Page 33 - Obligations & Contracts Module 1-2

*Requisites for the Application of Payment:

1. Various debts of the same kind

2. Same debtor

3. Same creditor

4. All debts must be due

*Exception: there may be application of payment even if all debts are not yet due if:

a) parties so stipulate

b) when application of payment is made for whose benefit the term has been

constituted

5. Payment is not enough to extinguish all debts

*How Application of Payment is made:

1. Debtor makes the designation

2. If not, creditor makes it by so stating in the receipt that he issues – unless

there is cause for invalidating the contract

3. If neither the debtor nor creditor has made the application or if the

application is not valid, then application, is made by operation of law

*Who Makes Application:

General Rule: Debtor Exception: Creditor

a) Debtor without protest accepts receipt in which creditor specified expressly and

unmistakably the obligation to which such payment was to be applied – debtor in this

case renounced the right of choice

b) When monthly statements were made by the bank specifying the application and the

debtor signed said statements approving the status of her account as thus sent to her

monthly by the bank