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Sandico

vs.

Piguing

(novation)

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 were subsequently paid by respondent. ISSUE: Was there a 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.

G.R. No. L-29280 August 11, 1988PEOPLE'S BANK AND TRUST COMPANY, plaintiff-appellee, vs. SYVEL'S INCORPORATED,ANTONIO Y. SYYAP and ANGEL Y SYYAP, defendants-appellants. This is an action for foreclosure of chattel mortgage executed in favour of the plaintiff by the defendant Syvel's Incorporated on its stocks of goods, personal properties and other materials owned by it and located at its stores orwarehouses The chattel mortgage was inconnection with a credit commercial line in the amount of P900, 000.00 granted the said defendant corporation, the expiry date of which was May 20, 1966. On May 20, 1965, defendants Antonio V. Syyap and Angel Y. Syyap executed an undertaking in favour of the plaintiff whereby they both agreed to guarantee absolutely and unconditionally and without the benefit of excussion(A seizing by law; in civil law, the act of exhausting legal proceedings against a debtor or his property, before proceeding against the property of a person secondarily liable for the debt) the full and prompt payment of any indebtedness to be incurred on account of the said credit line. Against the credit line granted the defendant Syvel's Incorporated the latter drew advances in the form of promissory notes. In view of the failure of the defendant corporation to make payment in accordance with the terms and conditions agreed upon in the Commercial Credit Agreement the plaintiff started to foreclose extra judicially the chattel mortgage. After the filing of this case and during itspendency, Syyap proposed to have the case settled. Mr. Syyap offered to execute a real estate mortgage on his real property located in Bacoor, Cavite. Mr. De las Alas consented, and so the Real Estate Mortgage was executed by the defendant Antonio V. Syyap and his

wife Margarita Bengco Syyap on June 22, 1967. In that deed of mortgage, defendant Syyap admitted that as of June 16, 1967, the indebtedness of Syvel's Incorporated was P601, 633.01. No part of the amount has been paid by either of the defendants. Hence their liabilities cannot be questioned. ISSUE: WON the obligation secured by the Chattel Mortgage sought to be foreclosed was novated by the subsequent execution by Syyap of a real estate mortgage as additional collateral to the obligation secured by said chattel mortgage. HELD: Novation takes place when the object or principal condition of an obligation is changed or altered. 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. In the case at bar, there is nothing in the Real Estate Mortgage which supports appellants' submission. The contract on its face does not show the existence of an explicit novation nor incompatibility on every point between the "old and the "new" agreements as the second contract evidently indicates that the same was executed as new additional security to the chattel mortgage previously entered into by the parties. Moreover, appellants agreed that the chattel mortgage "shall remain in full force and shall not be impaired by this (real estate) mortgage."It is clear, therefore, that a novation was not intended. The real estate mortgage was evidently taken as additional security for the performance of the contract

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