Notes on Article 1233: Complete Payment
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.
This Article sets out the requirement for payment in order to extinguish obligation: it must be complete. Therefore, if payment is not complete or if performance is only partial, there is no extinguishment of obligation.
It can be inferred that there are actually two (2) requirements in order to extinguish an obligation: first, the very thing or service agreed upon must be paid and second, the payment must be complete and whole. Thus, when A, who was indebted in the amount of Php 2000 to B, paid the latter only Php 1000, the obligation to pay still remains.
Who bears the burden of proof?He who alleges that there exists a debt (in this case, the creditor) has the duty to prove this in court. After doing his part, the creditor now shifts the burden of proof to the debtor for him to prove that he already made payment.
It must be noted that in a case decided by the Supreme Court, the fact that the creditor still is in possession of a promissory note is a rebuttable presumption that no payment has yet been made by the debtor. In yet another interesting case decided by the Highest Tribunal, it was held that the fact that the depositor still is in possession of certificates of deposit made in a bank gives rise to the presumption that the bank has not yet delivered the deposited money to the depositor. (Note that the relationship between banks and depositors is one similar to that between a creditor and a debtor.)
How do we prove that payment was already made?
Naturally, a receipt or a certificate of payment/receipt of payment is one of the best ways to prove the existence of payment. It is not against reason that a debtor demands the issuance of a receipt from the creditor upon payment of the whole amount or of a partial amount.
A was indebted to B in the amount of Php 1,000,000. B demanded payment but A argued that he already paid the whole amount. Hence, they went to court. A, although insistent that he was already free from the obligation to pay, was not able to show any receipt to that effect. He argued that since he and B are childhood friends, he only demanded a receipt once. Decide.
Absent any proof that payment of the whole amount was made, the obligation to pay remains. Here, A failed to prove in court that his obligation to pay B was already extinguished. Hence, he is still bound to pay B who sufficiently proved the existence of the debt.
What if A was able to show a receipt of one installment paid by him to B on his third month of the period of his indebtedness? What will be the presumption?
The presumption will be that A paid installments for the first and the second months. It is now up to the creditor to prove that no payment on such months was actually made.
During the time when the Usury Law was still in legal force and effect, A borrowed money from B in the interest of 192% per annum. A refused to pay afterwards stating that he was not long bound to pay since the interest is void for being contrary to law. Is A's contention correct?
No, A is still bound to pay the complete amount of the principal obligation and the complete amount of the legal interest imposable. The fact that the interest agreed upon is null and void does not automatically invalidate the obligation to pay the money which was in fact borrowed by the creditor and the interest due the latter under the law.
This Article sets out the requirement for payment in order to extinguish obligation: it must be complete. Therefore, if payment is not complete or if performance is only partial, there is no extinguishment of obligation.
It can be inferred that there are actually two (2) requirements in order to extinguish an obligation: first, the very thing or service agreed upon must be paid and second, the payment must be complete and whole. Thus, when A, who was indebted in the amount of Php 2000 to B, paid the latter only Php 1000, the obligation to pay still remains.
Who bears the burden of proof?He who alleges that there exists a debt (in this case, the creditor) has the duty to prove this in court. After doing his part, the creditor now shifts the burden of proof to the debtor for him to prove that he already made payment.
It must be noted that in a case decided by the Supreme Court, the fact that the creditor still is in possession of a promissory note is a rebuttable presumption that no payment has yet been made by the debtor. In yet another interesting case decided by the Highest Tribunal, it was held that the fact that the depositor still is in possession of certificates of deposit made in a bank gives rise to the presumption that the bank has not yet delivered the deposited money to the depositor. (Note that the relationship between banks and depositors is one similar to that between a creditor and a debtor.)
How do we prove that payment was already made?
Naturally, a receipt or a certificate of payment/receipt of payment is one of the best ways to prove the existence of payment. It is not against reason that a debtor demands the issuance of a receipt from the creditor upon payment of the whole amount or of a partial amount.
A was indebted to B in the amount of Php 1,000,000. B demanded payment but A argued that he already paid the whole amount. Hence, they went to court. A, although insistent that he was already free from the obligation to pay, was not able to show any receipt to that effect. He argued that since he and B are childhood friends, he only demanded a receipt once. Decide.
Absent any proof that payment of the whole amount was made, the obligation to pay remains. Here, A failed to prove in court that his obligation to pay B was already extinguished. Hence, he is still bound to pay B who sufficiently proved the existence of the debt.
What if A was able to show a receipt of one installment paid by him to B on his third month of the period of his indebtedness? What will be the presumption?
The presumption will be that A paid installments for the first and the second months. It is now up to the creditor to prove that no payment on such months was actually made.
During the time when the Usury Law was still in legal force and effect, A borrowed money from B in the interest of 192% per annum. A refused to pay afterwards stating that he was not long bound to pay since the interest is void for being contrary to law. Is A's contention correct?
No, A is still bound to pay the complete amount of the principal obligation and the complete amount of the legal interest imposable. The fact that the interest agreed upon is null and void does not automatically invalidate the obligation to pay the money which was in fact borrowed by the creditor and the interest due the latter under the law.
