APPLICATION OF PAYMENT a) Definition Application of Payment is the designation of the debt to which should be applied a payment made by a debtor who owes several debtors in favor of the same creditor.
b) Requisites b.1) Application of Payment by Debtor (Generally) (1) (") (#) (&)
There must must be two or more debts debts of of the same same ind! ind! There must must be only one one debtor debtor and only one one creditor! creditor! All of the debts debts must be due $unless $unless the the contrary contrary has been stipula stipulated%! ted%! and The payment payment is insuffici insufficient ent to e'tingui e'tinguish sh all the the debts.
b.") Application of Payment by reditor ('ception) (1) The debtor debtor did not mae mae any designati designation on on which which debt should should be paid when when he made the the payment! payment! (") The creditor creditor issued issued a receipt receipt e'pressing e'pressing the applic application ation of the the payment payment to a particular particular debt! and (#) The debtor debtor assented assented to the application application made by the creditor creditor by accepting accepting the receipt receipt without without any ob*ection ob*ection
b) Rules (a) The right to make application application of payment payment BELONGS PRIMRIL! PRIMRIL! to the "EBTOR (#) If the "R $ILE" $ILE" to e%erci&e e%erci&e the right' right' the R may e%erci& e%erci&e e it B! ISSING ISSING REEIPT REEIPT *herei *herein n the "EBT "EBT PI" i& IN"ITE"+ (c) If the "R ha& EPTE" the receipt i&&,e- #y the R .IT/OT OB0ETION' then the P!MENT i& "EEME" PPLIE" to the &pecific in-e#te-ne&& mentione- in the receipt+ (d) The D+ A,,-T A,,-T APP/ APP/ the paymen paymentt to an 0,20DA 0,20DATD TD D3T D3T or D04 D04 0,55 (d.1) there is a contrary stipulation4 or (d.") he is given the benefit of the period or term (e)
f the + is G6, T7 3,8T 3,8T -8 T7 P+-D P+-D or term4 which has not yet arrived4 arrived4 an applicatio application n of payment A,,-T A,,-T 3 9AD by the D+
(f)
f there is a specific specific agreemen agreementt as to which which debts shall shall be paid paid first4 the D+ D+ cannot vary vary the agreement agreement without without consent consent of the +.
(g) If there i& a principal principal o#ligation o#ligation *hich *hich #ear& intere&t' intere&t' the "R cannot pay the intere&t& *itho,t *itho,t fir&t paying the principal principal (rt+ 1234' N)+ (h) pplic pplica#i a#ilit lity y of rt+ rt+ 1235' 1235' N6 N6 (h+1) .hen application of payment NNOT BE M"E in accor-ance *ith rt+ 1232 an- 12347 or (h+2) .hen the application of payment NNOT BE IN$ERRE" from other circ,m&tance& the the "EBT "EBT *hic *hich h i& MOST ONERO ONEROS S to the the "R' "R' amon among g tho& tho&e e -,e' -,e' S/LL S/LL BE "EEME" "EEME" to ha8e ha8e #een STIS$IE"+
RULE:
(h+4) .hen the "EBTS -,e RE O$ T/E SME NTRE an- BR"EN RULE: the
P!MENT &hall #e PPLIE" to LL O$ T/EM 9PROPORTIONTEL!:
DATION IN PAYMENT (DACION EN PAGO) a) Definition
Dation in Payment is a special form of payment whereby property is alienated by the debtor to the creditor in satisfaction of a monetary debt. According to 9anresa4 it is the transmission of the ownership of a thing by the debtor to the creditor an accepted e:uivalent of the performance of an obligation.
b) Requisites (1) (") (#) (&) (;)
'istence of a money obligation! Alienation to the creditor of a property by the debtor with consent of the former! and t should not pre*udice other creditors! The debtor should not be *udicially declared insolvent! and The essential re:uisites of a contract of sale must concur.
b) Rules: (a) The aw on 5ales shall govern dation in payment (b) The dation in payment e'tinguishes the whole obligation $unless otherwise provided by the contracting parties% (c) f the + is evicted from the property4 the original obligation4 which was terminated4 is not ipso *ure reinstated. (d) f the + is evicted from the property4 the + can only recover the benefits provided under Art. 1;;;4 to wit< a. b. c. d. e.
The return of the value which the thing sold had at the time of the eviction4 be it greater than or less than the price of sale! The income or fruits4 if he has ordered to deliver them to the party who won the suit against him! The cost of the suit which caused the eviction4 and in proper case4 those of the suit brought against the vendor for warranty! The e'penses of the contract4 if the vendee has paid them! The damages and interests4 and ornamental e'penses if the sale was made in bad faith.
PAYMENT Y CE!!ION a) Definition Payment by ession is a special form of payment whereby the debtor cedes his property to his creditors so the latter may sell the same and the proceeds reali=ed shall be applied to the debts of the debtor.
b) Requisites (1) (") (#) (&) (;)
There is plurality of debts! There is complete or partial insolvency on the part of the debtor! There is at least two creditors! There is acceptance of the cession or assignment by the creditors! and Property ceded or assigned is not e'empt from e'ecution.
b) Rules: GENERAL R"LE: If there i& a ;LI" ESSION' the "R i& RELESE" from RESPONSIBILIT! P TO T/E E
E#CEPTION: ,nle&& there i& a STIPLTION TO T/E ONTRR! EFFECT OF CE!!ION: The +s D- ,-T 3-9 ->,+5! they are merely A55G,5 with authority to sell
TENDER OF PAYMENT AND CON!IGNATION a) Definition Tender of Payment is a manifestation made by the debtor to the creditor of his decision to comply immediately with his obligation with a demand that the creditor accept the same.
onsignation refers to the act of depositing the ob*ect of the obligation in a competent court $in accordance with the rules prescribed by law% after refusal or inability of the creditor to accept the tender of payment.
b) Requisites b.1) Tender of Payment (1) t must be made before the act of consignation! (") t must be unconditional! and (#) The full amount including the interests due must have been offered in legal tender. b.") onsignation (1) (") (#) (&) (;) (?)
There is an e'isting valid debt which is already due! There is a prior valid tender of payment to the creditor save when tender is dispensable! There is refusal to accept the payment without any valid reason on the part of the creditor! There is a prior notice of consignation given to the persons interested in the fulfillment of the obligation! That the amount or the thing due is deposited with the court or competent authority! and 5ubse:uent notice of consignation is given to the persons interested in the fulfillment of the obligation.
b) Rules: (a) ases wherein tender of payment is not necessary (Art. 1";?4 "nd par4 ,) (a.1) >hen the + is A35,T or 0,@,->,4 or D-5 ,-T APPA+ at the place of payment! (a.") >hen the + is ,APATATD to receive the payment at the time it is due! (a.#) >hen4 >T7-0T 05T A054 the + +8055 to G6 A +PT! (a.&) >hen T>- or 9-+ persons claim the same right to collect! and (a.;) >hen the TT of the -3GAT-, has been -5T
(b) onse:uences of the Deposit to a ourt (b.1) the amount or property is placed in Bcustodia legisC (b.") the property cannot be alienated or disposed without *udicial approval! (b.#) if the property is perishable4 the court may order its sale! (b.&) the property is e'empted from attachment or e'ecution! (b.;) when the property consigned consists of real estate which cannot actually be placed in the hands of the court4 the D+ becomes the agent of the court.
(c) -nce the consignation has been duly effected4 there is ,- A0T-9AT A,AT-, of the obligation. A 0DA -+D+ of A,AT-, -8 T7 -3GAT0-, upon motion of duly filed by the debtor is necessary. (d) >hen the 8ali-ity of con&ignation ha& #een affirme- by the court4 the -,5G,AT-, shall have a +T+-AT6 88T4 that is4 the obligation is D9D PAD 8+-9 T7 9-9,T the amount or thing due has been actually placed at the disposal of the court. (e) f the con&ignation i& not properly ma-e4 the -3GAT-, 5TA/5. (f)
f the con&ignation ha& #een -i&mi&&e- #y the co,rt for any 8ali- rea&on4 the attempted consignation will have ,8A6-+A3 88T upon the D+.
(g) The e'penses of consignation4 when properly made4 shall be charged against the +.
