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171750 January 25, 2012 FACTS: On September 29, 2003, Unibox, Ortega and UPPC executed a compromise agreement, wherein Unibox and Ortega acknowledged their obligation to UPPC in the amount of P35,089,544.00 as of August 31, 2003, inclusive of the principal and the accrued interest, and bound themselves to pay the said amount in accordance with a schedule of payments agreed upon by the parties. Consequently, the RTC promulgated its Judgment dated October 2, 2003 approving the compromise agreement. For failure of Unibox and Ortega to pay the required amounts for the months of May and June 2004 despite demand by UPPC, the latter filed its Motion for Execution to satisfy the remaining unpaid balance. In the July 30, 2004 Order, the RTC acted favorably on the said motion and, on August 4, 2004, it issued the requested Writ of Execution.

Whether the execution of the compromise agreement between UPPC and Unibox and Ortega was tantamount to a novation, which had the effect of releasing Acropolis from its obligation under the counter-attachment bond. RULING: The argument of Acropolis that its obligation under the counter-bond was novated by the compromise agreement is, thus, untenable. In order for novation to extinguish its obligation, Acropolis must be able to show that there is an incompatibility between the compromise agreement and the terms of the counter-bond, as required by Article 1292 of the Civil Code, which provides that: Art. 1292. In order that an obligation may be extinguished by another which substitute 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. Nothing in the compromise agreement indicates, or even hints at, releasing Acropolis from its obligation to pay UPPC after the latter has obtained a favorable judgment. Clearly, there is no incompatibility between the compromise agreement and the counterbond. Neither can novation be presumed in this case. Novation by presumption has never been favored. To be sustained, it need be established that the old and new contracts are incompatible in all points, or that the will to novate appears by express agreement of the parties or in acts of similar import.


FACTS: On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal under a first contract and for failure to deploy under a second contract. In his complaint-affidavit, respondent alleged that: 1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel "Stolt Aspiration" for a period of nine (9) months; 2. He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay of $404.00 or a total of $1,212.00 per month during the employment period commencing on 6 November 1991; 3. On 8 November 1991, he joined the vessel MV "Stolt Aspiration"; 4. On February 1992 or for nearly three (3) months of rendering service and while the vessel was at Batangas, he was ordered by the ships master to disembark the vessel and repatriated back to Manila for no reason or explanation; 5. Upon his return to Manila, he immediately proceeded to the petitioners office where he was transferred employment with another vessel named MV "Stolt Pride" under the same terms and conditions of the First Contract; 6. On 23 April 1992, the Second Contract was noted and approved by the POEA; 7. The POEA, without knowledge that he was not deployed with the vessel, certified the Second Employment Contract on 18 September 1992. 8. Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to deploy him with the vessel MV "Stolt Pride"; 9. He made a follow-up with the petitioner but the same refused to comply with the Second Employment Contract. 10. On 22 December 1994, he demanded for his passport, seamans book and other employment documents. However, he was only allowed to claim the said documents in exchange of his signing a document; 11. He was constrained to sign the document involuntarily because without these documents, he could not seek employment from other agencies. ISSUE: Whether or not there was a novation of the first contract when the parties entered into a second contract.

RULING: Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites 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. We concur with the finding that there was a novation of the first employment contract.

FIRST LEPANTO-TAISHO INSURANCE CORPORATION (now known as FLT PRIME INSURANCE CORPORATION) vs. CHEVRON PHILIPPINES, INC. (formerly known as CALTEX [PHILIPPINES], INC.), G.R. No. 177839 January 18, 2012 FACTS: Respondent Chevron Philippines, Inc., formerly Caltex Philippines, Inc., sued petitioner First Lepanto-Taisho Insurance Corporation (now known as FLT Prime Insurance Corporation) for the payment of unpaid oil and petroleum purchases made by its distributor Fumitechniks Corporation (Fumitechniks). Fumitechniks, represented by Ma. Lourdes Apostol, had applied for and was issued Surety Bond FLTICG (16) No. 01012 by petitioner for the amount of P15,700,000.00. As stated in the attached rider, the bond was in compliance with the requirement for the grant of a credit line with the respondent "to guarantee payment/remittance of the cost of fuel products withdrawn within the stipulated time in accordance with the terms and conditions of the agreement." The surety bond was executed on October 15, 2001 and will expire on October 15, 2002. Fumitechniks defaulted on its obligation. The check dated December 14, 2001 it issued to respondent in the amount of P11,461,773.10, when presented for payment, was dishonored for reason of "Account Closed." In a letter dated February 6, 2002, respondent notified petitioner of Fumitechniks unpaid purchases in the total amount of P15,084,030.30.. ISSUE: Whether or not the petitioner is entitled to damages RULING: Finally, we hold that the trial court correctly dismissed petitioners counterclaim for moral damages and attorneys fees. The filing alone of a civil action should not be a ground for an award of moral damages in the same way that a clearly unfounded civil action is not among the grounds for moral damages. Besides, a juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. Although in some recent cases we have held that the Court may allow the grant of moral damages to corporations, it is not automatically granted; there must still be proof of the existence of the factual basis of the damage and its causal relation to the defendants acts. This is so because moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. There

is no evidence presented to establish the factual basis of petitioners claim for moral damages. Petitioner is likewise not entitled to attorneys fees. The settled rule is that no premium should be placed on the right to litigate and that not every winning party is entitled to an automatic grant of attorneys fees. In pursuing its claim on the surety bond, respondent was acting on the belief that it can collect on the obligation of Fumitechniks notwithstanding the non-submission of the written principal contract.