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Activity 8 Oblicon

Payment constitutes the delivery of money, performance of an obligation, or fulfillment of a debt in any manner. The payor is the debtor obligated to pay, while the payee is the creditor entitled to receive payment. Payment can take various forms, including cash, property, performance of an act, or special types of payment like payment by cession where the debtor transfers all property to the creditor. The manner, place, currency, and expenses associated with payment are also outlined.

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35 views4 pages

Activity 8 Oblicon

Payment constitutes the delivery of money, performance of an obligation, or fulfillment of a debt in any manner. The payor is the debtor obligated to pay, while the payee is the creditor entitled to receive payment. Payment can take various forms, including cash, property, performance of an act, or special types of payment like payment by cession where the debtor transfers all property to the creditor. The manner, place, currency, and expenses associated with payment are also outlined.

Uploaded by

Ma. Chrisdel Mendez
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EXTINGUISHMENT OF OBLIGATIONS

Payment or performance

a. What constitutes payment


As stated in the Article 1232, payment means not only the delivery of
money but also the performance, in any other manner, of an obligation. Payment refers
to a cash, a thing, and a fulfillment and non-fulfillment of an act or performance. In law,
performance of the obligation and payment is the same since they are both allowed to
be an object of the prestation.
It is constituted by the payor and payee, the object, the cause, the mode
or form, the location where the obligation must be fulfilled, the imputation of expenses,
and other special parts which acts as an element in order to determine a payment.

b. Payor
The payor is the person who is obliged to pay his or her obligation and is
synonymous to a debtor since they considered as a legal person who is held
accountable to fulfill the obligation in an agreement. For example: First, A is obliged to
pay B for her 5000 php debt. In this situation, A is the payor since he or she will pay B
money. Second, in exchange of the car ride from Pampanga to Rizal, K will paint Y’s
kitchen. Since K is bound to fulfill his obligation to paint Y’s kitchen he or she is
considered as a payor.

c. Payee
The payee is the person who will receive the payment or performance
indicated in the obligation and is synonymous to a creditor since he or she is legally
allowed to accept the payment. For example: First, A is obliged to pay B for her 5000
php debt. In this situation, B is the payee since he or she will receive money from A.
Second, in exchange of the car ride from Pampanga to Rizal, K will paint Y’s kitchen.
Since Y is bound to acquire K’s performance of his obligation to paint Y’s kitchen he or
she is considered as a payee.

d. Manner/mode of payment
The payment is equivalent to the performance of the obligation, it is a mode to
extinguish an existing obligation. The payment must be given to the persons involved in
the contract, to the assignee, and to the authorized personnel to receive the obligation.
The payment can be in cash, object, fulfillment or non-fulfillment of a thing. However, in
some cases, special forms of payment are used: dation in payment, applications of
payments, payment by cession, and tender of payment and consignation, in order to
satisfy the debt especially when the debtor is incapable of paying the whole obligation in
full.

e. Special forms of payment


Payment by cession
Payment by cession a special way of payment whereas all of the
properties owned by the payor or debtor will be given to the creditor in order to
compensate for the debt. The creditor may sell the property in order to
accumulate proceeds that will satisfy the amount. However, unless it is stated in
the agreement, the creditor will not be considered as the legal owner of the
property. This type of payment can be applied when there is more than one
creditor, the debtor is not capable of paying the debt, all of the property of the
debtor will be included, and if the creditor agreed with this method of paying the
credit.

Tender of payment and consignation


Tender of payment is when a debtor offers an amount or a thing
that he or she possesses which can be delivered to the creditor when the offer
has been accepted. If is has been performed and the creditor refused to accept
the payment, the debtor can be freed from his or her obligation through the
means of consignation, or paying the amount due.
The consignation may have an equivalent effect as to when the
creditor is not present in the place where the payment will be made, when the
creditor is incapable of acquiring the payment, he or she refused to provide a
receipt, there are more than one person who will collect the obligation, and if the
title of the obligation has been misplaced or gone.
f. Application of payment
If a person is indebted with the same kind and it favors the creditor, the
payment must be specified during the fulfillment of the obligation. The debtor has the
option to choose what obligation due will be paid which must be done during the
payment. Here are some requirements to deem the payment valid: In the part of the
debtor, there must be one debtor and creditor, the debtor must have more than one
debt that has the same kind, the debt must be due and can be demanded, and the
payment must not be able to satisfy the debt of the payor. In the part of the creditor, he
or she must not designate a specific time to pay the debt, the payee must issue a
receipt, and the debtor must know that the payment has been applied to a certain debt.
However, there are some limitations: the debtor cannot choose the
obligation that is not due at the moment the payment has been done, the term has not
yet arrived, there is an agreement between the parties, the debtor cannot pay the
interest without paying the principal duty, and it cannot be applied to the debt that has a
higher amount than the other debt especially when it can satisfy the due completely.

g. Currency
As stated in the Article 1249, the payments of debts in money shall be
made 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. It is not applicable if the contract
has been established to pay in Philippine Peso since the “currency stipulated” describes
the other currency that differs from the available current in the Philippines. It requires
the obligations that is deemed to be fulfilled in the Philippines to use the PH Peso
currency in the agreement or it will be considered as null and void, it will take no effect,
and it is against the policy.

h. Place of payment
As emphasized in the Article 1251, payment shall be made in the
place designated in the obligation. There being no express stipulation and if the
undertaking is to deliver a determinate thing, the payment shall be made wherever
the thing might be at the moment the obligation was constituted.

However, if there is a place stated in the stipulation, the obligation


must be performed in that place. If there is no stipulation and the debtor is obliged to
deliver a specific thing, the obligation must be completed in the place where the
object is located. If there is no stipulation and the object to be delivered is common
or generic, the place where the payment will be made is in the debtor’s domicile.
Domicile is the residence of a person.

i. Expenses/costs in payment
As stated in Article 1247, unless it is otherwise stipulated, the extrajudicial
expenses required by the payment shall be for the account of the debtor. With regard to
judicial costs, the Rules of Court shall govern.

The expenses that have been accumulated by the debtor without the
authorization of the court will be shouldered by the debtor since the obligation is done
when the payment has been received by the creditor. However, if there is a contract or
agreement between the parties with regards to the expenses that will be incurred, the
agreement will be followed. Article 1247, is not applicable to the expenses gained by the
creditor in acquiring the payment in the debtor’s domicile.

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