## FACTS:

The case involved a petitioner appealing the decisions of the respondent court and the respondent Secretary of Justice. The first resolution upheld the dismissal of complaints filed by the petitioner against the private respondent for violations of B.P. Blg. 22 and estafa. The second resolution affirmed the resolution of the City Prosecutor finding a prima facie case against the petitioner for violation of B.P. Blg. 22 and estafa.

The petitioner, as the president of Eurotrust Capital Corporation, provided a loan to B.E. Ritz Mansion International Corporation (BERMIC) for the construction of a condominium and business park. BERMIC issued postdated checks for the loan payments, but these checks were dishonored due to a stop payment order by the private respondent, who was the president of BERMIC.

The petitioner filed criminal complaints against the private respondent for violations of B.P. Blg. 22 and estafa. However, the complaints were dismissed by the Provincial Prosecutor, citing novation as the reason for the private respondent assuming the petitioner's obligations to the AFP-Mutual Benefit Association, Inc. (AFP-MBAI).

The second resolution involved a complaint filed by AFP-MBAI against the petitioner for estafa and violation of B.P. Blg. 22. The complaint alleged that the petitioner fraudulently borrowed government securities from AFP-MBAI and failed to return them. The City Prosecutor recommended the filing of an information against the petitioner, but the Secretary of Justice dismissed the petition for review.

In response to the dismissal, the petitioner filed a petition for certiorari, prohibition, and mandamus with the respondent court. However, the court denied the petitioner's petition.

ISSUES

1. Whether the contract of loan between petitioner and respondent Eleazar was novated by substitution of creditor when Eleazar agreed to settle her firm's obligations directly with AFP-MBAI and DECS-IMC instead of with petitioner Reyes.

2. Whether a novation by substitution of debtor took place in the contract of sale of securities between petitioner and AFP-MBAI when respondent Eleazar assumed the obligation of the petitioner to make payments directly to AFP-MBAI.

RULING

1. The Supreme Court found that there was no novation by substitution of creditor in the first issue. It was determined that the essential requisites for novation were not met as there was no agreement among all the parties concerned and no express intention of novation was found. The court held that a mere arrangement between petitioner and respondent Eleazar that allowed Eleazar to settle the obligations directly with the real owners of the funds did not constitute a valid novation, as there was no new contract that extinguished the old one. Thus, the old obligation remained in force.

2. Regarding the second issue, the Supreme Court similarly held that no novation by substitution of debtor took place. The court emphasized that for a novation to be valid, the consent of the creditor is indispensable, and no evidence showed that AFP-MBAI consented to release the petitioner from her original obligations under the contract of sale of securities. Consequently, the court affirmed that Eleazar's actions, at best, created a situation of co-debtorship or suretyship but did not extinguish petitioner’s obligation to AFP-MBAI.

PRINCIPLES

1. Novation - Novation in a contractual context involves the extinguishment of an existing obligation by replacing it with a new one, necessitating the consent of all parties involved, including the creditor.

2. Consent in Novation - Both conventional subrogation (change of creditor) and subjective novation (change of debtor) require the explicit consent of the original parties and the new party. Without such consent, no novation can legally occur.

3. Finality of Judgment - Once a judgment becomes final, it must be respected for the sake of ending disputes and ensuring stability in legal interactions; challenging a final judgment without just cause is generally barred.

4. Principle of Laches - Failure to assert one's rights over an unreasonable period can lead to the presumption that these rights have been waived, and legal remedies may no longer be available.

5. Legal Presumption Against Novation - Novation is not presumed merely from a new agreement or change in terms; it must be explicit and unequivocal with a clear intent to extinguish the old obligation.