What is dation in payment?
One of the special forms of payment under the Civil Code is dation in payment (dacion en pago). Article 1245 of the Civil Code provides:
In this kind of payment, 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.[1] The requisites for this payment are: (a) existence of a money obligation; (b) alienation to the creditor of debtor's property with the former's consent; and (c) satisfaction of the money obligation.
ART. 1245. 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)
In this kind of payment, 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.[1] The requisites for this payment are: (a) existence of a money obligation; (b) alienation to the creditor of debtor's property with the former's consent; and (c) satisfaction of the money obligation.
[1] Tan Shuy v. Maulawin, 665 SCRA 604 (2012), citing Lopez v. CA, 200 Phil. 150 (2006).
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