PAYMENT OF PERFORMANCE

Problem No. 1 — In 1972, D executed a promissory note promising to pay to C P10,000 within a
period of four years. The payment of the debt was guaranteed by G. In 1976, P, a third person, paid
the entire amount of the indebtedness with the knowledge and consent of D. What are the respective
rights and obligations of the parties?
Answer — P shall be subrogated to all of the rights of C, not only against D, but also against G. This is
so, because the law expressly states that if a third person pays the obligation with the express or tacit
approval of the debtor, he shall be legally subrogated to all of the rights of the creditor, not only
against the debtor, but even against third persons, be they guarantors or possessors of mortgages.31
Consequently, P can demand reimbursement from D of the P10,000 which he had paid to C. If D
cannot pay because of insolvency, he can still proceed against G for the recovery of the amount.
Problem No. 2 — If in the above problem, C had condoned one-half of the obligation in 1975, and
subsequently, in 1976, P, unaware of the partial remission of the indebtedness, paid, without the
knowledge and consent of D, the entire amount of P10,000 to C, who accepted it, what would be the
effect of such payment upon the rights and obligations of the parties?
Answer — With respect to D, the only right which P has against him is to recover P5,000, because, it
is only to that extent that he had been benefi ted by the payment.34 With respect to G, if D cannot pay
the P5,000 because of insolvency, P can no longer proceed against him, because the payment was
made without the knowledge and consent of D, and consequently, he cannot be subrogated to the
rights of C against G.35 With respect to C, however, undoubtedly, P can still proceed against him for
the recovery of P5,000, applying the principle that no person can unjustly enrich himself at the
expense of another.