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Novation b.

creation of a new valid oblig

Article 1291. Obligations may be modified by: c. capacity of parties (to modify or exting oblig)
(1) Changing their object or principal conditions; d. modification or extinguishment of the oblig –
(2) Substituting the person of the debtor; substantial diff bet old and new
(3) Subrogating a third person in the rights of the creditor. e. intention of parties to extinguish
It is never presumed. Must be clearly and unmistakably
Novation – total or partial extinction of an oblig through established either by:
the creation of a new one which substitutes it.
- actually a new oblig or contract based upon a former one 1.) express agreement or
but containing one or more material changes 2.) acts of equivalent import or
 It is the change in: 3.) by incompatibility of 2 oblig in every aspect – test is
a.) Object or principal condition whether they can stand together. If they cannot,
b.) Debtor theyre incompatible. Subsequent oblig novates the
c.) Creditor (Subrogation) first. They must be independent.
 Novation is a contract containing 2 stipulations
a.) Extinguish or modify an existing oblig  Change must refer to 1291. Otherwise merely
b.) Substituting a new one in its place modificatory and insufficent to exting
 It doesn’t totally extinguish an oblig because it is sub
by a new one. Ex: 1.) A agreed to deliver to B a car on Nov 10.
 Only a relative extinction which is modified. Subsequently, a second agreement was entered into
whereby A would deliver a truck on the same day. Is there
Article 1292. In order that an obligation may be novation?
extinguished by another which substitute the same, it is NO. Not expressly declared and not incompatible. They can
imperative that it be so declared in unequivocal terms, or stand separately.
that the old and the new obligations be on every point 2.) Agreed to construct house on same land.
incompatible with each other. (1204) There is novation because 2 oblig are absolutely
incompatible w/ each other altho no express agreement
4 requisites:
a. previous valid oblig (old oblig)
Article 1293. Novation which consists in substituting a insolvency or non-fulfillment of the obligations shall not
new debtor in the place of the original one, may be made give rise to any liability on the part of the original debtor.
even without the knowledge or against the will of the latter, (n)
but not without the consent of the creditor. Payment by the
new debtor gives him the rights mentioned in articles 1236 In expromissorium, replacement of D not made at his own
and 1237. (1205a) initiative
Meaning: new D’s insolvency of nonfullfillment of the oblig
Real novation (dacion in pago) payment by way of will not revive the action of creditor against the old D –
alienation of prop whose oblig is extinguished upon assumption of new D.
- Change in the object ** Old D no longer liable to Creditor
Personal Novation – change of party
1.) Substitution - person of the D is substituted Article 1295. The insolvency of the new debtor, who has
2.) Subrogation – 3rd person subrogated in the rights of been proposed by the original debtor and accepted by the
the C creditor, shall not revive the action of the latter against the
*Of the debtor original obligor, except when said insolvency was
a.) expromission- 3rd p of his own initiative without already existing and of public knowledge, or known to
knowledge and consent of D assumes D’s oblig with consent the debtor, when the delegated his debt.
of C
-essential that old D be released from his oblig. - refers to delegacion. Only speaks of insolvency. If
b.) delegacion - C accepts 3rd P to take place of D. due to other causes, old D not liable
- all parties, old D, new D and C must agree. GR: Old D not liable to C in case of insolvency of the New D
*Consent of C is indispensable 1.) Insolvency was already existing and of public
Reason: sub implies a waiver by the C of his credit and it knowledge (altho old d didn’t know)
may be prejudicial to him. 2.) Insolvent and known to debtor
Ex. Delay in the fulfillment of oblig or contravention of its
tenor or non perf Reason: to prevent fraud on part of old D

Article 1294. If the substitution is without the knowledge Article 1296. When the principal obligation is extinguished
or against the will of the debtor, the new debtor's in consequence of a novation, accessory obligations may
subsist only insofar as they may benefit third persons who
did not give their consent. (1207) Article 1299. If the original obligation was subject to a
suspensive or resolutory condition, the new obligation shall
XPN: in case of accessory oblig created in favor of 3rd P, it be under the same condition, unless it is otherwise
will remain in force unless said 3rd P gives consent to stipulated. (n)
Reason: A person should not be prejudiced by the act of Article 1300. Subrogation of a third person in the rights of
another without his consent the creditor is either legal or conventional. The former is
not presumed, except in cases expressly mentioned in this
Article 1297. If the new obligation is void, the original one Code; the latter must be clearly established in order that it
shall subsist, unless the parties intended that the former may take effect. (1209a)
relation should be extinguished in any event. (n)
- Legal subrogation is not presumed except in cases
GR: No novation if new oblig is void. Therefore the original expressly provided by law (1302)
one shall subsist for reason that the second oblig being
inesistent, it cannot extinguish or modify the first A.) conventional – express agreement of the orig parties
XPN: If parties intended for old oblig to be exting in any and 3rd P. must be clearly established to take place.
event 1292, 1300
B.) Legal – takes place without agreement but by
** But if new oblig only voidable, novation will still take operation of law
place until annulled – so the orig oblig can be enforced.
Unless the intention of parties is otherwise. Article 1301. Conventional subrogation of a third person
requires the consent of the original parties and of the third
Article 1298. The novation is void if the original obligation person. (n)
was void, except when annulment may be claimed only by
the debtor or when ratification validates acts which are - in conventional sub – consent of all parties is an
voidable. (1208a) essential requirement
a.) debtor – becomes liable under new oblig of new
- void oblig cannot be novated. But if only voidable or creditor
validated by ratification, novation is valid. b.) old creditor – hif right against D is extingh
c.) new C – he may dislike or distrust debtor

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

(1) When a creditor pays another creditor who is preferred,
even without 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. (1210a)

Article 1303. Subrogation transfers to the persons

subrogated the credit with all the rights thereto
appertaining, either against the debtor or against third
person, be they guarantors or possessors of mortgages,
subject to stipulation in a conventional subrogation.

Article 1304. A creditor, to whom partial payment has

been made, may exercise his right for the remainder, and he
shall be preferred to the person who has been subrogated
in his place in virtue of the partial payment of the same
credit. (1213)