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...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 when through the fault of the creditor they have been
Art. 1233. A debt shall not be understood to have been paid impaired.
unless the thing or service in which the obligation consists In the meantime, the action derived from the original
has been completely delivered or rendered, as the case may obliga￾tion shall be held in abeyance.
be.
> Legal tender is that currency which a debtor can legally
Art. 1248. Unless there is an express stipulation to that compel a creditor to accept in payment of a debt in money
effect, the creditor cannot be compelled partially to receive when tendered by the debtor in the right amount
the prestations in which the obligation consists. Neither may > In the Philippines, all coins and notes issued by the Bangko
the debtor be required to make partial payments. Sentral ng Pilipinas constitute legal tender.
However, when the debt is in part liquidated and in part > Right of creditor to refuse or accept. — Promissory notes,
un￾liquidated, the creditor may demand and the debtor checks, bills of exchange and other commercial documents
may effect the payment of the former without waiting for the are not legal tender and, therefore, the creditor cannot be
liquidation of the latter. compelled to accept them.
> Payment for purpose of redemption. — “A redemption
> The creditor may accept but he cannot be compelled to of property sold under execution is not rendered invalid by
accept partial payment or performance. The debtor has the reason of the fact that the payment to the sheriff for the
duty to comply with the whole of the obligation but he purpose of redemption is effected by means of a check for
cannot be required to make partial payments if he does not the amount due.”
wish to do so. > Effect on obligation. — Payment by means of mercantile
documents does not extinguish the obligation — until they
> Cases when partial performance are required or insisted: have been cashed, or unless they have been impaired
1.) When there is an express stipulation through the fault of the creditor.
2.) When debt is in part liquidated and in part unliquidated
3.) when the different prestations in which the obligation ART. 1250. In case an extraordinary inflation or deflation of
consists are subject to different terms or conditions which the currency stipulated should supervene, the value of the
affect some of them. currency at the time of the establishment of the obligation
4.) when the parties know that the obligation reasonably shall be the basis of payment, unless there is an agreement
cannot be expected to be performed completely at one time; to the contrary.
5.) when there is abuse of right or if good faith requires .....No Substitution 0,,0,0,106
acceptance. ART. 1244. The debtor of a thing cannot compel the creditor
to receive a different one, although the latter may be of the
ART. 1249. The payment of debts in money shall be made in same value as, or more valuable than that which is due.
the currency stipulated, and if it is not possible to deliver In obligations to do or not to do, an act or forbearance
such currency, then in the currency which is legal tender in can￾not be substituted by another act or forbearance
the Philippines. against the obligee’s will.
The delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the > Substitution can be made if the obligee consents.
effect of payment only when they have been cashed, or
ART. 1245. Dation in payment, whereby property is alienated > Elements
to the creditor in satisfaction of a debt in money, shall be 1.) There is substantial performance by the debtor
governed by the law of sales. 2.) Debtor is in good faith

> Dation in payment (adjudication or dacion en pago) is the ART. 1235. When the obligee accepts the performance,
conveyance of ownership of a thing by the debtor to creditor knowing its incompleteness or irregularity, and without
as an accepted equivalent of performance of a monetary expressing any protest or objection, the obligation is deemed
obligation. fully complied with.

ART. 1246. When the obligation consists in the delivery of an > Principle of estoppel.
indeterminate or generic thing, whose quality and > Receiving of partial payments is not acceptance of
circum￾stances have not been stated, the creditor cannot incomplete payment.
demand a thing of superior quality. Neither can the debtor
deliver a thing of inferior quality. The purpose of the ART. 1236. The creditor is not bound to accept payment or
obligation and other cir￾cumstances shall be taken into performance by a third person who has no interest in the
consideration. fulfillment of the obligation unless there is a stipulation to the
con￾trary.
> Article 1246 is a principle of equity in that it supplies Whoever pays for another may demand from the debtor what
justice in cases where there is lack of precise declaration in he has paid, except that if he paid without the knowledge or
the obligation of the quality or kind of thing to be delivered. against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.
.....Costs/Expenses 0,,0,0,107
ART. 1247. Unless it is otherwise stipulated, the extrajudicial > the recovery is only up to the extent or amount of the debt
expenses required by the payment shall be for the account of at the time of payment if made without he knowledge or
the debtor. With regard to judicial costs, the Rules of Court against the will of debtor
shall govern. > If made with the knowledge of the debtor. — The payer
.....Payment / Performance 0,,0,0,108 shall have the rights of reimbursement and subrogation, that
Art. 1232 - 1251 is, to recover what he has paid (not necessarily the amount
of the debt) and to acquire all the rights of the creditor.
> Payment is not only money, but performance as well (to
act: to ommit) ART. 1237. Whoever pays on behalf of the debtor without the
> A debt is paid when the thing or service is completely knowledge or against the will of the latter, cannot compel the
delivered or rendered. creditor to subrogate him in his rights, such as those
aris￾ing from a mortgage, guaranty, or penalty.
ART. 1234. If the obligation has been substantially
performed in good faith, the obligor may recover as though > In subrogation, the person who pays for the debtor is put
there had been a strict and complete fulfillment, less into the shoes of the creditor.
damages suffered by the obligee.
ART. 1238. Payment made by a third person who does not
> Case to case basis intend to be reimbursed by the debtor is deemed to be a
dona￾tion, which requires the debtor’s consent. But necessary that it should have been invested in some
the payment is in any case valid as to the creditor who has profitable venture) or was benefited by the payment.
accepted it. > In the absence of this benefit, the debtor may be made to
pay again by the creditor’s guardian or by the
> no one should be compelled to accept the generosity of incapacitated person himself when he acquires or recovers
another. his capacity. Proof of such benefit is incumbent upon the
> if the creditor accepts the payment, it shall be valid as to debtor who paid.
him and the payor although the debtor did not give his > Payment to a third person or wrong party is not valid
consent to the donation. except insofar as it has redounded to the benefi t of the
creditor. It is immaterial that the debtor acted in utmost
ART. 1239. In obligations to give, payment made by one who good faith and by mistake as to the person of the creditor, or
does not have the free disposal of the thing due and capacity through error induced by fraud of a third person if the
to alienate it shall not be valid, without prejudice to the creditor is without fault or negligence.
provisions of Article 1427 under the Title on “Natural
Obligations.’’ ART. 1242. Payment made in good faith to any person in
possession of the credit shall release the debtor.
> Free disposal of the thing due means that the thing to be
delivered must not be subject to any claim or lien or ART. 1243. Payment made to the creditor by the debtor after
encumbrance of a third person. the latter has been judicially ordered to retain the debt shall
> Capacity to alienate means that the person is not not be valid.
incapacitated to enter into contracts (Arts. 1327, 1329.) and
for that matter, to make a disposition of the thing due. ART. 1244. The debtor of a thing cannot compel the creditor
to receive a different one, although the latter may be of the
ART. 1240. Payment shall be made to the person in whose same value as, or more valuable than that which is due.
favor the obligation has been constituted, or his successor in In obligations to do or not to do, an act or forbearance
interest, or any person authorized to receive it. can￾not be substituted by another act or forbearance
against the obligee’s will.
> The creditor referred to must be the creditor at the time
the payment is to be made not at the constitution of the ART. 1245. Dation in payment, whereby property is alienated
obligation. to the creditor in satisfaction of a debt in money, shall be
> When payment is made to the wrong party, the obligation governed by the law of sales.
is not extinguished as to the creditor who is without fault or
negligence even if the debtor acted in outmost good faith ART. 1246. When the obligation consists in the delivery of an
and by mistake as to the person of the creditor or through indeterminate or generic thing, whose quality and
error induced by fraud of a third person. circum￾stances have not been stated, the creditor cannot
demand a thing of superior quality. Neither can the debtor
Art 1241. deliver a thing of inferior quality. The purpose of the
> Payment to a person incapacitated to administer or obligation and other cir￾cumstances shall be taken into
manage his property is not valid unless such incapacitated consideration.
person kept the thing paid or delivered (so that it is not
> Rule of the medium quality. > If there is no stipulation and the thing to be delivered is
specific, the payment shall be made at the place where the
ART. 1247. Unless it is otherwise stipulated, the extrajudicial thing was, at the perfection of the contract
expenses required by the payment shall be for the account of > If there is no stipulation and the thing to be delivered is
the debtor. With regard to judicial costs, the Rules of Court generic, the place of payment shall be the domicile of the
shall govern. debtor.
......As to Prestation 0,,0,0,109
ART. 1248. Unless there is an express stipulation to that â— The very object must be delivered
effect, the creditor cannot be compelled partially to receive .......Identity 0,,0,0,115
the prestations in which the obligation consists. Neither may ........Exception: Dacion en Pago 0,,0,0,110
the debtor be required to make partial payments. ART. 1245. Dation in payment, whereby property is
However, when the debt is in part liquidated and in part alien￾ated to the creditor in satisfaction of a debt in
un￾liquidated, the creditor may demand and the debtor money, shall be governed by the law of sales.
may effect the payment of the former without waiting for the
liquidation of the latter. > Dation in payment (adjudication or dacion en pago) is the
conveyance of ownership of a thing by the debtor to creditor
Art 1249 as an accepted equivalent of performance of a monetary
> Currency default is legal tender. obligation.
> Requisites
ART. 1250. In case an extraordinary inflation or deflation of 1.) There must be performance of the prestation in lieu of
the currency stipulated should supervene, the value of the payment (animo solvendi) which may consist in the delivery
cur￾rency at the time of the establishment of the of a corporeal thing
obligation shall be the basis of payment, unless there is an or a real right or a credit against a third person.
agreement to the contrary. 2.) There must be some difference between the prestation
due and that which is given in substitution (aliud pro alio)
ART. 1251. Payment shall be made in the place designated in 3.) There must be an agreement between the creditor and
the obligation. debtor that the obligation is immediately extinguished by
There being no express stipulation and if the undertaking is reason of the performance of a prestation different from that
to deliver a determinate thing, the payment shall be made due.
wherever the thing might be at the moment the obligation
was constituted. > The undertaking really partakes in one sense of the nature
In any other case the place of payment shall be the domicile of sale, that is, the creditor is really buying the thing or
of the debtor. property of the debtor, payment for which is to be charged
If the debtor changes his domicile in bad faith or after he has against the debtor’s debt.
incurred in delay, the additional expenses shall be borne by ........Exception: Novation 0,,0,0,111
him Arco Pulp v Lim
> Novation is a mode of extinguishing an obligation by
> If there is a stipulation, the payment shall be made in the changing its objects
place designated 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 > Novation must be expressly consented to.
creditor. > Novation is never presumed
> Novation which consists in substituting a new debtor in the
place of the .......Integrity 0,,0,0,112
original one, may be made even without the knowledge or ART. 1233. A debt shall not be understood to have been
against the will of the latter, paid unless the thing or service in which the obligation
but not without the consent of the creditor consists has been completely delivered or rendered, as the
> two modes of substituting the person of the debtor: (1) case may be.
expromision and (2) delegacion. In expromision, the
initiative for the change does not > Integrity of the prestation. “This requisite means that the
come from — and may even be made without the prestation be fulfilled completely
knowledge of the debtor, since it > Partial or irregular performance will not produce the
consists of a third person’s assumption of the obligation. extinguishment of an obligation as a general rule.
As such, it logically requires
the consent of the third person and the creditor. In ART. 1234. If the obligation has been substantially
delegacion, the debtor offers, and per￾formed in good faith, the obligor may recover as
the creditor accepts, a third person who consents to the though there
substitution and assumes had been a strict and complete fulfillment, less damages
the obligation; thus, the consent of these three persons are suffered by the obligee.
necessary.
> Both modes > The requisites are:
of substitution by the debt or require the consent of the (1) There must be substantial performance. Its existence
creditor. depends upon the circumstances of each particular case; and
> For novation to take place, the following (2) The obligor must be in good faith. Good faith is
requisites must concur: presumed in the absence of proof to the contrary.
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract. > In case of substantial performance, the obligee is
3) The old contract must be extinguished. benefitted. So the obligor should be allowed to recover as if
4) There must be a valid new contract. there had been a strict and complete fulfillment less
damages suffered by the obligee. This last condition affords a
> Novation may also be express or implied. It is express just compensation for the relative breach committed by the
when the new obligation obligor
declares in unequivocal terms that the old obligation is
extinguished. It is implied when ART. 1235. When the obligee accepts the performance,
the new obligation is incompatible with the old one on every knowing its incompleteness or irregularity, and without
point. expressing any protest or objection, the obligation is deemed
> The test of fully complied with.
incompatibility is whether the two obligations can stand > The above provision is the other exception to Article 1233.
together, each It is founded on the principle of estoppel. In case of
one with its own independent existence
acceptance, the law considers that the creditor waives his > Debts secured by a mortgage or by pledge are more
right. The whole obligation is extinguished. onerous than unsecured debts
> Of two interest-bearing debts, the one with a higher rate is
> The requisites are: more onerous.
(1) The obligee knows that the performance is incomplete or > An obligation with a penalty clause is more burdensome
irregular; and than
(2) He accepts the performance without expressing any one without penalty clause.
protest or objection ........Substantial Performance 0,,0,0,113
ART. 1234. If the obligation has been substantially
> accept as used in Article 1235, means to take as per￾formed in good faith, the obligor may recover as
satisfactory or sufficient or to give assent to or to agree or though there
accede to an incomplete or irregular performance. The mere had been a strict and complete fulfi llment, less damages
receipt of partial payment is not equivalent to acceptance of suf￾fered by the obligee.
performance within the purview of Article 1235 as would
extinguish the whole obligation. Requisites for the application
of Article 1234.
> Article 1235 does not require the protest or objection of The requisites are:
the creditor to be made in a particular manner or at a (1) There must be substantial performance. Its existence
particular time. So long as the acts of the creditor, at the depends upon the circumstances of each particular case; and
time of the incomplete or irregular payment by the debtor, or (2) The obligor must be in good faith. Good faith is
within a reasonable time thereafter, evince that the former is presumed in the absence of proof to the contrary.
not satisfied or agreeable to said payment or performance,
the obligation shall not be deemed extinguished. International Hotel v Joaquin
> It is well to note that Article 1234 applies only when an
Article 1254. Par 2. obligor admits breaching the contract after honestly and
> If the debts due are of the same nature and burden, the faithfully performing all the material elements thereof except
payment shall be applied to all of them proportionately. for some technical
aspects that cause no serious harm to the obligee.
> In case no application of payment has been made by the
debtor and the creditor, then the payment shall be applied to > In order that there may be substantial performance of an
the most onerous debt, and if the debts are of the same obligation, there must have been an
nature and burden, to all of them proportionately. attempt in good faith to perform, without any willful or
> A debt is more onerous than another when it is more intentional departure therefrom. The deviation
burdensome to the debtor. from the obligation must be slight, and the omission or
> An interest-bearing debt is more onerous than a non- defect must be technical and unimportant,
interest bearing debt even if the latter is an older one and must not pervade the whole or be so material that the
> A debt as a sole debtor is more onerous than as a solidary object which the parties intended to
debtor accomplish in a particular manner is not attained. The non-
> All things being equal, older debts are more onerous. performance of a material part of a
contract will prevent the performance from amounting to a be expected to be performed completely at one time; and
substantial compliance. (5) when there is abuse of right or if good faith requires
.......Indivisibility 0,,0,0,114 acceptance.
ART. 1248. Unless there is an express stipulation to that
effect, the creditor cannot be compelled partially to receive ART. 1225. For the purposes of the preceding articles,
the prestations in which the obligation consists. Neither may obligations to give definite things and those which are not
the debtor be required to make partial payments. suscep￾tible of partial performance shall be deemed to be
However, when the debt is in part liquidated and in part indivisible.
unliquidated, the creditor may demand and the debtor may When the obligation has for its object the execution of a
effect the payment of the former without waiting for the certain number of days of work, the accomplishment of work
liquidation of the latter. by metrical units, or analogous things which by their nature
are
> In order that payment may extinguish an obligation, it is susceptible of partial performance, it shall be divisible.
necessary However, even though the object or service may be
that there be complete performance of the prestation. (Art. physi￾cally divisible, an obligation is indivisible if so
1233.) The provided by law
creditor may accept but he cannot be compelled to accept or intended by the parties.
partial In obligations not to do, divisibility or indivisibility shall be
payment or performance. determined by the character of the prestation in each
particular
> There are cases, however, when partial performance may case.
be either
required or insisted. Among these cases are: > Indivisible Obligations
(1) when there is an express stipulation to that effect (par. 1.) Obligations to give definite things.
1.); 2.) Obligations which are not susceptible of partial
(2) when the debt is in part liquidated (defi nitely performance.
determined or 3.) Obligations provided by law to be indivisible even if thing
determinable) and in part unliquidated (par. 2.); or service is physically divisible
(3) when the different prestations in which the obligation 4.) Obligations intended by the parties to be indivisible even
consists if thing or service is physically divisible .
are subject to different terms or conditions which affect some
of them. (8 Manresa 288.) In obligations which comprehend > Divisible Obligations
several distinct 1.) Obligations which have for their object the execution of a
prestations (e.g., obligation to pay debt in installments.), it is certain
evident number of days of work
that the prestations need not be executed simultaneously but 2.) Obligations which have for their object the
each accomplishment of work by metrical units
successive execution thereof must be complete; 3.) Obligations which by their nature are susceptible of
(4) when the parties know that the obligation reasonably partial perfor￾mance
cannot
ART. 1208. If from the law, or the nature or the wording of ART. 1236. The creditor is not bound to accept payment or
the obligations to which the preceding article refers the performance by a third person who has no interest in the fulfi
con￾trary does not appear, the credit or debt shall be ll￾ment of the obligation, unless there is a stipulation to
presumed to the con￾trary.
be divided into as many equal shares as there are creditors Whoever pays for another may demand from the debtor
or what he has paid, except that if he paid without the
debtors, the credits or debts being considered distinct from knowledge
one or against the will of the debtor, he can recover only insofar
another, subject to the Rules of Court governing the as
multiplicity the payment has been beneficial to the debtor.
of suits.
> The creditor is bound to accept payment or performance
> Joint liability - proportionate share from the
> Solidary liability - Can demand from one the whole oblig. following:
> Solidary liability is not lightly inferred. Under Article 1207, (1) The debtor;
there is (2) Any person who has an interest in the obligation (like a
solidary liability only when: guarantor); or
(1) the obligation expressly so states; or (3) A third person who has no interest in the obligation
(2) the law requires solidarity; or when
(3) the nature of the obligation requires solidarity. there is stipulation that he can make payment.
Solidary liability also exists when it is imposed in a fi nal > Creditor may refuse payment
judgment by a third person.
against several defendants
> Effects of payment of third person
ART. 1211. Solidarity may exist although the creditors and 1.) If made without the knowledge or against the will of
the debtors may not be bound in the same manner and by debtor. — The
the payer can recover from the debtor only in so far as the
same periods and conditions. payment has
been benefi cial to the latter. The third person is not
> Kinds according to legal tie subrogated to the rights of the creditor, such as those arising
1.) Uniform. — when the parties are bound by the same from a mortgage, guarantee, or penalty.
stipulations 2.) If made with the knowledge of the debtor. — The payer
or clauses shall have the rights of reimbursement and subrogation, that
2.) Non-uniform or varied. — when the parties are not is, to recover what
subject to the he has paid (not necessarily the amount of the debt) and to
same stipulations or clauses 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 interest, or any person authorized to receive it.
aris￾ing from a mortgage, guaranty, or penalty.
> (1) Payment shall be made to:
> Whoever pays on behalf of the debtor is entitled to (a) the creditor or obligee (person in whose favor the
subrogation if obligation has been constituted);
the payment is with the consent of the latter. (Arts. 1237, (b) his successor in interest (like an heir or assignee); or
1302[2].) If the (c) any person authorized to receive it.
payment is without the knowledge or against the will of the > The creditor referred to must be the creditor at the time
debtor, the third person cannot compel the creditor to the
subrogate him in the payment is to be made not at the constitution of the
latter’s accessory rights of mortgage, guaranty, or obligation. Hence, if a person is subrogated to the right of
penalty. the creditor, payment should
> May there be subrogation, if the creditor willingly permits be made to the new creditor.
the > When payment is made to the wrong party, the obligation
payor to be subrogated in his rights? Since the provision of is not extinguished as to the creditor who is without fault or
Article negligence
1237 is for the benefit of the debtor, the subrogation can even if the debtor acted in outmost good faith and by
only take place with his consent. The third person who mistake as to
without necessity paid under such condition is amply the person of the creditor or through error induced by fraud
protected by his right to reimbursement. of a third
person.
ART. 1238. Payment made by a third person who does not > not only a person authorized by the creditor, but also a
intend to be reimbursed by the debtor is deemed to be a person authorized by law to receive the payment.
dona￾tion, which requires the debtor’s consent. But
the payment is in ART. 1241. Payment to a person who is incapacitated to
any case valid as to the creditor who has accepted it. administer his property shall be valid if he has kept the thing
delivered, or insofar as the payment has been beneficial to
> If the paying third person does not intend to be him.
reimbursed the Payment made to a third person shall also be valid insofar
payment is deemed a donation which requires the as it has redounded to the benefi t of the creditor. Such
debtor’s consent to be valid. (see Art. 725.) However, if benefit
the creditor accepts the payment, it shall be valid as to him to the creditor need not be proved in the following cases:
and the payor although the debtor did not give his consent to (1) If after the payment, the third person acquires the
the donation. 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
.......Payee, Obligee, Creditor; Effect if Third Person to
0,,0,0,118 believe that the third person had authority to receive the
ART. 1240. Payment shall be made to the person in whose payment.
favor the obligation has been constituted, or his successor in
> Payment to a person incapacitated to administer or person or persons in whose f avor it was incurred or to his or
manage his their duly authorized agent. It f ollows, theref ore,
property is not valid unless such incapacitated person kept that the payment made to a third person, even through error
the thing and in good f aith, shall not release the debtor of
paid or delivered (so that it is not necessary that it should the obligation to pay and will not deprive the creditor of his
have been right to demand payment. If it becomes impossible
invested in some profi table venture) or was benefi ted by to recover what was unduly paid, any loss resulting
the payment. > Payment to a third person or wrong party is therefrom shall be borne by the deceived debtor, who is
not valid except insofar the only one responsible f or his own acts unless there is a
as it has redounded to the benefi t of the creditor. It is stipulation to the contrary or unless the creditor
immaterial that himself is responsible f or the wrongf ul payment
the debtor acted in utmost good faith and by mistake as to
the person of the creditor, or through error induced by fraud ......As to Time and Place of Performance0,,0,0,119
of a third person if ART. 1251. Payment shall be made in the place designated
the creditor is without fault or negligence. in the obligation.
> The debtor is relieved from proving benefit to the creditor There being no express stipulation and if the undertaking
in case is to deliver a determinate thing, the payment shall be made
of: wherever the thing might be at the moment the obligation
(1) subrogation of the payer in the creditor’s rights; was
(2) ratification by the creditor; or constituted.
(3) estoppel on the part of the creditor. In any other case the place of payment shall be the domicile
of the debtor.
ART. 1242. Payment made in good faith to any person in If the debtor changes his domicile in bad faith or after he
possession of the credit shall release the debtor. has incurred in delay, the additional expenses shall be borne
by
> It must be observed that the “possession” referred him.
to under the These provisions are without prejudice to venue under the
above provision is possession of the credit itself and not Rules of Court.
merely of the document or instrument evidencing the credit.
Hence, merepossession of the instrument (unless > Article 1251 gives the rules regarding the place for the
transferable by delivery) does not entitle the holder to payment of
payment nor does payment release the debtor. Furthermore, an obligation without prejudice to venue under the Rules of
the payer must act in good faith, that is, in the honest belief Court.
that he is making a valid payment and that the payee is the (1) If there is a stipulation, the payment shall be made in
owner of the credit. Good faith, however, is presumed. the place
designated (par. 1; see Art. 1306.);
Panganiban vs Cuevas (2) If there is no stipulation and the thing to be delivered is
> The payment of the debt in order to extinguish the specific, the payment shall be made at the place where the
obligation must be made to 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