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OBLIGATIONS AND
CONTRACTS
Laguna State Polytechnic University – Juris Doctor, Class
of 2019
 SECTION 6.
NOVATION
Posted on 3 Apr 2019

SECTION 6. NOVATION

Article 1291. Obligations may be modified

by:
(1) Changing their object or principal
conditions;

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the rights

of the creditor.

By: Kristia Capio

Artikulo 1291

Ang obligasyon ay maaring mabago ng:

(1) Pagbabago ng bagay o ng pangunahing

kondisyon;

(2)Paglilipat ng tao ng nangutang;

 (3) Pagpapalit ng ikatatlong tao sa karapatan
ng nagutang.

Novation is the total or partial extinction of an

obligation through the creation of a new one
which substitutes it.

It is the substitution or change of an obligation

by another, which extinguishes or modifies
the first, either by changing its object or
principal conditions, by or substituting
another in place of the debtor, or by
subrogating a third person in the rights of the
creditor.

ILLUSTRATION

(1) CHANGING THEIR OBJECT OR PRINCIPAL

CONDITIONS

Simon agreed to deliver to Ben a car. Later,

they entered into another contract whereby,
instead of Simon delivering a car, he would
deliver 10 air conditioners. The obligation to
deliver a car is extinguished by the obligation
to deliver the 10 air conditioners. The change
may involve the principal terms of the
obligation.

(2) SUBSTITUTING THE PERSON OF THE

DEBTOR

If after the constitution of the obligation, both

parties agreed that Cath will substitute for
Simon or that Dan will be subrogated in the
rights of Ben, there is a personal novation. In
this case, Cath becomes the new debtor or Dan,
the new creditor as the case may be.

(3) SUBROGATING A THIRD PERSON IN THE

RIGHTS OF THE CREDITOR
If the agreement of the parties is that Simon
will deliver to Dan the 10 air conditioners,
instead of Simon delivering a car to Ben, then
there is a mixed novation because the object of
the obligation and the person of the creditor
are changed.

Article 1292. In order that an obligation

may be extinguished by another which
substitute the same, it is imperative that it
be so declared in unequivocal terms, or that
the old and the new obligations be on every
point incompatible with each other.
by: Bryan Glenn Fabiaña

Upang ang pananagutan ay mapawalng bisa ng

tao na nagpalit nito, ito ay kailangan na
maipahayag sa malinaw na pamamaraan o
kaya ang luma at bagong obligasyon sa lahat
ng punto ay di ayon sa isat isa.

Comment:

This article did not provide for a specific form

of effectingnovation. The law however
provides for the essential requisites of
novation depending on whether it is express
or implied.
If novation is done in writing, it is imperative
that it be declared in unequivocal terms to
avoid any doubt.

And for implied novation to arise it is essential

that the old obligation and the new obligation
are incompatible on all material points.

Illustration:

Supposed Ben Executed a promissory note to

pay George on March 30, 2019 the amount of
five hundred thousand pesos. However before
the arrival of the agreed date of payment
Geroge upon sensing that Ben could not satisfy
the obligation on the aforementioned date
approach Ben for the novation of the
obligation that instead of paying the said
amount. He should pay it om four equal parts
starting from the month of April to July. Ben
agreed to the new obligation.

Under this example it is not properto consider

the obligation novated because it does not
alter its essence. He still oblige to pay the
exact same amount. for novation to be
effectual the old and new obligations must be
incompatible with each other.

Article 1293. Novation which consists 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. Payment by the new debtor gives
him the rights mentioned in Articles 1236
and 1237.
By: Janine Gumangol

Ang pagpapalit ng bagong mangungutang sa

dating nangutang, ay maaaring magawa kahit
walang kaalaman o labag sa kagustuhan ng
dating nangutang, ngunit hindi sa walang
pahintulot ng nagpautang. Ang kabayaran ng
bagong mangungutang ay binibigyan siya ng
mga karapatang nakasaad sa Artikulo 1236 at
1237.

Article 1293 speaks of passive subjective

novation (substitution of the debtor), not
active subjective novation (substitution of the
creditor)

Novation-The replacement of an old contract

with a new one, usually substituting a new
party for one of the original ones. It is the total
or partial extinction of an obligation through
the creation of a new one which substitute it.

Passive Subjective Novation may be in the

form of Expromision and Delegacion
Expromision-initiative comes from a third
person. The old debtor must be released from
his obligation; otherwise, there will be no
expromision, there will be novation.

Example: Debbie owes Celia P400,000.00. Mika,

friend of Debbie, approaches Celia and tells
her: “I will pay you what Debbie owes you.
From this moment, consider me your debtor,
not Debbie. Debbie is to be excused. Do you
agree?” Celia agrees. Is there expromision
here?

Answer: Yes, and even if Mika does not pay

Celia, Debbie cannot be held liable anymore
because her obligation has already been
extinguished. 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.

Delegacion-initiative comes from the debtor,

for it is he who delegates another to pay the
debt, and thus, he excuses himself. Here, the
three parties concerned—the old debtor, the
new debtor, and the creditor—must agree.

Article 1294. If the substitution is without

the knowledge or against the will of the
debtor, the new debtor’s insolvency or non-
fulfillment of the obligations shall not give
rise to any liability on the part of the
original debtor.

By: Algy Riguer

Kung ang kapalit ng obligasyon ay nangyari na

wala sa kaalaman ng umutang o salungat sa
kagustuhan ng umutang, ang di pagbabayad ng
bagong umutang ay hindi pagsisimulan ng
isang pananagutan ng dating umutang.

Because the substitution of the debtor is done

without the knowledge or consent of the
debtor. The substitution is without the consent
or even just knowledge of the debtor, the
inability of the new debtor to pay the
obligation he has shouldered shall not in any
way make the old debtor who is now freed
from liability, much less must the original
debtor be affected by insolvency of the new
debtor in whose choosing the former never
participated.

Expromision – which the creditor accepts a

new debtor, who becomes bound instead of the
old the latter being released.
 Article 1295. The insolvency of the new
debtor, who has been proposed by the
original debtor and accepted by the
creditor, 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 the delegated his debt.

By: Rose Ann Villanueva

Ang kawalan ng pambayad ng bagong may

utang na iminungkahi ng orihinal na may
utang at tinanggap ng nagpautang , ay hindi
buhayin ang ginawa ng nagpautang laban sa
orihinal na may utang, maliban kung ang
nasabing kawalan ng pambayad ay umiiral na
at alam na ng publiko, o kaya ay alam na ng
may utang nuong itinalaga nya ang kanyang
utang.

This article applies only to delegacion – where

the substitution of the old debtor is upon the
proposal of the old debtor himself (delegante)
and the proposal was accepted by the new
debtor (delegado) and the creditor
(delegatario)
If the new debtor who has been accepted by
the creditor, happens to be insolvent and
cannot fulfill the obligation delegated to him,
the original debtor is no longer liable anymore
for the payment of the obligation.

Exceptions:

If the insolvency was already existing

and is of public knowledge when the
debt was delegated to the new debtor ;
or
If the insolvency of the new debtor was
already existing and known to the
original original debtor at the time of
the delegation of the debt to the new
debtor (Art 1295)

Instances where the old debtor is still

liable:

When the third person is only

secondarily liable
If the third person is a mere agent of
the debtor
When the old debtor is still answerable
jointly with the new debtor or
solidarily by express stipulation.

Consent of the creditor in delegacion is

indispensable.
Example:

Pedro is indebted to Petra with 1000.00. Pedro

proposed Pete to be the new debtor and
obtained the consent of Petra. If at the time of
the delegacion Pete was already insolvent but
his insolvency was neither of public
knowledge nor known to Pedro, then Pedro is
not liable. Neither is Pedro liable if the
insolvency of Pete took place after he
delegated his debt.

Article 1296. When the principal obligation

is extinguished in consequence of a
novation, accessory obligations may subsist
only insofar as they may benefit third
persons who did not give their consent.

By: Jayson Calventas

Kapag ang pangunahing obligasyon ay

nawakasan bilang resulta ng isang nobasyon,
ang mga dagdag na tungkulin ay maaaring
magpatuloy lamang kung ito ay maaaring
makatulong sa ibang mga tao na hindi
nagbigay ng kanilang pahintulot.

Article 1296 NCC | speaks of…

Effect of novation on accessory obligations

GENERAL RULE | The extinguishment of

the principal obligation carries with it
that of the accessory obligations.
EXCEPTION | Accessory obligations
subsist insofar as they benefit third
persons who have NOT given their
consent to the novation.
Because NO person should be
prejudiced by the act of another
without his consent.

Article 1296 NCC | example:

Arthur owes Ben ₱2,000 with interest at

14%.
Ben owes Charlie ₱280.
It was agreed among the parties that
Arthur would pay the interest of ₱280
to Charlie. In this case, besides the
principal obligation of Arthur, there is
a stipulation in favor of Charlie, a third
person.
Later on, Arthur and Ben executed
another contract whereby they agreed
that Arthur would deliver to Ben a
television set in payment of the loan.
In spite of the novation, the accessory
obligation to pay the interest of ₱280 to
 Charlie still subsists unless Charlie
gives his consent to the novation.

Article 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.

By: Kristia Capio

Artikulo 1297. Kung ang bagong obligasyon ay

walang bisa, ang orihinal obligasyon ang syang
magpapatuloy, maliban na lamang kung ang
bawat partido ay ninais na ang naunang
relasyon ay tatapusin ng anumang kaganapan.

Article 1297 stresses one of the essential

requirements of a novation, to wit: the new
obligation must be valid. The general rule is
that there is no novation if the new obligation
is void and, therefore, the original one shall
subsist for the reason that the second
obligation being inexistent, it cannot
extinguish or modify the first.

ILLUSTRATION
Bryan is indebted to Anne in the amount of
Php 1, 000.00. Since Bryan cannot pay his
debt, Bryan and Anne entered into a new
contract whereby Bryan will kidnap and kill
the enemy of Anne and the later will consider
Bryan debt extinguished. In this case, the
original obligation of Bryan and Anne shall
subsist because the new obligation of Bryan to
Anne is void it being against the law.

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.

By: Johannes Aquino

Ang panibagong obligasyon ay walang bisa

kung ang orihinal na obligasyon ay walang
bisa, mailaban na lamang kung ito ay
mapapawalang bisa lamang na kinalaunan ay
nabigyan ng bisa.

Effect where the old obligation void or

voidable. This article has its basis also on the
requisites of a valid novation. A void
obligation cannot be novated because there is
nothing to novate. However, if the original
obligation is only voidable or if the voidable
obligation is validated by ratification, the
novation is valid.

Illustration

Peter Madilim agreed to deliver

prohibited drugs to vice-mayor Palo.
Later on, it was agreed that Peter
Madilim would pay vice-mayor Palo
P100,000.00 instead of delivering the
drugs. The novation is void because the
original obligation is void.
Suppose Peter Madilim was induced
through fraud committed by vice-
mayor Palo to sign a contract whereby
Peter Madilim obliged himself to
deliver a specific car to vice-mayor
Palo. Subsequently, it was agreed
between Peter Madilim and vice-mayor
Palo that Peter Madilim would give
vice-mayor Palo P100,000.00 instead of
 the car. Here, the original obligation of
Peter Madilim is voidable. As it has not
yet been annulled at the instance of
Peter Madilim, the second contract is
valid.
In the same example, if Peter Madilim
subsequently confirmed his obligation
to deliver the car and the right of vice-
mayor Palo thereto, his ratification
cleanses the contract from all its
defects and makes it valid and,
therefore, the novation is also 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.

By: Kristia Capio

Artikulo 1299. Kung ang orihinal na obligasyon

ay sumasailalim sa isang suspensive o
resolutory na kondisyon, ang bagong obligasyon
ay dapat na sa ilalim ng parehong kondisyon,
maliban kung ito ay nakasulat.

If the first obligation is subject to a suspensive

or resolutory condition, the second obligation
is deemed subject to the same condition unless
the contrary is stipulated by the parties in
their contract. The reason for the rule
contained in Article 1299 is that the efficacy of
the new obligation depends upon whether the
condition which affects the old obligation is
complied with or not. If the condition is
suspensive, and it is not complied with, no
obligation arises; and if it is resolutory and it is
complied with, the old obligation is
extinguished.

CASE DIGEST

THE UNITED STATES vs. FRANCISCO

BAUTISTA

G.R. No. L-2189 November 3, 1906

CARSON, J.

Facts: In 1903 a junta was organized and a

conspiracy entered into by a number of
Filipinos in Hongkong, for the purpose of
overthrowing the government of the United
States in the Philippine Islands by force of
arms and establishing a new government.

Francisco Bautista (1), a close friend of the

chief of military forces (of the conspirators)
took part of several meetings. Tomas Puzon (2)
held several conferences whereat plans are
made for the coming insurrection; he was
appointed Brigadier-General of the Signal
Corps of the revolutionary forces. Aniceto de
Guzman (3) accepted some bonds from one of
the conspirators.

The lower court convicted the three men of

conspiracy. Bautista was sentenced to 4 years
imprisonment and a P3,000 fine; Puzon and De
Guzman to 3 years imprisonment and P1,000.

Issue: Whether or not the accused are guilty of

conspiracy?

Ruling: Judgment for Bautista and Puzon

CONFIRMED. Judgment for de Guzman
REVERSED. Yes, Bautista and Puzon are guilty
of conspiracy. Bautista was fully aware of the
purposes of the meetings he participated in,
and even gave an assurance to the chief of
military forces that he is making the necessary
preparations. Puzon voluntarily accepted his
appointment and in doing so assumed all the
obligations implied by such acceptance. This
may be considered as an evidence of the
criminal connection of the accused with the
conspiracy.

However, de Guzman is not guilty of

conspiracy. He might have been helping the
conspirators by accepting bonds in the
bundles, but he has not been aware of the
contents nor does he was, in any occasion,
assumed any obligation with respect to those
bonds.

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.

by: Bryan Glenn Fabiaña

Comment:

Subrogation is the transfer to a third person of

all rights appertaining to the creditor in the
transaction including the rights to proceed
against the guarantors and similar others
subject to any applicable legal provision.

There are two kinds of subrogation of a third

person:

1. Legal subrogation is the subrogation

constituted by virtue of law. It takes place by
operation of the law.
Illustration:

Supposed “A” owes “B” the amount of one

million pesos. If A fails to satisfy the debt.
Creditor B may pursue the property in
possession of A to satisfy his claims under
article 1177. If his property is not sufficient to
cover the debt, B may file an accion
subrogatoria. It is an action where the creditor
whose claims had not been fully satisfied may
go after the debtor’s of the defendant debtor.
Hence if C is indebted to A, B may go against C
to satisfy the debt of A.

2. Conventional subragation is the subrogation

created by the parties by their voluntary
agreement.

Illustration:

Supposed Pedro entered into a motorcycle

loan with Juan as his guarantor against ABC
company. It was agreed upon by them in
writing that in case Pedro fails to pay, ABC
company may go against Juan. Pedro
absconded with the motorcycle. ABC company
mag go against Juan for the unsettled debt by
virtue of their agreement.

Article 1301. Conventional subrogation of a

third person requires the consent of the
 original parties and of the third person.

By: Janine Gumangol

COMMENT:

For Conventional or Voluntary Subrogation,

the consent of all the parties is required:

a) the debtor-because he becomes liable

under the new obligation; and because his
obligation ends

b) the old creditor-because his credit is

affected

c) the new creditor- because he becomes a

party to the obligation

NOTE: Generally, the debtor loses the right to

present against the new creditor any defense
which he, the debtor, could have set up against
the old creditor.

ASSIGNMENT OF CONVENTIONAL
CREDIT SUBROGATION

Extinguishes the
Mere transfer of the
obligation, and creates
same right and credit.
new one.

It does not require the This requires the

debtor’s consent debtor’s consent.
(mere notification to
him is sufficient)

The defect in the

credit or right is not The defect of the old
cured simply by obligation may be cured
assigning the same. in such a way that the
new obligation becomes
(The debtor entirely valid.
generally still has the
right to present (There is no right to
against the new present against the new
creditor any defense creditor any defense
available as against which he, the debtor,
old creditor) could have set up
against the old creditor).

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.

By: Algy Riguer

Subrogation means the substitution of one

claim for another, especially the transfer of
the right to receive payment of a debt to
somebody other than the original. Based on
article 1302 the third person may pay the
amount the obligation of a debtor to the
creditor even without his knowledge.

1. When a creditor pays another creditor who

is preferred, even without the debtor’s
knowledge;

Example:

Aleli owes Beth P100,000.00 secured by the

first mortgage on the land of Aleli. Aleli also
owes Chan P200,000.00. This debt is unsecured.

Under the law, Beth, who is a preferred

creditor, has preference to payment with
respect to the land as against Chan who is
merely an ordinary creditor.
2. WHEN A THIRD PERSON, NOT INTERESTED
IN THE OBLIGATION, PAYS WITH EXPRESS OR
TACIT APPROVAL OF THE DEBTOR.

Example:

ALELI OWES BETH P100,000.00. CHAN PAYS

BETH WITH THE EXPRESS OR IMPLIED
CONSENT OF ALELI.

IN THIS CASE, CHAN WILL BE SUBROGATED IN

THE RIGHTS OF BETH.

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 LATTERS’S SHARE.

Example:

Suppose in the same example, Chan is the

guarantor of Aleli. Chan is a person interested
in the fulfillment of the obligation of Aleli as
he would benefited by its extinguishment.

If Chan pays Beth even without the knowledge

of Aleli, Chan is subrogated in the rights of
Beth, Confusion takes place in the person of
Chan, Hence, the guaranty is extinguished but
the principal obligation still subsists.
 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.
By: Rose Ann Villanueva

Ang subrogasyon ang naglilipat sa mga

taong subrogated ang inutang kasama ang
lahat ng karapatan na ukol, alinman laban
sa may utang o ikatlong tao, sila man ay
mga guarantor o possessor ng sanla, batay
sa sinasaad ng kasunduan ng conventional
subrogation.

The effect of legal subrogation is to transfer to

the new creditor the credit and all the rights
and actions that could have been exercised by
the former creditor either against the debtor
or against third persons, be they guarantors or
mortgagor. Simply stated, except only for the
change in the person of the creditor, the
obligation subsists in all respects as before the
novation.

If the credit transferred to the new creditor is

subject to a suspensive condition, the credit
cannot be collected until after the fulfillment
of the said condition.

Rights which the new creditor may acquire

by reason of subrogation:

Payment of the principal debt

Right to exercise accessory rights like:
right to mortgage or pledge
Right to proceed against guarantors
and sureties or against solidary debtors

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.

By: Jayson Calventas

Ang nagpautang, kung kaninong ang

bahagyang pagbabayad ay ginawa, ay
maaaring gamitin ang kanyang karapatan para
sa natitira, at siya ang kikilalanin sa halip na
ang taong humalili sa kanyang kalagayan dahil
sa bahagyang pagbabayad ng parehong kredito.

Article 1304 NCC | speaks of…

Effect of partial subrogation

The creditor to whom partial payment

has been made by the new creditor
remains a creditor to the extent of the
balance of the debt.
In case of insolvency of the debtor,
he is given a preferential right to
recover the remainder as against
the new creditor.

Article 1304 NCC | example:

Darwin is indebted to Charlie for

₱10,000.
Xian pays Charlie ₱6,000 with the
consent of Darwin.
There is here partial subrogation as to
the amount of ₱6,000. Darwin remains
the creditor with respect to the balance
of ₱4,000. Thus, two credits subsist.
In case of insolvency of Darwin, Charlie
is preferred to Xian, that is, he shall be
paid from the assets of Darwin ahead of
Xian.

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