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Millar v CA

Doctrine: Implied novation requires clear and convincing proof of incompatibility


between the two obligation. There is no novation where the new obligation merely
reiterates the old one.
Facts:
Feb 11, 1956- Eusebio Millar obtained a favorable judgment from the CFI of
Manila against Antonio Gabriel, ordering the latter to pay him the sum of
1,746.98 with legal interest at 12% per annum from the date of the filing of
the complaint.
The said case went up to the CA, the CA remanded it to the court of origin for the
issuance of the corresponding writ of execution to enforce the judgment.
The lower court granted said petition and issued a writ of execution. Thereafter,
the Willy's Ford jeep of the respondent was seized.
Gabriel however pleaded with the petitioner to release the jeep under an
agreement whereby the former agreed to mortgage the vehicle in favor of
Eusebio Millar.
They both agreed and executed a chattel mortgage on the jeep stating that the
jeep is given as a security for the payment to Eusebio Millar by Gabriel of
the judgment and other incidental-expenses in the case. The stipulated
amount was 1,700 pesos to be paid in two installments of equal amounts.
Gabriel failed to pay the first installment. Millar filed for a writ of execution in
court. Pursuant to this, the sheriff levied on certain personal properties belonging
to respondent and then scheduled them for execution sale.
Gabriel then filed for an urgent motion to suspend the execution on the
ground of payment of the obligation. The court granted said petition; it ruled
that novation had taken place as the parties executed the chattel mortgage only
to secure or get better security for the judgment.
CA affirmed the ruling and held that the subsequent agreement of the parties

imploedly novated the judgment obligation.


It based its decision on the following:
1) the judgment ordered Gabriel to pay 1, 746.98 while the agreement states that
the amount to be paid is 1,700.
2) judgment do not mention any specific mode of payment, the agreement
provides to equal installments.
3) the judgment do not mention damages, the agreement obligates Gabriel to pay
300 pesos additional in case of default
4) the judgment debt was unsecured, the mortgage agreement secured the
obligation.
I: WON the subsequent agreement novated the judgment obligation?
H: NO.
1) Reason why the amount provided in the mortgage agreement is that in the
interim, the respondent made partial payments, necessarily resulting in the
lesser sum stated in the deed of chattel mortgage.
Besides, where the new obligation merely reiterates or ratifies the old
obligation, although the former effects minor alterations with respect to the
object of the obligation, such would not effectuate any substantial
incompatibility between two obligation as would require novation.
Case at bar, the mere reduction of the amount due in no sense constitutes a
sufficient indicium (distinguishing marks) of incompatibility.
2) The chattel mortgage simply gave the respondent a method and more time to
enable him to fully satisfy the judgment indebtedness.
Also, the parties constituted the chattel mortgage purposely to secure the
satisfaction of the then existing liability of the respondent arising from the
judgment against him.

In sum, the defense of implied novation requires clear and convincing proof
of complete incompatibility between the two obligations. The test is
whether the two obligations can stand together. If they cannot,
incompatibility arises, and the second obligation novates the first.

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