Sueno v. Land Bank of the Philippines
REITERATIONFacts
The Antecedents: Sally Sueno (Sueno) obtained loans totaling P2,500,000.00 from Land Bank of the Philippines (LBP), secured by Real Estate Mortgages (REM) over two parcels of land in Marikina City. Upon Sueno's default, LBP initiated extrajudicial foreclosure proceedings. LBP emerged as the highest bidder at the public auction on March 6, 2000. Shortly before the expiration of the one-year redemption period, Sueno requested a six-month extension. LBP agreed to the extension on the condition that Sueno post an initial amount of P115,000.00 to cover potential penalties and surcharges. Sueno paid only P50,000.00 via check. LBP informed Sueno that the balance of P65,000.00 must be paid by March 7, 2001, or it would proceed with consolidation. Sueno failed to pay the balance. Procedural History: On March 7, 2001, LBP denied the extension request and consolidated ownership, resulting in the issuance of new Transfer Certificates of Title (TCTs) in LBP's name. LBP then filed an Ex Parte Petition for the Issuance of a Writ of Possession before the Regional Trial Court (RTC) of Marikina City. Sueno opposed, arguing that a novation had occurred which extended the redemption period. The RTC granted the writ, ruling that Sueno failed to prove an agreement to extend the period. The Court of Appeals (CA) affirmed the RTC decision, stating the records were bereft of evidence showing LBP granted the extension. The Petition: Sueno filed a Petition for Review on Certiorari under Rule 45, asserting that LBP's acceptance and encashment of the P50,000.00 check signified acquiescence to the extension of the redemption period, thereby constituting a valid novation of the original obligation.
Issue(s)
Whether there was a valid novation of the original obligation that extended the redemption period. Whether the issuance of the Writ of Possession in favor of Land Bank of the Philippines was valid.
Ruling
The Petition is DENIED. The Decision and Resolution of the Court of Appeals are AFFIRMED.
Ratio Decidendi
On Issue 1: The Supreme Court held that no valid novation occurred. Applying Article 1292 of the Civil Code, the Court emphasized that novation is never presumed and requires the concurrence of four indispensable requisites: a previous valid obligation, an agreement to a new contract, the extinguishment of the old contract, and the validity of the new contract. In this case, while a previous obligation existed, there was no clear agreement to a new contract extending the redemption period. LBP's consent to the extension was subject to a suspensive condition—the full payment of P115,000.00. Sueno's payment of P50,000.00 was merely partial compliance, and LBP's acceptance of the check did not imply a waiver of the remaining balance. Citing Philippine Savings Bank v. Mañalac, Jr., the Court reiterated that the animus novandi must appear by express agreement or by acts that are too clear and unmistakable. Since the suspensive condition was not met, no new contract was perfected, and the old obligation to honor the redemption period expired on March 6, 2001. On Issue 2: The Court ruled that the issuance of the Writ of Possession was valid and mandatory. Under Section 33, Rule 39 of the Rules of Court and Section 7 of Act 3135, a purchaser in a foreclosure sale is entitled to possession of the property if no redemption is made within one year. Once the redemption period expires and the purchaser consolidates ownership and obtains a new title, the right to possession becomes absolute. The Court clarified that at this stage, the issuance of the writ of possession becomes a ministerial duty of the court. Following the ruling in Philippine National Bank v. Sanao Marketing Corporation, the court is deprived of discretion and must aid the confirmed owner in taking physical possession. Because LBP had already consolidated title in its name, the RTC correctly performed its ministerial duty in granting the writ.
Main Doctrine
Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first. In order for novation to take place, the concurrence of the following requisites are indispensable: (1) there must be a previous valid obligation; (2) there must be an agreement of the parties concerned to a new contract; (3) there must be the extinguishment of the old contract; and (4) there must be the validity of the new contract. Novation is never presumed, and the animus novandi, whether totally or partially, must appear by express agreement of the parties, or by their acts that are too clear and unmistakable.