2

• Payment


  Not only the delivery of money but also the performance, in any other manner, of an obligation
• In order that payment may extinguish the obligation, it is necessary that it be made at a proper time and place, in a proper manner, and by and to a proper person
• Payment


  • If the obligation is to give a specific car, payment is made by delivering the car
• Elements of payment


  • Persons who may pay and to whom payment may be made
  • Thing or object in which payment must consist
  • The cause thereof
  • The mode or form thereof
  • The place and the time in which it must be made
  • The imputation of expenses occasioned by it
  • The special parts which may modify the same and the effects they generally produce
• 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
• Requisites for a valid payment

  • Integrity of prestation - the prestation must be fulfilled completely
  • Identity of prestation - the very prestation due must be delivered
• Burden of proving payment


  The duty of a party to present evidence of the facts in issue necessary to prove the truth of his claim or defense by the amount of evidence required by law
• When the existence of a debt is admitted by the debtor or established by the evidence of the creditor, the burden of proving extinguishment by payment dissolves upon the debtor who claims payment
• Only when the debtor introduces evidence that his obligation has been paid or extinguished does the burden shift to the creditor
• Requisites for the application of Article 1234

  • There must be substantial performance
  • The obligor must be in good faith
• Substantial performance


  • S obliged himself to sell 1,000 bags of cement to B for a certain price. However, despite diligent efforts on his part, S was able to deliver only 950 bags because of the cement shortage
• Requisites for Article 1235 to apply

  • The obligee knows that the performance is incomplete or irregular
  • He accepts that the performance without expressing any protest or objection
• Persons from whom the creditor must accept payment

  • The debtor
  • Any person who has an interest in the obligation (like a guarantor)
  • A third person who has no interest in the obligation when there is stipulation that he can make payment
• Effect of payment by a third person without the knowledge or against the will of the debtor


  The recovery is only up to the extent or amount of the debt at the time of payment
• Effect of payment by a third person with knowledge of the debtor

  The payer shall have the rights of reimbursement and subrogations, that is, to recover what he has paid
• Subrogation


  The person who pays for the debtor is put into the shoes of the creditor. The payer acquires not only the right to be reimbursed for what he has paid but also all other rights which the creditor could have exercised pertaining to the credit either against the debtor or against third persons, be they guarantors or possessors of mortgages
• Reimbursement


  The third person entitled by reason of payment has merely the bare right to be refunded to the extent provided in the second paragraph of Article 1236 without the right to the guarantees and securities of the original obligation
• Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a donation, which requires the debtor's consent
• Even if the debtor does not agree after the creditor accepts the payment from the third person, the obligation will still be extinguished because the creditor has accepted it
• Requisites for payment to be valid in obligations to give

  • The thing to be delivered must not be subject to any claim or lien or encumbrance of a third person
  • The person is not incapacitated to enter into contracts
• Persons to whom payment shall be made


  • The creditor or obligee
  • His successor in interest (like heirs)
  • Any person authorized to receive it
• Payment to an incapacitated person


  • Not valid unless the incapacitated person has kept the thing delivered or insofar as the payment has been beneficial to him
• Payment to a third party not duly authorized

  • The payment is valid only to the extent of benefits to the creditor
  • The creditor was benefited by the payment made by the debtor to a third person is not presumed
• Payment made in good faith to any person in possession of the credit shall release the debtor
• Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall not be valid
• Very prestation due must be complied with


  A thing different from that due cannot be offered or demanded against the will of the creditor or debtor, as the case may be. The act to be performed or the act prohibited cannot be substituted against the obligee's will
• Dation in payment


  The conveyance of ownership of a thing by the debtor to creditor as an accepted equivalent of performance of a monetary obligation
• The law of sales governs dation in payment because it partakes in one sense of the nature of sale
• Rule of the medium quality

  If the obligation consists in the delivery of a generic thing, the purpose of the obligation and other circumstances shall be taken into consideration to determine the quality or kind of thing to be delivered