GR 154127; (December, 2003) (Digest)
G.R. No. 154127 ; December 8, 2003
Romeo C. Garcia, petitioner, vs. Dionisio V. Llamas, respondent.
FACTS
Respondent Dionisio Llamas filed a complaint for sum of money against petitioner Romeo Garcia and Eduardo de Jesus. The complaint alleged that on December 23, 1996, Garcia and de Jesus jointly and severally borrowed ₱400,000.00 from Llamas, as evidenced by a promissory note, and agreed to pay it by January 23, 1997, with 5% monthly interest. Despite demands, they failed to pay. In his Answer, Garcia claimed he signed the note merely as an accommodation party for de Jesus. He alternatively argued that de Jesus had paid the loan via a check dated April 17, 1997, and that Llamas’s acceptance of this check novated the promissory note, releasing Garcia from liability.
Llamas replied that the check issued by de Jesus was dishonored, leaving the loan unpaid. During pre-trial, Garcia’s counsel manifested they would no longer present evidence. The trial court subsequently granted Llamas’s motion for judgment on the pleadings against Garcia. The Regional Trial Court rendered judgment holding Garcia and de Jesus jointly and severally liable. Garcia appealed.
ISSUE
Whether the issuance and acceptance of a check by the creditor novated the original promissory note, thereby releasing the solidary debtor, Romeo Garcia, from his obligation.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals’ decision holding Garcia solidarily liable. The Court ruled that novation was not established. Novation, which extinguishes an obligation by substituting or changing its principal conditions, must be clearly proven. It requires either the express declaration of the parties or the complete incompatibility between the old and new agreements. Garcia failed to prove either element.
The issuance of a check by co-debtor de Jesus, which was subsequently dishonored, did not constitute a novation of the solidary obligation under the promissory note. The check was merely a proposed mode of payment that failed. There was no showing that the promissory note was extinguished and replaced by a new agreement. The original obligation remained unpaid and enforceable. As a solidary debtor under the note, Garcia remained liable to the creditor for the entire obligation. The creditor, Llamas, had the right to proceed against any one of the solidary debtors. The defense of novation, being unsubstantiated, did not absolve Garcia from his contractual liability under the promissory note.