Ajax

Marketing v CA
HELD
The spouses Marcial See and Lilian Tan constituted three real estate There was no novation.
mortgages over their property in Paco Manila in favor of and for the
following amounts: There was no change in the OBJECT of the prior obligation
(Objective novation):
1. Ylang-Ylang Merchandising Company (partnership b/w Rodriguez The 1 million loaN still represented the 3 loans obtained.
and Tan) => for 250,000 It merely restructured and renewed the 3 previous loans to make
2. Ajax Marketing Company (formerly Ylang-Ylang Merchandising the loan current and merely consolidated such loan.
Company, changed name but not its composition) => for 150,000
3. Ajax Marketing and Development Corporation (from partnership There was no change or substitution in the part of the debtors
to corporation) for 600,000 upon the consolidation of the loans in the promissory note
(Subjective novation):
All 3 loans were obtained from Metrobank. The fact that the petitioners changed from a partnership to a
The 3 loans w/ an aggregate amount of 1M were restructured and corporation without evidence that they were expressly released
consolidated into 1 loan. from their obligation did not make petitioner AJAX (w/ it new
Ajax Marketing and Development Co. executed a promissory note. corporate personality) a 3rd person or the new debtor.
It had these words typewritten: "secured by REM" and "9.Collateral. AJAX only became a co-debtor.
This is wholly/partly secured by:(x) real estate"
The property was extra-judicially foreclosed in favor of Metrobank Doctrine:
for the 1M promissory note. Novation is juridical action with a dual function. It extinguishes an
obligation & creates a new one in lieu of the old one.
Petitioners contend: Novation is never presumed and will not be allowed unless there
A novation occurred when their 3 loans which were all secured by was an express agreement or the new obligation is incompatible
the same property, were consolidated into a single loan of 1M with the old one.
under the promissory note, thereby extinguishing their monetary OLD DEBTOR should be released expressly from an obligation and
obligation and releasing the mortgaged property from liability. the 3rd person or new debtor assumed his place.
There is no novation if the old debtor would not be released. The
ISSUE: W/N there was indeed a novation in this case? new debtor would only become a co-debtor or surety.