G.R. No. 41320 ; November 9, 1934
CONCEPCION J. VIUDA DE SYQUIA, in her capacity as administratrix of the estate of the deceased Gregorio Syquia, plaintiff-appellee, vs. PERFECTO JACINTO, ET AL., defendants. RAFAEL PALMA, appellant.

FACTS

The Bank of the Philippine Islands obtained a judgment against Perfecto Jacinto, Felipe Jacinto, and Rafael Palma (as guarantor) for a promissory note. The judgment ordered the principals to pay P24,000 with interest, and execution against the guarantor Palma was to follow only after exhausting the principals’ assets. The bank later assigned this judgment to Gregorio Syquia for a nominal sum. After Syquia’s death, his administratrix filed an action to revive the judgment, alleging no payment had been made. The defendants claimed the judgment had been fully satisfied because, during an execution sale, the bank purchased two of the principals’ properties for P15,045, which should be credited to the debt. They also counterclaimed for the value of rents (P10,560 per year) collected by the bank and later by Syquia from those properties during the redemption period, arguing these should also be credited. The trial court computed the debt, applied the P15,045 credit and another payment, and held the defendants liable for the balance of P13,596.24, dismissing the counterclaim. Only the guarantor, Rafael Palma, appealed.

ISSUE

1. Whether the judgment debt was fully extinguished by the bank’s purchase of the properties at the execution sale and its subsequent collection of rents during the redemption period.
2. Whether the assignment of the judgment to Syquia constituted a novation that released the guarantor, Rafael Palma, from his obligation.

RULING

The Supreme Court affirmed the trial court’s judgment.
1. The judgment debt was not extinguished. The purchase price paid by the bank at the execution sale (P15,045) was properly credited against the debt, but this did not constitute full payment. The collection of rents and profits by the judgment creditor (the bank, and later Syquia) during the one-year redemption period is a right of the purchaser under the law. Such rents are not required to be credited against the judgment debt unless and until the judgment debtor exercises the right of redemption. Since the defendants did not redeem the properties, they were not entitled to a credit for the rents collected.
2. There was no novation that released the guarantor. The mere assignment of the judgment from the bank to Syquia did not alter the essential obligation of the guarantor. The obligation remained the same; only the person of the creditor changed. The court found no evidence that the assignment increased the guarantor’s risk or was made without his consent in a manner that would discharge him under the law. The guarantor, having joined in a general answer claiming full payment and not raising specific defenses available solely to a guarantor, was bound by the trial court’s determination of the remaining balance.

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