Sps Jorge v Metrobank
G.R. No. 224339. June 3, 2019
FACTS:
1. Sps Zuñiga obtained a loan from Solidbank, secured by a REM. The Sps then sold the
property to Sps Jorge. At the time of the sale, the property was still mortgaged with
Metrobank. Spouses Zuñiga executed a Special Power of Attorney (SPA) in favor of
petitioners, thereby appointing the latter as their attorney-in-fact and granting them the
full authority to do and perform all acts and things related to the ownership and
possession of the subject property. Petitioners then moved into the subject property
sometime in April 2000.
2. Metrobank did not formally agree to the substitution of the Sps Jorge as its new
debtors-mortgagors. The property was thereafter sold in a public sale. Petitioners then
filed a Complaint for Annulment of Foreeclose of REM and Cert of Sale. RTC dismissed
the complaint, as there was no valid substitution. CA affirmed, ruling the sale to be valid
and there was no valid substitution of debtors.
ISSUE: Whether there was valid substitution of debtors which would nullify the sale. NO!
RATIONALE:
1. There was no valid substitution of debtors. Novation is a mode of extinguishing an
obligation by changing its objects or principal obligations, by substituting a new debtor
in place of the old one, or by subrogating a third person to the rights of the creditor. It is
"the substitution of a new contract, debt, or obligation for an existing one between the
same or different parties." Article 1293 of the Civil Code defines novation as follows:
a. Art. 1293. Novation which consists in substituting a new debtor in the place of
the original one, may be made even without the knowledge or against the will of
the latter, but not without the consent of the creditor. Payment by the new
debtor gives him the rights mentioned in Articles 1236 and 1237.
b. Under this provision, there are two forms of novation by substituting the person
of the debtor, and they are: (1) expromision and (2) delegacion.
c. EXPROMISION - the initiative for the change does not come from the debtor and
may even be made without his knowledge, since it consists in a third person
assuming the obligation. As such, it logically requires the consent of the third
person and the creditor.
d. DELEGACION - the debtor offers and the creditor accepts a third person who
consents to the substitution and assumes the obligation, so that the intervention
and the consent of these three persons are necessary. 36 From the foregoing, it
is clear that the consent of the creditor is indispensable in both modes of
substitution. The reason for this is that the "substitution of one debtor for
another may delay or prevent the fulfillment of the obligation by reason of the
financial inability or insolvency of the new debtor; hence, the creditor should
agree to accept the substitution in order that it may be binding on him."
2. novation is never presumed. Novation will not be allowed unless it is clearly shown by
express agreement, or by acts of equal import. Thus, to effect an objective novation it is
imperative that the new obligation expressly declare that the old obligation is thereby
extinguished, or that the new obligation be on every point incompatible with the old
one. In the same vein, to effect a subjective novation by a change in the person of the
debtor it is necessary that the old debtor be released expressly from the obligation, and
the third person or new debtor assumes his place in the relation.
a. There is no novation without such release as the third person who has assumed
the debtor's obligation becomes merely a co-debtor or surety.
b. Petitioners were unable to present proof of the clear and unmistakable consent
of Metrobank to the substitution of debtors-mortgagors. The Court agrees with
the findings of the CA that petitioners were not validly substituted
