Can I pay my creditor's authorized agent or representative and be considered fully discharged of the debt?

Payment to an authorized person releases you

The law does not require that you place the money in the creditor's own hands. Article 1240 provides 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. An agent or representative to whom the creditor has given authority to collect falls squarely within that last category. Pay such a person and the debt is extinguished as fully as if you had paid the creditor directly. This is a practical rule; creditors routinely collect through employees, collection agents and attorneys-in-fact, and the debtor should not be left exposed simply because he dealt with the creditor's chosen representative.

The authority must actually exist and cover collection

The protection depends entirely on the authority being real. The person must in fact be authorized to receive payment, not merely someone who claims to act for the creditor or who happens to work in his office. Authority to negotiate or to deliver goods is not the same as authority to collect money, and a limited mandate does not stretch automatically to receiving payment. If you pay someone who was never authorized, or who exceeded the authority given, you risk having to pay again to the true creditor, because a payment made to the wrong hands generally does not discharge the debt. The burden of showing a valid payment rests on the debtor.

Verify, and get a receipt

Because you bear the risk of paying the wrong person, sensible precautions matter. Confirm the representative's authority, ideally in writing, such as a letter of authority or a special power of attorney covering collection, and keep a copy. Always obtain a receipt naming the creditor, the amount and the obligation being paid. Where the sum is significant or the agent is unfamiliar, it is reasonable to verify directly with the creditor before handing over payment. These steps are what let you later prove that the person you paid was indeed "authorized to receive it" within the meaning of the article.

When payment to a non-agent can still count

The Civil Code recognises limited situations in which a payment not made to an authorized person may still be effective, for instance where it has redounded to the benefit of the creditor, but these are narrower and harder to prove, and they turn on facts you would have to establish. They are a fallback, not a plan. The clean path to a discharge is to pay the creditor, his successor, or a genuinely authorized agent, and to hold the documents that show which of these you did. If the creditor later disputes that his agent could collect, the strength of your proof of authority is what decides whether you are released.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Gil M. Cembrano, et al. vs. City of Butuan, G.R. No. 163605, September 20, 2006 — read the decision on LawPhil →
• Francisco Culaba, et al. vs. Court of Appeals, et al, G.R. No. 125862, April 15, 2004 — read the decision on LawPhil →
• National Power Corporation vs. Lucman M. Ibrahim (represented by his heirs Adora B. Ibrahim, et al, G.R. No. 175863, February 18, 2015 — read the decision on LawPhil →
• Spouses Miniano B. Dela Cruz and Leta L. Dela Cruz vs. Ana Marie Concepcion, G.R. No. 172825, October 11, 2012 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1240 — To Whom Payment Must Be Made