Article 1247. Unless it is otherwise stipulated, the extrajudicial expenses required by the payment shall be for the account of the debtor. With regard to judicial costs, the Rules of Court shall govern.
Artikulo 1247. Maliban na ito ay napagkasunduan, ang mga gastusin na hindi sakop ng hukuman na kinakailangan sa pagbabayad ay dapat na nasa talaan ng nangutang. Para naman sa mga halaga na pang hukuman, ang pamantayan ng hukuman ang dapat na mamahala.
GENERAL RULE: The debtor has to pay for the extrajudicial expenses incurred during the payment. It is the debtor who benefits primarily, since his obligation is thus extinguished.
EXCEPTION: When there is a stipulation to the contrary.
DEBTOR PAYS FOR EXTRAJUDICIAL EXPENSES
The extrajudicial expenses of payment are for the account of the debtor. The reason is that the obligation is extinguished when payment is made and it is, therefore, the debtor who is primarily benefited.
If the parties have made a stipulation as to who will bear the expenses, then their stipulation shall be followed. Article 1247 does not apply to expenses incurred by the creditor in going to the debtor’s domicile to collect. (Art. 1251.)
LOSING PARTY GENERALLY PAY JUDICIAL COSTS
Judicial costs are the statutory amounts allowed to a party to an action for his expenses incurred in the action. Under the Rules of Court (Sec. 1, Rule 142.), the costs of an action shall, as a rule, be paid by the losing party. The court may, however, for special reasons, adjudge that either party shall pay the costs, or that the same be divided, as may be equitable.
No costs are allowed against the Government, unless otherwise provided by law.
ILLUSTRATION
Captain America is the owner of an apartment entered into a lease agreement with Iron Man for the amount of PHP 10, 000 to be paid every 5th of the month. Upon payment of the amount every 5th of the month, it is the debtor who benefits primarily, since his obligation is extinguished.
But let’s say for example, Iron Man failed to make the payment for 4 months despite oral demands. Captain America wish to have Iron Man vacate the property and collect the unpayed rental fee.
He then seek the service of Atty. Hulk and paid a fee of P 5, 000.00 . Two (2) demand letters sent via registered mail and incurred P 350.00 for such. Later on, Iron Man, forwarded his intent to vacate the apartment and make the payment for his debt, which shall include the unpaid rental and the expenses incurred upon hiring legal service.
OBLIGATIONS AND CONTRACTS 