Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 1966 > December 1966 Decisions > G.R. No. L-18411 December 17, 1966 MAGDALENA ESTATES, INC. v. ANTONIO A. RODRIGUEZ, ET AL.:




PHILIPPINE SUPREME COURT DECISIONS

EN BANC

[G.R. No. L-18411. December 17, 1966.]

MAGDALENA ESTATES, INC., Plaintiff-Appellee, v. ANTONIO A. RODRIGUEZ and HERMINIA C. RODRIGUEZ, Defendants-Appellants.

Roxas & Sarmiento for Plaintiff-Appellee.

Somera, Baclig & Savello, for Defendants-Appellants.


SYLLABUS


1. PRINCIPAL AND SURETY; LIABILITY OF SURETY NOT EXTENDED BY IMPLICATION; EFFECT OF ACCEPTANCE OF PRINCIPAL ON THE ACCRUED INTEREST. — The fact that appellee did not protest nor object when it accepted the payment of P5,000 because it knew that was the complete amount undertaken by the surety as appearing in the contract and because the liability of the surety cannot be extended, by implication beyond the terms of his contract, and for which appellee could not apply a part of P5,000 as payment for the accrued interest, we cannot now say that there was a waiver or condonation on the interest due.

2. CONTRACTS; NOVATION BY PRESUMPTION NOT FAVORED. — The rule is well settled that novation by presumption has never been favored. To be sustained, it needs to be established that the old and new contracts are incompatible in all points, or that the will to novate appears by express agreement of the parties or in acts of similar import.

3. ID.; NOVATION; OLD CONTRACT SUPPLEMENTED BY A NEW ONE: EFFECT. — An obligation to pay a sum of money is not novated in a new instrument wherein the old is ratified, by changing only the terms of payment and adding other obligations, not incompatible with the old ones, or wherein the old contract is merely supplemented by the new one.

4. OBLIGATIONS; APPLICATION OF PAYMENT; ARTS. 1252 AND 1254, CIVIL CODE, INTERPRETED; ART. 1253, C.C., MERELY DIRECTORY AND NOT MANDATORY. — The rules contained in Arts. 1252 and 1254 of the Civil Code applies to a person owing several debts of the same kind of a single creditor. They cannot be made applicable to a person whose obligation as a mere surety is both contingent and singular; his liability is confined to such obligation, and he is entitled to have all payments made applied exclusively to said application and to no other. Besides Art. 1253 of the Civil Code is merely directory, and not mandatory.

5. ID.; CREDITOR ACCEPTS PAYMENT FROM A THIRD PERSON; ABSENCE OF AGREEMENT THAT PRINCIPAL DEBTOR SHALL BE RELEASED FROM RESPONSIBILITY; EFFECT. — The mere fact that the creditor receives a guaranty or accepts payments from a third person who has agreed to assume the obligation, when there is no agreement that the first debtor shall be released from responsibility, does not constitute novation, and the creditor can still enforce the obligation against the original debtor (Straight v. Haskell, 49 Phil. 614; Pacific Commercial Co. v. Sotto, 34 Phil. 237; Estate of Mota v. Serra, 47 Phil. 464; Duñgo v. Lopena, G.R. No. L-18377, Dec. 29, 1962).

6. SURETY BOND; NATURE; CASE AT BAR. — In the instant case, the surety bond is not a new and separate contract but an accessory of the promissory note.


D E C I S I O N


REGALA, J.:


Appeal from the decision of the Court of First Instance of Manila ordering the defendants-appellants to pay jointly and severally to the plaintiff-appellee the sum of P655.89, plus legal interest thereon from the date of the judicial demand, the sum of P100.00 as attorney’s fees, and to pay the costs.

The appellants bought from the appellee a parcel of land in Quezon City known as Lot 7-K-2-G, Psd-26193. In view of an unpaid balance of P5,000.00 on account of the purchase price of the lot, the appellants executed on January 4, 1957, the following promissory note representing the said account:jgc:chanrobles.com.ph

"PROMISSORY NOTE

P5,000.00

Manila, January 4, 1957

We, the spouses ANTONIO A. RODRIGUEZ and HERMINIA C. RODRIGUEZ, jointly and severally promise to pay the Magdalena Estate, Inc., or order, at its offices in the City of Manila, without any demand the sum of FIVE THOUSAND PESOS (P5,000.00), Philippine currency, with interest at the rate of Nine Per Cent (9%) per annum, within sixty (60) days from January 7, 1957. The sum of P5,000.00 represents the balance of the purchase price of the parcel of land known as Lot 7-K- 2-G, Psd-26193, containing an area of 2,191 square meters, Quezon City.

(Sgd.) Antonio A. Rodriguez

(T.) ANTONIO A. RODRIGUEZ

(Sgd.) Herminia C. Rodriguez

(T.) HERMINIA C. RODRIGUEZ

Signed in the Presence of:chanrob1es virtual 1aw library

(Sgd.) ILLEGIBLE

(Sgd.) ILLEGIBLE"

On the same date, the appellants and the Luzon Surety Co., Inc. executed a bond in favor of the appellee, the undertaking thereof being embodied therein as follows:jgc:chanrobles.com.ph

". . . comply with the obligation to pay the amount of P5,000.00 representing balance of the purchase price of a parcel of land known as Lot 7-K-2-C, Psd-26193, with an area of 2,191 square meters, Quezon City, covered by Transfer Certificate of Title No. 13 (6947), Quezon City, within a period of sixty (60) days from January 7, 1957; That the Surety shall be notified in writing within Ten (10) days from moment of default otherwise, this undertaking is automatically null and void."cralaw virtua1aw library

On June 20, 1958, when the obligation of the appellants became due and demandable, the Luzon Surety Co., Inc. paid to the appellee the sum of P5,000.00. Subsequently, the appellee demanded from the appellants the payment of P655.89 corresponding to the alleged accumulated interests on the principal of P5,000.00. Due to the refusal of the appellants to pay the said interest, the appellee started this suit in the Municipal Court of Manila to enforce the collection thereof. The said court, on February 5, 1959, rendered judgment in favor of the appellee and against the appellants, ordering the latter to pay jointly and severally the appellee the sum of P655.89 with interest thereon at the legal rate from November 10, 1958, the date of the filing of the complaint, until the whole amount is fully paid. Not satisfied with that judgment, appellants appealed to the Court of First Instance of Manila, where the case was submitted for decision on the pleadings. The Court of First Instance of Manila rendered the judgment stated at the outset of this decision.

On appeal directly to this Court, the following errors are assigned:chanrob1es virtual 1aw library

I. The lower court erred in concluding as a fact from the pleadings that the plaintiff-appellee demanded, and the Luzon Surety Co., Inc. refused, the payment of interest in the amount of P655.89, and in not finding and declaring that said plaintiff-appellee waived or condoned the said interests.

II. The lower court erred in not finding and declaring that the obligation of the defendants-appellants in favor of the plaintiff- appellee was totally extinguished by payment and/or condonation.

III. The lower court erred in not finding and declaring that the promissory note executed by the defendants-appellants in favor of the plaintiff-appellee was, insofar as the said document provided for the payment of interests, novated when the plaintiff-appellee unqualifiedly accepted the surety bond which merely guaranteed payment of the principal in the sum of P5,000.00.

Appellants claim that the pleadings do not show that there was demand made by the appellee for the payment of accrued interest and what could be deduced therefrom was merely that the appellee demanded from the Luzon Surety Co., Inc., in the capacity of the latter as surety, the payment of the obligation of the appellants, and said appellee accepted unqualifiedly the amount of P5,000.00 as performance by the obligor and/or obligors of the obligation in its favor. It is further claimed that the unqualified acceptance of payment made by the Luzon Surety Co., Inc. of P5,000.00 or only the amount of the principal obligation and without exercising its (appellee’s) rights to apply a portion of P655.89 thereof to the payment of the alleged interest due despite its presumed knowledge of its right to do so, the appellee showed that it waived or condoned the interests due, because Articles 1235 and 1253 of the Civil Code provide:jgc:chanrobles.com.ph

"Art. 1235. When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing any protest or objection, the obligation is deemed fully complied with."cralaw virtua1aw library

"Art. 1253. If the debt produces interest, payment of the principal shall not be deemed to have been made until interests have been recovered."cralaw virtua1aw library

We do not agree with the contention of the appellants. It is very clear in the promissory note that the principal obligation is the balance of the purchase price of the parcel of land known as Lot 7-K-2-C, Psd-26193, which is the sum of P5,000.00, and in the surety bond, the Luzon Surety Co., Inc. undertook "to pay the amount of P5,000.00 representing balance of the purchase price of a parcel of land known as Lot 7-K-2-C, Psd-26193, . . ." The appellee did not protest nor object when it accepted the payment of P5,000.00 because it knew that was the complete amount undertaken by the surety as appearing in the contract. The liability of a surety is not extended, by implication, beyond the terms of his contract. 1 It is for the same reason that the appellee cannot apply a part of the P5,000.00 as payment for the accrued interest. Appellants are relying on Article 1253 of the Civil Code, but the rules contained in Articles 1252 to 1254 of the Civil Code apply to a person owing several debts of the same kind of* a single creditor. They cannot be made applicable to a person whose obligation as a mere surety is both contingent and singular; his liability is confined to such obligation, and he is entitled to have all payments made applied exclusively to said application and to no other. 2 Besides, Article 1253 of the Civil Code is merely directory, and not mandatory. 3 Inasmuch as the appellee cannot protest for non-payment of the interest when it accepted the amount of P5,000.00 from the Luzon Surety Co., Inc., nor apply a part of that amount as payment for the interest, we cannot now say that there was a waiver or condonation on the interest due.

It is claimed that there was a novation and/or modification of the obligation of the appellants in favor of the appellee because the appellee accepted without reservation the subsequent agreement set forth in the surety bond despite its failure to provide that it also guaranteed payment of accruing interest.

The rule is settled that novation by presumption has never been favored. To be sustained, it needs to be established that the old and new contracts are incompatible in all points, or that the will to novate appears by express agreement of the parties or in acts of similar import. 4

An obligation to pay a sum of money is not novated, in a new instrument wherein the old is ratified, by changing only the terms of payment and adding other obligations not incompatible with the old one, 5 or wherein the old contract is merely supplemented by the new one. 6 The mere fact that the creditor receives a guaranty or accepts payments from a third person who has agreed to assume the obligation, when there is no agreement that the first debtor shall be released from responsibility, does not constitute a novation, and the creditor can still enforce the obligation against the original debtor. (Straight v. Haskell, 49 Phil. 614; Pacific Commercial Co. v. Sotto, 34 Phil. 237; Estate of Mota v. Serra, 47 Phil. 464; Duñgo v. Lopena, supra). In the instant case, the surety bond is not a new and separate contract but an accessory of the promissory note.

WHEREFORE, the judgment appealed from should be, as it is hereby, affirmed, with costs against the Appellant.

Concepcion, C.J., Reyes, J. B. L., Barrera, Dizon, Makalintal, Bengzon, J. P., Zaldivar, Sanchez and Castro, JJ., concur.

Endnotes:



1. La Insular v. Machuca Go Tauco, 39 Phil. 567.

2. Socony-Vacuum Corp. v. Miraflores, 67 Phil. 304.

3. Baltazar v. Lingayen Gulf Electric Co., Inc., G. R. Nos. L-16236-38, June 30, 1965.

* Editor’s note: Should be to.

4. Martinez v. Cavives, 25 Phil. 581; Tiu Sinco v. Havana, 45 Phil. 707; Asia Banking Corporation v. Lacson, 48 Phil. 482; Pascual v. Lacsamana, 53 O.G. 2467; Duñgo v. Lopena, Et Al., G. R. No. L-18377, Dec. 29, 1962.

5. Inchausti v. Yulo, 34 Phil. 978; Pablo v. Sapungan, 71 Phil. 145.

6. Ramos v. Gibbon, 67 Phil. 371; Duñgo v. Lopena, supra.




Back to Home | Back to Main




















chanrobles.com





ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com






December-1966 Jurisprudence                 

  • G.R. No. L-21168 December 16, 1966 BACHRACH TRANSPORTATION CO., INC. v. GAVINO CAMUNAYAN

  • G.R. No. L-14441 December 17, 1966 PEDRO R. PALTING v. SAN JOSE PETROLEUM INCORPORATED

  • G.R. No. L-21915 December 17, 1966 GEORGE W. LUFT COMPANY, INC. v. NGO GUAN, ET AL.

  • G.R. No. L-21803 December 17, 1966 BAY VIEW HOTEL, INC. v. MANILA HOTEL WORKERS’ UNION-PTGWO, ET AL.

  • G.R. No. L-21775 December 17, 1966 CO PEK, ET AL. v. MARTINIANO VIVO

  • G.R. No. L-19457 December 17, 1966 VICTORIO MERCADO, ET AL. v. FELIX R. DOMINGO

  • G.R. No. L-18411 December 17, 1966 MAGDALENA ESTATES, INC. v. ANTONIO A. RODRIGUEZ, ET AL.

  • G.R. No. L-16394 December 17, 1966 JOSE STA. ANA, JR., ET AL. v. ROSA HERNANDEZ

  • G.R. No. L-18328 December 17, 1966 DIOSDADA SABINO v. CONRADO CUBA

  • G.R. No. L-21763 December 17, 1966 MUNICIPALITY OF COMPOSTELA, CEBU v. NATIONAL WATERWORKS AND SEWERAGE AUTHORITY

  • G.R. No. L-19740 December 17, 1966 SEVERINO GAGOLA v. COURT OF AGRARIAN RELATIONS, ET AL.

  • G.R. No. L-18630 December 17, 1966 APOLONIO TANJANCO v. COURT OF APPEALS, ET AL.

  • G.R. No. L-17392 December 17, 1966 JOSE SORIANO v. COMPAÑIA GENERAL DE TABACOS DE FILIPINAS

  • G.R. No. L-21335 December 17, 1966 ABOITIZ SHIPPING CORPORATION v. VIVENCIA ANDO PEPITO, ET AL.

  • G.R. No. L-25641 December 17, 1966 RAFAEL M. ABAYA v. ANTONIO J. VILLEGAS, ET AL.

  • G.R. No. L-21601 December 17, 1966 NIELSON & COMPANY, INC. v. LEPANTO CONSOLIDATED MINING COMPANY

  • G.R. No. L-19879 December 17, 1966 CINEMA, STAGE & RADIO ENTERTAINMENT FREE WORKERS v. COURT OF INDUSTRIAL RELATIONS, ET AL.

  • G.R. No. L-18089 December 17, 1966 VICTORINA ZABALLERO MILLAR v. RURAL BANK OF LUCENA, INC.

  • G.R. No. L-16379 December 17, 1966 PEOPLE OF THE PHIL. v. LAO WAN SING

  • G.R. No. L-18393 December 17, 1966 USAFFE VETERANS ASSOCIATION, INC. v. TREASURER OF THE PHILIPPINES, ET AL.

  • G.R. No. L-19797 December 17, 1966 MARCIANA VILLOCINO, ET AL. v. PEDRO DOYON, ET AL.

  • G.R. No. L-20011 December 17, 1966 PEDRO CABALAG, ETC., ET AL. v. ROXAS Y CIA., ET AL.

  • G.R. No. L-17742 December 17, 1966 DON VICENTE NOBLE v. MARIA S. NOBLE

  • G.R. No. L-18159 December 17, 1966 CASINO ESPAÑOL DE MANILA v. COURT OF INDUSTRIAL RELATIONS, ET AL.

  • G.R. No. L-18826 December 17, 1966 ANTONIO Y. MAYUGA v. CESAR. R. MARAVILLA

  • G.R. No. L-23139 December 17, 1966 MOBIL PHILIPPINES EXPLORATION, INC. v. CUSTOMS ARRASTRE SERVICE, ET AL.

  • G.R. No. L-17571 December 17, 1966 HOSPICIA ENCABO, ET AL. v. CEBU PORTLAND CEMENT COMPANY

  • G.R. No. L-22395 December 17, 1966 STATE BONDING INSURANCE COMPANY, INC. v. MANILA PORT SERVICE, ET AL.

  • G.R. No. L-22209 December 17, 1966 PHILIPPINES INTERNATIONAL SURETY CO., INC. v. COMMISSIONER OF CUSTOMS

  • G.R. No. L-25503 December 17, 1966 LEON DEL ROSARIO v. HON. BIENVENIDO CHINGCUANGCO

  • G.R. No. L-16745 December 17, 1966 AURORA CAMARA VDA. DE ZUBIRI v. WENCESLAO ZUBIRI, ET AL.

  • G.R. No. L-19548 December 22, 1966 NICEFORO S. AGATON v. PATRICIO PEREZ, ET AL.

  • G.R. No. L-26723 December 22, 1966 ARTHUR MEDlNA Y YUMUL v. MARCELO F. OROZCO, JR.

  • G.R. No. L-20330 December 22, 1966 ADOLFO RACAZA v. SUSANA REALTY INC.

  • G.R. No. L-19297 December 22, 1966 MARVEX COMMERCIAL CO. INC. v. PETRA HAWPIA & CO., ET AL.

  • G.R. No. L-19173 December 27, 1966 ROSE DESAMITO v. TRINIDAD CASAS-CUYEGKENG

  • G.R. No. L-21278 December 27, 1966 FEATI UNIVERSITY v. JOSE S. BAUTISTA

  • G.R. No. L-21950 December 28, 1966 AMBROCIO DE LA CRUZ, ET AL. v. PRIMITIVA BERROYA, ET AL.

  • G.R. No. L-19460 December 28, 1966 ROQUE BAIRAN v. AGUSTIN TAN SIU LAY, ET AL.

  • G.R. No. L-20406 December 29, 1966 ENRIQUE R. YU KING v. CITY OF ZAMBOANGA

  • G.R. No. L-19945 December 29, 1966 NATIONAL MARKETING CORPORATION v. PRISCO WORKERS UNION, ET AL.

  • G.R. No. L-18210 December 29, 1966 LAURENTIO ARMENTIA v. ERLINDA PATRIARCA, ET AL.

  • G.R. No. L-18735 December 29, 1966 NARCISO DEL ROSARIO v. YATCO, ET AL.