NOVATION..

NOVATION – extinguishment of obligation by creating/ substituting a new one in its place

a. changing object or principal conditions

b. substituting person of debtor

c. subrogating 3rd person in right of creditor

REQUISITES:
a. valid obligation

b. intent to extinguish old obligation – expressed or implied: completely/substantially incompatible old and new obligation on every point

c. capacity & consent of parties to the new obligation

d. valid new obligation

EFFECT OF NOVATION:

a. extinguishment of principal carries accessory, except:

- stipulation to contrary

- stipulation pour autri unless beneficiary consents

- modificatory novation only; obliged to w/c is less onerous

- old obligation is void

b. old obligation subsists if:
- new obligation is void or voidable but annulled already ( except: intention of parties )

c. if old obligation has condition

- if Resolutory & it occurred –old obligation already extinguished; no new obligation since nothing to novate

- if suspensive & it never occurred –as if no obligation; also nothing to novate

d. if old obligation has condition, must be compatible with the new obligation; if new is w/o condition – deemed attached to new

e. if new obligation has condition

- if resolutory: valid

- if suspensive & did not materialize: old obligation is enforced

KINDS:

a. REAL/OBJECTIVE – change object, cause/consideration or principal condition

b. PERSONAL/SUBJECTIVE

1. substituting person of debtor ( passive )

EXPROMISION; initiative is from 3rd person or new debtor; new debtor & creditor to consent; old debtor released from obligation;

subject to full reimbursement & subrogation if made w/ consent of old debtor; if w/o consent or against will , only beneficial reimbursement;

if new debtor is insolvent, not responsible since w/o his consent

DELEGACION; initiative of old debtor; all parties to consent; full reimbursement;

if insolvent new debtor – not responsible old debtor because obligation extinguished by valid novation unless:

insolvency already existing & of public knowledge or know to him at time of delegacion

a. Delegante – old debtor

b. Delegatario - creditor

c. Delegado – new debtor

2. subrogating 3rd person to rights of creditor ( active )

a. conventional- agreement & consent of all parties; clearly established

b. legal- takes place by operation of law; no need for consent; not presumed except as provided for in law:

presumed when-

1. creditor pays another preferred creditor even w/o debtor’s knowledge

2. 3rd person not interested in obligation pays w/ approval of debtor

3. person interested in fulfillment of obligation pays debt even w/o knowledge of debtor