Short answer. Yes. Article 1292 allows implied novation: the old obligation is extinguished if the old and new obligations are on every point incompatible with each other, even without an express declaration of cancellation. Express declaration is only one of two ways novation happens; total incompatibility works just as well on its own.
What the law says
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.
Civil Code, Article 1292 — Express or Implied Novation. Read the full provision →
Two separate routes to the same result
Article 1292 gives two independent ways an obligation can be extinguished by novation: 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. Notice the word 'or'. A written cancellation clause is not the only path. If the parties never said the old obligation is cancelled, the new agreement can still extinguish it, provided the second route is satisfied instead: the old and new obligations conflict so completely that they cannot both be honored at once.
Why 'every point' sets a high bar
The law does not extinguish an old obligation just because a new one touches some of the same subject matter or adjusts a few terms. The incompatibility has to run through the obligation entirely, such that performing under the old terms and the new terms would be contradictory, not merely different in degree. A new agreement that changes the payment schedule but otherwise leaves the same debt intact is unlikely to meet this standard, while one that substitutes an entirely different debtor, object, or set of obligations for the original arrangement is far more likely to.
Why silence about cancellation creates uncertainty
Because express declaration is not required, a creditor or debtor cannot assume that leaving the old document unmentioned means it survives untouched. If the new agreement is genuinely incompatible with the old one at every point, the old obligation is gone even though nobody wrote the word 'cancelled' anywhere. At the same time, a party who wants the new deal to fully replace the old one cannot assume silence achieves that either, since a court still has to find total incompatibility if there was no express declaration to rely on instead.
Why parties should state their intent plainly
The safest course for anyone entering a new agreement meant to replace an existing obligation is to say so directly, stating clearly that the earlier obligation is extinguished and superseded. Relying on implied novation through incompatibility leaves the outcome dependent on how thoroughly the two obligations actually conflict, which is a question of fact that can be argued either way long after the parties have moved on. A clear, unequivocal statement removes that uncertainty and avoids a later dispute over whether the old obligation quietly survived alongside the new one.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Diosa Arrivas vs. Manuel Bacotoc, G.R. No. 228704, December 2, 2020 — read the decision on LawPhil →
- Philippine National Bank vs. Lilian S. Soriano, G.R. No. 164051, October 3, 2012 — read the decision on LawPhil →
- Ruby Shelter Builders vs. Romeo Y. Tan, G.R. No. 217368, August 5, 2024 — read the decision on LawPhil →
- Systems Energizer Corporation (SECOR) vs. Bellville Development Incorporated (BDI), G.R. No. 205737, September 21, 2022 — read the decision on LawPhil →