G.R. No. 141853 - TERESITA V. IDOLOR, VS. HON. COURT OF APPEALS, SPS. GUMERSINDO DE GUZMAN AND ILUMINADA DE GUZMAN AND HON. PRUDENCIO CASTILLO, JR., PRESIDING JUDGE, REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, BRANCH 220, QUEZON CITY.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, it was held that no novation of a contract had occurred when the new agreement entered into between the parties was intended to give life to the old one. [16] A review of the "Kasunduang Pag-aayos" which is quoted earlier does not support petitioner's contention that it novated the real estate mortgage since the will to novate did not appear by express agreement of the parties nor the old and the new contracts were incompatible in all points. In fact, petitioner expressly recognized in the Kasunduan the existence and the validity of the old obligation where she acknowledged her long overdue account since September 20, 1994 which was secured by a real estate mortgage and asked for a ninety (90) days grace period to settle her obligation on or before December 21, 1996 and that upon failure to do so, she will execute a deed of sale with a right to repurchase without interest within one year in favor of private respondents. Where the parties to the new obligation expressly recognize the continuing existence and validity of the old one, where, in other words, the parties expressly negated the lapsing of the old obligation, there can be no novation. [17] We find no cogent reason to disagree with the respondent court's pronouncement as follows: "In the present case, there exists no such express abrogation of the original undertaking. The agreement adverted to (Annex 2 of Comment, p.75 Rollo) executed by the parties on September 21, 1996 merely gave life to the March 21, 1994 mortgage contract which was then more than two years overdue. Respondent acknowledged therein her total indebtedness in the sum of P1,233,288.23 including the interests due on the unpaid mortgage loan which amount she promised to liquidate within ninety (90) days or until December 21, 1996, failing which she also agreed to execute in favor of the mortgagee a deed of sale of the mortgaged property for the same amount without interest. Evidently, it was executed to facilitate easy compliance by respondent mortgagor with her mortgage obligation. It (the September 21, 1996 agreement) is not incompatible and can stand together with the mortgage contract of March 21, 1994. A compromise agreement clarifying the total sum owned by a buyer with the view that he would find it easier to comply with his obligations under the Contract to Sell does not novate said Contract to Sell ( Rillo v. Court of Appeals, 274 SCRA 461 [1997 ]). Respondent correctly argues that the compromise agreement has the force and effect of a final judgment. That precisely is the reason why petitioner resorted to the foreclosure of the mortgage on March 27, 1997, after her failure to comply with her obligation which expired on December 21, 1996. Reliance by private respondent upon Section 417 of the New Local Government Code of 1991, which requires the lapse of six (6) months before the amicable settlement may be enforced, is misplaced. The instant case deals with extra judicial foreclosure governed by ACT N