oblicon -novation digests

NPC vs. Dayrit (novation) Held: It is elementary that novation is never presumed; it must be explicitly stated or there must be manifest incompatibility between the old and the new obligations in every aspect. Thus the Civil Code provides: Art. 1292. 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, or that the old and the new obligations be on every point incompatible with each other. In the case at bar there is nothing in the May 14, 1982, agreement which supports the petitioner's contention. There is neither explicit novation nor incompatibility on every point between the "old" and the "new" agreements. Facts: Daniel Roxas sued NPC to compel the NPC to restore the contract of Roxas for security services which the former had terminated. However, they reached a compromise agreement, and the court approved it. One of the stipulations of the agreement was that the parties shall continue with the contract of security services under the same terms and conditions as the previous contract effective upon the signing thereof. Parties entered into another contract for security services but NPC refused to implement the new contract for which Daniel filed a Motion for Execution. The NPC assails the Order on the ground that it directs execution of a contract which had been novated by that of the new contracts. Upon the other hand, Roxas claims that said contract was executed precisely to implement the compromise agreement for which reason there was no novation.

Kabankalan Sugar Co. vs. Pacheco (novation) Held: When an easement of right way is one of the principal conditions of a contract, and the duration of said easement is specified, the reduction of said period in a subsequent contract, wherein the same obligation is one of the principal conditions, constitutes a novation and to that extent extinguishes the former contractual obligation. In the contract of November 1, 1920, the duration of the right of way which the defendant bound herself to impose upon her estate in favor of the plaintiff was twenty years, while in the contract of September 29, 1922, that period was reduced to seven crops which is equivalent to seven years. There can be no doubt that these two contracts, in so far as the duration of the right of way is concerned, are incompatible with each other, for the second contract reduces the period agreed upon in the first contract, and so both contracts cannot subsist at the same time. The duration of the right of way is one of the principal conditions of the first as well as of the second contract, and inasmuch as said principal condition has been modified, the contract has been novated, in accordance with the provision quoted above. Facts: Josefa Pacheco binds herself to acknowledge in favor of the Kabankalan Sugar

Co., Inc., all the easements which the Kabankalan may consider convenient and necessary for its railroad on the Hilabagan estate belonging to the Pacheco; the only differences being that the term of the contract of November 1, 1920, is twenty years, while that of the contract entered into on September 29, 1922, is seven crops (one of the stipulations of the contract).

Fua vs. Yap (novation) Held: We concur in the theory that appellants liability under the judgment in civil case No. 42125 had been extinguished by the settlement evidenced by the mortgage executed by them in favor of the appellee on December 16, 1933. Although said mortgage did not expressly cancel the old obligation, this was impliedly novated by reason of incompatibly resulting from the fact that, whereas the judgment was for P1,538.04 payable at one time, did not provide for attorney's fees, and was not secured, the new obligation is or P1,200 payable in installments, stipulated for attorney's fees, and is secured by a mortgage. Facts: By virtue of a judgment for P1,538.04 which Fua obtained against Yap, a writ of execution was issued in pursuance of which a parcel of land belonging to Yap was levied upon and its sale at public auction duly advertised. The sale was, however, suspended as a result of an agreement between the parties, by the terms of which the obligation under the judgment was reduced to P1,200 payable in four installments, and to secure the payment of this amount, the land levied upon with its improvement was mortgaged to appellee with the condition that in the event of appellants' default in the payment of any installment, they would pay 10 per cent of any unpaid balance as attorney's fees as well as the difference between the full judgment credit and the reduced amount thus agreed. Appellants failed to comply with the terms of the settlement, whereupon, appellee sought the execution of the judgment, and by virtue of an alias writ of execution, the land was sold at public auction to appellee and a final deed was executed in his favor. Appellants refused, however, to vacate the land and to recognize appellee's title thereto; hence, the latter instituted the present action for recovery.

Millar vs. CA (novation) Held: No substantial incompatibility between the mortgage obligation and the judgment liability of the respondent sufficient to justify a conclusion of implied novation. The stipulation for the payment of the obligation under the terms of the deed of chattel mortgage serves only to provide an express and specific method for its extinguishment payment in two equal installments. The chattel mortgage simply gave the respondent a method and more time to enable him to fully satisfy the judgment indebtedness. The chattel mortgage agreement in no manner introduced any substantial modification or alteration of the judgment. Instead of extinguishing the obligation of the respondent arising from the judgment, the deed of chattel mortgage expressly ratified and confirmed the existence of the same, amplifying only the mode and period for compliance by the

respondent. The defense of implied novation requires clear and convincing proof of complete incompatibility between the two obligations. The law requires no specific form for an effective novation by implication. The test is whether the two obligations can stand together. If they cannot, incompatibility arises, and the second obligation novates the first. If they can stand together, no incompatibility results and novation does not take place. Facts: Millar obtained a favorable condemning Antonio P. Gabriel to pay him the sum of P1,746.98 with interest at 12% per annum from the date of the filing of the complaint, the sum of P400 as attorney's fees, and the costs of suit. The lower court issued the writ of execution on the basis of which the sheriff seized the respondent's Willy's Ford jeep. The respondent, however, pleaded with the petitioner to release the jeep under an arrangement whereby the respondent, to secure the payment of the judgment debt, agreed to mortgage the vehicle in favor of the petitioner. The petitioner agreed to the arrangement; thus, the parties executed a chattel mortgage on the jeep. Resolution of the controversy posed by the petition at bar hinges entirely on a determination of whether or not the subsequent agreement of the parties as embodied in the deed of chattel mortgage impliedly novated the judgment obligation.

Sandico vs. Piguing (novation) Held: Reduction of the amount of money to be paid does not amount to novation. The payment by the respondent of the lesser amount of P4,000, accepted by the petitioners without any protest or objection and acknowledged by them as "in full satisfaction of the money judgment", completely extinguished the judgment debt and released the respondent from his pecuniary liability. In the case at hand, we fail to see what new or modified obligation arose out of the payment by the respondent of the reduced amount of P4,000 and substitute the monetary liability for P6,000 of the said respondent under the appellate court's judgment. Additionally, to sustain novation necessitates that the same be so declared in unequivocal terms clearly and unmistakably shown by the express agreement of the parties or by acts of equivalent import or that there is complete and substantial incompatibility between the two obligations. 5 Facts: The appellate court's judgment obliges the respondent to do two things: (1) to recognize the easement, and (2) to pay the petitioners the sums of P5,000 actual and P500 exemplary damages and P500 attorney's fees, or a total of P6,000. The full satisfaction of the said judgment requires specific performance and payment of a sum of money by the respondent. The parties entered into an agreement reducing the payment to P4000, and was subsequently paid by respondent. Was there a novation?

Cui vs. Arellano University (contracts; contrary to public policy) Held: The waiver signed by Cui was void as it was contrary to public policy; it was null and void. Facts: Cui was a law scholar at the Arellano University; he paid the tuition fees but it was returned to him at the end of every semester. Before Arellano awarded the scholarship grant, Cui was made to sign a contract covenant and agreement saying that he waives his right to transfer to another school in consideration of the scholarship grant and if he transfers, he shall pay the tuition fees awarded to him while being a scholar. He transferred to another school to finish his last term in law school. When he was about to take the Bar, his TOR at Arellano was not issued unless he pays the amount of the tuition fees that were returned to him when he was still their scholar. He paid under protest.