CHAPTER 4, SEC.

4 Confusion or Merger (Articles 1275-1277)

SECTION 4 - CONFUSION OR MERGER

(Arts. 1275-1277)

STUDY GUIDE :

1. Define confusion or merger.

It is the meeting in one person of the qualities of creditor and debtor with
respect to the same obligation. (Art. 1275)

2. What are the requisites of confusion?

(a) It must take place between the principal debtor and creditor; and
(b) It must be complete.

Example: D owes C P1,000 evidenced by a negotiable promissory note in favour of C.

C indorsed the note to E who, in turn, indorsed it to F. Now F bought goods from the
store of D. Instead of paying cash, F just indorsed the note to D. The result is that D,
who is the principal debtor under the promissory note, also becomes the creditor under
the said note; in other words, D owes himself. Consequently, his obligation is
extinguished.

3. What is the effect of merger in the person of the principal debtor or creditor?
(Art. 1276, par. 1)

It extinguishes the principal obligation.

It benefits the guarantors because the accessory obligation of guaranty is
also extinguished. Accessory follows the principal.

Example : D owes C P100,000 with G as guarantor. C assigns his credit to E. E

assigns the credit to F. F assigns the credit to D. Ds obligation is extinguished, and G
is then released from his obligation as guarantor.

4. What is the effect of merger in the person of the guarantor? (Art. 1276, par. 2)

It extinguishes the guaranty but leaves the principal obligation in force.

66
CHAPTER 4, SEC. 4 Confusion or Merger (Articles 1275-1277)

Example : D owes C P100,000 with G as guarantor. C assigns his credit to E. E

assigns the credit to F. F assigns the credit to G. Here, G becomes the new creditor of
D. In this case, the contract of guaranty is extinguished. However, Ds obligation to pay
the principal obligation subsists. G now, as the new creditor, can demand payment of the
P100,000 from D.

5. What is the effect of confusion in a joint obligation? (Art. 1277)

Confusion will extinguish a joint obligation only with respect to the share of
the creditor or debtor in whom the merger takes place.

Example : D1 and D2 jointly owe C P100,000. If C assigns the entire credit to D1, D1s
share is extinguished, but D2s share remains. In other words, D2 will still owe C the
sum of P50,000. In a joint obligation, the debts are distinct and separate from each other.

6. What is the effect of confusion in a solidary obligation?

Merger in the person of one of the solidary debtors shall extinguish the entire
obligation, because it is also a merger in the other solidary debtors. (Art. 1215)

However, the solidary debtor (in whose person the merger took place) may
claim reimbursement from his co-debtors for the shares which correspond to them.
(Art. 1217, par. 2)

Example : Pursuant to a promissory note, D1 and D2 are solidarily liable to C for

P100,000. C endorsed the note to E. E endorsed the note to F. F endorsed the note
back to D1. The obligation here is totally extinguished. However, D1 has the right to
proceed against D2, and collect P50,000 by way of reimbursement because it is as if D1
paid the entire debt.

APPLICATION/PROBLEMS :

1. On January 30, 2012, Prancer borrowed P200,000 from Vixen. Rudolf

guaranteed that if Prancer is not able to pay his obligation on January 30, 2013, Rudolf
will answer for the entire obligation of P200,000 to Vixen. On June 12, 2012, Vixen
assigned his credit to Donald. On August 15, 2012, Donald assigned the credit to Gloria.

67
CHAPTER 4, SEC. 4 Confusion or Merger (Articles 1275-1277)

On November 12, 2012, Gloria assigned the credit to Rudolf. On January 30, 2013,
Rudolf wants to collect the P200,000 from Prancer. Prancer, however, refuses to pay.
Prancer alleges that when the credit was endorsed to the guarantor of the obligation,
Rudolf, this completely extinguished the obligation of Prancer. Do you agree with
Prancers argument? Art. 1276

2. Armando and Nicolas jointly owe Daniela P400,000 payable on March 15, 2013.
On January 3, 2013, Daniela bought some pieces of jewelry from the store of Armando.
As payment, and instead of paying cash, Daniela assigns her entire P400,000 credit to
Armando. When the debt fell due on March 15, 2013, Armando went to Nicolas collecting
the amount of P200,000 as Nicolas proportionate share in the indebtedness. Nicolas,
however, refused to make payment, and claimed that when Daniela assigned the credit to
Armando, the principal obligation had already been extinguished by confusion or merger.
Hence, Nicolas is also released from liability. Does Nicolas argument have legal basis?
Art. 1277

68