Obligations & Contracts Digest AY '14-'15
Atty. Nestor Leynes, III
1
[Type the company name]
[Type the document title]
018 Smith, Bell & Co., LTD v. Vicente Sotelo Matti
9 March 1922 G.R. No. L-16570
TOPIC: Obligations Classifications: Pure & Conditional: Conditional: Kinds: Cause or Origin: Mixed
PONENTE: Romualdez, J.
AUTHOR: Myk
NOTES: During this time there was World War II and that rules and approvals regarding export of goods from the US were very stringent.
FACTS
August 1918 – Smith, Bell & Co. and Vicente Sotelo entered into a contract wherein Sotelo bought 2 steel tanks, 2 expellers, and 2 motors from Smith, Bell & Co.
The stipulations in the 3 separate contracts are as follows:
STEEL TANKS
To be delivered within 3 or 4 months — The promise or indication of shipment carries with it absolutely no obligation on our part — Government regulations, railroad embargoes, lack of vessel space, the exigencies of the requirement of the United States Government, or a number of causes may act to entirely vitiate the indication of shipment as stated. In other words, the order is accepted on the basis of shipment at Mill's convenience, time of shipment being merely an indication of what we hope to accomplish.
EXPELLERS
The following articles, herein below more particularly described, to be shipped at San Francisco within the month of September, or as soon as possible. — Two Anderson oil expellers . . . .
MOTORS
Approximate delivery within ninety days. — This is not guaranteed. — This sale is subject to our being able to obtain Priority Certificate, subject to the United States Government requirements and also subject to confirmation of manufactures.
FINAL CLAUSEFOR EVERY CONTRACT
The sellers are not responsible for delays caused by fires, riots on land or on the sea, strikes or other causes known as "Force Majeure" entirely beyond the control of the sellers or their representatives.
The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October, 1918; and the motors on the 27th of February, 1919.
Sotelo was notified of the arrival of his orders but then he refused to receive and pay the articles.
CAUSE OF ACTION: To enforce the contractual obligation of Vicente Sotelo to receive and pay the goods from Smith, Bell & Co.
ISSUE: Whether or not Vicente Sotelo Matti may be compelled to receive and pay for the articles.
HELD: Yes.
RATIO:
The SC determined that
No definite date was fixed for the delivery of the goods.
The contract was executed during World War II when there was a rigid restriction on the export from the US for the machineries in question. This fact was known to the parties hence clauses were inserted regarding government regulations, etc.
The delivery of the goods is regarded as conditional since the term which the parties attempted to fix is so uncertain that no one can tell just whether those articles could be brought to Manila.
The obligor will be deemed to have sufficiently performed his part of the obligation, if he has done all that was in his power, even if the condition has not been fulfilled in reality.
As the export of the machinery in question was, as stated in the contract, contingent upon the sellers obtaining certificate of priority and permission of the United States Government, subject to the rules and regulations, as well as to railroad embargoes, then the delivery was subject to a condition the fulfilment of which depended not only upon the effort of the herein plaintiff, but upon the will of third persons who could in no way be compelled to fulfil the condition.
CASE LAW/ DOCTRINE:
Conditional Obligations - Obligations for the performance of which a day certain has been fixed shall be demandable only when the day arrives. A day certain is understood to be one which must necessarily arrive, even though its date be unknown. If the uncertainty should consist in the arrival or non-arrival of the day, the obligation is conditional and shall be governed by the rules of the next preceding section. (referring to pure and conditional obligations)
DISSENTING/CONCURRING OPINION: N/A
019 Rustan Pulp & Paper Mills, Inc., Bienvenido R. Tantoco, Sr., and Romeo S. Vergara, vs. IAC and Iligan Diversified Projects, Inc., Romeo A. Lluch and Roberto G. Borromeo
19 October 1992 G. R. No. 70789
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds: Cause or Origin: Mixed
PONENTE: Melo, J.
AUTHOR: Myk
NOTES:
FACTS:
1966 – Rustan Pulp & Paper Mills established a pulp & paper mill in Lanao del Norte and Lluch was a holder of a forest products licence. They entered into a contract whereby Lluch was to supply Rustan raw materials.
That the contract to supply is not exclusive because Rustan shall have the option to buy from other suppliers who are qualified and holder of appropriate government authority or license to sell and dispose pulp wood.
While they were running tests on the pulp mill, the machinery thereat had major defects. The raw materials were piling up. This prompted the Japanese supplier of the machinery to recommend the stoppage of the deliveries.
The different suppliers were informed to stop the deliveries, among them was Lluch. He sought to clarify the tenor of the letter but failed to receive a reply.
Lluch and the other suppliers resumed deliveries after a series of talks between Vergara (President & Manager of the corporation) & Lluch.
CAUSE OF ACTION:
ISSUE: Whether or not the contract between Rustan Pulp & Paper Mills, Inc. and Lluch is a purely potestative imposition thereby making it invalid or void?
HELD: Yes, because the apprehension on the illusory resumption of deliveries inasmuch as the prerogative suggests a condition solely dependent upon the will of the petitioners.
RATIO:
Purely potestative imposition
Petitioners can stop delivery of pulp wood from Lluch if the supply at the plant is sufficient as ascertained by the company, subject to the re-delivery when the need arises as determined likewise the petitioners.
Right of stoppage (guaranteed to them by their contract)
This has diminished legal efficacy because it is dependent solely on their will for rendering it inoperable. The petitioners argue that the stoppage was merely temporary since the nature of the suspension itself is conditioned upon petitioner's determination of the sufficiency of the supplies in the plant.
CASE LAW/ DOCTRINE:
A purely potestative imposition of this character must be obliterated from the face of the contract without affecting the rest of the stipulations considering that the condition relates to the fulfillment of an already existing obligation and not to its inception. It is, of course, a truism in legal jurisprudence that a condition which is both potestative (or facultative) and resolutory may be valid, even though the saving clause is left to the will of the obligor like what this Court, through Justice Street, said in Taylor vs. Uy Tieng Piao and Tan Liuan.
But the conclusion drawn from the Taylor case, which allowed a condition for unilateral cancellation of the contract when the machinery to be installed on the factory did not arrive in Manila, is certainly inappropriate for application to the case at hand because the factual milieu in the legal tussle dissected by Justice Street conveys that the proviso relates to the birth of the undertaking and not to the fulfillment of an existing obligation.
DISSENTING/CONCURRING OPINION:
020 Virgilio R. Romero v CA & Enriqueta Chua Vda. Ongsiong
23 November 1995 G.R. No. 107207
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds: Cause or Origin: Mixed
PONENTE: Vitug, J.
AUTHOR: Myk
NOTES:
FACTS:
Romero was engaged in the business of production, manufacture and exportation of perlite filter aids, permalite insulation and processed perlite ore.
In 1988, petitioner and his foreign partners decided to put up a central warehouse in Metro Manila on a land area of approximately 2,000 square meters.
Alfonso Flores and his wife, accompanied by a broker, offered a parcel of land measuring 1,952 square meters. Located in Barangay San Dionisio, Parañaque owned by private respondent, Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and, except for the presence of squatters in the area, he found the place suitable for a central warehouse.
Later, the Flores spouses called on petitioner with a proposal that should he advance the amount of P50,000.00 which could be used in taking up an ejectment case against the squatters, private respondent would agree to sell the property for only P800.00 per square meter.
Petitioner expressed his concurrence. On 09 June 1988, a contract, denominated "Deed of Conditional Sale," was executed between petitioner and private respondent.
Chua filed an ejectment complaint against Melchor Musa and 29 other squatter families. Judgment was rendered in favour of Chua.
07 April 1989 – Chua sent a letter to Romero saying that she wants to return the P50,000.00 since she could not get rid of the squatters. Romero's counsel refused and proposed that Romero has taken it upon himself to eject the squatters and that the expenses shallo be chargeable to the purchase of the land.
The court issued a 45-day grace period for the ejection of the squatters.
19 June 1989 – Chua's camp advised Romero's camp that the Deed of Conditional Sale had been rendered null and void because of his client's failure to comply with the 60-day period of ejecting the squatters.
CAUSE OF ACTION: Chua filed a case to compel Romero to receive the P50,000.00.
ISSUE: Whether or not the vendor may demand the rescission of a contract for the sale of a parcel of land for a cause traceable to his own failure to have the squatters on the subject property evicted within the contractually-stipulated period?
HELD: No.
RATIO:
A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees.
The object of the sale is the 1,952-square meter lot in San Dionisio, Parañaque, Rizal.
The purchase price was fixed at P1,561,600.00, of which P50,000.00 was to be paid upon the execution of the document of sale and the balance of P1,511,600.00 payable "45 days after the removal of all squatters from the above described property."
When the contract is perfected, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.
Chua is obligated to evict the squatters on the property.
The ejectment of the squatters is a condition the operative act of which sets into motion the period of compliance by petitioner of his own obligation, i.e., to pay the balance of the purchase price.
Chua's failure "to remove the squatters from the property" within the stipulated period gives Romero the right to either refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code. This option clearly belongs to petitioner and not to private respondent.
Mixed Condition
The condition is not of a potestative nature which is dependent solely on the will of the debtor" that is be void in accordance with Article 1182 of the Civil Code 17 but a "mixed condition "dependent not on the will of the vendor alone but also of third persons like the squatters and government agencies and personnel concerned." We must hasten to add, however, that where the so-called "potestative condition" is imposed not on the birth of the obligation but on its fulfillment, only the condition is avoided, leaving unaffected the obligation itself. –
Waiving of the condition – According to the Code, the obligee may choose to proceed with the agreement or waive the performance of the condition.
In the case at bar, Romero has clearly waived the performance of the obligation by saying that he will be ejecting the squatters.
Rescission of the contract by Chua
In any case, private respondent's action for rescission is not warranted because she is not the injured party. 21 The right of resolution of a party to an obligation under Article 1191 of the Civil Code is predicated on a breach of faith by the other party that violates the reciprocity between them. 22 It is private respondent who has failed in her obligation under the contract.
CASE LAW/ DOCTRINE:
A perfected contract of sale may either be absolute or conditional 12 depending on whether the agreement is devoid of, or subject to, any condition imposed on the passing of title of the thing to be conveyed or on the obligation of a party thereto.
When ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the duty to convey title from acquiring an obligatory force.
If the condition is imposed on an obligation of a party which is not complied with, the other party may either refuse to proceed or waive said condition (Art. 1545, Civil Code).
Where the condition is imposed upon the perfection of the contract itself, the failure of such condition would prevent the juridical relation itself from coming into existence. 13
In determining the real character of the contract, the title given to it by the parties is not as much significant as its substance. For example, a deed of sale, although denominated as a deed of conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. 14
The term "condition" in the context of a perfected contract of sale pertains to the compliance by one party of an undertaking the fulfillment of which would beckon, in turn, the demandability of the reciprocal prestation of the other party.
The reciprocal obligations referred to would normally be, in the case of vendee, the payment of the agreed purchase price and, in the case of the vendor, the fulfillment of certain express warranties (which, in the case at bench is the timely eviction of the squatters on the property).
DISSENTING/CONCURRING OPINION:
021 The Roman Catholic Archbishop Of Manila, The Roman Catholic Bishop Of Imus, And The Spouses Florencio Ignao And Soledad C. Ignao v. CA, The Estate Eusebio De Castro And Martina Rieta
June 19, 1991 G.R. No. 77425
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds: Possibility
PONENTE: Regalado, J.
AUTHOR: Myk
NOTES:
FACTS:
23 August 1930 – de Castro ( ) & Rieta ( ) executed a deed of donation in favour of the RCAM covering a parcel of land located at Kawit, Cavite, containing an area of 964 square meters.
The deed of donation provides that the property shall not be disposed within a period of 100 years from the execution of the deed. Selling the property would render ipso facto null and void the deed of donation and it would revert back to the estate of the donors.
26 April 1962 – RCBI (administrator of the land) allegedly executed an absolute deed of sale in favour of Florencio & Soledad Ignao in consideration of the sum of P114,000.00. A new TCT was issued in their names.
29 November 1984 – The heirs of de Castro & Rieta filed a complaint for the nullification of the deed of donation, rescission of contract and reconveyance of real property with damages.
CAUSE OF ACTION: Nullification of the deed of donation, rescission of contract and reconveyance of real property with damages.
ISSUE: Whether or not the donation can be rescinded on the grounds of breach by the petitioners of the resolutory condition that the property donated shall not be sold within a period of 100 years.
HELD: No, because the condition constitutes an undue restriction on the rights arising from ownership of petitioners and is therefore, contrary to law and public policy.
RATIO:
The prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code.
Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy.
The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time.
Article 494 (3), a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years.
Article 870, on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void.
Such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail.
CASE LAW/ DOCTRINE:
It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code.
DISSENTING/CONCURRING OPINION:
022 Heirs of Timoteo Moreno, et. al. v. Mactan – Cebu International Airport
15 October 2003 G. R. No. 156273
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds: Mode: Loss, Deterioration, Improvement
PONENTE: Bellosillo, J.
AUTHOR: Myk
NOTES:
FACTS:
1949 – National Airport Corporation (predecessor of Mactan-Cebu International Airport Authority) wanted to acquire lot #s 916 & 920 for the expansion of the Lahug Airport. The government assured them that they could repurchase the properties once the Lahug Airport was closed or its operation transferred to Mactan Airport.
1991 – Mactan Airport was opened for incoming and outgoing flights. The purchased lots were not utilized and no expansion of the Lahug Airport took place.
The petitioners wrote to Pres. Ramos and the airport manger begging for their exercise of their right to repurchase but their pleas were not heeded.
CAUSE OF ACTION: Filed a complaint for reconveyance and damages against MCIAA to compel the repurchase of Lot #s 916 & 920.
ISSUE: Whether or not the heirs et.al. are entitled to repurchase the land on the ground that the expansion of Lahug Airport was put on hold.
HELD: Yes.
RATIO:
Implied Trust – Article 1454: "If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him."
Petitioners conveyed Lots Nos. 916 and 920 to the government with the latter obliging itself to use the realties for the expansion of Lahug Airport; failing to keep its bargain, the government can be compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized.
The rights and obligations between the constructive trustee and the beneficiary, in this case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, "When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received x x x x In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return x x x x"
MCIAA is obliged to reconvey Lots Nos. 916 and 920 to petitioners who shall hold the same subject to existing liens thereon, i.e., leasehold right of DPWH. In return, petitioners as if they were plaintiff-beneficiaries of a constructive trust must restore to respondent MCIAA what they received as just compensation for the expropriation of Lots Nos. 916 and 920 in Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential damages by way of legal interest from 16 November 1947.
Petitioners must likewise pay respondent MCIAA the necessary expenses it may have incurred in sustaining the properties and the monetary value of its services in managing them to the extent that petitioners will be benefited thereby.
The government however may keep whatever income or fruits it may have obtained from the parcels of land, in the same way that petitioners need not account for the interests that the amounts they received as just compensation may have earned in the meantime. As a matter of justice and convenience, the law considers the fruits and interests as the equivalent of each other.
Under Art. 1189 of the Civil Code, "If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x," the creditor being the person who stands to receive something as a result of the process of restitution. Consequently, petitioners as creditors do not have to settle as part of the process of restitution the appreciation in value of Lots Nos. 916 and 920 which is the natural consequence of nature and time.
CASE LAW/ DOCTRINE:
Although the symmetry between the instant case and the situation contemplated by Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of trusts: "The only problem of great importance in the field of constructive trusts is to decide whether in the numerous and varying fact situations presented to the courts there is a wrongful holding of property and hence a threatened unjust enrichment of the defendant." Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by courts as devices to remedy any situation in which the holder of the legal title may not in good conscience retain the beneficial interest.
The arrangement is temporary and passive in which the trustee's sole duty is to transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the "wronged party seeking the aid of a court of equity in establishing a constructive trust must himself do equity." Accordingly, the court will exercise its discretion in deciding what acts are required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good judgment of the court, the trustee may also be paid the necessary expenses he may have incurred in sustaining the property, his fixed costs for improvements thereon, and the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts.
DISSENTING/CONCURRING OPINION:
023 Taylor v. Uy Teng Piao
2 October 1922 G.R. No. L-16109
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds: Mode: Prevention by the Obligor
PONENTE: Street, J.
AUTHOR: Myk
NOTES:
FACTS:
12 December 1918 – the plaintiff contracted his services to Tan Liuan Co. as superintendent of an oil factory which the latter contemplated in establishing in the city.
The period of the contract spanned 2 years. With the following stipulations:
Rate of P600 per month in the first year and
P700 per month during the second year. They were also given electricity and water for domestic consumption and a residence or in lieu thereof of P60.
It is understood and agreed that should the machinery to be installed in the said factory fail, for any reason, to arrive in the city of Manila within a period of six months from date hereof, this contract may be cancelled by the party of the second part at its option, such cancellation, however, not to occur before the expiration of such six months.
At the time of the execution of the contract the machinery had not yet been acquired, but 10 expellers were already ordered from the US.
The equipment necessary in the business did not arrive within the 6 months period nor at anytime provided by the defendants.
28 June 1919 – the defendants communicated in writing to the plaintiff that they had decided to rescind the contract, effective June 30th then current, upon which date he was discharged.
CAUSE OF ACTION: The plaintiff thereupon instituted this action to recover damages in the amount of P13,000, covering salary and perquisites due and to become due under the contract.
Plaintiff - the right to cancel the contract upon the contingency of the nonarrival of the machinery in Manila within six months, must be understood as applicable only in those cases where such nonarrival is due to causes not having their origin in the will or act of the defendants, as delays caused by strikes or unfavorable conditions of transporting by land or sea; and it is urged that the right to cancel cannot be admitted unless the defendants affirmatively show that the failure of the machinery to arrive was due to causes of that character, and that it did not have its origin in their own act or volition. In this connection the plaintiff relies on article 1256 of the Civil Code, which is to the effect that the validity and fulfillment of contracts cannot be left to the will of one of the contracting parties, and to article 1119, which says that a condition shall be deemed fulfilled if the obligor intentially impedes its fulfillment.
ISSUE: Whether or not the plaintiff may recover damages after the defendants rescinded the contract.
HELD: No.
RATIO:
SC –the language is broad enough to cover any case of the nonarrival of the machinery, due to whatever cause; and the stress in the expression "for any reason" should evidently fall upon the word "any." The language used in the stipulation should be given effect in its ordinary sense, without technicality or circumvention; and in this sense it is believed that the parties to the contract must have understood it.
Article 1256 of the Civil Code in our opinion creates no impediment to the insertion in a contract for personal service of a resolutory condition permitting the cancellation of the contract by one of the parties. Such a stipulation, as can be readily seen, does not make either the validity or the fulfillment of the contract dependent upon the will of the party to whom is conceded the privilege of cancellation; for where the contracting parties have agreed that such option shall exist, the exercise of the option is as much in the fulfillment of the contract as any other act which may have been the subject of agreement. Indeed, the cancellation of a contract in accordance with conditions agreed upon beforehand is fulfillment.
Undoubtedly one of the consequences of this stipulation was that the employers were left in a position where they could dominate the contingency, and the result was about the same as if they had been given an unqualified option to dispense with the services of the plaintiff at the end of six months. But this circumstance does not make the stipulation illegal.
But it will be said that the question is not so much one concerning the legality of the clause referred to as one concerning the interpretation of the resolutory clause as written, the idea being that the court should adjust its interpretation of said clause to the supposed precepts of article 1256, by restricting its operation exclusively to cases where the nonarrival of the machinery may be due to extraneous causes not referable to the will or act of the defendants. But even when the question is viewed in this aspect their result is the same, because the argument for the restrictive interpretation evidently proceeds on the assumption that the clause in question is illegal in so far as it purports to concede to the defendants the broad right to cancel the contract upon nonarrival of the machinery due to any cause; and the debate returns again to the point whether in a contract for the prestation of service it is lawful for the parties to insert a provision giving to the employer the power to cancel the contract in a contingency which may be dominated by himself. Upon this point what has already been said must suffice.
As we view the case, there is nothing in article 1256 which makes it necessary for us to warp the language used by the parties from its natural meaning and thereby in legal effect to restrict the words "for any reason," as used in the contract, to mean "for any reason not having its origin in the will or acts of the defendants." To impose this interpretation upon those words would in our opinion constitute an unjustifiable invasion of the power of the parties to establish the terms which they deem advisable, a right which is expressed in article 1255 of the Civil Code and constitutes one of the most fundamental conceptions of contract right enshrined in the Code.
The view already expressed with regard to the legality and interpretation of the clause under consideration disposes in a great measure of the argument of the appellant in so far as the same is based on article 1119 of the Civil Code. This provision supposes a case where the obligor intentionally impedes the fulfillment of a condition which would entitle the obligee to exact performance from the obligor; and an assumption underlying the provision is that the obligor prevents the obligee from performing some act which the obligee is entitled to perform as a condition precedent to the exaction of what is due to him. Such an act must be considered unwarranted and unlawful, involving per se a breach of the implied terms of the contract. The article can have no application to an external contingency which, like that involved in this case, is lawfully within the control of the obligor.
Facultative Condition -- In Spanish jurisprudence a condition like that here under discussion is designated by Manresa a facultative condition (vol. 8, p. 611), and we gather from his comment on articles 1115 and 1119 of the Civil Code that a condition, facultative as to the debtor, is obnoxious to the first sentence contained in article 1115 and renders the whole obligation void (vol. 8, p. 131). That statement is no doubt correct in the sense intended by the learned author, but it must be remembered that he evidently has in mind the suspensive condition, such as is contemplated in article 1115. Said article can have no application to the resolutory condition, the validity of which is recognized in article 1113 of the Civil Code. In other words, a condition at once facultative and resolutory may be valid even though the condition is made to depend upon the will of the obligor.
If it were apparent, or could be demonstrated, that the defendants were under a positive obligation to cause the machinery to arrive in Manila, they would of course be liable, in the absence of affirmative proof showing that the nonarrival of the machinery was due to some cause not having its origin in their own act or will. The contract, however, expresses no such positive obligation, and its existence cannot be implied in the fact of stipulation, defining the conditions under which the defendants can cancel the contract.
CASE LAW/ DOCTRINE:
Manresa has the following observation with respect to article 1256 of the Civil Code. Says he: "It is entirely licit to leave fulfillment to the will of either of the parties in the negative form of rescission, a case frequent in certain contracts (the letting of service for hire, the supplying of electrical energy, etc.), for in such supposed case neither is the article infringed, nor is there any lack of equality between the persons contracting, since they remain with the same faculties in respect to fulfillment." (Manresa, 2d ed., vol. 8, p. 610.)
DISSENTING/CONCURRING OPINION:
024 Herrera v. Leviste
15 October 2003 G. R. No. 156273
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds: Mode: Loss, Deterioration, Improvement
PONENTE: Bellosillo, J.
AUTHOR: Myk
NOTES:
FACTS:
10 June 1969 - Leviste obtained a loan from GSIS in the amount of (P1,854,311.50) and mortgaged its Paranaque and Buendia properties.
3 November 1971 – Herrera bought the Buendia property for P3,750,000.00. The contract to sell stipulated:
pay Leviste P11,895,688.50;
assume Leviste's indebtedness of P1854,311.50 to the GSIS; and
substitute the Paranaque property with his own within a period of six (6) months.
Leviste undertook to arrange for the conformity of the GSIS to petitioner's assumption of the obligation.
"failure to comply with any of the conditions contained therein, particularly the payment of the scheduled amortizations on the dates herein specified shall render this contract automatically cancelled and any and all payments made shall be forfeited in favor of the vendor and deemed as rental and/or liquidated damages."
Herrera took possession of the Buendia property, received rentals of P21,000.00 monthly, and collected approximately P800,000.00 from December, 1971, up to March, 1975. He remitted a total of only P300,000.00 to the GSIS.
Herrera requested that GSIS to restructure the mortgage restructuring of the mortgage obligation because of his own arrearages in the payment of the amortizations.
GSIS replied that as a matter of policy, it could not act on his request unless he first made proper substitution of property, updated the account, and paid 20% thereof to the GSIS. There was no requirement by the GSIS for the execution of a final deed of sale by Leviste in favor of petitioner.
2 June 1974 – GSIS sent notice to Leviste of its intention to foreclose the mortgaged properties by reason of default in the payment of amortizations. A Certificate of Sale was issued in favor of the GSIS, as the highest bidder.
3 March 1975 –Leviste assigned its right to redeem both foreclosed properties Jose Marcelo, Jr. (Marcelo for brevity).
20 November 1975, Marcelo redeemed the properties from the GSIS by paying it the sum of P3,232,766.94 for which he was issued a certificate of redemption.
The Paranaque property was turned over by Marcelo to Leviste upon payment by the latter of approximately P250,000.00 as disclosed at the hearing. Leviste needed the Parañque Property as it had sold the same and suit had been filed against it for its recovery.
6 May 1975 Herrera wrote the GSIS informing the latter of his right to redeem the foreclosed properties and asking that he be allowed to do so in installments. Apparently, the GSIS had not favorably acted thereon.
CAUSE OF ACTION: Herrera filed for injunction, damages, and cancellation of annotation.
ISSUE: Whether or not Herrera has a better right to the foreclosed properties.
HELD: Yes.
RATIO:
Petitioner seeks reconsideration on the grounds that it would result in patent injustice as he would not only forfeit the Buendia Property to Marcelo, but would also lose the amount of P1,895,688.50 and P300,000.00, which he paid to Leviste and the GSIS, respectively; that it would result in the unjust enrichment of Leviste; and that Leviste as well the GSIS and Marcelo would be benefiting at petitioner's expense.
Considering the grounds of petitioner's Motion for Reconsideration, the arguments adduced during the oral argument and in the parties' respective Memoranda, we resolve to deny reconsideration upon the following considerations:
The GSIS has not benefited in any way at the expense of petitioner. What it received, by way of redemption from respondent Marcelo, was the mortgage loan it had extended plus interest and sundry charges.
Neither has Marcelo benefited at the expense of petitioner. Said respondent had paid to GSIS the amount P 3,232,766.94, which is not far below the sum of P 3,750,000.00, which was the consideration petitioner would have paid to Leviste had his contract been consummated.
Leviste had neither profited at the expense of petitioner, for losing his Buendia Property, all he had received was P 1,854,311.50 from GSIS less amounts he had paid, plus P 1,895,688.00 paid to him by petitioner, the total of which is substantially a reasonable value of the Buendia Property.
It is quite true that petitioner had lost the P 1,895,688.00 he had paid to Leviste, plus P 300,000.00 he had paid to GSIS, less the rentals he had received when in possession of the Buendia Property. That loss is attributable to his fault in:
Not having been able to submit collateral to GSIS in substitution of the Paranaque Property;
Not paying off the mortgage debt when GSIS decided to foreclose; and
Not making an earnest effort to redeem the property as a possible redemptioner.
It cannot be validly said that petitioner had fully complied with all the conditions of his contract with Leviste.
He was not able to substitute the Parañaque Property with another collateral for the GSIS loan.
Nowhere in the letter (of the GSIS) was mentioned that a final deed of sale must first be executed and presented before the assumption may be considered. For if it was really the intention of GSIS, the requirement of Deed of Sale should have been stated in its letter.
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION:
025 Lachica v. Araneta
Date G.R. No.
TOPIC:
PONENTE:
AUTHOR: Myk
NOTES:
FACTS:
CAUSE OF ACTION:
ISSUE:
HELD:
RATIO:
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION:
026 Ponce de Leon v. Syjuco
31 October 1951 G.R. No. L-3316
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Period/ Term: Benefit: Presumption
PONENTE: Bautista Angelo, J.
AUTHOR: Myk
NOTES:
FACTS:
CAUSE OF ACTION:
ISSUE:
HELD:
RATIO:
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION:
031 Inchausti & Co. & Gregorio Yulo
25 March 1914 G.R. No: L-7721
TOPIC: Obli Classifications: Pure & Conditional: Joint or Solidary: Kinds: Parties Bound, Uniformity
PONENTE: Arellano, J.
AUTHOR: Myk
NOTES:
FACTS:
Teodoro Yulo, a property owner of Iloilo, for the exploitation and cultivation of his numerous haciendas in the province of Occidental Negros, had been borrowing money from the firm of Inchausti & Company.
9 April 1903 – He died testate and appointed as administrators his wife and children. His wife died on October the following year leaving Pedro, Francisco, Teodoro, Manuel, Gregorio, Mariano, Carmen, Concepcion, and Jose Yulo y Regalado as the heirs of the estate of Teodoro & Gregoria (Concepcion and Jose were minors, while Teodoro was mentally incompetent) These children preserved the same relations under the name of Hijos de T. Yulo continuing their current account with Inchausti & Company in the best and most harmonious reciprocity until said balance amounted to two hundred thousand pesos.
26 June 1908 – Gregorio Yulo, for himself and in representation of his brothers Pedro, Francisco, Manuel, Mariano, and Carmen, executed a notarial document admitting their indebtedness to Inchausti & Company in the sum of P203,221.27 as securities for their loan they mortgaged an undivided 6/9 of their 39 properties.
11 January 1909 – Gregorio Yulo in representation of Hijos de T. Yulo answered a letter to the firm with the following terms:
"With your favor of the 2d inst. we have received an abstract of our current account with your important firm, closed on the 31st of last December, with which we desire to express our entire conformity as also with the balance in your favor of P271,863.12."
17 July 1909 – Inchausti & Company informed Hijos de T. Yulo of the reduction of the said balance to P253,445.42. Hijos de T. Yulo expressed its conformity by means of a letter of the 19th of the same month and year. Regarding this conformity a new document evidencing the mortgage credit was formalized.
12 August 1909 – Gregorio Yulo, for himself and in representation of his brother Manuel, and in their own behalf Pedro, Francisco, Carmen and Concepcion, executed a document ratified all the contents of the prior document of June 26, 1908, severally and jointly acknowledged and admitted their indebtedness to Inchausti & Company for the net amount of two hundred fifty-three thousand four hundred forty-five pesos and forty-two centavos (P253,445.42) @ 10% per annum and in five installments at the rate of fifty thousand pesos (P50,000), except the last, this being fifty-three thousand four hundred forty-five pesos and forty-two centavos (P53,445.42), beginning June 30, 1910, continuing successively on the 30th of each June until the last payment on June 30, 1914. Among other clauses, they expressly stipulated the following:
Fifth. The default in payment of any of the installments established in clause 3, or the noncompliance of any of the other obligations which by the present document and that of June 26, 1908, we, the Yulos, brothers and sisters, have assumed, will result in the maturity of all the said installments, and as a consequence thereof, if they so deem expedient Messrs. Inchausti & Company may exercise at once all the rights and actions which to them appertain in order to obtain the immediate and total payment of our debt, in the same manner that they would have so done at the maturity of the said installments.
Fifteenth. All the obligations which by this, as well as by the document of June 26, 1908, concern us, will be understood as having been contradicted in solidum by all of us, the Yulos, brothers and sisters.
Sixteenth. It is also agreed that this instrument shall be confirmed and ratified in all its parts, within the present week, by our brother Don Mariano Yulo y Regalado who resides in Bacolod, otherwise it will not be binding on Messrs. Inchausti & Company who can make use of their rights to demand and obtain immediate payment of their credit without any further extension or delay, in accordance with what we have agreed.
The instrument was neither ratified nor confirmed by Mariano Yulo.
The Yulos, brothers and sisters, who executed the preceding instrument, did not pay the first installment of the obligation.
27 March 1911 – Inchausti & Company brought an ordinary action in the Court of First Instance of Iloilo, against Gregorio Yulo for the payment of the said balance due of two hundred fifty-three thousand, four hundred forty-five pesos and forty-two centavos P253,445.42) with interest at ten per cent per annum, on that date aggregating forty-two thousand, nine hundred forty-four pesos and seventy-six centavos (P42,944.76)
12 May 1911 – Francisco, Manuel, and Carmen Yulo y Regalado executed in favor Inchausti & Company another notarial instrument in recognition of the debt and obligation of payment in the following terms:
First, the debt is reduce for them to two hundred twenty-five thousand pesos (P225,000); second, the interest is likewise reduced for them to 6 percent per annum, from March 15, 1911; third, the installments are increase to eight, the first of P20,000, beginning on June 30, 1911, and the rest of P30,000 each on the same date of each successive year until the total obligation shall be finally and satisfactorily paid on June 30, 1919," it being expressly agreed "that if any of the partial payments specified in the foregoing clause be not paid at its maturity, the amount of the said partial payment together with its interest shall bear interest at the rate of 15 per cent per annum from the date of said maturity, without the necessity of demand until its complete payment;" that "if during two consecutive years the partial payments agreed upon be not made, they shall lose the right to make use of the period granted to them for the payment of the debt or the part thereof which remains unpaid, and that Messrs. Inchausti & Company may consider the total obligation due and demandable, and proceed to collect the same together with the interest for the delay above stipulated through all legal means." (4th clause.)
Thus was it stipulated between Inchausti & Company and the said three Yulos, brothers and sisters — by way of compromise so that Inchausti & Company might, as it did, withdraw the claims pending in the special proceedings for the probate of the will of Don Teodoro Yulo and of the intestacy of Doña Gregoria Regalado — stipulating expressly however in the sixth clause that
"Inchausti & Company should include in their suit brought in the Court of First Instance of Iloilo against Don Gregorio Yulo, his brother and joint co-obligee, Don Pedro Yulo, and they will procure by all legal means and in the least time possible a judgment in their favor against the said Don Gregorio and Don Pedro, sentencing the later to pay the total amount of the obligation acknowledged by them in the aforementioned instrument of August 12, 1909; with the understanding that if they should deem it convenient for their interests, Don Francisco, Don Manuel, and Doña Carmen Yulo may appoint an attorney to cooperate with the lawyers of Inchausti & Company in the proceedings of the said case."
10 July 1911 – Gregorio Yulo answered the complaint and alleged as defenses; first, that an accumulation of interest had taken place and that compound interest was asked for the Philippine currency at par with Mexican; second, that in the instrument of August 21, 1909, two conditions were agreed one of which ought to be approved by the Court of First Instance, and the other ratified and confirmed by the other brother Mariano Yulo, neither of which was complied with; third , that with regard to the same debt claims were presented before the commissioners in the special proceedings over the inheritances of Teodoro Yulo and Gregoria Regalado, though later they were dismissed, pending the present suit; fourth and finally, that the instrument of August 12, 1909, was novated by that of May 12, 1911, executed by Manuel, Francisco and Carmen Yulo.
CAUSE OF ACTION: Recovery of the sum of money.
ISSUE: Whether or not Inchausti & Co can sue Gregorio Yulo alone despite the fact that there are other persons who signed the documents.
HELD: Yes.
RATIO:
Whether the company can sue Gregorio Yulo alone there being other obligors?
With respect to the first it cannot be doubted that, the debtors having obligated themselves in solidum, the creditor can bring its action in toto against any one of them, inasmuch as this was surely its purpose in demanding that the obligation contracted in its favor should be solidary having in mind the principle of law that, "when the obligation is constituted as a conjoint and solidary obligation each one of the debtors is bound to perform in full the undertaking which is the subject matter of such obligation." (Civil Code, articles 1137 and 1144.)
If so, whether it lost this right by the fact of its having agreed with the other obligors in the reduction of the debt, the proroguing of the obligation and the extension of the time for payment, in accordance with the instrument of May 12, 1911?
And even though the creditor may have stipulated with some of the solidary debtors diverse installments and conditions, as in this case, Inchausti & Company did with its debtors Manuel, Francisco, and Carmen Yulo through the instrument of May 12, 1911, this does not lead to the conclusion that the solidarity stipulated in the instrument of August 12, 1909 is broken, as we already know the law provides that "solidarity may exist even though the debtors are not bound in the same manner and for the same periods and under the same conditions." (Ibid, article 1140.) Whereby the second point is resolved.
Whether this contract with the said three obligors constitutes a novation of that of August 12, 1909, entered into with the six debtors who assumed the payment of two hundred fifty-three thousand and some odd pesos, the subject matter of the suit?
With respect to the third, there can also be no doubt that the contract of May 12, 1911, does not constitute a novation of the former one of August 12, 1909, with respect to the other debtors who executed this contract, or more concretely, with respect to the defendant Gregorio Yulo: First, because "in order that an obligation may be extinguished by another which substitutes it, it is necessary that it should be so expressly declared or that the old and the new be incompatible in all points" (Civil Code, article 1204); and the instrument of May 12, 1911, far from expressly declaring that the obligation of the three who executed it substitutes the former signed by Gregorio Yulo and the other debtors, expressly and clearly stated that the said obligation of Gregorio Yulo to pay the two hundred and fifty-three thousand and odd pesos sued for exists, stipulating that the suit must continue its course and, if necessary, these three parties who executed the contract of May 12, 1911, would cooperate in order that the action against Gregorio Yulo might prosper (7th point in the statement of facts), with other undertakings concerning the execution of the judgment which might be rendered against Gregorio Yulo in this same suit. "It is always necessary to state that it is the intention of the contracting parties to extinguish the former obligation by the new one" (Judgment in cassation, July 8, 1909). There exist no incompatibility between the old and the new obligation as will be demonstrated in the resolution of the last point, and for the present we will merely reiterate the legal doctrine that an obligation to pay a sum of money is not novated in a new instrument wherein the old is ratified, by changing only the term of payment and adding other obligations not incompatible with the old one. (Judgments in cassation of June 28, 1904 and of July 8, 1909.)
If not so, whether it does have any effect at all in the action brought, and in this present suit.
The defendant has a right to enjoy the benefits of partial remission of the debt granted by the creditor to the defendant's co-solidary debtors Under the Civil Code (Art. 1143). The amount stated in the contract of August 12, 1909,cannot be recovered but only that stated in the contract of May 12, 1911, which amounts to P225,000.Further, under Art. 1148 of the Civil Code, "the solidary debtor may utilize against the claims of the creditor all the defenses arising from the nature of the obligation and those which are personal to him. Those personally pertaining to the others may be employed by him only with regard to the share of the debt for which the latter may be liable." Not all of the P225, 000 can be demanded of him, for that part of Francisco, Manuel and Carmen are not yet due. (refer to the difference of 1st payment due of the two contracts). Thus, Gregorio Yulo shall pay the amount of P112, 500 the three-sixths part which feel due on the first contract, with interest stipulated in the May 12, 1911 contract.
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION:
032 Inciong v. CA & PBC
26 June 1996 G.R. No. 96405
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Period/ Term: Benefit: Presumption
PONENTE: Romero, J.
AUTHOR: Myk
NOTES:
FACTS:
3 February 1983 – Inciong, Naybe, & Pantanosas executed a promissory note holding them jointly & severally liable to PBC. It was due on 5 May 1983. They failed to pay.
"Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY promise to pay to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City of Cagayan de Oro, Philippines the sum of FIFTY THOUSAND ONLY (P50,000. 00) Pesos, Philippine Currency, together with interest x x x at the rate of SIXTEEN (16) per cent per annum until fully paid."
14 November 1983 & 8 June 1984 – PBC sent them telegrams demanding the payment. A final demand letter was given to Naybe on 11 December 1984. PBC filed a complaint for the collection of P50,000.00 against the 3 obligors.
Inciong alleged that 5 copies of blank promissory notes were brought to him. He alleged that he signed only 1 and for the amount of P5,000.00. He said that the promissory notes were obtained thru trickery, fraud, * misrepresentation.
CAUSE OF ACTION: PBC's recovery of the amoun in the promissory note.
ISSUE: Whether or not the dismissal against Naybe, the principal debtor, and against Pantanosas, his co-maker, constituted a release of his obligation? His basis for his claim is Article 2080 of the Civil Code which provides that:
"The guarantors, even though they be solidary, are released from their obligation whenever by some act of the creditor, they cannot be subrogated to the rights, mortgages, and preferences of the latter."
HELD: NO.
RATIO:
It should be kept in mind that petitioner signed the promissory note as a solidary co-maker and not as a guarantor.
A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, and each creditor is entitled to demand the whole obligation.[17] On the other hand, Article 2047 of the Civil Code states:
"By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed, In such a case the contract is called a suretyship."
While a guarantor may bind himself solidarily with the principal debtor, the liability of a guarantor is different from that of a solidary debtor.
Thus, Tolentino explains: "A guarantor who binds himself in solidum with the principal debtor under the provisions of the second paragraph does not become a solidary co-debtor to all intents and purposes. There is a difference between a solidary co-debtor, and a fiador in solidum (surety). The later, outside of the liability he assumes to pay the debt before the property of the principal debtor has been exhausted, retains all the other rights, actions and benefits which pertain to him by reason of the fiansa; while a solidary co-debtor has no other rights than those bestowed upon him in Section 4, Chapter 3, title I, Book IV of the Civil Code."[18]
Under Art. 1207 thereof, when there are two or more debtors in one and the same obligation, the presumption is that the obligation is joint so that each of the debtors is liable only for a proportionate part of the debt. There is a solidarity liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires.
Because the promissory note involved in this case expressly states that the three signatories therein are jointly and severally liable, any one, some or all of them may be proceeded against for the entire obligation.[20] The choice is left to the solidary creditor to determine against whom he will enforce collection.[21] Consequently, the dismissal of the case against Judge Pontanosas may not be deemed as having discharged petitioner from liability as well. As regards Naybe, suffice it to say that the court never acquired jurisdiction over him. Petitioner, therefore, may only have recourse against his co-makers, as provided by law.
CASE LAW/ DOCTRINE:
A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, and each creditor is entitled to demand the whole obligation.[17] On the other hand, Article 2047 of the Civil Code states:
"By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed, In such a case the contract is called a suretyship."
While a guarantor may bind himself solidarily with the principal debtor, the liability of a guarantor is different from that of a solidary debtor.
Thus, Tolentino explains: "A guarantor who binds himself in solidum with the principal debtor under the provisions of the second paragraph does not become a solidary co-debtor to all intents and purposes. There is a difference between a solidary co-debtor, and a fiador in solidum (surety). The later, outside of the liability he assumes to pay the debt before the property of the principal debtor has been exhausted, retains all the other rights, actions and benefits which pertain to him by reason of the fiansa; while a solidary co-debtor has no other rights than those bestowed upon him in Section 4, Chapter 3, title I, Book IV of the Civil Code."[18]
Under Art. 1207 thereof, when there are two or more debtors in one and the same obligation, the presumption is that the obligation is joint so that each of the debtors is liable only for a proportionate part of the debt. There is a solidarity liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires.
DISSENTING/CONCURRING OPINION:
033 RCBC v. CA, Philippine Blooming Mills, Inc. & Alfredo Ching
27 October 1989 G.R. No. 85396
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Period/ Term: Benefit: Presumption
PONENTE: Melencio-Herrera, J.
AUTHOR: Myk
NOTES:
FACTS:
5 May 1979 – Alfredo Ching signed a 'Comprehensive Surety Agreement" with RCBC binding himself to jointly & severally guarantee the prompt payment of all PBM obligations owing RCBC the aggregate sum of 40,000,000.00
8 September – 30 October 1980 – PBM filed several application of letters of credit with RCBC. In said documents PBM obligated itself to pay on demand all drafts drawn under the credits. RCBC opened the corresponding letters of credit and imported various goods for PBM's account. In due time the imported goods arrived and were released, in trust, to PBM who acknowledged receipt thereof through various trust receipts. All in all, PBM's obligations stood at P7,982,649.08.
7 August 1981 – RCBC filed a complaint for collection of the sum against PBM & Alfredo Ching.
A Writ of Preliminary Attachment was issued against the assets and properties of PBM & Alfredo Ching.
By way of special and affirmative defenses they alleged that "although the trust receipts stipulate due dates, the true intent and agreement of the parties was that the maturity dates of the trust receipts were to be extended at the end of the stipulated dates, as had been the customary practice of RCBC with PBM." The same was opposed by PBM & Ching on 23 September 1981. The attachment was lifted on 4 December 1981.
1 April 1982 – PBM filed a Petition for Suspension of Payments with the Securities and Exchange Commission, docketed as SEC Case No. 2250, seeking at the same time its rehabilitation.
6 July 1982 – an injunctive order was issued wherein all actions for claims against PBM pending before any Court or tribunal, in whatever stage the same may have been, were ordered suspended by the SEC in order to give the Commission the opportunity to pass upon the feasibility of any rehabilitation plans. And on 26 April 1988, SEC approved the revised rehabilitation plan and ordered its implementation.
14 October 1982 - RCBC pursued its claims with the CFI. Unopposed, a Motion for Summary Judgment in CV-42333, a motion for extension to file said opposition having been earlier withdrawn. RCBC contended that respondents PBM and Ching had not denied their indebtedness to RCBC and, therefore, no genuine issue was raised in the pleadings. The court rendered a judgment in favour of RCBC.
CAUSE OF ACTION: Recovery of the sum of 40,000,000.00 against PBM, as principal and Ching, as guarantor.
ISSUE: Whether or not an order from the SEC suspending payment of all claims against the principal debtor precludes the creditor from recovering from the surety.
HELD: No. He can be sued separately to enforce his liability as Surety for PBM
RATIO:
Where an obligation expressly states a solidary liability, the concurrence of two or more creditors or two or more debtors in one and the same obligation implies that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation (Article 1207, Civil Code).
The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously (Article 1216, Civil Code).
That there exists a Comprehensive Surety Agreement between RCBC and respondent Ching is admitted. There is no escaping the attendant liability that binds respondent Ching, as Surety. He is charged as an original promissor by virtue of his primary obligation under the Suretyship Agreement. That Agreement is bare of words imputing to respondent Ching any liability other than that of a Surety who binds himself to insure a debt in his personal capacity, lacking consideration therefor notwithstanding (p. 94, Original Record). That respondent Ching acted for and on behalf of respondent PBM as part of its usual corporate procedure is not supported by the evidence nor the pleadings on record, nor the Agreement itself .We cannot give any additional meaning to the plain language of the subject agreement.
It is basic that the parties are bound by the terms of their contract, which is the law between them. The extent of a surety's liability is determined only by the clause of the contract of suretyship. It cannot be extended by implication, beyond the terms of the contract. Conversely, liability therefor may not be restricted unless expressly so stated.
He can't seek refuge under the SEC's order.
The SEC injunctive Order cannot effect a suspension of payment of respondent Surety's due and demandable obligation, it being clear therefrom that the rehabilitation receivers were limited "to tak(ing) custody and control over all the existing assets and property of PBM." Nothing in said Order puts respondent Ching within its scope.
CASE LAW/ DOCTRINE:
Where an obligation expressly states a solidary liability, the concurrence of two or more creditors or two or more debtors in one and the same obligation implies that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation (Article 1207, Civil Code).
The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously (Article 1216, Civil Code).
It is basic that the parties are bound by the terms of their contract, which is the law between them. The extent of a surety's liability is determined only by the clause of the contract of suretyship. It cannot be extended by implication, beyond the terms of the contract. Conversely, liability therefor may not be restricted unless expressly so stated.
DISSENTING/CONCURRING OPINION:
034 Lafarge Cement Philippines, Inc., Luzon Continental Land Corporation, Continental Operating Corporation, & Philip Roseberg v. Continental Cement Corporation, Gregory T. Lim, & Anthony A. Mariano
23 November 2004 G.R. No. 155173
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Kinds:
PONENTE: Panganiban, J.
AUTHOR: Myk
NOTES:
FACTS:
11 August 1998 – parties executed an LOI whereby Lafarge Cement Philippines, Inc. (Lafarge), on behalf of its affiliates and other qualified entities, including Petitioner Luzon Continental Land Corporation (LCLC), agreed to purchase the cement business of Respondent Continental Cement Corporation (CCC).
21 October 1998 – Lafarge & CCC entered into a Sale and Purchase Agreement (SPA).
At the time of the foregoing transactions, petitioners were well aware that CCC had a case pending with the Supreme Court. The case was docketed as GR No. 119712, entitled Asset Privatization Trust (APT) v. Court of Appeals and Continental Cement Corporation.
In anticipation of the liability that the High Tribunal might adjudge against CCC, the parties, under Clause 2 (c) of the SPA, allegedly agreed to retain from the purchase price a portion of the contract price in the amount of P117,020,846.84 – the equivalent of US$2,799,140. This amount was to be deposited in an interest-bearing account in the First National City Bank of New York (Citibank) for payment to APT, the petitioner in GR No. 119712.
Lafarge allegedly refused to apply the sum to the payment to APT, despite the subsequent finality of the Decision in GR No. 119712 in favor of the latter and the repeated instructions of Respondent CCC.
Fearful that nonpayment to APT would result in the foreclosure, not just of its properties covered by the SPA with Lafarge but of several other properties as well, CCC filed before the Regional Trial Court of Quezon City on June 20, 2000, a "Complaint with Application for Preliminary Attachment" against petitioners.
Lafarge moved to dismiss the Complaint on the ground that it violated the prohibition on forum-shopping.
CCC had allegedly made the same claim it was raising in another action, which involved the same parties and which was filed earlier before the International Chamber of Commerce.
After the trial court denied the Motion to Dismiss in its November 14, 2000 Order, petitioners elevated the matter before the Court of Appeals in CA-GR SP No. 68688.
To avoid being in default and without prejudice to the outcome of their appeal, Lafarge filed their Answer and Compulsory Counterclaims ad Cautelam before the trial court in Civil Case No. Q-00-41103. In their Answer, they denied the allegations in the Complaint.
CAUSE OF ACTION:
ISSUE: Whether or not defendants in a civil case implead in their counterclaims persons who were not parties to the original complaint?
HELD: Yes.
RATIO:
Joint & Solidary character of their counterclaim against CCC, Lim & Mariano.
The solidary character of Lim & Mariano alleged liability is precisely why credence cannot be given to petitioners' assertion. According to such assertion, Respondent CCC cannot move to dismiss the counterclaims on grounds that pertain solely to its individual co-debtors.
In cases filed by the creditor, a solidary debtor may invoke defenses arising from the nature of the obligation, from circumstances personal to it, or even from those personal to its co-debtors. Article 1222 of the Civil Code provides:
"A solidary debtor may, in actions filed by the creditor, avail itself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertain to his own share. With respect to those which personally belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible."
The ambiguity in petitioners' counterclaims notwithstanding, respondents' liability, if proven, is solidary. This characterization finds basis in Article 1207 of the Civil Code, which provides that obligations are generally considered joint, except when otherwise expressly stated or when the law or the nature of the obligation requires solidarity. However, obligations arising from tort are, by their nature, always solidary. We have assiduously maintained this legal principle as early as 1912 in Worcester v. Ocampo,[30] in which we held:
"x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis of the present action is tort. They fail to recognize the universal doctrine that each joint tort feasor is not only individually liable for the tort in which he participates, but is also jointly liable with his tort feasors. x x x
"It may be stated as a general rule that joint tort feasors are all the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit. They are each liable as principals, to the same extent and in the same manner as if they had performed the wrongful act themselves. x x x
The act of Respondent CCC as a solidary debtor – that of filing a motion to dismiss the counterclaim on grounds that pertain only to its individual co-debtors – is therefore allowed.
In a "joint" obligation, each obligor answers only for a part of the whole liability; in a "solidary" or "joint and several" obligation, the relationship between the active and the passive subjects is so close that each of them must comply with or demand the fulfillment of the whole obligation.[31] The fact that the liability sought against the CCC is for specific performance and tort, while that sought against the individual respondents is based solely on tort does not negate the solidary nature of their liability for tortuous acts alleged in the counterclaims. Article 1211 of the Civil Code is explicit on this point:
"Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions."
However, a perusal of its Motion to Dismiss the counterclaims shows that Respondent CCC filed it on behalf of Co-respondents Lim and Mariano; it did not pray that the counterclaim against it be dismissed.
Be that as it may, Respondent CCC cannot be declared in default. Jurisprudence teaches that if the issues raised in the compulsory counterclaim are so intertwined with the allegations in the complaint, such issues are deemed automatically joined.[33] Counterclaims that are only for damages and attorney's fees and that arise from the filing of the complaint shall be considered as special defenses and need not be answered.[34]
While Respondent CCC can move to dismiss the counterclaims against it by raising grounds that pertain to individual defendants Lim and Mariano, it cannot file the same Motion on their behalf for the simple reason that it lacks the requisite authority to do so. A corporation has a legal personality entirely separate and distinct from that of its officers and cannot act for and on their behalf, without being so authorized. Thus, unless expressly adopted by Lim and Mariano, the Motion to Dismiss the compulsory counterclaim filed by Respondent CCC has no force and effect as to them.
CASE LAW/ DOCTRINE:
Obligations may be classified as either joint or solidary. "Joint" or "jointly" or "conjoint" means mancum or mancomunada or pro rata obligation; on the other hand, "solidary obligations" may be used interchangeably with "joint and several" or "several." Thus, petitioners' usage of the term "joint and solidary" is confusing and ambiguous.
"Joint tort feasors are jointly and severally liable for the tort which they commit. The persons injured may sue all of them or any number less than all. Each is liable for the whole damages caused by all, and all together are jointly liable for the whole damage. It is no defense for one sued alone, that the others who participated in the wrongful act are not joined with him as defendants; nor is it any excuse for him that his participation in the tort was insignificant as compared to that of the others. x x x
"Joint tort feasors are not liable pro rata. The damages can not be apportioned among them, except among themselves. They cannot insist upon an apportionment, for the purpose of each paying an aliquot part. They are jointly and severally liable for the whole amount. x x x
"A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any claim which might exist against the others. There can be but satisfaction. The release of one of the joint tort feasors by agreement generally operates to discharge all. x x x
"Of course the court during trial may find that some of the alleged tort feasors are liable and that others are not liable. The courts may release some for lack of evidence while condemning others of the alleged tort feasors. And this is true even though they are charged jointly and severally."
In a "joint" obligation, each obligor answers only for a part of the whole liability; in a "solidary" or "joint and several" obligation, the relationship between the active and the passive subjects is so close that each of them must comply with or demand the fulfillment of the whole obligation.[31] The fact that the liability sought against the CCC is for specific performance and tort, while that sought against the individual respondents is based solely on tort does not negate the solidary nature of their liability for tortuous acts alleged in the counterclaims. Article 1211 of the Civil Code is explicit on this point:
"Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions."
DISSENTING/CONCURRING OPINION:
035 Jaucian v. Querol
5 October 1919 G.R. No. L-11307
TOPIC: Obli Classifications: Pure & Conditional: Conditional: Period/ Term: Benefit: Presumption
PONENTE: Street, J.
AUTHOR: Myk
NOTES:
FACTS:
October 1908 – Dayandante & Rogero executed a private writing binding themselves to be indebted to Jaucian in the sum of P13,332.33.
We jointly and severally acknowledge our indebtedness in the sum of P13,332.23 Philippine currency (a balance made October 23, 1908) bearing interest at the rate of 10 per cent per annum to Roman Jaucian, of age, a resident of the municipality of Ligao, Province of Albay, Philippine Islands and married to Pilar Tell.
Rogero signed this document in the capacity of surety for Lino Dayandante.
But as clearly appears from the instrument itself both debtors bound themselves jointly and severally to the creditor, and there is nothing in the terms of the obligation itself to show that the relation between the two debtors was that of principal and surety.
November 1909 – Rogero brought an action in the CFI against Jaucian, praying that the document in question be canceled as to her upon the ground that her signature was obtained by means of fraud.
Jaucian asked for judgment against the plaintiff for the amount due upon the obligation, which appears to have matured at that time. Judgment was rendered in the CFI in favor of the Jaucian, from which judgment the Jaucian appealed to the Supreme Court.
Rogero died while the SC case was pending. The SC rendered a decision reversing the judgment of the CFI. During the pendency of the appeal, proceedings were had in the CFI for the administration of the estate of Rogero where Querol was named administrator.
Hermenegilda Rogero having been simply surety for Lino Dayandante, the administrator has a right to require that Roman Jaucian produce a judgment for his claim against Lino Dayandante, in order that the said administrator may be subrogated to the rights of Jaucian against Dayandante. The simple affidavit of the principal debtor that he had no property except P100 worth of property which he has ceded to the creditor is not sufficient for the court to order the surety to pay the debt of the principal. When this action shall have been taken against Lino Dayandante and an execution returned "no effects," then the claim of Jaucian against the estate will be ordered paid or any balance that may be due to him.
Acting upon the suggestions contained in this order Jaucian brought an action against Dayandante and recovered a judgment against him for the full amount of the obligation evidenced by the document of October 24, 1908. Execution was issued upon this judgment, but was returned by the sheriff wholly unsatisfied, no property of the judgment debtor having been found.
28 October 1914 – counsel for Jaucian filed another petition in the proceedings upon the estate of Hermenegilda Rogero, in which they averred, upon the grounds last stated, that Dayandante was insolvent, and renewed the prayer of the original petition. It was contended that the court, by its order of April 13, 1914, had "admitted the claim."
The petition was again opposed by the administrator of the estate upon the grounds (a) that the claim was not admitted by the order of April 13, 1914, and that "the statement of the court with regard to the admissibility of the claim was mere dictum," and (b) "that the said claim during the life and after the death of Hermenegilda Rogero, which occurred on August 2, 1911, was a mere contingent claim against the property of the said Hermenegilda Rogero, was not reduced to judgment during the lifetime of said Hermenegilda Rogero, and was not presented to the commissioners on claims during the period of six months from which they were appointed in this estate, said commissioner having given due and lawful notice of their sessions and more than one year having expired since the report of the said commissioners; and this credit is outlawed or prescribed, and that this court has no jurisdiction to consider this claim."
On November 24, 1914, the Honorable J. C. Jenkins, then sitting in the Court of First Instance of Albay, after hearing argument, entered an order refusing to grant Jaucian's petition. To this ruling the appellant excepted and moved for a rehearing. On December 11, 1914, the judge a quo entered an order denying the rehearing and setting forth at length, the reasons upon which he based his denial of the petition. These grounds were briefly, that as the claim had never been presented to the committee on claims, it was barred; that the court had no jurisdiction to entertain it; that the decision of the Supreme Court in the action brought by the deceased against Jaucian did not decide anything except that the document therein disputed was a valid instrument.
In this court the appellant contends that the trial judge erred (a) in refusing to give effect to the order made by the Honorable P.M. Moir, dated April 13, 1914; and (b) in refusing to order the administrator of the estate of Hermenegilda Rogero to pay the appellant the amount demanded by him. The contention with regard to the order of April 13, 1914, is that no appeal from it having been taken, it became final.
An examination of the order in question, however, leads us to conclude that it was not a final order, and therefore it was not appealable. In effect, it held that whatever rights Jaucian might have against the estate of Rogero were subject to the performance of a condition precedent, namely, that he should first exhaust this remedy against Dayandante. The court regarded Dayandante. The court regarded Dayandante as the principal debtor, and the deceased as a surety only liable for such deficiency as might result after the exhaustion of the assets of the principal co-obligor. The pivotal fact upon which the order was based was the failure of appellant to show that he had exhausted his remedy against Dayandante, and this failure the court regarded as a complete bar to the granting of the petition at that time. The court made no order requiring the appellee to make any payment whatever, and that part of the opinion, upon which the order was based, which contained statements of what the court intended to do when the petition should be renewed, was not binding upon him or any other judge by whom he might be succeeded. Regardless of what may be our views with respect to the jurisdiction of the court to have granted the relief demanded by appellant in any event, it is quite clear from what we have stated that the order of April 13, 1914, required no action by the administrator at that time, was not final, and therefore was not appealable. We therefore conclude that no rights were conferred by the said order of April 13, 1914, and that it did not preclude the administrator from making opposition to the petition of the appellant when it was renewed.
Appellant contends that his claim against the deceased was contingent. His theory is that the deceased was merely a surety of Dayandante. His argument is that as section 746 of the Code of Civil Procedure provides that contingent claims "may be presented with the proof to the committee," it follows that such presentation is optional. Appellant, furthermore, contends that if a creditor holding a contingent claim does not see fit to avail himself of the privilege thus provided, there is nothing in the law which says that his claim is barred or prescribed, and that such creditor, under section 748 of the Code of Civil Procedure, at any time within two years from the time allowed other creditors to present their claims, may, if his claim becomes absolute within that period present it to the court for allowance. On the other hand counsel for appellee contends (1) that contingent claims like absolute claims are barred for non-presentation to the committee but (2) that the claim in question was in reality an absolute claim and therefore indisputably barred.
CAUSE OF ACTION:
ISSUE:
HELD:
RATIO:
The second contention takes logical precedence over the first and our view of its conclusiveness renders any consideration of the first point entirely unnecessary to a determination of the case. Bearing in mind that the deceased Hermenegilda Rogero, though surety for Lino Dayandante, was nevertheless bound jointly and severally with him in the obligation, the following provisions of law are here pertinent.
Article 1822 of the Civil Code provides:
By security a person binds himself to pay or perform for a third person in case the latter should fail to do so.
"If the surety binds himself jointly with the principal debtor, the provisions of section fourth, chapter third, title first, of this book shall be observed.
Article 1144 of the same code provides:
A creditor may sue any of the joint and several (solidarios) debtors or all of them simultaneously. The claims instituted against one shall not be an obstacle for those that may be later presented against the others, as long as it does not appear that the debt has been collected in full.
Article 1830 of the same code provides:
The surety can not be compelled to pay a creditor until application has been previously made of all the property of the debtor.
Article 1831 provides:
This application can not take place —
(1) . . . (2) If he has jointly bound himself with the debtor . . . .
The foregoing articles of the Civil Code make it clear that Hermenegilda Rogero was liable absolutely and unconditionally for the full amount of the obligation without any right to demand the exhaustion of the property of the principal debtor previous to its payment. Her position so far as the creditor was concerned was exactly the same as if she had been the principal debtor.
The absolute character of the claim and the duty of the committee to have allowed it is full as such against the estate of Hermenegilda Rogero had it been opportunely presented and found to be a valid claim is further established by section 698 of the Code of Civil Procedure, which provides:
When two or more persons are indebted on a joint contract, or upon a judgment founded on a joint contract, and either of them dies, his estate shall be liable therefor, and it shall be allowed by the committee as if the contract had been with him alone or the judgment against him alone. But the estate shall have the right to recover contribution from the other joint debtor.
In the official Spanish translation of the Code of Civil Procedure, the sense of the English word "joint," as used in two places in the section above quoted, is rendered by the Spanish word "mancomunadamente." This is incorrect. The sense of the word "joint," as here used, would be more properly translated in Spanish by the word "solidaria," though even this word does not express the meaning of the English with entire fidelity.
The section quoted, it should be explained, was originally taken by the author, or compiler, of our Code of Civil Procedure from the statutes of the State of Vermont; and the word "joint" is, therefore, here used in the sense which attaches to it in the common law. Now, in the common law system there is no conception of obligation corresponding to the divisible joint obligation contemplated in article 1138 of the Civil Code. This article declares in effect that, if not otherwise expressly determined, every obligation in which there is no conception of obligation corresponding to the divisible joint obligation contemplated in article 1138 of the Civil Code. This article declares in effect that, if not otherwise expressly determined, every obligation in which there are numerous debtors — we here ignore plurality of creditors — shall be considered divided into as many parts as there are debtors, and each part shall be deemed to be the distinct obligation of one of the respective debtors. In other words, the obligation is apportionable among the debtors; and in case of the simple joint contract neither debtor can be required to satisfy more than his aliquot part.
In the common law system every debtor in a joint obligation is liable in solidum for the whole; and the only legal peculiarity worthy of remark concerning the "joint" contract at common law is that the creditor is required to sue all the debtors at once. To avoid the inconvenience of this procedural requirement and to permit the creditor in a joint contract to do what the creditor in a solidary obligation can do under article 1144 of the Civil Code, it is not unusual for the parties to a common law contract to stipulate that the debtors shall be "jointly and severally" liable. The force of this expression is to enable the creditor to sue any one of the debtors or all together at pleasure.
It will thus be seen that the purpose of section 698 of the Code of Civil Procedure, considered as a product of common law ideas, is not to convert an apportionable joint obligation into a solidary joint obligation — for the idea of the benefit of division is totally foreign to the common law system — but to permit the creditor to proceed at once separately against the estate of the deceased debtor, without attempting to draw the other debtors into intestate or testamentary proceedings. The joint contract of the common law is and always has been a solidary obligation so far as the extent of the debtor's liability is concerned.
In Spanish law the comprehensive and generic term by which to indicate multiplicity of obligation, arising from plurality of debtors or creditors, is mancomunidad, which term includes (1) mancomunidad simple, ormancomunidad properly such, and (2) mancomunidad solidaria. In other words the Spanish system recognizes two species of multiple obligation, namely, the apportionable joint obligation and the solidary joint obligation. The solidary obligation is, therefore, merely a form of joint obligation.
The idea of the benefit of division as a feature of the simple joint obligation appears to be a peculiar creation of Spanish jurisprudence. No such idea prevailed in the Roman law, and it is not recognized either in the French or in the Italian system.
This conception is a badge of honor to Spanish legislation, honorably shared with the Spanish — American, since French and Italian codes do not recognize the distinction of difference, just expounded, between the two sorts of multiple obligation. . . . (Giorgi, Theory of Obligations, Span. ed., vol. I, p. 77, note.)
Considered with reference to comparative jurisprudence, liability in solidum appears to be the normal characteristic of the multiple obligation, while the benefit of division in the Spanish system is an illustration of the abnormal, evidently resulting from the operation of a positive rule created by the lawgiver. This exceptional feature of the simple joint obligation in Spanish law dates from an early period; and the rule in question is expressed with simplicity and precision in a passage transcribed into the Novisima Recopilacion as follows:
If two persons bind themselves by contract, simply and not otherwise, to do or accomplish something, it is thereby to be understood that each is bound for one-half, unless it is specified in the contract that each is bound in solidum, or it is agreed among themselves that they shall be bound in some other manner, and this notwithstanding any customary law to the contrary; . . . (Law X, tit. I, book X, Novisima Recopilacion, copied from law promulgated at Madrid in 1488 by Henry IV.)
The foregoing exposition of the conflict between the juridical conceptions of liability incident to the multiple obligation, as embodied respectively in the common law system and the Spanish Civil Code, prepares us for a few words of comment upon the problem of translating the terms which we have been considering from English into Spanish or from Spanish into English.
The Spanish expression to be chosen as the equivalent of the English word "joint" must, of course, depend upon the idea to be conveyed; and it must be remembered that the matter to be translated may be an enunciation either of a common law conception or of a civil law idea. In Sharruf vs. Tayabas Land Co. and Ginainati (37 Phil. Rep., 655), a judge of one of the Courts of First Instance in these Islands rendered judgment in English declaring the defendants to be "jointly" liable. It was held that he meant "jointly" in the sense of "mancomunadamente," because the obligation upon which the judgment was based was apportionable under article 1138 of the Civil Code. This mode of translation does not, however, hold good where the word to be translated has reference to a multiple common law obligation, as in article 698 of the Code of Civil Procedure. Here it is necessary to render the word "joint" by the Spanish word "solidaria."
In translating the Spanish word "mancomunada" into English a similar difficulty is presented. In the Philippine Islands at least we must probably continue to tolerate the use of the English word "joint" as an approximate English equivalent, ambiguous as it may be to a reader indoctrinated with the ideas of the common law. The Latin phrasepro rata is a make shift, the use of which is not to be commended. The Spanish word "solidary," though it is not inaccurate here to use the compound expression "joint obligation," as conveying the full juridical sense of "obligacion mancomunada" and "obligacion solidaria," respectively.
From what has been said it is clear that Hermenegilda Rogero, and her estate after her death, was liable absolutely for the whole obligation, under section 698 of the Code of Civil Procedure; and if the claim had been duly presented to the committee for allowance it should have been allowed, just as if the contact had been with her alone.
It is thus apparent that by the express and incontrovertible provisions both of the Civil Code and the Code of Civil Procedure, this claim was an absolute claim. Applying section 695 of the Code of Civil Procedure, this court has frequently decided that such claims are barred if not presented to the committee in time (In re estate of Garcia Pascual, 11 Phil. Rep., 34; Ortiga Bros. & Co. vs. Enage and Yap Tico, 18 Phil. Rep., 345, 351; Santos vs.Manarang, 27 Phil. Rep., 209, 213); and we are of the opinion that, for this reason, the claim was properly rejected by Judge Jenkins.
There is no force, in our judgment, in the contention that the pendency of the suit instituted by the deceased for the cancellation of the document in which the obligation in question was recorded was a bar to the presentation of the claim against the estate. The fact that the lower court had declared the document void was not conclusive, as its judgment was not final, and even assuming that if the claim had been presented to the committee for allowance, it would have been rejected and that the decision of the committee would have been sustained by the Court of First Instance, the rights of the creditor could have been protected by an appeal from that decision.
Appellant apparently takes the position that had his claim been filed during the pendency of the cancellation suit, it would have been met with the plea of another suit pending and that this plea would have been successful. This view of the law is contrary to the doctrine of the decision in the case of Hongkong & Shanghai Banking Corporationvs. Aldecoa & Co. ([1915], 30 Phil. Rep., 255.)
Furthermore, even had Jaucian, in his appeal from the decision in the cancellation suit, endeavored to obtain judgment on his cross-complaint, the death of the debtor would probably have required the discontinuance of the action presented by the cross-complaint or counterclaim, under section 703.
As already observed the case is such as not to require the court to apply sections 746-749, inclusive, of the Code of Civil Procedure, nor to determine the conditions under which contingent claims are barred. But a few words of comment may be added to show further that the solidary obligation upon which this proceeding is based is not a contingent claim, such as is contemplated in those sections. Š The only concrete illustration of a contingent claim given is section 746 is the case where a person is liable as surety for the deceased, that is, where the principal debtor is dead. This is a very different situation from that presented in the concrete case now before us, where the surety is the person who is dead. In the illustration put in section 746 — where the principal debtor is dead and the surety is the party preferring the claim against the estate of the deceased — it is obvious that the surety has no claim against the estate of the principal debtor, unless he himself satisfies the obligation in whole or in part upon which both are bound. It is at this moment, and not before, that the obligation of the principal to indemnify the surety arises (art. 1838, Civil Code); and by virtue of such payment the surety is subrogated in all the rights which the creditor had against the debtor (art. 1839, same code).
Another simple illustration of a contingent liability is found in the case of the indorser of a contingent liability is found in the case of the indorser of a negotiable instrument, who is not liable until his liability is fixed by dishonor and notice, or protest an notice, in conformity with the requirements of law. Until this event happens there is a mere possibility of a liability is fixed by dishonor and notice, or protest and notice, in conformity with the requirements of law. Until this event happens there is a mere possibility of a liability, which is fact may never become fixed at all. The claims of all persons who assume the responsibility of a liability, which in fact may never become fixed at all. The claims of all persons who assume the responsibility of mere guarantors in — as against their principles — of the same contingent character.
It is possible that "contingency," in the cases contemplated in section 746, may depend upon other facts than those which relate to the creation or inception of liability. It may be, for instance, that the circumstance that a liability is subsidiary, and the execution has to be postponed after judgment is obtained until the exhaustion of the assets of the person or entity primarily liable, makes a claim contingent within the meaning of said section; but upon this point it is unnecessary to express an opinion. It is enough to say that where, as in the case now before us, liability extends unconditionally to the entire amount stated in the obligation, or, in other words, where the debtor is liable in solidum and without postponement of execution, the liability is not contingent but absolute.
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION:
