Professional Documents
Culture Documents
Moreover, the amount of P4,116 paid by the national On May 24, 1995, respondent filed with the RTC of
government for the 125 square meter portion of his Davao, a Complaint for accounting and rescission
lot was deposited with the Philippine National Bank against petitioner alleging that petitioner withheld
long before the sale at public auction of his remaining portions of his service fees covering the months from
property. It would have been an easy matter to October 1994 to January 1995 and his whole service
withdraw P 2,400 from the deposit so that he could fees for the succeeding months of February to April
pay the tax obligation thus aborting the sale at public 1995, the total amount of which was P222,202.84;
auction. Thus, the petition for review is dismissed. that petitioner's act grossly hampered, if not
The taxes assessed are the obligations of the taxpayer paralyzed, his business operation, thus left with no
arising from law, while the money judgment against other recourse, he suspended operations to minimize
the government is an obligation arising from contract, losses. He prayed for the rescission of the contract of
whether express or implied. services and for petitioner to render an accounting of
his service fees.
Mondragon vs. Sola
In its Answer with Counterclaim, petitioner
FACTS: Petitioner Mondragon Personal Sales Inc., a contended that respondents letter dated January 26,
company engaged in the business of selling various 1995 addressed to petitioner's Vice-President for
consumer products through a network of sales Finance, confirmed and obligated himself to pay on
representatives, entered into a Contract of Services installment basis the accountability of his wife with
with respondent Victoriano S. Sola, Jr. for a period of petitioner, thus respondent's service fees/commission
earned for the period of February to April 1995 P100,000.00 per month starting February 28, 1995
amounting to P125,040.01 was applied by way of and every end of the month thereafter but not to
compensation to the amounts owing to it; that all the exceed eighteen (18) months or July 31, 1996.
service fees earned by respondent prior to February
1995 were fully paid to him. In his Reply and Answer xxxxxxx
to petitioner's counterclaim, respondent averred that
I fully understand and voluntarily agree to the above
he was made to believe that the sales commission
undertaking with full knowledge of the consequences
contained in petitioner's memorandum dated July 5,
which may arise therefrom.
1994 would be applicable to him; that it was
improper for petitioner to confuse respondent's Very truly yours,
transaction with that of his wife as it was divergent in
nature and terms. (signed)
(3) That the two debts be due; Iloilo Traders vs. Heirs of Soriano
(4) That they be liquidated and demandable FACTS: Respondents executed two promissory notes
secured by real property mortgages in favor of
(5) That over neither of them there be any retention
petitioner. The respondents defaulted and petitioner
or controversy, commenced by third persons and
moved for extra-judicial foreclosure of the
communicated in due time to the debtor.
mortgages. Respondent filed a complaint against
A debt is liquidated when its existence and amount petitioner. The parties later entered into amicable
are determined. Also, when the determination of the settlement and submitted it to the trial court for
exact amount depends only on a simple arithmetical approval. The trial court required the parties to give
operation. It is not necessary that it be admitted by some clarifications on several issues that were not
the debtor. Nor is it necessary that the credit appear in complied. The amicable settlement was disapproved
a final judgment in order that it can be considered as and the court proceeded. Respondents withdrew the
liquidated; it is enough that its exact amount is case and filed a (new) case for novation and specific
known. performance which was decided favorably for the
respondents. The Court of Appeals affirmed the
In the instant case, both obligations are liquidated. judgment.
Vicente has the obligation to pay his debt due to ISSUE: Whether or not the amicable settlement
Jesus in the amount of P300,000.00 with interest at entered into between parties has novated the original
the rate of 12% per annum counted from the filing of obligation.
the instant complaint on August 17, 1993 until fully
paid. Jesus, on the other hand, has the obligation to RULING: NO. The parties entered into the
pay attorneys fees which the RTC had already agreement basically to put an end to Civil Case No.
determined to be equivalent to whatever amount 14007 then pending before the Regional Trial Court.
recoverable from Vicente. The said attorneys fees Concededly, the provisions of the settlement were
were awarded by the RTC on the counterclaim of beneficial to the respondent couple. The compromise
Vicente on the basis of quantum meruit for the extended the terms of payment and implicitly
legal services he previously rendered to Jesus. deferred the extrajudicial foreclosure of the
mortgaged property. It was well to the interest of
There are 2 parts to the decision of RTC respondent spouses to ensure its judicial approval;
instead, they went to ignore the order of the trial
FIRST PART - The computation of the amount due to court and virtually failed to make any further
Jesus which is P300, 000.00 is to be multiplied by the appearance in court. This conduct on the part of
interest rate of 12%. The result thereof plus the respondent spouses gave petitioner the correct
impression that the Sorianos did not intend to be
bound by the compromise settlement, and its non- Chairman/President and in his personal capacity as
materialization negated the very purpose for which it solidary co-obligor, and Elisa Tan as Vice-
was executed. President/Treasurer and in her personal capacity as
solidary co-obligor, executed a Promissory Note
Ajax Marketing vs. CA
Court of Appeals affirmed the trial court's judgment
FACTS: It is not disputed that Ylang-Ylang upholding the validity of the extra-judicial
Merchandising Company, a partnership between foreclosure of the real estate property of petitioners
Angelita Rodriguez and Antonio Tan, obtained a loan spouses Marcial See and Lilian Tan, located at
in the amount of P250,000.00 from the Metropolitan Paco District, Manila covered by TCT 105233, by
Bank and Trust Company, and to secure payment of private respondent Metropolitan Bank and Trust
the same, spouses Marcial See and Lilian Tan Company (Metrobank).
constituted a real estate mortgage in favor of said
bank over their property in the District of Paco, ISSUE: Whether or not novation occurred when their
Manila, covered by TCT No. 105233 of the Registry 3 loans which are all secured by the same real estate
of Deeds of Manila. The mortgage was annotated at property covered by TCT No. 105233 were
the back of the title. consolidated into a single loan of P1 million under
Promissory Note No. BDS-3605, thereby
Subsequently, after the partnership had changed its extinguishing their monetary obligations and
name to Ajax Marketing Company albeit without releasing the mortgaged property from liability.
changing its composition, it obtained a loan in the
sum of P150,000.00 from Metropolitan Bank and RULING: No, it does not constitute as novation
Trust Company. Again to secure the loan, spouses
Marcial See and Lilian Tan executed in favor of said The attendant facts herein do not make a case of
bank a second real estate mortgage over the same novation. There is nothing in the records to show the
property. As in the first instance, the mortgage was unequivocal intent of the parties to novate the three
duly annotated at the back of TCT No. 105233. loan agreements through the execution of PN No.
BDS-3065. The provisions of PN No. BDS-3065
On February 19, 1979, the partnership (Ajax yield no indication of the extinguishment of, or an
Marketing Company) was converted into a incompatibility with, the three loan agreements
corporation denominated as Ajax Marketing and secured by the real estate mortgages over TCT No.
Development Corporation, with the original partners 105233. On its face, PN No. BDS-3065 has these
(Angelita Rodriguez and Antonio Tan) as words typewritten: "secured by REM" and "9.
incorporators and three (3) additional incorporators, COLLATERAL.
namely, Elisa Tan, the wife of Antonio Tan, and Jose
San Diego and Tessie San Diego. Ajax Marketing and The foregoing shows that petitioners agreed to apply
Development Corporation obtained from the real estate property to secure obligations that they
Metropolitan Bank and Trust Company a loan of may thereafter obtain including their renewals or
P600,000.00, the payment of which was secured by extensions with the principals fixed at P600,000.00,
another real estate mortgage executed by spouses P150,000.00, and P250,000.00 which when added
Marcial See and Lilian Tan in favor of said bank over have an aggregate sum of P1.0 million. PN No. BDS-
the same realty located in the District of Paco, 3605 merely restructured and renewed the three
Manila. Again, the third real estate mortgage was previous loans to expediently make the loans current.
annotated at the back of TCT No. 105233. There was no change in the object of the prior
obligations. The consolidation of the three loans,
In December 1980, the three (3) loans with an contrary to petitioners' contention, did not release the
aggregate amount of P1,000,000.00 were re- mortgaged real estate property from any liability
structured and consolidated into one (1) loan and because the mortgage annotations at the back of TCT
Ajax Marketing and Development Corporation, No. 105233, in fact, all remained uncancelled, thus
represented by Antonio Tan as Board
indicating the continuing subsistence of the real ISSUE: Whether the Restructuring Agreement dated
estate mortgages. October 7, 1981, between petitioner CBLI and Delta
Motors, Corp. novated the five promissory notes
Delta Motors, Corp. assigned to respondent SIHI,
Neither can it be validly contended that there was a RULING: No, it does not constitute as novation
change, or substitution in the persons of either the
creditor (Metrobank) or more specifically the debtors The attendant facts do not make out a case of
(petitioners) upon the consolidation of the loans in novation. The restructuring agreement between Delta
PN No. BDS 3605. The bare fact of petitioners' and CBLI executed on October 7, 1981, shows that
conversion from a partnership to a corporation, the parties did not expressly stipulate that the
without sufficient evidence, either testimonial or restructuring agreement novated the promissory
documentary, that they were expressly released from notes. Absent an unequivocal declaration of
their obligations, did not make petitioner AJAX, with extinguishment of the pre-existing obligation, only a
its new corporate personality, a third person or new showing of complete incompatibility between the old
debtor within the context of a subjective novation. If and the new obligation would sustain a finding of
at all, petitioner AJAX only became a co-debtor or novation by implication. 59 However, our review of
surety. Without express release of the debtor from the its terms yields no incompatibility between the
obligation, any third party who may thereafter promissory notes and the restructuring agreement.
assume the obligation shall be considered merely as
co-debtor or surety. Novation arising from a Real or Objective Novation
purported change in the person of the debtor must be
PNB vs. Soriano
clear and express because, to repeat, it is never
presumed. Clearly then, from the aforediscussed FACTS: On March 20, 1997, [PNB] extended a
points, neither objective nor subjective novation credit facility in the form of [a] Floor Stock Line
occurred here. (FSL) in the increased amount of Thirty Million
Pesos (30 Million) to Lisam Enterprises, Inc.
California Bus Lines vs. State Investment House
[LISAM], a family-owned and controlled corporation
FACTS: Delta Motors Corporation applied for that maintains Current Account No. 445830099-8
financial assistance from respondent State Investment with petitioner PNB. x x x.
House, Inc., a domestic corporation engaged in the
Soriano is the chairman and president of LISAM, she
business of quasi-banking. SIHI agreed to extend a
is also the authorized signatory in all LISAMs
credit line to Delta which eventually became indebted
Transactions with [PNB].
to SIHI. Meanwhile, petitioner purchased on
installment basis several buses to Delta. To secure the On various dates, LISAM made several availments of
payment of the obligation petitioner executed the FSL in the total amount of Twenty Nine Million
promissory notes in favor of Delta. When petitioner Six Hundred Forty Five Thousand Nine Hundred
defaulted on the payments of the debts, it entered into Forty Four Pesos and Fifty Five Centavos
an agreement with delta to cover its due obligations. (P29,645,944.55), the proceeds of which were
However, petitioner still had trouble meeting its credited to its current account with [PNB]. For each
obligations with delta. Pursuant to the memorandum availment, LISAM through [Soriano], executed 52
of agreement delta executed a deed of sale assigning Trust Receipts (TRs). In addition to the promissory
to respondent, the promissory notes from petitioner. notes, showing its receipt of the items in trust with
Respondent subsequently sent a demand letter to the duty to turn-over the proceeds of the sale thereof
petitioner requiring remitting payments due on the to [PNB].
promissory notes. Petitioner replied informing
respondent of the fact that delta had taken over its Sometime on January 21-22, 1998, [PNBs]
management and operations. authorized personnel conducted an actual physical
inventory of LISAMs motor vehicles and the Floor Stock Line is incompatible with the
motorcycles and found that only four (4) units purported restructured Omnibus Line.
covered by the TRs amounting to One Hundred Forty
Thousand Eight Hundred Pesos (158,100.00) (sic) The test of incompatibility is whether the two
remained unsold. obligations can stand together, each one having its
independent existence. If they cannot, they are
Out of the Twenty Nine Million Six Hundred Forty incompatible and the latter obligation novates the
Four Thousand Nine Hundred Forty Four Pesos and first. Corollarily, changes that breed incompatibility
Fifty Five Centavos (29,644,944.55) as the must be essential in nature and not merely accidental.
outstanding principal balance [of] the total The incompatibility must take place in any of the
availments on the line covered by TRs, [LISAM] essential elements of the obligation, such as its
should have remitted to [PNB], Twenty Nine Million object, cause or principal conditions thereof;
Four Hundred Eighty Seven Thousand Eight Hundred otherwise, the change would be merely modificatory
Forty Four Pesos and Fifty Five Centavos in nature and insufficient to extinguish the original
(29,487,844.55). Despite several formal demands, obligation.
respondent Soriano failed and refused to turn over the
said [amount to] the prejudice of [PNB] We have scoured the records and found no
incompatibility between the Floor Stock Line and the
Sorianos failure to account for the proceeds of the purported restructured Omnibus Line. While the
sale of the motor vehicles, PNB, as previously restructuring was approved in principle, the
adverted to, filed a complaint-affidavit before the effectivity thereof was subject to conditions
Office of the City Prosecutor of Naga City charging precedent such as the payment of interest and other
Soriano with fifty two (52) counts of violation of the charges, and the submission of the titles to the real
Trust Receipts Law, in relation to Article 315, properties in Tandang Sora, Quezon City. These
paragraph 1(b) of the Revised Penal Code. conditions precedent imposed on the restructured
Omnibus Line were never refuted by Soriano who,
Trial court and CA dismissed the criminal complaint oddly enough, failed to file a Memorandum. To our
mind, Sorianos bare assertion that the restructuring
ISSUE: Whether or not the restructuring of the loan
was approved by PNB cannot equate to a finding of
agreement constitute as novation
an implied novation which extinguished Sorianos
RULING: No, it did not constitute as novation obligation as entrustee under the TRs.
In this case, without a written contract stating in Moreover, as asserted by Soriano in her counter-
unequivocal terms that the parties were novating the affidavit, the waiver pertains to penalty charges on
original loan agreement, thus undoubtedly the Floor Stock Line. There is no showing that the
eliminating an express novation, we look to whether waiver extinguished Sorianos obligation to sell the
there is an incompatibility between the Floor Stock [merchandise] for cash for [LISAMs] account and to
Line secured by TRs and the subsequent restructured deliver the proceeds thereof to PNB to be applied
Omnibus Line which was supposedly approved by against its acceptance on [LISAMs] account.
PNB. Soriano further agreed to hold the vehicles and
proceeds of the sale thereof in Trust for the payment
The approval of LISAMs restructuring proposal is of said acceptance and of any of its other
not the bone of contention in this case. The pith of the indebtedness to PNB. Well-settled is the rule that,
issue lies in whether, assuming a restructuring was with respect to obligations to pay a sum of money,
effected, it extinguished the criminal liability on the the obligation is not novated by an instrument that
loan obligation secured by trust receipts, by expressly recognizes the old, changes only the terms
extinguishing the entruster-entrustee relationship and of payment, adds other obligations not incompatible
substituting it with that of an ordinary creditor-debtor with the old ones, or the new contract merely
relationship. Stated differently, we examine whether supplements the old one.28 Besides, novation does
not extinguish criminal liability.29 It stands to reason had made was limited to merely accepting Enviro
therefore, that Sorianos criminal liability under the Kleen as an additional debtor from whom he could
TRs subsists considering that the civil obligations demand payment, but without releasing the petitioner
under the Floor Stock Line secured by TRs were not as the principal debtor from its debt to him.
extinguished by the purported restructured Omnibus
Line. ISSUE: Whether or not there is novation
On the issue of novation, the Court of Appeals ruled Notably in Exh. 1, albeit addressed to Enviro Kleen
that by retaining his option to seek satisfaction from Technologies, Inc., the respondent expressly stated
the petitioner, any acquiescence which the respondent that it has served notice to the petitioner that unless
the overdue account is paid, the matter will be the significance of which has been misinterpreted,
referred to its lawyers and there may be a pull-out of that if considered would have affected the result of
the delivered lighting fixtures. It was likewise stated the case. We find no such oversight in the
therein that incident damages that may result to the appreciation of the facts below, nor such a
structure in the course of the pull-out will be to the misinterpretation thereof, as would otherwise provide
account of the petitioner. a clear and unequivocal showing that a novation has
occurred in the contract between the parties resulting
It is evident from the 2 aforesaid letters that there is in the release of the petitioner.
no indication of respondent Paradas intention to
release Megaworld from its obligation to pay and to
transfer it to Enviro Kleen Technologies, Inc. The
acquiescence of Enviro Kleen Technologies, Inc. to
assume the obligation of the petitioner to pay the
unpaid balance of P 816,627.00 to the respondent
Parada when there is clearly no agreement to release
Megaworld will result merely to the addition of
debtors and not novation. Hence, the creditor can still
enforce the obligation against the original debtor. A
fact which points strongly to the conclusion that the
respondent did not assent to the substitution of
Enviro Kleen Technologies, Inc. as the new debtor is
the present action instituted by the respondent against
the petitioner for the fulfillment of its obligation. A
mere recital that the respondent has agreed or
consented to the substitution of the debtor is not
sufficient to establish the fact that there was a
novation.