1. ORIGIN. SUBROGATION BY AGUSTIN Y. KINTANAR, LL. B. CHAPTER I SUBROGATION IN GENERAL To the Romans (Giorgi, "Teorias de las Obligaciones," Vol. VII, p. 176) we owe the doctrine of subrogation, for it is a creation of the Civil Law (Durante vs. Eanacco, 65 N. Y. App. Div., 435); in fact it is one of the most beautiful features of that system (Enders vs. Brunc, 4 Rand (Va.), 438). But Paulo and Ulpiano failed to give it that perfection as we have it to-day. This doctrine is founded upon equity and justice (37 Cyc., 365). For this reason it found many a master mind, not only in its native home, but also in foreign lands, ready to retouch the little imperfections as he took it from the old Romans. Seeing the great justice and equity enunciated by this doctrine, the common law countries, one by one, adopt and make it their own. 2. DEFINITION. The word "subrogation" may be applied to both persons and things. When it is applied to persons, we call it "subrogacion personal." It is "subrogacion real" when applied to things. "Subrogacion personal" may be either the substitution of a third person in the place of a debtor by assuming the obligations of the latter, or the substitution of third person in the place of a creditor by acquiring his rights as such. The latter one is the technical subrogation, and it is the one that concerns us in this work. Subrogation transfers to the subrogated the credit with the rights annexed to it, either against the debtor or against third parties, be they sureties or holders of mortgages (Civil Code, Article 1212). It is then the substitution of another person in the place of a creditor so that the person in whose favor it is excercised succeeds to the rights of the creditor in relation to the debt (37 Cyc., 363). Viso defines it as the transmission made to a person of the credits, rights and actions which one has against another, the obligation of the debtor remaining unimpaired (Viso, "Derecho Civil," Vol. III, p. 95). More broadly speaking, it is the substitution of one person in the place of another, whether as creditor or as the possessor of any other rightful claim. The substitute is put in all respects in the place of the party to whose rights he is subrogated, subject only to a very narrow limitation. 3. NATURE. The Civil Code considers the substitution of a third person in the place of a creditor as novation (See Spanish Civil Code, Book IV, Title I, Chapter IV, Section 6; 7 Giorgi, 217). With this difficulty in view, we propose to discuss "Subrogation"' properly so called in this work. This juridical subject, very appropriately called "pago con subrogacion" by an Italian writer, is one of the most singular, and one of the most difficult for theoretical writers to handle; for, although it has some of the natures of novation, assignment of credit, and payment, nevertheless it refuses to be governed even by their elementary rules. It is different from novation, because in novation the obligation is extinguished wholly, and another new and distinct obligation take its place (8, Manresa, 436); from assignment of credit, because in assignment, what takes place is a mere transfer of the credit (8, Manresa, 436); from payment, because the obligation is totally extinguished in the act of payment, both on the part of the creditor and the debtor, and nothing takes the place of the once extinguished obligation. Subrogation is a legal fiction by force of which the debt is extinguished in relation to the creditor, but not in relation to the debtor. It has its own characteristics which distinguish it from any other. The payor pays the debt of another without any hope of personal pecuniary gain. It is either his kindnes that prompts him to pay the debt, or his secondary liability as surety or the like. When his benevolence is the cause, it is natural that the doctrine should be interpreted to favor the protection of the debtor, in order that his benevolence may accomplish its purpose. If the cause be the other, the interpretation should be that which gives the best justice to both. Subrogation necessitates three distinct persons: a creditor, a debtor, and a person who pays the debt in the manner recognized by law. There is no subrogation where a man pays his own debt (Dili vs. Voss, 94 Ind., 590). This third person may be a stranger in relation to the obligation, but, in such case, his intention must be clearly shown. Our existing laws do not require any special form so long as the intention can be clearly gathered, except the one provided for in Article 1211 of the Spanish Civil Code. In order to extinguish one obligation by the creation of another, it must be made to clearly appear. This is true both in Civil and Common Law jurisprudence (Zapanta vs. Rotache, 21 Phil., 154, 160). Substitution of debtor is never assumed (Martinez vs. Covive, 25 Phil., 583). The right of subrogation does not necessarily rest on contract or privity, but upon principles of natural equity, and does not depend upon the act of the creditor, but may be independent of him and also of the debtor. The right may, however, be modified or extinguished by contract (37 Cyc., 367). The right extends not only to sureties, subsequent incumbrancers, co-debtors, tenants in common, partners and purchasers, but to any person interested in the fulfilment of the obligation (See Chandler vs. Green, 101, 111. App., 409). Summarizing the discussion, we find that subrogation naturally divides itself into conventional (Civil Code, Article 1209, Par. 2) and legal (Civil Code, Article 1209, Par. 1 and 1210). The Spanish Civil Code mentions partial subrogation (Civil Code, Article 1213) which may well be included in conventional subrogation and in legal. To the preceding classification Viso adds judicial subrogation which he defines as the one declared by a judge, adjudicating to a person the same rights and actions which another has (Viso, "Derecho Civil," Vol. III, p. 97). 4. PARTIES TO SUBROGATION. The parties to subrogation, either legal or conventional, are: the creditor, the debtor, and a third person. In order to have a clear idea who these persons are, we propose to discuss each under the following headings: (a) Who are considered creditors? (b) Who are considered debtors? and (c) Who are considered third persons? (a). WHO ARE CONSIDERED CREDITORS? A creditor is one who has a right to require the fulfilment of an obligation or contract; a person to whom any obligation is due (Bouvier's Law Directory, Vol. I, p. 475). Creditors may be either preferred, judgment, or simple. Preferred creditors are those, who, in consequence of some provision of law, are entitled to some special privilege in the order in which their claims are to be paid. Judgment creditors are those who have obtained a judgment against his debtor, under which he can enforce execution (Bouvier's Law Directory, Vol. I, p. 475). Simple creditor is one who is neither preferred nor judgment creditor, but has a legal right to demand of another the fulfilment of an obligation or contract. In general, a creditor is one to whom another owes the performance of an obligation; one who has right by law to demand and recover a sum of money or any account whatever (N. Y. Guaranty Trust Co. vs. Galveston City R. Co., 167 Fed., 311, 317); one in whose favor an obligation exists, by reason of which he is or may become entitled to the payment of money; every party who has a demand, an account, an interest, or a cause of action for which he might recover any debt, damages, penalty or forfeiture (Waldradt vs. Brown, 6 Ill, 397, 399; 41 Am. Dec., 190); in the ordinary and almost universal definition of the word, a person to whom a debt is owing by another person, called a "debtor" (Cardenas vs. Miller, 108 Cal. 250, 258, quoting Black's Law Dictionary). In the strict sense, a creditor is one who has a right to require the fulfilment of an obligation or contract for the payment of money-any one who has a debt or demand against another upon a contract, express or implied, for the payment of money (Atwater v8. Manchester Savings Bank, 45 Minn. 341, 346; 12 L. R. A., 741). In a more liberal sense, a creditor is he who has a legal demand upon another, without his consent, by mistake or accident, which he is entitled to have, or to a compensation in damages for an implied promise (Stanly vs. Ogden, 2 Root (Conn.) 259, 261; in strict literal sense, he who has voluntarily given credit to another, for a sum of money or other property upon bond, bill, note or simple contract (Stanly vs. Ogden, 2 Root (Conn.) 259). (b) WHO ARE CONSIDERED DEBTORS? A debtor is one who owes a debt; he who may be compelled to pay a claim or demand (Black's Law Dictionary, p. 335), or is under obligation, arising from express agreement, implication of law, or from the principles of natural justice, to render and pay a sum of money to another (Commercial National Bank vs. Taylor, 64 Hun. (N. Y.), 499); one who by reason of an existing obligation is or may become liable to pay to another whether such liability is certain or contingent (Sonnesyn vs. Akin, 97 N. W., 557, 560); every one who owes to another the performance of an obligation; the person who has engaged to perform some obligation; one who owes anything to another, as money, goods, or services. Debtors may be either natural or juridical persons such as private corporation, public corporation, partnership, both commercial and civil. It may also include an indorsee of a promisory note before maturity (53 N. J. L., 200). (c) WHO ARE CONSIDERED THIRD PERSONS? Third person in law is he who has nothing to do with a certain act, transaction, or the like. He has nothing to do with a certain act or transaction spoken of, because he is not a party to it. He is neither an obligor nor an obligee. If he tries to enforce the thing spoken of in the particular act or transaction, the law will not help him to do so, but in its stead say: "You have nothing to do with it; get away from it." And if a party to the particular act or transaction tries to compel him to fulfill those which are made enforceable by virtue of said act or transaction, he (third person) may rest his defense upon the protection of law granted him as third person. As such person he cannot be compelled to perform the obligation, because the law says that nobody can compel him to do that which he is not a party of. 5. WHEN THERE IS NO SUBROGATION. As we have seen, the doctrine of subrogation is based on the theory of equity and justice; and therefore when there is neither equity nor justice, there is no subrogation. Carrying this doctrine a little farther, we find that the original obligation must be an existing deinandable one; otherwise subrogation does not take place. Whatever then is a sufficient cause to invalidate the original obligation, is also a sufficient defense against subrogation (Manresa, "Commentarios al Codigo Civil Espanol”). The Civil Code, Article 1208, with regard to this point says: "Novation (or subrogation: for the Civil Code classifies subrogation as a kind of novation) is null and void, if the original is also so, unless the cause of nullity can be claimed by the debtor only or the ratification gives validity to acts which were null in their origin." Therefore a gambling debt not being enforceable under our laws cannot be a subject of subrogation (Palma vs. Canizares, 1 Phil., 604). The same is true when payment is made by deceit and fraud, and falsely pretending that he was authorized. The payor has no right whatsoever to be subrogated (United States vs. Gorme, 18 Phil., 323). We are also of the opinion that a debt arising from a transaction of purchase and sale of opium cannot be a subject of subrogation. CHAPTER II 1. DEFINITION. CONVENTIONAL SUBROGATION Conventional subrogation is that which arises by virtue of an express contract between the payor and the debtor or the creditor, that payor shall be subrogated to the rights of the creditor. This kind of subrogation differs from legal subrogation in so far as the latter arises not by virtue of an express contract to that effect, but rather from the automatic operation of a rule of law upon a given set of circumstances (37 Cyc., 367). It also differs from the so-called judicial subrogation, because the latter can arise only by virtue of a judgment rendered by a competent judge, adjudicating to a person the same rights and actions which otherwise belong to another (Viso, "Derecho Civil," p. 95). 2. PARTIES TO CONVENTIONAL SUBROGATION. As its name indicates, conventional subrogation results from the agreement of the parties, and can take effect only by agreement. Except the special case provided for in Article 1211 of the Civil Code, this kind of subrogation requires the intervention and consent of three persons, viz., the old creditor, the person who substitutes the creditor, and the debtor. The intervention of the first two is justified by the fact that it is between them that the transfer of rights is to take effect. Of the first, because it is his right that is taken from him; and of the second, because it is he who is going to exercise the right of the former. In legal parlance one who succeeds to the right of another by subrogation is called “subrogee." The intervention or consent of the debtor is justified by the fact that the Civil Code considers subrogation of creditor as a novation whereby the old credit is extinguished and a new one takes its place. With regard to the new obligation the consent of the obligee and the debtor is esential. Furthermore Article 1210, No. 2 of the Civil Code provides that there is subrogation when a third person, not interested in the obligation, pays with the express or tacit approval of the debtor. 3. NATURE. The general rule is that a third person, either with or without interest in the fulfillment of an obligation of another, is subrogated to the rights of the creditor against the debtor for whom he pays (Sanchez Roman, 291). An exception is that mentioned in Article 1159 of the Civil Code which provides that he who pays in the name of the debtor, when the latter is not aware of it, cannot compel the creditor to subrogate him in the rights the creditor possesses. Another exception necessarily follows the first, and that is when the third person performs the obligation contrary to the express will of the debtor. In case the performance is done without the knowledge of the debtor, subrogation as a rule does not take place, but another right arises, and that is the right to be reimbursed by the debtor of what he has paid in the name of the latter. It is, however, clear that the payor may be put in the place |