Extinguishment of
OBLI
OBLIGATIONS
Group 1 BSA2-02
Receipt is a written and signed
ARTICLE 1232 acknowledgement that money has or
goods have been delivered.
Payment means not only the delivery Voucher is a documentary record of a
of money but also the performance, in business transaction.
any other manner, of an obligation.
➢ NOTE: A voucher is a method of
This Article manifested that the different recording payments, not a proof of
ways of payment of an obligation is payment. It must be supported by actual
through delivery of money or cash receipt or an encashed check.
performance of obligation in any
manner. REQUISITES OF PAYMENT
Payment may consist of not only the 1. Identity of the prestation
delivery of money but also the giving of a ➔ The very thing due must be delivered or
thing (other than money), the doing of released.
an act, or not doing of an act. 2. Integrity
➔ The prestation must be fulfilled
completely.
ARTICLE 1233
A debt shall not be understood to have
Evidence of payment of burden of proof
been paid unless the thing or service in
➢ A valid proof of payment is the
which the obligation consists has been
presentation of the receipt. Therefore, after
completely delivered or rendered, as
making payment of debt, a debtor may ask
the case may be.
the creditor for a receipt. If the creditor
declines to provide a receipt, the debtor
This Article sets out the requirement for
may request for a consignment. After the
payment in order to extinguish
creditor has established the debt’s
obligation: it must be complete.
existence, it is the debtor’s responsibility to
Therefore, if payment is not complete or
prove payment.
if performance is only partial, there is no
extinguishment of obligation.
The payor has the right to receive a
ARTICLE 1236 refund for the whole amount he paid if a
third person pays the debtor's obligation
The creditor is not bound to accept
with the latter's knowledge and consent.
payment or performance by a third
The same rule will apply if the debtor is
person who has no interest in the
aware that the third person has paid but
fulfillment of the obligation, unless
fails to dispute the payment at any point.
there is stipulation to the contrary.
If the payment was made without the
This article explains the general rule that debtor's consent or without knowledge,
a creditor cannot be forced to accept just the amount by which the debtor
payment from someone who is not a co- profited from it will be reimbursed.
debtor, guarantor, joint debtor, or who is Therefore, the payment would no longer
otherwise unconcerned in the be favorable to the debtor if the debt has
obligation's performance. already been prescribed or reimbursed.
In this instance, the payor has no right to
expect payment from the debtor.
ARTICLE 1238
Payment made by a third person who
does not intend to be reimbursed by
the debtor is deemed to be a donation,
Donation is when the paying third person
which requires the debtor's consent.
which has the debtor’s consent does not
But the payment is in any case valid as
intend to be reimbursed.
to the creditor who has accepted it.
NOTE: If the creditor accepts the
payment, it shall be valid as to him and
the payor although the debtor did not
give his consent to the donation.
ARTICLE 1239
In obligations to give, payment made
by one who does not have the free
GENERAL RULES:
disposal of the thing due and capacity
1. Payment is not valid even if accepted if
to alienate it shall not be valid, without
the person paying has not capacity to give;
prejudice to the provisions of Article
1427 under the Title on “Natural
2. If the person has no capacity to give, the
Obligations.
creditor cannot be compelled to accept the
If payment is made by a person who payment, and;
does not have any capacity to give
(either because he has no right to 3. The remedy of consignation cannot be
dispose of the thing due or because he availed of by the person attempting to pay
still has no legal capacity to dispose of without the capacity to do so.
such property, the same shall be invalid.
TO WHOM PAYMENT MUST BE MADE
ARTICLE 1240
1. The creditor at the time of the payment.
This is what is referred to in the phrase "to
Payment shall be made to the person the person in whose favor the obligation has
in whose favor the obligation has been been constituted."
constituted, or his successor in
interest, or any person authorized to 2. To the successors-in-interest of the
receive it. creditor. For example, payment must be
made to his heirs. ➢ The creditor referred to
must be the creditor at the time the
payment is to be made not at the
If payment is made by a person who
constitution of the obligation. Hence, if a
does not have any capacity to give
person is subrogated to the right of the
(either because he has no right to
creditor, payment should be made to the
dispose of the thing due or because he
new creditor.
still has no legal capacity to dispose of
such property, the same shall be invalid.
MEANING OF “ANY PERSON AUTHORIZED
ARTICLE 1240 TO RECEIVED IT”
As used in article 1240, it means not only
a person authorized by the creditor, but
3. To any person who bears the authority to also a person authorized by law to
receive such payment. A person acquires receive the payment such as guardian,
authority to receive payment by virtue of an executor or administrator of the estate
agreement or by law. of a deceased, and assignee or liquidator
of a partnership or corporation as well as
➢ When payment is made to the wrong any other person who may be
party, the obligation is not extinguished authorized to do so by the law.
as to the creditor who is without fault or
negligence even if the debtor acted in AUTHORIZED PERSON
outmost good faith and by mistake as to Legal – when conferred by Law
the person of the creditor or through (Authorized Guardian, Administrator of
error induced by fraud of a third person an estate of a deceased creditor.
Conventional – Authority given by the
creditor himself to an agent to collect
from the debtor
ARTICLE 1241
Payment to a person who is incapacitated (1) If after the payment, the third person
to administer his property shall be valid if acquires the creditor's rights;
he has kept the thing delivered, or insofar as
the payment has been beneficial to him. (2) If the creditor ratifies the payment to
Payment made to a third person shall also the third person;
be valid insofar as it has redounded to the
benefit of the creditor. Such benefit to the (3) If by the creditor's conduct, the debtor
creditor need not be proved in the following has been led to believe that the third
cases: person had the authority to receive the
payment. (1163a)
GENERAL RULE: INVALID PAYMENT
TO WHOM PAYMENT MUST BE MADE (ART.
EXCEPTIONS:
1240):
a. He has kept the thing delivered; or
VALID PAYMENT
b. Insofar, as the payment has been
1. Creditor or obligee
beneficial to him.
2. Successor in interest; or
3. Authorized agent
PAYMENT TO A THIRD PERSON ( ATR. 1241
PAYMENT TO INCAPACITATED PERSON
PART 2)
(ATR. 1241)
➢ Payment made to a third person shall
➢ Such as a minor, insane, or a person
also be valid as it has redounded to the
suffering from civil interdiction.
benefit of the creditor (but only up to the
extent of such benefit).
ARTICLE 1243 WHEN PAYMENT TO CREDITOR NOT
VALID
1. In an action against the debtor who is
Payment made to the creditor by the debtor
the creditor of another, the latter,
after the latter has been judicially ordered
during the pendency of the case may be
to retain the debt shall not be valid. (1165)
ordered by the court to retain the debt
(1) There must be an order to the judge to
until the right of the plaintiff, the
retain the debts because a third person filed
creditor in the main litigation is
a writ of attachment or garnishment.
resolved.
(2) Payment made subsequently by the
2. Payment made subsequently by the
debtor-stranger shall not be valid if the
debtor-stranger shall not be valid if the
plaintiff wins the case and cannot collect
plaintiff wins the case and cannot
from the debtor to whom the payment is
collect from the debtor to whom the
made. Such payment is considered as made
payment is made. Such payment is
in bad faith.
considered as made in bad faith.
(3) It is applicable only in “debts” or “credits”
not in property.
ARTICLE 1243 PRELIMINARY INJUNCTION
It is an order granted at any stage
of an action or proceeding prior to
PRELIMINARY ATTACHMENT
the judgment or final order,
a remedy by which the property of the
requiring a party or a court, agency
defendant is taken into the custody of
or a person to refrain from a
law either at the commencement of
particular act or acts.
action or at any time before the entry of
GARNISHMENT
judgment as security.
It is a species of attachment in
FINAL ATTACHMENT which the plaintiff seeks to subject
It is one that is issued to enforce a his claims properties of the debtor
judgment that has already become final in the hands of a stranger.
and executory.
ARTICLE 1245
Dacion en pago
A mode of extinguishing an existing
obligation partakes of the nature of sale
Dation in payment, wherein property is whereby property is alienated to the creditor
alienated to the creditor in satisfaction is satisfaction of a debt in money. It is an
of a debt in money, shall be governed by objective novation of the obligation, hence,
the law of sales. common consent of the parties is required in
order to extinguish the obligation.
DATION OF PAYMENT
It is a special form of payment because it
is not the ordinary way of extinguishing an
obligation. A debt in money is satisfied,
not by payment of money (Art. 1244.), but
by the transmission of ownership of a
thing by the debtor to the creditor.
ARTICLE 1252
If the debtor accepts from the creditor a
He who has various debts of the same
receipt in which an application of the
kind in favor of one and the same
payment is made, the former cannot
creditor, may declare at the time of
complain of the same, unless there is a cause
making the payment, to which of them
for invalidating the contract.
the same must be applied. Unless the
parties so stipulate, or when the
Application of Payment
application of payment is made by the
Defined as the designation of the debt to
party for whose benefit the term has
which the payment must be applied when
been constituted, application shall not
the debtor has several obligation of the same
be made as to debts which are not yet
kind in favor of the same creditor.
due.
ARTICLE 1255
The debtor may cede or assign his
property to his creditors in payment of
his debts. This cession, unless there is Payment by Cession
stipulation to the contrary, shall only Defined as a special form of payment
release the debtor from responsibility for whereby the debtor abandons all of his
the net proceeds of the thung assigned. property for the benefit of his creditor in
The agreement which, on the effect of order that from the proceeds thereof the
the cession, are made between the latter may obtain payment of their
debtor and his creditors shall be credits.
governed by special laws.
Consignation alone shall produce the
ARTICLE 1256 same effect in the following cases:
1.When the creditor is absent or unknown,
If the creditor to whom tender of
or does not appear at the place of
payment has been made refuses without
payment;
just cause to accept it, the debtor shall
be released from responsibilities by the
2. When he is incapacitated to receive the
consignation of the thing or sum due.
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 Tender of Payment
Definitive act of offering the creditor
what is due him or her, together with the
demand that the creditor accept the
same.
Consignation
The act of depositing the thing due with
the court or judicial authorities whenever
the creditor cannot accept or refuses to
accept payment, and it generally requires
a prior tender of payment.
Well-settled
The rule that tender of payment must be
accompanied by consignation in order
that the effects of payment may be
produced.
THANK YOU
FOR QUIZ
LISTENING TIME!!!
1. A paid B for something. It turned out,
however, that that something being the
object of the obligation has rendered the
obligation null and void. What happens to
the payment?
A. VOID B. VALID
2. A paid B the amount of P100 days after
the obligation to pay already prescribed
without knowing that it already did. May
A recollect the pay from B?
A. YES B. NO
3. A paid B the amount of P100 days after
the obligation to pay already prescribed
knowing fully well that it had already
been prescribed. May A still demand the
return of the P100 payment?
A. NO. B. YES
4&5. Give the Requisites of payment
6. Give the 2 kinds of authorized person
TRUE OR FALSE
7. The creditor is bound to accept
payment or performance by a third person
who has interest in the fulfillment of the
obligation.
TRUE OR FALSE
8. If the incapacitated person kept the
thing delivered, the obligation is
extinguished.
TRUE OR FALSE
9. Payment is valid if the third person is a
possessor merely of the document
evidencing the credit.
TRUE OR FALSE
10. There must be an order to the judge to
retain the debts because a third person
filed a writ of attachment or garnishment.
