Art. 1242.

Payment made in good faith to any person in possession of the credit shall release the debtor (1164)

 This article gives another instance when there is a valid payment to a third person.
 Possession referred to is possession of credit itself and not merely of document or instrument evidencing the credit.
 Payer must be in good faith, that is, in the honest belief that he is making valid payment and that the payee is the owner of
the credit. Good faith, however, is presumed.

Art. 1243. Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall not be
valid.

 Garnishment-the proceeding for the purpose of subjecting a debtor’s credit to the payment of his debt to another.
 In an action against the debtor who is the creditor of another, the latter (the debtor-stranger), during pendency of the
case may be ordered by the court to retain the debt until the right of the plaintiff, the creditor in the main litigation, is
resolved. Payment made by the debtor-stranger shall not be valid if the plaintiff wins the case and cannot collect from the
debtor to whom the payment is made. Such payment is considered as made in bad faith.

Art. 1244. The debtor of aa thing cannot compel the creditor to receive a different one, although the latter may be of the same value
as, or more valuable than that which is due.

In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the
obligee’s will. (1166a)

 Very prestation must be complied with.

 Prestation may be substituted if the obligee consents.

Art.1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by
law of sales.

 Dation in payment (adjudication or dacion en pago) – conveyance of ownership of a thing by the debtor to creditor as an
accepted equivalent of performance of monetary obligation.
 Requisites of dation of payment:
o There must be performance of the prestation in lieu of payment which may consist in the delivery of a corporal
thing or real right or a credit against a third person.
o There must be some difference between the prestation due and that which is given in substitution.
o There must be an agreement between the creditor and debtor that the obligation is immediately extinguished by
reason of the performance of a prestation different from that due.

 Law of sales governs dation of payment.

 Dation in payment requires the delivery and transmission of ownership of a thing to the creditor who accepts it as
equivalent of payment of an outstanding debt.