Law on Obligations and Contracts payment.

Chapter 4
Art. 1231
Obligations are extinguished by;
 Payment or performance
 Loss of the thing due
 Novation
 Compensation
 Confusion or merger of the
rights of creditor & debtor
 Remission of the debt
Other causes of extinguishment of
obligations;
 Mutual withdrawal of parties
 Arrival of a resolutory period
 Death of a party in case of
personal obligation
 Happening of fortuitous
event
 Impossibility of fulfillment
 Compromise Agreements –
contracts, whereby parties
undertake reciprocal
obligations to resolve their
differences.
Section 1
Art. 1232
Payment
- not only the delivery of money but
also the performance, in any other
manner, of an obligation.
- Jin owes P5,000 to Jake. Jin also bound
himself to repair the bicycle of Jay. If Jin
paid the P5,000 to Jake there is
PAYMENT. Likewise, if Jin repaired the
bicycle of Jay, then there is
PERFORMANCE.
General Rule
 one who pleads payment has the
burden of proving it
 Burden rests on the defendant to
prove payment, rather than on the
plaintiff to prove payment
Requisites of Payment:
 The very thing due must be delivered.
 Prestation must be fulfilled completely.
Art. 1233
Debt
- Shall not be understood as paid
unless the thing or service has been
completely delivered or rendered.
(there must be an evidence/official
document)
- Jin owes P5,000 to Jake. Jin also bound
himself to repair Jay’s bicycle. If Jin paid
P3,000 in advance, leaving P2,000 as
balance, then there’s NO PAYMENT.
Likewise, if Jin only partially repaired the
bicycle, then there’s NO
PERFORMANCE.
Extinguishment:
 Integrity of Prestation
- payment
 Identity of the Prestation
- performance
Art. 1234
Obligation Substantially Performed in Good
Faith:
 Obligor may recover
 Less damages suffered by oblige
Substantial Performance
- When only a minor part thereof has
not been carried out.
- Soobin obliged himself to deliver
500 bags of cement to Beomgyu for
a certain price. However, despite of
his diligent efforts, he was able to
deliver only 450 bags because of
cement shortage. (Unable to deliver
for reasons beyond control).
*The article allows only a proportionate reduction in
the amount recoverable by the obligor.

Art. 1235
Obligation fully complied:
Receipts Voucher  When the creditor accepts the
 Written & signed  Documentary performance, knowing its
acknowledgement record of a incompleteness/irregularity, without
that money or business expressing objection.
goods have been transaction.  Jin agreed to paint the house of
delivered.  not an Jungwon. According to their
evidenced for
 stipulation, Jin would use a
particular brand of paint. If Jungwon
accepted the performance of Jin
without objection, knowing that the
paint used was another brand, the
obligation is fully complied.

Art. 1236
Persons from whom the Creditor must accept
payment:
1. Debtor
2. Any person who has an interest in the
obligation (Guarantor)
3. Third person who has no interest in the
obligation where there is a stipulation
that he can make a payment.

Creditor may refuse payment by a third person:

 If he dislikes or distrust the third person
 If he doesn’t desire to have business
dealings
 If it’s his bitter enemy

Effect of Payment by a Third Person:

 Demand from the debtor what he has
paid
a) If made without the knowledge
or against the will of the debtor
- Payer can recover only
up to the amount of the
debt at the time of
payment
b) If