Notes on Article 1237: Stranger Pays

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.

If a third person pays in favor of the debtor with the latter's will, consent and knowledge, that third-person payor acquires all rights and actions that could have been exercised by the creditor. Such rights may arise from mortgage, guaranty or penalty.

With the knowledge and permission of B, the debtor, A, a person not interested in the fulfillment of the obligation, paid C, the creditor in the whole amount of the loan, Php 1,000,000. The loan was secured by a mortgage over B's house and lot.

A can reimburse the whole amount from B. This is so because B was obviously benefited up to Php 1,000,000. Furthermore, A can foreclose the mortgage on B's land in case of nonpayment. A can step into the shoes of the creditor and enforce all the rights and actions that could have been exercised by the latter. Article 1303 of the Civil Code provides for the definition of subrogation.

Article 1303. Subrogation transfers to the persons subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to stipulation in a conventional subrogation

Can there be tacit approval by the debtor of the payment made by the stranger?

Yes. The law uses the terms "without the knowledge" and "against the will." This means that the mere knowledge of the debtor without any objection made or any whimper that can be inferred from his acts is enough consent, albeit implied.

Article 1302 lays down the presumption of legal subrogation: (1) When a creditor pays another creditor who is preferred, even without the debtor's knowledge; (2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor; (3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter's share.What is the difference between subrogation and reimbursement?

In cases of subrogation, the stranger-payor has all the rights to enforce mortgages, guaranties and penalties which were previously under the control of the creditor. In cases of reimbursement, there is not such recourse.

In subrogation, the new creditor steps into the shoes of the old creditor. In reimbursement, the new creditor has different rights that the old creditor.

Manresa also has the view that there is something more than a personal action of recovery in subrogation. In reimbursement, there is only a personal action to recover the amount.

When it comes to matter in which subrogation and reimbursement are similar, it must be noted that in both cases, the stranger has made payment to the creditor in favor of a debtor.