EXTINGUISHMENT OF OBLIGATION

Article 1231: Obligations are extinguished:

1. By payment or performance;
2. By the loss of the thing due
3. By the condonation or remission of the debt;
4. By the confusion or merger of the rights of creditor and debtor;
5. By compensation;
6. By novation

Introduction to the Extinguishment of obligation

Sa article 1231 binabanggit dito ang different modes of extinguishment of obligation. Ang anim
na ito ay ang common mode of extinguishment of obligation

1. Payment or Performance
Example: X bound himself to give a specific book to Y
X bound himself to repair Y's cat

Payment: Let say meron tayong utang in money and mag babayad ng utang
- Pag nagbabayad ng utang extinguished na ang obligation

Performance: Term na gagamitin if we are refering to service ( Obligation to do )

Special Modes of payment or performance

1. Application of payment
2. Dacion en pago ( Dation in Payment )
3. Cession en pago ( Payment by cession )
4. Tender of payment and consignation

1. Application of Payment
Example: Ikaw meron kang utang sa iisang tao lang but marami kang utang sa kanya pero nung
mag babayad kana, assuming nag due na lahat ng utang mo pero nung magbabayad kana
kulang ang pambayad mo para mabayadan lahat ng utang mo.
- Mangyayari is kapag mag babayad kana tutal due na silang lahat pipiliin mo kung anong
utang ang babayadan mo.
- Saan mo iaapply? Aling utang mo ang aapplyan mo ng bayad.

2. Dacion en pago ( Dation in Payment )

- Mode of payment where in instead of paying money you will pay in kind
- Pag sinabing in kind you will use non-cash asset
Example: May utang kang P10,000 sa isang creditor. Napag usapan niyong dalawa ng creditor
na instead of paying P10,000 what if ibigay mo nalang ang cellphone mo sa kanya.
- Kapag genyan ang napagusapan niyo nagkaroon kayo ng tinatawag na Dacion en pago.

3. Cession en pago ( Payment by cession )

 - You paid by your properties pero compared kay Dacion en pago mas much larger ito
dahil it involves all your properties.

4. Tender of Payment and Consignation

- It has two process:
1. Payment and:
2. Consignation

Tender of Payment
- There is a act of paying something using a legal tender
- Ibig sabihin kapag ang ginagamit mo na pambayad ay isang legal tender ito ay pwede
mong ma enforced.
- Legal tenders in the Philippines: Ito ay iniissue ng Bangko Sentral ng Pilipinas like peso
bills, and peso coins
Tender of Consignation
- Act of depositing your debt in the court
- Bakit kailangan ideposit ang utang mo sa court? Kasi its either hindi possible na
maibigay mo sa creditor or hindi mo kilala si creditor.
- Ang only option mo ay ideposit sa court at yung creditor doon nalang kukunin.

2. Loss of the thing due

- Refers to the obligation where in ang obligation mo is to give a specific thing at nawala
ito by fortuitous event dahil dito ma eextinguished ang obligation mo.

3. Condonation or Remission of Debt

- From the root word donate
- Basically ang mangyayare dito is si creditor hindi nya naienforced yung obligation mo.
Ibig sabihin winewaive niya ang right niya to enforce a obligation.
Example: X is indebted to Y for P500,000 payable in December 31 next year.
- Assuming hindi pa dumadating anh December 31
- Ang nangyayare sabi ni Y “ X wag mo na bayadan ang utang mo “ dahil dito ma
eextingushed na ang obligation ni X.

4. Confusion or Merger of Rights

- Nag kakaroon ng literal na confusion dahil the characteristics of a debtor and creditor
resides in one person only.
Example: P loan to M P500,000. M issued a promissory note payable to P. Later, P sells the
promissory note to A, A to B, B to C, and Cback to M.
- Noong una si M ang creditor kay P. Sa huli naging debtor si M ng kanyang sarili.

5. Compensation
- Both paries are creditor and debtor of each other.
Example: X is indebted to Y for P100,000. Y is also indebted to X for P100,000
- There are 4 kinds of compensation
 1. Legal Compensation - Happen automatically without the need of consent from
either of the parties
2. Conventional Compensation - Kailangan ng consent ng both parties para
magtake effect ito
3. Facultative Compensation - This is a type of compensation where in only one
party have the ability to enforce compensation
4. Judicial Compensation - Si court ang mag dedecide kung ano ang magiging
effect ng compensation sa kani kanilang obligation

6. Novation
- There is a change of obligation
- Ang old obligation ay maeextingiushed and then mag kakaroon ng new obligation
Example: X is indebted to Y for P100,000. X and Y agreed that instead of P100,000 X will be
giving his car as a payment.

- Kinds of Novation
1. Real Novation - Nag kakaroon ng change of prestation
2. Personal Novation - Nag kakaroon ng change of subject either creditor or debtor
I. Substitution ( Debtor ) - Change of debtor
a. Expromission - Ang nag initiate ng substitution ay ang third person
which eventually become the new debtor
b. Delegacion - Ang nag initiate ng substitution ay ang original debtor
ll. Subrogation ( Creditor ) - Change of creditor
3. Mixed Novation - pinag halong personal at real novation.

PAYMENT OR PERFORMANCE
Article 1232: Payment means not only the delivery of money but also the performance, in
any other manner, of an obligation. (n)
- We refer to fulfillment of obligation to give includes the obligation to give specific thing
and also obligation to give a generic thing.
- Under the obligation to give generic thing nandito ang payment of money, nandito din
ang performance under obligation to do.

Subtopic of payment or performance

- In this mode of extinguishment of obligation;
1. Who can pay?
2. Who to pay?
3. What to pay?
4. How to pay?
5. Where to pay?
6. When to pay?

1. Who can pay?

 - Generally ang pwedeng mag bayad is the debtor himself, authorized agent kung meron
syang itinalaga na agent or mag aact on his behalf and the successor in interest. Usually
nag tetake effect ang successor in interest kapag namaty ang debtor, ito yung nag
mamana ng mga specific properties.
- Kapag nagbayad ang debtor, authorized agent and successor in interest ito ay valid
payment.
- Kapag valid ang payment, hindi pwedeng tumanggi ang creditor na tanggapin ang
payment.
- Kapag kasi hindi tinanggap ni creditor ang payment and valid payment ito, ang
mangyayare is mag kakaroon ng delay in the part of the creditor mag kakaroon ng mora
accipiendi
- Ang third person ay pwedeng magbayad
- The third person has a different scenarios
1. Interest in the fulfillment of the obligations
2. Not interested in the fulfillment of the obligation ( Article 1237 )
3. Does not intend to be reimbursed ( Article 1238 )

1. Interest in the fulfillment of the obligations

Keypoints:
There will be valid payment and
- The creditor cannot refuse payment
- The debtor shall fully reimburse third person
- The third person is subrogated to the right of creditor

- Kapag ang ang bayad ay isang interested person ang rules ay parehas lang sa debtor,
authorized agent at successor in interest na pag sila ay nagbayad ito ay valid payment
na kung saan hindi pwedeng tangihan ni creditor ang bayad. Ganun den sa third person
na interested in the fulfillment of the obligation.
Example: D is indebted to C for P1,000,000. As security, D pledge his car. Furthermore, G
guaranteed the debt. Before the debt matures, G presented payment of P1,000,000 to C.
- Who are interested persons?
1. Guarantors
2. Securities
3. Preferred creditors - mga creditors na dapat munang bayaran
4. Owners of securities.

2. Not interested in the fulfillment of the obligations ( Article 1237 )

Keypoints:
The creditor can refuse payment
- Kung irerefuse man ni creditor ito ay hindi delay dahil valid ang magiging refusal nya.

If the debtor consent to payment

- The debtor shall fully reimburse 3rd person
- The 3rd person is subrogated to the rights of creditors
If the debtors does not consent to payment ( Article 1237 )
- The debtor shall reimburse 3rd person for what has been beneficial to him.
- The third person is not subrogated to the rights of creditors.
Example: D is indebted to c for P1,000,000. As security, D pledge his car. 2 months before the
debt matures, D paid P100,000 to C which the latter accepted. 1 month before the debt
matures, X presented payment of P1,000,000 to C
- If the debtors does not consent to payment mag kakaroon pa den ng valid payment si X
kay C, however hindi nag consent si D. So si X maniningil na ng P1,000,000 hindi nya
pwedeng singilin ang buong P1,000,000 dahil ang pwede lang masingil is up to extent
na mag bebenefit si D which is P900,000. If ever hindi makasingil si X kay D hindi nya
magiging option ang car ni D.

3. Does not intend to be reimbursed

Key Points:
- The creditor can refuse payment
- If debtor consent to payment, it is deemed to be a donation

If debtor does no consent to payment

- The debtor shall reimbursed 3rd person for what has been beneficial to him.
- The 3rd person is not subrogated to the rights of creditor
Example: D is indebted to C for P1,000,000. As security, D pledge his car. 2 months before the
debt matures, D paid P100,000 to C which the latter accepted. 1 month before the debt
matures, X presented payment og P1,000,000 to C.
- Debtor consent to payment: Babayaran ng 3rd person utang ni debtor ng walang bayad
with consent

2. Who to pay?
- According to Article 1240, generally the creditor, authorized agent, and successor in
interest
- Kapag ang pinag bayaran mo ay si creditor mismo or ang authorized agent and
successor in interest ni creditor these will be a valid payment
- What if incapacitated? According to article 1241 the general rule is invalid payment but
there are exceptions:
1. Kept the thing delivered
2. Payment benefited him
- May mga chance na nung nagkaroon ng obligation matitino pa sila pero hindi nag laon
nabaliw sila. Nung nabaliw sila ito yung time na gusto mo na mag bayad, kapag
nagbayad ka sa incapacitated invalid ang gagawin mong payment. Pero may mga
certain exceptions.
- For example to give a cellphone tinago ng incapacitated ang specific cellphone sa bahay
niya pero insane sya at that moment.
- For example may utang kang pera then pinilit mo pa den mag bayad ang nangyare is
pinambili ng pagkain, insane ang creditor pero nagbenefit sya sa payment.
 - According to Article 1241 paragraph 2, Valid if 3rd person proves that benefited
redounded to creditor.
- Benefited need not be proven in the following cases:
1. After the payment the 3rd person acquires the creditor rights;
2. If the creditors ratifies the payment to the 3rd person
3. If by the creditor conduct, the debtor has been led to believe that the 3rd person
had authority to receive the payment.
- Magiging valid ang pagbayad sa 3rd person if the benefit redounded to the creditor. Ibig
sabihin, everytime na mag babayad ka ng utang mo siguraduhin mo na ang pinag
bayaran mo ng utang ay mismong creditor or ang authorized agent, hindi pwedeng 3rd
person like kapit bahay kasi may chance na hindi ma acknowledge yung payment at
may chance na baka magbayad ka ulit kasi hindi pa extinguish ang obligation.
- Sa korte may chance ka naman para patunayan
- Magiging valid lang ang bayad mo sa 3rd person pag naprove mo na yung benefit ay
napunta kay creditor, pero may mga exceptions where in hindi mo na kailangan
patunayan na the benefit redounded to the creditor.
- After the payment, the 3rd person acquires the creditors right - Ibig sabihin siya na nag
bagong creditor. Example may promissory note, binenta pala sa kanya ng creditor
malamang ang 3rd person na ang pag babayadan mo sya na ang bagong creditor mo.
- If the creditor ratifies the payment to the 3rd person - pag sinabi na ratifies, binayaran
mo ang 3rd person kasi hindi mo mahanap si creditor, after na contact mo na si creditor
at sinabi mo na binigay mo kay 3rd person ang bayad at sinabi ni creditor na kukunin
niya nalang kay 3rd person at that moment niratifies niya ang payment mo kay 3rd
person at that moment extinguish na ang obligation mo. at hindi mo na kailangan iprove
na nag redound ang benefit kay creditor
- If by the creditor conduct, the debtor has been led to believe that the 3rd person had
authority to receive the payment - Through the action of the creditors conduct, ang
nangyari akala mo pwede mong pagbayaran ang tao na ito well in fact hindi pala.
Example: D is indebted for C for P100,000 on maturity date, C is insane and despite being
aware of the insanity, D still paid C P100,00
- Pag tinapon ni creditor ito ay invalid, pero kung ito ay naging beneficial sa kanya kasi
pinambili niya ng needs niya ito ay magiging valid
Example: D is indebted to C for P10,000 on maturity date D went to C’s house to pay. C was not
in the house. D ask X ( the neighbor of C who was not authorized by C to accept payment ) to
receive the P10,000 and give it to C when he hets home
- It is invalid payment ant if the payment ay hindi nakadating kay C may utang pa den si D
kay C
- Pero pag si C ay natanggap ang bayad at this moment na nag redound ang benefit kay
C nagkaroon na ng valid payment pero dapat mapatunayan ni debtor kasi may chance
na mag sinungaling si C.

3. What is to be paid?
To give a specific thing
 - Debtor cannot compel C to receive a different specific thing even latter has same value
or more valuable than the due according to Article 1244

To give a generic thing

- Creditor cannot demand a thing of superior quality
- Debtor cannot deliver a thing of inferior quality unless:
Quality and circumstances have not been stated so the purpose of the obligation and
other circumstances shall be taken into consideration according to article 1246

Obligation to do or not to do
- In obligations to do or not to do, an act or for bearance cannot be substituted by another
act or forbearance against the obligee’s will according article 1244 paragraph 2

Obligation to give money

- The payment of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender in the
philippines according to article 1249

- Specific thing: Kapag ang napagusapan ay isang specific ang kailangan mo ibigay at
kapag ang binigay mo ay generic hindi ito valid payment, hindi ma eextinguish ang
obligation
- Generic thing: Ang ibibigay ay ballpen around P50, si creditor hindi sya pwedeng mag
demand ng sobrang taas sa P50, ganun den si debtor hindi sya pwedeng magdeliver ng
mataas sa P50. Pero what if hindi nabanggit ang quality yung intention yung pag
gagamitan dapat malinaw between the creditor and the debtor kung ano ba ang pag
gagamitan mo. Kung meron kang obligation na magbibigay ng martilyo. Gagamitin niya
ang martilyo pang pukpok ng bakal, itetake in consideration natin kung saan gagamitin
- To do or not to do: Meron kang obligation to repair a laptop, eto ang obligation mo hindi
mo pwedeng palitan. Ganun den sa obligation not to do, ang lease agreement niyo is
wag kayong mag papatayo ng restaurant tapos gusto mo inahin at gawing apartment ito
ay hindi pwede. Ang forebearance ay nililimit ka wag gawin.
- To give money: Kapag ang sabi ng obligation mo is magbabayad ka ng P1,000,000 in
dollar eto ang susundin mo, ang dollar ang pambabayad mo, pero kung hindi possible
philippine peso nalang

4. How to pay?
- General rule: Payment must be complete according to Article 1233, The creditor or
debtor cannot be compelled to accept or make partial payments according to article
1248, Substantial performance in good faith according to article 1234
- Excemptions: Creditor waives complete performance according to 1235, Contrary
stipulation, Partly liquidates, Debtor may recover as it there had been complete
fulfillment less damages suffered by creditor,
Example: D is indebted to C for P90,000. On maturity date, D cannot compel C to accept
P80,000 only for now nor C to compel D to pay P60,000 only for now.
- This is general rule

Example: D is bound to deliver 10 sacks of rice to C. Due to a certain circumstance beyond the
control o D, D is only able to deliver a sacks of rice. In this case, assuming each sack costs
P2,000 C is bound to pay P18,000 ( P2,000 x a sacks ) less damage. Suffered by C.
- Substantial performance: Magiging valid ang payment dun sa kanya niyang i perform
which is a sacks of rice x 2,000 less damages

5. Where to pay?
- General Rule
1. Stipulation of parties
2. If no stipulation
● Obligation to give a specific thing - Where the things was at the moment
obligation was constituted
● Any other type of obligation - Domicile of debtor
- Ang general rule ay kung saan ang napag usapan
- Pag walang napag usapan, eto ay merong dalawang situation eto ay to give specific
thing: kung nasaan man ang specific thing, kailan na constitute ang obligation, other
scenario ay kung eto ay any other type of obligation ( to de, generic thing ) kung saan or
place ni debtor.

6. When to pay
- Upon demand: When obligation is due and demandable but debtor may pay before due
date it period is for benefit the debtor
- Usually ang demand ay nangyayari on due ng obligation, hindi ka naman pwedeng mag
karoon ng valid demand if the debt is not yet due.
- Yung benefit of debtor eto yung kapag ang stipulation is the debtor can pay on or beore
the due date.

Other article in Payment or performance

- Article 1239: D is bound to deliver to C a dog. On due date, D delivered a dog he stole
from a pet shop to C. In this case pwedeng validly hindi iaccept ni creditor yung
payment ni D kasi ang hinihingi niya ay iang dog na ninakaw, pwedeng hindi iaccept
dahil hindi valid payment.
- Article 1242: D is indebted to C for P100,000. Because of this, D issue a promissory note
payable to C or bearer. One day C lost the note. It was found by X. On due date X
presented to D the promissory note for payment. May very important factor which is the
bearer. Pag sinabing bearer hindi na kailangan ng indorsement, kailangan lang is
delivery. Once na naideliver or napunta nabear na ng isang person yung specific
instrumenent. In this case dahil bearer sya medyo hindi sya masyadong secured, hindi
na kasi kailangan ng indorsement, delivery lang okay na.
 - Article 1245
- Article 1247
- Article 1250

SPECIAL MODES OF PAYMENTS

1. Application of Payment
2. Dation in Payment
3. Payment by cession
4. Tender of Payment

Application of Payment
- Pag sinabing application of payment, ito yung instances where in meron kang pambayad
yun nga lang yung pambayad ay hindi sapat para mabayaran lahat ng utang mo.
Requisites
1. Atleast 2 debts are due
2. One debtor and one creditor
3. Application of payment can be made only on debt that are due
- Dapat nag due na para ma applyan ng payment
4. Payment cannot cover all debts due
- Ibig sabihin kulang ang pambyad mo kasi kung kaya naman palang bayaran
lahat ng readily available cash mo ang utang mo sa obakit pa tayo pipili ng
babayaran.
5. Application of payment can be made only to debts of the same kind.

Example: D is indebted to C. Below are the debts of D to C with their due dates
1. June 30 - P10,000
2. July 8 - P12,000
3. July 5 - Give a specific cat
4. July 12 - P8,000 with 12% annual interest
5. July 13 - P15,000 secured by chattel mortgage
6. July 15 - P9,000
Assuming on July 14, D is ready to pay but only 20,000
- From July 14 ang 1-5 lahat ay due
- Ang 1, 2, 4, 5 ay lahat sila sa pera
- Paano iaapply ang payment? As a general rule amg pwedeng mag apply ng payment ay
si debtor. Ibig sabihn ang P20,000 ay pwede niyang iapply kahit alin sa 1, 2, 4, 5
- Pero kung hindi niya inapply yung P20,000 sa kahit anong utang, basta binayad niya
nalnag sa creditor, si creditor naman inaaccept niya. So ang mangyayare si creditor na
ang pwedeng mag apply kung saan nya gusto.
- Pero what if hindi den inapply ni creditor basta tinaggap niya nalang, mag aapply ang
utang din sa pinaka burdensome na utang which are yung 4 and 5.
- Paano siya iaapply sa 4 and 5 initially? Proportionately
Payment
- July 12: P20,000 x ( P8,000/P23,000) = P6, 957
 - July 13: P20,000 x ( P15,000/ 23,000 ) = P13,043
Outstanding-
- July 12: P8,000 - P6,957 = 1,043
- July 13: 15,000 - 13,043 = 1,957

Dation in payment and Payment by cession

- Article 1255 - The debtor may cede or assign his property to his creditors in payment of
his debts. This cession, unless there is stipulation to the contrary, shall only release the
debtor from responsibility for the net proceeds of the thing assigned. The agreements
which, on the effect of the cession, are made between the debtor and his creditors shall
be governed by special laws. (1175a)
- Ang similar nila is para ma extinguish ang utang mo mag bibigay ka ng property
Payment by Cession
- Debtor must be insolvent
- Two or more creditors
- Affects all properties of debtor except those exempted by law
- Lahat ng properties mo ay ipangbabayad mo
- Right to sell passes to the creditors
- Hindi porket na pinang babayad ang lahat ng properties hindi ibigsabihin na binibigay
natin ang properties sa mga creditor. ANg binibigay lang ay ang right to sell. Required
ang mga creditor na ibenta ito and ano man ang maging proceeds dun sa gawin nilang
sale ang mga property ito ay iaapply sa mga utang
- Obligation is extinguished up to the extend of the proceeds from the properties
- Hindi porket binibigay mo lahat ng properties mo or right to sell hindi ibig sabihin na
wala kanang utang depende pa ito kung mah kano ito na benta.
- Pag mababa ito nabenta kase sa utang mo, ikaw ay may utang pa den

Dation in Payment
- Debtor may or may not be insolvent
- Plurality of creditors not required
- Affects only a specific property
- which the debtor specifically choose to fulfill his obligation
- Ownership passes to the creditor
- Si creditor meron na syang option whether to sell or hindi dahil sya na ang bagong
owner
- Obligation is fully extinguished regardless of the existence of deficiency in proceeds from
the property. Further more, the creditor is not required to sell the property
- Kung binenta niya and kulang pa sa utang ni debtor hindi nya na pwedeng singilin si
debtor ng kakulangan.
- Simula ng tinanggap ni creditor and bayad extinguish na ang obligation.

Tender of payment and consignation

- Tender of payment: Act of debtor showing intention of complying with his obligation. In
this section, tender of payment is valid if you are “ tendering “ a legal tender
- Legal tender: This are bills and coins issued by bangko sentral ng pilipinas
- Rules
1. Bills - Legal tender as to any amount of debt
2. Coins ( P1, P5, P10 ) - Legal tender up to P1,000
3. Centavos - Legal tender up to P100
- Pag sinabing legal tender ito yung ibabayad mo na hindi nila pwedeng tanggihan
- Kunyare nagbabayad ka ng cheke pwede nila itong tanggihan dahil hindi legal tender
- Pag sinabing legal tender ito yung currency or instrument na pwedeng icompel si credito
na iaccept, dahil kung hindi niya ito inaccept mag kakaroon ng mora accipiendi dahil nag
comply ka ng tamang procedure sa payment

- Consignation: Made by depositing the things due at the disposal of judicial authority,
before whom the tender of payment shall be proved in a proper case, ANd the
announcement of the consignation in other cases According to article 1258
- Laging mag kasama si render of payment at consignation
- Generally hindi pwedeng magkaroon ng consignation kapag wala pang valid tender of
payment
- Ang consignation ay idepost natin yung utang sa judicial authority. Ito ay may mga
reasons like magbabayad tayo sa creditor, ayaw niyang iaccept without a valid reasons
so nag karoon ng tender of payment, so dahil ayaw niyang tanggapin pwede syang
ideposit sa judicial authority para wala kang utang
- General rule: There can be no consignation without a valid tender of payment.
- Exemptions ( Article 1256 )
1. When the creditor’s absent or unknown or does not appear at the place of
payment.
2. When he is incapacitated to receive the payment at the time it is due
3. When, without just case, he refuses to give a receipt
4. When two or more persons claims the same right to collect
5. When the title of the obligation has been lost
- Sa exemptions hindi kailangan ng tender of payment, pwedeng mag proceed kaagad sa
consignation.
- Requisites:
1. Debt is already due
- Dahil kung hindi pa due, hindi valid yung tender of payment. Mag vavalid
lang kapag already due, unless the benefit of the period is nasa debtor
lang. ‘
2. Tender of payment made but creditor refuses to accept payment without valid
cause
- Nag tender of payment na si debtor, pero hindi tinanggap ni creditor,
without a valid cause so ang mangyayare pwede na tayong mag proceed
sa consignation pero before that dapat dumaan muna sa requisites 3
3. Notice of consignation to interested person is given ( Article 1257 )
 - Ito ay required, dapat ibigay ang notice sa mga interested persons kasi
kung hindi ito gagawin magiging invalid ang gagawin mong consignation
4. Actual consignation of the sum due ( Article 1258 par 1 )
5. Notice to interested person that consignation was made must nbe given ( Article
1258 par 2 )
- After mo maideposit sa court, again magbibigay si debtor ng notice ng
consignation sa interested person

- Article 1259: The expense of consignation, when properly made, shall be charged
against the creditor.
● Kung ikeclaim na ni creditor dun sa specific court na pinag depositan bawas na
ang makukuha
- Article 1260: Once the consignation has been duly made, the debtor may ask the judge
to order the cancellation of the obligation.
Before the creditor has accepted the consignation, or before the judicial declaration that
the consignation has been properly made, the debtor may withdraw the thing or the sum
deposited, allowing the obligation to remain in force.
● Hindi porket consignation na hindi automatically extinguish na ang obligation ni
debtor. Dahil may choice paden si debtor na bawiin yung dineposit
● Pag nangyare na ang order of the judge which is the cancellation of the
obligation and ang pag accept ng creditor ma eextinguish na ang obligation
- Article 1261: If the consignation having been made, the creditor should authorize the
debtor to withdraw the same, he shall lose every preference which he may have over the
thing. The co-debtors, guarantors and sureties shall be released. (1181a)
● Kapag nangyare na ang declaration and the acceptance of the creditor pwede
niya padeng ma withdraw kapag ito ay inauthorized ni creditor
● How ever si creditor ma lose niya ang lahat ng preference sa utuang ni debtor.
● Example ang utang ay may security or guarantor lahat ng mga yon mawawala
na, simpleng utang nalnag sya na walang security.

2. Loss of the thing due

- Nag apply ito sa to give specific thing where in the loss of the thing is due to fortuitous
event
- Article 1262: An obligation which consists in the delivery of a determinate thing shall be
extinguished if it should be lost or destroyed without the fault of the debtor, and before
he has incurred in delay.
When by law or stipulation, the obligor is liable even for
fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be
responsible for damages. The same rule applies when the nature of the obligation
requires the assumption of risk. (1182a)
- Article 1263: In an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation. (n)
● Kapag generic thing ang obligation and nawala by fortuitous event meron pa
deng obligation, dahil pwede mo pa itong paltan ng other type
- Article 1264: The courts shall determine whether, under the circumstances, the partial
loss of the object of the obligation is so important as to extinguish the obligation. (n)
- Example: S obliged himself to deliver B a specific race horse. The horse met an accident
as a result of which it suffered a broken leg. The injury is permanent. Here, the partial
loss is so important as to extinguish the obligation.
● Ang purpose ni B sa horse ay pangkarera so kapag na injure ang horse, hindi ito
makakatakbo meaning hindi niya mapapakinabangan ang horse.
- Article 1265: Whenever the thing is lost in the possession of the debtor, it shall be
presumed that the loss was due to his fault, unless there is proof to the contrary, and
without prejudice to the provisions of Article 1165. This presumption does not apply in
case of earthquake, flood, storm, or other natural calamity.
● Kapag silence si problem tapos sinabi na nawala ang isnag bagay at hindi
naman sinabi na nawala ito through fortuitous event ang presumption ay nawala
through the fault of debtor
- Article 1266: The debtor in obligation to do shall also be released when the prestation
become legally or physically impossible without the fault of the obligor.
- Example: S is obliged to deliver a specific turtle to B. Before delivery, the specific turtle
was declared to be an endangered species and a law was passed at once to render
selling these turtles illegal
● Maeextinguish na ang obligation nya kasi nga illegal na ang specific obligation ni
debtor
- Article 1267: When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in
part.
- Example: X agreed to construct a rad near a mountain. A very strong typhoone caused
an avalanche making the construction of the road dangerous to human lives.
● Kahit hindi imposible na gawin ang construction ng road, pero naging delikado.
Mahirap mag build ng road kapag nagkaroon avalanche.
- Article: 1268: When the debt of a thing certain and determinate proceeds from a criminal
offense, the debtor shall not be exempted from the payment of its price, whatever maybe
the cause for the loss, unless the thing having been offered by him to the person who
should receive it, the latter refused without justification to accept it.
- Example: Civil Obligation
- X is obliged to deliver a specific car toy.
Criminal obligation
- X is obliged to return ( restitution ) a specific car he stole from Y.
● Ang unang example ay based on the civil obligation
● Ang pangalawa naman ay criminal obligation and based on the example ninakaw
ni X yung car from Y obliged syang ireturn at nag kakaroon ng restitution.
● In those 2 cases what if before maideliver kay Y nawala ito through fortuitous
event. In the fist case extinguished pero in the second case hindi sya
maeextinguish may obligation pa den sya, ito ay magiging monetary.
 - Article 1269: The obligation having been extinguished by the loss of the thing, the
creditor shall have all the rights of action which the debtor may have against third
persons by reason of the loss. (1186)
- Example: D is obliged to deliver to C a specific car. Before delivery, the car was lost due
to the fault of X, a third person. In this case, C will have a right of action against X.
● Ang specific car na to ay nawala through the fault of a third person. Si C pwede
niyang singilin si X.

3. By the condonation or remission of the debt;

- Basically for giving the obligation of hindi mo na sya papabayaran
- Article 1270: Condonation or remission is essentially gratuitous, and requires the
acceptance by the obligor. It may be made expressly or impliedly.
- Article 1271: The delivery of a private document evidencing a credit, made voluntarily by
the creditor to the debtor, implies the renunciation of the action which the former had
against the latter.
If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his
heirs may uphold it by proving that the delivery of the document was made in virtue of
payment of the debt. (1188)
- Example: Gumawa ang debtor ng promissory note at ibibigay niya sa kanyang creditor.
Kapag ang promissory note na ito ay binigay voluntarily ng creditor kay debtor ang
magiging presumption ay nirerenounce ng kinondona.
- Article 1272: Whenever the private document in which the debt appears is found in the
possession of the debtor, it shall be presumed that the creditor delivered it voluntarily,
unless the contrary is proved. (1189 )
● Kapag nakita na nasa possession ni debtor ang pressumption binibigay ni
creditor na ang purpose ay ma condone ang debt.
- Article 1273: The renunciation of the principal debt shall extinguish the accessory
obligations; but the waiver of the latter shall leave the former in force.
- Example: D is indebted to C for P100,000 secured by a chattel mortgage on his car.
If the obligation to pay P100,000 is condoned, the accessory obligation in the chattel
mortgage is also condoned
However, if the chattel mortgage is condoned the obligatio to pay the P100,000 remains
inforce
● Basically there are 2 obligation the principal obligation which is the P100,000 and
the other obligation na kalakip ng chattel mortgage and this a accessory
obligation
● Sabi ni 1273 kapag ang na condoned is yung principal obligation automatically
yung accessory obligation ay mawawala na den.
● Kapag ang accessory obligation lang ang na condone hindi ibig sabihin na
condoned pati ang principal obligation
- Article 1274: It is presumed that the accessory obligation of pledge has been remitted
when the thing pledged, after its delivery to the creditor, is found in the possession of the
debtor, or of a third person who owns the thing.
 ● Kapag sinabi nating pledge, ang contract of pledge ay isang real contract. Pag
sinabing real contract isa sa requisites ng real contract ay kailangan ideliver mo
ang specific thing sa creditor
● Sa 1274 ang presumption kapag binalik na ng creditor or napunta na sa debtor
yung object of the pledge ang presumption ay na condoned na ang contract of
pledge, or kapag napunta na sya sa third person who owns the thing.
● Pwedeng ipledge ang pag mamayari ng kaibigan as long as may consent ng
kaibigan mo.

4. By the confusion or merger of the rights of creditor and debtor;

- Ito ay meeting of qualities of the creditor and the debtor in the same person.
- Article 1275: The obligation is extinguished from the time the characters of creditor and
debtor are merged in the same person.
● Si D gumawa ng promissory note, yung promissory note binigay niya kay C, si C
kay E, E kay F and P kay D
● Si D na maker ng promissory note which is the debtor ay sya na den ang nag
hahawak ng promissory note meaning sya na ang may claim, sya na ang
pwedeng maningil sa promissory nite kasi kung sino ang naghahawak ng
promissoryy note sya ang pwedeng maningil sa promissory note.
- Article 1276: Merger which takes place in the person of the principal debtor or creditor
benefits the guarantors. Confusion which takes place in the person of any of the latter
does not extinguish the obligation.
- Example: M makes a promissory note payable to P. This note is secured by a contract of
guaranty by G. If P sells the note to G, the obligation of M is not extinguished. Rather, G
will be the new creditor of M and the contract of guaranty is extinguished
● Si M ay principal debtor however si G ang subsidiary debtor, kapag si P hindi
makasingil kay M ang sisingilin ni P ay si G.
● Kapag nagkaroon ng meeting of characteristics of a creditor and a subsidiary
debtor in one person hindi ma extinguish ang obligation. Ang maeextinguish ay
ang guaranty lang
- Article 1277: Confusion does not extinguish a joint obligation except as regards the
share corresponding to the creditor or debtor in whom the two characters concur. (1194)
- Example: A, B and C are jointly liable to D in the amount of P9,000 evidenced by a
negotiable promissory note. D endorsed the note to E, who inturn endorsed it to A.
In this case, A’s share is the obligation is extinguished because of confusion in his
person. However, the indebtedness of B and C in the amount of P3,000 each remains
because as to them there is no confusion. Consequently, B and C would be liable to A,
the new creditor P3,000 each.
● Si A debtor dun sa promissory note at the same time napunta sa kanya ang note
so magiging creditor na den sya ng sarili nya, pero hindi maeextinguish as a
whole ang obligation, ang ma extinguish lang ay ang portion niya as a debtor.
Ang obligation ni B and C ay hindi extinguish.
● Ang mangyayare magiging bagong creditor ni B and C si A
5. By compensation;
Types of compensation
1. Legal compensation
2. Conventional compensation
3. Facultative compensation
4. Judicial compensation

Legal Compensation
- Compensation that takes effect by operation o law, and extinguished both debts to the
concurrent amount, even though the creditors and debtors are not aware of the
compensation ( article 1290 )
● So it happens automatically, it doesnt require the consent of either the debtor and
the creditor.
- Article 1278: Compensation shall take place when two persons, in their own right, are
creditors and debtors of each other. (1195)

● General definition of compensation
- Article 1279: In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they
be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor. (1196)
● Requisites

(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
- Example: D is indebted to C for P10,000. G is the guarantor. Assuming c is indebted to
G for P9,000, is there legal compensation between G and C?
● No, there will be no legal compensation dahil sa requisites na sinasabi na each
parties must be bound principally
● Si C ay principally liable kay G, however si G ay only subsidiary liable kay c.
● In this case hindi na meet ang first requirement that each the obligor bound
principally.

(2) That both debts consist in a sum of money, or if the things due are consumable, they be of
the same kind, and also of the same quality if the latter has been stated;
- Example: D is indebted to c for P10,000; C is indebted to d for P9,000 ( article 1281 )
● Take note hindi kailangan na same amount ang required ay dapat same kind sila.
Parehong pera ang babayaran ng bawat isa.
● Na meet den ang requirement 1
● Ito ay partial compensation na makikita sa article 1281
 - D is indebted to C for P10,000; D is indebted to give C a specific ring
● There will be no legal compensation dahil hindi same kind yung obligation
- D is indebted to deliver to C a class A sugar; D is indebted to give C a class B sugar
● Although same na sugar hindi naman same ng class

(3) That the two debts be due;

- Kailangan ang parehong utang ay matured na dahil kung ang isa hindi pa nagmamature
walang legal compensation

(4) That they be liquidated and demandable;

- Pag sinabing liquidated, ibig sabihin na determine na ang amount
- Example: X is indebted to Y for P10,000 by virtue of a debt. On the other hand, Y is also
indebted to X by virtue of a court case. The amount is not determined
● In this case hindi pa pwedeng magkaroon ng legal compensation, dahil hindi pa
liquidated ang isang debt.

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.
- Example: A owes B P10,000. B owes A P10,000. B also owes C P10,000 C causes the
garnishment of the credit of B against A and notifies A not to pay B P10,000 as C has a
better right to the said amount.
● Okay ang 1 requisites, both are principally liable and both are same kind. Nag
due na and liquidates
● Si C nagkaroon ng garnishment, ang naging resulta ng garnisgment ay kailangan
bayaran muna ni B yung utang niya kay C
● In this case si B, kapag nagbayad sya kay C and id P10,000 nalang ang pera
niya, hindi pa magkakaroon ng legal compensation dahil meron pang controversy
na icommenced ng 3rd person
- Article 1280: Notwithstanding the provisions of the preceding article, the guarantor may
set up compensation as regards what the creditor may owe the principal debtor. (1197)
- Example:D is indebted to C for P10,000. G is the guarantor. Assuming C is indebted to D
for P9,000. If D fails to pay C between of insolvency, C will have the right to go against
G. However, G may set up compensation as what C may owe D which is P9,000.
Therefor C can only collect P1,000 from G.

Conventional or voluntary compensation

- Article 1282: The parties may agree upon the compensation of debts which are not yet
due.
● Kailangan ng consent ng both parties para magkaroon ng compensation
Judicial Compensation
- Article 1283: If one of the parties to a suit over an obligation has a claim for damages
against the other, the former may set it off by proving his right to said damages and the
amount thereof.
● Kapag judicial compensation ang mag dedecide ng compensation ay si court
● Usually ang application nito ay sa pag keclaim ng damages. May mga times na
namimitigate ang mga damages or nababawas

Facultative Compensation
- Kailangan ng consent nung party na pwedeng mag compel ng compensation
- Between 2 parties, isa lang ang pwedeng mag compelled ng compensation
1. One of the debt arises from a depositum or from the obligation of depositary of a bailee
in commodatum ( Article 1287 par 1 )
- Example: X is obliged to give Y a T-shirt, X left a T-shirt at y’s house
● Kapag acknowledge ni Y na naiwan nga ni X ang T-shirt niya ang
mangyayare ay magkakaroon ng kontrata which is contract of deposit
where in si X habang hindi pa kinukuha ni X yung naiwan na T-shirt ni Y
may obligation si Y na wag gamitin
● Kapag sinabi ni Y na yung naiwan nalang ni X ang shirt na ibigay, ito ay
hindi facultative it is conventional
● Kapag si X ang nag sabi na yung shirt na naiwan nya ang ibigay kay Y ito
ay facultative
2. Up against a creditor who has a claim for support due by gratuitous title ( article 1287 par
2)
- Example: W is the ex-wife of H. H was ordered by the court to give monthly
support of P50,000 to W for their children. W is indebted to H for P50,000.
Assume both H and W’s debt are due
● Ang pwedeng mag compelled ng compensation ay si W
3. One of the debts consists in civil liability arising from a penal affense ( Article 1288 )
- Example: X is indebted to Y for P100,000. Y attempt to kill X because of the
shock, X was awarded by the court of P100,000 damages. Y was also criminally
prosecuted
● In this case ang utang ni X na P100,000 ay pwedeng ma compensate
● Ang pwedeng mag compelled ay si X
● Pwedeng sabihin ni X na si Y ay hindi na magbabayd ng P100,000 na
damages pero quits na sila hindi na den nya baabyaran ang utang niya.
However si Y hindi nya pwedeng sabihin na sya magbabayad ng
damages
- Article 1284: When one or both debts are rescissible or voidable, they may be
compensated against each other before they are judicially rescinded or avoided.
- Example: A owes B P10,000. Subsequently A throughfraud was able to make B sign a
promissory note that B is indebted to A for the same amount.
● Dati meron ng obligation si A to B na P10,000 at nagkaroon ng obligation si B
kay A through fraud and ito ay voidable.
 ● Kahit ang obligation ay voidable pwede pa deng magkaroon compensation
- Article 1285: The debtor who has consented to the assignment of rights made by a
creditor in favor of a third person, cannot set up against the assignee the compensation
which would pertain to him against the assignor, unless the assignor was notified by the
debtor at the time he gave his consent, that he reserved his right to the compensation.
- Compensation in assigned debts
● How assigned
1. With debtors consent - with reservation to compensation
2. With debtor consent - without reservation to compensation
3. Without debtors consent
4. Without debtors knowledge
● Extent of compensation
1. Can set up compensation as to any debts due
2. Cannot setup compensation as to any debts due
3. Can set up compensation as to debts due prior to assignment
4. Can set up compensation as to debts due prior to debtor gaining
knowledge of assignment
- Example: X is indebted to y for P100,000. Y on the other hand is indebted to X for the
following amount ( together with due dates )
June 13 - p10,000
June 18- P12,000
June 22- P8,000
June 25 - P10,000
July 1 - P15,000
Assuming on june 24, Y assigned the P100,000 to Z. X gained knowledge of assignment
on june 26. How much can z collect from x?
● How much can X set up as compensation
1. P55,000 ( Z can collect P45,000 )
- Nung inassign nung June 24 ni Y yung P100,000 kay Z. Pag
sinabing assignment binibigay nya na ang right kay Z
- Merong knowledge si X, so alam niya na inassign kay Z at the
same time, nireserve niya ang right niya as to compensation. Ibig
sabihin pwede syang mag set uo or compensate ang mga debt na
mah dudue na

2. P0 ( Z can collect P100,000 )

- Hindi nya ni reserve ang right niya, hindi niya sinabi na may right
to compensation pa sya. Despite na alam niya na inaasign ang
kanyang liability to another person at may consent sya
- In this case wala na syang right to compensation. Pag nangolekta
si Z makokolekta niya ang lahat ng P100,000

3. P30,000 ( Z can collect P70,000 )

 - Alam ni debtor pero hindi sya nag consent, in this case pwede
niyang isetup ang compensation as to debtors due prior to
assignment. Lahat ng debts prior to assignment.
- Ang assignment ay June 24, ang mga debts na nag due prior to
assignment are June 13, June 18, June 22
- P10,000 + P12,000 + P8,000 = P30,000 na pwedeng iset up na
compensation
4. P40,000 ( Z can collect P60,000 )
- Walang kaalam alam nagkaroon ng compensation
- Nagkaroon lang sya ng knowledge on June 26
- Ang nacover na debt before June 26 ay June 13, June 18, June
22, and June 25
- P10,000 + P12,000 + P8,000 + P10,000 = P40,000 ang pwedeng
masetup na compensation
- Therefore kapag mangongolekta na si Z P60,000 ang
macocollect.

- Article 1286: Compensation takes place by operation of law, even though the debts may
be payable at different places, but there shall be an indemnity for expenses of exchange
or transportation to the place of payment. (1199a)
- Example: A obliged himself to deliver to B 100 sacks of rice in Davao. B is also bound to
deliver to A 100 sacks of rice of the same kind in Bulacan. The expenses for
transportation of the rice to Davao amount to P4,000 and to Bulacan P1,000
If A claims compensation, he must indemnity B the amount of P3,000 for the expenses
of transportation of the rice to Davao
● Ang expenses for transportation ay hindi pareho sa Davao P4,000 sa BUlacan
P1,000
● In this case kung nacompensate niya lahat ang mangyayare is lugi ang isa. Ang
difference ay kailangan indemnity

6. By novation
Kinds of Novation ( article 1291 )
1. Real Novation
- Change of prostration or the principal conditions affecting differents obligations
2. Personal Novation
- Replace the subject involve in the obligation its either the debtor or creditor
I. Substitution ( Debtor )
a. Expromission
b. Delegacion
II. Subrogation ( creditor )
a. Legal Subrogation
b. Conventional Subrogation
Effects of Novation
- General Rule: Old obligation is extinguished and replaced by the new one stipulated (
Article 1292 )
- If original obligation is Void: Novation is void if the original obligation was void if the
original obligation is voidable, effective if contract is ratified before novation or annulment
can only be claimed by the debtor ( Article 1298 )
● Kapag void ang original obligation ang novation ay void den. However if the
original obligation is voidable, pwedeng valid yung novation
- If new obligation is Void: If the new obligation is void, the original one shall subsist,
unless the parties intended that the former relation should be extinguished in any event (
Article 1297 )
● Under article 1297 hindi pa den magkakaroon ng novation kasi hindi
maeextinguish ang original obligation as a general rule.
- In summary kapag void ang original obligation void pa den ang novation
- Kapag void ang new obligation void pa den anh novation

Effect of novation on accessory obligation

- Article 1296: When the principal obligation is extinguished in consequence of a novation,
accessory obligations may subsist only insofar as they may benefit third persons who did
not give their consent. (1207)
- Example: A owes B P2,000 with interest at 14%. B owes C P280. It was agreed among
the parties that A would pay the interest of P280 to C. In this case, besides the principal
obligation of A, there is a stipulation in favor of C, a third person ( Article 1311 par 2 )
later on, A and B executed another contract whereby they agreed that A would deliver to
B a television set in payment of the ban. In spite of the novation, the accessory
obligation to pay the interest of P280 to C still subsist unless C gives his consent to the
novation
● Gusto nilang inovate yung obligation from obligation to give P2,000 to obligation
to give a television nalang, Pag television ang pinaguusapan hindi ito nag eearn
ng interest.
● May obligation pa den ba si B kay C na mag bayad ng P280? The answer is yes,
kapag hindi nag consent si C sa novation. Matutuloy pa den ang novation, pero
ang accessory obligation which is the P280 ito ay mag susubsist pa den
● Pero kapag si C nagbigay ng consent sa novation hindi na magkakaroon ng
liability na magbigay ng P280, kasi hindi naman ng eearn ng interest ang
television

Substitution
- Article 1293: Novation which consists in substituting a new debtor in the place of the
original one, may be made even without the knowledge or against the will of the latter,
but not without the consent of the creditor. Payment by the new debtor gives him the
rights mentioned in Articles 1236 and 1237. (1205a)
● Kapag nagkakaroon ng substitution or change of debtor ang pinaka required is
the consent of the creditor, if doesnt matter kung nag consent si debtor
Substitution - Delegacion
- Example: D owes C P1,000. D Proposed to C that X would substitute him as debtor. C
agreed to the proposal. If at the time of the delegacion, X was already insolvent but his
insolvency was neither of public knowledge nor know to D, then D is not liable. Neither is
D liable if the insolvency of X took place after he delegated his debt.
● Substitution delegation is define as a substitution where in the original debtor
takes the initiatives to present to the creditor a new debtor.
● Kapag nagkaroon ng delegacion, ang mangyayari is maeextinguish na ang
obligation ni D ang original debtor.

Delegacion - When old debtor’s debt can be revived?

1. New debtor’s insolvency exists before or during the delegacion
2. The old debtor has knowledge of insolvency or if he has none the new debtor’s
insolvency is not public knowledge ( Article 1295 )
● Kapag si X at the time of delegacion, when si D prinopose niya kay C na may
bago ng debtor ang ibig sabihin na kakuha na tayo ng one step para ,agkaroon
ng revival dun sa debt.
● Kapag may knowledge ka so may halong panloloko kasi at the moment na
dinedelegate niya kay X ang kanyang debt, is alam niya pala na insolvent na si X
at that moment pero prinesent niya parin kay C. At si C di niya alam kung
insolvent ba si X o hindi, Inaccept niya. At that moment pwede ng marevive yung
kanyang debt.
● What if wala syang knowledge? Prinoposed niya si X as a new debtor pero wala
syang knowledge na insolvent sya at that moment. Generally hindi marerevive
ang kanyang debt pero pwedeng marevive if the new debtor of insolvency is of
public knowledge or kumbaga pwedeng malamn ng kahit sino

Expromission - When old debtor’s debt can revived?

- Expromission - its actually the newdebtor takes the initiatives to present himself as the
new debtor to the creditor.
- Para makumpleto ang expromission kailangan lang den ng consent of the creditor.

1. No revival ( article 1294 )

2. There may be a revival if old debtor is an accomplice of the new debtor

Subrogation
- Article 1303: Subrogation transfers to the persons subrogated the credit with all the
rights thereto appertaining, either against the debtor or against third person, be they
guarantors or possessors of mortgages, subject to stipulation in a conventional
subrogation. (1212a)
 ● Sa payment and performance, may instance doon na kapag may consent ng
debtor yung pagbabayad ng isang third person ang mangyayare is ma
susubrogate yung third person to all the rights which the creditor have.
● Example hindi ka makasingil sa debtor pwede mong iforeclosed kung ano mang
chattel mortgage or other securities na meron. Kasi subrogatated ka sa lahat ng
rights
● Same lang ng concept ng under subrogation of novation

Legal Subrogation
Happens when the following pays the crediton
1. When a creditor pays another creditor who is preferred, even without the debtors
knowledge
- Example: A owes B P1,000 securred by a first mortgage on the land of A. A also
owes C P2,000. This debt is unsecured. Under the law B who is a preferred
creditor, has preference to payment with respect to the land as against C who is
merely an ordinary creditor. If C pays the debt of A to B, C will be subrogated in
B’s right so that he can have the mortgage foreclosed in case A fails to pay the
P1,000 debt.
● Si C binabayran niya yung utang ni A kay B
● With regards to P1,000 debt magkakaroon ng change in creditor, hindi na
si B ang creditor ni A si C na ang creditor ni A kasi binayaran sya.
● Ang mangyayare is masusubrogate ang all the right ni C.
● Pag sinabi nating legal, automatically masusubrogate yung creditor to all
the rights of the previous creditor.
● In this case, ano ba ang right sa example ni previous creditor ( B ), kapag
hindi sya makasingil ng P1,000 pwede nyang iforeclosed ang mortgage
sa lupa ni A.
● Kapag binayaran ni C ( another creditor ) at binayaran niya ang isang
creditor na mas preffered sa kanya. In this case si C pasok sya sa first
type of person na pwedeng automatically magkaroon ng legal subrogation
● Paano pag si B binayaran niya ang utang ni A kay C magkakaroon ba
nglegal subrogation? Hindi magkakaroon
2. When a third person, not interested in the obligation, pays with the express or tacit
approval of the debtor.
- Example: A owes B P1,00. C pays B with the express or implied consent of A. In
this case, C will be subrogated in the rights of B
● In this case magkakaroon ng legal subrogation dahil may consent ni
debtor
3. When even without the knowledge of the debtor, a person interested in the fulfillment of
the obligation pays without prejudice to the effects of confusion as to the latter’s share (
Article 1302 )
- Suppose in the same example, C is the guarantor of A. C is a person interested
in the fulfillment of the obligation of A as he would be benefited by its
 extinguishment. If C pays B, even without the knowledge of A, C is subrogated in
the rights of B. Confusion takes place in the person of C. Hence, the guaranty is
extinguished but the principal obligation still subsist.
● So if ever may rights si B to foreclosed a certain mortgage pwedeng
makuha ito ni ni C, kasi sya ay isang interested person.

Conventional Subrogation
- Article 1304: A creditor, to whom partial payment has been made, may exercise his right
for the remainder, and he shall be preferred to the person who has been subrogated in
his place in virtue of the partial payment of the same credit.
- Example: D is indebted to C for P10,000. X pays C P6,000 with the consent of D. There
is here partial subrogation as the amount of P6,000. D remains the creditor with respect
to the balance of P4,000. Thus, two credits subsists. In case of insolvency of d, C is
preferred to X that is he shall be paid from the assets of A ahead o X
● With the consent of D pasok sya sa legal subrogation pero P6,000 ang binayaran
out of P10,000. Nagkaroon ng legal subrogation pero partial lang
● Nahati ang debt into P6,000 and P4,000
● Yung P6,000 utang ni D kay X ang P4,000 ay utang niya pa den kay C.
● If kulang ang pambayad ni D, kanina muna magbabayad? Ang una munang
babayaran ay ang original which is si C. That is the rule in partial subrogation.
● Interms of partial subrogation ang magiging preferred interms of insolvency or
kulang ang pambayad ng debtor is yung original creditor muna.