Short answer. You must pay the person the obligation was created in favor of, or that person's successor in interest, or anyone else who is authorized to receive the payment on their behalf. Paying someone outside those three categories does not, by itself, settle what you owe.
What the law says
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.
Civil Code, Article 1240 — To Whom Payment Must Be Made. Read the full provision →
The original creditor is the first proper recipient
Article 1240 starts with the most obvious recipient: the person in whose favor the obligation has been constituted — the original creditor the debt is owed to. Paying that person directly is always a proper settlement, assuming the rest of the obligation's terms, such as amount and manner of payment, are also met, and that the creditor has not since transferred their rights to someone else.
A successor in interest can also receive payment
The article extends proper payment to the creditor's successor in interest — someone who has stepped into the original creditor's shoes, such as through assignment of the credit or inheritance. If the right to collect the debt has validly passed to someone else, paying that successor satisfies the obligation just as paying the original creditor would, provided the transfer of that right was itself valid.
Anyone authorized to receive it also counts
Article 1240's third category is any person authorized to receive it — someone the creditor has given authority to collect on their behalf, such as an agent or a representative with that specific authorization. Payment to such a person is treated the same as payment to the creditor directly, so long as the authorization actually covers receiving that particular payment and has not been withdrawn.
Why paying the wrong person is a real risk
If you pay someone who does not fall into one of these three categories — not the original creditor, not a valid successor, and not someone actually authorized — Article 1240 does not treat that payment as settling the debt. The obligation can remain outstanding even after money has changed hands, which is why confirming who you are actually paying matters before handing over payment, especially when a debt is old or has changed hands more than once over time.
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 →