CARILLO, PRINCESS JULIA

CALARA, AUREA MADELEINE

NAVIDA, CHARLENE AUBREY

ORTIZ, BHERLINEMAY

SAHAGUN, FRANCESCA BRIELLE

LAW 1101 - Section 20

Group Discussion

1. Is payment same as performance?

Yes, payment and performance under legal terms are basically the same under
Article 1232 of the Civil Code. This article explains that payment means not only
the delivery of money but also the performance, in any other manner, of an
obligation.

In simple terms, payment is not a simple act of transferring cash. It can also
mean an act that is done (or not done) to discharge a duty or an obligation that
one has to meet. This means that if you owe a duty or act for instance delivering
a good or performing a service, fulfilling that duty is also referred to as
“payment.” Thus, in legal terms, both terms mean to meet an obligation—
whether it is monetary, perform an action, or to omit an action.

2. Explain the general rule that "Payment must be complete and regular". Are there
exceptions to the general rule?
In the general rule of the "payment must be complete and regular", it states that if
someone owes money, they must pay the entire amount due on time, with no
delays or partial payments, unless the creditor agrees differently. This is done to
ensure that the loan is paid in whole and on time. There are some exceptions.
For example, if both parties agree to pay in installments, the regulation can be
eased. In the event of an unanticipated hardship or if the law allows it, a debtor
may be granted additional time to pay or be permitted to make lower installments
than originally agreed upon.

3. May the creditor be compelled to accept payment by a third person? Who is a

third person?
No, according to the Article 1236 of the Civil Code, a creditor cannot be
compelled to accept payment or performance from a third person unless there is
an agreement (stipulation). In this context, a third party is anyone with no direct
connection to the debtor or any person with an interest in the obligation. In other
 words, the person is not a holder of legal or financial interest in the obligation.
For example, they are not the guarantors or co-debtors.

4. When a third person pays the obligation, does he acquire any right against the
debtor?
Yes, when a third person pays the obligation of the debtor, they acquire rights of
against the debtor but they do not have full rights against the debtor until the
debtor knew or consented to the payment. Article 1236 states that a third person
always has the right of reimbursement for beneficial payments. However, Article
1237 of the Civil Code states that they can obtain all the rights of the creditor
(subrogation) only if they paid with the debtor’s consent.

5. A owes B P5,000 secured by a gold necklace. If X pays the obligation and A is

unable to make reimbursement due to insolvency, may X avail of the security
(gold necklace)?
Yes, X may avail of the security (gold necklace). According to Article 1236,
whoever pays for another may demand from the debtor what he has paid, except
that if he paid without the knowledge or against the will of the debtor, he can
recover only the payment which has been beneficial to the debtor. Also,
according to Article 1302, there is a legal subrogation present, which entitles the
third party (X) who paid the debt to claim any securities provided for the
obligation. This involves the gold necklace, which was originally pledged to
secure the loan between A and B. Since X paid the debt on behalf of A, and
assuming X was subrogated to B’s rights, X can enforce the security against A’s
property (the gold necklace) to recover the amount they paid.

6. What is the effect if a third person does not intend to be reimbursed by the
debtor?

A payment made by the third party to fulfill a debtor’s obligation without the
guarantee of reimbursement, is categorized as a donation. Under Article 1238 of
the Civil Code of the Philippines, payments made without the debtor’s consent or
knowledge are valid. Hence, it is deemed to be a donation. However, without a
contrary arrangement, the creditor is not obligated to accept such payments.

7. Is payment by a third person same as Expromission?

No, payment by a third person is not same as Expromision. Under Article 1293,
Expromision takes place when a third person of his own initiative and without the
knowledge or against the will of the original debtor assumes the latter’s obligation
 with the consent of the creditor. Hence, referring to a situation where another
party does the assumption of liability, while payment does not transfer any
obligations of rights unless agreed upon. In contrast, payment by a third person
who does not intend to be reimbursed does not create a similar legal relationship
or obligation while it is treated as a donation unless otherwise stipulated.

8. X owed Y P3,000. On due date, X went to Y's residence to pay but was told by
his mother that Y was in the U.S. for a brief vacation. X gave the payment to Y's
mother. Is the obligation extinguished?

According to Article 1240, payment shall be made to the person in whose favor
the obligation has been constituted, or his successor in interest, or any person
authorized to receive it. In this case, X made the payment to Y's mother, if Y's
mother was authorized to receive payments on his behalf, then the payment
would be valid, and the obligation would be extinguished.

9. M, 16 years old, without his parent's consent lent P3,000 to O, 18 years old. On
due date, O paid his loan to M. On his way home, M was robbed by an armed
person and took away all his money. Upon learning of the incident, M's mother
got furious and demanded from O to pay her the amount he borrowed from M. Is
the obligation of M extinguished or not?

In this case, M, a minor of only 16 years old, lent money to O without his parents'
permission. O repaid the loan, but M was robbed before he could come home.
Legally, O's repayment responsibility is regarded as satisfied after he hands over
the money to M, because the debt was cleared when O made the payment. The
robbery incident did not relieve O of his commitment because he had already
fulfilled his portion of the deal. As a result, M's commitment remains and he
cannot demand recovery payment from O for the lost money.

10. What are the different forms of special payment?

• Dation in payment (Art. 1245) - Dation in payment, whereby property is

alienated to the creditor in satisfaction of a debt in money, shall be governed
by the law of sales.

• Application of payments (Art. 1252) - The determination of the debt to

which a payment made by a debtor with many similar debts in favor of one (1)
and the same creditor shall be applied.
 • Payment by cession (Art. 1255) - The debtor can assign their property to
creditors for debt payment, but this only releases them from net proceeds,
and special laws govern agreements between the debtor and creditors.

• Tender of payment and consignation (Art. 1256-1261) - When a debtor

proposes to pay a creditor the amount or object owed, this is known as a
tender of payment. The debtor may be relieved from their obligation through
consignment, which entails depositing the amount owing with a court, if the
creditor declines without good reason.

11. What are the distinctions between Dacion en pago/dation in payment and
Payment by Cession?
In dation in payment or dacion en pago, there is usually 1 creditor, it does not
presuppose the insolvency of the debtor, it does not involve all the property of the
debtor, the creditor becomes the owner of the thing given by the debtor, and it
really is an act of novation. On the other hand, payment by cession includes
several creditors, extends to all the property owned by the debtor subject to
execution, the debtor is insolvent at the time or assignment, creditors involved
only acquire the right to sell the thing, and it is not an act of novation.

12. X owes Y 500 due and demandable. He also owes Y P1000 due and demandable. If
X has P500 only, who has the right to apply the payment and to which debt should it be
applied?

The debtor or X has the right to apply the payment to which debt he prefers to pay. If X
does not make the decision to apply the payment, the creditor or Y can apply it to the
debt he prefers to choose. If no one states which debt will be paid, it will be applied to
the debt that is the most onerous to the debtor.

13. A owes B P5,000. If despite repeated demands to accept his payment the creditor
refuses to accept it without valid reason, is the obligation extinguished?
According to Article 1256, if the creditor to whom tender of payment has been made
refuses without just cause to accept it, the debtor shall be released from responsibility
by the consignation of the thing or sum due. Therefore, A can deposit the payment in
court through consignation. Once the court accepts the consignation, the obligation
would be considered extinguished.

14. What is legal tender?

Legal tender is a currency offered by the debtor to the creditor, whom the latter must
accept in payment of a debt in money if it is in the right amount. The legal tender in the
Philippines refers to all the coins and notes issued by the Bangko Sentral ng Pilipinas
(BSP).

15. A issued a check to B as payment of his obligation which the latter accepted. Is the
obligation extinguished?
The obligation is not extinguished since the creditor did not encash the check.
Paragraph 2 of Article 1249 can back up this claim since it states that the delivery of
mercantile documents shall produce the effect of payment only when they have been
cashed, or when through the fault of the creditor they have been impaired.