ARTICLE 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.

Article 1248 (Par. 1)

EXAMPLE:
Joanne is indebted to Julie for P5000 due today. Joanne cannot
compel Julie to receive P4000 in partial payment of the obligation
and neither can Julie require Joanne to pay only P4000 unless
there is an agreement to the contrary.

Article 1248 (Par. 2)

Partial performance is allowed when:
a. There is an express stipulation to that effect;
b. The debt is partly liquidated and in partly
unliquidated;
c. Obligation consists prestation that are subject to
different terms or conditions.

Article 1248 (Par. 2)

Example :
(A)If Joanne owes Julie P5000 plus the share of Julie from a
profit of a business which, however, has not yet been
liquidated or determined, Julie may demand and Joanne may
effect the payment of the P5000, which is already known.

(B)If P4000 of the debt of Joanne is due today and P1000

tomorrow, the obligation can be complied with partially.
Similarly, partial performance may be effected in case the
payment of the P1000 is subject to the fulfillment of a
condition.

Article 1248 (Par. 2)

(C) Joanne obliged herself to deliver 50,000 bags of cement to

Julie at the construction site of a building. Joanne makes a first
delivery of 5,000 bags informing Julie that continues deliveries
will follow. In this case, Julie cannot, in good faith refuse to
accept the partial deliveries as long as they are sufficient for his
construction needs.

ARTICLE 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 obligation
shall be held in the abeyance.

MERCANTILE DOCUMENTS

ARTICLE 1249
PAR. 1
EXAMPLE:
Debtor owes Creditor P10,000 which is due today. Here, payment
in cash and in legal tender is implied. Creditor can legally refuse to
accept a check from Debtor and insist on payment in cash. The
Creditor has the legal right to treat their contract as a breach unless
Debtor complies.

ARTICLE 1249
PAR. 2
EXAMPLE:
If Creditor accepts, there is no payment yet until the check has been
cashed or through his fault, it has been impaired as when he has
delayed in presenting the check for payment for an unreasonable
length of time and check has lost its value by reason of the
insolvency of the bank.

ARTICLE 1252 (Subsection 1 - Application of Payment)

He who has various debts of the same kind in favor of one and
the same creditor, may declare at the time of making the payment,
to which of them the same must be applied. Unless the parties so
stipulate, or when the application of payment is made by the party
for whose benefit the term has been constituted, application shall
not be made as to debts which are not yet due.
If the debtor accepts from the creditor a receipt in which an
application of the payment is made, the former cannot complain of
the same, unless there is a cause for invalidating the contract.

ARTICLE 1252 (Subsection 1 - Application of Payment)

Requisites of Application of Payments:
There must be one debtor and one creditor;
There must be two or more debts;
The debts must be of the same kind;
The debts to which payment has been applied must be due;
Payment must not be sufficient to cover all debts.

ARTICLE 1252 (Subsection 1 - Application of Payment)

PAR.1
Example:
Debtor owes Creditor as follows:
(a) P1500 payable on Sept 5;
(b)P1200 payable on Sept 20;
(c) A specific transistor radio worth P2000 to be delivered on Sept
20;
(d)P1000 payable on Oct 15.
On Sept 20, Debtor paid creditor P1500.

ARTICLE 1252 (Subsection 1 - Application of Payment)

Application shall not be made as to debts not yet due unless:
(a)There is a stipulation that the debtor may so apply;
(b)It is made by the debtor or creditor for whose benefit the
period has been constituted.

ARTICLE 1252 (Subsection 1 - Application of Payment)

PAR.2
EXAMPLE:
If Debtor does not make a choice, Creditor can make the
designation in the receipt with the consent of Debtor. His
acquiescence to the application made by Creditor may no
longer revoke or change by the former unless there is a cause
for invalidating the contract.

Article 1255 (Subsection 2 - Payment by Cession)

The debtor may cede or assign his property to his
creditors in payment of his debts. This cession, unless
there is stipulation to the contrary, shall only release the
debtor from responsibility for the net proceeds of the
thing assigned. The agreements which, on the effect of
the cession, are made between the debtor and his
creditors shall be governed by special laws.

Article 1255 (Subsection 2 - Payment by Cession)

Payment by Cession
Assignment or abandonment of all the properties of the debtor
for the benefit of his creditors in order that the latter may sell same
and apply proceeds thereof to the satisfaction of their credits.
Requisites of payment by cession:
(1) There must be two or more creditors;
(2) Debtors must be (partially) insolvent;
(3) The assignment must involve all the properties of the debtor;
(4) The cession must be accepted by the creditors.

Article 1255 (Subsection 2- Payment by Cession)

Example:
Debtor is indebted to several creditors in the amount of P2M. His
assets are not sufficient to pay all his debts.
With the consent of his creditors, Debtor may assign his property
to them to be sold, to satisfy their credits. If the net proceeds of the
sale amount only to P1.5M, Debtor is still liable for the balance of
P500,000 unless there is a stipulation that the assignment shall be in
full satisfaction of all his debts.

ARTICLE 1256(Subsection 3 - Tender of Payment and

Consignation)
If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the
consignation of the thing or sum due.
Consignation alone shall produce the same effect in the following cases:
(1) When the creditor is absent or unknown, or does not appear at the place
of payment;
(2) When he is incapacitated to receive the payment at the time it is due;
(3) When, without just cause, he refuses to give a receipt;
(4) When two or more persons claim the same right to collect;
(5) When the title of the obligation has been lost.

ARTICLE 1256(Subsection 3 - Tender of Payment and

Consignation)
Tender of payment
Is the act (on part of debtor) of offering the creditor the thing
or amount due.
Consignation
Is the act of depositing the thing or amount due with the
proper court when the creditor does not desire or cannot receive
it, after complying with the formalities required by law. This is
applicable when there is a debt or an obligation to pay.

ARTICLE 1256(Subsection 3 - Tender of Payment and

Consignation)
PAR. 1
EXAMPLE:
Debtor owes Creditor a sum of money. On the due date of obligation,
Debtor offers to pay the obligation but Creditor refuses to accept the
payment without any justifiable reason.
In this case, Debtors obligation will not be extinguished until he
has made a valid consignation.

ARTICLE 1258
Consignation shall be made by depositing the things
due at the disposal of judicial authority, before whom the
tender of payment shall be proved, in a proper case, and
the announcement of the consignation in other cases.
The consignation having been made, the interested
parties shall also be notified thereof.

ARTICLE 1258
(Par.1)
Consignation must be with proper judicial authority.
(Par.2)
Notice to be given to the interested parties of the
consignation made.

ARTICLE 1260
Once the consignation has been duly made, the debtor
may ask the judge to order the cancellation of the
obligation.
Before the creditor has accepted the consignation, or
before a judicial declaration that the consignation has
been properly made, the debtor may withdraw the thing
or the sum deposited, allowing the obligation to remain
in force.

ARTICLE 1262
An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be
lost or destroyed without the fault of the debtor, and
before he has incurred in delay.
When by law or stipulation, the obligor is liable even
for fortuitous events, the loss of the thing does not
extinguish the obligation, and he shall be responsible for
damages. The same rule applies when the nature of the
obligation requires the assumption of risk.

ARTICLE 1262
When loss of the thing will extinguish an obligation to
give:
(A)The obligation is to deliver a specific or a
determinate thing;
(B)The loss of the thing occurs without the fault of the
debtor;
(C)The debtor is not guilty of delay.

ARTICLE 1262
When loss of the thing will not extinguish liability:
(A)The law so provides;
(B)When the stipulation so provides;
(C)When the nature of the obligation requires the
assumption of risk;
(D)When the obligation to deliver a specific thing arises
from a crime.