G.R. No.

L-24543

July 12, 1926

ROSA VILLA MONNA, plaintiff-appellee,

The plaintiff, Rosa Villa y Monna, viuda de E. Bota, was the owner of a printing
establishment and bookstore located at 89 Escolta, Manila, and known as La Flor de
Cataluna, Viuda de E. Bota, with the machinery, motors, bindery, type material
furniture, and stock appurtenant thereto.

The plaintiff sold the establishment above-mentioned to the defendants Guillermo

The defendants France and Goulette obligated themselves as solidary sureties with
the principals Bosque and Ruiz, to answer for any balance, including interest, which
should remain due and unpaid after the dates stipulated for payment of said
installments, expressly renouncing the benefit of exhaustion of the property of the
principals.

Figueras Hermanos may effect the collection of such sums of money as may be due
to the plaintiff by reason of the sale of the bookstore and printing establishment
already mentioned.

When the time came for the payment of the second installment and accrued interest
due at the time, the purchasers were unable to comply with their obligation, and after
certain negotiations between said purchasers and one Alfredo Rocha, representative
of Figueras Hermanos, acting as attorney in fact for the plaintiff, an agreement was
reached.

The owners of the business La Flor de Catalua, appear to have converted it into a
limited partnership under the style of Guillermo Garcia Bosque, S. en C.;" and
presently a corporation was formed to take over the business under the name "Bota
Printing Company, Inc."

The partnership appears to have conveyed all its assets to this corporation for the
purported consideration of P15,000.

Meanwhile the seven notes representing the unpaid balance of the second
installment and interest were failing due without being paid.

Figueras entered into the agreement. In this document it is recited that Guillermo
Garcia Bosque. S. en C., is indebted to Rosa Villa, viuda de E. Bota, in the amount of
P32,000 for which R. G. France and F. H. Goulette are bound as joint and several
sureties, and that the partnership mentioned had transferred all its assets to the Bota
Printing Company, Inc., of which one George Andrews was a principal stockholder.

It is then stipulated that France and Goulette shall be relieved from all liability on
their contract as sureties and that in lieu thereof the creditor, Doa Rosa Villa y
Monna, accepts the Bota Printing Company, Inc., as debtor to the extent of P20,000,
which indebtedness was expressly assumed by it, and George Andrews as debtor to
the extent of P12,000, which he undertook to pay at the rate of P200 per month
thereafter.

RTC: Upon hearing the cause the trial judge gave judgment in favor of the plaintiff, requiring
all of the defendants, jointly and severally, to pay to the plaintiff. From this judgment
Guillermo Garcia Bosque, as principal, and R. G. France and F.H. Goulette, as sureties,
appealed.
ISSUE: WON the appellant sureties were discharged by the agreement between the principal
debtor and Figueras Hermanos, as attorney in fact for the plaintiff, whereby the period for
the payment of the second installment was extended, without the assent of the sureties, and
new promissory notes for unpaid balance were executed
HELD: The execution of these new promissory notes undoubtedly constituted and extension
of time as to the obligation included therein, such as would release a surety, even though of
the solidary type, under article 1851 of the Civil Code. Nevertheless it is to be borne in mind
that said extension and novation related only to the second installment of the original
obligation and interest accrued up to that time. Furthermore, the total amount of these
notes was afterwards paid in full, and they are not now the subject of controversy. It results
that the extension thus effected could not discharge the sureties from their liability as to
other installments upon which alone they have been sued in this action. The rule that an
extension of time granted to the debtor by the creditor, without the consent of the sureties,
extinguishes the latter's liability is common both to Spanish jurisprudence and the common
law; and it is well settled in English and American jurisprudence that where a surety is liable
for different payments, such as installments of rent, or upon a series of promissory notes, an
extension of time as to one or more will not affect the liability of the surety for the others.
(32 Cyc., 196; Hopkirk vs. McConico, 1 Brock., 220; 12 Fed. Cas., No. 6696; Coe vs. Cassidy,
72 N. Y., 133; Cohn vs. Spitzer, 129 N. Y. Supp., 104; Shephard Land Co. vs. Banigan, 36 R. I.,
1; I. J. Cooper Rubber Co. vs. Johnson, 133 Tenn., 562; Bleeker vs. Johnson, 190, N. W. 1010.)
The contention of the sureties on this point is therefore untenable.
There is one stipulation in the contract (Exhibit A) which, at first suggests a doubt as to
propriety of applying the doctrine above stated to the case before us. We refer to cause ( f)
which declares that the non-fulfillment on the part of the debtors of the stipulation with
respect to the payment of any installment of the indebtedness, with interest, will give to the
creditor the right to treat and declare all of said installments as immediately due. If the
stipulation had been to the effect that the failure to pay any installment when due would
ipso facto cause to other installments to fall due at once, it might be plausibly contended
that after default of the payment of one installment the act of the creditor in extending the
time as to such installment would interfere with the right of the surety to exercise his legal
rights against the debtor, and that the surety would in such case be discharged by the
extension of time, in conformity with articles 1851 and 1852 of the Civil Code. But it will be
noted that in the contract now under consideration the stipulation is not that the maturity of
the later installments shall be ipso facto accelerated by default in the payment of a prior

installment, but only that it shall give the creditor a right to treat the subsequent
installments as due, and in this case it does not appear that the creditor has exercised this
election. On the contrary, this action was not instituted until after all of the installments had
fallen due in conformity with the original contract. It results that the stipulation contained in
paragraph (f) does not affect the application of the doctrine above enunciated to the case
before us.