FACTS:

Respondent filed a complaint for sum of money and damages against petitioner, claiming that petitioner owed her P2,100,000 and issued a check to guarantee the payment of the debt. However, the check was dishonored and petitioner refused to pay despite repeated demands. Petitioner argued that it was her deceased parents who owed respondent money and that the claim should be filed in the proceedings for the settlement of their estates. Respondent countered that petitioner personally borrowed almost half of the amount and that she made installment payments but failed to make any succeeding payments. The RTC ruled in favor of respondent, finding that petitioner cannot deny her liability and that a mixed novation took place. The CA affirmed the ruling of the RTC. Petitioner appealed to the Supreme Court.

ISSUES:

1. Whether or not petitioner should be held liable to respondent for the entire debt in the amount of P2,100,000.00.

RULING:

1. The Court ruled in favor of the respondent and affirmed the decisions of the lower courts. The Court held that petitioner is indeed liable to respondent for the entire debt in the amount of P2,100,000.00. The Court agreed with the lower courts' findings that petitioner cannot deny her liability to respondent, as she herself admitted borrowing money from respondent. The Court also found no merit in petitioner's contention that she issued a blank check, ruling that she personally wrote the amount on the check after agreeing with respondent that the loans she and her deceased parents obtained amounted to P2,100,000.00. The Court also confirmed the lower courts' ruling that a mixed novation took place, substituting petitioner in her parents' place as debtor, and that there was no novation with respect to the object of the contract, as the parties merely modified the terms of payment of the debt.

PRINCIPLES:

• A party cannot deny his or her liability if there is admission of borrowing money from the other party.

• A novation takes place when the old obligation is substituted by a new one which extinguishes the former.

• A novation does not occur if the new contract merely modifies the terms of payment of the old obligation.