Notes about Novation

Salazar vs J.Y. Brothers Marketing Corp., G.R. No. 171998, October 20, 2010
Novation is done by the substitution or change of the obligation by a subsequent one which extinguishes the first,
either by changing the object or principal conditions, or by substituting the person of the debtor, or by subrogating a
third person in the rights of the creditor. Novation may:
[E]ither be extinctive or modificatory, much being dependent on the nature of the change and the intention of the
parties. Extinctive novation is never presumed; there must be an express intention to novate; in cases where it is
implied, the acts of the parties must clearly demonstrate their intent to dissolve the old obligation as the moving
consideration for the emergence of the new one. Implied novation necessitates that the incompatibility between the
old and new obligation be total on every point such that the old obligation is completely superceded by the new one.
The test of incompatibility is whether they can stand together, each one having an independent existence; if they
cannot and are irreconcilable, the subsequent obligation would also extinguish the first.
An extinctive novation would thus have the twin effects of, first, extinguishing an existing obligation and, second,
creating a new one in its stead. This kind of novation presupposes a confluence of four essential requisites: (1) a
previous valid obligation, (2) an agreement of all parties concerned to a new contract, (3) the extinguishment of the
old obligation, and (4) the birth of a valid new obligation.

S.C. Megaworld Construction vs Parada, G.R. No. 183804, September 11, 2013
Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a
new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. It is "the substitution of
a new contract, debt, or obligation for an existing one between the same or different parties." Article 1293 of the Civil
Code defines novation as follows:
Art. 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 rights mentioned in Articles 1236 and 1237.
Thus, in order to change the person of the debtor, the former debtor must be expressly released from the obligation,
and the third person or new debtor must assume the formers place in the contractual relation. Article 1293 speaks of
substitution of the debtor, which may either be in the form of expromision or delegacion, as seems to be the case
here. In both cases, the old debtor must be released from the obligation, otherwise, there is no valid novation.
In general, there are two modes of substituting the person of the debtor: (1) expromision and (2) delegacion. In
expromision, the initiative for the change does not come fromand may even be made without the knowledge ofthe
debtor, since it consists of a third persons assumption of the obligation. As such, it logically requires the consent of
the third person and the creditor. In delegacion, the debtor offers, and the creditor accepts, a third person who
consents to the substitution and assumes the obligation; thus, the consent of these three persons are necessary. Both
modes of substitution by the debtor require the consent of the creditor.