SECTION 6 Novation Novation is the substitution or change of an obligation by another, resulting in its extinguishment or modification, either by changing its

s object or principal conditions, or by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. Article 1291. Obligations may be modified by: (1) Changing their object or principal conditions (objective or real); (2) Substituting the person of the debtor (passive subjective or personal) ; (3) Subrogating a third person in the rights of the creditor (active subjective or personal). (1203) Mixed combination of objective and subjective novation. 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 (express), or that the old and the new obligations be on every point incompatible with each other (implied). (1204) 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. (1205a) The two forms of this novation are expromision and the delegacion. In the expromision, the initiative for the change does not emanate from the debtor and may be made even without his knowledge. It logically requires the consent of this third person and the creditor. In delegacion, the debtor offers and the creditor accepts a third person who consents to the substitution, so that the consent of the three is necessary. 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 . (n) 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. (1206a) 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. (1207)

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. 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 . (n) 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. (1208a) 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. (n) 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 . (1209a) Subrogation is the transfer of all the rights of the creditor to a third person, who substitutes him in all his rights. KINDS OF OBLIGATIONS Legal Subrogation is that which takes place without agreement but by operation of law because of certain facts. Conventional Subrogation is that which takes place by agreement of the parties; this kind of subrogation requires the intervention and consent of three persons: the original creditor, the new creditor, and the debtor. Article 1301. Conventional subrogation of a third person requires the consent of the original parties and of the third person. (n) 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. (1212a)

Subrogation transfers to the third person or new creditor the entire credit, with all the corresponding rights, either against the debtor or against third persons. If a suspensive condition is attached to the credit so transferred, the condition must be fulfilled in order that the new creditor may exercise his right. 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)