G.R. No. L-14220. April 29, 1961.
DOMINGO E. LEONOR, plaintiff-appellee, vs. FRANCISCO SYCIP, defendant-appellant.

FACTS

Plaintiff Domingo E. Leonor leased a building to defendant Francisco Sycip for two years at a monthly rental of P350. From July to October 1956, Sycip defaulted on rental payments, prompting Leonor to file an unlawful detainer case (Civil Case No. 1972). This first case was dismissed on November 12, 1956, after Napoleon Coronado guaranteed Sycip’s arrears by assigning to Leonor a chattel mortgage executed by Sycip in Coronado’s favor. Sycip continued to default on subsequent rentals. Leonor’s attempt at extrajudicial foreclosure of the chattel mortgage failed due to Sycip’s refusal to surrender the property. Consequently, Leonor filed a second unlawful detainer suit (Civil Case No. 2067) on March 7, 1957. The municipal court ruled in Leonor’s favor, ordering Sycip to vacate and pay accrued and future rentals. Pending Sycip’s appeal, the court granted execution, leading to Sycip’s ejectment on July 13, 1957, and a sheriff’s auction of his properties. The case was elevated to the Court of First Instance of Rizal (Civil Case No. 1756-P).

ISSUE

The primary issue is whether the assignment of the chattel mortgage constituted a novation of the lease contract, thereby releasing Sycip from his obligation to pay monthly rentals and barring the second ejectment suit. A secondary issue is whether Leonor was required to first judicially rescind the compromise agreement (embodied by the assignment and dismissal of the first case) before filing the second unlawful detainer action.

RULING

The Supreme Court affirmed the lower court’s decision, ruling against Sycip. The assignment of the chattel mortgage did not novate the lease contract. Novation requires a clear intent to extinguish the old obligation and substitute a new one. The assignment merely provided additional security for the payment of rentals; it did not alter the fundamental terms of the lease, particularly Sycip’s monthly payment obligation. The security bolstered, rather than replaced, the lessor’s rights. Consequently, Sycip’s continued default gave Leonor a valid cause for unlawful detainer.
Furthermore, under Article 2041 of the Civil Code, no separate action for judicial rescission of a compromise agreement is required as a precondition to enforcing the original demand. The aggrieved party may simply regard the compromise as rescinded due to the other party’s breach and insist upon the original claim. Requiring a prior rescission suit would defeat the summary nature of ejectment proceedings. Therefore, Leonor was not obligated to foreclose the mortgage or sue the guarantor before pursuing ejectment. The decision correctly held Sycip liable for back rentals from July 13, 1956, until his actual ejectment on July 13, 1957.