ROMEO C. GARCIA, petitioner, vs. DIONISIO V.
LLAMAS,
respondent.
FACTS:
1… Petitioner Romeo Garcia and Eduardo de Jesus borrowed P
400,000 from respondent Dionisio Llamas on Dec. 23, 1996.
Garcia and de Jesus executed a promissory note for that purpose
binding themselves jointly and severally the loan on or before Jan.
23, 1997 with 5% interest per month. When the debt was due,
they failed to pay. Despite repeated demands, they still failed to
pay prompting Llamas to institute a collection suit against the two.
2. Petitioner Garcia in his answer averred that he assumed no
responsibility under the promissory note, for he merely signed it
as an accommodation party for de Jesus. Furthermore, that since
de Jesus already made a payment through the delivery of a check
which was also accepted by Llamas, the obligation was already
novated and superseded. However, the check delivered bounced
upon presentment.
ISSUE: Whether or not the original obligation as evidenced by a
promissory note was subsequently novated when Llamas
accepted the payment of de Jesus through a check.
HELD:
The Supreme Court said No.
The check could not have extinguished the obligation because
it bounced upon presentment. By law, the delivery of a check
produces the effect of payment only when it is cashed.
1… No novation took place because the parties did not
unequivocally declare that the old obligation had been
extinguished by the issuance and the acceptance of the check, or
that the check would take the place of the note.
2. There is no incompatibility between the promissory note and
the check. The check had been issued precisely to answer the
obligation. The note evidences the loan obligation, while the
check answers it. Verily, the 2 can stand together.
3. There is also no novation by substitution of debtors. In
order to change the person of the debtor, the old debtor must be
expressly released from the obligation and the new debtor to
assume the former's place.
4. In the case at bar, petitioner Garcia has not shown that he
was expressly released from the obligation, that a third person
was substituted in his place and that the joint and solidary
obligation was cancelled by the solitary undertaking of de
Jesus.
Novation is a mode of extinguishing an obligation by changing its
objects or principal obligations, by substituting a new debtor in
place of the old one, or by subrogating a third person to the rights
of the creditor.1[10] Article 1293 of the Civil Code defines
novation as follows:
“Art. 1293. Novation which consists in substituting a new debtor in
the place of the original one, may be made even without the
knowledge or against the will of the latter, but not without the
consent of the creditor. Payment by the new debtor gives him
rights mentioned in articles 1236 and 1237.”
In general, there are two modes of substituting the person of the
debtor: (1) expromision and (2) delegacion. In expromision, the
initiative for the change does not come from -- and may even be
made without the knowledge of -- the debtor, since it consists of a
third person’s assumption of the obligation. As such, it logically
requires the consent of the third person and the creditor. In
delegacion, the debtor offers, and the creditor accepts, a third
person who consents to the substitution and assumes the
obligation; thus, the consent of these three persons are
necessary. Both modes of substitution by the debtor require the
consent of the creditor.2[12]
Novation may also be extinctive or modificatory. It is extinctive
when an old obligation is terminated by the creation of a new one
that takes the place of the former. It is merely modificatory when
the old obligation subsists to the extent that it remains compatible
with the amendatory agreement.3[13] Whether extinctive or
modificatory, novation is made either by changing the object or
the principal conditions, referred to as objective or real novation;
or by substituting the person of the debtor or subrogating a third
person to the rights of the creditor, an act known as subjective or
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personal novation.4[14] For novation to take place, the following
requisites must concur:
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract.
3) The old contract must be extinguished.
4) There must be a valid new contract.5[15]
Novation may also be express or implied. It is express when the
new obligation declares in unequivocal terms that the old
obligation is extinguished. It is implied when the new obligation is
incompatible with the old one on every point.6[16] The test of
incompatibility is whether the two obligations can stand together,
each one with its own independent existence.7[17]
Applying the foregoing to the instant case, we hold that no
novation took place.
The parties did not unequivocally declare that the old obligation
had been extinguished by the issuance and the acceptance of the
check, or that the check would take the place of the note. There
is no incompatibility between the promissory note and the check.
As the CA correctly observed, the check had been issued
precisely to answer for the obligation. On the one hand, the note
evidences the loan obligation; and on the other, the check
answers for it. Verily, the two can stand together.
Neither could the payment of interests -- which, in petitioner’s
view, also constitutes novation change the terms and conditions
of the obligation. Such payment was already provided for in the
promissory note and, like the check, was totally in accord with the
terms thereof.
Also unmeritorious is petitioner’s argument that the obligation was
novated by the substitution of debtors. In order to change the
person of the debtor, the old one must be expressly released from
the obligation, and the third person or new debtor must assume
the former’s place in the relation.8[19] Well-settled is the rule that
novation is never presumed.9[20] Consequently, that which arises
from a purported change in the person of the debtor must be clear
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and express.10[21] It is thus incumbent on petitioner to show
clearly and unequivocally that novation has indeed taken place.
In the present case, petitioner has not shown that he was
expressly released from the obligation, that a third person was
substituted in his place, or that the joint and solidary obligation
was cancelled and substituted by the solitary undertaking of De
Jesus.
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