GR 42274; (July, 1935) (Digest)
G.R. No. 42274 ; July 31, 1935
PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs. JOSE TONGOY, ET AL., defendants. PACIFIC COMMERCIAL CO., appellant.
FACTS
On April 17, 1918, Jose Tongoy and others executed a mortgage in favor of Philippine National Bank (PNB) to secure a P11,000 promissory note. The mortgage covered a parcel of land in which the defendants, including the Sonora minors, each owned an undivided one-fifth interest. Later, on December 31, 1930, Jose Tongoy executed two new promissory notes in favor of PNB, consolidating his separate personal indebtedness and the unpaid balance of the original P11,000 note. The Pacific Commercial Co. (appellant) had previously purchased at auction the one-fifth interest of Jose Tongoy in the mortgaged land, subject to PNB’s mortgage. The Sonora heirs refused to ratify the 1930 notes, arguing Jose Tongoy lacked authority to bind them as they were already of age. PNB subsequently amended its complaint to seek foreclosure based on the original mortgage and note.
ISSUE
Whether the execution of the two promissory notes on December 31, 1930 novated the original P11,000 promissory note, thereby extinguishing the mortgage securing it.
RULING
No. The Supreme Court affirmed the trial court’s judgment, holding that no novation occurred. For a valid novation, all parties to the original obligation must agree to the new contract. Here, the Sonora heirs, who were co-obligors in the original P11,000 note, did not agree to or ratify the new 1930 notes. Since one of the essential requisites of novation—the agreement of all parties to the new contract—was absent, the original obligation and its securing mortgage remained in force. Consequently, Pacific Commercial Co.’s purchased interest remained subject to the mortgage.
AI Generated by Armztrong.