G.R. No. 74553 . June 8, 1989.
SERVICEWIDE SPECIALISTS, INCORPORATED, petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, GALICANO SITON AND JUDGE JUSTINIANO DE DUMO, respondents.

FACTS

Private respondent Galicano Siton purchased a vehicle from Car Traders Philippines, Inc., executing a promissory note and a chattel mortgage to secure the balance. The note stipulated payment in monthly installments without need of demand and provided that upon default in any installment, the entire unpaid balance would become immediately due and demandable, with accrued interest and attorney’s fees. The credit was subsequently assigned to Filinvest Credit Corporation and then to petitioner Servicewide Specialists, Inc. Alleging that Siton defaulted on installments due in November and December 1981 and January 1982, petitioner filed an action for replevin or sum of money against Siton and a “John Doe.”
Respondent Justiniano de Dumo identified himself as the “John Doe,” asserting he purchased the vehicle from Siton on November 24, 1979, and had since religiously paid the installments. The Regional Trial Court denied the writ of replevin and ordered respondents to pay the remaining balance by installments per the original note, without additional interest, and to reimburse insurance premiums. The Intermediate Appellate Court affirmed this decision in toto.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s decision which did not declare the entire obligation due and demandable and did not hold respondents jointly liable for the full amount with stipulated interest and charges.

RULING

Yes. The Supreme Court reversed the appellate court’s decision. The legal logic centers on the binding nature of the contractual stipulations and the principles of joint obligation and novation. The promissory note expressly stipulated that installments were payable without need of demand and that default in any installment would render the entire unpaid balance immediately due and demandable. Under Article 1169 of the Civil Code, demand is not necessary to incur delay when the obligation expressly so declares. The parties are bound by this agreement; therefore, upon Siton’s default, the entire obligation became due.
Regarding liability, the purchase of the car by de Dumo from Siton did not extinguish Siton’s original liability. For novation by substitution of debtor under Article 1293 to occur, there must be a clear intention to release the original debtor. This was neither established nor shown. The acceptance of payments from de Dumo, who assumed the obligation, merely resulted in the addition of a debtor, not novation. Consequently, the creditor may enforce the obligation against both debtors. In the absence of a stipulation of solidarity, they are considered joint debtors. Thus, respondents Siton and de Dumo are jointly liable to petitioner for the entire unpaid balance with stipulated interest from January 25, 1982, attorney’s fees, liquidated damages, and reimbursement for insurance premiums.