Money debts: what they are paid in and when interest runs

They are Articles 1074, 1075 and 1076 of the Civil Code of 2020, closing the subsection on the obligation to give. They govern the money debt: what it is paid in, what compensatory interest is, and what happens to interest that falls due and is not paid.

Any debtor or creditor of an obligation whose object is a sum of money, unless a special statute provides otherwise for that kind of debt.

• Paying in the specie agreed; only if the specie cannot be delivered, in legal tender currency in Puerto Rico.Verified against the official source
• That there be a duty to pay interest for the legal-interest rule to apply: Article 1075 triggers it where interest must be paid without a rate having been fixed.Verified against the official source
• For anatocism, that the interest be fallen due and unpaid and that it be claimed judicially: from that moment it earns legal interest.Verified against the official source

• The document of the obligation, because the agreed specie and the rate, if one was fixed, come from it.

1. 1

   Step 1: What it is paid in

   Article 1074 says it in one line: payment of money debts must be made in the specie agreed and, if the specie cannot be delivered, in legal tender currency in Puerto Rico. The order matters: legal tender is the fallback when the agreed specie cannot be delivered, not the default rule.

2. 2

   Step 2: Paying by cheque or promissory note

   The same Article 1074 closes by referring out: the delivery of negotiable instruments in payment of an obligation produces the effects the law determines. The Code does not say what those effects are. That law is a different one and we did not read it for this guide, so you will not find here when a debt paid by cheque is deemed paid.

3. 3

   Step 3: What interest the Code defines

   Only one, and by its function: Article 1075 says interest is compensatory if it constitutes the consideration for the use of the money. That is, the interest charged for holding someone else’s money for a time, not the one that penalizes delay.

4. 4

   Step 4: If interest is owed and no one fixed the rate

   The second sentence of Article 1075 settles it: where interest must be paid without a rate having been fixed, the debtor must pay the legal interest. Note the condition: there must first be a duty to pay interest; the article does not create that duty, it only says which rate applies where the duty exists and no rate was agreed.

5. 5

   Step 5: How much the legal interest is: the Code does not say

   And here this guide stops. Articles 1075 and 1076 name the legal interest four times between them and never quantify it. Whoever fixes that rate is not this Code, and we did not read the instrument that fixes it, so we will not publish a percentage. A different thing — and one that is verified, in its own guide — is the interest rate the Office of the Commissioner of Financial Institutions certifies every half-year on judgment amounts: that is interest on judgments, not the legal interest of Article 1075.

6. 6

   Step 6: Interest upon interest

   Article 1076 is headed "Anatocismo" and the consolidated text prints it thus: interest fallen due and unpaid on the principal earns legal interest from when it is claimed judicially, even where the obligation was silent on the point. We reproduce it as published. Two things operate: a judicial claim is needed, and the contract’s silence does not stop it from running.

These are rules applying between creditor and debtor. The anatocism of Article 1076 runs from when the interest is claimed judicially, that is, before the Court of First Instance. The Code names no agency here.

• Paying in legal tender where the agreed specie could in fact be delivered: the currency is the fallback, not the rule.
• Believing the Code fixes the legal-interest rate: it names it and does not quantify it.
• Confusing the legal interest of Article 1075 with the rate OCIF certifies on judgments.
• Charging interest where no duty to pay it exists: Article 1075 only says which rate applies where that duty already exists.
• Calling compensatory an interest that is not the consideration for the use of the money.
• Counting anatocism from when the interest fell due: it runs from when it is claimed judicially.
• Assuming the contract’s silence blocks anatocism: the article says expressly that it runs even where the obligation was silent.
• Treating a debt as paid on the mere delivery of a cheque: the effects are determined by another law, not this Code.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov