ZAPANTE vs.

ROTAECHE
A final judgment is one of the most solemn obligations incurred by parties known to the law.
The Civil Code, in article 1156, provides the method by which all civil obligations may be
extinguished. One of the methods recognized by said code for the extinguishment of
obligation is that by novation. (Civil Code, arts. 1156, 1203 to 1213.) In order, however, that
an obligation shall be extinguished by another obligation (by novation) which substitutes it,
the law requires that the novation or extinguishment shall be expressly declared or that the
old and new obligations shall be absolutely incompatible. (Civil Code, art. 1204.) In the
present case, the contract referred to does not expressly extinguish the obligations existing
in said judgment. Upon the contrary it expressly recognizes the obligations existing between
the parties in said judgement and expressly provides a method by which the same shall be
extinguished, which method is, as is expressly indicated in said contract, by monthly
payment. The contract, instead of containing provisions "absolutely incompatible" with the
obligations of the judgment, expressly ratifies such obligations and contains provisions for
satisfying them. The said agreement simply gave the plaintiff a method and more time for the
satisfaction of judgment. It did not extinguish the obligations contained in the judgment, until
the terms of said contract had been fully complied with. Had the plaintiff continued to comply
with the conditions of said contract, he might have successfully invoked its provisions against
the issuance of an execution upon the said judgment. The contract and the punctual
compliance with its terms only delayed the right of the defendant to an execution upon the
judgment. The judgment was not satisfied and the obligation existing thereunder still
subsisted until the terms of the agreement had been fully complied with. The plaintiff was
bound to perform the conditions mentioned in said contract punctually and fully, in default of
which the defendant was remitted to the original rights under his judgment.
The contract was not a new and independent obligation expressly extinguishing the
judgment; neither were its terms incompatible with the obligations of the judgment. It was
simply another method of satisfying the judgment. The judgment was not extinguished. Its
enforcement by the methods provided for by law was only delayed during a strict compliance
with the terms of the contract. (Ives vs. Phelps, 16 Minn., 407; Brown vs. Feeter, 7 Wendell
(N. Y.), 301; Plunkett vs. Block, 117 Ind., 14; Terret vs. Brooklyn Improvement Co., 87 N. Y.,
92; Maute vs. Gross, 56 Pa. St., 250; 94 Am. Dec., 62.)
Between the civil and the common law, with reference to the extinguishing of one obligation
by the creation of another, there seems to be no difference. Under both systems of
imprudence, in order to extinguish one obligation by the creation of another, the
extinguishment must be made to clearly appear. In our opinion, in the present case the new
contract did not expressly extinguish the obligations of the judgment, neither are the terms of
said contract "absolutely incompatible" with the obligations of said judgment.
Under the view which we have taken of the first assignment of error, we deem it unnecessary
to discuss the second and third assignment of error.
Our conclusion is, therefore, that when the plaintiff failed to comply with the conditions of
said contact, the defendant had a right to resort the methods provides by law for the
satisfaction of the obligations created by said judgment.

URACA vs. CA
First Issue: No Extinctive Novation
The lynchpin of the assailed Decision is the public respondent's conclusion that the sale of
the real property in controversy, by the Velezes to petitioners for P1,050,000.00, was
extinguished by novation after the said parties negotiated to increase the price to
P1,400,000.00. Since there was no agreement on the sale at the increased price, then there
was no perfected contract to enforce. We disagree.
The Court notes that the petitioners accepted in writing and without qualification the Velezes'
written offer to sell at P1,050,000.00 within the three-day period stipulated therein. Hence,
from the moment of acceptance on July 10, 1985, a contract of sale was perfected since
undisputedly the contractual elements of consent, object certain and cause
concurred. 13 Thus, this question is posed for our resolution: Was there a novation of this
perfected contract?
Article 1600 of the Civil Code provides that "(s)ales are extinguished by the same causes as
all other obligations, . . . ." Article 1231 of the same Code states that novation is one of the
ways to wipe out an obligation. Extinctive novation requires: (1) the existence of a previous
valid obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old obligation or contract; and (4) the validity of the new one. 14 The
foregoing clearly show that novation is effected only when a new contract has extinguished an
earlier contract between the same parties. In this light, novation is never presumed; it must be
proven as a fact either by express stipulation of the parties or by implication derived from an
irreconcilable incompatibility between old and new obligations or contracts. 15 After a thorough
review of the records, we find this element lacking in the case at bar.
As aptly found by the Court of Appeals, the petitioners and the Velezes did not reach an
agreement on the new price of P1,400,000.00 demanded by the latter. In this case, the
petitioners and the Velezes clearly did not perfect a new contract because the essential
requisite of consent was absent, the parties having failed to agree on the terms of the
payment. True, petitioners made a qualified acceptance of this offer by proposing that the
payment of this higher sale price be made by installment, with P1,000,000.00 as down
payment and the balance of P400,000.00 payable thirty days thereafter. Under Article 1319
of the Civil Code, 16 such qualified acceptance constitutes a counter-offer and has the ineludible
effect of rejecting the Velezes' offer. 17 Indeed, petitioners' counter-offer was not accepted by the
Velezes. It is well-settled that "(a)n offer must be clear and definite, while an acceptance must be
unconditional and unbounded, in order that their concurrence can give rise to a perfected
contract." 18 In line with this basic postulate of contract law, "a definite agreement on the manner
of payment of the price is an essential element in the formation of a binding and enforceable
contract of sale." 19 Since the parties failed to enter into a new contract that could have
extinguished their previously perfected contract of sale, there can be no novation of the latter.
Consequently, the first sale of the property in controversy, by the Velezes to petitioners for
P1,050,000.00, remained valid and existing.
In view of the validity and subsistence of their original contract of sale as previously
discussed, it is unnecessary to discuss public respondent's theses that the second
agreement is unenforceable under the Statute of Frauds and that the agreement constitutes
a mere promise to sell.

REYES vs. CA
Admittedly, in order that a novation can take place, the concurrence of the following
requisites 7 is indispensable:
1. there must be a previous valid obligation,
2 there must be an agreement of the parties concerned to a new contract,
3. there must be the extinguishment of the old contract, and
4. there must be the validity of the new contract.
Upon the facts shown in the record, there is no doubt that the last three essential requisites
of novation are wanting in the instant case. No new agreement for substitution of creditor war
forged among the parties concerned which would take the place of the preceding contract.
The absence of a new contract extinguishing the old one destroys any possibility of novation
by conventional subrogation, In concluding that a novation took place, the respondent court
relied on the two letters dated March 19, 1991, 8 which, according to it, formalized petitioner's
and respondent Eleazar's agreement that BERMIC would directly settle its obligation with the real
owners of the funds - the AFP MBAI and DECS IMC. 9 Be that as it may, a cursory reading of
these letters, however clearly and unmistakably shows that there was nothing therein that would
evince that respondent AFP-MBAI agreed to substitute for the petitioner as the new creditor of
respondent Eleazar in the contract of loan. It is evident that the two letters merely gave
respondent Eleazar an authority to directly settle the obligation of petitioner to AFP-MBAI and
DECS-IMC. It is essentially an agreement between petitioner and respondent Eleazar only. There
was no mention whatsoever of AFP-MBAI's consent to the new agreement between petitioner
and respondent Eleazar much less an indication of AFP-MBAI's intention to be the substitute
creditor in the loan contract. Well settled is the rule that novation by substitution of creditor
requires an agreement among the three parties concerned the original creditor, the debtor and
the new creditor. 10 It is a new contractual relation based on the mutual agreement among all the
necessary parties, Hence, there is no novation if no new contract was executed by the parties.
Article 1301 of the Civil Code is explicit, thus:
Conventional subrogation of a third person requires the consent of the
original parties and of the third person.
The fact that respondent Eleazar made payments to AFP-MBAI and the latter accepted them
does not ipso facto result in novation. There must be an express intention to novate
animus novandi. 11 Novation is never
presumed. 12 Article 1300 of the Civil Code provides inter alia that conventional subrogation must
be clearly established in order that it may take effect.