Extinguishment of ⁃ both parties are creditor and debtor of each

other.
Obligation Ex: X is indebted to Y for P100,000. Y is also
Most common types or modes of extinguishment indebted to X for P100.000.
of obligation
KINDS OF COMPENSATION
1. PAYMENT/PERFORMANCE Legal compensation
⁃ largest mode of obligation ⁃ happens automatically without the need of
consent from either of the parties.
Application of payment
⁃ Maraming utang pipili kung alin babayaran Conventional compensation
⁃ need ng consent ng both parties para mag take
Ex: effect.
X bound himself to give a specific book to Y.
X bound himself to repair Y's car. Facultative compensation
⁃ only one party have the ability to enforce
Dacion en pago compensation.
⁃ Paying non cash asset
Judicial compensation
Cession en pago ⁃ court will decide kung ano magiging effect ng
⁃ Payment using your property compensation sa affected parties.

Tender of payment and consignation 6. NOVATION

⁃ Paying something using legal tender ⁃ there is a change of obligations. Old
⁃ Act of depositing your debt in court, ex: di obligation is extinguished and magkakaron ng
kilala si creditor tas si creditor sa court na new obligation.
kukunin. (Consignation)
Ex: X is indebted to Y for P100,000. X and Y
2. LOSS OF THE THING agreed that instead of P100,000, X will be giving
Ex: X bound himself to give a specific book to Y. his car instead as
payment.
3. CONDONATION
donate - creditor will not enforce the obligation... Kinds of Novation
1. Real Novation
Ex: X is indebted to Y for P500,000 payable Dec ⁃ change of prestation
31 next year.
2. Personal Novation
4. CONFUSION ⁃ change of subject
⁃ the characteristics of the debtor and creditor
decides in one person only. • Substitution (debtor)
⁃ Extinguish kase siya parehas ang creditor at a. Expromission
debtor. ⁃ naginitiate ng substitution ay ang 3rd person
that will eventually become the new debtor.
Ex: P loan to M P500,000. M issued a promissory b. Delegacion
note payable to P. Later, P sells the note to A, A to ⁃ nag initiate ng substitution ay ang original
B, B to C, and C back to M. debtor.

5. COMPENSATION • Subrogation (creditor)

 Art 1237
3. Mixed Novation • Not interested in the fulfillment of the
⁃ change of both prestation and subject obligation
Ex: boyfriend mo

Key Points:
⁃ The creditor can refuse payment
Part 1 Note: kahit irefuse ng creditor hindi pa rin siya
Who can pay? Art 1236 & 1238 magiging in delay.

Note: pag valid ang payment di pedeng tumanggi If debtor consent to payment:
ang creditor na tanggapin ang valid or else pag di ⁃ The debtor shall fully reimburse 3rd person
tinanggap magkakaron ng delay on the lart of the ⁃ The 3rd person is subrogated to the rights of
creditor ( Mora Accipiendi) creditor
VALID PAYMENT FROM: If debtor does not consent to payment [Art. 1237):
Art 1240
⁃ The debtor shall reimburse 3rd person for
⁃ Kung sino may utang (debtor) what has been beneficial to him
⁃ Authorized agent (will act on behalf of the ⁃ The 3rd person is not subrogated to the rights
debtor) of creditor
⁃ Succesor in interest (usually take effect pag
namatay ung debtor) Ex:
D is indebted to C for P1M. As security, D
3rd person pledged his car. 2 months before
• interested in the fulfillment of the obligation the debt matures, D paid P100,000 to C which the
(valid payment) latter accepted. 1 month
Key Points: before the debt matures, X presented payment of
There will be valid payment and P1M to C.
⁃ The creditor cannot refuse payment
⁃ The debtor shall fully reimburse 3rd person • Does not intend to be reimbursed
⁃ The 3rd person is subrogated (substitute for
another) to the rights of creditor Key Points:
⁃ The creditor can refuse payment
Who are the interested persons: ⁃ If debtor consent to payment, it is deemed to
⁃ guarantors be a donation
⁃ Sureties (parang guarantors)
If debtor does no consent to payment:
⁃ Preferred creditors (creditors na nauuna
bayaran) ⁃ The debtor shall reimburse 3rd person for
what has been beneficial to him
⁃ Owners of securities
Note: pede ipledge ang pag mamay ari ng iba with ⁃ The 3rd person is not subrogated to the rights
their consent. of creditor

Ex: Ex:
D is indebted to C for P1M. As security, D D is indebted to C for P1M. As security, D
pledged his car. Furthermore, G guaranteed the pledged his car. 2 months before
debt. Before the debt matures, G presented the debt matures, D paid P100,000 to C which the
payment of P1M to C. latter accepted. 1 month
before the debt matures, X presented payment of
P1M to C.
Who to pay? What is to be paid?
⁃ Creditor • To give a specific thing
⁃ Debtor cannot compel C to receive a different
VALID PAYMENT FROM: specific thing even latter has same value or
Art 1240 more valuable than that due [Art. 1244)
⁃ Creditor
⁃ Authorized agent (will act on behalf of the • To give a generic thing
creditor) ⁃ Creditor cannot demand a thing of superior
⁃ Succesor in interest (usually take effect pag quality;
namatay ung creditor) ⁃ Debtor cannot deliver a thing of inferior
quality
What if anticipated(nabaliw)? (Art 1241)
General rule: Invalid payment Unless:
Exceptions : ⁃ quality & circumstances have not been stated
1. Kept the thing delivered (obligations to give) so the purpose of the obligation and other
2. Payment benefited him (pinambili ng pagkain) circumstances shall be taken into
consideration (Art. 1246)
Ex:
D is indebted to C for P100,000. On maturity date, • Obligation to do or not to do
C is insane and despite being aware of the ⁃ In obligations to do or not to do, an act or
insanity, D still paid C P100,000. forbearance cannot be substituted by another
act or forbearance against the obligee's will.
3rd person (1241) (Art. 1244 par. 2]
Valid IF 3rd person proves that benefit redounded
(to have an effect) to creditor. • Obligation to give money
Note: burden of proof nakay debtor ⁃ The payment of debts in money shall be made
in the currency stipulated, and if it is not
Benefit need not be proven in the following cases: possible to deliver such currency, then in the
1. after the payment, the third person acquires currency which is legal tender in the
the creditor's rights; Philippines. (Art. 1249)
2. If the creditor ratifies the payment to the third
person; (binayaran ang kaibigan ng creditor at How to pay? Art 1233, 1234, 1235, 1248
nakausap mo si creditor tas sabi niya is ok
kunin ko nalang sakanya)
⁃ dapat ang payment ay kumpleto (concept)
3. If by the creditor's conduct, the debtor has ⁃ Unliquidated (di pa nadedetermine ang exact
been led to believe that the third person had amount pero there is an estimate made)
authority to receive the payment.
General rule
Ex: Payment must be complete [Art.
D is indebted to C for P10,000. On maturity date, 1233]. The creditor or debtor cannot be compelled
D went to C's house to pay. C was not in the to accept or make partial payments (Art. 1248).
house. D ask X (neighbor of C who was not
authorized by C to accept payment) to receive the EXCEPTIONS
P10,000 and give it to C when he gets home. - not ⁃ Creditor waives complete performance [Art.
valid payment 1235)
⁃ Contrary stipulation (ex: payment is by
installment)
⁃ Partly liquidated
What to pay? Art 1244, 1246 & 1249
Ex: thing due and capacity to alienate it shall not
D is indebted to C for P90,000. On maturity date, be valid, without prejudice to the provisions
D cannot compel C to accept P80,000 only for of article 1427 under the Title on "Natural
now nor C to compel D to pay P60,000 only for Obligations."
now.
Ex: D is bound to deliver to C a dog. On due date,
Substantial D delivered a dog he stole from a pet shop to C.
⁃ Performance in Good Faith (Art. 1234) ⁃ pwedeng validly hindi iaccept ni creditor ang
⁃ Debtor may recover as if there had been payment because ninakaw lang kaya walang
complete fulfillment - Less damages suffered free disposal...
by Creditor.
Art 1242
Ex: ⁃ Payment made in good faith to any person in
D is bound to deliver 10 sacks of rice to C. Due to possession of the credit shall release the
a certain circumstance beyond the control of D, D debtor.
is only able to deliver 9 sacks of rice. In this
case, assuming each sack costs P2,000, C is bound Ex:
to pay P18,000 D is indebted to C for P100,000. Because of this,
(P2,000 X 9 sacks] less damages suffered by C. D issue a promissory note payable to C or bearer.
(doesn't need endorsement only delivery is
Where to pay? Art 1251 needed) One day, C lost the note. It was found by
General Rule X. On due date, X presented to D the promissory
⁃ stipulation of parties note for payment. - valid payment and the
obligation is extinguished.
If no stipulation:
• obligation to give a specific thing
⁃ wherever the thing was at the moment
obligation was constituted Article 1245
⁃ Dation in payment, whereby property is
• Any other type of obligation (obligation to alienated to the creditor in satisfaction of a
do and obligation to give a generic thing) debt in money, shall be governed by the law
⁃ domicile of debtor (lugar/place ni debtor) of sales.

Article 1247
⁃ Unless it is otherwise stipulated, the
When to pay? extrajudicial expenses required by the
⁃ kelan naoblige na magbayad or gawing ang payment shall be for the account of the debtor.
isang bagay. With regard to judicial costs (general rule is
ang mag bebear ay si debtor), the Rules of
⁃ Papasok ang concept ng demand and delay. Court shall govern.
• Upon demand
Article 1250
⁃ when obligation is due and demandable but ⁃ In case an extraordinary inflation or deflation
debtor may pay before due date if period is for
of the currency stipulated should supervene,
benefit of debtor.
the value of the currency at the time of the
establishment of the obligation shall be the
basis of payment, unless there is an agreement
Art 1239
to the contrary.
⁃ In obligations to give, payment made by one
who does not have the free disposal of the
Ex: may utang na 5M tas nag kainflation, ang 3. July 5 - Give a specific cat
babayaran mo na ay mas mataas na sa 5M. 4. July 12 - P8.000 with 12% annual interest
(Soriano book) 5. July 13 - P15,000 secured by chattel mortgage
6. July 15 - P9,000
Pero sa ibang book is same lang ung value na
babayaran magkainflation man o hindi. Assuming on July 14, D is ready to pay but only
up to P20,000.
Article 1250 according to De Leon's Book, the
amount liable by debtor is the equivalent amount D is indebted to C. Below are the debts of D to C
of the obligations currency today (if 5k obligation with their due dates:
and now value nya is 10k, debtor's obligation is
10k) unless there's 1. June 30 - P10,000
stipulation that regardless of inflation and 2. July 8 - P12,000
deflation debtor's liability will stay as what its 3. July 12 - P8.000 with 12% annual interest
value upon making the contract. 4. July 13 - P15,000 secured by chattel mortgage

General rule si debtor ang mag aapply kung saan

Part 2 niya gustong ibayad.
Special Modes of payment, loss of the thing,
condonation, and confusion. (Art. 1252-1277) If di inapply ni debtor at creditor mag aapply ang
payment sa pinakaburdensome na utang (onerous)
Special Modes of Payment which is the number 3 or 4. For an instance equal
1. Application of Payment (Art 1252) burden ang 3 or 4 so kahit saan dito pede iapply.
2. Dation in payment And kapag may sobra pa sa 20k don na siya
3. Payment by cession ibabayad sa 1 at 2.
4. Tender of Payment and Consignation
Iaapply ito proportionately...

Art 1253
⁃ payment of interest first before payment of the
principal
Article 1255
• Application of Payment ⁃ payment by cession
⁃ may pambayad ka pero di sapat para
mabayaran lahat ng utang mo
• Cession en pago
Requisites: ⁃ Payment using your property
1. At least two (2] debts are due
2. One (1) debtor and one (1) creditor • Dacion en pago
3. Application of payment can be made only on ⁃ Paying non cash asset
debts that are due Ex: laptop in exchange of money
4. Payment cannot cover all debts due
5. Application of payment can be made only to • Tender of Payment and Consignation
debts of the same kind
Tender of Payment
Example: ⁃ act of debtor showing intention of complying
D is indebted to C. Below are the debts of D to C with his obligation. In this section, tender of
with their due dates: payment is valid if you are "tendering" legal
1. June 30 - P10,000 tender
2. July 8 - P12,000
Legal tender
⁃ these are bills and coins issued by the Bangko ARTICLE 1260
Sentral ng Pilipinas (BSP) ⁃ Once the consignation has been duly made,
⁃ Creditor must accept the debtor may ask the judge to order the
• Bills - legal tender as to any amount of debt cancellation of the obligation.
• Coins (P1, P5, P10) - legal tender up to P1,000 ⁃ Before the creditor has accepted the
• Coins (centavos] - legal tender up to P100 consignation, or before a judicial declaration
that the consignation has been properly made,
(BSP Circular No. 537, Series of 2006) the debtor may withdraw the thing or the sum
Note: checks are not legal tender. deposited, allowing the obligation to remain
in force.
Consignation
⁃ made by depositing the things due at the ARTICLE 1261
disposal of judicial authority, before whom ⁃ If, the consignation having been made, the
the tender of payment shall be proved, in a creditor should authorize the debtor to
proper case, and the announcement of the withdraw the same, he shall lose every
consignation in other cases. [Art. 1258] preference which he may have over the thing.
The co-debtors, guarantors and sureties shall
GENERAL RULE be released.
There can be no consignation without a valid
tender of payment. • LOSS OF THE THING
⁃ obligation to give a specific thing (applied)
EXCEPTIONS (Art. 1256)
1. When the creditor is absent or unknown, or ARTICLE 1264
does not appear at the place of payment; ⁃ The courts shall determine whether, under the
2. When he is incapacitated to receive the circumstances, the partial loss of the object of
payment at the time it is due; the obligation is so important as to extinguish
3. When, without just cause, he refuses to give a the obligation.
receipt;
4. When two or more persons claim the same Ex:
right to collect; S obliged himself to deliver to B a specific race
5. When the title of the obligation has been lost. horse. The horse met
an accident as a result of which it suffered a
Tender of Payment and Consignation broken leg. The injury is
Requisites: permanent. Here, the partial loss is so important as
1. Debt is already due to extinquish the
2. Tender of payment made but creditor refuses to obligation.
accept payment without valid cause
3. Notice of consignation to interested persons is
given (Art. 1257) ARTICLE 1265
4. Actual consignation of the sum due (Art. 1258
par. 1)
⁃ Whenever the thing is lost in the possession of
the debtor, it shall be presumed that the loss
5. Notice to interested person that consignation
was due to his fault, unless there is proof to
was made must be
the contrary, and without prejudice to the
given (Art. 1258 par. 2)
provisions of article 1165. This presumption
does not apply in case of earthquake, flood,
storm or other natural calamities.
ARTICLE 1259
⁃ The expenses of consignation, when properly ARTICLE 1266
made, shall be charged against the creditor.
⁃ The debtor in obligations to do shall also be Ex:
released when the prestation becomes legally D is obliged to deliver to C a specific car. Before
or physically impossible without the fault of delivery, the car was lost
the obligor. due to the fault of X, a third person. In this case, C
Ex: will have a right of
S is obliged to deliver a specific turtle to B. action against X.
Before delivery, the specific turtle was declared to
be an endangered species and a law was passed at
once to render selling these turtles illegal. • Condonation or Remission of the Debt
ARTICLE 1270
⁃ Condonation or remission is essentially
ARTICLE 1267 gratuitous(generosity), and requires the
⁃ When the service has become so difficult as to acceptance by the obligor. It may be made
be manifestly beyond the contemplation of the expressly or impliedly.
parties, the obligor may also be released ⁃ One and the other kinds shall be subject to the
therefrom, in whole or in part. rules which govern inofficious donations.
Ex: Express condonation shall, furthermore,
X agreed to construct a road near a mountain. A comply with the forms of donation.
very strong typhoon
caused an avalanche making the construction of ARTICLE 1271
the road dangerous to ⁃ The delivery of a private document
human lives. evidencing a credit, made voluntarily by the
creditor to the debtor, implies the renunciation
of the action which the former had against the
ARTICLE 1268 latter.
⁃ When the debt of a thing certain and ⁃ If in order to nullify this waiver it should be
determinate proceeds from a criminal offense, claimed to be inofficious, the debtor and his
the debtor shall not be exempted from the heirs may uphold it by proving that the
payment of its price, whatever may be the delivery of the document was made in virtue
cause for the loss, unless the thing having of payment of the debt.
been offered by him to the person who should
receive it, the latter refused without ARTICLE 1272
justification to accept it. ⁃ Whenever the private document in which the
Ex: debt appears is found in the possession of the
Civil obligation: debtor, it shall be presumed that the creditor
⁃ X is obliged to deliver a specific car to Y. delivered it voluntarily, unless the contrary is
(Extinguished) proved. (Rebuttable presumption)
Criminal obligation:
⁃ X is obliged to return (restitution) a specific
car he stole from Y. (Not extinguished kahit ARTICLE 1273
loss from fortuitous event and it will be ⁃ The renunciation of the principal debt shall
monetary) extinguish the accessory obligations; but the
waiver of the latter shall leave the former in
force.
ARTICLE 1269
⁃ The obligation having been extinguished by Ex:
the loss of the thing, the creditor shall have all ⁃ D is indebted to C for P100,000 (principal
the rights of action which the debtor may have obligation) secured by a chattel mortgage on
against third persons by reason of the loss. his car (accessory obligation).
⁃ If the obligation to pay P100,000 is condoned, ⁃ Confusion does not extinguish a joint
the accessory obligation in the chattel obligation except as regards the share
mortgage is also condoned. corresponding to the creditor or debtor in
⁃ However, if the chattel mortgage is condoned, whom the two characters concur.
the obligation to pay the P100,000 remains in
force. Ex:
A, B, and C are jointly liable to D in the amount
of P9,000.00 evidenced by a
negotiable promissory note. D endorsed the note
ARTICLE 1274 to E, who, in turn endorsed it
⁃ It is presumed that the accessory obligation of to A.
pledge has been remitted when the thing In this case, A's share in the obligation is
pledged, after its delivery to the creditor, is extinguished because of confusion
found in the possession of the debtor, or of a in his person. However, the indebtedness of B and
third person who owns the thing. C in the amount of P3,000.00 each remains
because as to them there is no confusion.
Consequently, B and C would be liable to A, the
⁃ contract of pledge is a real contract (one of the new creditor, P3,000.00 each.
requisites is to deliver the specific thing to
creditor).

Part 3
• Confusion or Merger of Rights
Compensation and Novation (Art. 1278-1304)
⁃ meeting of the qualities of the creditor and
debtor in the same person. KINDS OF COMPENSATION
1. Legal compensation
ARTICLE 1275 ⁃ happens automatically without the need of
⁃ The obligation is extinguished from the time consent from either of the parties.
the characters of creditor and debtor are ⁃ compensation that takes effect by operation of
merged in the same person.
law, and extinguishes both debts to the
concurrent amount, even though the creditors
ARTICLE 1276
and debtors are not aware of the compensation
⁃ Merger which takes place in the person of the [Art. 1290).
principal debtor or creditor benefits the
guarantors. Confusion which takes place in
the person of any of the latter does not ARTICLE 1278 (definition)
extinguish the obligation. (Contract of ⁃ Compensation shall take place when two
guaranty is only extinguished)
persons, in their own right, are creditors and
Ex:
debtors of each other.
M makes a promissory note payable to P. This
note is secured by a contract of guaranty by G. If
ARTICLE 1279 (requisites in legal compensation)
P sells the note to G, the obligation of M is not
In order that compensation may be proper, it is
extinguished. Rather, G will be the new creditor
necessary:
of M and the contract of guaranty is extinguished.
1. That each one of the obligors be bound
principally, and that he be at the same time a
M is the principal debtor while G is the subsidiary
principal creditor of the other:
debtor.
Ex:
D is indebted to C for P10,000. G is the guarantor.
ARTICLE 1277
Assuming C is indebted to G for P9,000, is there
legal compensation between G and C?
⁃ there will be no legal compensation. C is ⁃ Notwithstanding the provisions of the
principally liable to G. G is subsidiary liable preceding article, the guarantor may set up
to C. compensation as regards what the creditor
may owe the principal debtor.
2. That both debts consist in a sum of money, or Ex:
if the things due are consumable, they be of ⁃ D is indebted to C for P10,000. G is the
the same kind, and also of the same quality if guarantor. Assuming C is indebted to D for
the latter has been stated; P9,000.
Ex: ⁃ If D fails to pay C because of insolvency, C
⁃ D is indebted to C for P10,000; C is indebted will have the right to go against G. However,
to D for P9,000 (Art. 1281) ✅ (partial G may set up compensation as what C may
compensation). owe D which is 9,000. Therefore, C can only
⁃ D is indebted to C for P10,000; D is indebted collect P1,000 from G.
to give C a specific ring ❌ (not same kind)
⁃ D is indebted to deliver to C a class A sugar; Conventional or Voluntary compensation
D is indebted to give C a class B sugar ❌ (not ⁃ need ng consent ng both parties para mag take
same class of sugar) effect.

3. That the two debts be due: (dapat nagmature Article 1282

na ang parehas na utang) ⁃ the parties may agree upon the compensation
of debts which are not yet due.
4. That they be liquidated (nadetermine na ung
amount) and demandable; Judicial compensation
Ex: ⁃ court will decide kung ano magiging effect ng
X is indebted to Y for P10,000 by virtue of a debt. compensation sa affected parties.
On the other hand. Y is also indebted to X by
virtue of a court case. The amount is not yet ARTICLE 1283
determined. (No legal compensation kase it is the
debt is not yet liquidated, if not liquidated it is not
⁃ If one of the parties to a suit over an
obligation has a claim for damages against the
demandable)
other, the former may set it off by proving his
right to said damages and the amount thereof.
5. That over neither of them there be any
Facultative compensation
retention or controversy, commenced by third
persons and communicated in due time to the ⁃ only one party have the ability to enforce
debtor. compensation.
Ex: ⁃ Need consent from the party na pwedeng mag
A owes B P10,000. B owes A P10,000. B also compel ng compensation.
owes C P10,000. C causes the
garnishment of the credit of B against A and 1. one of the debts arises from a depositum or
notifies A not to pay B P10,000.00 as C has a from the obligations of a depositary or of a
better right to the said amount. bailee in commodatum.
Note: pag di indicated if nag due na it is presumed [Art. 1287 par. 1)
na nag due na siya. Ex:
⁃ X is obliged to give Y a t-shirt. X left a t-shirt
Note: at Y's house. (Deposit). The consent is from
Once na compensate wala ng liability ung X.
dalawang parties. (Automatically) ⁃ Pag si x nag compel ng compensation at
pumayag si y, facultative
ARTICLE 1280
⁃ Pag si y nag compel and pumayag si x ⁃ If the creditor communicated the cession to
magiging conventional him but the debtor did not consent thereto, the
⁃ X is obliged to give Y a laptop. X lent Y a latter may set up the compensation of debts
laptop. [Commodatum). The consent is from previous to the cession, but not of subsequent
x. ones.
⁃ If the assignment is made without the
2. up against a creditor who has a claim for knowledge of the debtor, he may set up the
support due by gratuitous title (Art. 1287 par. compensation of all credits prior to the same
2) and also later ones until he had knowledge of
Ex: the assignment.
W is the ex-wife of H. H was ordered by the court
to give monthly support of P50,000 to W for their
children. W is indebted to H for P50,000. Assume
both H and W's debts are due.
⁃ Si W ang pwedeng mag compel ng
compensation. But H can't compel.

3. one of the debts consists in civil liability arising

from a penal
offense. [Art. 1288]

Ex: Cession - assignment

⁃ X is indebted to Y for P100,000. Y attempted
Compensation in Assigned Debts
to kill X. Because of the shock, X was
awarded by the court of P100,000 damages. Y ⁃ X is indebted to Y for P100,000. Y, on the
was also criminally prosecuted. (X can other hand, is indebted to X for the following
compel) amount [together with due dates:
June 13 - P10,000
ARTICLE 1284 June 18 - P12,000
June 22 - P8,000
⁃ When one or both debts are rescissible or
June 25 - P10,000
voidable, they may be compensated against
July 1 - P15,000
each other before they are judicially rescinded
Total 55k
or avoided.
Ex:
Assuming on June 24, Y assigned the P100,000 to
A owes B P10,000.00. Subsequently, A, through
Z. X gained knowledge of assignment on June 26.
fraud was able to make B sign a promissory note
How much can Z collect from X?
that B is indebted to A for the same amount.

ARTICLE 1285
⁃ The debtor who has consented to the
assignment of rights made by a creditor in
favor of a third person, cannot set up against
the assignee the compensation which would
pertain to him against the assignor, unless the
assignor was notified by the debtor at the time
he gave his consent, that he reserved his right
to the compensation.
Assigned - binibigay na ung right
ARTICLE 1286
⁃ Compensation takes place by operation of
law, even though the debts may be payable at
different places, but there shall be an
indemnity for expenses of exchange or
transportation to the place of payment.
Ex:
⁃ A obliged himself to deliver to B 100 sacks of
rice in Davao. B is also bound to deliver to A
100 sacks of rice of the same kind in Bulacan.
The expenses for transportation of the rice to
Davao amount to P4,000.00 and to Bulacan,
P1,000.00.
⁃ If A claims compensation, he must indemnify
B the amount of P3,000.00 for the expenses of
transportation of the rice to Davao.
(Possible ang legal compensation)

• Novation

Kinds of Novation (Art. 1291)

1. Real Novation
⁃ change of prestation
2. Personal Novation
⁃ change of subject
• Substitution (debtor)
a. Expromission
⁃ naginitiate ng substitution ay ang 3rd person
that will eventually become the new debtor.
b. Delegacion
⁃ nag initiate ng substitution ay ang original
debtor.

• Subrogation (creditor)
a. Legal Subrogation
b. Conventional Subrogation