No change, no release

Mil, who represented himself as a real estate developer from IAD Corp., offered to sell XYZ Inc. a property in a highly urbanized area.

For this purpose, Mil showed Carl, an officer of XYZ Inc., a photocopy of TCT 123 registered in the name of spouses Jim and Kate Handi, as well as a Special Power of Attorney purportedly executed by the spouses in favor of Mil.

Since Carl was convinced by Mil’s authority, XYZ purchased the property, issuing a dated check in the amount representing 75 percent of the purchase price. After receiving the check, Mil gave Carl a notarized Deed of Absolute Sale executed by Spouses Handi in favor of XYZ, and an original Owner’s Duplicate Copy of TCT No. 123.

Mil then gave Aco, Carl’s partner, a copy of the new TCT to the property, TCT No. 456, registered in the name of XYZ. Thereafter, it tendered in favor of Mil another check as payment for the balance.

Mil turned over TCT No. 456 to Aco, but did not furnish the latter with the receipts for the transfer taxes and other costs incurred in the transfer of the property. This failure to turn over the receipts prompted Carl to check with the Register of Deeds, where he discovered that the Certificate of Title given to them by Mil could not be found therein; there was no transfer of the property from Spouses Handi to XYZ; and TCT No. 123 was registered in the name of a certain Mati Cruz.

Consequently, Carl demanded the return of all money received by Mil, who then issued checks for the said amount.

However, these checks were dishonored for having been drawn against insufficient funds. When Mil ignored the demand letter sent by Carl, the latter, by virtue of the authority vested in him by the XYZ Board of Directors, filed a criminal complaint for Estafa Thru Falsification of Public Documents against Mil.

Mil contends that his issuance of new checks before the institution of the criminal complaint against him novated his obligation to XYZ, thereby enabling him to avoid any incipient criminal liability and converting his obligation into a purely civil one.

Q: Was the acceptance by XYZ of the checks tendered by Mil novated their original transaction?

A: No. The acceptance by XYZ of the checks tendered by Mil did not novate the original transaction, as the checks were only intended to secure the return of the amount the former had already given him. Even then, these checks bounced and were thus unable to satisfy his liability.

Moreover, the estafa involved here was not for simple misappropriation or conversion, but was committed through Mil’s falsification of public documents, the liability for which cannot be extinguished by mere novation.

Mere payment of an obligation before the institution of a criminal complaint does not, on its own, constitute novation that may prevent criminal liability.

Even in Civil Law, the acceptance of partial payments, without further change in the original relation between the complainant and the accused, cannot produce novation. For the latter to exist, there must be proof of intent to extinguish the original relationship, and such intent cannot be inferred from the mere acceptance of payments on account of what is totally due.

Much less can it be said that the acceptance of partial satisfaction can effect the nullification of a criminal liability that is fully matured, and already in the process of enforcement. Thus, the offended party’s acceptance of a promissory note for all or part of the amount misapplied does not obliterate the criminal offense.

Q: When will an obligation be deemed novated?

A: There are two ways which could indicate, in fine, the presence of novation and thereby produce the effect of extinguishing an obligation by another which substitutes the same.

The first is when novation has been explicitly stated and declared in unequivocal terms. The second is when the old and the new obligations are incompatible on every point. The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first.

Corollarily, changes that breed incompatibility must be essential in nature and not merely accidental. The incompatibility must take place in any of the essential elements of the obligation, such as its object, cause or principal conditions thereof; otherwise, the change would be merely modificatory in nature and insufficient to extinguish the original obligation. (Source: Milla vs. People of the Philippines,G.R. No. 188726, Jan. 25, 2012)

Ma. Soledad Deriquito-Mawis is Dean, Lyceum of the Philippines University; Chairperson, Philippine Association of Law Schools; and founder, Mawis Law Office