This case has been cited 1 times or more.
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2010-11-24 |
VELASCO JR., J. |
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| On the matter of novation, Spouses Benjamin and Agrifina Lim v. M.B. Finance Corporation[14] provides the following discussion: Novation, in its broad concept, may either be extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement. An extinctive novation results either by changing the object or principal conditions (objective or real), or by substituting the person of the debtor or subrogating a third person in the rights of the creditor (subjective or personal). Under this mode, novation would have dual functions â"€ one to extinguish an existing obligation, the other to substitute a new one in its place â"€ requiring a conflux 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. x x x | |||||