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BSA31KB2
DE OCAMPO, James P. BSA31KB2 Dation in Payment Conveyance of ownership of a thing as an accepted equivalent of performance. Debtor alienates property in payment of a debt in money. The creditor cannot demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. Application of Payment Designation of debt when there are several debts to a creditor. Principally, it is the debtor who can make an application of payment. Failure of the debtor to make an application automatically allows the creditor to make an application. If both parties fail to make an application, the More Burdensome Rule will apply. Payment must be applied first to the interest and whatever balance is left can be credited to the principal. Payment by Cession Debtor abandons property in favor of the creditor so that the latter may dispose of the property in order to apply the same to the debts, Voluntary Cession requires the consent of all the creditors Ex: Pnoy is indebted to Pablo, Diego and Juan in the amount of P10,000. He has more debts than assets. because Pnoy cannot pay them all in full amount, Pnoy may assign to Pablo, Diego, and Juan his properties valued at P6,000 so they can sell the same and the net proceeds applied in payment of his debt. Tender of Payment and Consignation Tender of payment is an act on the part of the debtor to offer to the creditor the thing or amount due. Consignation is the act of depositing the thing due or placing the same under judicial authority when the creditor refuses to accept payment without just cause. Ex: Billy was indebted to Vhong. On maturity of the obligation, Billy offered to pay Vhong the amount of the debt but without justified reason refused to accept the payment. Billy then notified Vhong, thus if Vhong persist in not accepting the payment, Billy will go to the proper court. Proved to the court that there was a valid tender of payment and that, Vhong, the creditor, unjustly refused to accept the payment and that, there was previous notice consignation. The clerk accepted the payment.
DE OCAMPO, James P. BSA31KB2 Ex: Marcus agreed to construct a commercial building for Buddy. The government refused to sign a building permit because the area has been declared as a residential zone. The obligation therefore was extinguished. Loss of a Generic Thing Debtor can still be compelled to deliver a thing of a same kind. Ex: Herbert obliges himself to deliver to Joseph a cow. The cow which Herbert intended to deliver to Joseph died of sickness. In this case, Herberts obligation to deliver a cow is not extinguished because a cow is generic, he is still obliged to deliver any of the species. Loss of a Specific Thing If the loss is due to fortuitous event: a. Due to the fault of the debtor not extinguished b. Not due to the fault of the debtor - extinguished Ex: Herbert obliges himself to deliver to Joseph his dog named Labuyo. Before the agreed date of delivery, Labuyo dies without Herberts fault. In such case, the obligation is extinguished.
DE OCAMPO, James P. BSA31KB2 Confusion in a joint obligation What is extinguished is only the share of that debtor in the obligation. Ex: Gomez and Burgos are jointly indebted to Zamora in the amount of P1000. If merger of confusion takes place between Gomez and Zamora, the Gomezs obligation of P500 will be extinguished. However, the indebtedness of Burgos to Zamora will remain. Confusion in a solidary obligation The obligation is extinguished Ex: In the same example above, if the obligation of Gomez and Burgos is solidary, the indorsement to Gomez extinguishes the entire obligation of P1000. Gomez can demand reimbursement from Burgos.
Section V. - Compensation
Two persons or two parties are debtors and creditors of each other. Kinds of Compensation Legal by operation of law Conventional by agreement of the parties Facultative only one party can claim compensation Judicial declared by court Compensation in General Ex: Mario is indebted to Luigi in the amount of P100. On the other hand, Luigi is also indebted to Mario in the amount of P100. Both debts are due. Compensation will take place. Requisites of Compensation: Obligors must be bound principally Ex: Mario is indebted to Luigi in the amount of P100. In another obligation, Mario is the creditor of Princess in the amount of P100 with Luigi as guarantor. Compensation will not take place because Mario and Luigi are not bound principally to each other. Debt consist in a sum of money Ex: Mario owes Luigi the amount of P100. Luigi is under obligation to Mario to render his professional services. No compensation can take place because the second debt does not consist in a sum of money. Two debts be due Ex: Mario owed Luigi P100 payable on Sept. 1 2013. On the other hand, Luigi owed Mario also P100 due Sept. 15 2013. If on Sept 16 2013, both debts are still unpaid, then compensation can take place. No retention or controversy commenced by third person Ex: Mario is indebted to Luigi. Luigi is also indebted to Mario. Before both debts fall due, Princess secures an order from court notifying Mario not to pay Luigi as she (Princess) claims right to the said amount. Exception to the General Rule
DE OCAMPO, James P. BSA31KB2 The guarantor may set up by way of compensation what the creditor owes his principal debtor Total Compensation Ex: A owed B P1000 due on Sept 1 2013. But B also owed A P1000 due on the same date Partial Compensation Ex: A owed B P1000. But B only owes A P500, then partial payment took place, A is still liable to pay B P500
Meaning of Depositum Is a contract where one person receives a thing belonging to another, with the obligation of safe keeping it and of returning the same. Meaning of Commodatum Is a gratuitous contract where one of the parties to another, something not consumable so that the latter may use the same for a certain time and return it.