Art. 1296. When the principal obligation is
If the new obligation is void, the
extinguished in consequence of a novation,
accessory obligations may subsist only insofar as
they may benefit third persons who did not give
their consent. (1207)
EFFECT OF NOVATION ON ACCESSORY
OBLIGATIONS
 This article follows the GENERAL RULE that
the extinguishment of the principal obligation
carries with it that of the accessory obligations.
The extinguishment of the principal
obligation by novation extinguishes the obligation to
pay interest, unless otherwise stipulated. It releases
pledges and mortgages as well as guarantors and
sureties, unless the latter is bound under the new
obligation.
REASON: the mortgage, pledge, or guaranty
was given to answer for a particular obligation, or for
the solvency of a particular debtor; any change in
either of this destroys the basis of the consent of the
mortgagors, pledger, surety or guarantor. The rule in
this articles is thus especially applicable to novation
by substitution of debtors.
 This article provides, however, an EXCEPTION
in the case of an accessory obligation created in
favor of a third person which remains in force
unless said third person gives his consent to the
novation. This is so because a person should not
be prejudiced by the act of another without its
consent.
o Although technically it is an accessory
obligation, it is in reality a distinct
obligation in favor of a third person and
cannot be extinguished by novation
without the consent of the latter
Art. 1297.
original one shall subsist, unless the parties
intended that the former relation should be
extinguished in any event. (n)
EFFECT WHERE THE NEW OBLIGATION IS
VOID
Article 1297 stresses one of the essential
requirements of a novation, to wit: the new
obligation must be valid.
*Where a new contract was to become
effective only after the signature of other parties
thereto had been secured, a novation does not take
place when such other signatures are not obtained,
because then it is no more than a mere executory
agreement subject to a condition (di ko alam pano ba
to nasingit nakakagigil)
 GENERAL RULE: there is no novation if the
new obligation is void. Thus, the original one
shall subsist because the second obligation being
inexistent, it cannot extinguish or modify the
first.
 XPN under this article: Where the parties
intended that the old obligation should be
extinguished in any event.
EFFECT WHERE THE NEW OBLIGATION
VOIDABLE
If the new obligation is only voidable,
novation is effective and can take place.
But the moment it is annulled, the novation
must be considered as not having been taken place,
and the original one can be enforced or it subsists,
UNLESS the intention of the parties otherwise.
ADDITIONAL:
 The original obligation may be pure, and the new
obligation is subject to suspensive condition.
o If the intention of the parties is merely to
attach the condition to the original
obligation, there is no novation.
o If the new conditional obligation is
intended to substitute the original pure
obligation, the novation itself, and the
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 consequent extinguishment of the
original obligation, is subject to the
condition.
Therefore, pending the happening of the condition,
the old obligation cannot be considered as
extinguished, nor can its performance be enforced; it
is as much in a state of suspense as the new one. If
the condition is not fulfilled before one of the parties
withdraws from the proposed conditional contract,
there is no novation at all.
 After the novation has taken place, by the change
of the object of the obligation, the old obligation
can no longer be enforced.
 Hence, if the new obligation is extinguished by
the loss of its object, the creditor cannot demand
the object of the original obligation.
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. (1208a)
EFFECT WHERE THE OLD OBLIGATION VOID
OR VOIDABLE
 This article has its basis also on the requisites of
a valid novation
 When the original obligation is VOID (lacking of
some essential requisite or otherwise inexistent)
cannot be novated because there is nothing to
novate.
 However, if the original novation is only
VOIDABLE, or if the voidable obligation is
validated by ratification, the novation is valid.
The rule in this article applies to a voidable
contract which has already been set aside or annulled
by a decree of a competent court. And an obligation
which has already been extinguished is also
inexistent. Hence, it cannot be novated.
When the original obligation has been
ratified before novation, the novation is effective.
And even if there has been no previous ratification at
the time of novation, if the nullity can be claimed
only by the debtor, the consent of the debtor to the
novation will render the novation effective, because
such consent is impliedly a waiver of the action for
nullity.
To have a valid novation when the original
obligation is voidable at the instance of the debtor, it
is necessary that such obligation should have the
essential requites for its existence, and that the debtor
consent to the novation with knowledge of the cause
for nullity and after it has ceased.
The defect, however, is not completely cured
if the novation takes place by EXPROMISSION,
where the old debtor has not intervened or consented.
In such case, the old debtor may avail himself of the
defense of the nullity of the original obligation, in the
event that an action for reimbursement is brought
against him by the new debtor. On the other hand, in
his relation to the creditor, the new debtor cannot set
up the nullity as a defense or as a ground for recover,
if he knew of the cause of nullity.
When a debt is already barred by
prescription, it cannot be enforced by the creditor.
But a new contract, recognizing and assuming the
prescribed debt, would be valid and enforceable. The
prescription, being available only to the debtor, can
be waived by him; and he does so by voluntarily
promising to pay the prescribed debt. THE
NOVATION OF A PRESCRIBED DEBT IS THUS
VALID.
Art. 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. (n)
PRESUMPTION WHERE ORIGINAL
OBLIGATION SUBJECT TO A CONDITION
 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
 REASON FOR THE RULE: the efficacy of the
new obligation depends upon whether the
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 condition which affects the old obligation is
complied with or not.
o 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.
o In either case, one requisites of novation
to wit: a previous valid obligation, would
be wanting.
 The original obligation may be conditional, and
the new obligation pure.
o If the intention is merely to suppress the
condition, there would be no condition.
o If it is to extinguish the original obligation
itself by the creation of the new obligation, it
does not arise except from the fulfillment of
the condition of the original obligation.
o REASON: if the SUSPENSIVE
CONDITION of the original obligation is not
performed, that obligation does not come into
existence, and the cause for the new
obligation would then be wanting. If the
condition of the old obli is RESOLUTORY,
its happening would resolve the old
obligation and place it in the same category
as a void obligation or one which has been
extinguished.
o In either case, therefore, one requisite of
every novation – a pre-existing valid
obligation – would be lacking.
o Thus, where the original obligation is
conditional, the novation itself must be held
conditional also, and its efficacy depends
upon whether the condition which affects the
former is complied with or not.
 But the parties may by their express will,
substitute a pure obligation for a conditional one
 It may happen that the old obligation and the new
one are BOTH CONDITIONAL.
o If the conditions in the two obligations are not
incompatible with each other, and they can
stand together, they must all be fulfilled in
order that the novation may become effective
and the new obligation be enforceable.
o If only the conditions affecting the obligation
are fulfilled, and those affecting the new obli
are not, then there is no novation, and the old
obligation subsists, because the requisite of a
new valid obligation would be lacking.’
o Likewise, if only the conditions affecting the
new obligation are fulfilled, but the
conditions of the old obligation are not, there
will be no novation, since the requisite of a
previous existing obligation would be
wanting.
 If the conditions of the old and the new
obligations are incompatible with each other,
there is an obvious intention to substitute the new
conditional obligation for the old obligation,
leaving only the new obligation, subject to its
conditions. Only the conditions of the new
obligation, therefore, have to be fulfilled, in order
that such obligation may become enforceable.
Art. 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. (1209a)
MEANING OF SUBROGATION
- Transfer of all the rights of the creditor to a third
person, who substitutes him in all his rights.
- The substitution of one person (subrogee) in the
place of a creditor (subroger) with reference to a
lawful claim or right, giving the former all the
rights to the latter, including the right to employ
all remedies to enforce payment.
- May either be legal or conventional
LEGAL CONVENTIONAL
*when it takes place *when it takes place by
without agreement but express agreement of
by operation of law the original parties (the
[because of certain debtor and the original
acts]; this referred to in creditor) and the third
art.1302 person (the new
creditor)
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 *it is not presumed *must be clearly
except in the cases established in order that
expressly provided by it may take place
law
Art. 1301. Conventional subrogation of a third
person requires the consent of the original parties
and of the third person. (n)
CONSENT OF ALL PARTIES REQUIRED IN
CONVENTIONAL SUBROGATION
 In conventional subrogation, the consent of all
the parties is an essential requirement.
1. The debtor – because he becomes liable
under the new obligation to a new creditor
2. The old creditor – because his right against
the debtor is extinguished
3. The new creditor – because he becomes a
party to a new relation; and he may dislike or
distrust the debtor
 Under the Code, conventional subrogation is not
identical to assignment of credit. In the former,
the debtor’s consent is necessary; in the latter, it
is not required.
 SUBROGATION extinguishes an obligation and
gives rise to a new one; ASSIGNMENT refers to
the same right which passes from one person to
another.
 The nullity of an old obligation may be cured by
subrogation, such that the new obligation will be
perfectly valid; but the nullity of an obligation is
not remedied by the assignment of the creditor’s
right to another.
Art. 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)
CASES OF LEGAL SUBROGATION
In the three (3) cases enumerated,
subrogation takes place by operation of law even
without the consent of the parties. Note that the
subrogation is produced from payment:
1. When a creditor pays another creditor who is
preferred.
2. When a third person without interest in the
obligation pays with the approval of the
debtor
3. When a third person with interest in the
obligation pays even without the knowledge
of the debtor
(see examples de leon page.301-302)
TOLENTINO:
Illustration:
Juan has two obligations: a mortgage debt of
P10,000 in favor of Pedro, and a simple unsecured
obligation for P5,000 in favor of Jose. If Jose pays
the mortgage obligation of P10,000 to Pedro, even
without the knowledge of Juan, then Jose will be
subrogated in the rights of Pedro; in other words,
Jose will become a mortgage creditor for P10,000
and an ordinary creditor for P5,000. It is not material
what amount Jose actually pays to Pedro; so long as
Pedro accepts such amount as full payment of the
mortgage credit, there will be subrogation. However,
the debtor in cases like this can still set up against the
new creditor the defenses which he could have used
against the original creditor, such as compensation,
payments already made, or vice or defect of the
original obligation.
 If a third person pays the creditor without the
consent of the debtor, he is only entitled to
reimbursement from the debtor for the amount
paid by him
o If the amount he paid is less than the credit,
even if the creditor has accepted it as full
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 payment, the third person is entitled to If a suspensive condition is attached to the
reimbursement only for what he actually credit so transferred, that condition must be fulfilled
paid. in order that the new creditor may exercise his right;
o He cannot proceed against sureties, but prestations which could not have been required
guarantors, or mortgages and pledges. of the original creditor cannot be demanded of the
o But if the debtor had consented, expressly or new one.
tacitly, to such payment by the third person,
Upon payment of the loss, the insurer is
there will be subrogation, and the payor can
entitled to be subrogated pro tanto to any right of
exercise all the rights of the creditor rising
action which the insured may have against the third
from the very obligation itself, whether
person whose negligence or wrongful act caused the
against the against debtor or against third
loss.
person
 PERSON WHO HAS INTEREST IN THE The effect of legal subrogation as provided in
FULFILLMENT OF THE OBLI: those who Art.1303 may not be modified by agreement. The
would be benefited by the extinguishment of the effects of conventional subrogation are governed by
obligation. (co-debtors, sureties, guarantors, and the stipulation of the parties.
owners of property mortgaged or pledged)
 When a solidary debtor pays the obligation, he is
subrogated in the rights of the creditors. Art. 1304. A creditor, to whom partial payment
o The scope of this subrogation, however, has been made, may exercise his right for the
should not be misunderstood. remainder, and he shall be preferred to the
o The payor cannot take advantage of the person who has been subrogated in his place in
solidarity and recover the amount in excess virtue of the partial payment of the same credit.
of his share of the obligation from any of his (1213)
co-debtors
EFFECT OF PARTIAL SUBROGATION
o The solidarity terminates by his payment, and
the obligation among the co-debtors becomes The creditor to whom partial payment has
joint, each being liable to the payor for his been made by the new creditor remains a creditor to
respective share.(Art.1217) the extent of the balance of the debt.
In case of insolvency of the debtor, he is
given a preferential right under the above article to
Art. 1303. Subrogation transfers to the persons
recover the remainder as against the new creditor.
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. (1212a)
EFFECT OF LEGAL SUBROGATION
The effect of legal subrogation is to transfer
to the third person or new creditor the entire credit,
with all the corresponding rights, either against the
debtor or against third persons. Simply stated, except
only for the change in the person of the creditor, the
obligation subsist in all respects as before the
novation.
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