G.R. No. 180144; September 24, 2014
LEONARDO BOGNOT, Petitioner, vs. RRI LENDING CORPORATION, represented by its General Manager, DARIO J. BERNARDEZ, Respondent.

FACTS

Petitioner Leonardo Bognot and his brother Rolando Bognot obtained a ₱500,000 loan from respondent RRI Lending Corporation in September 1996, evidenced by a promissory note and secured by a post-dated check. The loan was renewed multiple times, with petitioner paying renewal fees and issuing new post-dated checks. In March 1997, petitioner executed Promissory Note No. 97-035, payable on April 1, 1997, with Rolando as co-maker, and issued a post-dated check as security. The loan was subsequently renewed until June 30, 1997, with the respondent superimposing “June 30, 1997” on the promissory note to reflect the new maturity date. Before maturity, Rolando’s wife, Julieta Bognot, applied for another renewal, issued a new promissory note and a check for the renewal fee, and obtained the loan documents from the respondent’s clerk under the pretext of having them signed. She never returned the documents or issued a replacement check. Respondent demanded payment, but the Bognot siblings failed to pay. Respondent filed a complaint for sum of money. Only petitioner filed an answer, denying liability and claiming full payment, and alleging that the promissory note was tampered. The Regional Trial Court ruled in favor of respondent, holding the Bognot siblings solidarily liable. The Court of Appeals affirmed the decision.

ISSUE

1. Whether the Court of Appeals erred in holding petitioner solidarily liable with Rolando.
2. Whether petitioner is relieved from liability due to material alteration of the promissory note.
3. Whether the obligation was extinguished by (i) payment or (ii) novation by substitution of debtors.

RULING

1. Solidary Liability: The Supreme Court upheld the solidary liability of petitioner. The promissory note clearly indicated joint and solidary obligation, and petitioner signed as a principal, not merely as a guarantor. The factual findings of the lower courts on this matter are binding.
2. Material Alteration: The Court ruled that the superimposition of “June 30, 1997” on the promissory note did not materially alter the instrument in a manner that would discharge petitioner. The alteration merely reflected the agreed-upon renewal date and did not change the essential terms of the obligation. Petitioner failed to prove that the alteration was made without his consent or that it prejudiced his rights.
3. Extinguishment of Obligation:
– Payment: Petitioner failed to prove payment. The burden of proving payment rests on the debtor. Petitioner’s possession of a cancelled check and lack of official receipts or evidence of encashment were insufficient to establish payment.
– Novation: The Court found no novation by substitution of debtors. The acts of Julieta Bognot did not clearly indicate an agreement to substitute her as the sole debtor, nor did they show an intent to extinguish petitioner’s original obligation. Novation must be explicit and cannot be presumed.
The petition was partly meritorious only in modifying the interest rate. The Supreme Court reduced the interest from 5% per month to 12% per annum, in line with prevailing jurisprudence, but upheld petitioner’s solidary liability for the loan.