1

Obligations

CHAPTER 1 (4) Acts or omissions punished by

General Provisions law; and

Article 1156. An OBLIGATION is a (5) Quasi-delicts.

juridical necessity:
The enumeration is exclusive. (Naval v. Rias, 8
Phil. 508)
1. to give;
2. to do; or
Article 1158. Obligations derived from
3. not to do.
law are not presumed. Only those
Elements of obligation: expressly determined in this Code or in
special laws are demandable, and shall
1. An active subject (oblige or creditor) the be regulated by the precepts of the law
possessor of a right which establishes them; and as to what
2. A passive subject (obligor or debtor) he
has not been foreseen, by the provisions
who has the duty of giving, doing, or not
doing of this Book. (Obligation ex lege)
3. The object or prestation the subject matter;
the duty of giving, doing or not doing The law says obligations derived from law are
4. The efficient cause the reason why the not presumed. This merely means that the
obligation exists obligation must be clearly set forth in the law.
5. In certain cases, form is also important.
If regarding an obligation ex lege, there is a
Kinds of obligations: conflict between the New Civil Code and a
special law, the latter prevails unless the contrary
1. From the view point of sanction has been expressly stipulated in the New Civil
a. Civil obligation Art. 1156 Code.
b. Natural obligation the duty not to
recover what has voluntarily been
paid although payment was no
Article 1159. Obligations arising from
longer required contracts have the force of law between
c. Moral obligation the contracting parties and should be
2. From the viewpoint of subject matter
a. Real obligation the obligation to complied with in good faith. (Obligation
give ex contractu)
b. Personal obligation the obligation
to do or not to do Contracts are not superior to law. Their terms and
3. From the affirmativeness and negativeness
conditions must not be contrary to law, morals,
of the obligation
good customs, public order, or public policy.
a. Positive or affirmative obligation
the obligation to give or to do
Neither party pay unilaterally and upon his own
b. Negative obligation the obligation
exclusive volition, escape his obligations under
not to do
4. From the viewpoint of persons obliged the contract, unless the other party assented
a. Unilateral where only one of the thereto, or unless for causes sufficient in law and
parties is bound pronounce adequate by a competent tribunal. (L-
b. Bilateral where both parties are 10337)
bound
i. Reciprocal
ii. Non-reciprocal the
performance of one is non- CONTRACT OBLIGATION
dependent upon
performance of the other If valid, results to an A result of a contract, but
obligation not all obligations come
from contracts
Article 1157. Obligations arise from:
Presupposes meeting of Meeting of the minds is
(1) Law; the minds not always necessary

(2) Contracts; Contracts for attorneys services stand upon an

entirely different footing from contracts for the
payment of compensation for any other services.
(3) Quasi-contracts;
An attorney is not entitled, in the absence of
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express contract, to recover more than a liability and only the civil liability directly arising from
reasonable compensation for his services. And and based solely on the offense committed, i.e., civil
even when an express contract is made, the liability ex delicto in senso strictiore."
court can ignore it and limit the recovery of
reasonable compensation if the amount of the 2. Corollarily, the claim for civil liability survives
stipulated fee is found by the court unreasonable. notwithstanding the death of accused, if the same
(Borcena v. IAC, G.R. No. 70099) may also be predicated on a source of obligation
other than delict. Article 1157 of the Civil Code
Innominate contracts (contratos innominados): enumerates these other sources of obligation from
which the civil liability may arise as a result of the
1. Do ut des I give that you may give same act or omission:
2. Do ut facias I give that you may do
3. Facio ut des I do that you may give a) Law
4. Facio ut facias I do that you may do

b) Contracts
Article 1160. Obligations derived from
quasi-contracts shall be subject to the c) Quasi-contracts
provisions of Chapter 1, Title XVII, of this
Book. d) . . .

Quasi-contract that juridical relation resulting from a e) Quasi-delicts

lawful, voluntary, and unilateral act, and which has for
its purpose the payment of indemnity to the end that 3. Where the civil liability survives, as explained in
no one shall be unjustly enriched or benefited at the Number 2 above, an action for recovery therefor may
expense of another be pursued but only by way of filing a separate civil
action and subject to Section 1, Rule 111 of the 1985
Kinds of quasi-contracts: Rules on Criminal Procedure as amended. This
separate civil action may be enforced either against
1. Negotiorum gestio This takes place when a the executor/administrator or the estate of the
person voluntarily takes charge of anothers accused, depending on the source of obligation upon
abandoned business or property without the which the same is based as explained above.
owners authority. Reimbursement must be
made to the gestor for necessary and useful 4. Finally, the private offended party need not fear a
expenses, as a rule. forfeiture of his right to file this separate civil action by
2. Solutio indebiti This takes place when prescription, in cases where during the prosecution of
something is received when there is no right the criminal action and prior to its extinction, the
to demand it, and it was unduly delivered private-offended party instituted together therewith the
thru mistake. The recipient has the duty to civil action. In such case, the statute of limitations on
return it. the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with
Requisites of solutio indebiti: provisions of Article 1155 of the Civil Code, that
should thereby avoid any apprehension on a possible
1. He who paid was not under obligation to do privation of right by prescription.
so; and
2. The payment was made by reason of an Article 1162. Obligations derived from
essential mistake of fact. quasi-delicts shall be governed by the
provisions of Chapter 2, Title XVII of this
Article 1161. Civil obligations arising Book, and by special laws. (Obligation ex
from criminal offenses shall be governed quasi-delict)
by the penal laws, subject to the
provisions of article 2177, and of the Quasi-delict a fault or act of negligence (or omission
pertinent provisions of Chapter 2, of care) which causes damages to another, there
Preliminary Title, on Human Relations, being no pre-existing contractual relations between
the parties
and of Title XVIII of this Book, regulating
damages. (Obligation ex delicto)

Every person criminally liable for a felony is also

civilly liable. (Art. 100, RPC)

Ruling of Bayotas Case:

1. Death of the accused pending appeal of his

conviction extinguishes his criminal liability as well as
the civil liability based solely thereon. As opined by
Justice Regalado, in this regard, "the death of the
accused prior to final judgment terminates his criminal
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CHAPTER 2 Remedies of the creditor when debtor fails to comply

with his obligation:
Nature and Effect of Obligations
1. Demand specific performance;
Article 1163. Every person obliged to 2. Demand rescission or cancellation in proper
cases;
give something is also obliged to take
3. Demand damages either with or without
care of it with the proper diligence of a either of the first two.
good father of a family, unless the law or
the stipulation of the parties requires Effect of fortuitous event:
another standard of care. (1094a)
1. If the thing to be delivered is a determinate
DEFAULT RULE: Diligence of a good father of a thing, when such determinate thing is lost
family is required. because of a fortuitous event before delivery,
the obligation to deliver is extinguished.
2. If the thing to be delivered is a generic thing,
CUSTOM RULE: Another standard of care is required
when such generic thing is lost because of a
if the law or the stipulation of the parties so provides.
fortuitous event before delivery, the
obligation to deliver is not extinguished.
Article 1164. The creditor has a right to
the fruits of the thing from the time the Instances when fortuitous event does
obligation to deliver it arises. However, not excuse compliance with the
he shall acquire no real right over it until obligation to deliver:
the same has been delivered to him.
1. If the obligor delays, (really means in
default) or
REAL RIGHT PERSONAL RIGHT 2. If the obligor has promised to deliver
the same thing to two or more
A power over a specific A power demandable by
thing one person of another
persons who do not have the same
interest. (obligor is in bad faith)
Binding on the whole Enforceable only against 3. If the thing to be delivered is a generic thing,
world the obligor when such generic thing is lost because of a
fortuitous event before delivery, the obligation to
Kinds of delivery: deliver is not extinguished.

1. Actual delivery where physically, the

property changes hands ORDINARY DELAY DEFAULT (Legal Delay)
2. Constructive delivery where the physical
transfer is implied There is merely non- That delay that amount to
a. Traditio simbolica performance at the a virtual non-fulfillment of
b. Traditio longa manu
stipulated time the obligation (see Art.
c. Traditio brevi manu
d. Traditio constitutum possessorium 1169 to know when there
e. Tradition by execution of legal is default)
forms and solemnities
Article 1166. The obligation to give a
When obligation to deliver arise: determinate thing includes that of
delivering all its accessions and
1. If there is not term or condition, then from the accessories, even though they may not
perfection of the contract; or
2. If there is a term or a condition, then from the have been mentioned. (1097a)
moment the term arrives or the condition
happens. If there is a stipulation to said effect, accession
and accessories do not have to be included.
Article 1165. When what is to be
delivered is a determinate thing, the Article 1167. If a person obliged to do
creditor, in addition to the right granted something fails to do it, the same shall
him by article 1170, may compel the be executed at his cost.
debtor to make the delivery.
This same rule shall be observed if he
If the thing is indeterminate or generic, does it in contravention of the tenor of
he may ask that the obligation be the obligation. Furthermore, it may be
complied with at the expense of the decreed that what has been poorly done
debtor. (Specific performance) be undone. (Positive personal obligation)

Remedies of creditor here:

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1. To have the obligation performed by another Different kinds of mora:

at the debtors expense;
2. To obtain damages. 1. Mora solvendi default on the part of the
Specific performance is not available here
debtor
because it would amount to involuntary servitude a. Mora solvendi ex re debtors fault
which is prohibited by the Constitution. in real obligations
b. Mora solvendi ex persona
Article 1168. When the obligation debtors default in personal
obligations
consists in not doing, and the obligor 2. Mora accipiendi default on the part of the
does what has been forbidden him, it creditor
shall also be undone at his expense. 3. Compensation morae when in a reciprocal
obligation both parties are in default
(Negative personal obligation)
Requisites of default (mora solvendi):
When things may be ordered undone at the expense
of obligor:
1. The obligation must be due, enforceable,
and already liquidated or determinate in
1. When something is poorly done; or
2. When the obligation consists in not doing, amount;
2. There must be non-performance;
and obligor does what has been forbidden
3. There must be a demand, unless the
him.
demand is not necessary; (apply here the
enumeration in Art. 1169) and
Article 1169. When those obliged to 4. The demand must be for the obligation that
deliver or to do something incur in delay is due.
(means in default): There is not mora solvendi in negative obligations
because one cannot be late in not doing or
1. When the obligee judicially or giving.
extrajudicially demands from the
There is no mora in natural obligations.
obligor fulfillment of his
obligation. The default begins at the A mere reminder, like This is to remind you that
time of the demand. (General Rule) your next instalment fall due on Jan. 7, 2005, is
not a demand because for all that we know
2. When the obligation or the law lateness may still be tolerated by the creditor.
(Castan)
expressly so declare; or
Demand may be in any form (oral or written),
In case of stipulation, mere fixing of the period is provided that it can be proved. (Cetus
not enough. There must be a provision that if Development v. CA, G.R. No. 77647)
payment is not made when due, default or liability
for damages or interests automatically arises. Demand must be categorical and not a mere
(De la Rosa v. BPI, 51 Phil. 926) statement of fact or a suggestion. (Aerospace
Industries v. CA, G.R. No. 108129)
3. When from the nature and the
Demand is ineffective if action is already barred
circumstances of the obligation it
by laches. (Soliva v. Intestate Estate of Villalba,
appears that the designation of G.R. No. 154017)
the time when the thing is to be
delivered or the service is to be Effects of mora solvendi:
rendered was a controlling motive
for the establishment of the 1. Liability for damages or interest;
2. Bear the risk of loss;
contract; (when time is of the 3. Liable even for a fortuitous event (dagames
essence) or may however be mitigated if he can prove
that even if he had not been in default, loss
4. When demand would be useless, would have occurred just the same).
as when the obligor has rendered
The creditor is guilty of default (mora accipiendi)
it beyond his power to perform; or
when he unjustifiably refuses to accept payment
or performance at the time said payment or
5. When the obligor has expressly performance can be done.
acknowledged that he really is in
default. A debtor who incurs delay or default is liable for
damages plus interest, generally from
Mere asking for extension of time is not an extrajudicial or judicial demand in the form of
express acknowledgement of the existence of interest. (Malayan Insurance v. CA, G.R. No.
default on his part. 59919)
 5

In reciprocal obligations, neither party contravene the tenor thereof, are liable
incurs in delay if the other does not for damages.
comply or is not ready to comply in a
proper manner with what is incumbent Kinds of damages (M.E.N.T.A.L.):
upon him. From the moment one of the
1. Moral
parties fulfills his obligation, delay by the 2. Exemplary
other begins. (1100a) 3. Nominal
4. Temperate
5. Actual
When damages or interest entitled to a creditor may
6. Liquidated
be lost:

1. If the principal obligation is allowed to lapse

Article 1171. Responsibility arising from
by prescription; fraud is demandable in all obligations.
2. If the damages or interest are allowed to Any waiver of an action for future fraud
prescribe; is void.
3. If the damages or interest are condoned.

Classification of fraud:
Guidelines for imposition of interest on the amount
claim or damage:
1. According to time of commission
a. Past action against it may be
1. When the obligation is breached, and it
waived
consists in the payment of a SUM OF b. Future action for it cannot be
MONEY, i.e., a loan or forbearance of waived
money, the interest due should be that which 2. According to meaning
may have been stipulated in writing. a. Fraud in performing a contract (Art.
a. Interest due shall itself earn legal 1171)
interest from the time it is judicially b. Fraud in obtaining consent
demanded. i. Dolo causante (Art. 1338)
b. In the absence of stipulation, the ii. Dolo incidente (Art. 1344)
rate of interest shall be 12% per
annum. Article 1172. Responsibility arising from
c. The interest shall begin to run from
the time the demand is judicially or
negligence in the performance of every
extrajudicially made (from the time kind of obligation is also demandable,
of default). but such liability may be regulated by the
2. When an obligation, NOT constituting a loan courts, according to the circumstances.
or forbearance of money, is breached, an
interest on the amount of damages awarded
may be imposed at the courts discretion with
6% rate per annum. DOLO CULPA
a. The interest shall begin to run from
the time the demand is made There is deliberate Although voluntary, still
judicially or extrajudicially if the intention to cause there is no deliberate
amount of the damage is damage or prejudice intention to cause
established with reasonable damage
certainty; or
b. The interest shall begin to run only Liability arising from dolo Liability due to
from the date the court judgement cannot be mitigated or negligence may be
is made when such certainty cannot reduced reduced in certain cases
be so reasonably established at the
time of the judicial or extrajudicial Waiver of an action to Waiver of an action to
demand. enforce liability due to enforce liability due to
c. In any case, the actual base of
future fraud is void future culpa may in a
computation of legal interest shall
certain sense be allowed
be on the amount finally adjudged.
3. When the judgment of the court awarding a
sum of money becomes final and executory,
the rate of legal interest, whether the case GROSS negligence can never be excused in
falls under paragraph 1 or paragraph 2, advance for this would be contrary to public
above, shall be 12% per annum from such policy.
finality until its satisfaction, this interim period
SIMPLE negligence may in certain cases be
being deemed to be by then an equivalent to
excused or mitigated.
a forbearance of credit.

Kinds of culpa according to source of obligation:

Article 1170. Those who in the
performance of their obligations are 1. Culpa contractual
guilty of (1) fraud, (2) negligence, or (3) 2. Culpa aquiliana
delay, and (4) those who in any manner 3. Culpa criminal
 6

Elements of fortuitous event:

CULPA CULPA CULPA
CONTRACTUA AQUILIANA CRIMINAL 1. The event must be independent of the will of
L the debtor;
2. It must be either unforeseeable or
Contractual Tort or quasi- Crime or delict unavoidable;
3. It must be such as to render it impossible for
negligence delict
the debtor to fulfil his obligation in a normal
manner;
Negligence is Negligence is Negligence is
4. The debtor must be free from any
merely incidental direct, direct,
participation in, or aggravation of, the injury
to the substantive, substantive
to the creditor.
performance of and and
an obligation independent independent of If the war had already broken out before the
already existing contract contract was entered into, the war cannot be
because of a considered unforeseen. (Server v. Eisemberg
contract and Co., G.R. No. L-10741)

There is a pre- No pre-existing No pre-existing

EXCEPTIONS:
existing obligation obligation
obligation
1. Cases expressly specified by the law
Requires Requires The quantum (see Art. 1165); or
preponderance preponderance of evidence is 2. When it is otherwise declared by
of evidence of evidence proof beyond stipulation; or
reasonable 3. When the nature of the obligation
doubt
requires the assumption of risk.
Defense of Defense of Defense of (Doctrine of created risk)
good father of good father of good father of
the family is not the family is the family is Article 1175. Usurious transactions shall
available available not a proper be governed by special laws. (n)
defense

Debtor is Ordinarily, the Accused is Article 1176. The receipt of the principal
presumed at victim has to presumed by the creditor without reservation with
fault prove the innocent respect to the interest, shall give rise to
negligence of the presumption that said interest has
the defendant
been paid. The receipt of a later
installment of a debt without reservation
Article 1173. The fault or negligence of
as to prior installments, shall likewise
the obligor consists in the omission of
raise the presumption that such
that diligence which is required by the
installments have been paid.
nature of the obligation and corresponds
with the circumstances of the persons,
Article 1177. The creditors, after having
of the time and of the place. When
pursued the property in possession of
negligence shows bad faith, the
the debtor to satisfy their claims, may
provisions of articles 1171 and 2201,
exercise all the rights and bring all the
paragraph 2, shall apply.
actions of the latter for the same
purpose, save those which are inherent
Standard of care or diligence to be
in his person; they may also impugn the
observed:
acts which the debtor may have done to
defraud them.
1. That agreed upon by the parties;
2. In the absence of (1), that required
Rights of creditors against defaulting debtor:
by law; or
3. That which is expected of a good
1. Exact payment;
father of a family. (If the law or 2. Exhaust debtors property (attachment);
contract does not so state.) 3. Exercise all the rights and bring all the
actions of the debtor except those inherent in
his person (accion subrogatoria);
Article 1174. GENERAL RULE: No person 4. Impugn the acts which the debtor may have
shall be responsible for those events done to defraud them (accion pauliana).
which could not be foreseen, or which,
though foreseen, were inevitable. Article 1178. GENERAL RULE: Subject to
the laws, all rights acquired in virtue of
 7

an obligation are transmissible, if there

has been no stipulation to the contrary.

Exceptions: CHAPTER 3
Different Kinds of Obligations
1. If the law provides otherwise;
2. If the contract provides otherwise;
3. If the obligation is purely personal. SECTION 1
Pure and Conditional Obligations

Article 1179. Every obligation whose

performance does not depend upon a
future or uncertain event, or upon a past
event unknown to the parties, is
demandable at once. (pure)

Every obligation which contains a

resolutory condition shall also be
demandable, without prejudice to the
effects of the happening of the event.
(with resolutory condition)

Pure obligation one without a condition or term;

demandable at one, provided there will be no
absurdity

Condition an uncertain event which wields an

influence on a legal relationship

Term or period that which necessarily must come

whether the parties know when it will happen or not

Article 1180. When the debtor binds

himself to pay when his means permit
him to do so, the obligation shall be
deemed to be one with a period, subject
to the provisions of article 1197. (Thus,
Sec. 2 herein will apply.)

Payment here does not depend on the debtors

will. It is the time when payment is to be made
that is dependent upon him. Thus, this is an
obligation with a term or period.

Article 1181. In conditional obligations,

the acquisition of rights, as well as the
extinguishment or loss of those already
acquired, shall depend upon the
happening of the event which
constitutes the condition.

Suspensive condition the happening of which will

give rise to the acquisition of a right

Resolutory condition the happening of which

extinguishes a right already acquired

Article 1182. When the fulfillment of the

condition depends upon the sole will of
the debtor, the conditional obligation
 8

shall be void (potestative). If it depends bearing in mind the nature of the

upon chance or upon the will of a third obligation. (1118)
person, the obligation shall take effect in
conformity with the provisions of this Article 1186. The condition shall be
Code (casual). deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
Types of conditions here: (Constructive or presumed fulfilment)

1. Potestative (facultative) condition depends This article applies to suspensive conditions. It

upon the sole will of the debtor also applies to instances when the obligor
a. If it is suspensive and potestative
secures the happening of a resolutory condition.
on the part of the debtor, VOID
the condition and the obligation are
both void; Article 1187. GENERAL RULE: The
b. If it is potestative on the part of the effects of a conditional obligation to
debtor and resolutory, VALID; give, once the condition has been
c. If it is potestative on the part of the
creditor, VALID; fulfilled, shall retroact to the day of the
2. Casual depends upon chance or upon the constitution of the obligation.
will of a third person; VALID
3. Mixed the condition does not solely
If A, in 2004, promises to sell the land to B if B
depend on the will of the debtor, VALID
passes the bar in 2006, B would be entitled to the
land beginning 2004 if he passes the bar in 2006.
Article 1183. Conditions that would annul The sale or donation made by B in 2004 is valid.
the obligation which depends upon them The sale or donation made by A in 2004 will not
(both the condition and the obligation are be valid.
void):
Nevertheless, when the obligation
1. Impossible conditions; imposes reciprocal prestations upon the
2. Those contrary to good customs or parties, the fruits and interests during
public policy; and the pendency of the condition shall be
3. Those prohibited by law. deemed to have been mutually
compensated.
If the obligation is divisible, that part
thereof which is not affected by the In the previous example, A can keep the fruits
impossible or unlawful condition shall be and interest of the land from 2004 until the
condition is fulfilled.
valid.

If the obligation is unilateral, the debtor

The condition not to do an impossible
shall appropriate the fruits and interests
thing shall be considered as not having
received, unless from the nature and
been agreed upon. (But, the obligation
circumstances of the obligation it should
here is valid.)
be inferred that the intention of the
person constituting the same was
Article 1184. The condition that some
different.
event happen at a determinate time shall
extinguish the obligation as soon as the
If A, in 2004, promised to give the land to B if B
time expires or if it has become passes the bar in 2006, A will keep the fruits and
indubitable that the event will not take interest of the land from 2004 until 2006 if B
place. (Positive condition) passes the bar in 2006.

Article 1185. The condition that some In obligations to do and not to do, the
event will not happen at a determinate courts shall determine, in each case, the
time shall render the obligation effective retroactive effect of the condition that
from the moment the time indicated has has been complied with. (1120)
elapsed, or if it has become evident that
the event cannot occur. (Negative Article 1188. The creditor may, before the
condition) fulfillment of the condition, bring the
appropriate actions for the preservation
If no time has been fixed, the condition of his right.
shall be deemed fulfilled at such time as
may have probably been contemplated,
 9

The debtor may recover what during the Article 1190. When the conditions have
same time he has paid by mistake in for their purpose the extinguishment of
case of a suspensive condition. an obligation to give, the parties, upon
the fulfillment of said conditions, shall
Article 1189. When the conditions have return to each other what they have
been imposed with the intention of received. (Resolutory condition)
suspending the efficacy of an obligation
to give, the following rules shall be In case of the loss, deterioration or
observed in case of the improvement, improvement of the thing, the provisions
loss or deterioration of the thing during which, with respect to the debtor, are laid
the pendency of the condition: down in the preceding article shall be
applied to the party who is bound to
A. If the thing is LOST it perishes, goes return.
out of commerce, of disappears in such
a way that its existence is unknown or it As for the obligations to do and not to
cannot be recovered do, the provisions of the second
paragraph of article 1187 shall be
1. Without the fault of the debtor observed as regards the effect of the
extinguishment of the obligation. (1123)
Effect: The obligation shall be
EXTINGUISHED. Article 1191. The power to rescind
obligations is implied in reciprocal ones,
2. Through the fault of the debtor in case one of the obligors should not
comply with what is incumbent upon
Effect: The debtor shall be obliged to him. (Right to rescind)
PAY DAMAGES.
The injured party may choose between
B. When the thing DETERIORATES the fulfillment and the rescission of the
(partial loss) obligation, with the payment of damages
in either case. He may also seek
1. Without the fault of the debtor
rescission, even after he has chosen
fulfillment, if the latter should become
Effect: The impairment is to be BORNE
impossible. (Choice of injured party)
by the creditor.
The rescission referred to here is not predicated
2. Through the fault of the debtor
on injury to economic interests on the part of the
party plaintiff (which is the basis for the rescission
Effect: The creditor may CHOOSE mentioned in Arts. 1380 and 1381), but on the
between the (1) RESCISSION of the breach of faith by the defendant, which breach is
obligation and its (2) FULFILLMENT, with violative of the reciprocity between the parties.
(UFC v. CA, G.R. No. L-29155)
indemnity for damages in either case.
Reciprocal obligations those where two parties are
C. If the thing is IMPROVED reciprocally obliged to do or give something

1. By its NATURE, or by TIME It is not enough that both parties are indebted to
each other. The cause must be identical and the
Effect: The improvement shall INURE to obligations should arise simultaneously.
the benefit of the creditor. (Manresa)

The right of rescission exists only in reciprocal

2. At the EXPENSE of the debtor obligations.

Effect: The debtor shall have no other Rescission can be demanded only if the plaintiff
is ready, willing, and able to comply with his own
right than that granted to the
obligation, and the other is not.
USUFRUCTUARY.
The guilty party cannot rescind. He who comes to
This article applies only if the suspensive equity must come with clean hands. (Seva v.
condition is fulfilled and if object is specific. Berwia, 48 Phil. 581)

Trivial cause or slight breaches will not cause

rescission. (Song Fo v. Hawaiian-Phil. Co., 47
 10

Phil. 821) Rescission may be had only for such Obligations with a resolutory period take
breaches that are so substantial and fundamental effect at once, but terminate upon arrival
as to defeat the object of the parties in making
the agreement. (Ang v. CA, G.R. No. 80058)
of the day certain. (Resolutory period)

The court shall decree the rescission A day certain is understood to be that
claimed, unless there be just cause which must necessarily come, although
authorizing the fixing of a period. it may not be known when. (like death)

Judicial approval is needed when there has If the uncertainty consists in whether the
already been delivery of the object (unless of day will come or not, the obligation is
course there is a voluntary returning). (Guevara conditional, and it shall be regulated by
v. Pascual, 12 Phil. 311) the rules of the preceding Section.
Judicial approval is not needed when there has
been no delivery yet, or in case there has been Period a certain length of time which determines the
delivery, the contract stipulates that either party effectivity or the extinguishment of obligations
can rescind the same or take possession of the
property upon fulfilment by the other party.
(Consing v. Jamandre, G.R. No. L-27674) PERIOD CONDITION

The right is not conjunctive, that is, the plaintiff

An event which is certain An uncertain event, an
cannot ask for both remedies. (Verceluz v. to happen, whether the event which may happen
Edano, 44 Phil. 801) But, they can be prayed in time when it will happen or not
the alternative in the complaint. (TS, Feb. 6, is known or not
1912)

The rule is that rescission or resolution of a Always refer to the future May refer even to the
past
contract has the effect of abrogating it in all its
parts. The creditor cannot demand rescission,
and still insist on the performance of subordinate Merely fixes the time or Causes an obligation to
stipulations. (Po Paues v. Sequenza, 47 Phil. the efficaciousness of an arise or to cease
404) obligation

Kinds of terms or periods:

This is understood to be without
prejudice to the rights of third persons 1. Definite the exact date or time is known
who have acquired the thing, in and given
accordance with articles 1385 and 1388 2. Indefinite something that will surely
happen, but the date of happening is
and the Mortgage Law.
unknown
3. Legal a period granted under the
The right to rescind may be waived, expressly or provisions of law
impliedly. 4. Conventional or voluntary period agreed
upon or stipulated by the parties
5. Judicial the period or term fixed by the
Article 1192. In case both parties have
courts for performance of an obligation or for
committed a breach of the obligation, the its termination
liability of the first infractor shall be 6. Ex die a period with a suspensive effect
7. In diem a period or term with a resolutory
equitably tempered by the courts.
effect

If it cannot be determined which of the Requisites for a valid period or term:

parties first violated the contract, the
same shall be deemed extinguished, and 1. It must refer to the future;
each shall bear his own damages. (n) 2. It must be certain but can be extended;
3. It must be physical and legally possible,
otherwise the obligations is void.

The period of prescription commences from the

SECTION 2 time the term in the obligation arrives, for it is
only from that date that it is due and demandable.
Obligations with a Period
(Ullmann v, Hernaez, 30 Phil. 69)

Article 1193. Obligations for whose Evidence of extension of period, if any be given,
fulfillment a day certain has been fixed, must be shown by debtor. (Phil. Engg. Co. v.
Green, 48 Phil. 466)
shall be demandable only when that day
comes. (Suspensive period)
Article 1194. In case of loss,
deterioration or improvement of the
 11

thing before the arrival of the day by the courts, the period cannot be
certain, the rules in article 1189 shall be changed by them.
observed.
When by virtue of Art. 1197, the court fixes the
Article 1195. Anything paid or delivered term, it does not thereby amend or modify the
obligation concerned. Whenever the period is
before the arrival of the period, the
fixed, the court merely enforces or carries out an
obligor being unaware of the period or implied stipulation in the contract. (Deudor v. J.M.
believing that the obligation has become Tuason and Co., G.R. No. L-13768)
due and demandable, may be recovered,
If a case falls under the situations in this article,
with the fruits and interests. (1126a)
the proper action is not to compel the debtor the
performance of the obligation, but to ask the
If the debtor is aware of the period or knows that court to fix the duration of the term. However,
the obligation has not yet become due and when a prior and separate action would be a
demandable, he cannot recover what he has paid mere formality and serve no other purpose but
or delivered. delay, there is no necessity of a prior action to
ask the court to fix the duration of the term.
The debtor may recover what he has paid or (Tiglao v. Manila Railroad Co., 98 Phil. 181)
delivered (with fruits and interests) before the
debt matures. But he can recover the fruits and The prescriptive period for an action to have the
interests even after maturity (this right, however, period fixed is 10 years from the perfection of the
prescribes 5 years after premature payment). contract. (Calero v. Carrion, G.R. No. L-13246)

The law presumes that the debtor know of the

prematureness. This may, however, be rebutted Article 1198. The debtor shall lose every
by him. Thus, in order to avail of the right to right to make use of the period (the term
recover, the debtor must prove that he was is extinguished, and the obligation is
unaware of the period or believed in good faith demandable at once):
that the obligation has become due and
demandable.
(1) When after the obligation has been
Article 1196. GENERAL RULE: Whenever contracted, he becomes insolvent,
in an obligation a period is designated, it unless he gives a guaranty or security
is presumed to have been established for the debt;
for the benefit of both the creditor and
(2) When he does not furnish to the
the debtor.
creditor the guaranties or securities
This article applies only where the parties to a which he has promised;
contract themselves have fixed a period, and not
to a case where the parties have authorized the (3) When by his own acts he has
court to fix a reasonable term. (Orit v. Balrodgan, impaired said guaranties or securities
G.R. No. L-12277)
after their establishment, and when
through a fortuitous event they
EXCEPTION: If from the tenor of the
disappear, unless he immediately gives
same or other circumstances it should
new ones equally satisfactory;
appear that the period has been
established in favor of one or of the
(4) When the debtor violates any
other.
undertaking, in consideration of which
the creditor agreed to the period;
Article 1197. When the courts may fix a
period:
(5) When the debtor attempts to
abscond. (1129a)
1. If the obligation does not fix a period,
but from its nature and the
circumstances it can be inferred that
a period was intended. SECTION 3
2. When the duration of the period
Alternative Obligations
depends upon the will of the debtor.
Article 1199. A person alternatively
In every case, the courts shall determine
bound by different prestations shall
such period as may under the
completely perform one of them.
circumstances have been probably
contemplated by the parties. Once fixed
 12

The creditor cannot be compelled to Article 1204. The creditor shall have a
receive part of one and part of the other right to indemnity for damages when,
undertaking. (1131) through the fault of the debtor, all the
things which are alternatively the object
Article 1200. The right of choice belongs of the obligation have been lost, or the
to the debtor, unless it has been compliance of the obligation has become
expressly granted to the creditor. impossible.

The debtor shall have no right to choose The indemnity shall be fixed taking as a
those prestations which are impossible, basis the value of the last thing which
unlawful or which could not have been disappeared, or that of the service which
the object of the obligation. (Limitation on last became impossible.
the debtors choice)
Damages other than the value of the last
Article 1201. The choice shall produce thing or service may also be awarded.
no effect except from the time it has
been communicated. (1133) Article 1205. When the choice has been
expressly given to the creditor, the
Since the law requires no specific for, it is obligation shall cease to be alternative
believed the choice can communicated orally or from the day when the selection has
in writing, expressly or impliedly, such as by
been communicated to the debtor.
performance of one of the obligations. (Manresa)

An election once made is binding on the person Until then the responsibility of the debtor
who makes it, and he will not, therefore, be shall be governed by the following rules:
permitted to renounce his choice and take an
alternative which was first open to him. (Reyes v.
Martinez, 55 Phil. 492) 3. If one of the things is lost through a
fortuitous event, he shall perform the
The debtor must notify the creditor in order to obligation by delivering that which
inform the creditor that the obligation is now a
the creditor should choose from
simple one, no longer alternative, and if already
due, for the creditor to receive the object being among the remainder, or that which
delivered, if tender of the same has been made. remains if only one subsists;
4. If the loss of one of the things occurs
Requisites for the making of choice: through the fault of the debtor, the
creditor may claim any of those
1. It must be made properly so that the creditor subsisting, or the price of that which,
or his agent will actually know;
2. It is made with full knowledge that a through the fault of the former, has
selection is indeed being made; disappeared, with a right to damages;
3. It is made voluntarily and freely; 5. If all the things are lost through the
4. It is made in due time; fault of the debtor, the choice by the
5. It is made to all proper persons;
6. It is made without conditions unless agreed creditor shall fall upon the price of
to by the creditor; any one of them, also with indemnity
7. It may be waived, expressly or impliedly.
for damages.

Article 1202. The debtor shall lose the

The same rules shall be applied to
right of choice when among the
obligations to do or not to do in case
prestations whereby he is alternatively
one, some or all of the prestations
bound, only one is practicable. (1134)
should become impossible.

Article 1203. If through the creditor's Art. 1205 does not apply when the contract does
acts the debtor cannot make a choice not state to whom the right to choose is given, for
according to the terms of the obligation, in such case it is the debtor who can choose.
the latter may rescind the contract with
damages. Article 1206. When only one prestation
has been agreed upon, but the obligor
This means that if one of the choices is deprived may render another in substitution, the
from the debtor because of the act of the creditor, obligation is called FACULTATIVE.
the debtor may choose the other choice(s)
available, or rescind the contract with damages.
 13

The loss or deterioration of the thing 4. Liability of principals, accomplices, and

intended as a substitute, through the accessories of a felony
5. Bailees in commodatum
negligence of the obligor, does not
render him liable. But once the Article 1208. If from the law, or the nature
substitution has been made, the obligor or the wording of the obligations to
is liable for the loss of the substitute on which the preceding article refers the
account of his delay, negligence or contrary does not appear, the credit or
fraud. debt shall be presumed to be divided
into as many shares as there are
creditors or debtors, the credits or debts
ALTERNATIVE FACULTATIVE
being considered distinct from one
Various things are due Only one thing is due, another, subject to the Rules of Court
but the giving of one is and it is that one which governing the multiplicity of suits.
sufficient generally is given, but the
other may be given to This article gives us the presumption that when
render payment of there are two or more debtors, or two or more
fulfilment easy creditors, the obligation is joint.

If one of the prestations If the principal obligation Description of joint obligations:

is illegal, the others may is void, there is no
be valid and the necessity of giving the
1. The credit or debt is divided into as many
obligation remains substitute
shares as there are creditors or debtors;
2. The credits or debts will be considered
If it is impossible to give If it is impossible to give distinct from one another, subject to the
all except one, that last the principal, the Rules of Court governing multiplicity of suits.
one must still be given substitute does not have
to be given
Consequences of joint liability:

The right to choose may The right to choose given

1. Vitiated consent on the part of one debtor
be given either to debtor only to the debtor
does not affect the others.
or creditor
2. Insolvency of one debtor does not make
others responsible for his share.
3. Demand by the creditor on one joint debtor
SECTION 4 puts him in default, but not the others since
Joint and Solidary Obligations the debts are distinct.
4. When the creditor interrupts the running of
the prescriptive period by demanding
Article 1207. GENERAL RULE: The judicially from one, the others are not
concurrence of two or more creditors or affected. Therefore, it is possible that the
of two or more debtors in one and the share of one joint debtor has not prescribed,
while those of the others have already
same obligation does not imply that each
prescribed.
one of the former has a right to demand, 5. Defenses of one debtor are necessarily
or that each one of the latter is bound to available to the others.
render, entire compliance with the
prestation. (Two or more creditors in one Article 1209. If the division is impossible,
obligation are joint creditors. Two or more the right of the creditors may be
debtors in one obligation are jointly liable.) prejudiced only by their collective acts,
and the debt can be enforced only by
EXCEPTIONS: There is a solidary liability proceeding against all the debtors. If one
when: of the latter should be insolvent, the
others shall not be liable for his share.
1. When the obligation expressly so (Indivisible joint obligation)
states, or
2. When the law or the nature of the ILLUSTRATION:
obligation requires solidarity.
A, B, and C are jointly liable to give a particular car
worth P1.2M in favor of D, E, F, and G. A is insolvent.
Some instances where the law imposes solidary
D and E have renounced their share. The debtors are
liability:
not in default. How much can F and G get from each
debtor?
1. Obligations arising from tort
2. Obligations arising from quasi-delicts
3. Legal provisions regarding the obligations of
devisees and legatees
 14

F can get P100,000 from B and P100,000 from C. F Article 1215. Novation, compensation,
has rights of creditor over an insolvent debtor against confusion or remission of the debt, made
A.
by any of the solidary creditors or with
G has the same rights as F. any of the solidary debtors, shall
extinguish the obligation, without
Article 1210. The indivisibility of an prejudice to the provisions of article
obligation does not necessarily give rise 1219.
to solidarity. Nor does solidarity of itself
imply indivisibility. (n) The creditor who may have executed any
of these acts, as well as he who collects
the debt, shall be liable to the others for
INDIVISIBILITY SOLIDARITY the share in the obligation
corresponding to them.
Refers to the nature of Refers to the tie between
the obligation the parties
Article 1216. The creditor may proceed
May exist even if there is Needs at least two debtor
against any one of the solidary debtors
only one debtor and only or creditors or some or all of them simultaneously.
one creditor
The demand made against one of them
The fault of one is not the The fault of one is the shall not be an obstacle to those which
fault of others fault of the others
may subsequently be directed against
the others, so long as the debt has not
Article 1211. Solidarity may exist
been fully collected.
although the creditors and the debtors
may not be bound in the same manner
This article applies only to solidary obligations,
and by the same periods and conditions. not to joint ones, for in the latter, failure to collect
from one joint debtor his share does not
ILLUSTRATION: authorize the creditor to proceed against the
others, regarding the insolvent debtors share.
A, B, and C are solidary debtors of X in the amount of (Luna v. Arcenas, 34 Phil. 80)
P300,000 subject to the following stipulations: A to
pay in 2005; B, if he passes the bar; C, in 2007.
SOLIDARY DEBTOR SURETY
In 2005, X may collect from A, B, or C P100,000. The
moment B passes the bar, X can collect from any of Indebted for his own Indebted only for the
them another P100,000. In 2007, the remaining share only share of the principal
P100,000 may be collected by X from any of them. debtor

The rule is that the whole solidary obligation can Can be reimbursed what Can be reimbursed for
be recovered from any of the solidary debtors he has paid minus his everything he paid
minus the share of those with unmatured own share
conditions or terms. (Manresa)
If a solidary receives an If the principal debtor
Article 1212. Each one of the solidary extension of the period receives an extension
creditors may do whatever may be useful for payment, the other without the suretys
are still liable for the consent, the surety is
to the others, but not anything which whole obligation minus released
may be prejudicial to the latter. (1141a) the share of the debtor
who has received the
Article 1213. A solidary creditor cannot extension
assign his rights without the consent of
the others. (GENERAL RULE) Article 1217. Payment (of the whole
obligation) made by one of the solidary
EXCEPTION: He is allowed if all the others consent. debtors extinguishes the obligation. If
two or more solidary debtors offer to
Article 1214. GENERAL RULE: The pay, the creditor may choose which offer
debtor may pay any one of the solidary to accept.
creditors.
He who made the payment may claim
EXCEPTION: But if any demand, judicial from his co-debtors only the share which
or extrajudicial, has been made by one of corresponds to each, with the interest
them, payment should be made to him. for the payment already made. If the
 15

payment is made before the debt is due, If through a fortuitous event, the thing is
no interest for the intervening period lost or the performance has become
may be demanded. impossible after one of the solidary
debtors has incurred in delay through
With reference to the reimbursement, the co- the judicial or extrajudicial demand upon
debtors of the debtor who paid the whole amount him by the creditor, the provisions of the
are merely joint debtors of the latter. He may only
preceding paragraph shall apply.
claim the share which corresponds to each of
his co-debtors.
Article 1222. A solidary debtor may, in
The fact of payment is the basis of the right to be actions filed by the creditor, avail himself
reimbursed, for not until then had he the right to
of all defenses which are derived from
be reimbursed. Hence, the obligation of the
others to reimburse him arises only from the time the nature of the obligation and of those
payment is made. (Wilson v. Berkenkotter, G.R. which are personal to him, or pertain to
No. L-4476) his own share. With respect to those
which personally belong to the others,
When one of the solidary debtors he may avail himself thereof only as
cannot, because of his insolvency, regards that part of the debt for which
reimburse his share to the debtor paying the latter are responsible.
the obligation, such share shall be borne
by all his co-debtors, in proportion to the Defenses available to the solidary debtor sued:
debt of each.
1. Those derived from the nature of the
obligation (TOTAL DEFENSE);
Article 1218. Payment by a solidary
debtor shall not entitle him to
Here, the debtor(s) sued will not be liable.
reimbursement from his co-debtors if
such payment is made after the 2. Those which are personal to the debtor sued
obligation has prescribed or become (TOTAL OR PARTIAL DEFENSE);
illegal.
Here, generally, the debtor(s) sued will not be liable.
1. If the debtor pays the creditor without knowing But if the defense is based on a condition or term that
that the debt has already prescribed, the former has not yet been fulfilled or arrived, the debtor will not
can recover from the latter what he has paid on be totally free from liability. The defense is merely
the basis of solution indebiti. partial.

Article 1219. The remission made by the 3. Those which personally belong to the others
(PARTIAL DEFENSE).
creditor of the share which affects one of
the solidary debtors does not release the Here the debtor sued may set up the personal
latter from his responsibility towards the defense belonging to a co-debtor, but it only has
co-debtors, in case the debt had been the effect of decreasing the liability equal to the
totally paid by anyone of them before the share of the debtor to whom the personal
defense belong.
remission was effected. (1146a)

Article 1220. The remission of the whole

obligation, obtained by one of the
SECTION 5
solidary debtors, does not entitle him to
Divisible and Indivisible Obligations
reimbursement from his co-debtors. (n)
Article 1223. The divisibility or
Article 1221. If the thing has been lost or
indivisibility of the things that are the
if the prestation has become impossible
object of obligations in which there is
without the fault of the solidary debtors,
only one debtor and only one creditor
the obligation shall be extinguished.
does not alter or modify the provisions
of Chapter 2 of this Title. (1149)
If there was fault on the part of any one
of them, all shall be responsible to the
Divisible obligation one capable of partial
creditor, for the price and the payment of performance
damages and interest, without prejudice
to their action against the guilty or Indivisible obligation one not capable of partial
negligent debtor. performance
 16

Article 1224. A joint indivisible obligation penalty shall substitute the indemnity for
gives rise to indemnity for damages from damages and the payment of interests in
the time anyone of the debtors does not case of noncompliance.
comply with his undertaking. The
debtors who may have been ready to EXCEPTIONS: Damages will still be paid:
fulfill their promises shall not contribute
to the indemnity beyond the 1. If there is a stipulation to the
corresponding portion of the price of the contrary;
thing or of the value of the service in 2. If the obligor refuses to pay the
which the obligation consists. penalty; or
3. If the obligor is guilty of fraud in the
Joint indivisible obligation: fulfillment of the obligation.

A and B are jointly liable to give C a specific car worth The penalty may be enforced only when
P2 million. it is demandable in accordance with the
provisions of this Code.
If A is ready to fulfil the obligation but B is not, the
obligation will be converted into a monetary one for
indemnity. A will be liable for P1 million only to C; and Article 1227. GENERAL RULE: The
B to the other P1 million. debtor cannot exempt himself from the
performance of the obligation by paying
Article 1225. Obligations that are deemed the penalty.
indivisible:
EXCEPTION: Save in the case where this
1. Obligations to give definite things; right has been expressly reserved for
2. Those which are not susceptible of him.
partial performance;
3. Even though the object or service GENERAL RULE: The creditor cannot
may be physically divisible, an demand the fulfillment of the obligation
obligation is indivisible if so provided and the satisfaction of the penalty at the
by law or intended by the parties. same time.

Obligations that are deemed divisible: EXCEPTION: Unless this right has been
clearly granted to him.
1. When the obligation has for its object
the execution of a certain number of However, if after the creditor has decided
days of work; to require the fulfillment of the
2. When the obligation has for its object obligation, the performance thereof
the accomplishment of work by should become impossible without his
metrical units; fault, the penalty may be enforced.
3. Analogous things which by their
nature are susceptible of partial
Article 1228. Proof of actual damages
performance.
suffered by the creditor is not necessary
in order that the penalty may be
In obligations not to do, divisibility or
demanded. (n)
indivisibility shall be determined by the
character of the prestation in each
Article 1229. When the penalty may be
particular case.
reduced by the judge:
2. In case of a divisible contract, if the illegal terms
can be separated from the legal ones, the latter 1. When the principal obligation has
may be enforced. (Art. 1420) been partly or irregularly complied
with by the debtor.
2. Even if there has been no
performance, if the penalty is
SECTION 6 iniquitous or unconscionable.
Obligations with a Penal Clause
Article 1230. The nullity of the penal
Article 1226. GENERAL RULE: In clause does not carry with it that of the
obligations with a penal clause, the principal obligation.
 17

The nullity of the principal obligation 4. Manner, time and place of payment.
carries with it that of the penal clause. 3. If the judgement upon which the aggrieved party
made payment is null and void, the payment
made thereunder is also null and void. (Manila
Surety v. Lim, G.R. No. L-9343)

Article 1233. A debt shall not be

understood to have been paid unless the
thing or service in which the obligation
consists has been completely delivered
or rendered, as the case may be. (1157)
CHAPTER 4
Extinguishment of Obligations Article 1234. If the obligation has been
substantially performed in good faith,
General Provisions the obligor may recover as though there
had been a strict and complete
Article 1231. Obligations are
fulfillment, less damages suffered by the
extinguished:
obligee.

(1) By payment or performance;

Article 1235. When the obligee accepts
the performance, knowing its
(2) By the loss of the thing due;
incompleteness or irregularity, and
without expressing any protest or
(3) By the condonation or remission of
objection, the obligation is deemed fully
the debt;
complied with.
(4) By the confusion or merger of the 4. Mere receipt of a partial payment is not
rights of creditor and debtor; equivalent to the required acceptance of
performance as would extinguish the whole
(5) By compensation; obligation. (De Castro v. CA, G.R. No. 115838)

(6) By novation. Article 1236. GENERAL RULE: The

creditor is not bound to accept payment
Other causes of extinguishment of or performance by a third person.
obligations, such as
EXCEPTIONS: (1) If there is a stipulation
1. annulment, to the contrary; or (2) If the third person
2. rescission, has an interest in the fulfilment of the
3. fulfillment of a resolutory obligation.
condition, and
4. prescription, Effect of payment by third person:

are governed elsewhere in this Code. 1. The third person may demand from
the debtor what he has paid. (Right to
Reimbursement and subrogation)
2. If he paid without the knowledge or
SECTION 1 against the will of the debtor, he can
Payment or Performance recover only insofar as the payment
has been beneficial to the debtor.
Article 1232. PAYMENT means: (Right to Beneficial reimbursement only;
no right of subrogation)
1. the delivery of money; and
2. the performance, in any other Instances when the third person can recover from the
manner, of an obligation. creditor and not from the innocent debtor:

Requisites for payment to exist: 1. In case of undue payment or solutio indebiti;

2. When the debt had already prescribed;
3. When the debt had been completely
1. Person who pays;
remitted;
2. Person to whom payment is made;
4. When the debt has already been paid;
3. Thing to be paid; and
 18

5. When legal compensation had already taken Payment made to a third person shall
place. also be valid insofar as it has redounded
to the benefit of the creditor. Such
Article 1237. Whoever pays on behalf of
benefit to the creditor need not be
the debtor without the knowledge or
proved in the following cases:
against the will of the latter, cannot
compel the creditor to subrogate him in (1) If after the payment, the third
his rights, such as those arising from a person acquires the creditor's
mortgage, guaranty, or penalty. rights;
Subrogation the act of putting somebody into the
shoes of the creditor, hence, enabling the former to
(2) If the creditor ratifies the
exercise all the rights and actions that could have payment to the third person;
been exercised by the latter
(3) If by the creditor's conduct, the
debtor has been led to believe
SUBROGATION REIMBURSEMENT that the third person had authority
to receive the payment. (1163a)
Recourse can be had to There is no such
the mortgage, guaranty, guaranty
or pledge Article 1242. Payment made in good faith
to any person in possession of the credit
The debt is extinguished The new creditor has shall release the debtor. (1164)
in one sense, but a new different rights, so it is as
creditor, with exactly the if there has indeed been
Article 1243. Payment made to the
same rights as the old an extinguishment of the
one, appears on the obligation creditor by the debtor after the latter has
scene been judicially ordered to retain the debt
shall not be valid. (1165)
There is something more There is only a personal
than a personal action for action to recover the
Article 1244. The debtor of a thing
recovery amount
cannot compel the creditor to receive a
Article 1238. Payment made by a third different one, although the latter may be
person who does not intend to be of the same value as, or more valuable
reimbursed by the debtor is deemed to than that which is due.
be a donation, which requires the
debtor's consent. But the payment is in In obligations to do or not to do, an act
any case valid as to the creditor who has or forbearance cannot be substituted by
accepted it. (Payment by stranger is another act or forbearance against the
deemed a donation) obligee's will. (1166a)

Article 1239. In obligations to give, Article 1245. Dation in payment, whereby

payment made by one who does not property is alienated to the creditor in
have the free disposal of the thing due satisfaction of a debt in money, shall be
and capacity to alienate it shall not be governed by the law of sales.
valid, without prejudice to the provisions
of article 1427 under the Title on "Natural
SALE DATION IN PAYMENT
Obligations."
There is no pre-exisitng There is a pre-exisitng
Article 1240. Payment shall be made to credit credit
the person in whose favor the obligation
has been constituted, or his successor Gives rise to obligations Extinguishes the
obligation
in interest, or any person authorized to
receive it. The cause or The cause or
consideration is the price consideration is the
Article 1241. Payment to a person who is or object extinguishment of the
incapacitated to administer his property debt or the acquisition of
the object offered in
shall be valid if he has kept the thing
credit
delivered, or insofar as the payment has
been beneficial to him. There is greater freedom There is less freedom in
 19

2. When the different prestations are subject to

in the determination of the determination of price different conditions or different terms;
the price 3. When a debt is in part liquidated and in part
unliquidated, in which case performance of
the liquidated part may be insisted upon
The giving of the price The giving of the object
either by the debtor or the creditor;
may generally end the in lieu of the credit may
4. When a joint debtor pays his share or the
obligation of the buyer extinguish completely or
creditor demands the same;
partially the credit 5. When a solidary debtor pays only the part
demandable because the rest are not yet
Requisites of dation in payment: demandable on account of their being
subject to different terms and conditions;
1. Consent of the creditor; 6. In case of compensation, when one debt is
2. It should not prejudice the other creditors; larger than the other, it follows that a balance
3. The debtor should be judicially declared is left;
insolvent; 7. When work is to be done by parts.
4. It should not constitute pactum
commissorium.
Article 1249. FORM OF PAYMENT of
debts in money: (follow this order)
Article 1246. When the obligation
consists in the delivery of an
1. In the currency stipulated (R.A. 8183);
indeterminate or generic thing, whose
or
quality and circumstances have not been 2. If it is not possible to deliver such
stated, the creditor cannot demand a currency, then in the currency which
thing of superior quality. Neither can the is legal tender in the Philippines.
debtor deliver a thing of inferior quality.
The purpose of the obligation and other Legal tender that which a debtor may compel a
circumstances shall be taken into creditor to accept a payment of the debt
consideration. (1167a)
5. Obligations in foreign currency may be
discharged in Philippine currency based on the
Article 1247. GENERAL RULE: The
prevailing rate at the time of payment. (Sharp &
extrajudicial expenses required by the Co. v. Northwest Airlines, G.R. No. 133498)
payment shall be for the account of the
debtor. The delivery of promissory notes
payable to order, or bills of exchange or
EXCEPTION: IF it is otherwise stipulated. other mercantile documents shall
produce the effect of payment only when
With regard to judicial costs, the Rules they have been cashed, or when through
of Court shall govern. the fault of the creditor they have been
impaired.
Article 1248. Unless there is an express
stipulation to that effect, the creditor In the meantime, the action derived from
cannot be compelled partially to receive the original obligation shall be held in
the prestations in which the obligation the abeyance.
consists. Neither may the debtor be
required to make partial payments. GENERAL RULE: A check is not a legal tender and,
therefore, the creditor cannot be compelled to accept
However, when the debt is in part payment thru this means.
liquidated and in part unliquidated, the
EXCEPTIONS:
creditor may demand and the debtor may
effect the payment of the former without 1. When the creditor is in estoppel or he had
waiting for the liquidation of the latter. previously promised he would accept check;
2. When the check has lost its value because
GENERAL RULE: The creditor cannot be compelled of the fault of the creditor.
partially to receive the prestations in which the 3. When payment occurs not because of a debt
obligation consists. Neither may the debtor be but because of the exercise of the right of
required to make partial payments. conventional redemption.

EXCEPTIONS: Article 1250. In case an extraordinary

inflation or deflation of the currency
1. When there is an express stipulation to that stipulated should supervene, the value
effect; of the currency at the time of the
establishment of the obligation shall be
 20

the basis of payment, unless there is an payment is to be applied, if there

agreement to the contrary. (n) is a stipulation to the contrary;
b. The debtor cannot choose to pay
Inflation a sharp sudden increase of money or credit principal first ahead of interest.
or both without a corresponding increase in business (Art. 1253)
transaction
If the debtor makes a proper application and the
Extraordinary inflation a decrease or increase in the creditor refuses, the creditor will be in mora
purchasing power of the Philippine currency which is accipiendi.
unusual or beyond the common fluctuation in the
value of said currency If the creditor makes the application without the
knowledge and consent of the debtor, the
6. The effects of extraordinary inflation or deflation application is not valid. (BPI v. Espinosa)
are not to be applied without an official
declaration thereof by competent authorities. Application of payments cannot be revoked
(Singson v. Caltex) unless both parties agree. (Bachrach v. Golingco,
39 Phil. 912)

Article 1251. Payment shall be made in Even if both parties agree, however, still the
the place designated in the obligation. revocation or change in the application will not be
allowed if third persons would be prejudiced.
There being no express stipulation and if
the undertaking is to deliver a If the debtor accepts from the creditor a
determinate thing, the payment shall be receipt in which an application of the
made wherever the thing might be at the payment is made, the former cannot
moment the obligation was constituted. complain of the same, unless there is a
cause for invalidating the contract.
In any other case the place of payment
shall be the domicile of the debtor. Application must be made at the time when
payment by the debtor is made, not afterwards.
(Powell v. National Bank, 54 Phil. 54)
If the debtor changes his domicile in bad
faith or after he has incurred in delay, the Application of payment cannot be availed of by a
additional expenses shall be borne by surety or a solidary guarantor, or partner-creditor.
him.
Article 1253. If the debt produces
These provisions are without prejudice interest, payment of the principal shall
to venue under the Rules of Court. not be deemed to have been made until
the interests have been covered.
SUBSECTION 1. Application of Payments (General Rule)

EXCEPTION: If the creditor agrees, this all right.

Article 1252.Requisites for APPLICATION
(Manresa)
OF PAYMENT to be made use of:
Article 1254. When the payment cannot
1. The debtor has various debt;
be applied in accordance with the
2. The debts are of the same kind;
3. They are favor of one and the same preceding rules, or if application cannot
creditor; be inferred from other circumstances,
4. All the debts must be due, unless the debt which is most onerous to the
there is a stipulation to the contrary, debtor, among those due, shall be
or unless the application of payment deemed to have been satisfied.
is made by the party for whose
benefit the term has been If the debts due are of the same nature
constituted; and burden, the payment shall be
5. The payment is not enough to applied to all of them proportionately.
extinguish all the debts;
6. The debtor has preferential right to This article applies if no voluntary application of
choose the debt to which his payment is payments is made.
to be applied (this is given by law as a
rule). SUBSECTION 2. Payment by Cession
a. The debtor will not have the right
to choose the debt to which Article 1255. The debtor may cede or
assign his property to his creditors in
 21

payment of his debts. This cession, (1) When the creditor is absent or
unless there is stipulation to the unknown, or does not appear at
contrary, shall only release the debtor the place of payment;
from responsibility for the net proceeds
of the thing assigned. The agreements (2) When he is incapacitated to
which, on the effect of the cession, are receive the payment at the time it
made between the debtor and his is due;
creditors shall be governed by special
laws. (3) When, without just cause, he
refuses to give a receipt;

DACION EN PAGO CESSION (4) When two or more persons

claim the same right to collect;
Does not affect all the In general, affects all
(action for interpleader)
properties properties of the debtor

Does not require plurality Requires more than one (5) When the title of the obligation
of creditors creditor has been lost.

Only the specific or Requires the consent of Tender of payment without consignation does not
concerned creditors all the creditors extinguish the debt; consignation must follow.
consent is required (Capalungan v. Medrano, G.R. No. L-13783)

May take place during Requires full or partial When consignation is not required:
the solvency of the insolvency
debtor
1. In the case of options;
2. In case of pacto de retro;
Transfers ownership Does not transfer 3. In the case of legal redemption.
upon delivery ownership
For the purposes of the preceding enumeration,
This is really an act of Not an act of novation mere tender of payment is sufficient to compel
novation them, but it does not relive the tenderer from his
obligation to pay the price when they are allowed.
SUBSECTION 3. Tender of Payment and (Paez v. Magno, 83 Phil. 405)

Consignation

Tender of payment the act of offering the creditor

what is due him together with a demand that the Article 1257. In order that the
creditor accept the same consignation of the thing due may
release the obligor, it must first be
Consignation the act of depositing the thing due
announced to the persons interested in
with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment the fulfillment of the obligation.

The consignation shall be ineffectual if it

TENDER OF PAYMENT CONSIGNATION is not made strictly in consonance with
the provisions which regulate payment.
Tender of payment is the antecedent of consignation.
Essential requisites for consignation:
May be extrajudicial Necessarily judicial
1. Existence of a valid debt;
Article 1256. If the creditor to whom
2. Valid prior tender, unless tender is excused;
tender of payment has been made
refuses without just cause to accept it,
Requisites of a valid tender of payment:
the debtor shall be released from
responsibility by the consignation of the 1. Made in lawful currency;
thing or sum due. 2. Should include the interest due;
3. Must be unconditional, unless the cause for
refusal is some other ground;
Consignation alone shall produce the 4. The obligation must be due;
same effect in the following cases: 5. The tender must also be in full satisfaction of
the claim, not merely a partial payment
thereof.

3. Prior notice of consignment;

 22

REASON: To enable the creditor and other parties declaration that the consignation has
interested to reconsider the previous refusal, and been properly made, the debtor may
thus, avoid litigation by the simple expedient of
accepting payment.
withdraw the thing or the sum deposited,
allowing the obligation to remain in
The first notice of consignation may be force. (The power to withdraw is a matter of
accomplished simultaneously with the tender of right)
payment. (Valenzuela v. Bakani, G.R. No. L-
4689) Article 1261. If, the consignation having
The notice is not essential if the sum to be been made, the creditor should authorize
deposited is the sum due under a final the debtor to withdraw the same (the
judgement. (Arzaga v. Rumbaoa, 91 Phil. 499) power to withdraw is a matter of privilege),
4. Actual consignation; he shall lose every preference which he
may have over the thing. The co-debtors,
Requisites: guarantors and sureties shall be
released.
1. A complaint filed in court;
2. The thing deposited is the very object that is
due;
3. It must be deposited with the proper judicial
authority;
4. It must be accompanied by proof that tender
has been duly made, unless tender is
excused, and that prior notice of
consignation had already been sent. SECTION 2
5. Subsequent notice of consignation (Art. 1258). Loss of the Thing Due
This is not mandatory if the amount due is as
consequence of a final judgement. (Salvante v. Article 1262. An obligation which
Cruz, 88 Phil. 236) consists in the delivery of a determinate
thing shall be extinguished if it should
The mere filing of the complaint and the service
be lost or destroyed without the fault of
of summons on the defendant-creditor,
accompanied by a copy of the complaint, can the debtor, and before he has incurred in
take the place of said second notice. (Andres v. delay.
CA, 47 O.G. 2876)
When by law or stipulation, the obligor is
Article 1258. Consignation shall be made liable even for fortuitous events, the loss
by depositing the things due at the of the thing does not extinguish the
disposal of judicial authority, before obligation, and he shall be responsible
whom the tender of payment shall be for damages. The same rule applies
proved, in a proper case, and the when the nature of the obligation
announcement of the consignation in requires the assumption of risk.
other cases.
Requisites in order that loss or destruction of the thing
The consignation having been made, the due will extinguish the obligation:
interested parties shall also be notified
1. The thing is determinate or specific;
thereof. (1178) 2. It was lost or destroyed without fault of the
debtor;
Article 1259. The expenses of 3. The debtor is not in default;
4. The law or a stipulation does not make the
consignation, when properly made, shall
debtor liable even for fortuitous event;
be charged against the creditor. (1179) 5. The nature of the obligation does not require
the assumption of risk.
If not properly made, the consignation expenses
THUS the GENERAL RULE is: The loss of the
are chargeable to the debtor.
thing extinguishes the obligation.

Article 1260. Once the consignation has EXCEPTIONS:

been duly made, the debtor may ask the
o If the loss was due to the debtors fault;
judge to order the cancellation of the o The thing lost or destroyed is generic
obligation. (Art. 1263);
o If the debtor is in default;
Before the creditor has accepted the o The law makes the debtor liable even
for fortuitous event;
consignation, or before a judicial
 23

o There is a stipulation that makes the Requisites in order for the debtor to be released from
debtor liable even for fortuitous event; his obligation here:
o The nature of the obligation requires the
assumption of risk. 1. The service has become so difficult;
2. The subsequent difficulty was beyond the
Article 1263. In an obligation to deliver a contemplation of both parties; it is not
enough that the parties have not anticipated
generic thing, the loss or destruction of
or foresaw the difficulty, it must be
anything of the same kind does not impossible for the parties to anticipate or
extinguish the obligation. foresee the difficulty;
3. The debtor must ask for relief;
4. The object must be for future service with
Article 1264. The courts shall determine future unusual change in conditions.
whether, under the circumstances, the
partial loss of the object of the obligation Article 1268. When the debt of a thing
is so important as to extinguish the certain and determinate proceeds from a
obligation. criminal offense, the debtor shall not be
exempted from the payment of its price,
Article 1265. Whenever the thing is lost whatever may be the cause for the loss,
in the possession of the debtor, it shall unless the thing having been offered by
be presumed that the loss was due to his him to the person who should receive it,
fault, unless there is proof to the the latter refused without justification to
contrary, and without prejudice to the accept it.
provisions of article 1165. This
presumption does not apply in case of Article 1269. The obligation having been
earthquake, flood, storm, or other natural extinguished by the loss of the thing, the
calamity. creditor shall have all the rights of action
which the debtor may have against third
Article 1266. The debtor in obligations to persons by reason of the loss. (1186)
do shall also be released when the
prestation becomes legally or physically
impossible without the fault of the
obligor.
SECTION 3
The impossibility must be after the constitution of
Condonation or Remission of the Debt
the obligation. If it was before, there is nothing to
extinguish.
Article 1270. Condonation or remission
Obligation to do includes all kinds of work or is essentially gratuitous, and requires
service the acceptance by the obligor. It may be
made expressly or impliedly.
Obligation to give a prestation which consists in
the delivery of a movable or an immovable thing in Condonation or remission the gratuitous
order to create a real right, or for the use of the abandonment by the creditor of his right
recipient, or for its simple possession, or in order to
return it to its owner
One and the other kind shall be subject
to the rules which govern inofficious
Article 1267. When the service has
donations. Express condonation shall,
become so difficult as to be manifestly
furthermore, comply with the forms of
beyond the contemplation of the parties,
donation.
the obligor may also be released
therefrom, in whole or in part. (rebus sic
Essential requisites for remission:
stantibus; moral impossibility or
impracticability due to change of certain 1. There must be acceptance by the obligor;
conditions; doctrine of the frustration of the 2. The parties must be capacitated and must
commercial object; doctrine of frustration of consent;
3. There must be subject matter;
enterprise) 4. The cause or consideration must be
liberality;
Real obligations (to give) are not included within 5. The obligation remitted must be demandable
this article. This article applies only to personal at the time of remission;
6. The remission must not be inofficious;
obligations.
7. Formalities of a donation are required in the
case of an express remission;
 24

8. Remission must be clearly and convincingly Requisites of a valid merger:

shown.
1. It should take place between the principal
Article 1271. The delivery of a private debtor and creditor;
2. The merger must be clear and definite;
document evidencing a credit, made 3. The very obligation involved must be the
voluntarily by the creditor to the debtor, same or identical.
implies the renunciation of the action
which the former had against the latter. Article 1276. Merger which takes place in
(Implied remission) the person of the principal debtor or
creditor benefits the guarantors. (The
If in order to nullify this waiver it should obligation is extinguished and the contract
be claimed to be inofficious, the debtor of guaranty is extinguished.)
and his heirs may uphold it by proving
that the delivery of the document was Confusion which takes place in the
made in virtue of payment of the debt. person of any of the latter does not
extinguish the obligation. (The obligation
This is not applicable to public documents. is not extinguished, but the contract of
guaranty is extinguished.)
Article 1272. Whenever the private
document in which the debt appears is Article 1277. Confusion does not
found in the possession of the debtor, it extinguish a joint obligation except as
shall be presumed that the creditor regards the share corresponding to the
delivered it voluntarily, unless the creditor or debtor in whom the two
contrary is proved. characters concur.

Outline/Requisites of implied remission:

1. The private document evidencing the credit

SECTION 5
is delivered to the debtor;
2. The delivery to the debtor was made Compensation
voluntarily by the creditor.
a. It is presumed that the delivery was
Article 1278. COMPENSATION shall take
voluntary if the private document is
found in the possession of the place when two persons, in their own
debtor. right, are creditors and debtors of each
other. (a specie of abbreviated payment)
Article 1273. The renunciation of the
principal debt shall extinguish the Compensation that which takes place when two
accessory obligations; but the waiver of persons, in their own right, are creditors and debtors
of each other, and which extinguishes the obligation,
the latter shall leave the former in force.
partially or completely

Article 1274. It is presumed that the

accessory obligation of pledge has been COMPENSATION PAYMENT
remitted when the thing pledged, after its
delivery to the creditor, is found in the Partial extinguishment is As a rule, must be
possession (1) of the debtor, or (2) of a always permitted complete and indivisible
third person who owns the thing.
Takes place by operation Involves action or
of law delivery

SECTION 4 COMPENSATION MERGER

Confusion or Merger of Rights
There must be two There is only one person
persons who are in whom is merged the
Article 1275. The obligation is mutually creditor and qualities of creditor and
extinguished from the time the debtor of each other debtor
characters of creditor and debtor are
merged in the same person. There must be two There can only be one
obligations obligation
Merger or confusion the meeting in one person of
the qualities of creditor and debtor with respect to the
same obligation COMPENSATION SET-
 25

The requisites in Art. 1279 are not necessary.

OFF/COUNTERCLAIM
Here, the parties must have legal capacity and
Takes place by operation Must be pleaded to be must freely give their consent.
of law effectual
Article 1283. If one of the parties to a suit
Set-off or counterclaim works as a sort of judicial over an obligation has a claim for
compensation. damages against the other, the former
may set it off by proving his right to said
Stockholders, as such, are not creditors of the
corporation. (Corpus Juris)
damages and the amount thereof.
(Judicial compensation or set-off)
Article 1279. In order that (LEGAL)
The requisites in article 1279 are necessary, but it
compensation may be proper, it is
is not required that the claim be liquidated at the
necessary: time of pleading. The liquidation may be made in
the proceedings.
(1) That each one of the obligors
be bound principally, and that he Article 1284. When one or both debts are
be at the same time a principal rescissible or voidable, they may be
creditor of the other; compensated against each other before
they are judicially rescinded or avoided.
(2) That both debts consist in a
sum of money, or if the things due Article 1285. The debtor who has
are consumable, they be of the consented to the assignment of rights
same kind, and also of the same made by a creditor in favor of a third
quality if the latter has been person, cannot set up against the
stated; assignee the compensation which would
pertain to him against the assignor,
(3) That the two debts be due; unless the assignor was notified by the
debtor at the time he gave his consent,
(4) That they be liquidated and that he reserved his right to the
demandable; compensation.

(5) That over neither of them there If the creditor communicated the cession
be any retention or controversy, to him but the debtor did not consent
commenced by third persons and thereto, the latter may set up the
communicated in due time to the compensation of debts previous to the
debtor. cession, but not of subsequent ones.

Voluntary compensation does not require the If the assignment is made without the
requisites in the preceding enumeration. It only
knowledge of the debtor, he may set up
requires that the agreement be voluntary and
validly entered into. the compensation of all credits prior to
the same and also later ones until he had
Article 1280. Notwithstanding the knowledge of the assignment. (1198a)
provisions of the preceding article, the
guarantor may set up compensation as Article 1286. Compensation takes place
regards what the creditor may owe the by operation of law, even though the
principal debtor. (exception to no. 1 in Art. debts may be payable at different places,
1279) but there shall be an indemnity for
expenses of exchange or transportation
Article 1281. Compensation may be total to the place of payment. (1199a)
or partial. When the two debts are of the
same amount, there is a total Article 1287. When compensation is not
compensation. proper or cannot be set up:

Article 1282. The parties may agree upon 1. When one of the debts arises from a
the compensation of debts which are not depositum; (the depositary cannot
yet due. (Conventional or voluntary claim compensation, but the depositor
compensation) can) or
 26

2. When one of the debts arises from or that the old and the new obligations
the obligations of a depositary; (the be on every point incompatible with each
depositary cannot claim compensation, other. (1204)
but the depositor can; this must not be
confused with deposits in banks, in Article 1293. Novation which consists in
which case this rule does not apply) or substituting a new debtor in the place of
3. When of the debts arises from the the original one, may be made even
obligations of a bailee in without the knowledge or against the will
commodatum; (the lender may claim of the latter, but not without the consent
the compensation; the borrower cannot) of the creditor. Payment by the new
or debtor gives him the rights mentioned in
4. When one of the debts arises from a articles 1236 and 1237. (1205a)
claim for support due by gratuitous
title; (the person obliged to support Article 1294. If the substitution is without
cannot claim compensation) or the knowledge or against the will of the
5. If one of the debts consists in civil debtor, the new debtor's insolvency or
liability arising from a penal offense. non-fulfillment of the obligations shall
(the accused cannot claim not give rise to any liability on the part of
compensation, but the offended party the original debtor. (n)
can) (Art. 1288)
Article 1295. The insolvency of the new
The cases in preceding enumeration are referred
to as facultative compensation. debtor, who has been proposed by the
original debtor and accepted by the
Article 1289. If a person should have creditor, shall not revive the action of the
against him several debts which are latter against the original obligor, except
susceptible of compensation, the rules when said insolvency was already
on the application of payments shall existing and of public knowledge, or
apply to the order of the compensation. known to the debtor, when the delegated
his debt. (1206a)
Article 1290. When all the requisites
mentioned in article 1279 are present, Article 1296. When the principal
compensation takes effect by operation obligation is extinguished in
of law, and extinguishes both debts to consequence of a novation, accessory
the concurrent amount, even though the obligations may subsist only insofar as
creditors and debtors are not aware of they may benefit third persons who did
the compensation. not give their consent. (1207)

Article 1297. If the new obligation is void,

the original one shall subsist, unless the
SECTION 6 parties intended that the former relation
Novation should be extinguished in any event. (n)

Article 1291. Obligations may be Article 1298. The novation is void if the
modified by: original obligation was void, except
when annulment may be claimed only by
(1) Changing their object or the debtor or when ratification validates
principal conditions; acts which are voidable. (1208a)

(2) Substituting the person of the Article 1299. If the original obligation
debtor; was subject to a suspensive or
resolutory condition, the new obligation
(3) Subrogating a third person in shall be under the same condition,
the rights of the creditor. (1203) unless it is otherwise stipulated. (n)

Article 1292. In order that an obligation Article 1300. Subrogation of a third

may be extinguished by another which person in the rights of the creditor is
substitute the same, it is imperative that either legal or conventional. The former
it be so declared in unequivocal terms, is not presumed, except in cases
 27

expressly mentioned in this Code; the (3) When, even without the
latter must be clearly established in knowledge of the debtor, a person
order that it may take effect. (1209a) interested in the fulfillment of the
obligation pays, without prejudice
Article 1301. Conventional subrogation to the effects of confusion as to
of a third person requires the consent of the latter's share. (1210a)
the original parties and of the third
person. (n) Article 1303. Subrogation transfers to the
persons subrogated the credit with all
Article 1302. It is presumed that there is the rights thereto appertaining, either
legal subrogation: against the debtor or against third
person, be they guarantors or
(1) When a creditor pays another possessors of mortgages, subject to
creditor who is preferred, even stipulation in a conventional
without the debtor's knowledge; subrogation. (1212a)

(2) When a third person, not Article 1304. A creditor, to whom partial
interested in the obligation, pays payment has been made, may exercise
with the express or tacit approval his right for the remainder, and he shall
of the debtor; be preferred to the person who has been
subrogated in his place in virtue of the
partial payment of the same credit.