HANDOUT NO.

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Novation – is the extinction of an obligation through the creation of a new one which
substitutes it.

Dual Purpose 1) to extinguish an existing obligation

2) to substitute/create a new obligation in its place

Requisites of Novation
a) A previous valid obligation;
b) Capacity and intention of the parties to modify or extinguish the obligation;
c) The modification or extinguishment of the obligation; and
d) The creation of new valid obligation.

Kinds of Novation

(1) According to origin:

a) Legal b) Conventional

(2) According to how it is constituted:

a) Express
b) Implied – old and new obligations essentially incompatible with each
other.

(3) According to the subject:

a) Real or Objective – when the object or principal conditions are changed.
b) Personal or Subjective – when the person of the debtor is substituted and/or
when a third person is subrogated in the rights of the creditor.
c) Mixed – when the object and the debtor or the creditor, or both the parties
are changed.

Two Kinds of Personal Novation

A. Two forms of Substitution of Debtors

1) Expromision – effected with the consent of the creditor at the instance of the
new debtor even without the consent or against the will of the old debtor.
2) Delegacion – effected with the consent of creditor at the instance of the old
debtor with the concurrence of the new debtor.

B. Two forms of Subrogating a Third Person in the Rights of the Creditor

1) Conventional – takes the place upon the agreement of the original creditor,
debtor and third person subrogating the original creditor.
2) Legal – takes place by operation of law.
Sources: Obligations and Contracts, Desiderio Jurado, 2012 edition
Pointers in Bar Examination, Garcia, 2012 edition
The Law on Obligations and Contracts, De Leon 2011 edition
A. Villegas