Magdalena Estates, Inc. v.

Antonio Rodriguez and Herminia Rodriguez

GR No. L-18411, December 17, 1966
Nature: Appeal from CFI decision
Facts:
The Rodriguez spouses bought a parcel of land in Quezon City from Magdalena Estates. They
executed a promissory note in view of an unpaid balance of P5k. On the same day, Rodriguez
spouses and Luzon Surety executed a bond in favor of Magdalena.
Undertaking: P5k within a 60 days from January 7, 1957. Luzon Surety to be notified in
writing within 10 days from moment of default otherwise the undertaking is
automatically NAV
June 20, 1958 when obligation became due and demandable (DAD) Luzon Surety paid P5k to
Magdalena. Magdalena demanded from Rodriguez spouses P655.89, the alleged accumulated
interests on the P5k principal.
Due to refusal to pay, Magdalena filed suit in the Municipal Court of Manila to enforce
collection. Court rendered judgment in favor of Magdalena. Rodriguez spouses to pay jointly
and severally P655.89 with legal interest from Nov 10, 1958 (date of filing of the complaint)
Rodriguez spouses appealed to CFI. CFI also ordered Rodriguez spouses to pay jointly and
severally P655.89 + legal interest + AF.
Issue: WoN CFI erred in its judgment / WoN there was a novation
Held: No, there was no novation. Magdalena did not waive or condone the interests due
because it is very clear in the promissory note that Luzon Surety will only pay the balance of the
purchase price of P5k. The liability of Luzon Surety is not extended beyond the terms of his
contract.
There was no novation/modification of the obligation just because Magdalena accepted without
reservation the subsequent agreement in the surety bond despite its failure to provide that is
also guaranteed payment of accruing interest.
Novation by presumption is never favored. To be sustained, it needs to be established
that the old and new contracts are incompatible in all points, or that the will to novate
appears by express agreement of the parties
An obligation to pay a sum of money is not novated in a new instrument wherein the old
one is ratified by changing only the terms of payment and adding other obligations not
incompatible with the old one, or wherein the old contract is merely supplemented by
the old one
Just because a creditor receives a guaranty or accepts payments from a third person who
has agreed to assume the obligation, when there is no agreement that the first debtor
shall be released from responsibility does not constitute a novation, and the creditor can
still enforce the obligation against the original debtor
Judgment appealed from is affirmed