If the debt produces interest, payment of the principal shall not be deemed to have been made until the interests have been covered. (1173)
Kapag ang utang ay nagkaroon na ng tubo, ang kabayaran ng puhunan ay dapat na hindi tanggapin hanggang ang tubo ay hindi kasama.
Discussion
1) Interest must be paid first – obligatory(2) Effect if payment is credited to the principal – reduction of principal(3) What interest is supposed to be paid(a) interest by way of compensation(b) interest by way of damages due to default
Case Illustration: Magdalena State v Antonio& Herminia Rodriguez (JNR)18 Scra 967 Dec 17, 1966
Obligations and Contracts 