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Essential Requisites of Novation under Philippine Law

 1. A Previous Valid Obligation

  • Novation requires a pre-existing, legally enforceable obligation to serve as the basis for the modification.
  • If the original contractual obligation is void or unenforceable, novation cannot take place.

2. Agreement of All Parties to the New Contract

  • For a valid novation, all parties must agree to the creation of the new contract. This includes:
    • The original debtor
    • The original creditor
    • The new debtor or creditor (if involved in substitution or subrogation scenarios)
  • Consent can be express or implied based on the circumstances.

3. Extinguishment of the Old Contract

  • Novation results in the termination of the original obligation. It's a replacement, not a mere modification of the existing terms.
  • The old contract must be completely extinguished.

4. Validity of the New One

  • The new contract must fulfill all legal requirements to be enforceable.
  • This includes factors like lawful object, proper form, and the capacity of the parties involved.

Key Points:

  • Express vs. Implied: Express novation requires an explicit declaration of the intent to extinguish the old obligation. Implied novation occurs when the new obligation is wholly incompatible with the old one, even without an explicit statement.
  • Presumption: The law generally presumes against novation. The intent to extinguish the earlier obligation must be clear.
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Location: Davao City, Davao del Sur, Philippines

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