Article 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.

Explanation: It is the effect where the old obligation is void or voidable. If the original
obligation is void then the novation is automatically void because it cannot be novated because
there is nothing to novate. But if the original obligation is voidable then the novation is valid.

EXAMPLES:

John Paul agreed to deliver prohibited drugs to Yves. Later on, it was agreed that John Paul
would pay Yves in cash P50,000 instead of delivering the drugs. The novation is void because
the original obligation is void. Because delivering drugs is unlawful then automatically the
novation is void.

John Paul obliged himself to deliver a car to Yves. Later on, it was agreed between the two that
John Paul will give Yves cash worth 50,000 instead of delivering a car. The original obligation is
void because it has not yet been annulled, by that the second contract is valid.

Article 1299 - If the original obligation was subject to a suspensive or resolutory condition, the
new obligation shall be under the same condition, unless it is otherwise stipulated.

Explanation: If the first obligation is subject to a suspensive or resolutory condition, the second
obligation will be subject to the same condition unless the contrary is stipulated by the parties in
their contract.

Example: Haidee and Sheila agreed that if Sheila will graduate in college Haidee will give
Sheila iPhone 11. After that Sheila graduated in college and later on the two of them agreed that
instead of giving iPhone 11, Haidee will give Sheila an iPhone 10. The obligation is extinguished
because the first obligation is to give an iPhone 11 to Sheila and the second obligation is in the
same condition which is giving iPhone 10 to Sheila.

Article 1300 - Subrogation of a third person in the rights of the creditor is either legal or
conventional. The former is not presumed, except in cases expressly mentioned in this Code; the
latter must be clearly established in order that it may take effect.
Explanation: Subrogation is the transfer to a third person of all rights appertaining to the
creditor in the transaction. There are two kinds of subrogation of a third person:

1. Conventional Subrogation (CS) - is the subrogation created by the parties (creditor,

debtor and the third person) by their voluntary agreement
Example: April borrows money (P20,000) to Angelika with her guarantor named Renalyn. It
was agreed in the contract that in case Ann fails to pay, Angelika may go against Renalyn. April
fails to pay the 20,000 to Angelika so Angelika will go to Renalyn for the unsettled debt of April.

2. Legal Subrogation (LS) - It take place by operation of the law.

Example: Dexter owes Emman with the amount of 10,000 pesos. If Dexter fails to pay, Emman
may pursue the property of Dexter to satisfy his claims. If Dexter’s property is not sufficient to
cover the debt, Emman can file an Accion Subrogatoria.

Article 1301 - Conventional subrogation of a third person requires the consent of the original
parties and of the third person.

Explanation: In this article, the consent of all the parties is required. (the creditor, the debtor and
the third person)

Example: Nico borrows 20,000 pesos to Sheila with his guarantor Gim, they agreed that if Nico
cannot pay the 20,000 Sheila may go against Gim to pay the debt of Nico. Nico fails to pay the
20,000 to Sheila so Sheila may go against Gim to pay it. In this example all parties has consent.

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

Explanation: In this article, they are presuming that there is legal subrogation

(1) When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge; (CPAC EWTDK)

Example: Ronnie owes Kasandara 5,000 pesos. Ronnie also owes Maria 5,000 pesos. Kasandara
pays Maria even without the consent of Ronnie. So the new creditor will be Kasandara and
Ronnie has to pay Kasandara with the amount of 10,000 pesos. The confusion will takes place on
Ronnie because he doesn’t know that Kasandara pays his debt on Maria.
 (2) When a third person, not interested in the obligation, pays with the express or tacit
approval of the debtor; (TPNIIO PWTAOD)

Example: Ian owes Gary with the amount of 5,000 pesos, Eugene (third person) pays Gary with
the consent of Ian. In this example, Eugene will be subrogated in the rights of old creditor which
is Gary.

(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) (EWTKOD APIITFOTOP)

Example: Ian owes Gary with the amount of 10,000 pesos, Eugene (third person) pays Gary
even without the consent of Ian. In this example, Eugene will also be the one who will subrogate
in the rights of old creditor which is Gary. The confusion takes place in Ian because he doesn’t
know that Eugene pays his debt to Gary. Hence, the guaranty is extinguished but the principal
obligation is still subsists.

Article 1303 - Subrogation transfers to the person subrogated the credit with all the rights there
to appertaining, either against the debtor or against third persons, be they guarantors or
possessors of mortgages, subject to stipulation in a conventional subrogation.

Explanation: In this article, the effect of subrogation is to transfer to the new creditor (third
person) the credit and all the rights of the old creditor.

Example: Renalyn owes Baby with the amount of 20,000 pesos, with her guarantor Joanna.
Renalyn fails to pay Baby so Baby has a right to go against Joanna. After that Joanna (third
person) pays the debt of Renalyn with the amount of 20,000 pesos. So Joanna will be subrogated
in Baby’s right for her to recover the 20,000 pesos from Renalyn. By that Joanna is now the new
creditor and the debtor is the same which is Renalyn.

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.
Explanation: The person (third person) who pay the partial payment of the person who is in debt
is will be the same person who will pay the unsettled amount of money. In case the debtor fails
to pay the balance/remainder, the creditor may go against the third person who made the partial
payment.

Example: Benjie is indebted to Yves with the amount of 15,000. Christian (third person) pays
Yves with the amount of 10,000 pesos with the consent of Benjie. In case Benjie pays to fail the
5,000 pesos, Yves may go against to Christian because he made the partial payment. If Christian
pays all the debt of Benjie, then Christian will be the new creditor of Benjie.