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Sales

Dation in payment is a special mode of payment under the Civil Code where property is transferred to the creditor in satisfaction of a debt owed in money. Under Article 1245, the law of sales governs datation in payment since the creditor is essentially purchasing the debtor's property, with the payment being credited against the outstanding debt. Dation in payment extinguishes the obligation to the extent of the value of the property delivered, as agreed by the parties or proven, unless the parties consider the property equivalent to the full obligation, in which case the debt is fully extinguished.

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45 views1 page

Sales

Dation in payment is a special mode of payment under the Civil Code where property is transferred to the creditor in satisfaction of a debt owed in money. Under Article 1245, the law of sales governs datation in payment since the creditor is essentially purchasing the debtor's property, with the payment being credited against the outstanding debt. Dation in payment extinguishes the obligation to the extent of the value of the property delivered, as agreed by the parties or proven, unless the parties consider the property equivalent to the full obligation, in which case the debt is fully extinguished.

Uploaded by

Bianca Viel Tombo Caligagan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Article 1245

March 25, 2016


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. (n)

Ang pagbabago sa pagbabayad, na kung saan ang pagaari ay nailipat sa nagpautang


upang matugunan ang nautang na salapi, ay dapat na mapamahalaan ayon sa batas
ng bentahan

Discussion

There is dation in payment when property is alienated to the creditor in satisfaction of a


debt in money. Indeed, pursuant to Article 1232 of the Civil Code, an obligation is
extinguished by payment or performance. There is payment when there is delivery of
money or performance of an obligation. Article 1245 of the Civil Code provides for a
special mode of payment called dation in payment (dación en pago).

There is dation in payment when property is alienated to the creditor in satisfaction of a


debt in money. Here, the debtor delivers and transmits to the creditor the former’s
ownership over a thing as an accepted equivalent of the payment or performance of an
outstanding debt. In such cases,

Article 1245 provides that the law on sales shall apply, since the undertaking really
partakes –in one sense  of the nature of sale; that is, the creditor is really buying the
thing or property of the debtor, the payment for which is to be charged against the
debtor’s obligation. Dation in payment extinguishes the obligation to the extent of the
value of the thing delivered, either as agreed upon by the parties or as may be proved,
unless the parties by agreement – express or implied, or by their silence – consider the
thing as equivalent to the obligation, in which case the obligation is totally extinguished.

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