PLAN DE VIGILANCIA DE LA SALUD:

lines for such amounts which they desire to avail of. The availments of such amounts, renewable from time to time, have an average term of 60 days each. Gobonsengs availed of the full amount of 900K which they renewed from time to time. With respect to the loan of 800K, the Gobonsengs obtained various amounts in installments. Claiming that the Gobonsengs failed to pay the two loans on their due date on May 2, 1984 and that despite demands, failed to remit the payment due, SIHI instituted an extrajudicial foreclosure proceedings. Gobonsengs filed with the court a quo a complaint for annulment/reformation of documents and damages with prayer for a temporary restraining order and preliminary injunction. Held: If the debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered. As a matter of fact, an amount of P7,417.86 was credited to the principal in the promissory note per Official Receipt dated 2 May 1984. This partial payment for the principal clearly proves that the interest due had been paid. Article 1253 of the Civil Code provides that if the debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered. Consequently, automatic renewal of the loans by way of promissory notes for the succeeding interest period was unavoidable.

c. Payment by cession (Article 1255)

Art. 1255. The debtor may cede or assign his property to his creditors in payment of his debts. This cession, unless there is stipulation to the contrary, shall only release the debtor from responsibility for the net proceeds of the thing assigned. The agreements which, on the effect of the cession, are made between the debtor and his creditors shall be governed by special laws.

• Tolentino: the assignment or cession contemplated by this article is the abandonment of the universality of the property of the debtor for the benefit of his creditors in order that such property may be applied to the payment of the credits.

• 1 debtor several creditors: Balane owes Loque, Nitura and Caguioa. Balane will give you some land and they will sell it and divide the proceeds.

o Remember: they have to agree!

o This is different from dacion because ownership is not transferred over the land. They only acquire the authority to sell.

o This is a SPA to sell

o If the sale doesn’t cover everything, then he will still owe the balance.

• The situation is contemplated here is that the debtor has several creditors and several debts. He turns over property to his creditors who are given the authority to sell the property and to apply the proceeds to his debt.

• In payment by cession, property is turned over by the debtor to the creditors who acquire the right to sell it and divide the net proceeds among themselves.

• In payment by cession, the creditors do not own the property to be sold. The creditors only have the power to sell. The net proceeds of the sale will be distributed according to the agreement. • Payment by cession is a special form of payment because there is no completeness of performance

– integrity. In most cases, there will be a balance due. • More differences acc. to Tolentino:

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o Dation: only in favor of 1 creditor; Cession: several creditors • Payment by Cession Distinguished from Dacion en Pago

• In dacion en pago, there is a transfer of ownership from the debtor to the creditor. In payment by cesion, there is no transfer of ownership. The creditors simply acquire the right to sell the

properties of the debtor and apply the proceeds of the sale to the satisfaction of their credit. • Payment by cession does not generally terminate all debts due since normally there is still a

balance due. The balance will continue to be due unless the parties agree otherwise. Usually, the termination is only to the extent of the net proceeds. The extinguishment of the obligation is pro

tanto.

• What makes it special? Violates indivisibility and integrity • Payment by cession must be distinguished from insolvency. • 2 Kinds of Insolvency (not discussed)

i. Extrajudicial or Voluntary (this is voluntary)

o In extrajudicial insolvency, if there is a balance left, the debtor must still pay.

o However, the debtor may limit which properties will be sold by the creditors since the agreement is contractual.

ii. Judicial

o In judicial insolvency, the obligation is totally extinguished even if there’s still a balance. o In judicial insolvency, every property which is not exempt from attachment or execution is

made available for sale.

d. Tender of payment and consignation (Article1256-1261)

• Consignation is the act of depositing the thing due w/ the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment.

• It is defined in the case of Soco v. Militante as a deposit of the object of the prestation in a competent court in accordance with the rules prescribed by law, after tender of payment was refused or circumstances which render payment impossible or inadvisable.

• According to Balane, the title of the subsection is wrong. It should have been consignation only because that is the special mode of payment and not the tender of payment.

• Tender of payment is a manifestation made by the debtor of his willingness, readiness and ability to pay.

• Tolentino notes: it only applies to discharge a debt and not to exercise a right. So in redemption or right to repurchase, tender is sufficient.

• It is a special mode of payment because payment is made not to the creditor but to the court. • Consignation is an option on the part of the debtor because consignation assumes that the creditor

was in mora accipiendi when the creditor without just cause, refuses to accept payment. Of course, if the creditor without just cause refuses to accept payment, the debtor may just delay payment. But something still hangs above his head. He is therefore, given the option to consign.

• Mora accipiendi will not extinguish. But stops running of interest from time of mora. • Requisites (Soco v. Militante):

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ii. That the consignation of the obligation had been made because of some legal cause, either because

a. Tender of payment was unjustly refused by the creditor:

o tender= manifestation to comply with the obligation coupled with the offer of immediate performance

b. There is no need for tender of payment due to circumstances which make tender of payment impossible or inadvisable

o Circumstances Which Make Tender of Payment Unnecessary (Article 1256) a. The creditor was absent or unknown, or does not appear at the place of payment

o Tolentino: absence need not be judicially declared. He must also have no legal representative, or the debtor does not know of such legal representative. b. The creditor was incapacitated to receive the payment at the time it was due

o Payment made to an incapacitated person does not count except to the extent that the incapacitated person is benefited or if he has kept the thing.

c. The creditor, without just cause refuses to give a receipt

o According to Professor Balane, this is wrong. This presupposes that there has been a prior tender of payment.

d. Several persons claimed to be entitled to receive the amount due o The debtor should file interpleader with consignation e. The title of the obligation has been lost

iii. First notice: That previous notice of the consignation had been given to the person interested in the performance of the obligation (Article 1257)

iv. That the amount due was placed at the disposal of the court (consignation proper) v. That after the consignation had been made the person interested was notified thereof

(second notice.)

• Tolentino: this second notice can be service of summons.

• All persons interested in the fulfillment of the obligation, whether passive or active must be notified.

• Failure of any of these requirements is enough ground to render a consignation ineffective. • Why is it special? You have to pay the creditor or his successor in interest. Here, you pay the

court.

Soco v. Militante: Soco leased her commercial building and lot to Francisco at P800 monthly rental,