total performance? -There is none

Is there a claim for damages? -There is none

Why?

-Because it is marked by Estoppel 2. Identity of Payment

a. Dation in Payment- consent of creditor is always necessary because the debtor is giving something different from the thing due

Should the creditor accept the Dation in Payment, what would be the effect to the obligations?

-Dation in Payment will not always result to the extinguishment of the obligation,

because the value of the thing offered may be less than the thing due. It depends on the agreement of the parties.

3. Indivisibility