Payment

-refers not only to the delivery of money but also to the performance, in any other manner, of an
obligation.

How the payment must be made

1. There must be delivery of the thing or rendition of the service that was contemplated.
a. The debtor of the thing cannot compel the creditor to accept a different one although the
latter may be of the same value as, or more valuable than that which is due.
b. In obligations to do or not to do, an act or forbearance cannot be substituted by another act
or forbearance against the obligee’s will.
c. In obligations to give a generic thing whose quality and circumstances have not been stated,
the creditor cannot demand a thing of superior quality. Neither can the debtor deliver a
thing of inferior quality. The purpose of the obligation and other circumstances shall be
taken into consideration.
d. If the obligation is a monetary obligation, the payment must be in legal tender.
Legal tender is the money or currency which the debtor may compel his creditor to accept
in payment of his debt.

Under Section 52 of Republic Act No. 7653, the following are considered to be legal tender
in the Philippines:
 One thousand pesos for denominations of 1-Piso, 5-Piso and 10-Piso coins.
 One hundred pesos for denominations of 1sentimo, 5-sentimo, 10-sentimo, and
25-sentimo coins.
 All bills are legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile
documents shall produce the effect of payment when they have been cashed or when
through the fault of the creditor they have been impaired.

A check is not a legal tender and therefore, cannot constitute a valid tender of payment.

2. The payment or performance must be complete.

Exceptions:
a. If the obligation has been substantially performed in good faith, the obligor may recover as
though there had been strict and complete fulfillment, less damages suffered by the obligee.
b. When the obligee accepts the performance knowing its incompleteness or irregularity, and
without expressing any protest or objection, the obligation is deemed fully complied with.
c. When there is an agreement to that effect.
d. When the debt is in part liquidated and in part unliquidated.

Payment by a third person

1. The creditor is not bound to accept payment by a third person

Exceptions:
 When there is a stipulation to that effect.
 When the third person has an interest in the fulfillment of the obligation.
2. Rights of third person who makes the payment
a. Payment with the knowledge and consent of the debtor
 He can recover what he has paid.
  He is entitled to be subrogated in the rights of the creditor such as those arising for
mortgage, guaranty or penalty.

b. Payment without the knowledge or against the will of the debtor

He can recover only insofar as the payment has been beneficial to the debtor.

3. Payment by a third person who does not want to be reimbursed

a. The payment shall be deemed a donation.
b. If the debtor does not consent, the payment shall nevertheless be valid to the creditor who
has accepted it.

To whom shall payment be made?

1. To the creditor
Payment to an incapacitated creditor – not valid
Except:
 If he has kept the thing delivered.
 Insofar as the payment has been beneficial to him.
2. To the creditor’s successors in interest, such as his heirs or assigns.
3. To any person authorized to receive payment.

Where payment must be made

1. If there is a stipulation, then in the place designated.

2. If there is no stipulation
a. SPECIFIC – where the thing must be at the time the obligation was constituted.
b. GENERIC – domicile of the debtor.

PAYMENT BY CESSION AND DATION IN PAYMENT DISTINGUISHED

Payment by Cession Dation in payment

1. There must be two or
more creditors.
3. The debtor is insolvent.
5. Affects all the debtor’s
properties.
7. The creditors are
authorized to sell only
the debtor’s properties.
9. The debtor is not
released as a rule.
2. Plurality of creditors is not required.
4. The debtor may not be insolvent.
6. Does not affect all the debtor’s
properties
8. The creditor becomes the owner of the
properties given as payment.
10. The debtor is released as a rule.

Module 1 - Finals

Prepared by: RICALYN E. SUMPAY