GAW vs INTERMEDIATE APPELLATE COURT G.R. No. 70451. March 24, 1993 case Digest

Concept: 1293

Facts:

·         Henry Gaw , a business man, got his trading firm appointed as one of the exclusive dealers of white cement of the Prime White Cement Corporation (PWCC). Under the agreement, Gaw would deposit the amount of P200,000 to be repaid or returned" to the dealer under a scheme set forth in the same contract, and that the dealer would increase its allocation to 6,500 bags a month and "increase its loan" to PWCC to Five Hundred Thousand Pesos (P500,000.00)

·         February 2, 1979. Gaw entered into a marketing agreement with Foundation Commercial through Uy Diet Tan.

·         Tan issued a check in the amount of P250,000 payable to PWCC but PWCC refused to accept fearing that it might violate their agreement with Gaw.

·         Gaw, to save his option to increase his monthly allocation, entered into a marketing agreement with Mandee Commercial.

·         March 5, 1979.Tan filed a case against Gaw in the Court of First Instance of Rizal. Tan alleged that when he tried to deposit the money to PWCC, the auditor of PWCC said that he should write the check under the name of Gaw. Tan praying that Gaw should honor his contract and pay him for moral damages, litigation costs and atty.’s fees. Tan also filed a restraining order against Gaw to prevent Gaw from disposing the cement bags.

·         Gaw filed a motion to dismiss on the ground of lack of cause but Tan filed an opposition.

·         July 16, 1979. Tan filed a motion to withdraw, claiming that the litigation is giving him chest pains thus might affect his heart. The case was dismissed.

·         Gaw filed a case against Tan on the ground that the case against him caused him to lose profit. Court held in favor of Gaw, thus ordering Tan to pay Gaw. Tan filed a motion for reconsideration but was denied.

·         Tan appealed in the Immediate Appellate Court. The said court reversed the decision of the lower court and ordered Gaw to pay P100,000 to Tan for actual damages. Gaw filed a motion for reconsideration but was denied.

Issue:

W/ON there is novation if PWCC accepted the payment from Tan.

Held:

No. Because in this case there is a co-terminus marketing agreement present. It is axiomatic that novation is never presumed. It must be explicitly stated in the contract and there must be a manifest

 incompatibility between the old and the new obligation in every aspect. The fact that the two agreements are co-terminous with each other does not imply that a new obligation had arisen when the marketing agreement was signed, thus displacing the dealership contract. Not only was Gaw not released from complying with the terms and conditions of the dealership agreement but he was, in a sense, already implementing the latter.