TITLE: Evadel Realty vs.

Soriano, 357 SCRA 395

TOPIC: Conventional Novation
PRINCIPLE: Novation, one of the modes of extinguishing an obligation, requires the
concurrence of the following: (1) there is a valid previous obligation; (2) the parties
concerned agree to a new contract; (3) the old contract is extinguished; and (4) there is
valid new contract. Novation may be express or implied. In order that an obligation may
be extinguished by another which substitutes the same, it is imperative that it be so
declared in unequivocal terms (express novation) or that the old and the new obligations
be on every point incompatible with each other (implied novation).
FACTS:
Spouses Soriano entered into a contract to sell with Evadel Realty Development
Corporation involving a parcel of land. Upon payment of the initial installment, petitioner
introduced improvements and constructed concrete walls to fence the property.

It was later revealed that the property fenced off by the petitioners exceeded the area
which is the subject of the contract to sell.

Verification of both parties revealed that the trespassed area was a part of a subdivision
plan. It was segregated from the mother title and a new certificate of title was issued.

Respondent successively sent demand letters to the petitioner requiring the latter to
vacate the encroached area. The petitioners claim that there is a novation of contract
because of the second agreement between the parties due to the encroachment made
by the national road on the property subject of the contract.

ISSUES:

WON there was a novation of contract.

RULING:

No. There was no novation in the present case. In order that an obligation may be
extinguished by another which substitutes the same, it is imperative that it be so
declared in unequivocal terms (express novation) or that the old and the new obligations
be on every point incompatible with each other (implied novation).

In the instant case, there was no express novation because the "second" agreement
was not even put in writing. Neither was there implied novation since it was not shown
that the two agreements were materially and substantially incompatible with each other.