Q. X brought a house and lot from Y valued at P5M. He paid P3M and for the balance, he executed a promissory note with interest at 10% to be paid within 90 days. ABC Corporation executed a surety for the balance. X failed to pay, hence, ABC paid the amount and sued X for the interest and the principal. X contended that he is not bound due to novation when Y accepted the security. Is X correct? (Solved)
1. Yes, because there is complete incompatibility between the PN and the surety bond;
2. No, because the two contracts, PN and surety can stand together, the surety being merely an accessory to the original contract;
3. Yes, because of implied novation;
4. Yes, because the surety is a new and separate contract.
- b. No, because the two contracts, PN and surety can stand together, the surety being merely an accessory to the original contract;