Kinds of novation
Novation is a juridical act of dual function—it
extinguishes an obligation, and at the same
time, it creates a new one in lieu of the old. It
operates as a relative, not an absolute,
extinction.
There are different kinds of novation.
As to origin.
As to origin.1. Legal - takes place by operation of law; or
2. Conventional - takes place by agreement of parties.
As to form.
1. Express - when it is declared in unequivocal terms; or
2. Implied - when the old and new obligations are
on every point incompatible with each other.
In California Bus Line v. State
Investment,[1] the Supreme Court held that in the absence of an unequivocal declaration of
extinguishment of the pre-existing obligation,
only proof of incompatibility between the old
and new obligation would warrant a novation
by implication. Moreover, the test of incompatibility decides whether or not the
two obligations can stand together, each one
having its independent existence. If they
cannot, they are incompatible and the latter
obligation novates the first. In Quinto v. People,[2] the Supreme Court held that the incompatibility must take place in any of
the essential elements of the obligation, such
as its object, cause or principal conditions
thereof; otherwise, the change would be
merely modificatory in nature and insufficient to
extinguish the original obligation
As to subject.
1. Real/objective - when the object, cause (consideration), or principal
conditions of the obligation are changed;
2. Personal/subjective - when the person of the debtor is
substituted and/or when a third person is subrogated in the rights
of the creditor; or
3. Mixed - when the object or principal condition of the
obligation and the debtor or the creditor or both the parties, are
changed. It is a combination of real and personal novations.[3]
As to effect.
1. Total - when the old obligation is completely extinguished; or
2. Partial - when the old obligation is
merely modified, i.e., the change is merely incidental to the main
obligation.[4]
[1] California Bus Line v. State Investment, G.R. No. 147950, (2003).
[2] Quinto v.
People, G.R. No. 126712, (1999).
[3] De Leon. (2014). Obligations and Contracts.
[4] Id.