Payment to an agent of the principal extinguishes obligation


Persida Acosta

Dear PAO,
I entered into a contract with Pedro, regarding the purchase of 40 square meters of land in Cavite. We agreed that I will pay 50 percent of the purchase price and the remaining balance shall be paid in six monthly installments. The down-payment was received personally by Pedro. When I went to Pedro’s residence to pay the first installment, his house helper informed me that Pedro left for abroad. I contacted Pedro through his phone and asked him who will receive the payment. He told me to just leave the payment with his helper and the latter will issue an acknowledgement receipt covering the said payment.

I followed the said method of payment for six months. When I was informed that Pedro had already returned, I immediately asked him for the transfer of the title of the said property to my name. However, he refused and claimed that his helper allegedly ran away with the money covering the instalments for two months. Pedro is now asking me to pay the amount taken by his helper, but I refused and claimed that I had already settled my obligation. Can Pedro collect from me again the amount taken by his helper?

Dear Berto,
Payment or performance is one mode of extinguishing an obligation under Article 1231 of the New Civil Code of the Philippines. Correlative thereto, Article 1240 states that “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.”

Please be guided also by the decision of the Supreme Court in the case of Spouses Dela Cruz vs Concepcion (G.R. No. 172825, October 11, 2012), where the Honorable Associate Justice Diosdado M. Peralta stated that:

“Payment made by the debtor to the person of the creditor or to one authorized by him or by the law to receive it extinguishes the obligation. When payment is made to the wrong party, however, the obligation is not extinguished as to the creditor who is without fault or negligence even if the debtor acted in utmost good faith and by mistake as to the person of the creditor or through error induced by fraud of a third person. In general, a payment in order to be effective to discharge an obligation, must be made to the proper person. Thus payment must be made to the obligee himself or to an agent having authority, express or implied, to receive the particular payment. Payment made to one having apparent authority to receive the money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one who by law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a judgment by an officer authorized by law to accept it will, therefore, satisfy the debt.”

Applying the abovementioned jurisprudence and provision of law in your case, it is clear that your obligation had already been extinguished by the payment you made to the helper of Pedro. His helper was acting on behalf of Pedro, as per the latter’s authority conveyed to you during your telephone conversation, and also the acknowledgment receipts issued. Hence, the payment made to the helper, who is the agent or representative, is deemed payment to the principal.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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1 Comment

  1. Please advise on the following problem:-
    A broker living in the same condominium as us undertook to manage our property with regards to securing tenants then managing the property for a fee. Whilst rental fees were normally received regularly by us ( mostly late) apart from the last time in January when his check on presentation was returned twice. We don’t really have an issue on that score. When the tenant left in January they called us to inform us that said broker couldn’t or wouldn’t return they’re security deposit. We paid this to the tenant although we never had control of this. The rental agreement included the payment of management/ association fees plus Sky cable service by the tenant, broker received these monies but didn’t pay the bills and by his own admission used these monies for his own use. He wrote and signed an affidavit promising payment over a month ago, to date no effort of any payment has been made. The Sky service has been disconnected, the management fees in arrears are attracting punitive, compounded interest charges.He is still operating in the building. You answered a query before about Estafa although the subject related to jewellery. Can this class as an Estafa case and as it appears to be a criminal violation, how can we register a case against this man, what is the process?
    Thank you for any advice you can provide..