Article 1236: Disinterested 3rd Person Pays

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.

This Article inaugurates the rule that a creditor, generally, cannot be compelled to accept payment made by a person outside the agreement, who is not a co-debtor, guarantor or joint debtor or who is otherwise not interest interested in the fulfillment of the obligation. This rule, of course, like any other rule, admits of exceptions: (1) if the contract so expressly provides that this can be done, or; (2) if the second requisite is not present (i.e. the payor is a person interested in the fulfillment of the obligation).

Demand of the whole amount can be made by a stranger to the agreement who paid the obligation of the debtor. This rule, however, does not apply when he did so without the debtor knowing it or against the debtor's will. In such cases, the stranger can only demand from the debtor the return of the payment which actually benefited the latter.

What was the old rule?

The old rule states that payment may be made by a stranger where the obligation is not intuitu personae (strictly personal).

What is the reason for this new rule?

According to the framers of the new Civil Code, the creditor should have the right to insist on the liability of the debtor and the right to avoid business dealings with people he might dislike or distrust. Furthermore, the creditor should have a right to transact only with people in whom he has confidence and a right to avoid fraud whenever he so desires.

This rule actually prevents the issue of payment from getting more complicated.

What if the stranger paid with the knowledge and consent of the debtor?

In such a case, he may demand reimbursement and subrogation covering even rights as guaranty, penalty clause, mortgage and the like.

What if the stranger pad without the debtor's knowledge and consent?

In this case, subrogation cannot be availed of. Also, what can be demanded only is beneficial reimbursement because he (the stranger) was at fault in not seeking first the consent of the debtor.

A paid Php 500 for B without the latter's knowledge or consent. Later, it turned out that B only had to pay Php 250. What happens then?Since A made the payment in favor of B without his knowledge or consent, he can only demand Php 250 - the beneficial payment. A's action for recovery of the beneficial payment should be directed against B and not the creditor since this is not a case of solutio indebiti. There is no mistake in payment since the Php 250 was actually due and demandable at the time of payment.

The other Php 250 is of course covered by the principle of unjust enrichment since what was actually required was Php 250, not Php 500. The proper course of action is to recover said amount from the creditor who received it unduly.

A was paid C in favor of B. Little did he know, the debt had already prescribed before he made the payment.

A can recover payment from C. This is a case of undue payment. This is one of the instances when recovery can be had from the creditor and not from the innocent debtor. Other instances are when the debt had been completely remitted, when the debt had already been paid and when legal compensation had already taken place. (Manresa)

A paid without the knowledge of the debtor. B paid against the will of the debtor. What now?

The same rule applies: the stranger-payor is only entitled to reimbursement of the payment beneficial to the debtor. The law does not distinguish between "without the knowledge" and "against the will."

Having knowledge of something and not doing anything to prevent it is in itself an implied consent.

Who has the burden of proof?

The stranger who paid in behalf of the debtor bears the burden to prove that (1) he is interested in the fulfillment of the obligation, (2) that the debtor has knowledge of the payment or (3) that the payment is not against the will of the debtor.

Does this apply to payment of taxes?

In a loose sense, yes. However, there is a separate provision of law that applies to such a circumstance. Article 2175: "Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter."

Rehabilitation Finance Corp. vs. CA (94 Phil. 985)

The Supreme Court laid down the following principles in this case:

[1] The creditor has no obligation to bring up the fact that the payment was in fact beneficial to the debtor. After consenting to the payment, the debtor lets the third person pay the creditor. The creditor is now out of the picture. The case is not between the debtor and the stranger-payor.
[2] Once the creditor has accepted payment made by a third person, he can no longer require proof of the debtor's consent to the same.
[3] If a debtor who knows fully well that a third person attempts to pay in his favor does nothing to object or stop the latter, he is estopped from protesting later on.