My brother purchased a brand new car from a dealer here in Malolos. He used this vehicle mainly to fetch his wife from work and kids from school as well as other after-school activities. Unfortunately, his wife was hospitalized, making him unable to settle his monthly amortizations. He opted to sell the car to his former officemate. They agreed that he will be paid the amount equivalent to what he has already paid with the dealer and that the remaining monthly amortizations will be paid by the latter directly to the dealer. Now, the dealer has been constantly calling my brother, asking him to pay the amortizations which have become due. He explained to the dealer’s representatives that he already sold the car and asked them to run after his former officemate. He even showed them the contract which he and his former officemate executed, but they refused to run after this guy.
What should my brother do? Is he not off-the-hook already since he has sold the car to another person who agreed to assume responsibility of paying for the monthly amortizations? Thank you for any advice you can give me.
Considering that your brother has entered into a contract with the car dealership for the purchase of his brand new vehicle, he is under the obligation to pay the purchase price thereof in the manner so agreed by them, which in this case is to be made through monthly amortizations. Failure to comply thereto gives right to either or both the contracting parties to avail of the appropriate legal remedies.
It likewise bears stressing that your brother’s obligation is not terminated by the mere fact that he has already sold the subject vehicle to his former officemate. The reason being, insofar as the car dealership is concerned, the full amount of the purchase price has not yet been settled. Accordingly, said company still has the right to collect whatever amount is due in its favor.
In addition, the car dealership was not made a party and did not acquiesce to the agreement which your brother and his former officemate executed. Thus, it cannot be said that it is bound by the terms thereof. While our laws recognize novation as a mode of extinguishment of obligations, it is essential that the same must be clearly and expressly stated, and that it is accomplished with the consent of the creditor. This is explicitly mentioned under our New Civil Code:
Article 1292. In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other.
Article 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. x x x
Since the obligation of your brother with the car dealership is still subsisting, it will be best for him to coordinate with its representatives to possibly give him ample time to settle his remaining obligation with them. In this manner, your brother will also have time and opportunity to talk with his former officemate and compel him to comply with the tenets of their agreement.
We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to email@example.com