 Payment – aka performance; means not only the  Application of payments – the designation of the debt

delivery of money but also the performance, in any to which should be applied the payment made by a
other manner, of an obligation debtor who has various debts of the same kind in
 Debt – may refer to an obligation to deliver money, favor of one and the same creditor
to deliver a thing (other than money), to do an act, or  Payment by Cession – the assignment or
not to do an act abandonment of all the properties of the debtor for
 Substantial Performance – when the important or the benefit of his creditors in order that the latter may
essential part of the contract has been performed and sell the same and apply the proceeds thereof to the
only a small or minor part thereof has not been satisfaction of their credits
carried out  Tender of Payment – the act, on the part of the
 Subrogation – payor acquires the right to be debtor, of offering to the creditor the thing or amount
reimbursed and all other rights which the creditor due
could have exercised pertaining to the credit against  Consignation – the act of depositing the thing or
the debtor or against third persons amount due with the proper court when the creditor
 Reimbursement – third person entitled by reason of does not desire or cannot receive it, after complying
payment has merely the bare right to be refunded with the formalities required by law
without the right to the guaranties and securities of  Thing is Lost - when the thing perishes or goes out
the original obligation of commerce or disappears in such a way that its
 Donation – a payment made by a third person existence is unknown or it cannot be recovered
without the intention of being reimburse; requires the  Partial loss – when only a portion of the thing is lost
debtor’s consent to be valid or destroyed or when it suffers depreciation or
 Free disposal of the thing due – the thing to be deterioration
delivered must not be subject to any claim or lien or  Condonation or remission – the gratuitous
encumbrance of a third person abandonment by the creditor of his right against the
 Capacity to alienate – the person is not incapacitated debtor; a form of donation
to enter into contracts and to make a disposition of KINDS OF REMISSION:
the thing due o As to its extent:
 Estoppel – an admission or representation rendered o Complete
conclusive upon the person making it and cannot be o Partial
denied or disproved as against the person relying o As to its form:
thereon o Express
SPECIAL FORMS OF PAYMENT: o Implied
o Dation in payment o As to its date of effectivity:
o Application of Payments o Inter vivos – deed of donation
o Payment by Cession o Mortis causa – last will and testament
o Tender of payment and consignation  Legitime – that part of the testator’s property which
 Dation in Payment – the conveyance of ownership of he cannot dispose of because the law has it reserved
a thing as an accepted equivalent of performance; for certain heirs (compulsory heirs)
money debt is satisfied by alienation of property  Prima facie – rebuttable by contrary evidence
 Judicial Costs – the statutory amounts allowed to a  Pledge – a contract by virtue of which the debtor
party to an action for his expenses incurred in the delivers to the creditor or to a third person a
action movable/instrument evidencing incorporeal rights for
 Legal Tender – the currency which, if offered by the the purpose of securing the fulfillment of a principal
debtor in the right amount, the creditor must accept in obligation with the understanding that when the
payment of a debt in money obligation is fulfilled, the thing delivered shall be
 Inflation – a sharp sudden increase of money or returned with all its fruits and accessions
credit or both without a corresponding increase in  Confusion or Merger – the meeting in one person of
business transactions; causes a drop in the value of the qualities of creditor and debtor with respect to the
money, resulting in the rise of the general price level same obligation
 Deflation – the reduction in volume and circulation  Compensation – aka simplified payment; the
of the available money or credit, resulting in a decline extinguishment to the concurrent amount of the debts
of the general price level of two persons who, in their own right, are debtors
 Venue - the place where a court suit or action must and creditors of each other; involves the simultaneous
be filed or instituted balancing of two obligations in order to extinguish
 Domicile – the place of a person’s habitual residence them to the extent in which the amount of one is
the place where he has his fixed true permanent home covered by that of the other
and to which place he, whenever he is absent, has the KINDS OF COMPENSATION:
intention of returning o By its effect or extent:
 Residence – only an element of domicile; simply o Total
requires bodily presence as an inhabitant in a given o Partial
place
 o By its cause or origin:
o Legal
o Voluntary
o Judicial
o Facultative
 Retention – when the credit of one of the parties is
subject to the satisfaction of the claims of a third
person
 Controversy – when a third person claims he is the
creditor of one of the parties
 Foreign exchange – the conversion of an amount of
money or currency of one country into an equivalent
amount of money or currency of another
 Exchange rate – the price of one currency expressed
or quoted in relation to another country
 Depositum – no intention to use; only for safekeeping
 Commodatum – legal term for borrowing; with
intention to use
 Novation – the total or partial extinction of an
obligation through the creation of a new one which
susbstitutes it

KINDS OF NOVATION:
o According to origin:
o Legal
o Conventional
o According to how it is constituted:
o Express
o Implied
o According to extent or effect:
o Total or extinctive
o Partial or modificatory
o According to the subject:
o Real or objective
o Personal or subjective
 Substitution – person of debtor is
substituted
 Expromision – third
person’s own initiative
and without the
knowledge or consent of
original debtor
 Delegacion – all parties
involved must agree
 Subrogation – third person is
subrogated in the rights of the
creditor
 Conventional
 Legal

o Mixed