Modes of Extinguishing an Obligation to the contrary, and without prejudice to the

Payment or Performance provisions of article 1165. This presumption does

- Delivery of money not apply in case of earthquake, flood, storm or
- Performance of a service other natural calamity.
Loss of the Thing Due ▪ Presumption: If the loss was due to your
fault, you are therefore liable to damages
Special modes of payment: ▪ Thus, if you are ready to pay but the
1. Application of payment – one debtor, one creditor creditor will not accept it: go to the court
2. Payment by Cession and deposit the thing (it will absolve you
3. Dation in Payment of any liability)
4. Tender of Payment
5. Consignation ART 1256. If the creditor to whom tender of payment has been made
refuses without just cause to accept it, the debtor shall be released
SUBSECTION 2: PAYMENT BY CESSION from responsibility by the consignation of the thing or sum due.
ART 1255. The debtor may cede or assign his property to his property Consignation alone shall produce the same effect in the following
to his creditors in payment of his debts. This cession, unless there is cases:
stipulation to the contrary, shall only release the debtor from (1) When the creditor is absent or unknown, or does not
responsibility for the net proceeds of the thing assigned. The appear at the place of payment;
agreements, which, on the effect of the cession, are made between (2) When he is incapacitated to receive the payment at the
the debtor and his creditors shall be governed by special laws. time it is due;
(3) When, without just cause, he refuses to give a receipt;
Payment by Cession (4) When two or more persons claim the same right to
1. Two or more creditors collect;
2. Asset of the debtors is not enough to settle the liabilities of (5) When the title of the obligation has been lost.
all the creditors (assumed that he is partially insolvent)
3. Acceptance of the cession by the creditors - Tender of payment is a prerequisite to consignation
- Even with no tender of payment you can always proceed to
- By the orders of the court: right of the creditor to collect from consignation
the debtor is suspended - Who shoulders cost: creditor
- EXAMPLE:
o A may utang kay B 50K, kay C 50K and kay D 50K; ART. 1258. Consignation shall be made by depositing the things due
total utang is 150K. at the disposal of judicial authority, before whom the tender of
o A’s Assets are only 100K; as such, he will give to payment shall be proved, in a proper case, and the announcement of
the receiver the 100K and the receiver will the consignation in other cases. The consignation having been made,
distribute it to the creditors. the interested parties shall also be notified thereof.
o Although the creditors are of equal footing, ang
nabayaran lang niya is 33.33K per creditor. He will ART. 1260. Once the consignation has been duly made, the debtor
pay the remaining 16.67K when his financial may ask the judge to order the cancellation of the obligation.
conditions improve. Before the creditor has accepted the consignation, or before
- The debtor is protected under the law against the creditor. a judicial declaration that the consignation has been properly made,
The creditor cannot run after the debtor for the time being the debtor may withdraw the thing or the sum deposited, allowing the
until the court will declare that the debtor is financially OK obligation to remain in force.
o But it does not settle the entire obligation
- Applicable when there is partial insolvency - Before the creditor has accepted the consignation, pwede
bawiin yung consignation and tanggapin ng creditor ang
*REFER TO PAGE 291 OF DOMINGO FOR DISTINCTION BETWEEN payment
DATION IN PAYMENT AND PAYMENT BY CESSION - However this must be done before the declaration of the
court that there was consignation
Dation in payment – let go of 1 thing o If it is done after consignation, cost ensues – if you
Payment by cession – all properties are given to the receiver take back the thing, you have to pay the court
(appointed by the court in case you apply for insolvency) (deposit fee)

SUBSECTION 3: TENDER OF PAYMENT AND CONSIGNATION

- Overall objective of debtor: settle the obligation at the
soonest possible time
- Sometimes the creditor will not accept the payment or will
not issue a receipt or the creditor becomes insolvent
- In this case: do tender of payment by looking for the creditor,
but if these instances are present, consign the object of the
obligation
o If you do not consign, the creditor may charge you
with interest
o ART 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
 SECTION 2: LOSS OF THE THING DUE - If thing is lost in your possession: you are at fault
o It was lost because you were negligent
ART. 1262. An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be lost or ART 1262 – 1265: Obligation to give (Real Obligation)
destroyed without the fault of the debtor, and before he has incurred ART 1266 – 1267: Obligation to do (Personal Obligation)
in delay.
When by law or stipulation, the obligor is liable even for ART. 1266. The debtor in obligations to do shall also be released when
fortuitous events, the loss of the thing does not extinguish the the prestation becomes legally or physically impossible without the
obligation, and he shall be responsible for damages. The same rule fault of the obligor.
applies when the nature of the obligation requires the assumption of
risk. ART. 1267. When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may
- Determinate Thing: if it lost through the fault of the debtor, also be released therefrom, in whole or in part.
the obligation is extinguished
o Unless the debtor incurs: mora, dolo, and culpa - The Doctrine of Unforeseen Events
- The thing is assumed to be lost without the debtor’s fault if - EXAMPLE: Mananahi ako and I committed to tahi your gown
it was lost due through fortuitous event in Iran, but I cannot go there because of war. There is
- EXCEPTION: difficulty beyond the contemplation of the party because of
1. When the law so provides the unforeseen event.
2. When the stipulation so provides
3. When the nature of the obligation requires the SECTION 3: CONDONATION OR REMISSION OF THE DEBT
assumption of risk
4. When the loss of the thing occurs with the fault of the ART. 1270. Condonation or remission is essentially gratuitous, and
debtor (negligence) requires the acceptance by the obligor. It may be made expressly or
5. When the loss of the thing occurs after the debtor has impliedly. One and the other kind shall be subject to the rules which
incurred in delay (delay) govern inofficious donations. Express condonation shall, furthermore,
6. When the debtor promised to deliver the same thing to comply with the forms of donation.
two or more persons who do not have the same interest
(fraud) - Elements of Condonation/Remission:
7. When the obligation is to deliver a generic thing, and 1. Must be gratuitous
8. When the obligation to deliver a specific thing arises 2. Acceptance by the obligor
from a crime 3. Should not be inofficious
- A thing is lost when it perishes, or goes out of commerce or 4. Comply with the forms of donation
disappears in such a way that its existence is unknown or it - EXAMPLE:
cannot be recovered o Si A may utang kay B, 100K, sabi ni B “Ay wag mo
na bayaran, quits na.”
ART. 1263. In an obligation to deliver a generic thing, the loss or o It is as if it is a donation
destruction of anything of the same kind does not extinguish the - Donation – gratuitous transfers of rights and privileges in
obligation. favor of one party
o Gratuitous – assumption is nothing is expected in
- Genus never perish – you can always substitute the generic return (purely love and affection)
thing with another thing o Onerous – opposite of gratuitous; you expect that
something is given in return
ART. 1264. The courts shall determine whether, under the ▪ EXAMPLE: Contract of sale – you let go of
circumstances, the partial loss of the object of the obligation is so a thing in exchange for money
important as to extinguish the obligation. - The gratuity must be accepted by the obligor
o Under the principle that no one should be
- Loss can be – total or partial compelled to accept the liberality of another
o Partial loss can be considered as a total loss if a - Acceptance may be (according to form):
material part of the object is lost o Express – by passing; verbally or in writing
- In case of partial loss, the court is given the discretion, in o Implied – by his conduct
case of disagreement between the parties, to determine - Inofficious donations/Inofficious remission
whether under the circumstances it is so important in o Usually there is one paragraph that states: “I am
relation to the whole as to extinguish the obligation. In other giving my property…” and “I have reserved enough
words, the court will decide whether the partial loss is such property for…”
as to be equivalent to a complete or total loss. o If you do not specify it, it will fall under inofficious
o What was lost is so important that the thing would donation
be considered useless. o Bumigay ka ng sobra-sobra, pero wala nang natira
para sa sarili mo
ART. 1265. Whenever the thing is lost in the possession of the debtor, o While a person may make donations, no one can
it shall be presumed that the loss was due to his fault, unless there is give more than that which he can give by will,
proof to the contrary, and without prejudice to the provisions of article otherwise, the excess shall be inofficious and shall
1165. This presumption does not apply in case of earthquake, flood, be reduced by the court accordingly.
storm or other natural calamity. o You cannot give what you do not have; you cannot
give in excess of what you own
 o EXAMPLE: there is a rich guy may asawa and anak, SECTION 4: CONFUSION OR MERGER OF RIGHTS
last will and testament – I am giving everything to
my beautiful secretary ART. 1275. The obligation is extinguished from the time the characters
▪ Is the provision inofficious? Yes, because of creditor and debtor are merged in the same person.
under the law, you can only dispose one-
half of what you own, the remaining goes - Confusion or merger is the meeting in one person of the
to your compulsory heir which is his qualities of creditor and debtor with respect to the same
spouse and wife obligation.
- Forms of Donation - The personality of creditor and debtor is merged into one
o If the donation is a real property person
▪ must be in public instrument; the - The law treats confusion or merger as a mode of
acceptance must also in public extinguishing obligations because if a debtor is his own
instrument otherwise it’s void creditor, enforcement of the obligation becomes absurd
o If the donation is a personal property since a person cannot claim payment from himself.
▪ The form depends on the value of the - Furthermore, when there is a confusion of rights, the
object purposes for which the obligation may have been created are
▪ If the value of which is 5K or more, it deemed realized
should be done in writing - EXAMPLE:
▪ But if it is below 5K, it could be verbally o There are two types of promissory notes:
or written (It is safer to receive a gift that negotiable and nonnegotiable
is below 5K) o Once a promissory note is negotiable, it could be
- Donation Inter Vivos negotiated – it could be transferred from one
o Takes effect during the lifetime of the donor person to another
- Donation Mortis Causa ▪ Once the debtor becomes the holder of
o Takes effect after the death of the decedent the note, he now becomes the creditor –
o EXAMPLE: therefore the personality of the debtor
o Si A may utang kay B 1M, sabi ni B since friends and creditor are merged into one and the
tayo, quits na (inter vivos) same person
o But if B says okay nandiyan lang yan (the 1M), but o “I promise to pay A/order, the sum of P100,000.
if I die, quits na tayo, that is mortis causa (takes Signed X”
effect after the death of B) ▪ Creditor: A; Debtor: X
▪ If the note is in the possession of A, A may
ART. 1271. The delivery of a private document evidencing a credit, negotiate it to someone else.
made voluntarily by the creditor to the debtor, implies the renunciation Nagkautang si A kay B, therefore he will
of the action which the former had against the latter. pass it to B. (I promise to pay B, Signed A)
If in order to nullify this waiver it should be claimed to be ▪ Nagkautang si B kay C (To C signed B),
inofficious, the debtor and his heirs may uphold it by proving that the nagkautang si C kay D (To D signed C),
delivery of the document was made in virtue of payment of the debt. nagkautang si D kay X (To X signed D)
▪ You can use the note as payment (money
- Debt is supported by a document substitute) because it is negotiable
o If si A may utang kay B na 100K, si A mag eexecute ▪ Because the personality of the debtor
ng promissory note and creditor was merged, the note is now
o B now holds the promissory note; but if the note abrogated. (wala na siyang silbi kasi
was seen with A, the presumption is that it: umikot siya)
▪ Has been paid
▪ There was condonation/remission SECTION 5: COMPENSATION
ART. 1273. The renunciation of the principal debt shall extinguish the
ART. 1278. Compensation shall take place when two persons, in their
accessory obligations; but the waiver of the latter shall leave the
own right, are creditors and debtors of each other.
former in force.
- Compensation – “offset”
- What is contemplated here is a principal obligation with an
- Compensation is the extinguishment to the concurrent
accessory obligation
amount of the debts of two persons who, in their own right,
- EXAMPLE:
are reciprocally principal debtors and creditors of each other.
- Si A may utang kay B 100K (contract of loan). B, in order to
- EXAMPLE:
be secured that A will pay him, said “You give me your
- A is indebted to B. The due of the debt is 1K. The next month,
necklace,” para security na babayaran talaga ni A (accessory
B owed A. The due of the note is 1.2K. Can they offset? Yes.
contract of pledge)
The remaining balance is 200.
- 1 transaction, 2 contracts
- Two types: legal and voluntary
- Now B says “forget about the 100K” – the contract of pledge
o Legal – arising under the operation of law
is also forgotten (accessory follows the principal)
▪ For legal compensation to ensue, there
- But if B returns the necklace, the contract of pledge was
are several prerequisites (refer to ART.
condoned, but he did not say na quits na ang 100K. The
1279)
100K still exists – what was abrogated was the contract of
▪ EXAMPLE: May loan ka sa bank and wala
pledge and not the contract of loan
ka nagbayad, so the bank has an option
 na kung mag deposit ka, your deposit will ART. 1287. Compensation shall not be proper when one of the debts
be offset with your loan arises from a depositum or from the obligations of a depositary or of
▪ This is because your contract with the a bailee in commodatum.
bank is not a contract of depositum but a Neither can compensation be set up against a creditor who
contract of loan (your relationship is has a claim for support due by gratuitous title, without prejudice to the
creditor-debtor) provisions of paragraph 2 of Article 301.
▪ If nagdeposit ka sa bank – nagpautang
ka sa bank - Debt arising from Contract of Depositum
▪ If nagloan ka sa bank – nagutang ka sa o Compensation shall not be proper when one of the
bank debts arises from a depositum or from the
o Voluntary – volition of the parties obligations of a depositary.
▪ EXAMPLE: o A deposit is constituted from the moment a person
▪ A is indebted to B. The due of the debt is receives a thing belonging to another, with the
1K. The next month, B owed A. The due obligation of safely keeping it and of returning the
of the note is 1.2K. Can they offset? Yes. same.
The remaining balance is 200. o EXAMPLE:
▪ This is also partial (because there is ▪ You check in the hotel and your
remaining balance) belongings are deposited in the
o Judicial - when so declared by a final judgment of a concierge of the hotel; you and the hotel
court in a suit; by judicial decree have entered into a contract of
o Facultative – compensation can be set up only by depositum, wherein you deposited your
one of the parties valuables.
o Total – when the two debts are of the same amount ▪ Compensation cannot arise in a contract
o Partial – when the two debts are not of the same of depositum, but the hotel can hold your
amount belongings until such time that you are
able to pay as a security measure
ART. 1279. In order that compensation may be proper, it is - Debt arising from Contract of Commodatum
necessary: o By the contract of loan, one of the parties delivers
(1) That each one of the obligors be bound principally, and to another, either something not consumable so
that he be at the same time a principal creditor of the other; that the latter may use the same for a certain time
(exception: ART 1280) and return it, in which case the contract is called a
(2) That both debts consist in a sum of money, or if the things commodatum. (it is essentially gratuitous)
due are consumable, they be of the same kind, and also of o Loan of nonconsumable goods (goods not
the same quality if the latter has been stated; destroyed by use)
(3) That the two debts be due; (exception: ART 1282) o Mutuum – loan of consumable goods (ordinary
(4) That they be liquidated and demandable; Loan for money and other consumable goods; yes
(5) That over neither of them there be any retention or to compensation)
controversy, commenced by third persons and o EXAMPLE: Borrowing utensils and plates from your
communicated in due time to the debtor. neighbor
o You cannot offset a new debt with an existing
- Consumable – destroyed by use (food) contract of commodatum
- Claim for Support due by gratuitous title
ART. 1280. Notwithstanding the provisions of the preceding article, o EXAMPLE:
the guarantor may set up compensation as regards what the creditor ▪ Nanay and tatay naghiwalay. There was
may owe the principal debtor. annulment. It follows that there will be
separation of properties, but they have a
ART. 1282. The parties may agree upon the compensation of debts child to raise. Usually the father supports
which are not yet due. the child. Mother files complaint before
the court claiming support. Can the
- General rule: Compensation will take place only when the father say “ay daghan man kag utang sa
debts are due akoa, buhia atong anak”? No.
- Exception: parties stipulate that even when the debts are not o Compensation cannot be set up against a creditor
due, they will enter into compensation who has a claim for support due by gratuitous title.
o Support – everything that is indispensable for
Legal Compensation vs. Conventional Compensation sustenance. The right to support cannot be:
Legal Compensation Conventional Compensation 1. Renounced
Takes place by operation of law Occurs when the parties 2. Transmitted to third persons
when all the requisites are present. agree to compensate their 3. Compensated with what the recipient
The only requisites are: mutual obligations even if owes the obligor
1. That each of the parties some requisite is lacking,
can dispose of the credit such as that provided in
he seeks to compensate, Article 1282. It is intended to
and eliminate or overcome
2. That they agree to the obstacles which prevent
mutual extinguishment of ipso jure extinguishment of
their credits their obligations.
 SECTION 6: NOVATION ▪ EXAMPLE: I will give you this pen if it rains
or shines
ART. 1291. Obligations may be modified by: ➢ To novate this: remove the “if it
(1) Changing their object or principal conditions; rains or shines” – I will give you
(2) Substituting the person of the debtor; this pen
(3) Subrogating a third person in the rights of the creditor. ➢ It is converted from conditional
obligation to a pure obligation
- Novation because the conditions are in
o Total or partial extinction of an obligation through conflict of each other
the creation of a new one which substitutes it. ➢ Because of the incompatibility
o It is the substitution or change of an obligation by of the conditions, it is novated
another, which extinguishes or modifies the first, impliedly
either by changing its object or principal - No form is required to novate
conditions, by or substituting another in place of - Novation is always expressed
the debtor, or by subrogating a third person in the
rights of the creditor. ART. 1292. In order that an obligation may be extinguished by another
o Change the provisions of the contract which substitutes the same, it is imperative that it be so declared in
o Changes may be imputed on the basic elements of unequivocal terms, or that the old and the new obligations be on every
the contract: point incompatible with each other.
▪ Object/Condition (object – obligation to
give; change in the principal condition of - Unequivocal – in conflict, not in harmony with each other
the performance – obligation to do) - EXAMPLE: I will deliver a horse, then we will novate the object
▪ Part of the Debtor (change debtor and I will deliver a cow. Is the horse and cow the same? No.
through substitution) Therefore, the presumption there is that it is novated
▪ Part of the Creditor (change creditor through the change of the object.
through subrogation)
- Requisites of Novation: ART. 1293. Novation which consists in substituting a new debtor in
1. There must be a previous valid obligation (you cannot the place of the original one, may be made even without the
novate an invalid obligation) knowledge or against the will of the latter, but not without the consent
2. There must be an agreement of the parties concerned of the creditor. Payment by the new debtor gives him the rights
to a new contract mentioned in Articles 1236 and 1237.
3. There must be extinguishment of the old contract
4. There must be validity of the new contract (presumption - Substituting – refers to debtor
of the validity of the new contract) - EXAMPLE: A is indebted to B. C, a third party, comes in, and
- Kinds of Novation says, “B, I will pay for and on behalf of A” without informing
o As to the subject: A or maybe against the will of A. Can C do that? Yes, provided
1. Real or Objective – changing the object or the that B, the creditor, agrees
principal conditions o Substitution Expromision – the initiative for the
2. Personal or Subjective – substituting the change does not come from the debtor and may
person of the debtor or subrogating a third even be made without his knowledge
person to the rights of the creditor ▪ Granting that C, the party who
o As to Constitution: volunteered, becomes insolvent
1. Express (Explicit Declaration) – the new eventually or atik-atik lang niya na mag
obligation declares in unequivocal terms that bayad, can B run after A, the party whom
the old obligation is extinguished after expromision has taken effect? No.
2. Implied (Material Incompatibility) – the new By agreeing to the contentions of C, a
obligation is incompatible with the old one on third party, B forfeits his right to run after
every point A in case C will not pay it.
o As to extent or effect: o Substitution Delegacion – takes place when the
1. Total or Extinctive – an old obligation is creditor accepts a third person to take the place of
terminated by the creation of a new one that the debtor at the instance of the latter
takes the place of the former ▪ A is indebted to B, and A went to B
2. Partial or Modificatory – when the old bringing C telling B that “B, si C na ang
obligation subsists to the extent that it magbabayad ng utang ko”. This is
remains compatible with the amendatory substitution delegacion.
agreement ▪ There is consent of the debtor or brings a
o As to origin: third party and tells the creditor that the
1. Legal – takes place by operation of law third person will pay for and on my behalf
2. Conventional – takes place by stipulation of o Difference between expromision and delegacion:
parties 1. Consent of the debtor
o Novation is never presumed. It is always express. 2. In case the third party who volunteered to pay
o There is implied novation when the provisions of or is substituted will not pay, in expromision,
the contract are incompatible the creditor can no longer run after the debtor,
but in delegacion, the creditor can run after
the debtor (if the original debtor has
 knowledge about the condition of the person ART. 1297. If the new obligation is void, the original one shall subsist,
whom he presented to pay for and on his unless the parties intended that the former relation should be
behalf). extinguished in any event.

ART. 1294. If the substitution is without the knowledge or against the - In relation to requirement number 1: There must be a
will of the debtor, the new debtor’s insolvency or non-fulfillment of the previous valid obligation
obligation shall not give rise to any liability on the part of the original - Old obligation must be valid, otherwise that is not subject to
debtor. novation, because you cannot novate a void obligation

- Expromision – because you consented to the request of a ART. 1298. The novation is void if the original obligation was void,
third party to pay for and on behalf of the debtor against the except when annulment may be claimed only by the debtor, or when
will/without the knowledge of the debtor, he becomes the ratification validates acts which are voidable.
new party to the transaction which will prevent you from
claiming the payment from the old debtor in case the new - If the first contract is void, you cannot novate unless there is
debtor will not pay ratification
- Rights are waivable – when the creditor conceded to the new
debtor, he forfeited his right to collect from the old debtor ART. 1299. If the original obligation was subject to a suspensive or
resolutory condition, the new obligation shall be under the same
ART. 1295. The insolvency of the new debtor, who has been proposed condition, unless it is otherwise stipulated.
by the original debtor and accepted by the creditor, shall not revive the
action of the latter against the original obligor, except when said ART. 1300. Subrogation of a third person in the rights of the creditor
insolvency was already existing and of public knowledge, or known to is either legal or conventional. The former is not presumed, except in
the debtor, when he delegated his debt. cases expressly mentioned in this Code; the latter must be clearly
established in order that it may take effect.
- Delegacion – you can collect from the old debtor if he has
knowledge of the condition of the third party so delegated - Subrogation is the substitution of one person in the place of
o But if he has no knowledge (in good faith), then it another with reference to a lawful claim or right, so that he
will fall under expromision who is substituted succeeds to the right of the other in
- Theory of Novation relation to a debt or claim, including its remedies and
o Under the law, parties have the option to change securities.
their mind because contracts in essence are - Kinds of Subrogation
consensual and bilateral 1. Conventional – takes place by the agreement of parties
o If situations will change, novation is an option given 2. Legal – takes place without agreement but by operation
to the parties for them to amend what they want to of law because of certain acts
amend
o Novation, in essence, is amendment. Conventional Subrogation Assignment of Rights
o The new debtor contracts with the old debtor that Transfer of all the rights of the An agreement by virtue of which
he will pay the debt, and also to the same effect creditor to a third person, who the owner of a credit (assignor),
with the creditor, while the latter agrees to accept substitutes him in all his rights by legal cause – such as sale,
the new debtor for the old. which takes place by agreement dation in payment or exchange
of parties. or donation – and without need
ART. 1296. When the principal obligation is extinguished in of the debtor’s consent,
transfers that credit and its
consequence of a novation, accessory obligations may subsist only
accessory rights to another
insofar as they may benefit third persons who did not give their
(assignee) who acquires the
consent. power to enforce it, to the same
extent as the assignor could
- Principal obligation novated – accessory obligation have enforced it against the
continues to subsist so long as it is not incompatible with the debtor
provisions of the main obligation Debtor’s consent is necessary Debtor’s consent is not required
- Accessory obligations may subsist only insofar as they may Subrogation extinguishes an Assignment refers to the same
benefit the third persons who did not give their consent obligation and gives rise to a right which passes from one
- EXAMPLE: A and B entered into a contract of loan. The value new one person to another
of the loan is 50K. In order to be secured, B asked from A
the pledging of a necklace. - Conventional Subrogation – total change of contract
o Contract of loan – primary obligation because the creditor was substituted (whatever defects
o Pledging of necklace – accessory obligation were present in the previous condition are not absent)
o The parties decided to novate. They agreed that - Assignment of Rights – assignee merely steps into the shoes
instead of 50K without interest, they say 50K plus of the assignor; whatever the defenses or defects of the
10% interest per annum. Was there novation? Yes. contract of the assignor, it is only carried forward
There was change in the principal condition of the
obligation.
o Is the accessory obligation (pledge) abrogated? No.
It continues to exist.
ART. 1301. Conventional subrogation of a third person requires the
consent of the original parties and of the third person.

- Always with the consent of all the parties (no expromision or

delegacion)
1. The debtor. — because he becomes liable under the
new obligation to a new creditor.
2. The old or original creditor. — because his right against
the debtor is extinguished.
3. The new creditor. — because he may dislike or distrust
the debtor.

ART. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred,
even without the debtor’s knowledge;
(2) When a third person, not interested in the obligation,
pays with the express or tacit approval of the 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.

- EXAMPLE: Si A may lupa. Sinangla niya kay B (mortgage).

Ngayon sinangla niya ulit kay C, sinangla niya ulit kay D.
Under the law, bawal yan (staffa). But if walang knowledge si
A at si B na naka sangla ang lupa, and si D naki sangla rin,
so ngayon tatlo sila nakikisawsaw sa titulo ng isang lupa.
o Now who is the most preferred in right? The one
who first registered. Tapos second registrant ka or
third registrant, ikaw na third registrant interesado
ka masyado sa lupa and you want that if you are
not paid you will foreclose the property. What are
you going to do?
▪ You do legal subrogation if the two
mortgagees accept. Bayaran mo sila, and
you become the most preferred creditor.

ART. 1303. Subrogation transfers to the person subrogated the credit

with all the rights thereto appertaining, either against the debtor or
against third persons, be they guarantors or possessors of mortgages,
subject to stipulation in a conventional subrogation.

ART. 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.