CASE DIGEST

CASE TITLE: Balila v. IAC

PETITIONER: SPOUSES ANICETO BALILA and EDITHA S. DE GUZ MAN, SPOUSES ASTERIO DE
GUZMAN and ERLINDA CONCEPCION and ENCARNACION OCAMPO VDA. DE
CONCEPCION

RESPONDENT: HONORABLE INTERMEDIATE APPELLATE COURT, HONORABLE FLORANTE S.

ABASOLO, in his capacity as Judge, Regional Trial Court, First Judicial Region,
Branch L, Villasis, Pangasinan, GUADALUPE C. VDA. DE DEL CASTILLO and
WALDO DEL CASTILLO

DOCTRINE: Novation:

RELEVANT FACTS:

 Petitioners sold parcels of land to the respondents under a pacto de retro sale.
 The respondents obtained the ownership of the lots through court judgment.
 Petitioners won’t give up on their ownership over the subject lots so they entered with the
respondents an amicable settlement that they would pay the value of the lots not later than a specific
date.
 The petitioners defaulted in the amicable settlement.
 So, the respondents filed a motion to obtain the ownership over the lots.
 The lower court granted the motion, hence this petition.

SOURCE OF OBLIGATION: Judgment obligation.

Was there Breach? Yes, petitioners defaulted to pay their obligation under their amicable settlement, but
given series of extensions.
Was there Novation? Yes

ISSUES:

1. WON The appellate court erred in not declaring that the contract between the petitioners and private
respondent Guadalupe is one of equitable mortgage and not a pacto de retro sale.
2. WON The appellate court erred in not declaring that the decision dated 11, 1980, based upon the
agreement of the parties was novated upon subsequent mutual agreements of the said parties.

ARGUMENTS

PETITIONER’S ARGUMENTS:
1. Petitioners contend that despite the rendition of the said decision by the appellate court, private
respondent accepted payments from petitioners and gave petitioners several extensions of time to
pay their remaining obligations

RESPONDENT’S DEFENSES:
1.

RULING/S AS TO ISSUE/S

CA’s COMMENTS:

SUPREME COURT’S RULING:

1. Equitable mortgage.
2. There is novation.

Old obligation: Transfer of ownership of parcels of land from petitioner to respondent.

New obligation: Pay the value of the land instead on or before a specific date.

ADDITIONAL NOTES:

How come there is novation?