G.R. No. L-7663; October 20, 1913
PEDRO MARTINEZ, plaintiff-appellant, vs. MATIAS CAVIRES, ET AL., defendants-appellees. ROBERT LINEAU, admr., intervener-appellant.

FACTS:
Pedro Martinez sought to recover from Matias Cavires and Severino Cavires (defendants) on several promissory notes executed in 1896. The first note was jointly signed by the defendants and their brother, Carlos Cavires (now deceased). Subsequent notes were signed individually by Matias and Severino. None of the notes were paid. In 1898, Carlos Cavires and Pedro Martinez executed a new note (Exhibit 4) liquidating the total obligations of the three brothers, with Carlos agreeing to obtain his brothers’ signatures, which he never did. Later, during the settlement of Carlos’s estate, Martinez agreed with Carlos’s widow to accept a reduced sum in full satisfaction of his claim against the estate, evidenced by another note (Exhibit 5). The trial court held that the original obligations were novated by the 1898 agreement (Exhibit 4) and the subsequent compromise with the widow, thereby releasing Matias and Severino from liability. Martinez appealed.

ISSUE:
Whether the execution of the 1898 agreement (Exhibit 4) and the subsequent compromise with Carlos Cavires’s widow (Exhibit 5) effected a novation that extinguished the original obligations of defendants Matias and Severino Cavires.

RULING:
No, there was no novation. The Supreme Court reversed the trial court’s decision.
1. On Exhibit 4 (1898 Agreement): Novation is never presumed and must be clearly proven. The 1898 note was an executory contract with a condition precedent: Carlos Cavires was to obtain his brothers’ signatures. Since he failed to do so, Martinez was not bound to accept it as a novation of the original debts. There was no evidence that Martinez intended to release the defendants or that Carlos intended to assume sole liability without consideration. The original notes remained in Martinez’s possession, indicating no extinguishment.
2. On Exhibit 5 (Compromise with Widow): The compromise pertained only to the claim against Carlos’s estate. It could not, without Carlos’s consent (which was impossible after his death), novate the debts to substitute Carlos as the sole debtor in place of his brothers. Martinez’s active prosecution of the suit against the defendants contemporaneously with the compromise negated any intent to release them.
3. On the Intervener’s Claim: The claim of Robert Lineau, administrator of the estate of Francisco Martinez (plaintiff’s father), that the notes belonged to that estate was denied. The notes were payable to Pedro Martinez, and no agency relationship was established.
The Court ordered the defendants to pay their respective obligations under the original notes, with interest. The case was remanded to the trial court solely to determine the conversion rate from Mexican currency to Philippine currency for final judgment.