CAUSES OF EXTINGUISHMENT OF OBLIGATIONS

PAYMENT or PERFORMANCE

Q117. A pays the Php200.00 transport fare of B, without B's knowledge or against B's will. Later, A discovers that B is entitled to 50% discount or should pay only Php100.00. How much can A recover from B? Why?

Q118. Can A recover from the transport company the other half paid by him on behalf of B? Why?

Article 1237 - Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty or penalty.

Q119. A borrows Php1 Million from B, secured by a mortgage of A's land in favor of B. Without the knowledge of A, C pays B Php1 Million for A's debt. How much can C reimburse from A

AYMENT or PERFORMANCE

Q120. If A cannot reimburse C, may C foreclose the mortgage on A's land? Why?

Article 1238 - Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a donation, which requires the debtor's consent. But the payment in any case is valid as to the creditor who accepted it.

Q121. A owes B Php 1 Million. In behalf of A and against the consent of A, C pays Php 1 Million to B although C has previously told A that C does not intend to be reimbursed. B accepts the payment of C. Is A's obligation towards B already extinguished? Why?

Q122. May C recover from A, although originally C did not intend to be reimbursed by A? Why?

PAYMENT or PERFORMANCE

- Payment shall be made to the persons in whose favor the obligation has been constituted, or his successor-in-interest, or any person authorized to receive it. (Art. 1240)

Q123. A owes Php1 Million to B payable on or before 01 June 2021. To whom should A pay the debt?

Q124. Assuming that on 02 May 2021, without the loan having been paid yet by A, B dies leaving his two children B1 and B2. To whom should A pay?

Q125. Will your answer be the same if B instructs in his last will and testament that B2 shall be authorized to received all payments from B's debtor/s?

PAYMENT or PERFORMANCE

Article 1240 - Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall NOT be valid.

Q126. A owes Php1 Million to B payable in August 2020. In turn, B owes Php500,000 to C payable in March 2020. When B fails to pay his debt to C in March 2020, C files a suit against B. B claims insolvency but admits the credit which he has over A. Thus, A is summoned by the court and asked to retain the debt in the meantime that the suit is being heard. On August 2020, without the knowledge of the court, A pays his Php1 Million debt to B. Is the payment valid? Why?

Article 1244 - The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable that that which is due.

PAYMENT or PERFORMANCE

Article 1249 (first paragraph) - The payment of debts in money shall be in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines.

Q127. What is dation en payment?

A127. It is that mode of extinguishing an obligation whereby the debtor alienates, in favor of the creditor, his property for the satisfaction of his monetary debt. It is also known as dacion en pago, datio in solidum, and adjudicacion en pago.

Example:

A owes Php1 Million to B. With B's consent, A gives B a diamond ring worth Php1 Million. This is a case of dation en payment.

PAYMENT or PERFORMANCE

Article 1252 - He who has various debts of the same kind in favor or one and the same creditor, may declare at the time of making the payment, to which of them the same must be applied. Unless the same parties so stipulate, or when the application of payment is made by the party for whose benefit the term has been constituted, application shall not be made as to debts which are not yet due.

If the debtor accepts from the creditor a receipt in which an application of the payment is made, the former cannot complain of the same, unless there is a cause for invalidating the contract.

Article 1254 - When payment cannot be applied in accordance with the preceding rules, or if the application cannot be inferred from other circumstances, the debt which is most onerous to the debtor, among those due, shall be deemed to have been satisfied.

If the debts due are of the same nature and burden, the payment shall be applied to all of them proportionately.

PAYMENT or PERFORMANCE

Samples of more burdensome (more onerous) debts:

a. Older debts as against current debts.

b. Interest-bearing debts even if the non-interest-bearing debt is older.

c. Between two interest-bearing debts, that which charges the higher interest is more burdensome.

d. Debts secured by mortgage or by pledge.

e. Debts with a penalty clause.

Q128. If one debt is Php1 Million and the other is Php600,000, and the debtor, without making any application of payment, gives Php400,000. How should the payment be applied?