SECTION 1 Payment or Performance

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SECTION 1Payment or Performance

Article 1232.Payment means not only the delivery of money but also the performance, in any other manner, ofan obligation. (n)

Article 1233.A debt shall not be understood to have been paid unless the thing or service in which theobligation consists has been completely delivered or rendered, as the case may be. (1157)

Article 1234.f the obligation has been substantially performed in good faith, the obligor may recover asthough there had been a strict and complete fulfillment, less damages suffered by the obligee. (n)

Article 1235.!hen the obligee accepts the performance, "nowing its incompleteness or irregularity, andwithout e#pressing any protest or ob$ection, the obligation is deemed fully complied with. (n)

Article 1236.%he creditor is not bound to accept payment or performance by a third person who has nointerest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

!hoever pays for another may demand from the debtor what he has paid, e#cept that if he paid without the"nowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial tothe debtor. (115&a)

Article 1237.!hoever pays on behalf of the debtor without the "nowledge or against the will of the latter,cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty, orpenalty. (115'a)

Article 1238.Payment made by a third person who does not intend to be reimbursed by the debtor is deemedto be a donation, which reuires the debtors consent. *ut the payment is in any case valid as to the creditorwho has accepted it. (n)

Article 123.n 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 pre$udice to the provisions of article 1+7 under the %itle on-atural /bligations.- (110a)

Article 124!.Payment shall be made to the person in whose favor the obligation has been constituted, or hissuccessor in interest, or any person authori2ed to receive it. (110a)

Article 1241.Payment to a person who is incapacitated to administer his property shall be valid if he has "eptthe 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 benefit of the creditor.3uch benefit to the creditor need not be proved in the following cases4

(1) f after the payment, the third person acuires the creditors rights

() f the creditor ratifies the payment to the third person

(6) f by the creditors conduct, the debtor has been led to believe that the third person had authority toreceive the payment. (1106a)

Article 1242.Payment made in good faith to any person in possession of the credit shall release the debtor.(110+)


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Article 1243.Payment made to the creditor by the debtor after the latter has been $udicially ordered to retainthe debt shall not be valid. (1105)

Article 1244.%he debtor of a thing cannot compel the creditor to receive a different one, although the lattermay be of the same value as, or more valuable than that which is due.

n obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearanceagainst the obligees will. (1100a)

Article 1245.ation in payment, whereby property is alienated to the creditor in satisfaction of a debt inmoney, shall be governed by the law of sales. (n)

Article 1246.!hen the obligation consists in the delivery of an indeterminate or generic thing, whose ualityand circumstances have not been stated, the creditor cannot demand a thing of superior uality. either canthe debtor deliver a thing of inferior uality. %he purpose of the obligation and other circumstances shall beta"en into consideration. (1107a)

Article 1247.8nless it is otherwise stipulated, the e#tra$udicial e#penses reuired by the payment shall be forthe account of the debtor. !ith regard to $udicial costs, the 9ules of :ourt shall govern. (110&a)

Article 1248.8nless there is an e#press stipulation to that effect, the creditor cannot be compelled partially toreceive the prestations in which the obligation consists. either may the debtor be reuired to ma"e partialpayments.

;owever, when the debt is in part liuidated and in part unliuidated, the creditor may demand and the debtormay effect the payment of the former without waiting for the liuidation of the latter. (110'a)

Article 124.%he payment of debts in money shall be made in the currency stipulated, and if it is not possibleto deliver such currency, then in the currency which is legal tender in the Philippines.

%he delivery of promissory notes payable to order, or bills of e#change or other mercantile documents shallproduce the effect of payment only when they have been cashed, or when through the fault of the creditor they

have been impaired.

n the meantime, the action derived from the original obligation shall be held in the abeyance. (117)

Article 125!.n case an e#traordinary inflation or deflation of the currency stipulated should supervene, thevalue of the currency at the time of the establishment of the obligation shall be the basis of payment, unlessthere is an agreement to the contrary. (n)

Article 1251.Payment shall be made in the place designated in the obligation.

%here being no e#press stipulation and if the underta"ing is to deliver a determinate thing, the payment shall bemade wherever the thing might be at the moment the obligation was constituted.

n any other case the place of payment shall be the domicile of the debtor.

f the debtor changes his domicile in bad faith or after he has incurred in delay, the additional e#penses shall beborne by him.

%hese provisions are without pre$udice to venue under the 9ules of :ourt. (1171a)

S"#SECTION 1. A$$lication of Payment%


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Article 1252.;e who has various debts of the same "ind in favor of one and the same creditor, may declare atthe time of ma"ing the payment, to which of them the same must be applied. 8nless the parties so stipulate, orwhen 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.

f the debtor accepts from the creditor a receipt in which an application of the payment is made, the formercannot complain of the same, unless there is a cause for invalidating the contract. (117a)

Article 1253.f the debt produces interest, payment of the principal shall not be deemed to have been madeuntil the interests have been covered. (1176)

Article 1254.!hen the payment cannot be applied in accordance with the preceding rules, or if application cannot be inferred from other circumstances, the debt which is most onerous to the debtor, among those due, shallbe deemed to have been satisfied.

f the debts due are of the same nature and burden, the payment shall be applied to all of them proportionately.(117+a)

S"#SECTION 2. Payment &y Ce%%ion

Article 1255.%he debtor may cede or assign his property to his creditors in payment of his debts. %his cession,unless there is stipulation to the contrary, shall only release the debtor from responsibility for the net proceedsof the thing assigned. %he agreements which, on the effect of the cession, are made between the debtor andhis creditors shall be governed by special laws. (1175a)

S"#SECTION 3. Ten'er of Payment an' Con%i(nation

Article 1256.f the creditor to whom tender of payment has been made refuses without $ust cause to accept it,the debtor shall be released from responsibility by the consignation of the thing or sum due.

:onsignation alone shall produce the same effect in the following cases4

(1) !hen the creditor is absent or un"nown, or does not appear at the place of payment

() !hen he is incapacitated to receive the payment at the time it is due

(6) !hen, without $ust cause, he refuses to give a receipt

(+) !hen two or more persons claim the same right to collect

(5) !hen the title of the obligation has been lost. (1170a)

Article 1257.n order that the consignation of the thing due may release the obligor, it must first be announcedto the persons interested in the fulfillment of the obligation.

%he consignation shall be ineffectual if it is not made strictly in consonance with the provisions which regulatepayment. (1177)

Article 1258.:onsignation shall be made by depositing the things due at the disposal of $udicial authority,before whom the tender of payment shall be proved, in a proper case, and the announcement of theconsignation in other cases.

%he consignation having been made, the interested parties shall also be notified thereof. (117&)


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Article 125.%he e#penses of consignation, when properly made, shall be charged against the creditor. (117')

Article 126!./nce the consignation has been duly made, the debtor may as" the $udge to order thecancellation of the obligation.

*efore the creditor has accepted the consignation, or before a $udicial declaration that the consignation has

been properly made, the debtor may withdraw the thing or the sum deposited, allowing the obligation to remainin force. (11&)

Article 1261.f, the consignation having been made, the creditor should authori2e the debtor to withdraw thesame, he shall lose every preference which he may have over the thing. %he co


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Article 1232.Payment means not only the delivery of money but also the performance, in any othermanner, of an obligation. (n)

Article 1233.A debt shall not be understood to have been paid unless the thing or service in whichthe obligation consists has been completely delivered or rendered, as the case may be. (1157)

Article 1234.f the obligation has been substantially performed in good faith, the obligor mayrecover as though there had been a strict and complete fulfillment, less damages suffered by theobligee. (n)

Article 1235.!hen the obligee accepts the performance, "nowing its incompleteness or irregularity,and without e#pressing any protest or ob$ection, the obligation is deemed fully complied with. (n)

Article 1236.%he creditor is not bound to accept payment or performance by a third person who hasno interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

!hoever pays for another may demand from the debtor what he has paid, e#cept that if he paidwithout the "nowledge or against the will of the debtor, he can recover only insofar as the payment

has been beneficial to the debtor. (115&a)

Article 1237.!hoever pays on behalf of the debtor without the "nowledge or against the will of thelatter, cannot compel the creditor to subrogate him in his rights, such as those arising from amortgage, guaranty, or penalty. (115'a)

Article 1238.Payment made by a third person who does not intend to be reimbursed by the debtoris deemed to be a donation, which reuires the debtors consent. *ut the payment is in any casevalid as to the creditor who has accepted it. (n)

Article 123.n obligations to give, payment made by one who does not have the free disposal ofthe thing due and capacity to alienate it shall not be valid, without pre$udice to the provisions of

article 1+7 under the %itle on -atural /bligations.- (110a)

Article 124!.Payment shall be made to the person in whose favor the obligation has beenconstituted, or his successor in interest, or any person authori2ed to receive it. (110a)

Article 1241.Payment to a person who is incapacitated to administer his property shall be valid if hehas "ept 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 benefit of thecreditor. 3uch benefit to the creditor need not be proved in the following cases4

(1) f after the payment, the third person acuires the creditors rights

() f the creditor ratifies the payment to the third person

(6) f by the creditors conduct, the debtor has been led to believe that the third person hadauthority to receive the payment. (1106a)

Article 1242.Payment made in good faith to any person in possession of the credit shall release thedebtor. (110+)


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Article 1243.Payment made to the creditor by the debtor after the latter has been $udicially orderedto retain the debt shall not be valid. (1105)

Article 1244.%he debtor of a thing cannot compel the creditor to receive a different one, althoughthe latter may be of the same value as, or more valuable than that which is due.

n obligations to do or not to do, an act or forbearance cannot be substituted by another act orforbearance against the obligees will. (1100a)

Article 1245.ation in payment, whereby property is alienated to the creditor in satisfaction of adebt in money, shall be governed by the law of sales. (n)

Article 1246.!hen the obligation consists in the delivery of an indeterminate or generic thing,whose uality and circumstances have not been stated, the creditor cannot demand a thing ofsuperior uality. either can the debtor deliver a thing of inferior uality. %he purpose of theobligation and other circumstances shall be ta"en into consideration. (1107a)

Article 1247.8nless it is otherwise stipulated, the e#tra$udicial e#penses reuired by the payment

shall be for the account of the debtor. !ith regard to $udicial costs, the 9ules of :ourt shall govern.(110&a)

Article 1248.8nless there is an e#press stipulation to that effect, the creditor cannot be compelledpartially to receive the prestations in which the obligation consists. either may the debtor bereuired to ma"e partial payments.

;owever, when the debt is in part liuidated and in part unliuidated, the creditor may demand andthe debtor may effect the payment of the former without waiting for the liuidation of the latter.(110'a)

Article 124.%he 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.

%he delivery of promissory notes payable to order, or bills of e#change or other mercantiledocuments shall produce the effect of payment only when they have been cashed, or when throughthe fault of the creditor they have been impaired.

n the meantime, the action derived from the original obligation shall be held in the abeyance. (117)

Article 125!.n case an e#traordinary inflation or deflation of the currency stipulated shouldsupervene, the value of the currency at the time of the establishment of the obligation shall be thebasis of payment, unless there is an agreement to the contrary. (n)

Article 1251.Payment shall be made in the place designated in the obligation.

%here being no e#press stipulation and if the underta"ing is to deliver a determinate thing, thepayment shall be made wherever the thing might be at the moment the obligation was constituted.

n any other case the place of payment shall be the domicile of the debtor.

f the debtor changes his domicile in bad faith or after he has incurred in delay, the additionale#penses shall be borne by him.


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%hese provisions are without pre$udice to venue under the 9ules of :ourt. (1171a)

S"#SECTION 1. A$$lication of Payment%

Article 1252.;e who has various debts of the same "ind in favor of one and the same creditor, maydeclare at the time of ma"ing the payment, to which of them the same must be applied. 8nless the

parties so stipulate, or when the application of payment is made by the party for whose benefit theterm has been constituted, application shall not be made as to debts which are not yet due.

f the debtor accepts from the creditor a receipt in which an application of the payment is made, theformer cannot complain of the same, unless there is a cause for invalidating the contract. (117a)

Article 1253.f the debt produces interest, payment of the principal shall not be deemed to havebeen made until the interests have been covered. (1176)

Article 1254.!hen the payment cannot be applied in accordance with the preceding rules, or ifapplication can not be inferred from other circumstances, the debt which is most onerous to thedebtor, among those due, shall be deemed to have been satisfied.

f the debts due are of the same nature and burden, the payment shall be applied to all of themproportionately. (117+a)

S"#SECTION 2. Payment &y Ce%%ion

Article 1255.%he debtor may cede or assign his property to his creditors in payment of his debts.%his cession, unless there is stipulation to the contrary, shall only release the debtor fromresponsibility for the net proceeds of the thing assigned. %he agreements which, on the effect of thecession, are made between the debtor and his creditors shall be governed by special laws. (1175a)

S"#SECTION 3. Ten'er of Payment an' Con%i(nation

Article 1256.f the creditor to whom tender of payment has been made refuses without $ust cause toaccept it, the debtor shall be released from responsibility by the consignation of the thing or sumdue.

:onsignation alone shall produce the same effect in the following cases4

(1) !hen the creditor is absent or un"nown, or does not appear at the place of payment

() !hen he is incapacitated to receive the payment at the time it is due

(6) !hen, without $ust cause, he refuses to give a receipt

(+) !hen two or more persons claim the same right to collect

(5) !hen the title of the obligation has been lost. (1170a)

Article 1257.n order that the consignation of the thing due may release the obligor, it must first beannounced to the persons interested in the fulfillment of the obligation.


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%he consignation shall be ineffectual if it is not made strictly in consonance with the provisions whichregulate payment. (1177)

Article 1258.:onsignation shall be made by depositing the things due at the disposal of $udicialauthority, before whom the tender of payment shall be proved, in a proper case, and theannouncement of the consignation in other cases.

%he consignation having been made, the interested parties shall also be notified thereof. (117&)

Article 125.%he e#penses of consignation, when properly made, shall be charged against thecreditor. (117')

Article 126!./nce the consignation has been duly made, the debtor may as" the $udge to order thecancellation of the obligation.

*efore the creditor has accepted the consignation, or before a $udicial declaration that theconsignation has been properly made, the debtor may withdraw the thing or the sum deposited,allowing the obligation to remain in force. (11&)

Article 1261.f, the consignation having been made, the creditor should authori2e the debtor towithdraw the same, he shall lose every preference which he may have over the thing. %he co

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SECTION 1 Payment or Performance