Sunday, July 9, 2023

Case Digest: Petterson vs Azada, 8 Phil 432

Petterson vs Azada, 8 Phil 432

Subject: Obligations and Contracts

FACTS

A owed C P500 and P3000 evidenced by two promissory notes. Later, a new loan of P300 was obtained. By express agreement, the three debts were consolidated into one promissory note for P3,800 (P500 plus P3,000 and P300). That the last promissory note was to take the place of the others was agreed upon.

ISSUE

Whether or not there was novation in this case.

RULING

Yes, there was novation in this case in view of the changes made.

Under the law (Art 1292, NCC), in order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligation be on every point incompatible with each other.

In this case, had there been no proof that the third note intended to replace the others, there really would be nothing inconsistent with having different notes for different amount. If there is no novation, all the obligation would remain subsisting and the other would be liable for all.

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