G.R. No.
79518 January 13, 1989 The lower court decided in favor of the
REBECCA C. YOUNG assisted by her
husband ANTONIO GO, petitioner,
vs.
COURT OF APPEALS, PH CREDIT CORP.,
PHIL. HOLDING, INC. FRANCISCO
VILLAROMAN, FONG YOOK LU, ELLEN YEE
FONG and THE REGISTER OF DEEDS OF
MANILA, respondents.
Defendant Philippine Holding, Inc. secured an
order from the City Engineer of Manila to
demolish a building it owned. Antonio Young,
then a tenant, filed an action to annul the City
Engineer's demolition Order. As an incident in
said case, the parties submitted a
Compromise Agreement. Paragraph 3 of said
agreement provides that the tenants and all
persons claiming rights under them bind
themselves to voluntarily and peacefully vacate
the premises which they were, subject to the
proviso that should defendant decided to sell the
subject property or portion thereof, "plaintiff
and Rebecca C. Young have the right of first
refusal thereof."
Philippine Holding, Inc. had previously sold the
above said property described in the
compromise agreement by way of dacion in
payment to PH Credit Corporation
PH Credit Corporation sold the property to
spouses Fong Yook Lu and Ellen Yee Fong.
Thereafter, petitioners filed for the annulment of
the sale in favor of herein respondent spouses,
Fong Yook Lu and Ellen Yee Fong and for
specific performance and damages against the
PH Credit Corporation and Philippine Holding,
Incorporated.
Plaintiffs claim that the property was sold without
affording them the right of first refusal to
purchase that portion of the property which they
are renting.
defendants and against the plaintiffs, thus
dismissing the complaint together with
defendants' counterclaims. With regards to
Plaintiff Rebecca Young was rejected on the
basis that she was not a party to the
compromise agreement.
Chui Wan and Felisa Tan Yu and Rebecca C.
Young, assisted by her husband, appealed to
the Court of Appeals which dismissed the same.
Hence this petition, which was brought to this
Court only by Rebecca Young, assisted by her
husband Antonio Go.
The petition is devoid of merit.
The main issue in this case is whether or not
petitioner can enforce a compromise
agreement to which she was not a party. This
issue has already been squarely settled by this
Court in the negative in J.M. Tuason & Co., Inc.
v. Cadampog where it was ruled that appellant
is not entitled to enforce a compromise
agreement to which he was not a party and
that as to its effect and scope, it has been
determined in the sense that its effectivity if
at all, is limited to the parties thereto and
those mentioned in the exhibits From the
terms of this agreement, the conditions are very
clear, such as: (1) that Rebecca C. Young shall
be impleaded in the action as the daughter of
one of the tenants party to the compromise
agreement and (2) that she shall signify her
written conformity thereto.
The parties did not make any move to
implead Rebecca as necessary party in the
case. Neither did her written conformity
appear in said agreement. Rebecca C. Young
did not affix her signature above her printed
name, nor on the left margin of each and every
page thereof.
The actions of the parties and by Rebecca the
intention is evident, not to include the latter
either in the said agreement.
Petitioner further argued that the stipulation
giving her the right of first refusal is a
stipulation pour autrui or a stipulation in
favor of a third person under Article 1311 of
the Civil Code.
The requisites of a stipulation pour autrui or a
stipulation in favor of a third person are the
following:
(1) there must be a stipulation in
favor of a third person.
(2) the stipulation must be a
part, not the whole of the
contract.
(3) the contracting parties must
have clearly and deliberately
conferred a favor upon a third
person, not a mere incidental
benefit or interest.
(4) the third person must have
communicated his acceptance
to the obligor before its
revocation.
(5) neither of the contracting
parties bears the legal
representation or authorization
of the third party. (Florentino v.
Encarnacion, Sr., 79 SCRA 193
[1977]).
However, Rebecca had not communicate her
acceptance whether expressly or impliedly. She
insists however, that the stipulation has not yet
been revoked, so that her present claim or
demand is still timely.
The above argument is pointless, considering
that the sale of subject property to some
other person or entity constitutes in effect a
revocation of the grant of the right of first
refusal to Rebecca C. Young.
G.R. No. 171998 October 20, 2010
ANAMER SALAZAR, Petitioner,
vs.
J.Y. BROTHERS MARKETING
CORPORATION, Respondent.
DECISION
PERALTA, J.:
J.Y. Brothers Marketing is a corporation engaged
in the business of selling sugar, rice and
other commodities. Anamer Salazar, assisting
Calleja and Kallos procured from J. Y. Bros. 300
cavans of rice worth P214,000.00. As
payment, Salazar negotiated and indorsed to
J.Y. Bros. Prudential two Bank Checks dated
October 15, 1996 issued by Timario in the
amount of P214,000.00 with the assurance
that the check is good as cash. On that
assurance, J.Y. Bros. parted with 300 cavans of
rice to Salazar. However, upon presentment,
the check was dishonored due to "closed
account."
. When despite the demand letter Salazar failed
to settle the amount due J.Y. Bros., the latter
charged Salazar and Timario with the crime of
estafa before the Regional Trial Court of Legaspi
City.After the prosecution rested its case and
with prior leave of court, Salazar submitted a
demurrer to the court acquitted Salazar of the
criminal charge.The Regional Trial Court (RTC)
then proceeded with the trial on the civil aspect
of the criminal case.
the RTC again dismissed.
The RTC found that the Prudential Bank check
drawn by Timario was payable to the order of
respondent, and such check was a negotiable
order instrument; that petitioner was not the
payee appearing in the check, but respondent
who had not endorsed the check, much less
delivered it to petitioner. \Since petitioner had
never been the holder of the check, petitioner's
signing of her name did not produce the
technical effect of an indorsement arising from
negotiation.The solid bank check that followed
was a crossed check, which meant that such
check was only for deposit in payees account,
rendering it non-negotiable, the substitution of a
non-negotiable check for a negotiable check
was an essential change which had the effect
of discharging from the obligation whoever
may be the endorser of the negotiable check.
The RTC concluded that the absence of
negotiability rendered nugatory the obligation
arising from the technical act of indorsing a
check and, thus, had the effect of novation; and
that the ultimate effect of such substitution was
to extinguish the obligation arising from the
issuance of the Prudential Bank check.
The CA reversed.the CA found that petitioner as
an accommodation indorser.WON THERE WAS
NOVATION.
We find no merit in this petition.
Petitioner's claim that respondent's acceptance
of the Solid Bank check which replaced the
dishonored Prudential bank check resulted to
novation which discharged the latter check is
unmeritorious.
x x x Novation is done by the substitution or
change of the obligation by a subsequent one
which extinguishes the first, either by changing
the object or principal conditions, or by
substituting the person of the debtor, or by
subrogating a third person in the rights of the
creditor. Novation may:
[E]ither be extinctive or modificatory, much being
dependent on the nature of the change and the
intention of the parties. Extinctive novation is
never presumed; there must be an express
intention to novate; in cases where it is implied,
the acts of the parties must clearly demonstrate
their intent to dissolve the old obligation as the
moving consideration for the emergence of the
new one. Implied novation necessitates that the
incompatibility between the old and new
obligation be total on every point such that the
old obligation is completely superceded by the
new one. The test of incompatibility is whether
they can stand together, each one having an
independent existence; if they cannot and are
irreconcilable, the subsequent obligation would
also extinguish the first.
An extinctive novation would thus have the twin
effects of, first, extinguishing an existing
obligation and, second, creating a new one in its
stead. It has four essential requisites: (1) a
previous valid obligation, (2) an agreement of all
parties concerned to a new contract, (3) the
extinguishment of the old obligation, and (4) the
birth of a valid new obligation. Novation is
merely modificatory where the change brought
about by any subsequent agreement is merely
incidental to the main obligation (e.g., a change
in interest rates or an extension of time to pay; in
this instance, the new agreement will not have
the effect of extinguishing the first but would
merely supplement it or supplant some but not
all of its provisions.)
The obligation to pay a sum of money is not
novated by an instrument that expressly
recognizes the old, changes only the terms of
payment, adds other obligations not
incompatible with the old ones or the new
contract merely supplements the old one.13
In Nyco Sales Corporation v. BA Finance
Corporation,14 we found untenable petitioner
Nyco's claim that novation took place when the
dishonored BPI check it endorsed to BA Finance
Corporation was subsequently replaced by a
Security Bank check,15 and said:
In this case, respondents acceptance of the
Solid Bank check, which replaced the
dishonored Prudential Bank check, did not result
to novation as there was no express agreement
to establish that petitioner was already
discharged from his liability to pay respondent
the amount of P214,000.00 as payment for the
300 bags of rice. As we said, novation is never
presumed, there must be an express intention to
novate. In fact, when the Solid Bank check was
delivered to respondent, the same was also
indorsed by petitioner which shows petitioners
recognition of the existing obligation to
respondent to pay P214,000.00 subject of the
replaced Prudential Bank check.
Moreover, respondents acceptance of the Solid
Bank check did not result to any incompatibility,
since the two checks Prudential and Solid
Bank checks were precisely for the purpose of
paying the amount of the credit obtained from
the purchase of the 300 bags of rice from
respondent. Indeed, there was no substantial
change in the object or principal condition of the
obligation of petitioner as the indorser of the
check to pay the amount of P214,000.00. It
would appear that respondent accepted the
Solid Bank check to give petitioner the chance to
pay her obligation.
Petitioner also contends that the acceptance of
the Solid Bank check, a non-negotiable check
being a crossed check, which replaced the
dishonored Prudential Bank check, a negotiable
check, is a new obligation in lieu of the old
obligation arising from the issuance of the
Prudential Bank check, since there was an
essential change in the circumstance of each
check.
Such argument deserves scant consideration.
the effect of crossing a check relates to the
mode of payment, meaning that the drawer had
intended the check for deposit only by the
rightful person.21 The change in the mode of
paying the obligation was not a change in any of
the objects or principal condition of the contract
for novation to take place.22
PHILIPPINE SAVINGS BANK, petitioner,
vs. SPS. RODOLFO C. MAALAC, JR.
and ROSITA P.
MAALAC, respondents.
Sps. Maalac obtained a P1,300,000.00 loan
from PSBank covered by promissory note. As
security for the loan, Maalac executed a Real
Estate Mortgage in favor of the bank over 8
parcels of land.
In view of Maalacs inability to pay the loan
installments as they fell due, their loan
obligation was restructured. Accordingly,
Maalac signed another promissory note for
P1,550,000.00.[4] To secure the payment of the
restructured loan, Maalac executed a Real
Estate Mortgage over the same
aforementioned 8 real properties.
Maalac and spouses Galicia, with the prior
consent of PSBank,[5] entered into a Deed of
Sale with Assumption of Mortgage involving
3 of the mortgaged properties.
Thereafter, the 3 parcels of land purchased
by the Galicias, together with another property,
were in turn mortgaged by them to secure a loan
which they obtained from PSBank. [7] This loan is
evidenced by Promissory Note.[8]
Maalac paid PSBank an amount covering
the amount of the parcels of land now registered
under the spouses Galicia. Accordingly, PSBank
executed a partial release of the real estate
mortgage covered by the aforesaid properties.[9]
the spouses Galicia obtained a second loan
from PSBank for which they executed
Promissory Note. They also executed a Real
Estate Mortgage in favor of the bank over the
properties sold to them. Since Maalac defaulted
again in the payment of their loan installments,
PSBank filed for extrajudicial foreclosure of their
5 remaining mortgaged propertiesTThe
foreclosure sale of the subject real properties
proceeded with PSBank as the highest bidder.
 Thereafter, Maalac instituted an action for
damages, before the Regional Trial Court,
against PSBank and its officers, and spouses
Alejandro and Teresita Jalbuena(buyers).
The bank also filed a petition, before the
Regional Trial Court of Pasig, for the issuance of
a writ of possession against and the ejectment
of the respondents.
The RTC annulled the Certificate of Sale and
the Contract to Sell executed in favor of defendants
spouses Jalbuena, and dismissed the banks action.
The Court of Appeals affirmed with
modification of damages
On the issue of novation, the Court of
Appeals held that novation occurred when
PSBank applied P1,000,000.00 of the
P1,200,000.00 PCIB Check tendered by Maalac
to the loan account of the Galicias and the
remaining P200,000.00 thereof to Maalacs
account. It held that when the bank applied the
amount of the check in accordance with the
instructions contained therein, there was
novation of the previous mortgage of the
properties. It further observed that the bank was
fully aware that the issuance of the check was
conditional hence, when it made the application
thereof, it agreed to be bound by the conditions
imposed by Maalac.[25]
Novation is the extinguishment of an
obligation by the substitution or change of the
obligation by a subsequent one which
extinguishes or modifies the first, either by
changing the object or principal conditions, or,
by substituting another in place of the debtor, or
by subrogating a third person in the rights of the
creditor. In order for novation to take place, the
concurrence of the following requisites is
indispensable:
1. There must be a previous valid
obligation,
2. There must be an agreement of the
parties concerned to a new
contract,
3. There must be the extinguishment
of the old contract, and
4. There must be the validity of the
new contract.[26]
The elements of novation are patently
lacking in the instant case. Maalac tendered a
check for the release of 4 parcels of land under
the loan account of the Galicias and under the
loan account of Maalac. However, while the
bank applied the tendered amount to the
accounts as specified by Maalac, it
nevertheless refused to release the subject
properties. Instead, it issued a receipt with a
notation that the acceptance of the check is
not a commitment on the part of the bank to
release the TCTs as requested by Maalac.
From the foregoing, it is obvious that there
was no agreement to form a new contract by
novating the mortgage contracts of the Maalacs
and the Galicias. In accepting the check, the
bank only acceded to Maalacs instruction on
whose loan accounts the proceeds shall be
applied but rejected the other condition that
the 4 parcels of land be released from
mortgage. Clearly, there is no mutual consent to
replace the old mortgage contract with a new
obligation. 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. 3 of the 4
properties sought to be released from
mortgage, have already been sold by Maalac
to Galicia who thereafter mortgaged the same
as security to a separate loan they obtained
from the bank. Thus, without the consent of
PSBank as the mortgagee bank, Maalac, not
being a party to the mortgage contract
between the Galicias and the bank, cannot
demand much less impose upon the bank
the release of the subject properties. Unless
there is a stipulation to the contrary, the release
of the mortgaged property can only be made
upon the full satisfaction of the loan obligation
upon which the mortgage attaches. Neither can
Maalac be deemed substitute debtor within the
contemplation of Article 1293 of the Civil Code,
which states that:
Art. 1293. Novation which consists in substituting a
new debtor in the place of the original one, may be
made 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 the rights
mentioned in articles 1236 and 1237.[28]
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 formers place in the relation. It
is thus incumbent on Maalac to show clearly and
unequivocally that novation has indeed taken
place Maalac has not shown by competent
evidence that they were expressly taking the
place of Galicia as debtor, or that the latter were
being released from their solidary obligation.
ASTRO ELECTRONICS CORP. and PETER
ROXAS, petitioner, vs. PHILIPPINE
EXPORT AND FOREIGN LOAN
GUARANTEE
CORPORATION, respondent.
Astro was granted several loans by the
Philippine Trust Company (Philtrust) amounting
to P3,000,000.00 and secured by three
promissory notes. In each of these promissory
notes, it appears that petitioner Roxas signed
twice, as President of Astro and in his
personal capacity.[2] Roxas also signed a
Continuing Surety ship Agreement in favor of
Philtrust Bank, as President of Astro and as
surety.[3]
Thereafter, Philguarantee, with the
consent of Astro, guaranteed in favor of
Philtrust the payment of 70% of Astros loan,
[4]
subject to the condition that upon payment by
Philguanrantee of said amount, it shall be
proportionally subrogated to the rights of
Philtrust against Astro.[5]
As a result of Astros failure to pay its loan
obligations, Philguarantee paid 70% of the
guaranteed loan to Philtrust. Subsequently,
Philguarantee filed against Astro and Roxas a
complaint for sum of money with the RTC of
Makati.
Roxas disclaims any liability on the
instruments, alleging, that he merely signed the
same in blank and the phrases in his personal
capacity and in his official capacity were
fraudulently inserted without his knowledge.[6]
After trial, the RTC rendered its decision in
favor of Philguarantee
The trial court observed that if Roxas really
intended to sign the instruments merely in his
capacity as President of Astro, then he should
have signed only once in the promissory note.[8]
On appeal, the Court of Appeals affirmed
the RTC decision .[9]
In the present petition, the principal issue to
be resolved is whether or not Roxas should be
jointly and severally liable (solidary) with Astro
for the sum awarded by the RTC.
The answer is in the affirmative.
Astros loan with Philtrust Bank is secured
by three promissory notes. These promissory
notes are valid and binding against Astro and
Roxas. As it appears on the notes, Roxas
signed twice: first, as president of Astro and
second, in his personal capacity. In signing
his name aside from being the President of
Asro, Roxas became a co-maker of the
promissory notes and cannot escape any
liability arising from it. Under the Negotiable
Instruments Law, persons who write their
names on the face of promissory notes are
makers,[10] promising that they will pay to the
order of the payee or any holder according to its
tenor.[11] Thus, even without the phrase personal
capacity, Roxas will still be primarily liable as a
joint and several debtor under the notes
considering that his intention to be liable as such
is manifested by the fact that he affixed his
signature on each of the promissory notes
twicel.
The three promissory notes uniformly
provide: FOR VALUE RECEIVED, I/We jointly,
severally and solidarily, promise to pay to
PHILTRUST BANK or order...[12] An instrument
which begins with I, We, or Either of us promise
to pay, when signed by two or more persons,
makes them solidarily liable.[13] Also, the phrase
joint and several binds the makers jointly and
individually to the payee so that all may be sued
together for its enforcement, or the creditor may
select one or more as the object of the suit.
[14]
Having signed under such terms, Roxas
assumed the solidary liability of a debtor and
Philtrust Bank may choose to enforce the notes
against him alone or jointly with Astro.
Roxas is the President of Astro and
reasonably, a businessman who is presumed to
take ordinary care of his concerns. Absent any
countervailing evidence, it cannot be gainsaid
that he will not sign document without first
informing himself of its contents and
consequences. Clearly, he knew the nature of
the transactions and documents involved as he
not only executed these notes on two different
dates but he also executed, and again, signed
twice, a continuing Surety ship Agreement,
wherein he guaranteed, jointly and severally with
Astro the repayment of the loan due to
Philtrust. Such continuing suretyship agreement
even re-enforced his solidary liability to Philtrust
because as a surety, he bound himself jointly
and severally with Astros obligation.[18] Lastly,
Philguarantee has all the right to proceed
against petitioner, it is subrogated to the rights of
Philtrust to demand for and collect payment from
both Roxas and Astro since it already paid the
value of 70% of roxas and Astro Electronics
Corp.s loan obligation. In compliance with its
contract of Guarantee in favor of Philtrust.
Subrogation is the transfer of all the rights
of the creditor to a third person, who substitutes
him in all his rights.[19] It may either be legal or
conventional. Legal subrogation is that which
takes place without agreement but by
operation of law because of certain acts.
[20]
Instances of legal subrogation are those
provided in Article 1302 of the Civil
Code. Conventional subrogation, on the
other hand, is that which takes place by
agreement of the parties.[21]
Roxas acquiescence is not necessary
for subrogation to take place because the
instant case is one of the legal subrogation
that occurs by operation of law, and without
need of the debtors knowledge.[22] Further,
Philguarantee, as guarantor, became the
transferee of all the rights of Philtrust as against
Roxas and Astro because the guarantor who
pays is subrogated by virtue thereof to all the
rights which the creditor had against the debtor.
[23]