My debtor has money owed to him by other people but won't bother collecting it - can I step in and pursue those claims to get paid?

You can exercise your debtor's own rights

Article 1177 gives you exactly this tool. It says the creditors may exercise all the rights and bring all the actions of the latter for the same purpose, the latter being the debtor. Your debtor has receivables: money that other people owe him. Those are among his rights. Because he will not collect, and that inaction keeps you from being paid, the law allows you to step into his position and pursue those claims yourself, so that what is recovered can go toward satisfying your debt. This is sometimes called a subrogatory action, because you act in the debtor's stead to enforce the rights he is neglecting.

First go after what the debtor directly holds

This remedy is not the starting point; it is a fallback. The article opens with a condition: creditors may do this only after having pursued the property in possession of the debtor to satisfy their claims. In other words, you first look to the assets the debtor actually has in his own hands. Only when those are insufficient to pay you may you reach out to the rights and claims he holds against third persons. The logic is that going after other people's obligations to your debtor is an extraordinary step, justified only when the ordinary route, the debtor's own available property, has not covered what you are owed.

Some rights you cannot exercise for him

There is a boundary on which of the debtor's rights you may use. The article excludes save those which are inherent in his person. Purely personal rights, ones tied to the debtor as an individual rather than to his patrimony, are off limits; you cannot exercise them on his behalf. But an ordinary money claim against a third person is not personal in that sense. A debt owed to your debtor is part of his assets, exactly the kind of right the law intends creditors to be able to enforce when he neglects it. So collecting what others owe him falls within, not outside, what Article 1177 permits.

A second tool, and what stepping in means

The same article gives a related weapon. Creditors may also impugn the acts which the debtor may have done to defraud them, so if your debtor is not merely failing to collect but actively giving away or hiding assets to keep them from you, you can attack those fraudulent acts as well. As for the subrogatory action itself, remember that you are enforcing the debtor's right, not creating a new one: you can recover only what the third person actually owes him, subject to any defences that third person could have raised against the debtor.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Equatorial Realty, et al. vs. Mayfair Theater, G.R. No. 106063, November 21, 1996 — read the decision on LawPhil →
• Dr. Restituto C. Buenviaje vs. Spouses Jovito R. and Lydia B. Salonga, et al, G.R. No. 216023, October 5, 2016 — read the decision on LawPhil →
• Anchor Savings Bank (formerly Anchor Finance and Investment Corporation) vs. Henry H. Furigay, et al, G.R. No. 191178, March 13, 2013 — read the decision on LawPhil →
• Carmelita Leaño, etc. vs. Court of Appeals, et al, G.R. No. 129018, November 15, 2001 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1177 — Remedies of Creditors (Subrogatory and Rescissory Actions)