JOEs RADIO and ELECTRICAL SUPPLY v ALTO ELECTRONICS CORPORATION and ALTO SURETY and INSURANCE CO., INC.

Facts: Joes Radio and Bolinao Electronics entered into a dealership agreement: o Bolinao would sell 500 TV sets to Joes Radio in 2 shipments of 250 o TVs would be at PhP1,134 each o Bolinao agreed to put up a surety bond to cover Joes advance payment o If Bolinao failed to comply with its obligation under the agreement, it would return any amounts Joes would have already deposited with 6%p.a. interest plus damages of 20% total cost of 250 TV sets Alto Electronics was subrogated to Bolinaos rights and TV s obligations in the dealership agreement o Alto issued a surety bond in the amount of PhP66,150 in favour of Joes, to guarantee its full and faithful performance The first shipment was fully paid for and delivered Joes deposited PhP66,150 as advance partial payment for the second shipment Alto failed to deliver the second batch, and Joes filed a suit against Alto During the pendency of the case, Alto and Joes executed an ADDITIONAL AGREEMENT: o That Alto would deliver 66 TV sets to liquidate the amount it owed to Joes (plus interest), to be completed within 90 days o Alto Surety signed in conformity Alto only delivered 13 TVs. It still owed Joes PhP49,378.77 worth of TVs

AFTER the lapse of 90 days, Alto delivered 2 more TVs, which Joes accepted as deposit pending receipt of Alto Suretys approval (so that Alto Suretys bond would not be released) Joes reactivated its suit against Alto, because it failed to comply with its obligation to deliver the 66 TV sets meant to fully liquidate the amount that Joes had paid Alto in advance o It wanted Alto to fully comply with the ADDITIONAL AGREEMENT o TC rendered judgment in favour of Joes

Alto Electronics and Alto Surety appealed to the CA, and the CA elevated the present case to the Supreme Court (pursuant to Sec. 17, paragraph 2 of the Judiciary Act)

Issues: 1. Whether or not the value of the 2 TV sets should have been credited to the principal amount it owed Joes (such that it could be said that Alto delivered 15 TVs, not 13; and therefore owed Joes Radio a smaller amount) 2. Whether the Additional Agreement was a novation, or a supplement to the original Dealership Agreement and that the Lower Court erred in holding that the stipulation for liquidated damages from the DA was carried over to the Additional Agreement

Ruling: TRIAL COURT DECISION AFFIRMED (with modifications regarding interest and liquidated damages) 1. (Evidence) NO. o The delivery of the 2 TVs was made AFTER the prescribed 90 day period; Joes had no intention of extending the obligation so that Alto Surety would be released from its surety bond. It agreed to hold on to the TVs, but had not yet accepted them, because Alto Surety had not yet delivered its letter of approval.

o !!!! ALTO ELECTRONICS ADMITTED IN ITS OWN AMMENDED COMPLAINT that it had only delivered 13 TV sets, and that it had a remaining unpaid balance of PhP49,378.77 It is a familiar doctrine that an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to him, and that all proofs submitted by him contrary thereto or inconsistent therewith, should be ignored, whether objection is interposed by the party or not.

2. The Additional Agreement was NOT a novation; there was no animus novendi on the part of either party, as the intent to discharge an obligation by novation was not expressed or clearly apparent from the incompatibility in all points of the old and new obligations o The Additional Agreement only gave Alto more time, and the opportunity to liqudate their obligations; it wasnt meant to completely supersede the DA until there was full performance of the new agreement