2. Las tendencias en las políticas de asistencia social
2.3 La política social 2000- 2006
DIVISIBLE INDIVISIBLE Susceptibility of an obligation to be performed partially Non-susceptibility to be performed partially Partial performance is tantamount to non- performance Test of divisibility
Whether or not the prestation is susceptible of partial performance, not in the sense of performance in separate or divided parts, but in the sense of the possibility of realizing the purpose which the obligation seeks to obtain. If a thing could be
divided into parts and as divided, its value is impaired disproportionately, that thing is indivisible (Pineda, 2000).
Obligations that are deemed indivisible
1. Obligations to give definite things
2. Those which are not susceptible of partial performance
3. Even the object or service may be physically divisible, an obligation is indivisible if so provided (i) by law or (i) intended by the parties (Art. 1225, NCC).
NOTE: A pledge or mortgage is one and indivisible by provision of law, and
the rules apply even if the obligation is joint and not solidary (Art. 2089,
NCC).
Obligations that are deemed divisible
When the object of the obligation involves:
a. Certain number of days of work;
b. Accomplishment of work by metrical unit;
c. Analogous things which are by their nature susceptible of
partial performance (Art. 1225, NCC)
Effect of illegality of a part of a contract
1. Divisible contract – illegal part is void and unenforceable.
Legal part is valid and enforceable (Art. 1420).
2. Indivisible contract – entire contract is indivisible and
unenforceable.
Partial performance in indivisible obligation
It is tantamount to non-performance (Pineda, 2000).
KINDS OF CIVIL OBLIGATIONS: OBLIGATIONS WITH A PENAL CLAUSE
Obligations with a penal clause
An obligation with a penal clause is one with an accessory undertaking by virtue of which the obligor assumes a greater liability in case of breach of he obligations (Jurado, 2009, citing
Manresa).
Penal clause
An accessory obligation or undertaking to assure greater responsibility in case of breach.
NOTE: Proof of actual damages suffered by the creditor is not necessary in
order that the penalty may be demanded (Art. 1228, NCC). Kinds of penalties
1. As to origin
a. Legal - It is legal when it is constituted by law;
b. Conventional - It is constituted by agreement of the parties.
2. As to purpose
a. Compensatory - It is compensatory when it is
established for the purpose of indemnifying the damages suffered by the obligee or creditor in case of breach of the obligation.
b. Punitive - It is punitive when it is established for the purpose of punishing the obligor or debtor in case of breach of the obligation.
3. As to effect
a. Subsidiary - It is subsidiary when only the penalty may be demanded in case of breach of the obligation;
b. Joint - It is joint when the injured party may demand the enforcement of both the penalty and the principal obligation.
Q: Can the debtor just choose penalty over non-fulfillment? A: GR: The debtor cannot exempt himself from the performance of
the obligation by paying the penalty (Art. 1227, NCC).
XPN: When the right has been expressly reserved to the debtor
(Art. 1227, NCC).
Creditor cannot demand both the fulfillment of the principal obligation and the penalty
GR: The creditor cannot demand the fulfillment of the obligation
and the satisfaction of the penalty at the same time (Art. 1227,
NCC).
XPNs:
1. When the right has been clearly granted to him;
2. If the creditor has decided to require the fulfillment of the obligation, the performance thereof should become impossible without his fault, the penalty may be enforced(Art. 1227, NCC).
Effect of incorporating a penal clause in an obligation
GR: The penalty fixed by the parties is a compensation or
substitute for damages in case of breach.
XPNs: Damages shall still be paid even if there is a penal clause if:
1. There is a stipulation to the contrary
2. The debtor refuses to pay the agreed penalty
3. The debtor is guilty of fraud in the fulfillment of the
obligation (Art. 1126, NCC).
NOTE: The nullity of the penal clause does not carry with it that of the
principal obligation but the nullity of the principal obligation carries with it that of the penal clause (Art. 1230, NCC).
Instances where penalty may be reduced by the courts (PIU)
1. Partial performance of the obligation
2. Irregular performance of the obligation
3. Penalty is Unconscionable even if there has been no
performance.
EXTINGUISHMENT OF OBLIGATIONS
Modes of extinguishment of an obligation
Principal Modes (PaLoCo₃N) 1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger
5. Compensation
6. Novation (Art. 1231, NCC)
Other Modes (PARF) 7. Annulment
8. Rescission
9. Fulfillment of a resolutory condition
10. Prescription (Art. 1231, NCC)
NOTE: The enumeration is not exclusive.
Mutual desistance as another mode of extinguishing obligations
Mutual agreement of the parties to extinguish the obligation. It is a concept derived from the principle that since mutual agreement can create a contract, mutual disagreement by the parties can likewise cause its extinguishment (Saura v. Development Bank of
the Phils., G.R. No. 24968, Apr. 27, 1972).
PAYMENT OR PERFORMANCE
Payment
Payment is the fulfilment of the prestation due, a fulfilment that extinguishes the obligation by the realization of the purposes for which it is constituted (Tolentino, 2002).
Payment may consist not only in the delivery of money but also the giving of a thing (other than money), the doing of an act, or not doing of an act (Art. 1232, NCC).
Characteristics of payment
1. Integrity – the payment of the obligation must be completely
made
2. Identity – the payment of the obligation must consist the
performance of the very thing due
3. Indivisibility – the payment of the obligation must be in its
entirety
Integrity
GR: Payment or Performance must be complete (Art. 1233, NCC) XPNs:
1. Substantial performance performed in good faith (Art. 1234,
NCC)
2. When the obligee accepts the performance, knowing its
incompleteness or irregularity and without expressing any protest or objection (Art. 1235, NCC)
3. Debt is partly liquidated and partly unliquidated, but the liquidated part of the debt must be paid in full.
Substantial Performance Doctrine
It provides the rule that if a good-faith attempt to perform does not precisely meet the terms of an agreement or statutory requirements, the performance will still be considered complete if the essential purpose is accomplished(Black’s Law Dictionary, 9th
edition, 2009).
Requisites for Substantial Performance Doctrine
1. Attempt in good-faith to comply with obligation
2. Slight deviation of the obligation or omission or defect of the
performance is technical and unimportant (Tolentino, 2002).
Identity of the thing
GR: Thing paid must be the very thing due and cannot be another
thing even if of the same or more quality and value.
XPNs:
1. Dation in payment
2. Novation of the obligation
3. Obligation is facultative
NOTE: In an obligation to do or not to do, an act or forbearance cannot be
Indivisibility
GR: Debtor cannot be compelled by the creditor to perform
obligation in parts and neither can the debtor compel the creditor to accept obligation in parts.
XPNs: When:
1. Partial performance has been agreed upon
2. Part of the obligation is liquidated and part is unliquidated
3. To require the debtor to perform in full is impractical
The acceptance by a creditor of a partial payment is not an abandonment of its demand for full payment. When creditors receive partial payment, they are not ipso facto deemed to have abandoned their prior demand for full payment.
To imply that creditors accept partial payment as complete performance of their obligation, their acceptance must be made under circumstances that indicate their intention to consider the performance complete and to renounce their claim arising from the defect.
NOTE: While Article 1248 of the Civil Code states that creditors cannot be
compelled to accept partial payments, it does not prohibit them from accepting such payments (Selegna Management and Development Corp. v.
UCPB, G.R. No. 165662, May 30, 2006).
Requisites of a valid payment (P3AD)
1. Person who pays
2. Person to whom payment is made
3. Propriety of the time, place, and manner of payment
4. Acceptance by the creditor
5. Delivery of the full amount or the full performance of the
prestation
Person who pays
The following persons may effect payment and compel the creditor to accept the payment:
1. Debtor himself
2. His heirs and assigns
3. His agents and representatives
4. Third persons who have a material interest in the fulfilment of the obligation
Payment made by third persons
GR: The creditor is not bound to accept payment or performance
by a third person.
XPNs:
1. When made by a third person who has interest in the
fulfillment of the obligation
2. Contrary stipulation (Art. 1236, NCC)
Rights of a third person who made the payment
1. If the payment was made with knowledge and consent of the debtor:
a. Can recover entire amount paid (absolute
reimbursement)
b. Can be subrogated to all rights of the creditor.
2. If the payment was made with without knowledge or against the will of the debtor – can recover only insofar as payment
has been beneficial to the debtor (right of conditional reimbursement)
NOTE: 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 is in any case valid as to the creditor who has accepted it (Art. 1238, NCC).
Person to whom payment is made
Persons entitled to receive the payment:
1. The person in whose favor the obligation has been
constituted
2. his successor in interest, or
3. any person authorized to receive it (Art. 1240, NCC).
Payment to an unauthorized person
GR: Payment to an unauthorized person is not a valid payment
(Art. 1241, NCC).
XPNs:
1. Payment to an incapacitated person if:
a. He kept the thing delivered, or
b. It has been beneficial to him (Art. 1241, NCC)
2. Payment to a third person insofar as it redounded to the benefit of the creditor
Benefit to the creditor need not be proved: (RRE)
a. If after the payment, the third person acquires the creditor’s Rights;
b. If the creditor Ratifies the payment to the third
person;
c. If by the creditor’s conduct, the debtor has been led to
believe that the third person had authority to receive the payment (Estoppel) (Art. 1241, NCC).
3. Payment in good faith to the possessor of credit (Art. 1242,
NCC)
NOTE: Payment made to the creditor by the debtor after the latter has
been judicially ordered to retain the debt shall not be valid (Art. 1243,
NCC).
Consent of the debtor is necessary when the third person does not intend to be reimbursed
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 is in any case valid to the creditor who has accepted it (Art. 1238, NCC).
SPECIAL FORMS OF PAYMENT
Dation in Payment
Alienation by the debtor of a particular property in favor of his creditor, with the latter’s consent, for the satisfaction of the
former’s money obligation to the latter, with the effect of extinguishing the said money obligation (Pineda, 2000)
Application of Payment
Designation of the particular debt being paid by the debtor who has two or more debts or obligations of the same kind in favor of
the same creditor to whom the payment is made (Pineda, 2000)
Payment by Cession
Debtor cedes his property to his creditors so the latter may sell the same and the proceeds realized applied to the debts of the debtor
(Pineda, 2000)
Tender of Payment
Voluntary act of the debtor whereby he offers to the creditor for acceptance the immediate performance of the former’s obligation
to the latter (Pineda, 2000)
Consignation
Act of depositing the object of the obligation with the court or competent authority after the creditor has unjustifiably refused to
accept the same or is not in a position to accept it due to certain reasons or circumstances (Pineda, 2000)
DATION IN PAYMENT
Dation in payment (dacion en pago)
The delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. The property given may consist not only of a thing but also of a real right (Tolentino, 2002).
NOTE: The undertaking partakes of the nature of sale, that is, the creditor is
really buying the thing or property of the debtor, payment for which is to be charged against the debtor’s debt. As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present.
Elements of dation in payment
1. Existence of a money obligation
2. Alienation to the creditor of a property by the debtor with the consent of the former
3. Satisfaction of the money obligation of the debtor
Q: Lopez obtained a loan in the amount of P20, 000.00 from the Prudential Bank. He executed a surety bond in which he, as principal, and PHILAMGEN as surety, bound themselves jointly and severally for the payment of the sum. He also executed a deed of assignment of 4,000 shares of the Baguio Military Institution in favor of PHILAMGEN. Is the stock assignment made by Lopez dation in payment or pledge?
A: The stock assignment constitutes a pledge and not a dacion en pago. Dation in payment is the delivery and transmission of
ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. Lopez’s loan has not yet matured when he "alienated" his 4,000 shares of stock to Philamgen. Lopez's obligation would arise only when he would default in the payment of the principal obligation which is the loan and Philamgen had to pay for it. Since it is contrary to the nature and concept of dation in payment, the same could not have been constituted when the stock assignment was executed. In case of doubt as to whether a transaction is a pledge or a dation in payment, the presumption is in favor of pledge, the latter being the lesser transmission of rights and interests (Lopez v. CA, G.R. No. L-
33157, June 29, 1982).
Q: Cebu Asiancars Inc., with the conformity of the lessor, used the leased premises as a collateral to secure payment of a loan which Asiancars may obtain from any bank, provided that the proceeds of the loan shall be used solely for the construction of a building which, upon the termination of the lease or the voluntary surrender of the leased premises before the expiration of the contract, shall automatically become the property of the lessor. Meeting financial difficulties and incurring an outstanding balance on the loan, Asiancars conveyed ownership of the building on the leased premises to MBTC, by way of "dacion en pago."Is the dacion en pago by Asiancars in favor of MBTC valid? A:Yes. MBTC was a purchaser in good faith. MBTC had no
knowledge of the stipulation in the lease contract. Although the same lease was registered and duly annotated, MBTC was charged with constructive knowledge only of the fact of lease of the land and not of the specific provision stipulating transfer of ownership of the building to the Jaymes upon termination of the lease. While the alienation was in violation of the stipulation in the lease contract between the Jaymes and Asiancars, MBTC’s own rights could not be prejudiced by Asiancars’ actions unknown to MBTC. Thus, the transfer of the building in favor of MBTC was valid and binding (Jayme v. CA, G.R. No. 128669, Oct. 4, 2002).
Assignment of credit
An agreement by virtue of which the owner of a credit, known as the assignor, by a legal cause, such as sale, dation in payment, exchange or donation, and without the consent of the debtor, transfers his credit and accessory rights to another, known as the assignee, who acquires the power to enforce it to the same extent as the assignor could enforce it against the debtor. It may be in the form of sale, but at times it may constitute a dation in payment, such as when a debtor, in order to obtain a release from his debt, assigns to his creditor a credit he has against a third person. As a
dation in payment, the assignment of credit operates as a mode of
extinguishing the obligation; the delivery and transmission of ownership of a thing (in this case, the credit due from a third person) by the debtor to the creditor is accepted as the equivalent of the performance of the obligation.
FORM OF PAYMENT
1. Payment in cash – all monetary obligations shall be settled in
Philippine currency. However, the parties may agree that the obligation be settled in another currency at the time of payment (Sec. 1, R.A. 8183).
2. Payment in check or other negotiable instrument – not
considered payment, they are not considered legal tender and may be refused by the creditor except when:
a. the document has been encashed; or
b. it has been impaired through the fault of the creditor.
PAYMENT IN CASH
Legal Tender
Legal Tender means such currency which in a given jurisdiction can be used for the payment of debts, public and private, and which cannot be refused by the creditor(Tolentino, 2002).
The legal tender covers all notes and coins issued by the Bangko Sentral ng Pilipinas and guaranteed by the Republic of the Philippines. The amount of coins that may be accepted as legal tender are:
a. 1-Peso, 5-Pesos, 10-Pesos coins in amount not exceeding
P1,000.00
b. 25 centavos or less – in amount not exceeding P100.00 (BSP
Circular No. 537, Series of 2006, July 18, 2005).
Q: Northwest Airlines, through its Japan Branch, entered into an International Passenger Sales Agency Agreement with CF Sharp, authorizing the latter to sell its air transport tickets. CF Sharp failed to remit the proceeds of the ticket sales, thus, Northwest Airlines filed a collection suit before the Tokyo District Court which rendered judgment ordering CF Sharp to pay 83,158,195 Yen and damages for the delay at the rate of 6% per annum. Unable to execute the decision in Japan, Northwest Airlines filed a case to enforce said foreign judgment with the RTC of Manila. What is the rate of exchange that should be applied for the payment of the amount?
A: The repeal of R.A. 529 by R.A. 8183 has the effect of removing
the prohibition on the stipulation of currency other than Philippine currency, such that obligations or transactions may now be paid in the currency agreed upon by the parties. Just like R.A. 529, however, the new law does not provide for the applicable rate of exchange for the conversion of foreign currency-incurred obligations in their peso equivalent. It follows, therefore, that the jurisprudence established in R.A. 529 regarding the rate of conversion remains applicable. Thus, in Asia World Recruitment,
Inc. v. National Labor Relations Commission, the SC, applying R.A.
8183, sustained the ruling of the NLRC that obligations in foreign currency may be discharged in Philippine currency based on the
prevailing rate at the time of payment. It is just and fair to
preserve the real value of the foreign exchange- incurred obligation to the date of its payment.
PAYMENT BY NEGOTIABLE INSTRUMENT
Rule on tender payment as to checks
A check does not constitute a legal tender, and that a creditor may validly refuse it. However, this does not prevent a creditor from accepting a check as payment – the creditor has the option and the discretion of refusing or accepting it (Far East Bank & Trust
Company vs. Diaz Realty, Inc, G.R. No. 138588, 2001).
Q: Diaz & Company obtained a loan from Pacific Banking Corp