Asia Banking Corporation v. Fred J. Elser

Summary

Asia Banking Corporation sued to collect a P58,900 corporate stock subscription debt from the estate of deceased Henry W. Elser. The debt originally belonged to Luis R. Yangco who sold his shares to Elser in 1922, with Elser assuming Yangco's unpaid subscription liability. The Supreme Court affirmed that valid novation by substitution of debtors occurred under Civil Code Article 1205, as evidenced by the corporation's consent through prior negotiations, board election of Elser as president, and subsequent recognition of the debt assumption. Asia Banking Corporation acquired the debt through sheriff's sale of the insolvent corporation's assets and could properly collect from Elser's estate. The decision establishes that creditor consent for debt substitution can be implied from conduct and need not be express or contemporaneous.