...Extinguishment of Obligations 0,,0,0,102 a.

) By reason of the subject

Art. 1231 Obligations are extinguished: i.) Confusion
1.) By payment or performance; ii.) Death where obligations are personal
2.) By the loss of the thing due b.) By reason of the object
3.) By the condonation or remission of the debt; i.) Loss of the thing due or impossibility of performance
4.) By the confusion or merger of the rigts of creditor and c.) By failure to exercise (right of action)
debtor i.) Extinctive prescription
5.) By compensation ....Definition 0,,0,0,103
6.) By Novation Art. 1232. Payment means not only the delivery of money
Other causes of extinguishment of obligations, such as but also the performance, in any other manner, of an
annulment, rescission, fulfillment of a resolutory condition, obligation
and prescription, are governed elsewhere in this Code.
> Payment means not only delivery of money but also giving
> Additional causes of a thing, the doing of an act, or not doing of an act.
1.) Death of a party in case the obligation is a personal one > Payment and performance are synonymous
2.) Muuptual desistance or withdrawal > Elements of payment:
3.) Arrival of resolutory period 1.) Persons ( who may pay and to whom payment may be
4.) Compromise made.
5.) Impossibility of fulfillment 2.) thing or object in which payment must consist
6.) Happening of a fortuitous event. 3.) The cause thereof
4.) The mode or form thereof
Classification: 5.) The place and time in which it must be made
1.) Voluntary 6.) The imputation of expenses occasioned by it
a.) Performance: 7.) the special parts which may modofy the same and the
i.) Payment effects they generally produce.
ii.) Consignation ....How Made 0,,0,0,104
b.) Substitution St. Paul Fire v Macondray
i.) Dacion en pago (conveyance for payment) > Respondents carrier, are only loable to the CIF value
ii.) Novation instead of the insured value.
c.) By release agreement > Exchange rate, when in another currency, will be at when
i.) Agreement subsequent to the constitution of the the obligation arose instead of the exchange rate of when the
obligation judgement was made.
a.) Mutual waiver
b.) Unilateral waiver Papa v AV Valencia
c.) Remission > There is presumption of encashment in cheques.
ii.) Agreement simultaneous to the constitution of the > Payment thru cheque will be deemed paid even if not
obligation encashed if the creditor is at fault
a.) Resolutory condition > If it is impaired thru the fault of creditor, obligation is
b.) Extinctive period deemed paid.
2.) Involuntary > Principle of good faith
.....Ways 0,,0,0,105
Art. 1233. A debt shall not be understood to have been paid
unless the thing or service in which the obligation consists
has been completely delivered or rendered, as the case may
be.
Art. 1248. Unless there is an express stipulation to that
effect, the creditor cannot be compelled partially to receive
the prestations in which the obligation consists. Neither may
the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part
un￾liquidated, the creditor may demand and the debtor
may effect the payment of the former without waiting for the
liquidation of the latter.
> The creditor may accept but he cannot be compelled to
accept partial payment or performance. The debtor has the
duty to comply with the whole of the obligation but he
cannot be required to make partial payments if he does not
wish to do so.
> Cases when partial performance are required or insisted:
1.) When there is an express stipulation
2.) When debt is in part liquidated and in part unliquidated
3.) when the different prestations in which the obligation
consists are subject to different terms or conditions which
affect some of them.
4.) when the parties know that the obligation reasonably
cannot be expected to be performed completely at one time;
5.) when there is abuse of right or if good faith requires
acceptance.
ART. 1249. The payment of debts in money shall be made in
the currency stipulated, and if it is not possible to deliver
such currency, then in the currency which is legal tender in
the Philippines.
The delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the
effect of payment only when they have been cashed, or
when through the fault of the creditor they have been
impaired.
In the meantime, the action derived from the original
obliga￾tion shall be held in abeyance.
> Legal tender is that currency which a debtor can legally
compel a creditor to accept in payment of a debt in money
when tendered by the debtor in the right amount
> In the Philippines, all coins and notes issued by the Bangko
Sentral ng Pilipinas constitute legal tender.
> Right of creditor to refuse or accept. — Promissory notes,
checks, bills of exchange and other commercial documents
are not legal tender and, therefore, the creditor cannot be
compelled to accept them.
> Payment for purpose of redemption. — “A redemption
of property sold under execution is not rendered invalid by
reason of the fact that the payment to the sheriff for the
purpose of redemption is effected by means of a check for
the amount due.”
> Effect on obligation. — Payment by means of mercantile
documents does not extinguish the obligation — until they
have been cashed, or unless they have been impaired
through the fault of the creditor.
ART. 1250. In case an extraordinary inflation or deflation of
the currency stipulated should supervene, the value of the
currency at the time of the establishment of the obligation
shall be the basis of payment, unless there is an agreement
to the contrary.
.....No Substitution 0,,0,0,106
ART. 1244. The debtor of a thing cannot compel the creditor
to receive a different one, although the latter may be of the
same value as, or more valuable than that which is due.
In obligations to do or not to do, an act or forbearance
can￾not be substituted by another act or forbearance
against the obligee’s will.
> Substitution can be made if the obligee consents.
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.
> Dation in payment (adjudication or dacion en pago) is the
conveyance of ownership of a thing by the debtor to creditor
as an accepted equivalent of performance of a monetary
obligation.
ART. 1246. When the obligation consists in the delivery of an
indeterminate or generic thing, whose quality and
circum￾stances have not been stated, the creditor cannot
demand a thing of superior quality. Neither can the debtor
deliver a thing of inferior quality. The purpose of the
obligation and other cir￾cumstances shall be taken into
consideration.
> Article 1246 is a principle of equity in that it supplies
justice in cases where there is lack of precise declaration in
the obligation of the quality or kind of thing to be delivered.
.....Costs/Expenses 0,,0,0,107
ART. 1247. Unless it is otherwise stipulated, the extrajudicial
expenses required by the payment shall be for the account of
the debtor. With regard to judicial costs, the Rules of Court
shall govern.
.....Payment / Performance 0,,0,0,108
Art. 1232 - 1251
> Payment is not only money, but performance as well (to
act: to ommit)
> A debt is paid when the thing or service is completely
delivered or rendered.
ART. 1234. If the obligation has been substantially
performed in good faith, the obligor may recover as though
there had been a strict and complete fulfillment, less
damages suffered by the obligee.
> Case to case basis
> Elements
1.) There is substantial performance by the debtor
2.) Debtor is in good faith
ART. 1235. When the obligee accepts the performance,
knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed
fully complied with.
> Principle of estoppel.
> Receiving of partial payments is not acceptance of
incomplete payment.
ART. 1236. The creditor is not bound to accept payment or
performance by a third person who has no interest in the
fulfillment of the obligation unless there is a stipulation to the
con￾trary.
Whoever pays for another may demand from the debtor what
he has paid, except that if he paid without the knowledge or
against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.
> the recovery is only up to the extent or amount of the debt
at the time of payment if made without he knowledge or
against the will of debtor
> If made with the knowledge of the debtor. — The payer
shall have the rights of reimbursement and subrogation, that
is, to recover what he has paid (not necessarily the amount
of the debt) and to acquire all the rights of the creditor.
ART. 1237. Whoever pays on behalf of the debtor without the
knowledge or against the will of the latter, cannot compel the
creditor to subrogate him in his rights, such as those
aris￾ing from a mortgage, guaranty, or penalty.
> In subrogation, the person who pays for the debtor is put
into the shoes of the creditor.
ART. 1238. Payment made by a third person who does not
intend to be reimbursed by the debtor is deemed to be a
dona￾tion, which requires the debtor’s consent. But
the payment is in any case valid as to the creditor who has
accepted it.
> no one should be compelled to accept the generosity of
another.
> if the creditor accepts the payment, it shall be valid as to
him and the payor although the debtor did not give his
consent to the donation.
ART. 1239. In obligations to give, payment made by one who
does not have the free disposal of the thing due and capacity
to alienate it shall not be valid, without prejudice to the
provisions of Article 1427 under the Title on “Natural
Obligations.’’
> Free disposal of the thing due means that the thing to be
delivered must not be subject to any claim or lien or
encumbrance of a third person.
> Capacity to alienate means that the person is not
incapacitated to enter into contracts (Arts. 1327, 1329.) and
for that matter, to make a disposition of the thing due.
ART. 1240. Payment shall be made to the person in whose
favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it.
> The creditor referred to must be the creditor at the time
the payment is to be made not at the constitution of the
obligation.
> When payment is made to the wrong party, the obligation
is not extinguished as to the creditor who is without fault or
negligence even if the debtor acted in outmost good faith
and by mistake as to the person of the creditor or through
error induced by fraud of a third person.
Art 1241.
> Payment to a person incapacitated to administer or
manage his property is not valid unless such incapacitated
person kept the thing paid or delivered (so that it is not
necessary that it should have been invested in some
profitable venture) or was benefited by the payment.
> In the absence of this benefit, the debtor may be made to
pay again by the creditor’s guardian or by the
incapacitated person himself when he acquires or recovers
his capacity. Proof of such benefit is incumbent upon the
debtor who paid.
> Payment to a third person or wrong party is not valid
except insofar as it has redounded to the benefi t of the
creditor. It is immaterial that the debtor acted in utmost
good faith and by mistake as to the person of the creditor, or
through error induced by fraud of a third person if the
creditor is without fault or negligence.
ART. 1242. Payment made in good faith to any person in
possession of the credit shall release the debtor.
ART. 1243. Payment made to the creditor by the debtor after
the latter has been judicially ordered to retain the debt shall
not be valid.
ART. 1244. The debtor of a thing cannot compel the creditor
to receive a different one, although the latter may be of the
same value as, or more valuable than that which is due.
In obligations to do or not to do, an act or forbearance
can￾not be substituted by another act or forbearance
against the obligee’s will.
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.
ART. 1246. When the obligation consists in the delivery of an
indeterminate or generic thing, whose quality and
circum￾stances have not been stated, the creditor cannot
demand a thing of superior quality. Neither can the debtor
deliver a thing of inferior quality. The purpose of the
obligation and other cir￾cumstances shall be taken into
consideration.
> Rule of the medium quality.
ART. 1247. Unless it is otherwise stipulated, the extrajudicial
expenses required by the payment shall be for the account of
the debtor. With regard to judicial costs, the Rules of Court
shall govern.
ART. 1248. Unless there is an express stipulation to that
effect, the creditor cannot be compelled partially to receive
the prestations in which the obligation consists. Neither may
the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part
un￾liquidated, the creditor may demand and the debtor
may effect the payment of the former without waiting for the
liquidation of the latter.
Art 1249
> Currency default is legal tender.
ART. 1250. In case an extraordinary inflation or deflation of
the currency stipulated should supervene, the value of the
cur￾rency at the time of the establishment of the
obligation shall be the basis of payment, unless there is an
agreement to the contrary.
ART. 1251. Payment shall be made in the place designated in
the obligation.
There being no express stipulation and if the undertaking is
to deliver a determinate thing, the payment shall be made
wherever the thing might be at the moment the obligation
was constituted.
In any other case the place of payment shall be the domicile
of the debtor.
If the debtor changes his domicile in bad faith or after he has
incurred in delay, the additional expenses shall be borne by
him
> If there is a stipulation, the payment shall be made in the
place designated
> If there is no stipulation and the thing to be delivered is
specific, the payment shall be made at the place where the
thing was, at the perfection of the contract
> If there is no stipulation and the thing to be delivered is
generic, the place of payment shall be the domicile of the
debtor.
......As to Prestation 0,,0,0,109
â— The very object must be delivered
.......Identity 0,,0,0,115
........Exception: Dacion en Pago 0,,0,0,110
ART. 1245. Dation in payment, whereby property is
alien￾ated to the creditor in satisfaction of a debt in
money, shall be governed by the law of sales.
> Dation in payment (adjudication or dacion en pago) is the
conveyance of ownership of a thing by the debtor to creditor
as an accepted equivalent of performance of a monetary
obligation.
> Requisites
1.) There must be performance of the prestation in lieu of
payment (animo solvendi) which may consist in the delivery
of a corporeal thing
or a real right or a credit against a third person.
2.) There must be some difference between the prestation
due and that which is given in substitution (aliud pro alio)
3.) There must be an agreement between the creditor and
debtor that the obligation is immediately extinguished by
reason of the performance of a prestation different from that
due.
> 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, payment for which is to be charged
against the debtor’s debt.
........Exception: Novation 0,,0,0,111
Arco Pulp v Lim
> Novation is a mode of extinguishing an obligation by
changing its objects
or principal obligations, by substituting a new debt or in
place of the old
one, or by subrogating a third person to the rights of the
creditor.
> Novation which consists in substituting a new debtor in the
place of the
original one, may be made even without the knowledge or
against the will of the latter,
but not without the consent of the creditor
> two modes of substituting the person of the debtor: (1)
expromision and (2) delegacion. In expromision, the
initiative for the change does not
come from — and may even be made without the
knowledge of the debtor, since it
consists of a third person’s assumption of the obligation.
As such, it logically requires
the consent of the third person and the creditor. In
delegacion, the debtor offers, and
the creditor accepts, a third person who consents to the
substitution and assumes
the obligation; thus, the consent of these three persons are
necessary.
> Both modes
of substitution by the debt or require the consent of the
creditor.
> For novation to take place, the following
requisites must concur:
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract.
3) The old contract must be extinguished.
4) There must be a valid new contract.
> Novation may also be express or implied. It is express
when the new obligation
declares in unequivocal terms that the old obligation is
extinguished. It is implied when
the new obligation is incompatible with the old one on every
point.
> The test of
incompatibility is whether the two obligations can stand
together, each
one with its own independent existence
> Novation must be expressly consented to.
> Novation is never presumed
.......Integrity 0,,0,0,112
ART. 1233. A debt shall not be understood to have been
paid unless the thing or service in which the obligation
consists has been completely delivered or rendered, as the
case may be.
> Integrity of the prestation. “This requisite means that the
prestation be fulfilled completely
> Partial or irregular performance will not produce the
extinguishment of an obligation as a general rule.
ART. 1234. If the obligation has been substantially
per￾formed in good faith, the obligor may recover as
though there
had been a strict and complete fulfillment, less damages
suffered by the obligee.
> The requisites are:
(1) There must be substantial performance. Its existence
depends upon the circumstances of each particular case; and
(2) The obligor must be in good faith. Good faith is
presumed in the absence of proof to the contrary.
> In case of substantial performance, the obligee is
benefitted. So the obligor should be allowed to recover as if
there had been a strict and complete fulfillment less
damages suffered by the obligee. This last condition affords a
just compensation for the relative breach committed by the
obligor
ART. 1235. When the obligee accepts the performance,
knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed
fully complied with.
> The above provision is the other exception to Article 1233.
It is founded on the principle of estoppel. In case of
acceptance, the law considers that the creditor waives his
right. The whole obligation is extinguished.
> The requisites are:
(1) The obligee knows that the performance is incomplete or
irregular; and
(2) He accepts the performance without expressing any
protest or objection
> accept as used in Article 1235, means to take as
satisfactory or sufficient or to give assent to or to agree or
accede to an incomplete or irregular performance. The mere
receipt of partial payment is not equivalent to acceptance of
performance within the purview of Article 1235 as would
extinguish the whole obligation.
> Article 1235 does not require the protest or objection of
the creditor to be made in a particular manner or at a
particular time. So long as the acts of the creditor, at the
time of the incomplete or irregular payment by the debtor, or
within a reasonable time thereafter, evince that the former is
not satisfied or agreeable to said payment or performance,
the obligation shall not be deemed extinguished.
Article 1254. Par 2.
> If the debts due are of the same nature and burden, the
payment shall be applied to all of them proportionately.
> In case no application of payment has been made by the
debtor and the creditor, then the payment shall be applied to
the most onerous debt, and if the debts are of the same
nature and burden, to all of them proportionately.
> A debt is more onerous than another when it is more
burdensome to the debtor.
> An interest-bearing debt is more onerous than a non-
interest bearing debt even if the latter is an older one
> A debt as a sole debtor is more onerous than as a solidary
debtor
> All things being equal, older debts are more onerous.
> Debts secured by a mortgage or by pledge are more
onerous than unsecured debts
> Of two interest-bearing debts, the one with a higher rate is
more onerous.
> An obligation with a penalty clause is more burdensome
than
one without penalty clause.
........Substantial Performance 0,,0,0,113
ART. 1234. If the obligation has been substantially
per￾formed in good faith, the obligor may recover as
though there
had been a strict and complete fulfi llment, less damages
suf￾fered by the obligee.
Requisites for the application
of Article 1234.
The requisites are:
(1) There must be substantial performance. Its existence
depends upon the circumstances of each particular case; and
(2) The obligor must be in good faith. Good faith is
presumed in the absence of proof to the contrary.
International Hotel v Joaquin
> It is well to note that Article 1234 applies only when an
obligor admits breaching the contract after honestly and
faithfully performing all the material elements thereof except
for some technical
aspects that cause no serious harm to the obligee.
> In order that there may be substantial performance of an
obligation, there must have been an
attempt in good faith to perform, without any willful or
intentional departure therefrom. The deviation
from the obligation must be slight, and the omission or
defect must be technical and unimportant,
and must not pervade the whole or be so material that the
object which the parties intended to
accomplish in a particular manner is not attained. The non-
performance of a material part of a
contract will prevent the performance from amounting to a
substantial compliance.
.......Indivisibility 0,,0,0,114
ART. 1248. Unless there is an express stipulation to that
effect, the creditor cannot be compelled partially to receive
the prestations in which the obligation consists. Neither may
the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part
unliquidated, the creditor may demand and the debtor may
effect the payment of the former without waiting for the
liquidation of the latter.
> In order that payment may extinguish an obligation, it is
necessary
that there be complete performance of the prestation. (Art.
1233.) The
creditor may accept but he cannot be compelled to accept
partial
payment or performance.
> There are cases, however, when partial performance may
be either
required or insisted. Among these cases are:
(1) when there is an express stipulation to that effect (par.
1.);
(2) when the debt is in part liquidated (defi nitely
determined or
determinable) and in part unliquidated (par. 2.);
(3) when the different prestations in which the obligation
consists
are subject to different terms or conditions which affect some
of them. (8 Manresa 288.) In obligations which comprehend
several distinct
prestations (e.g., obligation to pay debt in installments.), it is
evident
that the prestations need not be executed simultaneously but
each
successive execution thereof must be complete;
(4) when the parties know that the obligation reasonably
cannot
be expected to be performed completely at one time; and
(5) when there is abuse of right or if good faith requires
acceptance.
ART. 1225. For the purposes of the preceding articles,
obligations to give definite things and those which are not
suscep￾tible of partial performance shall be deemed to be
indivisible.
When the obligation has for its object the execution of a
certain number of days of work, the accomplishment of work
by metrical units, or analogous things which by their nature
are
susceptible of partial performance, it shall be divisible.
However, even though the object or service may be
physi￾cally divisible, an obligation is indivisible if so
provided by law
or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be
determined by the character of the prestation in each
particular
case.
> Indivisible Obligations
1.) Obligations to give definite things.
2.) Obligations which are not susceptible of partial
performance.
3.) Obligations provided by law to be indivisible even if thing
or service is physically divisible
4.) Obligations intended by the parties to be indivisible even
if thing or service is physically divisible .
> Divisible Obligations
1.) Obligations which have for their object the execution of a
certain
number of days of work
2.) Obligations which have for their object the
accomplishment of work by metrical units
3.) Obligations which by their nature are susceptible of
partial perfor￾mance
ART. 1208. If from the law, or the nature or the wording of
the obligations to which the preceding article refers the
con￾trary does not appear, the credit or debt shall be
presumed to
be divided into as many equal shares as there are creditors
or
debtors, the credits or debts being considered distinct from
one
another, subject to the Rules of Court governing the
multiplicity
of suits.
> Joint liability - proportionate share
> Solidary liability - Can demand from one the whole oblig.
> Solidary liability is not lightly inferred. Under Article 1207,
there is
solidary liability only when:
(1) the obligation expressly so states; or
(2) the law requires solidarity; or
(3) the nature of the obligation requires solidarity.
Solidary liability also exists when it is imposed in a fi nal
judgment
against several defendants
ART. 1211. Solidarity may exist although the creditors and
the debtors may not be bound in the same manner and by
the
same periods and conditions.
> Kinds according to legal tie
1.) Uniform. — when the parties are bound by the same
stipulations
or clauses
2.) Non-uniform or varied. — when the parties are not
subject to the
same stipulations or clauses
ART. 1236. The creditor is not bound to accept payment or
performance by a third person who has no interest in the fulfi
ll￾ment of the obligation, unless there is a stipulation to
the con￾trary.
Whoever pays for another may demand from the debtor
what he has paid, except that if he paid without the
knowledge
or against the will of the debtor, he can recover only insofar
as
the payment has been beneficial to the debtor.
> The creditor is bound to accept payment or performance
from the
following:
(1) The debtor;
(2) Any person who has an interest in the obligation (like a
guarantor); or
(3) A third person who has no interest in the obligation
when
there is stipulation that he can make payment.
> Creditor may refuse payment
by a third person.
> Effects of payment of third person
1.) If made without the knowledge or against the will of
debtor. — The
payer can recover from the debtor only in so far as the
payment has
been benefi cial to the latter. The third person is not
subrogated to the rights of the creditor, such as those arising
from a mortgage, guarantee, or penalty.
2.) If made with the knowledge of the debtor. — The payer
shall have the rights of reimbursement and subrogation, that
is, to recover what
he has paid (not necessarily the amount of the debt) and to
acquire all the rights of the creditor.

......As to Parties 0,,0,0,116 ART. 1237. Whoever pays on behalf of the debtor without
.......Payor, Obligor, Debtor; Effect if Third Person the knowledge or against the will of the latter, cannot compel
0,,0,0,117
the creditor to subrogate him in his rights, such as those
aris￾ing from a mortgage, guaranty, or penalty.
> Whoever pays on behalf of the debtor is entitled to
subrogation if
the payment is with the consent of the latter. (Arts. 1237,
1302[2].) If the
payment is without the knowledge or against the will of the
debtor, the third person cannot compel the creditor to
subrogate him in the
latter’s accessory rights of mortgage, guaranty, or
penalty.
> May there be subrogation, if the creditor willingly permits
the
payor to be subrogated in his rights? Since the provision of
Article
1237 is for the benefit of the debtor, the subrogation can
only take place with his consent. The third person who
without necessity paid under such condition is amply
protected by his right to reimbursement.
ART. 1238. Payment made by a third person who does not
intend to be reimbursed by the debtor is deemed to be a
dona￾tion, which requires the debtor’s consent. But
the payment is in
any case valid as to the creditor who has accepted it.
> If the paying third person does not intend to be
reimbursed the
payment is deemed a donation which requires the
debtor’s consent to be valid. (see Art. 725.) However, if
the creditor accepts the payment, it shall be valid as to him
and the payor although the debtor did not give his consent to
the donation.
.......Payee, Obligee, Creditor; Effect if Third Person
0,,0,0,118
ART. 1240. Payment shall be made to the person in whose
favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it.
> (1) Payment shall be made to:
(a) the creditor or obligee (person in whose favor the
obligation has been constituted);
(b) his successor in interest (like an heir or assignee); or
(c) any person authorized to receive it.
> The creditor referred to must be the creditor at the time
the
payment is to be made not at the constitution of the
obligation. Hence, if a person is subrogated to the right of
the creditor, payment should
be made to the new creditor.
> When payment is made to the wrong party, the obligation
is not extinguished as to the creditor who is without fault or
negligence
even if the debtor acted in outmost good faith and by
mistake as to
the person of the creditor or through error induced by fraud
of a third
person.
> not only a person authorized by the creditor, but also a
person authorized by law to receive the payment.
ART. 1241. Payment to a person who is incapacitated to
administer his property shall be valid if he has kept the thing
delivered, or insofar as the payment has been beneficial to
him.
Payment made to a third person shall also be valid insofar
as it has redounded to the benefi t of the creditor. Such
benefit
to the creditor need not be proved in the following cases:
(1) If after the payment, the third person acquires the
creditor’s rights;
(2) If the creditor ratifies the payment to the third person;
(3) If by the creditor’s conduct, the debtor has been led
to
believe that the third person had authority to receive the
payment.
> Payment to a person incapacitated to administer or
manage his
property is not valid unless such incapacitated person kept
the thing
paid or delivered (so that it is not necessary that it should
have been
invested in some profi table venture) or was benefi ted by
the payment. > Payment to a third person or wrong party is
not valid except insofar
as it has redounded to the benefi t of the creditor. It is
immaterial that
the debtor acted in utmost good faith and by mistake as to
the person of the creditor, or through error induced by fraud
of a third person if
the creditor is without fault or negligence.
> The debtor is relieved from proving benefit to the creditor
in case
of:
(1) subrogation of the payer in the creditor’s rights;
(2) ratification by the creditor; or
(3) estoppel on the part of the creditor.
ART. 1242. Payment made in good faith to any person in
possession of the credit shall release the debtor.
> It must be observed that the “possession” referred
to under the
above provision is possession of the credit itself and not
merely of the document or instrument evidencing the credit.
Hence, merepossession of the instrument (unless
transferable by delivery) does not entitle the holder to
payment nor does payment release the debtor. Furthermore,
the payer must act in good faith, that is, in the honest belief
that he is making a valid payment and that the payee is the
owner of the credit. Good faith, however, is presumed.
Panganiban vs Cuevas
> The payment of the debt in order to extinguish the
obligation must be made to the
person or persons in whose f avor it was incurred or to his or
their duly authorized agent. It f ollows, theref ore,
that the payment made to a third person, even through error
and in good f aith, shall not release the debtor of
the obligation to pay and will not deprive the creditor of his
right to demand payment. If it becomes impossible
to recover what was unduly paid, any loss resulting
therefrom shall be borne by the deceived debtor, who is
the only one responsible f or his own acts unless there is a
stipulation to the contrary or unless the creditor
himself is responsible f or the wrongf ul payment
......As to Time and Place of Performance0,,0,0,119
ART. 1251. Payment shall be made in the place designated
in the obligation.
There being no express stipulation and if the undertaking
is to deliver a determinate thing, the payment shall be made
wherever the thing might be at the moment the obligation
was
constituted.
In any other case the place of payment shall be the domicile
of the debtor.
If the debtor changes his domicile in bad faith or after he
has incurred in delay, the additional expenses shall be borne
by
him.
These provisions are without prejudice to venue under the
Rules of Court.
> Article 1251 gives the rules regarding the place for the
payment of
an obligation without prejudice to venue under the Rules of
Court.
(1) If there is a stipulation, the payment shall be made in
the place
designated (par. 1; see Art. 1306.);
(2) If there is no stipulation and the thing to be delivered is
specific, the payment shall be made at the place where the
thing was, at the perfection of the contract (par. 2.);
 (3) If there is no stipulation and the thing to be delivered is
generic,
the place of payment shall be the domicile of the debtor.
(par. 3.) In this case, the creditor bears the expenses in
going to the debtor’s place to accept payment (see Art.
1247.) subject to the rule in paragraph 4.

> Domicile is the place of a person’s habitual residence.

ART. 1169. Those obliged to deliver or to do something incur

in delay from the time the obligee judicially or extra-
judicial￾ly demands from them the fulfi llment of their
obligation.
......Special Forms of Payment 0,,0,0,120
.......Dacion en Pago 0,,0,0,121
.......Application of Payments 0,,0,0,122