o Exhibit 2 - a letter of Khu Yek Chiong to the bank,
9. GARCIA VS. KHU YEK CHIONG
(G.R. No. L-45154, March 31, 1938)
DOCTRINE: In order that an obligation may be extinguished by another
which substitutes the same, it is imperative that it be so declared in
unequivocal terms, or that the old and new obligations be on every point
incompatible with each other. 1292
FACTS
Khu Yek Chiong obtained a credit from the Mercantile Bank of
China amounting to P115,294.41. Ang Gioc Chim-M. Escolar & Co.
also obtained a credit from the same Bank amounting to P18, 805.08.
Khu Yek Chiong, jointly and severally, with Ang Gioc Chim-M.
Escolar & Co., guaranteed the obligations; Khu Yek Chiong
delivered to the bank 1,500 stock certificates to secure his payment.
Plaintiff Tirso Garcia was the receiver of bank upon liquidation, he
filed this case for recovery of the said amounts from appellants.
The court ruled in favor of plaintiff and ordered Khu Yek Chiong to
pay plaintiff P115,294.41 w/ interest at 10%; both appellants to pay
plaintiff, jointly and severally, P18, 805.08 w/ interest at 10%; and
that the stock certificates placed as security be sold at public auction,
its proceeds be applied to the payment. Hence, this appeal.
It is alleged that the contract between the bank and Ang Gioc Chim-
M. Escolar & Co. was later novated and Khu Yek Chiong assumed,
as sole debtor, all the obligations of Ang Gioc Chim-M. Escolar &
Co. Appellants presented:
o Exhibit 1 - a letter of Ang Gioc Chim to the bank informing
the latter that the copartnership had been transferred to Khu
Yek Chiong, who took charge of all the properties and
assumed all the obligations off said copartnership
confirming that he had assumed the obligations of the
copartnership.
o Exhibit 3 - a letter of the bank to Khu Yek Chiong inquiring
if he had already assumed the obligations of the
copartnership.
ISSUE
WON the novation is valid? NO.
HELD
The alleged novation is contradicted by the fact that Ang Gioc Chim
as well as M. Escolar subsequently had transactions with the
plaintiff bearing the name of the copartnership Ang Gioc Chim-M.
Escolar & Co.
The kind of novation alleged cannot be made without the
consent of the creditor. The consent of the Bank to the novation
was not shown nor proven.
Exhibits 1, 2 and 3 merely state that Khu Yek Chiong was willing to
assume the obligations of Ang Gioc Chim-M. Escolar & Co. Said
pieces of evidence do not say that Khu Yek Chiong assumed this
obligation as sole debtor, relieving Ang Gioc Chim-M. Escolar &
Co.
Clearly, without the consent of the creditor bank, the letters
shown by the defendants are useless in declaring novation.
WHO WON? GARCIA