The burden of proof of payment is on the debtor.

To extinguish an obligation
complete payment or performance is needed

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.

Partial payment or performance may be allowed

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.

Article 1493. If at the time the contract of sale is perfected, the thing which is the object of the contract has
been entirely lost, the contract shall be without any effect.

But if the thing should have been lost in part only, the vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon.

Article 1494. Where the parties purport a sale of specific goods, and the goods without the knowledge of the
seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially
changed in character, the buyer may at his option treat the sale:

(1) As avoided; or

(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding
the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was
divisible. 

Article 1655. If the thing leased is totally destroyed by a fortuitous event, the lease is extinguished. If the
destruction is partial, the lessee may choose between a proportional reduction of the rent and a rescission of the
lease. 

The creditor or oblige cannot be compelled to receive a different one

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. 
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.

When the oblige accepts the performance knowing its incompleteness without
expressing any protest, the obligation is deemed completed

Article 1481. In the contract of sale of goods by description or by sample, the contract may be rescinded if the
bulk of the goods delivered do not correspond with the description or the sample, and if the contract be by
sample as well as description, it is not sufficient that the bulk of goods correspond with the sample if they do
not also correspond with the description.

The buyer shall have a reasonable opportunity of comparing the bulk with the description or the sample.

Article 1585. The buyer is deemed to have accepted the goods when he intimates to the seller that he has
accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is
inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods
without intimating to the seller that he has rejected them.

Payment by a third person to the creditor needs consent of the latter but not the
debtor

Article 1236. The creditor is not bound to accept payment or performance by a third person who has no
interest in the fulfillment of 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 against the will of the debtor, he can recover only insofar as the payment has been beneficial to
the debtor. 

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.

Article 1293. Novation which consists in substituting a new debtor in the place of the original one, may be
made even without the knowledge or against the will of the latter, but not without the consent of the creditor.
Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237. 

Nevertheless, if the third person and the creditor agree to release the debtor, the
latter’s obligation is extinguished
Article 1294. If the substitution is without the knowledge or against the will of the debtor, the new debtor's
insolvency or non-fulfillment of the obligations shall not give rise to any liability on the part of the original
debtor. 

There is conventional subrogation when the creditor, debtor and the third person
agree to the substitution
Article 1295. The insolvency of the new debtor, who has been proposed by the original debtor and accepted by
the creditor, shall not revive the action of the latter against the original obligor, except when said insolvency
was already existing and of public knowledge, or known to the debtor, when the delegated his debt. 

Article 1301. Conventional subrogation of a third person requires the consent of the original parties and of the
third person. 

Article 1303. Subrogation transfers to the persons subrogated the credit with all the rights thereto appertaining,
either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to
stipulation in a conventional subrogation.

Legal subrogation takes place even without the agreement of the three parties

Article 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred, even without the debtor's knowledge;

(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the
debtor;

(3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the
obligation pays, without prejudice to the effects of confusion as to the latter's share.

Payment made by the debtor to the third person who is not authorized to receive
payment does not extinguish the obligation
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. 

Assignment of credit does not need the consent of the debtor, and the assignee is
subrogated to the rights of the creditor

Article 1285. The debtor who has consented to the assignment of rights made by a creditor in favor of a third
person, cannot set up against the assignee the compensation which would pertain to him against the assignor,
unless the assignor was notified by the debtor at the time he gave his consent, that he reserved his right to the
compensation.

If the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the
compensation of debts previous to the cession, but not of subsequent ones.

If the assignment is made without the knowledge of the debtor, he may set up the compensation of all credits
prior to the same and also later ones until he had knowledge of the assignment. 

Article 1627. The assignment of a credit includes all the accessory rights, such as a guaranty, mortgage, pledge
or preference.

Payment made to a third person who is not authorized to receive payment is valid
if it redounded to the benefit of the creditor
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. 

Payment is in Philippine currency or may be in a foreign currency if stipulated by

the parties
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. 

Payment by checks is deemed complete when encashed or when the check is

cleared and credited to the creditor’s account
Delivery of a negotiable promissory notes payable to bearer or order shall produce
the effect of payment when through the fault of the creditor they have been
impaired

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. 

Payment made by the debtor in good faith to a person in possession of the

negotiable instrument releases the debtor
Article 1242. Payment made in good faith to any person in possession of the credit shall release the debtor. 

Dation in payment is a novation by changing the object

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. 

Article 1291. Obligations may be modified by:

(1) Changing their object or principal conditions;

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the rights of the creditor.

Place of payment
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. 

Article 1521. Whether it is for the buyer to take possession of the goods or of the seller to send them to the
buyer is a question depending in each case on the contract, express or implied, between the parties. Apart from
any such contract, express or implied, or usage of trade to the contrary, the place of delivery is the seller's
place of business if he has one, and if not his residence; but in case of a contract of sale of specific goods,
which to the knowledge of the parties when the contract or the sale was made were in some other place, then
that place is the place of delivery.

Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is
fixed, the seller is bound to send them within a reasonable time.

Where the goods at the time of sale are in the possession of a third person, the seller has not fulfilled his
obligation to deliver to the buyer unless and until such third person acknowledges to the buyer that he holds the
goods on the buyer's behalf.

Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour. What is a
reasonable hour is a question of fact.

Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be
borne by the seller.

When the creditor refuses to accept payment without just cause, tender of payment
alone does not extinguish the obligation to pay, consignation in court is necessary

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.

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. 

Tender of payment is extrajudicial while consignation is judicial. In the application

of payment, the debtor has various debts which are of the same kind that are all
due; and the debtor cannot pay all the debts

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.

He can declare which of the debts the payment will apply. However, he cannot
choose partial payments unless the debts are of the same nature and burden
Article 1254. When the payment cannot be applied in accordance with the preceding rules, or if application
can not 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. 

Moreover, interest has to be paid first

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.

Receipt of the principal amount without the reservation with respect to the
nonpayment of the interest gives rise to the presumption that said interest has been
paid

Article 1176. The receipt of the principal by the creditor without reservation with respect to the interest, shall
give rise to the presumption that said interest has been paid.
The receipt of a later installment of a debt without reservation as to prior installments, shall likewise raise the
presumption that such installments have been paid.

If the debtor does not choose which debts the payment should apply, and the
creditor does not indicate in the receipt the debt that the payment should apply, the
debt which is most onerous to the debtor shall be deemed to have been satisfied

Article 1254. When the payment cannot be applied in accordance with the preceding rules, or if application
can not 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. 

Loss of the object by a fortuitous event extinguishes the obligation and the owner
bears the loss

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. 

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

Article 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's
risk whether actual delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance
of the contract and the ownership in the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from
the time of such delivery;

(2) Where actual delivery has been delayed through the fault of either the buyer or seller the goods are
at the risk of the party in fault.
Another event that extinguishes an obligation is the impossibility of the
performance or when the obligation is so difficult to perform as it is manifestly
beyond the contemplation of the parties
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.

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

Remission of the debt is essentially gratuitous. An express condonation of the debt

must be in writing

Article 1270. Condonation or remission is essentially gratuitous, and requires the acceptance by the obligor. It
may be made expressly or impliedly.

One and the other kind shall be subject to the rules which govern inofficious donations. Express condonation
shall, furthermore, comply with the forms of donation. 

Presumption of remission of the debt by delivery of the creditor to the debtor of the
promissory note made by the latter

Article 1271. The delivery of a private document evidencing a credit, made voluntarily by the creditor to the
debtor, implies the renunciation of the action which the former had against the latter.

If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his heirs may uphold it
by proving that the delivery of the document was made in virtue of payment of the debt.

Article 1272. Whenever the private document in which the debt appears is found in the possession of the
debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved. 

Payment made by the debtor to a person in possession of the credit extinguishes

the obligation
Article 1242. Payment made in good faith to any person in possession of the credit shall release the debtor. 

Renunciation of the principal debt shall extinguish the accessory, but the waiver of
the accessory leaves the principal in force
Article 1273. The renunciation of the principal debt shall extinguish the accessory obligations; but the waiver
of the latter shall leave the former in force.

Article 1274. It is presumed that the accessory obligation of pledge has been remitted when the thing pledged,
after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the
thing. 

Article 2110. If the thing pledged is returned by the pledgee to the pledgor or owner, the pledge is
extinguished. Any stipulation to the contrary shall be void.

If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner, there is a
prima facie presumption that the same has been returned by the pledgee. This same presumption exists if the
thing pledged is in the possession of a third person who has received it from the pledgor or owner after the
constitution of the pledge. 

The remission of the whole obligation obtained by one of the solidary debtors does
not entitle him to reimbursement
Article 1220. The remission of the whole obligation, obtained by one of the solidary debtors, does not entitle
him to reimbursement from his co-debtors

Merger of rights occur when the characters of creditor and debtor are merged in the
same person
Article 1275. The obligation is extinguished from the time the characters of creditor and debtor are merged in
the same person.

For example, the debtor executes a negotiable promissory note to his creditor.
Subsequently, the creditor purchases goods from a third person, and as payment
endorses the promissory note to the third person. The third person then endorses
the same promissory note drawn by the debtor to the debtor himself as payment of
the supplies delivered by the debtor to the third person. The debt is extinguished.
Merger of the debt/credit in the person of the debtor extinguishes the obligation
including accessory obligations such as guaranty. But merger of the debt/credit in
the guarantor releases the guarantor but not the principal debt
Article 1276. Merger which takes place in the person of the principal debtor or creditor benefits the
guarantors. Confusion which takes place in the person of any of the latter does not extinguish the obligation.