Payment or Performance

Payment refers to either the delivery of money and/or the performance, in any other manner, of an obligation. The currency stipulated by the parties is the basis of the payment for debts in money. If it is not possible to do so, then the debt is to be paid in the currency which is legal tender in the Philippines. For obligations to give, a payment is only valid if the person making payment has free disposal of the thing due and capacity to alienate it.

As a general rule for obligations to give, a debt is only considered paid if the thing or service in which the obligation consists has been completely delivered or rendered. However, there is no valid payment to the creditor by the debtor who had been judicially ordered to retain the debt. By way of exception to the general rule, the debtor who has substantially performed in good faith its obligations has the right to recover (or demand performance against the creditor) as if there had been a strict and complete fulfillment less damages that the creditor may have been suffered. This is the rule on substantial compliance.

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