ART. 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. (1203)

ART. 1292
Express Novation. Binding parties must declare in their new executed contract that they agreed to extinguish the old one
and that the former is on every point incompatible with the latter.
Example:
Muning owed Kuting P5,000 and P300 evidenced by two promissory notes. Later, a new loan of P500 was obtained. By
express agreement, the three debts were consolidated into one promissory note for P5,800 (P500 plus P5,000 plus
P300). That the last promissory note was to take the place of the others was agreed upon.
Implied Novation. For an implied novation to arise, it is essential that there is an incompatibility between the preceding
and subsequent contracts.
Example:
A corporation was being established. KL subscribed to some shares of stock in the proposed corporation. Without KL’s
consent, the authorized capital of the corporation was increased.

ART. 1293
EXAMPLES:
(1) D (debtor) tells C (creditor) that X will pay D’s debt. C agrees. It does not necessarily mean that there is delegacion
here. But if D tells B that X will pay his debt and he asks C to release him from his obligation, to which C agrees,
delegacion results.
(2) Suppose, in the same example, it is X who approaches C and tells him that X will pay the debt of D. C agrees. There is
no expromision

ART. 1294
EXPLANATION:
New debtor’s insolvency or non-fulfillment of obligation will NOT revive the action of creditor against the old debtor whose
obligation is ALREADY EXTINGUISHED by the assumption of the debt by the new debtor.

ART. 1295
EXAMPLE:
D owes C P1,000.00. D proposed to C that X would substitute him as debtor. C agreed to the proposal. If, at the time of
the delegacion, X was already insolvent but his insolvency was neither of public knowledge nor known to D , then D is not
liable. Neither is D liable if the insolvency of X took place after he delegated his debt.
It is believed that D is also not liable if C had knowledge that X was insolvent at the time the debt was delegated to him.

ART. 1296
EXAMPLE: 
 A owes B P2,000.00 with interest at 14%. B owes C P280.00.
It was agreed among the parties that A would pay the interest of P280.00 to C. In this case, besides the principal
obligation of A, there is a stipulation in favor of C, a third person. (see Art. 1311, par. 2.) Later on, A and B executed
another contract whereby they agreed that A would deliver to B a television set in payment of the loan.
In spite of the novation, the accessory obligation to pay the interest of P280.00 to C still subsists unless C gives his
consent to the novation.

ART. 1297
EXAMPLE: Paras is indebted to Soriano in the amount of P1, 000.00. Since Paras cannot pay his debt, Paras and
Soriano entered into a new contract whereby Paras will kidnap and kill the enemy of Soriano and the later will consider
Paras’ debt extinguished. In this case, the original obligation of Paras and Soriano shall subsist because the new
obligation of Paras to Soriano is void it being against the law.

ART. 1298
EXAMPLES:
(1) S agreed to deliver prohibited drugs to B. Later on, it was agreed that S would pay B P100,000.00 instead of delivering
the drugs.
The novation is void because the original obligation is void.
(2)Suppose S was induced through fraud committed by B to sign a contract whereby S obliged himself to deliver a specific
car to B. Subsequently, it was agreed between S and B that S would give B P100,000.00 instead of the car. (see Art.
1293.)
ART. 1299
Example: Naomi promised Alexandra with a building which could be converted into a hospital, provided 
 that Alexandra
shall become a licensed doctor of medicine. Shortly thereafter, the parties agreed that instead of a building, Naomi will
just give Alexa his resthouse in Baguio City. The second agreement did not make any stipulation on the nature of the
condition. The giving of the rest house is nevertheless subject to the same condition, that Alexa shall become a licensed
doctor of medicine. 


ART. 1300
Legal Subrogation – This is the subrogation that takes place by virtue and operation of law (Art. 1302) 

Voluntary or Conventional Subrogation – This is the subrogation created by the agreement of the parties. 


ART. 1301
- In the absence of consent of all the parties, no subrogation will result. 

- Assignment of rights is not subrogation. 

- Active subjective novation is stricter than passive subjective novation because in the latter, the consent of 
 the
old debtor is not even required in expromission. 


ART. 1302

(1) When a creditor pays another creditor who is preferred (see Arts. 2236, 2251.) —
EXAMPLE:
A owes B P1,000.00 secured by a first mortgage on the land of A.
A also owes C P2,000.00. This debt is unsecured (or secured by a second mortgage).
Under the law, B, who is a preferred creditor, has preference to payment with respect to the land as against C who is
merely an ordinary creditor. (see Arts. 2242 and 2244.) If C pays the debt of A to B, C will be subrogated in B’s right so
that he can have the mortgage foreclosed in case A fails to pay the P1,000.00 debt.

(2) When a third person without interest in the obligation pays with t he approval of the debtor —
EXAMPLE:
 A owes B P1,000.00.
 C pays B with the express or implied consent of A.
In this case, C will be subrogated in the rights of B. (see Arts. 1236- 1237; see Philippine National Bank vs. Court of
Appeals, 337 SCRA 381 [2000].)
Where the money used to discharge a person’s debt rightfully belonged to the debtor, the party paying cannot be
considered a third- party payor under Article 1302(2). (Chemphil Export & Import Corp. vs. Court of Appeals, 251 SCRA
257 [1996].)

(3) When a third person with interest in the obligation pays even without the knowledge of the debtor —
EXAMPLES:
(1) Suppose in the same example, C is the guarantor of A. C is a person interested in the fulfillment of the obligation of A
as he would be benefited by its extinguishment.
If C pays B, even without the knowledge of A, C is subrogated in the rights of B. Confusion takes place in the person of C.
Hence, the guaranty is extinguished but the principal obligation still subsists. (Art. 1276.)
(2) A and B are joint debtors of C for the amount of P1,000.00. Without the knowledge of A, B pays the debt of P1,000.00.
In this case, B becomes a creditor of A for P500.00, the latter’s share of the debt but not for the remaining P500.00, the
portion of the debt which corresponds to B, which is extinguished by confusion or merger of rights. (see Arts. 1277, 1217.)

ART. 1303
EXAMPLE: Bea borrowed money from Nica. Monique stood as guarantor for the obligation of Bea. Nicole, a stranger to
the contract, paid the obligations of Bea with the latter’s consent and that of Monique, the guarantor. If Bea could not pay
the obligation to Nicole, who has been subrogated in the place of Nica, Nicole could proceed against Monique, the
guarantor. The reason is that the guaranty subsists in the absence of a contrary agreement.

ART. 1304
EXAMPLE:
D is indebted to C for P10,000.00. X pays C P6,000.00 with the consent of D.
There is here partial subrogation as to the amount of P6,000.00. D remains the creditor with respect to the balance of
P4,000.00. Thus, two credits subsist. In case of insolvency of D, C is preferred to X, that is, he shall be paid from the
assets of A ahead of X.