Art. 1231-1269

CHAPTER 4
Extinguishment of Obligations
General Provisions
Article 1231. Obligations are extinguished:
(1) By payment or performance;
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation.
Other causes of extinguishment of obligations, such as annulment,
rescission, fulfillment of a resolutory condition, and prescription,
are governed elsewhere in this Code. (1156a)
SECTION 1
Payment or Performance
Article 1232. Payment means not only the delivery of money but also
the performance, in any other manner, of an obligation. (n)
Article 1233. 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, as the case may be. (1157)
Article 1234. If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been a
strict and complete fulfillment, less damages suffered by the obligee.
(n)
Article 1235. 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. (n)
Article 1236. The creditor is not bound to accept payment or
performance by a third person who has no interest in the fulfillment
the obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has
paid, except that if he paid without the knowledge or againstthe will of
the debtor, he can recover only insofar as the payment has been
beneficial to the debtor. (1158a)
Article 1237. Whoever pays on behalf of the debtor without the
knowledge 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, or penalty. (1159a)
Article 1238. 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. But the payment is in any case valid as to
the creditor who has accepted it. (n)
Article 1239. In 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 prejudice to the provisions of article 1427 under
the Title on "Natural Obligations." (1160a)
Article 1240. Payment shall be made to the person in whose favor the
obligation has been constituted, or his successor in interest, or any
person authorized to receive it. (1162a)
Article 1241. Payment to a person who is incapacitated to administer
his property shall be valid if he has kept 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 the creditor. Such benefit to the
creditor need not be proved in the following cases:
(1) If after the payment, the third person acquires the creditor's rights;
(2) If the creditor ratifies the payment to the third person;
(3) If by the creditor's conduct, the debtor has been led to believe that
the third person had authority to receive the
payment. (1163a)
Article 1242. Payment made in good faith to any person in possession
of the credit shall release the debtor. (1164)
Article 1243. Payment made to the creditor by the debtor after the
latter has been judicially ordered to retain the debt shall not be
valid. (1165)
Article 1244. The debtor of a thing cannot compel the creditor to
receive a different one, although the latter may be of the same value
as, or more valuable than that which is due.
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.
(1166a)
Article 1245. Dation in payment, whereby property is alienated to the
creditor in satisfaction of a debt in money, shall be governed by the law
of sales. (n)
Article 1246. When the obligation consists in the delivery of an

indeterminate or 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. (1167a)
Article 1247. Unless it is otherwise stipulated, the extrajudicial

expenses required by the payment shall be for the account of the
debtor. With regard to judicial costs, the Rules of Court shall govern.
(1168a)
Article 1248. Unless there is an express stipulation to that effect, the

creditor cannot be compelled partially to receive the prestations in
which the obligation consists. Neither may the debtor be required to
make partial payments.
However, when the debt is in part liquidated and in part unliquidated,
the creditor may demand and the debtor may effect the payment of
the former without waiting for the liquidation of the latter. (1169a)
Article 1249. The 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.
The delivery of promissory notes payable to order, or bills of exchange
or other mercantile documents shall produce the effect of payment
only when they have been cashed, or when through the fault of the
creditor they have been impaired.
In the meantime, the action derived from the original obligation shall
be held in the abeyance. (1170)
Article 1250. In case an extraordinary inflation or deflation of the
currency stipulated should supervene, the value of the currency at
the time of the establishment of the obligation shall be the basis of
payment, unless there is an agreement to the contrary. (n)
Article 1251. Payment shall be made in the place designated in the
obligation.
There being no express stipulation and if the undertaking is to deliver a
determinate thing, the payment shall be made wherever the
thing might be at the moment the obligation was constituted.
In any other case the place of payment shall be the domicile of the
debtor.
If the debtor changes his domicile in bad faith or after he has incurred
in delay, the additional expenses shall be borne by him.
These provisions are without prejudice to venue under the Rules of

Court. (1171a)
SUBSECTION 1. Application of Payments
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. (1172a)
Article 1253. If the debt produces interest, payment of the principal
shall not be deemed to have been made until the interests have
been covered. (1173)
Article 1254. When 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, shall be deemed to have been satisfied. If the debts due are
of the same nature and burden, the payment shall be applied to all of
them proportionately. (1174a)
SUBSECTION 2. Payment by Cession
Article 1255. The debtor may cede or assign his property to his
creditors in payment of his debts. This cession, unless there is
stipulation to the contrary, shall only release the debtor from
responsibility for the net proceeds of the thing assigned. The
agreements which, on the effect of the cession, are made between the
debtor and his creditors shall be governed by special laws.
(1175a)
SUBSECTION 3. Tender of Payment and Consignation
Article 1256. If the creditor to whom tender of payment has been made
refuses without just cause to accept it, the debtor shall be
released from responsibility by the consignation of the thing or sum
due.
Consignation alone shall produce the same effect in the following cases:
(1) When the creditor is absent or unknown, or does not appear at the
place of payment;
(2) When he is incapacitated to receive the 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. (1176a)
Article 1257. In order that the consignation of the thing due may
release the obligor, it must first be announced to the persons
interested in the fulfillment of the obligation.
The consignation shall be ineffectual if it is not made strictly in

consonance with the provisions which regulate payment. (1177)
Article 1258. Consignation shall be made by depositing the things due
at the disposal of judicial authority, before whom the tender
of payment shall be proved, in a proper case, and the announcement of
the consignation in other cases.
The consignation having been made, the interested parties shall also be
notified thereof. (1178)
Article 1259. The expenses of consignation, when properly made, shall
be charged against the creditor. (1179)
Article 1260. Once the consignation has been duly made, the debtor
may ask the judge to order the cancellation of the obligation.
Before the creditor has accepted the consignation, or before a judicial

declaration that the consignation has been properly made,
the debtor may withdraw the thing or the sum deposited, allowing the
obligation to remain in force. (1180)
Article 1261. If, the consignation having been made, the creditor should
authorize the debtor to withdraw the same, he shall lose
every preference which he may have over the thing. The co-debtors,
guarantors and sureties shall be released. (1181a)
SECTION 2
Loss of the Thing Due
Article 1262. An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be lost or
destroyed without the fault of the debtor, and before he has incurred
in delay.
When by law or stipulation, the obligor is liable even for fortuitous
events, the loss of the thing does not extinguish the obligation,
and he shall be responsible for damages. The same rule applies when
the nature of the obligation requires the assumption of risk.
(1182a)
Article 1263. In an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the
obligation. (n)
Article 1264. The courts shall determine whether, under the
circumstances, the partial loss of the object of the obligation is so
important as to extinguish the obligation. (n)
Article 1265. Whenever the thing is lost in the possession of the debtor,
it shall be presumed that the loss was due to his fault,
unless there is proof to the contrary, and without prejudice to the
provisions of article 1165. This presumption does not apply in case
of earthquake, flood, storm, or other natural calamity. (1183a)
Article 1266. The debtor in obligations to do shall also be released
when the prestation becomes legally or physically impossible
without the fault of the obligor. (1184a)
Article 1267. When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may
also be released therefrom, in whole or in part. (n)
Article 1268. When the debt of a thing certain and determinate
proceeds from a criminal offense, the debtor shall not be exempted
from the payment of its price, whatever may be the cause for the loss,
unless the thing having been offered by him to the person
who should receive it, the latter refused without justification to accept
it. (1185)
Article 1269. The obligation having been extinguished by the loss of the
thing, the creditor shall have all the rights of action which
the debtor may have against third persons by reason of the loss. (1186)

Art. 1231-1269

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CHAPTER 4

Article 1246. When the obligation consists in the delivery of an

Article 1247. Unless it is otherwise stipulated, the extrajudicial

Article 1248. Unless there is an express stipulation to that effect, the

These provisions are without prejudice to venue under the Rules of

interested in the fulfillment of the obligation.

The consignation shall be ineffectual if it is not made strictly in

Before the creditor has accepted the consignation, or before a judicial

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