SILAHIS vs IAC

De Leon sold and delivered to Silahis Marketing Corporation various items of merchandise covered by
several invoices in the amount of 22,213.75 payable within 30 days from date of the covering invoices. Due to
Silahis’ failure to pay despite repeated demands, de Leon filed a complaint for the collection of the said accounts
plus interests.
Silahis admitted the allegations insofar as the invoices were concerned, but presented some defenses;
a debit memo for 22,000 as unrealized profit for a commission that Silahis should received from de Leon for the
sale of sprockets in the amount of 111,000 made directly to DOLE without coursing through SIlhas and Silahis is
entitled to return a stainless steel screen which was found defective by its client and to have the amount of it
cancelled from its account with de Leon.
The trial court rendered a judgment confirming the claim but ordered that it be partially offsetted by
Silahis’ counterclaim. The Intermediate Apellate Court set aside the decision and dismissed the petitioner. It
found out that there was no agreement or any contractual obligation between de Leon and Silahis prohibiting any
direct sales from DOLE nor was any memo for the commission of the sprocket’s sale.

Whether or not there was a compensation that took place

NO. Compensation takes place when two persons, in their own right, are creditors and debtors to each other.
Article 1279 provided requisites for the occurrence of a compensation. When all requisites are present,
compensation takes place by operation of law even without the knowledge of the creditors and debtors.

There is no evidence on record which can be inferred that there was an agreement between petitioner and
respondent prohibiting the latter from selling directly to DOLE nor was any commitment by de Leon to pay any
commision to Silahis involving in the sale of sprockets to DOLE.

Strengthening respondent’s claim a letter in reply to SIlahis stating that it never agreed to give petitioner any
commission on the direct sale to DOLE, Inc. by its company because said letter denied any utilization of
petitioner's personnel and facilities at its Davao Branch in the transaction with Dole Philippines, Inc. which would
otherwise lend a basis for petitioner's monetary claim.

BPI vs CA

Respondent opened a joint savings account with his wife, he also held a joint savings account with his
grandmother, Emeteria Fernandez in BPI. He regularly deposited in this account the US Treasury Warrants
payable to Fernandez as her monthly pension. Fernandez died without the knowledge of the US Treasury
Department. She was still sent a Treasury Warrant in the amount of $377. Private respondent deposited the
treasury check in Fernandez’s savings account.
Two months after, private respondent closed the savings account with Fernandez and transferred it to
his joint savings account with his wife, amounting to 13,112.91 pesos. The last treasury warrant was dishonored
as it was discovered that Fernandez died three days prior to its issuance. The US Department of Treasury
requested petitioner bank for a refund. With this, BPI came to know the death of Fernandez.
Respondent received a telegram from BPI requesting him to contact its manager or assistant manager.
When he called up, he was informed that the treasury check was the subject claim by Citibank NA. He assured
petitioner that he would drop by to look into the matter. He verbally authorized them to debit from his other joint
account the amount stated in the dishonored check. BPI debited the amount of 10,556.00 pesos.
Respondent visited the bank and the refund documents and demanded from the bank restitution of the
debited amount. He claimed that because of the debt, he failed to withdraw his money when he needed them. He
filed a suit for damages. Petitioner contested that respondent gave them verbal authorization to debit the amount.
The trial court dismissed the complaint but the Court of Appeals reversed the decision.

Whether or not the legal compensation made by the bank is proper

YES. Firstly, the petitioners were able to prove the verbal authority by preponderance of evidence making the
debit authorized, as made by the testimonies during the case. Respondent’s testimony that he did not give any
authorization is uncorroborated. Nor does he inspire credence, when he concealed the bank the death of
Fernandez and declaring the former still living in the withdrawal slip during the closing of the account. His act
constituted as perjurious.

Compensation takes place when two persons are creditors and debtors to each other and when the essential
requisites concur. It operates even without the consent or against the will of the parties. Its effects arise on the
very day on which all its requisites concur. When used as a defense, it retroacts to the date when its requisites
are fulfilled.

The elements are all present in the case at bar. The obligors bound principally are at the same time creditors of
each other. Petitioner bank stands as a debtor of the private respondent, a depositor. At the same time, said
bank is the creditor of the private respondent with respect to the dishonored U.S. Treasury Warrant which the
latter illegally transferred to his joint account. The debts involved consist of a sum of money. They are due,
liquidated, and demandable. They are not claimed by a third person.

We hold that the presence of private respondent's wife does not negate the element of mutuality of parties, i.e.,
that they must be creditors and debtors of each other in their own right. The wife of private respondent is not a
party in the case at bar. She never asserted any right to the debited U.S. Treasury Warrant. Indeed, the right of
the petitioner bank to make the debit is clear and cannot be doubted. To frustrate the application of legal
compensation on the ground that the parties are not all mutually obligated would result in unjust enrichment on
the part of the private respondent and his wife who herself out of honesty has not objected to the debit. The rule
as to mutuality is strictly applied at law. But not in equity, where to allow the same would defeat a clear right or
permit irremediable injustice.

DIONGZON vs CA

Diongzon was a sales supervisor of Filpro Inc, he had authority to allow the withdrawal of Filpro
products from its warehouse fore delivery to dealers and to receive payment through its depository bank at
Bacolod. Due to the questionable transactions made by Diongzon, the Area Sales Manager investigated
Diongzon’s withdrawal of goods and remittance of payments. The Sales Manager contacted the dealers byt
denied receiving the goods listed in the delivery orders signed by the accused.
Diongzon approached a sales representative and offered assistance in the collection of payments.
Diongzon presented three checks in payment listed in the invoices to three companies. The checks were
deposited with SBTC. However, upon presentment to the drawee bank, Allied Bank, the checks were dishonored.
The two having a defect on the signatures and the other one for insufficiency of funds. The manager conferred
with the dealers but they claimed that they did not received the goods under the delivery orders. When
confronted, Diongzon admitted having issued the three checks under his account No. 006873 with the Allied
Banking Corporation (Bacolod Branch). He explained that he resorted to credit riding, a practice whereby other
dealers were allowed to use the existing credit line of the authorized dealers in order to avail of Filipro's goods
without cash payments. According to the accused, he practiced this technique which was unofficially allowed by
the company in order to achieve Filipro sales targets.
During trial Diongzon denied the signatures in the first two checks. Then he argued that the three
checks were not issued "on account" or "for value" as required in B.P. Blg. 22. Later, however, he admitted that
he issued the third check to replace the second check which, he insisted, he did not issue. Trial court rendered
him guilty of violating B.P. Blg. 22.
On appeal, petitioner raised the same defenses he presented during trial. In addition, however, he
claimed that the information charged more than one offense and that the issuance of the third check as
replacement for the second check constituted novation which thereby extinguished his obligation. The Court of
Appeals affirmed his conviction.

Whether or not there was novation, and thereby extinguishing his obligation and criminal liability
NO. Novation is not a mode of extinguishing criminal liability and criminal liability, once incurred, cannot be
compromised. Indeed, there was no novation, and even if there was, petitioner's liability under B.P. Blg. was not
thereby extinguished. Novation may only take place when all the requisites concur.

These requisites, particularly the third, were not proven in this case. As the Court of Appeals held, the transaction
became a personal undertaking of the petitioner when he received the goods for delivery but made no delivery
thereof either to the credited dealer or to the credit rider. Petitioner had an existing obligation to pay the value of
the goods for which the check was issued. This obligation was not extinguished when the check was dishonored
and a new agreement was reached by the two parties to pay in cash its value. The change in the mode of paying
the obligation was not a change in any of the objects or principal conditions of the contract. As Tolentino states,
neither acceptance of partial payment nor change of place or manner of payment involves novation. 6 For
novation cannot be presumed but must be expressly intended by the parties.

Nor is novation a mode of extinguishing criminal liability. As held by this Court, novation "may prevent the rise of
criminal liability as long as it occurs prior to the filing of the criminal information in court." 8 In other words,
novation does not extinguish criminal liability but may only prevent its rise. The Court thus held that the novation
theory does not apply where the offer to pay by the debtor, and accepted by the creditor, turns out to be merely
an empty promise. In this case, the balance of the check was never paid, as witness Anacleto B. Palisoc testified.

Indeed, the gravamen of the offense of violating B.P. Blg. 22 is the issuance of worthless checks. In this case,
petitioner admitted issuing the check which when presented was dishonored.

SANDICO vs PIGUING

Petitioner spouses administrator of the estate of the late Sixta Paras obtained a favorable judgment
against Respondent Desiderio Paras. Petitioners moved for the issuance of a writ of execution to enforce the
appellate court’s judgment. The petitioners and respondent reached a settlement agreeing to reduce the money
judgment from 6,000 to 4,000. Thus, respondent paid the amount.
Petitioner sent respondent a letter demanding compliance to the reconstruction and reopening of the
irrigation canal. Upon refusal of the respondent, a motion for contempt was filed to private respondent but was
later denied. It was clear in the dispositive portion of the judgment that nothing was stated for the reconstruction
of the canal. Petitioner moved for the issuance of an alias writ of execution to enforce the judgment of the Court
of Appeals. Respondent moved to set aside alleging full satisfaction of the money judgment. Court of Appeals
judge directed to quash the writ of execution stating that the parties novated the money judgment provided in the
decision.

Whether or not there was novation on the money judgment

NO. 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 5,000 actual and 500 exemplary damages and 500 attorney's fees, or a
total of 6,000. The full satisfaction of the said judgment requires specific performance and payment of a sum of
money by the respondent.

The respondent's judgment debt as having been fully satisfied. There is no valid objection to the petitioners and
the respondent entering into an agreement regarding the monetary obligation of the latter under the judgment of
the Court of Appeals, reducing the same from 6,000 to 4,000. The payment by the respondent of the lesser
amount of 4,000, accepted by the petitioners without any protest or objection and acknowledged by them as "in
full satisfaction of the money judgment" in civil case 1554, completely extinguished the judgment debt and
released the respondent from his pecuniary liability.

Both the petitioners and the respondent take exception to the respondent judge's ruling that their agreement to
reduce the judgment debt, as evidenced by the receipt herein before adverted to, "novated" the money judgment
rendered by the appellate court.
Novation results in two stipulations — one to extinguish an existing obligation, the other to substitute a new one
in its place. Fundamental it is that novation effects a substitution or modification of an obligation by another or an
extinguishment of one obligation by the creation of another. 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 substituted
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.

PBTC vs SYVEL

An action for foreclosure of chattel mortgage was executed in the favor of the plaintiff by the defendant
Syvel’s Inc. on its stocks of goods, personal properties and other materials. The chattel mortgage was in
connection with a credit commercial line in the amount of P900,000.00 granted the said defendant corporation.
Defendants Antonio V. Syyap and Angel Y. Syyap executed an undertaking in favor of the plaintiff whereby they
both agreed to guarantee absolutely and unconditionally and without the benefit of excussion 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 which are attached to the complaint as Annexes 'C' to 'I.' 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 extrajudicially the chattel mortgage. However,
because of an attempt to have the matter settled, the extra-judicial foreclosure was not pushed thru. As no
payment had been paid, this case was eventually filed in this Court.
The plaintiff contended that the defendants are disposing their properties with intent to defraud their
creditors, particularly the plaintiff. After filing, a proposal for amicable settlement took place. Defendant Syapp
requested to dismiss the case and offered to execute a real mortgage on his real property. In that deed of
mortgage, defendant Syyap admitted, the indebtedness of Syvel's Incorporated was 601,633.01, the breakdown
of which is as follows: 568,577.76 as principal and 33,055.25 as interest. A motion to dismiss was prepared, but
the defendants did not want to agree if the dismissal would mean also the dismissal of their counterclaim against
the plaintiff. The defendant filed instead their own motion to dismiss on the ground that by the execution of said
real estate mortgage, the obligation secured by the chattel mortgage subject of this case was novated, and
therefore, appellee's cause of action thereon was extinguished.

Whether or not a novation took place that extinguished the cause of action of the appellee

NO. 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, records show
that in the real estate mortgage, 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.

CRUZ vs CA

Delfin I. Cruz and Adoracion Cruz were spouses and their children were Thelma, Nerissa, Arnel and
Gerry Cruz. Upon the death of Delfin I. Cruz, his surviving spouse and children executed a notarized deed of
partial partition (DPP) by virtue of which each one of them was given a share of several parcels of land all
situated in Taytay, Rizal. A day after the execution of the DPP, the same parties executed a Memorandum of
Agreement (MOA) wherein they covenanted and agreed among themselves that they shall alike and receive
equal shares from the proceeds of the sale of any of the lot or lots allotted to and adjudicated in their individual
names by virtue of the DPP.
The DPP was subsequently registered and title were issued in their names. The annotation pertaining to
the MOA was carried in each of the title. The spouses Nerissa Cruz-Tamayo and Nelson Tamayo were sued by
the spouses Eliseo and Virginia Malolos for a sum of money in the Court of First Instance of Rizal (Quezon City).
The Tamayo spouses, after trial, were condemned by the trial court to pay a sum of money to the Malolos
spouses. After the finality of the decision, a writ of execution was issued. Enforcing said writ, the sheriff of the
court levied upon the land in question and thereafter sold the properties in an execution sale to the highest
bidders, the Malolos spouses.
Accordingly, the sheriff executed a certificate of sale. Nerissa Cruz-Tamayo failed to exercise her right
of redemption within the statutory period and so the final deed of sale was executed by the sheriff conveying the
lands to the Malolos spouses. The Malolos couple asked the Nerissa Cruz-Tamayo to give them the owners
duplicate copy of the seven (7) titles of the lands in question but she refused. The couple moved the court to
compel her to surrender said titles to the Register of Deeds of Rizal for cancellation. The motion was granted, but
Nerissa was adamant. She did not comply with the order so the Malolos couple asked the court to declare said
titles null and void.
At this point, petitioners entered the picture by filing in said court a motion for leave to intervene and
oppose the Maloloses' motion. They alleged that they are co-owners of the lands in question. They insist that the
MOA categorically and unmistakably named and covenanted them as co-owners of the parcels in issue and
novated their earlier agreement, the Deed of Partial Partition.
The lower court rendered a decision for private respondents from which the defendants appealed to the
Court of Appeals. The appellate court ruled in favor of herein private respondents, holding that the DPP was not
materially and substantially incompatible with the MOA.

Whether or not the Deed of Partial Partition and Memorandum of Agreement were incompatible and a novation
took place

NO. The going provision in the MOA does not novate, much less cancel, the earlier DPP. Novation occurs when
all the requisites concurs. Novation may be express or implied. Article 1292 of the Code provides: "In order that
an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in
equivocal terms [express novation], or that the old and the new obligations be on every point incompatible with
each other [implied novation]."

Tested against the foregoing standards, petitioners' stance is shattered to pieces. The MOA falls short of
producing a novation, because it does not express a clear intent to dissolve the old obligation as a consideration
for the emergence of the new one. Likewise petitioners fail to show that the DPP and the MOA are materially and
substantially incompatible with each other. Petitioners admit that, under the MOA, they and the Tamayo spouses
agreed to equally share in the proceeds of the sale of the lots. 16 Indeed, the DPP granted title to the lots in
question to the co-owner to whom they were assigned, and the MOA created an obligation on the part of such
co-owner to share with the others the proceeds of the sale of such parcels. There is no incompatibility between
these two contracts. Verily, the MOA cannot be construed as a repudiation of the earlier DPP. Both documents
can exist together and must be so interpreted as to give life to both. Respondent Court aptly explained:

"The Deed of Partial Partition conferred upon Nerissa Cruz Tamayo absolute ownership over the lands in
question. The Memorandum of Agreement merely created an obligation on the part of absolute owner Nerissa
Cruz Tamayo to share [with] the appellees with [sic] the proceeds of the sale of said properties. The obligation of
the owner of a piece of land to share [with] somebody with [sic] its fruits or the proceeds of its sale does not
necessarily impair his dominion over the property much less make the beneficiary his co-owner thereof."

QUINTO vs PEOPLE

Petitioner Quinto took some jewelries from private complainant Amelia Cariaga consisting of one (1) set
of marques with briliantitos worth P17,500.00, one (1) solo ring of 2.30 karats worth P16,000.00 and one (1)
rosetas ring worth P2,500.00. for selling purposes. When the 5-day period given to her had lapsed, Leonida
requested for and was granted additional time within which to vend the items. Leonida failed to conclude any
sale. After 6 months, however, Quinto failed to return the jewelries or pay the value thereof. Hence, a case of
estafa was filed against Quinto as a result of which she was convicted, affirmed by the Court of Appeals.
Quinto admitted that she took some jewelries from Cariaga but she sold the same to Mrs. Camacho and
Mrs. Ramos. Unfortunately however, both were unable to pay the whole amount and promised to pay the balance
in installment to Cariaga. Petitioner thus alleged that the agreement between her and Cariaga was effectively
novated when the latter consented to receive payment on installments directly from Mrs. Camacho and Mrs.
Ramos.

Whether or not there was a novation

The changes alluded to by petitioner consists only in the manner of payment. There was really no substitution of
debtors since Cariaga merely acquiesced to the payment but did not give her consent to enter into a new
contract. Thus, Cariaga's acceptance of Ramos and Camacho's payment on installment basis cannot be
construed as a case of either expromision or delegacion sufficient to justify the attendance of extinctive novation.
Further the defense of novation cannot avoid the incipient criminal liability for Estafa to which Quinto was found
guilty of. It is a public offense which must be prosecuted and punished by the State on its own.