Article 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.
• Judicial costs are the statutory
amounts allowed to a party to an
action for his expenses incurred in
the action. Under the Rules of
Court (Sec. 1, Rule 142.), the
costs of an action shall, as a rule,
be paid by the losing party.
 Captain America is the owner of an apartment
entered into a lease agreement with Iron Man for the
amount of PHP 10, 000 to be paid every 5th of the month.
Upon payment of the amount every 5th of the month, it is
the debtor who benefits primarily, since his obligation is
extinguished.
But let’s say for example, Iron Man failed to make
the payment for 4 months despite demands. Captain
America wish to have Iron Man vacate the property and
collect the unpayed rental fee.
He then seek the service of Atty. Hulk and paid a fee
of P 5, 000.00 . Two (2) demand letters sent via registered
mail and incurred P 350.00 for such.
Later on, Iron Man, forwarded his intent to vacate the
apartment and make the payment for his debt, which shall
include the unpaid rental and the expenses incurred
upon hiring legal service.
 Article 1256
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.
• Tender of payment is the act, on the part
of the debtor, of offering to 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
refuses to accept payment, or cannot
receive it, after complying with the
formalities required by law.
 ILLUSTRATION
Doctor Strange borrowed PHP 10, 000 from
Captain America. On the due date of the obligation,
Doctor Strange offers to pay the obligation but
Captain America refuses to accept the payment
without any justifiable reason.
In this case, Doctor Strange’s obligation will
not be extinguished until he has made a valid
consignation. The refusal by Captain America to
accept the offer to pay without just cause will not
have the effect of payment but Doctor Strange will
be relieved from payment of any interest from the
date of tender.
 ILLUSTRATION
In the same example, upon Captain America’s
refusal, Doctor Strange then notified Captain America,
thus: “I will file a complaint against you and deposit the
money in the proper court of Manila on May 25, 2019 at
10:00 o’clock a.m., if before that time you do not accept
my payment.” Captain America having refused payment,
Doctor Strange went to the proper court, proved to the
clerk of court’s satisfaction that there was valid tender of
payment, that Doctor Strange, the creditor unjustly refused
to accept the payment and that, there was a previous
notice of consignation. The clerk accepted the deposit.
Thereafter, Doctor Strange gave notice to Captain America
that amount had been deposited in court.
 ILLUSTRATION
(1) EFFECTS OF ABSENCE
Suppose Captain America was absent at the place of
payment, then Doctor Strange could only consign
(deposit) then amount in court.

(2) INCAPACITY TO RECEIVE PAYMENT

Suppose Captain America became insane at the time
payment became due, then Doctor Strange also could
make consignation.

(3) REFUSES TO GIVE A RECEIPT

Suppose Captain America without just cause refuse to
give Doctor Strange a receipt.
ILLUSTRATION
(4) TWO OR MORE PERSONS CLAIM SAME RIGHT TO
COLLECT
Suppose Hulk, aside from Captain America, also claimed
payment from Doctor Strange, and later could not
determine to whom payment should be made, then Doctor
Strange could also consign the amount in court.

(5) TITLE OF OBLIGATION IS LOST

Suppose Captain America could not return the document
evidencing the obligation, then Doctor Strange could
make consignation in court.
 Article 1265
Whenever the thing is lost in the
possession of the debtor, it shall be
presumed that the loss was due to his
fault, unless there is proof to the
contrary, and without prejudice to the
provisions of Article 1165. This
presumption does not apply in case
of earthquake, flood, storm, or other
natural calamity.
• Under the third paragraph of Article
1165, the obligor who is not at fault is
still liable in case he is guilty of delay or
has promised to deliver the same thing
to two or more persons who do not
have the same interest.
 Ben borrowed the car of Bon. On the due
date of the obligation, Ben told Bon that the
car was stolen and that he was not at fault.
That is not enough to extinguish Ben’s
obligation. It is presumed that the loss was
due to his fault. Hence, he is liable unless he
proves the contrary.
 Suppose the house of Ben was
destroyed because of fire. It is admitted that
there was a fire and it was accidental and that
the car was in the house at the time it
occurred. Here, Ben is not liable.
 Article 1274
It is presumed that the
accessory obligation of pledge
has been remitted when the
thing pledged, after its delivery
to the creditor, is found in the
possession of the debtor, or of a
third person who owns the thing.
 Harry delivers to Hermione his diamond
ring in pledge to guarantee the payment of a
loan. If later on the ring is found in the
possession of Harry, the presumption is that
Hermione agreed to the loan without the
pledge. Hermione may prove that he returned
the ring to Harry upon the latter's request to
be delivered back to him.
Article 1283
If one of the parties to a suit
over an obligation has a claim
for damages against the other,
the former may set it off by
proving his right to said
damages and the amount
thereof.
EXAMPLE
Anne owes Bryan PHP 10, 000. When
Bryan demanded payment, Anne failed to pay.
In anger, Bryan damaged the property of Anne
to the extent of PHP 9, 000.

Anne can set off the obligation of Bryan

to pay him damages in the amount of PHP 9,
000 against his debt of P10, 000.