CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
JOINT AND SOLIDARY OBLIGATIONS
solidary, the presumption is that the obligation is
only joint.
ARTICLE 1207
The concurrence of two or more creditors or of two
or more debtors in one and the same obligation does
not imply that each one of the former has a right to
demand, or that each one of the latter is bound to
render, entire compliance with the prestation. There
is a solidary liability only when the obligation
expressly so states, or when the law or the nature of
the obligation requires solidarity.
EXAMPLES:
A, B, and C borrowed P9,000.00 from D. The
presumption is that A, B, and C are jointly liable.
ARTICLE 1208
If from the law, or the nature or the wording of the
obligations to which of the preceding article refers
the contrary does not appear, the credit or debt shall
be presumed to be divided into as many equal
shares as there are creditors or debtors, the credits
or debts being considered distinct from one
another, subject to the Rules of Court governing the
multiplicity of suits.
Kinds of obligations according to the number of
parties:
1. Individual obligations – where there is only 1
obligor and 1 obligee;
2. Collective obligations – where there are 2 or more
creditors and 2 or more debtors.
- It may be joint or solidary.
JOINT OBLIGATIONS.
.
 Each debtor answers only for the part of the
whole liability and to each creditor belongs
only a part of the correlative rights.
“Joint”, or “jointly” or “conjoint” means mancum or
mancomunada, mancomunadamente or pro rata
obligation.
EXAMPLE:
Ex: A, B, and C borrowed P9,000.00 from D. The
presumption is that A, B, and C are jointly liable.
Here, there are three (3) debts and one (1) credit. D
can demand only P3,000.00 each from A, B, and C or
a total of P9,000.00.
SOLIDARY OBLIGATIONS.
.
 One in which each debtor is liable for the
entire obligation, and each creditor is
entitled to demand the whole obligation.
“Solidary” obligations may be used interchangeably
with “joint and several” or “several” obligations.
Here, there are three (3) debts and one (1) credit. D
can demand only P3,000.00 each from A, B, and C or
a total of P9,000.00.
Since the debts are distinct and separate from each
other, the insolvency of one of the debtors shall not
make the others liable.
A borrowed from B, C, and D P9,000.00. Unless the
contrary appears, the obligation is prima facie a joint
one.
In this case, there is one (1) debt and three (3)
credits. Each creditor can demand only P3,000.00
from A.
Instances when Liability is Solidary
1. When the obligation expressly so states;
2. When the law so provides; and
3. When the nature of the obligation so requires.
KINDS OF SOLIDARITY.
.
1. PASSIVE SOLIDARITY
solidarity on the part of the debtors, where
anyone of them can be made liable for the
fulfillment of the entire obligation.
A and B are solidary debtors of C in the amount of
P10,000.00. C may demand payment from either A
or B, or both of them simultaneously, the whole
obligation. (Art. 1216.)
Payment by A (or B) extinguishes the obligation but
A (or B) may claim from B (or A) the share which
corresponds to him depending upon the agreement
between them. (Art. 1217.)
2.
-
A is liable for P10,000.00 in favor of B and C who are
solidary creditors. A may pay either B or C. (Art.
1214.) So long as the entire debt is not paid, B and C
can demand payment from A. (Art. 1207)
3.
-
EXAMPLE:
Ex: A is a solidary creditor of B and C. A may either
pay B or C and the extinguish will be extinguished.
PRESUMPTION
In case of the concurrence of two or more creditors
or of two or more debtors in one and the same
obligation, and in the absence of express and
indubitable terms characterizing the obligation as
ACTIVE SOLIDARITY
solidarity on the part of the creditors,
where anyone of them can demand the
fulfillment of the entire obligation.
MIXED SOLIDARITY
SOLIDARITY ON THE PART OF THE DEBTORS
AND CREDITORS, WHERE EACH ONE OF THE
DEBTORS IS LIABLE TO RENDER, AND EACH
ONE OF THE CREDITORS HAS A RIGHT TO
DEMAND, ENTIRE COMPLIANCE WITH THE
OBLIGATION.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
EXAMPLE:
A and B are solidarily liable to C and D, solidary
creditors, in the amount of P10,000.00. A (or B) can
pay either C or D.
C (or D) can demand from either a or the payment
by A (or B) of P10,000.00 to C (or D)
Shall extinguish the obligation.
A (or B) can ask reimbursement from B (or A) in the
amount of P5,000.00 or such amount agreed upon
between them.
C (or D), in turn, is liable to give to D (or C), the
latter’s share of P5,000.00 or the amount stipulated.
JOINT INDIVISIBLE OBLIGATIONS.
.
ARTICLE 1209
If the division is impossible, the right of the creditors
may be prejudiced only by their collective acts, and
the debt can be enforced only by proceeding against
all the debtors. If one of the latter should be
insolvent, the others shall not be liable for his share.
(1139)
●
●
Indivisibility pertains to the object of the
contract (prestation)
Solidarity refers to the rights of the creditors
and obligations of the debtors.
ARTICLE 1210
The indivisibility of an obligation does not necessarily
give rise to solidarity. Nor does solidarity of itself
imply indivisibility.
EXAMPLES:
A and B are jointly liable to deliver to C a particular
car.
Here, the prestation is indivisible but the liability of A
and B is joint. We have what is called a joint
indivisible obligation. (Arts. 1209, 1224.)
If A and B obliged themselves solitarily to give the
car to C, we have a solidary indivisible obligation —
the obligation is indivisible and the liability of A and
B is solidary.
To put it in another way, we have a solidary
obligation the subject matter of which is indivisible.
In case of breach, even the innocent debtors are
liable for the entire
indemnity without prejudice to their right of action
against the guilty one. (Art. 1221, par. 2.)
A solidary obligation does not necessarily mean that
the obligation is also indivisible.
Thus, where A and B promised in solidum to pay C
P10,000.00, we have an example of a solidary
divisible obligation. Now, if A and B are jointly liable
to pay C P10,000.00, what we have is a joint divisible
obligation. Money is divisible.
ARTICLE 1211
Solidarity may exist although the creditors and the
debtors may not be bound in the same manner and
by the same periods and conditions. (1140)
Kinds of solidary obligation according to the legal
tie
1. Uniform. — when the parties are bound by the
same stipulations or clauses; or
2. Non-uniform or varied. — when the parties are
not subject to the same stipulations or clauses.
Example:
A, B, C and D obliged themselves to solidarily pay E
P20,000.00 as follows:
Technically, the share of A, B, C and D is P5,000 each.
A – to pay in instalment at P1,000 to start in July;
B – to pay in September;
C – to pay in December ; and
D – when he passes the CPA board exam.
1. In July, E can demand only P1,000 from A. E can
also demand the P1,000 from B,C OR D the share
corresponding to A. He cannot yet collect the share
of B,C and D as they are not yet due and
demandable.
2. In September, E can collect from B his share of
P5,000 or from A, C or D as well as the share of A of
P3,000 if he has not yet paid any installment .
3. In December , E can collect from C his share of
P5,000 or from A, B or D as well as the share of A and
B if they have not yet paid the same.
4. E can collect the share of D if he passes the CPA
board exam.
ARTICLE 1212
Each one of the solidary creditors may do whatever
may be useful to the others, but not anything which
may be prejudicial to the latter.
●
An example of a useful act that may be
done by a solidary creditor is to demand for
the payment of the debt when it is already
due.
●
An example of a prejudicial act is the
remission or condonation by the solidary
creditor of the entire obligation.
ARTICLE 1214
The debtor may pay any one of the solidary
creditors; but if any demand, judicial or extrajudicial,
has been made by one of them, payment should be
made to him. (1142a)
Payment to any of the solidary creditors. The rule is
that the debtor may pay any one of the solidary
creditors. But when a demand, judicial or extrajudicial, has been made by one of them, to avoid
confusion, as well as prejudice to the more diligent
creditor, payment should be made to him.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
Example:
A is the solidary debtor of C and D in the amount of
P10,000.00. Normally, if A pays C or D, the obligation
is extinguished. However, if D already made a
demand to A, then A should only make
payment to D and not to C.
ARTICLE 1215
Novation, compensation, confusion or remission of
the debt, made by any of the solidary creditors or
with any of the solidary debtors, shall extinguish the
obligation, without prejudice to the provisions of
article 1219.
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 the share in the obligation
corresponding to them. (1143)
Novation
- is the extinguishment of an obligation by the
substitution or change of the obligation by a
subsequent one which extinguishes or modifies
the first either by
(1) changing the object or principal conditions,
(2) substituting another in place of the debtor
(3) subrogating a third person in the rights of the
creditor.
Compensation
is a mode of extinguishing to the concurrent
amount the obligations of those persons who in
their own right are reciprocally debtors and
creditors of each other.
Confusion or Merging
- is the extinguishment of the obligation from the
time the characters of the creditor and the
debtor are merged in one person.
Remission or Condonation
- the extinguishment of an obligation through
the act of liberality of the creditor by virtue of
which, without receiving any equivalent, the
creditor renounces the enforcement of the
obligation and is accepted by the debtor.
Liability of solidary creditor in case of novation,
compensation, confusion, or remission.
Novation, compensation, confusion, and remission
are modes or causes of extinguishment of
obligations. (Art. 1231.)
It is but logical that the creditor who executed any of
these acts should be liable to the others for their
corresponding shares considering that such acts are
prejudicial to them. (Art. 1212.)
Example:
A, debtor and B, C, D solidary creditors in the
amount of P30,000.
Technically the liability of A is P10,000 each to B, C
and D. If B validly condones the debt in the amount
of P18,000.00, he shall be liable for P6,000 each to C
and D.
If B collects P15,000 from A, B must account for the
P5,000 share of each C and D.
ARTICLE 1217
Payment made by one of the solidary debtors
extinguishes the obligation.
If two or more solidary debtors offer to pay, the
creditor may choose which offer to accept. He who
made the payment may claim from his co- debtors
only the share which corresponds to each, with the
interest for the payment already made.
If the payment is made before the debt is due, no
interest for the intervening period may be
demanded. When one of the solidary debtors
cannot, because of his insolvency, reimburse his
share to the debtor paying the obligation, such share
shall be borne by all his co- debtors, in proportion to
the debt of each. (1145a)
EFFECTS OF PAYMENT BY A SOLIDARY
DEBTOR.
.
●
Article 1217 refers to the effects of payment by
one of the solidary debtors. It is not applicable
where no such payment has been made.
1. BETWEEN THE SOLIDARY DEBTORS AND
CREDITOR(S)
 Payment made by one of the solidary
debtors extinguishes the obligation. (When
speaking of payment that extinguishes an
obligation, the law refers to payment in
full.)
2. AMONG THE SOLIDARY DEBTORS
 Payment by one of the solidary debtors
entitles him to claim reimbursement from
his co- debtors “only the share which
corresponds to each.’’
3. AMONG THE SOLIDARY CREDITORS
 The receiving creditor is jointly liable to the
others for their corresponding shares. (Art.
1208.)
EXAMPLES:
A, B, and C are jointly and severally liable to D and E
in the amount of P3,000.00 due on January 5.
If both A and B offer to pay D, on January 5, the
latter may choose which offer to accept. If A pays
the entire amount of P3,000.00 on January 5, the
obligation is extinguished.
The payment by A gives him the right to demand
reimbursement from B and C P1,000.00 each with
interest from the date of payment. But A is not
entitled to reimbursement nor to interest for any
payment made before January 5.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
The obligation of B and C to reimburse him with
interest will arise only from January 5. If C is
insolvent, both A and B shall bear his insolvency in
proportion to their shares. Hence, A can still ask B to
pay an additional sum of P500.00.
Of course, A and B can later on recover from C
should the latter’s finances improve.
ARTICLE 1218
Payment by a solidary debtor shall not entitle him to
reimbursement from his co- debtors if such payment
is made after the obligation has prescribed or
become illegal. (n)
Effect of payment where obligation has already
prescribed or become illegal.
●
●
When a solidary debtor pays the obligation, he
is entitled, as a rule, to reimbursement from his
co- debtors.
Article 1218 mentions two cases when the
paying debtor cannot get any reimbursement.
When the obligation has prescribed or became
illegal. Hence, the obligation is extinguished.
ARTICLE 1219
The remission made by the creditor of the share
which affects one of the solidary debtors does not
release the latter from his responsibility towards the
co-debtors, in case the debt had been totally paid by
anyone of them before the remission was effected.
(1146a)
If payment is made first, the remission (see Art.
1270.) or waiver is of no effect. There is no more
obligation to remit. If remission is made previous to
the payment and payment is made, solutio indebiti
arises.
EXAMPLES:
A and B are liable in solidum to C in the amount of
P1,000.00. C remitted A’s share.
Subsequent payment by B of P1,000.00 to C will not
entitle him to reimbursement from A since the
remission
extinguished the obligation with respect to A’s share.
However, B can demand the return of P500.00 from
C under the principle of solutio indebiti. If payment
by B was made before the remission, A is still liable
to B because the remission is without effect, the
obligation having been extinguished already by the
payment.
ARTICLE 1221
If the thing has been lost or if the prestation has
become impossible without the fault of the solidary
debtors, the obligation shall be extinguished.
If there was fault on the part of any one of them, all
shall be responsible to the creditor, for the price and
the payment of damages and interest, without
prejudice to their action against the guilty or
negligent debtor.
If through a fortuitous event, the thing is lost or the
performance has become impossible after one of the
solidary debtors has incurred in delay (legal delay)
through the judicial or extrajudicial demand upon
him by the creditor, the provisions of the preceding
paragraph shall apply. (1147a)
If the thing is lost or the prestation becomes
impossible, the liability of the solidary debtors
depends upon whether or not there is fault or delay.
1. LOSS IS WITHOUT FAULT AND BEFORE DELAY.
EXAMPLE:
A, B, and C obliged themselves solidarily to deliver to
D a particular truck valued at P300,000.00.
The obligation shall be extinguished if the truck is
lost or destroyed through a fortuitous event without
the fault of A, B, and C and before they have
incurred in delay. (Arts. 1262, par. 1; 1174.)
2. LOSS IS DUE TO FAULT ON THE PART OF A
SOLIDARY DEBTOR.
EXAMPLES:
If, in the preceding example, the truck was lost
through the fault of C, A and B shall also be
responsible to D for the price of the truck as well as
damages although A and B were not at fault at all.
A solidary obligation is, in essence, a mutual agency.
As far as the creditor is concerned, the fault or delay
of one solidary debtor, shall be the fault or delay of
all the solidary debtors.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
DIVISIBLE AND INDIVISIBLE
OBLIGATIONS
ARTICLE 1223
The divisibility or indivisibility of the things that are
the object of obligations in which there is only one
debtor and only one creditor does not alter or
modify the provisions of Chapter 2 of this Title.
(1149)
DIVISIBLE OBLIGATION
- One the object of which, in its delivery or
performance, is capable of partial
fulfillment
INDIVISIBLE OBLIGATION
- One the object of which, in its delivery or
performance, is not capable of partial
fulfillment


In determining whether an obligations is
indivisible or not, the controlling circumstance
is not the possibility or impossibility of partial
prestation but the purposes of the obligation or
the intention of the parties.
Hence, even if the object or service may be
physically divisible, the obligation is indivisible
if so provided by law or intended by the parties.
EXAMPLE:
D agreed to pay C P2,000.00 in four equal monthly
installments.
The obligation of D is divisible because it is capable
of partial performance.
But if the agreement is that D will pay C on a certain
date the full amount of P2,000.00, the obligation is
indivisible although money is physically divisible
because the intention of the parties is that the
obligation must be fulfilled at one time and as a
whole (not partially).
The divisibility of an obligation should not,
therefore, be confused with the divisibility of the
thing which is the object thereof.
KINDS OF DIVISION
1. Qualitative Division or one based on quality.
2. Quantitative Division or one based on quantity
rather than on quality.
3. Ideal or Intellectual Division or one which exists
only in the minds of the parties.
2. Conventional Indivisibility – where the will of the
parties makes as indivisible, obligations
which, by their nature, are divisible.
3. Natural Indivisibility – where the nature of the
object or prestation does not admit of division, such
as to give a particular car, or to give computer, etc
ARTICLE 1224
A joint indivisible obligation gives rise to indemnity
for damages from the time anyone of the debtors
does not comply with his undertaking.
The debtors who may have been ready to fulfill their
promises shall not contribute to the indemnity
beyond the corresponding portion of the price of
the thing or of the value of the service in which the
obligation consists. (1150)
EFFECT OF NON-COMPLIANCE BY A
DEBTOR IN A JOINT DIVISIBLE
OBLIGATION
If any one of the debtors does not comply with his
undertaking in a joint indivisible obligation, the
obligation is transformed into one for damages, i.e.,
to pay money.
In a joint indivisible obligation, the effect of noncompliance by a debtor is to make all the debtors
liable for damages but the innocent debtors shall not
contribute beyond their respective shares of the
obligation. The obligation becomes a divisible one.
1. Indemnity for Damages in Joint Indivisible
Obligations.
• Ex. Obligation: Deliver a Car.
2. Solidary Indivisible Obligations.
• Ex. Obligation: Deliver a Car.
ARTICLE 1225
For the purposes of the preceding articles,
obligations to give definite things and those which
are not susceptible of partial performance shall be
deemed to be indivisible.
When the obligation has for its object the execution
of a certain number of days of work, the
accomplishment of work by metrical units, or
analogous things which by their nature are
susceptible of partial performance, it shall be
divisible.
However, even though the object or service may be
physically divisible, an obligation is indivisible if so
provided by law or intended by the parties.
KINDS OF INDIVISIBILITY
1. Legal Indivisibility – where a specific provision of
law declares as indivisible, obligations which, by
their nature, are divisible.
In obligations not to do, divisibility or indivisibility
shall be determined by the character of the
prestation in each particular case. (1151a)
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
INDIVISIBLE OBLIGATIONS.
.
1. Obligation to give definite things that are not
physically divisible.
EXAMPLE:
To give a particular electric fan; to deliver a specific
car. Here, the obligation is indivisible because of the
nature of the subject matter.
2. Obligation to render a service which is not
susceptible of partial performance.

3. Obligation to give a thing or service which is
capable of physical division or partial performance
but the law or intention of the parties states that
the obligation is indivisible.
EXAMPLE:
The obligation of D to giveP1,000.00 to C on a
certain date. Money is physically divisible but the
clear intention here is for D to deliverP1,000.00 at
one time and as a whole.
Neither can the creditor demand the fulfillment of
the obligation and the satisfaction of the penalty at
the same time, unless this right has been clearly
granted him.
However, if after the creditor has decided to
require the fulfillment of the obligation, the
performance thereof should become impossible
without his fault, the penalty may be enforced.
(1153a)
.
1. Obligation to give things that are physically
divisible;
2. Obligation to render service which is susceptible
of partial performance.
PENALTY NOT SUBSTITUTE FOR
PERFORMANCE

 If the debtor is allowed to just pay the
penalty, this would in effect make the
obligation an alternative one. (Art. 1199.)
OBLIGATIONS WITH A PENAL CLAUSE
ARTICLE 1226
In obligations with a penal clause, the penalty shall
substitute the indemnity for damages and the
payment of interests in case of noncompliance, if
there is no stipulation to the contrary.
Nevertheless, damages shall be paid if the obligor
refuses to pay the penalty or is guilty of fraud in the
fulfillment of the obligation.
 The debtor can exempt himself from the
non-fulfifillment of the obligation only when
“this right has been expressly reserved for
him.”
ARTICLE 1228
Proof of actual damages suffered by the creditor is
not necessary in order that the penalty may be
demanded. (n)

In an obligation with a penal clause all that the
creditor has to prove, to enforce the penalty, is
the violation of the obligation by the debtor.

The creditor may enforce the penalty whether
he suffered damages or not.
The penalty may be enforced only when it is
demandable in accordance with the provisions of
this Code. (1152a)
PRINCIPAL OBLIGATION
 is one which can stand by itself and does
not depend for its validity and existence
upon another obligation.
Generally, the debtor cannot just pay the
penalty instead of performing the obligation.
Precisely, the object of the penalty is to secure
compliance with the obligation. (Cui vs. Sun
Chan, 41 Phil. 523 [1921].)
EXAMPLE:
The obligation of X to teach “Obligations and
Contracts” for one year in a university; the obligation
of Y to render 3 song numbers in a program;
Meaning of Principal and Accessory
Obligations
An OBLIGATION WITH A PENAL CLAUSE is one
which contains an accessory undertaking to pay
a previously stipulated indemnity in case of
breach of the principal prestation intended
primarily to induce its fulfillment.
ARTICLE 1227
The debtor cannot exempt himself from the
performance of the obligation by paying the penalty,
save in the case where this right has been expressly
reserved for him.
EXAMPLE:
To sing a song
DIVISIBLE OBLIGATIONS.
ACCESSORY OBLIGATION
 one which is attached to a principal
obligation and, therefore, cannot stand
alone.
ARTICLE 1229
The judge shall equitably reduce the penalty when
the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been
no performance, the penalty may also be reduced by
the courts if it is iniquitous or unconscionable.
(1154a)
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
REDUCTION OF PENALTY.
.
1. When there is partial or irregular performance.
2. When the penalty agreed upon is iniquitous or
unconscionable.
ARTICLE 1230
The nullity of the penal clause does not carry with it
that of the principal obligation.
The nullity of the principal obligation carries with it
that of the penal clause. (1155)
ACCESSORY OBLIGATION
- is defined as an obligation attached to a
principal obligation in order to complete the
same or take its place in case of breach.
EFFECT OF NULLITY OF THE PENAL
CLAUSE

If the penal clause is void, the principal
obligation remains valid and demandable. The
penal clause is just disregarded, and the injured
party may just recover damages.
EXAMPLE:
S agreed to sell merchandise to B. It is provided in
their agreement that in case of default, S will deliver
a prohibited drug as a penalty.
EFFECT OF NULLITY OF THE PRINCIPAL
OBLIGATION

If the principal obligation is void, the penal
clause is likewise void. The reason is that the
clause cannot stand alone without the principal
obligation to which it is subordinated.
EXAMPLE:
S agreed to deliver to B two (2) grams of prohibited
drugs. The contract carries a penal clause to the
effect that in case of noncompliance with the
obligation, S would pay the penalty of P10,000.00
Here, the nullity of the principal obligation carries
with it that of the penal clause although it is itself
valid.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
EXTINGUISHMENT OF OBLIGATIONS
ARTICLE 1234
If the obligation has been substantially performed
in good faith, the obligor may recover as though
there had been a strict and complete fulfillment, less
damages suffered by the obligee. (n)
ARTICLE 1231
Obligations are extinguished:
(1) By payment or performance
(2) By the loss of the thing due
(3) by the condonation and remission of the debt
(4) By the confusion or merger of rights of the
creditor and debtor
(5) By compensation
(6) By novation
EXAMPLE:
S obliged himself to sell 1,000 bags of cement to B
for a certain price. However, despite diligent efforts
on his part, S was able to deliver only 950 bags
because of cement shortage.
Other causes of extinguishment of obligations, such
as annulment, rescission, fulfillment of a resolutory
condition, and prescription, are governed elsewhere
in this Code. (1156a)
Take note that S wants to comply with his obligation
to deliver the entire 1,000 bags but he could not do
so for reasons beyond his control.
ARTICLE 1235
When the obligee accepts the performance,
knowing its incompleteness or irregularity, and
without expressing any protest or objection, the
obligation is deemed fully complied with. (n)
SECTION 1
ARTICLE 1232
Payment means not only the delivery of money but
also the performance, in any other manner, of an
obligation. (n)
REQUISITES FOR THE APPLICATION.
Payment
- may consist of not only in the delivery of
money but also the giving of a thing (other
than money), the doing of an act, or not doing
of an act.
- In law, payment and performance are
synonymous
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)
WHEN DEBT IS CONSIDERED PAID.
.
Debt - may refer to an obligation to deliver money,
to deliver a thing (other than money), to do an act,
or not to do an act
(1) Integrity of the Prestation
 This requisite means that the prestation be
fulfilled completely.
 Partial or irregular performance will not
produce the extinguishment of an
obligation as a rule.
EXAMPLE:
D bound himself to pay C P10,000.00. D is giving only
P9,000.00. C can refuse to accept P9,000.00 because
the fulfillment is not complete.
(2) Identity of the Prestation
 This second requisite means that the very
prestation due must be delivered or
performed.
EXCEPTIONS TO IDENTITY AND
INTEGRITY
.
1. The obligee knows that the performance is
incomplete or irregular; and
2. He accepts the performance without expressing
any protest or objection.

The exceptions to the requirements of payment
under Art. 1233 are substantial performance in
good faith (Art. 1234) and incomplete or
irregular performance without protest (Art.
1235).
ARTICLE 1236
The creditor is not bound to accept payment or
performance by a third person who has no interest
in the fulfillment of the obligation, unless there is a
stipulation to the contrary.
Whoever pays for another may demand from the
debtor what he has paid, except that if he paid
without the knowledge or against the will of the
debtor, he can recover only insofar as the payment
has been beneficial to the debtor. (1158a)
PERSONS FROM WHOM THE CREDITOR MUST
ACCEPT PAYMENT
The creditor is bound to accept payment or
performance from the following:
1. The debtor;
2. Any person who has an interest in the obligation
(like a guarantor); or
3. A third person who has no interest in the
obligation when there is stipulation that he can
make payment. (par. 1.)
EFFECT OF PAYMENT BY A THIRD PERSON
1. If made without the knowledge or against the will
of debtor.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
 The payer can recover from the debtor only
in so far as the payment has been beneficial
to the latter.
EXAMPLE:
If the actual indebtedness is P1,000.00 and S paid
P1,000.00, he can ask reimbursement for P1,000.00
but if P400.00 had already been paid by D, then S is
entitled to be reimbursed only for the amount of
P600.00 because it is only to that amount that D has
been benefited.
2. If made with the knowledge of the debtor.
- The payer shall have the rights of
reimbursement and subrogation, that is, to
recover what he has paid (not necessarily the
amount of the debt) and to acquire all the
rights of the creditor.
EXAMPLE:
If the payment of P1,000.00 was made with the
knowledge or consent of D, S can recover from D
P1,000.00 with all the rights of subrogation to the
accessory obligations such as mortgage, guaranty, or
penalty.
ARTICLE 1237
Whoever pays on behalf of the debtor without the
knowledge or against the will of the latter, cannot
compel the creditor to subrogate him in his rights,
such as those arising from a mortgage, guaranty, or
penalty. (1159a)
Whoever pays on behalf of the debtor is entitled to
subrogation if the payment is with the consent of the
latter.
SUBROGATION
- if a third persons pay with the consent of
the debtor, the third persons becomes the
new creditor replacing the old creditor.
REIMBURSEMENT
- that the third person has merely the bare
right to be refunded by reason of payment.
ARTICLE 1238
Payment made by a third person who does not
intend to be reimbursed by the debtor is deemed to
be a donation, which requires the debtor’s consent.
But the payment is in any case valid as to the
creditor who has accepted it. (n)
PAYMENT BY A THIRD PERSON WHO DOES
NOT INTEND TO BE REIMBURSED

If the paying third person does not intend to be
reimbursed the payment is deemed a donation
which requires the debtor’s consent to be valid.
(see Art. 725.)

However, if the creditor accepts the payment, it
shall be valid as to him and the payor although
the debtor did not give his consent to the
donation.
ARTICLE 1240
Payment shall be made to the person in whose favor
the obligation has been constituted, or his successor
in interest, or any person authorized to receive it.
(1162a)
To whom payment shall be made:
1. Creditor
2. Creditor’s successor-in-interest; or
3. any person authorized to receive payment.
ARTICLE 1242
Payment made in good faith to
any person in possession of the credit shall
release the debtor. (1164)
PAYMENT TO THIRD PERSON IN POSSESSION OF
CREDIT
 Payment should be made to the person in
Possession of Credit and not to the person
who is possession of Instrument of Credit or
Document Evidencing the Credit only
ARTICLE 1244
The debtor of a thing cannot compel the creditor to
receive a different one, although the latter may be of
the same value as, or more valuable than that which
is due.
In obligations to do or not to do, an act or
forbearance cannot be substituted by another act or
forbearance against the obligee’s will. (1166a)
VERY PRESTATION DUE MUST BE COMPLIED
WITH

The first paragraph refers to a real obligation to
deliver a specific thing. A thing different from
that due cannot be offered or demanded
against the will of the creditor or debtor, as the
case may be.

The second paragraph refers to personal
(positive and negative) obligations. The act to
be performed or the act prohibited cannot be
substituted against the obligee’s will. (see Art.
1167.)
ARTICLE 1245
Dation in payment whereby property is alienated to
the creditor in satisfaction of a debt in money, shall
be governed by the law of sales
SPECIAL FORMS OF PAYMENT.
.
There are four special forms of payment under the
Civil Code, namely:
1. Dation in payment (Art. 1245.);
2. Application of payments (Art. 1253.);
3. Payment by cession (Art. 1255.); and
4. Tender of payment and consignation. (Arts. 12561261.)
Strictly speaking, application of payments is not a
special form of payment.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
DATION IN PAYMENT (ADJUDICATION OR DACION
EN PAGO)
- the conveyance of ownership of a thing by
the debtor to creditor as an accepted
equivalent of performance of a monetary
obligation.
- Special form of payment because it is not
the ordinary way of extinguishing an
obligation
Legal tender
- is that currency which a debtor can legally
compel a creditor to accept in payment of a
debt in money when tendered by the
debtor in the right amount.
EXAMPLE:
D owes C P15,000.00. To fulfill the obligation, D, with
the consent of C, delivers a piano.
ARTICLE 1251
Payment shall be made in the place designated
in the obligation. There being no express stipulation
and if the undertaking is to deliver a determinate
thing, the payment shall be made wherever the thing
might be at the moment the obligation was
constituted.
If the piano, however, is worth less than P15,000.00,
the conveyance must be deemed to extinguish the
obligation to the extent only of the value of the
piano as agreed or as may be proved, unless the
parties have considered the piano by their
agreement, express or implied, as full payment in
which case the obligation of D is totally extinguished.
ARTICLE 1248
Unless there is an express stipulation to that effect,
the creditor cannot be compelled partially to receive
the prestations in which the obligation consists.
Neither may the debtor be required to make partial
payments. However, when the debt is in part
liquidated and in part unliquidated, the creditor may
demand and the debtor may effect the payment of
the former without waiting for the liquidation of the
latter. (1169a)


In order that payment may extinguish an
obligation, it is necessary that there be
complete performance of the prestation. (Art.
1233.)
The creditor may accept but he cannot be
compelled to accept partial payment or
performance.
EXAMPLE:
D is indebted to C for P5,000.00 due today. D cannot
compel C to receive P4,000.00 in partial payment of
the obligation and neither can C require
D to pay only P4,000.00 unless there is an agreement
to the contrary.
ARTICLE 1249
The payment of debts in money shall be made in the
currency stipulated, and if it is not possible to deliver
such currency, then in the currency which is legal
tender in the Philippines.
The delivery of promissory notes payable to order, or
bills of exchange or other mercantile documents
shall produce the effect of payment only when they
have been cashed, or when through the fault of the
creditor they have been impaired.
In the meantime, the action derived from the
original obligation shall be held in abeyance. (1170)
 In the Philippines, all coins and notes issued by
the Bangko Sentral ng Pilipinas constitute legal
tender for all debts, both public or private.
In any other case the place of payment shall be the
domicile of the debtor.
If the debtor changes his domicile in bad faith or
after he has incurred in delay, the additional
expenses shall be borne by him. These provisions are
without prejudice to venue under the Rules of Court.
(1171a)

Article 1251 gives the rules regarding the place
for the payment of an obligation without
prejudice to venue under the Rules of Court.
(1) If there is a stipulation, the payment shall be
made in the place designated (par. 1; see Art. 1306.);
(2) If there is no stipulation and the thing to be
delivered is specific, the payment shall be made at
the place where the thing was, at the perfection of
the contract (par. 2.);
(3) If there is no stipulation and the thing to be
delivered is generic, the place of payment shall be
the domicile of the debtor. (par. 3.)
 In this case, the creditor bears the expenses
in going to the debtor’s place to accept
payment (see Art. 1247.) subject to the rule
in paragraph 4
ARTICLE 1252
He who has various debts of the same kind in
favor of one and the same creditor, may declare at
the time of making the payment, to which of them
the same must be applied.
Unless the parties so stipulate, or when the
application of payment is made by the party for
whose benefit the term has been constituted,
application shall not be made as to debts which are
not yet due.
If the debtor accepts from the creditor a receipt in
which an application of the payment is made, the
former cannot complain of the same, unless there is
a cause for invalidating the contract. (1172a)
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
MEANING OF APPLICATION OF PAYMENTS
Application of payments
- is the designation of the debt to which should
be applied the payment made by a debtor
who has various debts of the same kind in
favor of one and the same creditor. (Art.
1252, par. 1.)
Requisites of application of payments.
The requisites are:
1.
2.
3.
4.
5.
There must be one debtor and one creditor;
There must be two or more debts;
The debts must be of the same kind;
The debts to which payment made by the
debtor has been applied must be due; and
The payment made must not be suffificient to
cover all the debts.
EXAMPLES:
D owes C as follows:
Debt A: P1,500.00 payable on September 5;
Debt B: P1,200.00 payable on September 20;
Debt C: A specifific table worth P2,000.00 to be
delivered on September 20; and
Debt D.: P1,000.00 payable on October 15.
On September 20, D paid C P1,500.00. D may apply
the P1,500.00 to debt (a), or to debt (b) and (if C
does not object) to a portion of debt (a).
If D paid only P1,000.00, he cannot choose to apply
his payment to the P1,500.00 debt because C
cannot be compelled to receive partial
payment. (see Art. 1248.)
D cannot properly apply his payment to debt (c)
because it is not of the same kind. He must deliver
the thing agreed upon. (Art. 1244.)
the same and apply the proceeds thereof to
the satisfaction of their credits.
EFFECT OF PAYMENTS BY CESSION.

.
Unless there is a stipulation to the contrary, the
assignment does not make the creditors the
owners of the property of the debtor and the
debtor is released from his obligation only up
to the net proceeds of the sale of the property
assigned. (Art. 1255.)
In other words, the debtor is still liable if there is a
balance.
TENDER OF PAYMENT AND CONSIGNATION
ARTICLE 1256
If the creditor to whom tender of payment has been
made refuses without just cause to accept it, the
debtor shall be released from responsibility by the
consignation of the thing or sum due.
Consignation alone shall produce the same effect in
the following cases:
1. When the creditor is absent or unknown, or does
not appear at the place of payment;
2. When he is incapacitated to receive the payment
at the time it is due;
3. When, without just cause, he refuses to give a
receipt;
4. When two or more persons claim the same right
to collect;
5. When the title of the obligation has been lost.
(1176a)
PAYMENT BY CESSION
Tender of payment
- the act, on the part of the debtor, of offering
to the creditor the thing or amount due. The
debtor must show that he has in his
possession the thing or money to be delivered
at the time of the offer.
ARTICLE 1255
The debtor may cede or assign his property to his
creditors in payment of his debts. This cession,
unless there is stipulation to the contrary, shall only
release the debtor from responsibility for the net
proceeds of the thing assigned.
Consignation
- the act of depositing the thing or amount due
with the proper court when the creditor does
not desire, or refuses to accept payment, or
cannot receive it, after complying with the
formalities required by law.
The agreements which, on the effect of the cession,
are made between the debtor and his creditors shall
be governed by special laws. (1175a)
REQUISITES OF A VALID CONSIGNATION..
Neither can he apply it to debt (d) which is not yet
due unless there is a stipulation to the contrary or he
has the benefit of the period.
MEANING OF PAYMENT BY CESSION
Payment by cession
- is another special form of payment. It is the
assignment or abandonment of all the
properties of the debtor for the benefit of
his creditors in order that the latter may sell
In order that the debtor may be released from his
obligation by the consignation of the thing or sum
due to the following requisites must be observed:
1. existence of a valid debt which is due (Art. 1256,
par. 1.);
2. tender of payment by the debtor and refusal
without justifiable reason by the creditor to accept it
(Ibid.);
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
3. previous notice of consignation to persons
interested in the fulfillment of the obligation (Art.
1257, par. 1.);
4. consignation of the thing or sum due (Art. 1258,
par. 1.); and
5. subsequent notice of consignation made to the
interested parties.
EXAMPLE:
D owes C a sum of money. On the due date of the
obligation, D offers to pay the obligation but C
refuses to accept the payment without any
justifiable reason.
In this case, D’s obligation will not be extinguished
until he has made a valid consignation.
ARTICLE 1257
In order that the consignation of the thing due
may release the obligor, it must first be announced
to the persons interested in the fulfillment of the
obligation.
The consignation shall be ineffectual if it is not made
strictly in consonance with the provisions which
regulate payment. (1177)
ARTICLE 1258
Consignation shall be made by depositing the
things due at the disposal of judicial authority,
before whom the tender of payment shall be proved,
in a proper case, and the announcement of the
consignation in other cases.
The consignation having been made, the
interested parties shall also be notified thereof.
(1178)
LOSS OF THE THING DUE
ARTICLE 1262
An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should
be lost or destroyed without the fault of the debtor,
and before he has incurred in delay.
When by law or stipulation, the obligor is liable even
for fortuitous events, the loss of the thing does not
extinguish the obligation, and he shall be responsible
for damages.
WHEN LOSS OF THING WILL EXTINGUISH AN
OBLIGATION TO GIVE:
 The obligation is to deliver a specifific or
determinate thing;
 The loss of the thing occurs without the fault
of the debtor;
 The debtor is not guilty of delay.
Remember, a generic thing can be replaced or
substituted as provided in…
ARTICLE 1263
In an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not
extinguish the obligation. (n)
SECTION 3
CONDONATION OR REMISSION OF THE DEBT
ARTICLE 1270
Condonation or remission is essentially gratuitous
and requires the acceptance by the obligor. It may
be made expressly or impliedly.
One and the other kind shall be subject to the rules
which govern in officious donations. Express
condonation shall, furthermore, comply with the
forms of donation. (1187)
Meaning of condonation or remission.
Condonation or remission
- the gratuitous renunciation by the creditor
of his right against the debtor resulting in
the extinguishment of the latter’s obligation
in its entirely or in that part of the same to
which the renunciation refers.
- It is thus a form of donation.
Requisites of condonation or remission.
The requisites are the following:
• It must be gratuitous;
• It must be accepted by the obligor;
• The parties must have capacity;
• It must not be in officious; and
• If made expressly, it must comply with the
forms of donation.
Remission must be accepted by debtor.
 Condonation or remission is a bilateral act
The same rule applies when the nature of the
obligation requires the assumption of risk. (1182a)
Article 1270 expressly requires its acceptance by the
debtor.
WHEN IS A THING CONSIDERED LOST
RENUNCIATION BY CREDITOR OF THIS
CREDIT

The thing is lost when it perishes or goes out
of commerce or disappears in such a way that
its existence is unknown, or it cannot be
recovered.
Can the creditor renounce his credit even against the
will of the debtor? Yes.
 Such unilateral renunciation is allowed.
Article 6 provides that “Rights may be
waived, unless the waiver is contrary to law,
public order, public policy, morals or good
customs, or prejudicial to a third
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
person with a right recognized by law.”
Inofficious Donations
 The rules on inofficious donations apply to
the condonation or remission of debts .
A person’s prerogative to make donations is subject
to certain limitations, one of which is that he cannot
give by donation more than what he can give by will.
Otherwise, so much of what is donated which
exceeds what he can give by will is deemed
inofficious and the donation is reducible to the
extent of such excess.
SECTION 4
CONFUSION OR MERGER OF RIGHTS
ARTICLE 1275
The obligation is extinguished from the time the
characters of creditor and debtor are merged in the
same person. (1192a)
Meaning of confusion or merger.
CONFUSION OR MERGER
- the meeting in one person of the qualities
of creditor and debtor with respect to the
same obligation. (4 Sanchez Roman 421.)
REASON OR BASIS FOR CONFUSION.
ARTICLE 1272
Whenever the private document in which the debt
appears is found in the possession of the debtor, it
shall be presumed that the creditor delivered it
voluntarily, unless the contrary is proved. (1189)


Ordinarily, the document evidencing the debt is
in the possession of the creditor.
If the document is later found in the hands of
the debtor and it is not known how he came
into possession of the same, the presumption is
that it was voluntarily delivered by the creditor
This presumption of voluntary delivery, in turn,
gives rise to the presumption of remission.
EXAMPLE:
D owes C P1,000.00 evidenced by a promissory note.
The note, signed by D, is given to C.
If the promissory note is voluntarily delivered to D,
the presumption is that the debt must have been
paid by D.
If it is known that D has not yet paid C, it must be
presumed that the obligation has been remitted by
C. (Art. 1271.)
Suppose it is not known how D came into
possession of the promissory
note.
The presumption is that it was voluntarily delivered
by C, unless C proves the contrary. (Art. 1272.)
ARTICLE 1273
The renunciation of the principal debt shall
extinguish the accessory obligations; but the waiver
of the latter shall leave the former in force. (1190)
EFFECT OF RENUNCIATION OF PRINCIPAL DEBT
ON ACCESSORY OBLIGATION


The above provision follows the rule that the
accessory follows the principal.
While the accessory obligations cannot exist
without the principal obligation, the latter may
exist without the former. (see Art. 1230.)

.
The law treats confusion or merger as a mode
of extinguishing obligations because if a debtor
is his own creditor, enforcement of the
obligation becomes absurd since a person
cannot claim payment from himself.
EXAMPLE:
D owes C P1,000.00 for which D executed a
negotiable promissory note in favor of C.
C indorsed the note to X who, in turn, indorsed it
to Y. Now, Y bought goods from the store of D.
Instead of paying cash, Y just indorsed the
promissory note to D.
Here, D owes himself. Consequently, his obligation is
extinguished by merger.
SECTION 5
COMPENSATION
ARTICLE 1278
Compensation shall take place when two persons, in
their own right, are creditors and debtors of each
other. (1195)
COMPENSATION
- the extinguishment to the concurrent
amount of the debts of two persons who, in
their own right, are reciprocally principal
debtors and creditors of each other. (Arts.
1278, 1290.)
EXAMPLE:
A owes B the amount of P1,000.00. B owes A the
amount of P700.00.
Both debts are due and payable today. Here
compensation takes place partially, that is, to the
concurrent amount of P700.00. So, A shall be liable
to B for only P300.00.
If the two debts are of the same amount, there is
total compensation. (Art. 1281.)
The two debts are extinguished without actual
transfer of money between the parties.
Legal Compensation takes effect by operation of law
when all the requisites mentioned in Art. 1279 are
present.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
It extinguishes both debts to the concurrent amount
even though the creditors and debtors are not aware
of the compensation. It operates even against the
will of the interested parties or without their
consent.
Such compensation takes place ipso jure, its effects
arise on the very day in which all of the requisites
concur.
ARTICLE 1279
In order that compensation may be proper, it is
necessary:
(1) That each one of the obligors be bound
principally, and that he be at the same time a
principal creditor of the other;
A owes B P10,000.00. B owes A P10,000.00.
Compensation will take place because A and B
are principal debtors and creditors of each other.
(2) That both debts consist in a sum of money, or if
the things due are consumable, they be of
the same kind, and also of the same quality if the
latter has been stated;
A owes B P10,000.00. B owes A an electric range
worth P10,000.00.
No compensation will take place.
(3) That the two debts be due;
A owes B P10,000.00 due today. B owes A
P10,000.00 due next month. No compensation will
take place.
For purposes of the application of payment, A is the
debtor. He must specify to B which of the three
debts should be compensated. If he fails to inform B,
then the latter should apply the compensation to
the second obligation of A, namely, the obligation
bearing the 12% interest because it is the most
onerous obligation.
SECTION 6
NOVATION
Meaning of novation.
Novation is the total or partial extinction of an
obligation through the
creation of a new one which substitutes it.
It is the substitution or change of an obligation by
another, which
extinguishes or modififies the fifirst, either by
changing its object or
principal conditions, by or substituting another in
place of the debtor, or
by subrogating a third person in the rights of the
creditor.
ARTICLE 1291
Obligations may be modified by:
1. Changing their object or principal conditions;
2. Substituting the person of the debtor;
3. Subrogating a third person in the rights of the
creditor. (1203)
ARTICLE 1292
In order that an obligation may be extinguished by
another which substitutes the same, it is imperative
that it be so declared in unequivocal terms, or that
the old and the new obligations be on every point
incompatible with each other. (1204)
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention
or controversy, commenced by third
persons and communicated in due time to the
debtor. (1196)
ARTICLE 1280
If a person should have against him several debts
which are susceptible of compensation, the rules on
the application of payments shall apply to the order
of the compensation. (1201)
Compensation is similar to payment.
 If a debtor has various debts which are
susceptible of compensation, he must inform
the creditor which of them shall be the object
of compensation. In case he fails to do so, then
the compensation shall be applied to the most
onerous obligation. (Arts. 1252, 1254.)
EXAMPLE:
A is indebted to B in the amount of:
P1,000.00 without interest due today;
P1,000.00 with interest of 12% due to also today;
P1,000.00 with interest of 10% due yesterday. B
owes A P1,000.00 due today.
EXAMPLE:
S agreed to construct a house for B on a certain
parcel of land.
Subsequently they agreed to construct an apartment
on the same parcel of land. The area of the land is
that both house and apartment cannot be
constructed on the same site.
There is novation because even in the absence
of an express agreement to that effect the two (2)
obligations cannot stand and are absolutely
incompatible with each other.
ARTICLE 1293
Novation which consists in substituting a new debtor
in the place of the original one, may be made even
without the knowledge or against the will of the
latter, but not without the consent of the creditor.
Payment by the new debtor gives him the rights
mentioned in Articles 1236 and 1237. (1205a)
KINDS OF PERSONAL NOVATION.
Personal novation may be in the form of:
.
CENTRAL PHILIPPINE UNIVERSITY
BSA 2-02
BUSLAW3111 – LAW ON OBLIGATIONS AND CONTRACTS
PROF.: Atty. Mark Lozano
1. Substitution — when the person of the debtor is
substituted (Art. 1291[2].); or
Kinds of Substitution
Article 1293 speaks of substitution which, in turn,
may be:
Expromision
- that which takes place when a third person
of his own initiative and without the
knowledge or against the will of the original
debtor assumes the latter’s obligation with
the consent of the creditor.
Delegacion
- that which takes place when the creditor
accepts a third person to take the place of
the debtor at the instance of the latter. In
delegacion, all the parties, the old debtor,
the new debtor, and the creditor must
agree.
In either of these two modes of substitution, the
consent of the creditor is an indispensable
requirement. (De Cortez vs. Venturanza, supra.)
2. Subrogation — when a third person is subrogated
in the rights of the creditor. (Ibid., [3]; Art. 1300.)
ARTICLE 1297
If the new obligation is void, the original one shall
subsist, unless the parties intended that the former
relation should be extinguished in any event. (n)

The general rule is that there is no novation if
the new obligation is void and, therefore, the
original one shall subsist for the reason that the
second obligation being inexistent, it cannot
extinguish or modify the first.
ARTICLE 1300
Subrogation of a third person in the rights of the
creditor is either legal or conventional. The former is
not presumed, except in cases expressly mentioned
in this Code; the latter must be clearly established in
order that it may take effect. (1209a)
Subrogation
- the substitution of one person in the place of
another with reference to a lawful claim or
right, so that he who is substituted succeeds to
the right of the other in relation to a debt or
claim, including its remedies and securities.
SUBROGATION MAY BE EITHER:
Conventional — when it takes place by express
agreement of the original parties (the debtor and the
original creditor) and the third person (the new
creditor) (Art. 1301.)
Legal — when it takes place without agreement but
by operation of law.
(Art. 1302.)