56 Philippine Savings Bank vs. Mañalac, Jr.

Philippine Savings Bank vs. Mañalac, Jr. On December 19, 1983, the bank applied P1,000,000.00 ofthe P1,200,000.
000,000.00 ofthe P1,200,000.00 to the

loan account of the Galicias aspayment for the arrearages in interest and the
On October 8, 1976, respondent-spouses Rodolfo and Rosita Mañalac (Mañalac) remainingP200,000.00 thereof was applied to the expenses relative tothe account of
obtained a P1,300,000.00 loan from PSBank covered by promissory note L.C. No. 76- Mañalac.
269.As security for the loan, Mañalac executed a Real Estate Mortgage in favor of the
bank over 8 parcels of land covered by TCT Nos. 417012, N-1348, N-1347, N-3267, N- On May 23, 1985, the bank sold the property covered byTCT No. 79996 (previously
8552, N-6162, 469843 and 343593. TCT No. 343593) to EsterVillanueva who thereafter sold it to Mañalac. On October30,
1985, the land covered by TCT No. 79995 was sold bythe bank to Teresita Jalbuena.
In view of Mañalac’s inability to pay the loan installments as they fell due, their loan
obligation wasrestructured on October 13, 1977. Accordingly, Mañala csigned another Mañalac institutedan action for damages against PSBank and its officers. The bank
promissory note denominated as LC No. 77-232 for P1,550,000.00 payable to the order also filed a petition for the issuance of a writ of possession against theproperties
of PSBank with interest rate of 19% per annum. To secure such, he executed a Real covered.
Estate Mortgage in favor of PSBank ove rthe same aforementioned 8 real properties.
RTC Ruling:
On March 5, 1979, Mañalac and spouses Igmidio and Dolores Galicia, with the prior
consent of PSBank, entered into a Deed of Sale with Assumption of Mortgage Ordered the annulment of the Certificate of Sale issued by the acting Ex Officio
involving3 of the mortgaged properties covered by TCT Nos. N-6162(now N-36192), N- Provincial Sheriff of Rizal.
8552 (now TCT No. N-36193), and469843 (now TCT No. N-36194).
CA Ruling:
Thereafter, the 3 parcels of land purchased by the Galicias,together with another affirmed with modification thedecision of the trial court
property, were in turn mortgaged bythem to secure a P2,600,000.00 loan which they
obtainedfrom PSBank. This loan is evidenced by Promissory Note LC-79-36. Issue :
On March 12, 1979, Mañalac paid PSBank P919,698.11which corresponds to the Whether there was a novation of the previous mortgage of the properties
value of the parcels of landcovered by TCT Nos. N-36192, N-36193, and N-36194, now
On March 12, 1979, Mañalac paid PSBank P919,698.11which corresponds to the Ruling:
value of the parcels of landcovered by TCT Nos. N-36192, N-36193, and N-36194.
Novation is the extinguishment of an obligation by thesubstitution or change of the
the spouses Galicia obtained asecond loan from PSBank in the amount of obligation by a subsequentone which extinguishes or modifies the first, either
P3,250,000.00for which they executed Promissory Note LC No. 81-108.They also bychanging the object or principal conditions, or, bysubstituting another in place of
executed a Real Estate Mortgage in favor of thebank covering TCT Nos. N-36192, N- the debtor, or bysubrogating a third person in the rights of the creditor. Inorder for
36193, N-36194,75584 and 87690. novation to take place, the concurrence of thefollowing requisites is indispensable:
Since Mañalac defaulted again in the payment of their loan installments and despite There must be a previous valid obligation,
repeated demands still failedto pay their past due obligation which now amounted toP There must be an agreement of the partiesconcerned to a new contract,
1,804,241.76. There must be the extinguishment of the oldcontract, and
There must be the validity of the new contract.
PSBank filed petition for extrajudicial foreclosure oftheir 5 remaining mortgaged
properties, specifically thosecovered by TCT Nos. 417012, N-1347, N-1348, N-3267, The elements of novation are patently lacking in theinstant case. Mañalac tendered a
and343593. check for P1,200,000.00to PSBank for the release of 4 parcels of land covered byTCT
Nos. N-36192, 36193, and 36194, under the loanaccount of the Galicias and 417012
Despite several postponements of the public auctionsale, Mañalac still failed to pay (now TCT No. 79996) under the loan account of Mañalac. However, while thebank
their mortgage obligation. Mañalac failed to redeem the properties hence titlesthereto applied the tendered amount to the accounts asspecified by Mañalac, it nevertheless
were consolidated in the name of PSBank and newcertificates of title were issued in refused to release thesubject properties. Instead, it issued a receipt with anotation that
favor of the bank. the acceptance of the check is not acommitment on the part of the bank to release the
4 TCTsas requested by Mañalac.
On December 16, 1983, Mañalac wrote the Chairman ofthe Board of PSBank asking
information on their request for the partial release of the mortgage covered by TCT From the foregoing, it is obvious that there was no agreement to form a new contract
Nos.N-36192, N-36193, N-36194, and 417012 (now TCT No.79996). TCT Nos. 36192, by novating the mortgage contracts of the Mañalacs and the Galicias. In accepting the
36193, and 36194 were registeredin the name of the Galicias, and mortgaged to check, the bank only acceded to Mañalac’s instruction on whose loan accounts the
partiallysecure their outstanding loan from the bank. Enclosed inthe same letter is a proceeds shall be applied but rejected the other condition that the 4 parcels of land be
Cashier’s Check for P1,200,000.00. released from mortgage. Clearly, there is no mutual consent to replace the old
mortgage contract with a new obligation. The conflicting intention and acts of the
parties underscore the absence of any express disclosure or circumstances with which
to deduce a clear and unequivocal intent by the parties to novate the old agreement.
Novation is never presumed, and the animus novandi, whether totally or partially,
must appear by expressa greement of the parties, or by their acts that are too clear
and unmistakable. The extinguishment of the old obligation by the new one is a
necessary element of novation, which may be effected either expressly or impliedly. The
term “expressly” means that the contracting parties incontrovertibly disclose that their
object in executing the new contract is to extinguish the old one
Upon the other hand, no specific form is required for animplied novation, and all that
is prescribed by law would bean incompatibility between the two contracts. While
thereis really no hard and fast rule to determine what mightconstitute to be a
sufficient change that can bring aboutnovation, the touchstone for contrariety,
however, would be an irreconcilable incompatibility between the old and thenew
obligations.
3 of the 4 properties sought to be released from mortgage, namely, TCT Nos. N-36192,
N-36193, andN-36194, have already been sold by Mañalac to Galicia and are now
registered in the name of the latter who thereafter mortgaged the same as security to a
separate loan theyobtained from the bank. Thus, without the consent of PSBank as the
mortgagee bank, Mañalac, not being a party to the mortgage contract between the
Galicias and th ebank, cannot demand much less impose upon the bank therelease of
the subject properties. Unless there is as tipulation to the contrary, the release of the
mortgaged property can only be made upon the full satisfaction of the loan obligation
upon which the mortgage attaches. Unfortunately, Mañalac has not shown that the
P1,000,000.00 was sufficient to cover not only the accrued interests but also the entire
indebtedness of the Galicias to the bank.
Neither can Mañalac be deemed substitute debtor within the contemplation of Article
1293 of the Civil Code. In order to change the person of the debtor, the old one must
be expressly released from the obligation, and thethird person or new debtor must
assume the former’s place in the relation. Novation is never presumed. It is thus
incumbent on Mañalac to show clearly and unequivocally that novation has indeed
taken place.
“the mere fact that the 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.
Mañalac has not shown by competent evidence that they were expressly taking the
place of Galicia as debtor, or that the latter were being released from their solidary
obligation. Nor was it shown that the obligation of the Galicias was being extinguished
and replaced by a new one. The existence of novation must be shown in clear and
unmistakable terms.

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56 Philippine Savings Bank vs. Mañalac, Jr.

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Philippine Savings Bank vs. Mañalac, Jr. On December 19, 1983, the bank applied P1,000,000.00 ofthe P1,200,000.

000,000.00 ofthe P1,200,000.00 to the

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