Oblicon - Novation

6TH MODE OF EXTINGUISHING OBLIGATION: Novation - you change the provisions of the contract
ART. 1291 Obligations may be modified by:

1. Changing their object (obligation to give) or principal conditions (obligation to do)
2. Substituting the person of the debtor
3. Subrogating a third person in the rights of the creditor
Novation – total or partial extinction of an obligation through the creation of a new one which
substitutes it
Dual function of novation

1. To extinguish or modify an existing obligation
2. To substitute a new one in its place
Kinds of novation
1. According to origin
a. Legal – operation of law
b. Conventional – agreement of the parties
2. According to how it is constituted
a. Express – declared in unequivocal terms
b. Implied – when old and new obligation are essentially incompatible with each other
3. According to extent or effect
a. Total or extinctive – old obligation is completely extinguished
b. Partial or modificatory – when the old obligation is merely modified
4. According to subject
a. Real or objective – when the object or principal conditions of the obligation are changed
b. Personal or subjective – debtor is substituted or when a third person is subrogated in the
rights of the creditor
c. Mixed – combination of real and personal obligations
ART. 1292 In order that an obligation may be extinguished by another which substitutes the same, it is
imperative that it be so declared in unequivocal terms, or that the old and new obligations be on every
point incompatible with each other.
Ex. I will deliver the horse. To novate the object, I will deliver a cow.
Requisites of novation:
1. A previous valid obligation
2. Consent/ agreement of the parties to modify or extinguish the obligation
3. Modification or extinguishment of the obligation
4. Creation of a new valid obligation
Novation is not presumed. Therefore, it is always expressed.

Implied novation - if the provisions of the contract are incompatible with each other.
Ex. I will give you this pen if it rains or shine. How to novate it? I will give you this pen.
No form is required to novate.
Art. 1293 Novation w/c consist in substituting a new debtor in the place of the original one
- may be made even without the knowledge or against the will of the latter, but not without the
consent of the creditor.
Kinds of Substitution
1. Expromission – takes place when a 3rd person of his own initiative and without the knowledge or
against the will of the original debtor assume the latter’s obligation with the consent of the
creditor. Creditor cannot run after the old debtor if 3 rd party does not pay.
2. Delegacion – creditor accepts a third person to take place of the debtor at the instance of the
latter. It is the old debtor that tells the creditor na si third party magbayad. There is consent of
the debtor. If 3rd party, creditor can run after the old debtor.
ART. 1294 If the substitution is without the knowledge or against the will of the debtor (expromission),
the new debtor’s insolvency or non-fulfillment of the obligation shall not give rise to any liability on the
part of the original debtor.
ART. 1295 The insolvency of the new debtor, who has been proposed by the original debtor and
accepted by the creditor (delegacion)
- shall not revive the action of the latter against the original obligor
- except, when said insolvency was already existing and of public knowledge, or known to the
debtor, when he delegated his debt
Theory of Novation - under the law, parties have the option to change their mind because contracts in
essence are consentual and also bilateral. It is an amendment.
ART. 1296 When the principal obligation is extinguished in the consequence of a novation
- accessory obligations may subsist only insofar as they may benefit 3 rd persons who did not give their
consent
- they continue to subsist as long it is not incompatible with the provisions of the obligation
Ex. A and B entered into a contract of loan. The value is 50,000. B in order to be secured asked for the
pledging of necklace. The contract of loan is the principal, the contract of pledge is the accessory. They
novate. Agreed instead of 50000 without interest. It became 50000 plus 10% interest per annum. The
accessory continues to exist.
ART. 1297 If the new obligation is void, the original one shall subsist
-unless the parties intended that the former relation should be extinguished in any event
ART. 1298 The novation is void if the original obligation was void
- except when annulment may be claimed only by the debtor or when ratification validates acts
which are voidable
ART. 1299 If the original obligation was subject to suspensive or resolutory condition
- new obligation shall be under the same condition, unless it is otherwise stipulated
ART. 1300 Subrogation of a 3rd person in the rights of the creditor

- legal or conventional
- Former is not presumed, except in cases expressly mentioned in this code; latter must be clearly
established in order that it may take effect
Conventional - there is total change of contract because the creditor was substituted. Kung ano ang
defect, absent na.
Assignment - asignee merely steps on the shoes of the creditor. Carry forward lang kung unsa ang naa sa
contract
ART. 1301 Conventional subrogation of a 3rd person – requires the consent of the original parties and of
the 3rd person
- consent of all the parties is an essential requirement
ART. 1302 It is presumed that there is legal subrogation:

1. When a creditor pays another creditor who is preferred, even w/o 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
Ex. Si A may lupa. Sinangla kay B. Sinangla niya uli kay C. Sinangla niya kay D. Who is the most preferred?
B. Third registrant is interested sa lupa. If you want na if you’re not paid, you would foreclose the
property. So what can you do? Legal subrogation if the two mortgagee accepts.
ART. 1303 Subrogation transfers to the person subrogated the credit with all the rights thereto
appertaining, either against the debtor or against third persons, be they guarantors or possessors of
mortgages, subject to stipulation in a conventional subrogation.
ART. 1304 A creditor to whom partial payment has been made

- may exercise his right for the remainder and he shall be preferred to person who has been
subrogated in his place in virtue of the partial payment of the same credit

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6TH MODE OF EXTINGUISHING OBLIGATION: Novation - you change the provisions of the contract

ART. 1291 Obligations may be modified by:

Dual function of novation

Novation is not presumed. Therefore, it is always expressed.

No form is required to novate.

ART. 1300 Subrogation of a 3rd person in the rights of the creditor

ART. 1302 It is presumed that there is legal subrogation:

ART. 1304 A creditor to whom partial payment has been made

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