139-Milla v. People-G.R. No. 188726-January 25, 2012

Topic: Novation
G.R. No. 188726
January 25, 2012
CRESENCIO C. MILLA, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES and MARKET PURSUITS, INC. represented by CARLO V. LOPEZ, Respondents
Facts:
Cresencio Milla fraudulently sold real property to Market Pursuits, Inc. (MPI) through the use of
falsified documents. This caused the latter to believe that the registered owners of the said lot are
actually selling the property. It was later found out by MPI that the CTC given to them was false and the
title of the property was not transferred to their name.
MPI demanded for a refund of the amount they paid to Milla. Milla gave two checks covering
the amount paid earlier on. However, the checks were dishonoured due to insufficient funds. MPI
demanded Milla to pay with proper funds to support the checks. This was not heeded by Milla which led
MPI to file estafa through falsification of public documents against him.
The RTC found Milla guilty beyond reasonable doubt of two counts of estafa through
falsification of public documents. The CA affirmed RTC’s decision. In this Petition, as part of his defense,
Milla contended that his issuance of the two checks before the institution of the criminal complaint
against him novated his obligation to MPI, thereby enabling him to avoid any incipient criminal liability
and converting his obligation into a purely civil one.
Issue:
Is Novation applicable when the accused issued 2 checks resulting to the extinguishment of his criminal
liability?
Ruling:
No. In Quinto v. People, the Court exhaustively explained the concept of novation in relation to incipient
criminal liability, viz:
Novation is never presumed, and the animus novandi, whether totally or partially, must appear
by express agreement of the parties, or by their acts that are too clear and unequivocal to be
mistaken.
The extinguishment of the old obligation by the new one is a necessary element of novation
which may be effected either expressly or impliedly. The term expressly means that the
contracting parties incontrovertibly disclose that their object in executing the new contract is to
extinguish the old one. Upon the other hand, no specific form is required for an implied
novation, and all that is prescribed by law would be an incompatibility between the two
contracts. While there is really no hard and fast rule to determine what might constitute to be a
sufficient change that can bring about novation, the touchstone for contrariety, however, would
be an irreconcilable incompatibility between the old and the new obligations.
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.
The criminal liability for estafa already committed is then not affected by the subsequent novation of
contract, for it is a public offense which must be prosecuted and punished by the State in its own
conation.
In the case at bar, the acceptance by MPI of the Equitable PCI checks tendered by Milla could not have
novated the original transaction, as the checks were only intended to secure the return of the P2 million
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 Millas falsification of public documents, the liability for which cannot be
extinguished by mere novation.

139-Milla v. People-G.R. No. 188726-January 25, 2012

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139-Milla v. People-G.R. No. 188726-January 25, 2012

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Topic: Novation

G.R. No. 188726

January 25, 2012

CRESENCIO C. MILLA, Petitioner,

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