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Tag Archives: novation

Philippine Savings Bank vs. Mañalac, Jr. (457 SCRA 203)

FACTS:

Respondent spouses obtained a loan from petitioner covered by promissory note. As a security for the loan, respondent executed a Real Estate Mortgage in favor of the petitioner over eight parcels of land. Respondents were unable to pay the installments so that the loan obligations were restructured. Respondent entered into Deed of Sale with Assumption of Mortgage on 3 real properties (and another property) with spouses Galicia. Respondent’s repeated default in payment of past due obligations prompted the petitioner to file for extrajudicial foreclosure of remaining mortgaged properties. Respondent asked for partial release of mortgage after enclosing a cashier check payment. Petitioner sold some mortgaged properties that prompted respondent to institute action for damages. Trial court annulled the sale of mortgaged properties. The Court of appeals affirmed with modification the decision of trial court requiring indemnification of the respondent by petitioner.

 

ISSUE:

Whether or not there was novation in applying the payment made by respondent to loan account of Galicia.

 

RULING:

NO. Novation is never presumed. 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. It is obvious that there was no agreement to form a new contract by novating the mortgage contracts of the Mañalacs and the Galicias. Neither can Mañalac be deemed substitute debtor within the contemplation of Article 1293 of the Civil Code. The Decision of the Court of Appeals was reversed and set aside.

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Posted by on January 14, 2013 in Case Digests, Civil Law

 

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Iloilo Traders Finance. Inc. vs. Heirs of Oscar Soriano, Jr. (404 SCRA 67)

FACTS:

Respondents executed two promissory notes secured by real property mortgages in favor of petitioner. The respondents defaulted and petitioner moved for extra-judicial foreclosure of the mortgages. Respondent filed a complaint against petitioner. The parties later entered into “amicable settlement” and submitted it to the trial court for approval. The trial court required the parties to give some clarifications on several issues that were not complied.  The amicable settlement was disapproved and the court proceeded. Respondents withdrew the case and filed a (new) case for novation and specific performance which was decided favorably for the respondents. The Court of Appeals affirmed the judgment.

 

ISSUE:

Whether or not the amicable settlement entered into between parties has novated the original obligation.

 

RULING:

NO. The parties entered into the agreement basically to put an end to Civil Case No. 14007 then pending before the Regional Trial Court.Concededly, the provisions of the settlement were beneficial to the respondent couple. The compromise extended the terms of payment and implicitly deferred the extrajudicial foreclosure of the mortgaged property. It was well to the interest of respondent spouses to ensure its judicial approval; instead, they went to ignore the order of the trial court and virtually failed to make any further appearance in court. This conduct on the part of respondent spouses gave petitioner the correct impression that the Sorianos did not intend to be bound by the compromise settlement, and its non-materialization negated the very purpose for which it was executed.

The decision of the court of the Court of Appeals affirming that of the trial court was reversed and set aside.

 
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Posted by on January 14, 2013 in Case Digests, Civil Law

 

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International Corporate Bank vs. Gueco (351 SCRA 516)

FACTS:

The respondents obtained a loan from the petitioner to purchase a motor vehicle (car). The respondents defaulted in payment of installments. A civil case was filed by the petitioner which resulted later into negotiations in lowering the remaining unpaid balance from P184,000.00 to P150,000.00, detaining the car until payment thereof. Respondent delivered a manager’s check but petitioner insisted on the signing of “Joint Motion to Dismiss”, still holding the motor vehicle.  Respondent initiated civil action for damages before MTC but the case was dismissed for lack of merit. On appeal to RTC, the decision of MTC was reversed ordering herein petitioners to indemnify the respondents. The Court of Appeals likewise affirmed the decision of the RTC.

ISSUE:

Whether or not the respondents are entitled of indemnification for damages.

RULING:

NO. Petitioner’s act of requiring respondents to sign the Joint Motion to Dismiss can not be said to be a deliberate attempt on the part of petitioner to renege on the compromise agreement of the parties. The law presumes good faith. In fact, the act of petitioner bank in lowering the debt of respondent from P184,000.00 to P150,000.00 is indicative of its good faith and sincere desire to settle the case.

The decision of the Court of Appeals affirming the decision of the RTC was set aside.  Respondents were ordered to pay the original obligation amounting to P150,000.00 to the petitioner upon surrender or cancellation of the manager’s check in the latter’s possession, afterwhich, petitioner is to return the subject motor vehicle in good working condition.

 
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Posted by on December 10, 2012 in Case Digests, Civil Law

 

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