Article 1246.

When the obligation No costs are allowed against the

consists in the delivery of an indeterminate Government, unles otherwise provided by
or generic thing, whose quality and law.
circumstances have not been stated, the Article 1248. Unless there is an

creditor cannot demand a thing of superior express stipulation to that effect, the
quality. Neither can the debtor deliver a creditor cannot be compelled partially to

thing of inferior quality. The purpose of the receive the prestations in which the
obligation and other circumstances shall be obligation consists. Neither may the debtor

taken into consideration. be required to make partial payments.

However, when the debt is in part
Article 1247. Unless it is otherwise liquidated and in part unliquidated, the

stipulated, the extrajudicial expenses creditor may demand and the debtor may
required by the payment shall be for the effect the payment of the former without

account of the debtor. With regard to waiting for the liquidation of the latter.
judicial costs, the Rules of Court shall
govern. Performance of obligation should be
complete

Debtor pays for extrajudicial expenses The above provision contemplates

The extrajudicial expenses of obligations where then is only one creditor

payment are for the account of the debtor. and only one debtor. Joint and solidary
The reason is that the obligation is obligations are governed by Articles 1207 to
extinguished when payment is made and it 1222.

is, therefore, the debtor who is primarily In order that payment may
benefited. extinguish an obligation, it is necessary

If the parties have made a that there be complete performance of the

stipulation as to who will bear the prestation (Art. 1233.) The creditor may
expenses, then their stipulation shall be accept but he cannot be compelled to

followed. accept partial performance. The debtor has

Article 1247 does not apply to the duty to comply with the whole of the

expenses incurred by creditor in going to obligation but he cannot be required make

the debtor's domicile to collect. partial payments if he does not wish to do

so.
Losing party generally pays judicial costs
Judicial costs are the statutory When partial performance allowed
amounts allowed to a an action for his There are cases, however, when
expenses incurred in the action. Under the partial performance may beeither required
Rule of Court (Sec. 1, Rule 142.), the costs or insisted. Among these cases are:
of an action shall, as a r be paid by the (1) when there is an express
losing party. The court may, however, for stipulation to that effect
speci reasons, adjudge that either party (2) when the debt is in part

shall pay the costs or that b same be liquidated (definitely and determined or
divided as may be equitable. Party. computed) and in part unliquidated
 (3) when the different prestations in Pilipinas (BSP) constitutes legal tender for
which the obligation consists are subject to all debts, both public or private.
different terms or conditions which affect Unless otherwise fixed by the
some of them. In obligations which Monetary Board of the BSP coins are legal

comprehend several distinct prestations tender for amounts not exceeding P50.00
(e.g., obligation to pay debt in installments), for denominations of P0.25 and above, and

it is evident that the prestations need not in those of amounts not exceeding P20.00
be executed simultaneously but each for denominations of P0.10 or less. All coins

successive execution thereof must be and bills above P1.00 are, therefore, valid
complete. legal tenders for any amount.

Article 1249. The payment of debts Payment by means of instruments of credits

in money shall be made in the currency (1) Right of creditor to refuse or accept –

stipulated, and if it is not possible to deliver Promissory notes, checks, bills of exchange
such currency, then in the currency which and other commercial documents ar
is legal tender in the Philippines. The Promissory notes not legal tender and,
delivery of promissory notes payable to therefore, the creditor cannot be compelled

order, or bills of exchange or other to accept them. This is true even though

mercantile documents shall produce the the check is certified or is manager's check.
effect of payment only when they have been a) The creditor, however, if he
cashed, or when through the fault of the chooses, may accept them, without the
creditor they have been impaired. acceptance producing the effect of payment.

In the meantime, the action derived In the meantime, the demandability of the
from the original obligation shall be held in original obligation is suspended.

abeyance. (b) The creditor must cash the

instrument, and it is only when it is
Meaning of legal tender dishonored that he can bring an action for

Legal tender is that currency which non-payment of the debt. (par. 3.)
if offered by the debtor the right amount, (2) Effect on obligation - Payment by means

the creditor must accept in payment of a of mercantile documents does not

debt in money. extinguish the obligation:

(a) until they have been cashed;

Legal tender in the Philippines (b) unless they have been impaired
Debts in money shall be paid in the through the fault of the creditor.
currency stipulated! it is not possible to
deliver such currency or in the absence of Article 1250. In case an
any stipulation to make payment in a extraordinary inflation or deflation of the
foreign currency, then the payment shall be currency stipulated should supervene, the
made in the currency which is legal tender value of the currency at the time of the
in the Philippines. establishment of the obligation shall be the

In the Philippines, all coins and basis of payment, unless there is an

notes issued by the Bangko Sentral ng agreement to the contrary.
Meaning of inflation and deflation Place where obligation shall be paid
(1) Inflation is a sharp sudden increase of Article 1251 gives the rules
money or credit or both without a regarding the place for the payment of an
corresponding increase in business obligation without prejudice to venue under

transactions. Inflation causes a drop in the the Rules of Court.

value of money, resulting in the rise of the (1) If there is a stipulation, the

general price level. payment shall be made in the place

(2) Deflation is the reduction in volume and designated.

circulation of the available money or credit, (2) If there is a stipulation and the
resulting in a decline of the general price thing to be delivered is specific, the
level; it is the opposite of inflation. payment shall be made at the place where

the thing was, at the perfection of the

Basis of payment in case of extraordinary contract.

inflation or deflation. (3) If there is no stipulation and the

Under Article 1250, the purchasing thing to be delivered is generic, the place of
value of the currency at the time of the payment shall be the domicile of the debtor.
establishment of the obligation shall be the In this case, the creditor bears the expenses

basis of payment, in case of any in going to the debtor's place to accept

extraordinary increase or decrease in the payment subject to the rule in paragraph

purchasing power of the currency which the five.
parties could not have reasonably foreseen. The order as above enumerated is
This is, however, subject to the agreement successive and exclusive as may be gleaned

of the parties to the contrary. from the provision itself.

Note: Venue is the place where a

Article 1251. Payment shall be made in the court suit or action must be filed or
place designated in the obligation. instituted.
There being no express stipulation Domicile is the place of a person's

and if the undertaking is to deliver a habitual residence the place where he has
determinate thing, the payment shall be his true fixed permanent home and to

made wherever the thing might be at the which place he, whenever he is absent, has
moment the obligation was constituted. the intention of returning. Residence is only

In any other case the place of an element of domicile. It simply requires

payment shall be the domicile of the debtor. bodily presence as an inhabitant in a given
If the debtor changes his domicile in place, while domicile (or legal residence)
bad faith or after he has incurred in delay, requires bodily presence in that place and
the additional expenses shall be borne by also an intention to make it one's domicile.
him. It is believed that the term
These provisions are without "domicile," as used in Article 1251,
prejudice to venue under the Rules of connotes "actual" as distinguished from
Court. "legal" residence.
 Article 1252. 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 1253. If the debt produces

interest, pay- ment of the principal shall

not be deemed to have been made until the

interests have been covered. (1173)