Notes on Article 1240: To Whom to Pay

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.

To whom must payment be made?

The one obliged to make payment incumbent upon him must do so to:

(1) The creditor at the time of the payment. This is what is referred to in the phrase "to the person in whose favor the obligation has been constituted."
(2) To the successors-in-interest of the creditor. For example, payment must be made to his heirs.
(3) To any person who bears the authority to receive such payment. A person acquires authority to receive payment by virtue of an agreement or by law.

What if the person who received the payment was not authorized by law or by agreement?

Well, the receipt/payment is not valid. Take note, however, of Article 1241 which states, "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."A is the creditor of B. C presented himself to B, the debtor, and alleged that he has been given authority by A to receive the money. B paid the whole amount to C.

The payment is not valid. B is still indebted to A.

It must be noted that payment made to a person without any authority to collect the debt is at the risk of loss on the part of the person paying. This is to protect the interest of the creditor. If any debtor can allege payment made in favor of just anyone, the right of the creditor to collect what he rightfully owns will be impaired.

It is an unwritten rule, therefore, that a debtor should exert all efforts to verify the authority of the person collecting the payment.