Chapter 4 Section 6 (Novation)

Question 1

Obligations may be modified by: (1) Changing their ______ or principal conditions; (2) Substituting the person of the _____; (3) _______ a third person in the rights of the creditor.

Answer 1

object, debtor, Subrogating

Question 2

Novation is:

Answer 2

The total or partial extinction of an obligation through the creation of a new one which substitutes it

Question 3

Novation is a contract containing two stipulations:

Answer 3

one to extinguish or modify an existing obligation, the other to substitute a new one in its place

Question 4

T/F: Novation operates as an absolute extinction of an obligation.

Answer 4

False. It does not operate as an absolute but only as a relative extinction of an obligation which is only “modified”

Question 5

Kinds of Novation:

Answer 5

1.) According to origin a.) Legal b.) Conventional 2.) According to how it is constituted a.) Express b.) Implied 3.) According to extent or effect a.) Total or extinctive b.) Partial or modificatory 4.) According to the subject a.) Real or objective b.) Personal or subjective c.) Mixed

Question 6

Legal Novation:

Answer 6

takes place by operation of law

Question 7

Conventional Novation:

Answer 7

takes plae by agreement of the parties

Question 8

Express Novation:

Answer 8

When it is so declared in unequivocal terms

Question 9

Implied Novation:

Answer 9

When the old and the new obligations are essentially incompatible with each other

Question 10

Total or extinctive Novation:

Answer 10

When the old obligation is completely extinguished

Question 11

Partial or modificatory Novation:

Answer 11

When the old obligation is merely modified, i.e., the change is merely incidental to the main obligation

Question 12

Real or objective Novation:

Answer 12

When the object or principal conditions of the obligation are changed

Question 13

Personal or subjective Novation:

Answer 13

When the person of the debtor is substituted and/or when a third person is subrogated in the rights of the creditor

Question 14

Mixed Novation:

Answer 14

When the object and/or principal conditions of the obligation and the debtor or the creditor, or both the parties, are changed. It’s a combination of real and personal novations

Question 15

Art. 1292: In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in _____ terms, or that the old and the new obligations be on every point _____ with each other

Answer 15

unequivocal, incompatible

Question 16

Requisites of Novation:

Answer 16

1.) Previous valid obligation 2.) Capacity and intention of the parties to modify or extinguish the obligation 3.) The modification or extinguishment of the obligation 4.) The creation of a new valid obligation

Question 17

T/F: Novation may be presumed.

Answer 17

False. Novation is never presumed. It must be clearly and unmistakable established either by the express agreement of the parties or acts of equivalent import or by the incompatibility of the 2 obligaions with each other in every material respect.

Question 18

The burden of showing novation is on the party who ____

Answer 18

claims its existence

Question 19

Choose the correct answer: If two obligations cannot stand together, the (subsequent/first) obligation novates the (subsequent/first).

Answer 19

subsequent, first

Question 20

Art. 1293: Novation which consists in substituting a new debtor in the place of the original one, may be made even without the ______ or ___________, but not without the ______. Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237

Answer 20

knowledge, against the will of the latter, consent of the creditor

Question 21

Kinds of Personal Novation:

Answer 21

1.) Substitution (the person of the debtor is substituted) 2.) Subrogation (a third person is subrogated in the rights of the creditor)

Question 22

Kinds of Substitution (a kind of personal novation)

Answer 22

1.) Expromision (that which takes place when a third person of his own initiative and without the knowledge or against the will of the original debtor assumes the latter’s obligation with the consent of the creditor. It logically requires the consent of the third person and the creditor) 2.) Delegacion (that which takes place when the creditor accepts a third person to take place of the debtor at the instance of the latter. The creditor may withhold approval. In delegacion, all the parties, the old debtor, the new debtor, and the creditor must agree.)

Question 23

T/F: Creditor’s consent is necessary in both modes of substitution. (State why True/False)

Answer 23

True because the substitution implies a waiver by the creditor of his credit and it may be prejudicial to him. Prejudice in the form of delay in the fulfillment of the obligation or contravention of its tenor, or non-performance thereof by the new debtor, by reason of his financial inability or insolvency.

Question 24

In expromision, payment by the new debtor gives him the right to ____ under the second paragraph of Art. 1236.

Answer 24

beneficial reimbursement

Question 25

In delegacion, the new debtor is entitled to ____ and ______ under Art. 1237.

Answer 25

reimbursement, subgrogation

Question 26

T/F: D (the debtor) tells C (the creditor) that T will pay D's debt. C agrees. There is delegacion.

Answer 26

False. It does not necessarily mean that there is delegacion. But if D tells C that T will pay his debt and asks C to release him from his obligation, to which C agrees, delegacion results.

Question 27

T/F: D is the debtor and C is the creditor. T approaches C and tells him that T will pay the debt of D. C agrees. There is expromision.

Answer 27

False. Expromision will exist when there is an agreement that D shall be released from his obligation to C.

Question 28

Art. 1294: If the substitution is without the knowledge or against the will of the debtor, the new debtor's insolvency or nonfulfillment of the obligations shall not give rise to __________-

Answer 28

any liability on the part of the original debtor

Question 29

T/F: D (the debtor) tells C (the creditor) that T will pay D's debt. C agrees and there is an agreement that D shall be released from his obligation to C. In case of insolvency of T or non-fulfillment by T of his obliation, D will be liable to C.

Answer 29

False. Since this is a case of expromision, D will no longer be liable to C in case of T's insolvency or non-fulfillment.

Question 30

Art. 1295: The insolvency of the new debtor, who has been proposed by the original debtor and accepted by the creditor, shall not revive the action of the latter against the original obligor, except when said insolvency was ____________, or ______, when _____.

Answer 30

already existing and of public knowledge, known to the debtor, he delegated his debt

Question 31

T/F: In delegacion, if the new debtor does not fulfill the obligation because of causes other than insolvency, the old debtor is not liable.

Answer 31

True.

Question 32

The general rule is that the old debtor is not liable to the creditor in case of the insolvency of the new debtor, with 2 exceptions:

Answer 32

1.) The said insolvency was already existing and of public knowledge (although it was not know to the old debtor) at the time of the delegacion 2.) The insolvency was already existing and known to the debtor (although it was not of public knowledge) at the time of the delegacion

Question 33

The general rule is that the old debtor is not liable to the creditor in case of the insolvency of the new debtor, with 2 exceptions in order to prevent ____

Answer 33

fraud on the part of the old debtor

Question 34

Art. 1296: When the principal obligation is extinguished in consequence of a novation, accessory obligations may subsist only insofar as __________

Answer 34

they may benefit third persons who did not give their consent.

Question 35

Art. 1297: If the new obligation is void, the original one shall ____, unless ___________________________.

Answer 35

subsist, the parties intended that the former relation should be extinguished in any event

Question 36

T/F: If the new obligation is voidable, novation will take place.

Answer 36

False. If the new obligation is only voidable, novation can take place. If it is not yet annulled, the novation shall take effect. But the moment it is annulled, the novation must be considered as not having taken place, and the origianl one can be enforced, unless the intention of the parties is otherwise.

Question 37

Art. 1298: The novation is void if the original obligation was void, except when _______________ or when ___________.

Answer 37

annulment may be claimed only by the debtor, ratification validates acts which are voidable

Question 38

T/F: A novation is void if the original obligation was voidable.

Answer 38

False. If the original obligation was voidable, it is valid until annulled in court.

Question 39

T/F: A novation is not void if the original obligation was voidable and subsequently validated by ratification.

Answer 39

TRUE

Question 40

Art. 1299: If the original obligation was subject to a suspensive or resolutory condition, the new obligation shall be _____, unless ______.

Answer 40

under the same condition, it is otherwise stipulated

Question 41

Art. 1300: Subrogation of a third person in the rights of the creditor is either legal or conventional. The former is _____, except______; the latter must be _____ in order that it may take effect.

Answer 41

not presumed, in cases expressly mentioned in this Code, clearly established

Question 42

Art. 1301: Conventional subrogation of a third person requires the consent of ____________________

Answer 42

the original parties and of the third person

Question 43

Art. 1302: It is presumed that there is legal subrogation: (1) When a creditor pays __________, even without the debtor's knowledge; (2) When a third person, not interested in the obligation, __________________; (3) When, even without the knowledge of the debtor, _______________________, without prejudice to the effects of confusion as to the latter's share.

Answer 43

another creditor who is preferred, pays with the express or tacit approval of the debtor, a person interested in the fulfillment of the obligation pays

Question 44

Art. 1303: Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to _________.

Answer 44

stipulation in a conventional subrogation

Question 45

Art. 1304: A creditor, ____________-, may exercise his right for the remainder, and he shall be preferred to the person who has been subrogated in his place in virtue of the partial payment of the same credit.

Answer 45

to whom partial payment has been made