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SOLIDARITY MAY EXIST EVEN THOUGH DEBTORS ARE NOT

BOUND IN THE SAME MANNER AND FOR THE SAME PERIODS


UNDER THE SAME CONDITION
Article 1211 of the Civil Code
Solidarity may exist although the creditors and the debtors may not
be bound in the same manner and by the same periods and conditions
Debtors obligated themselves in solidum therefore creditor
can bring action to any of them
2nd Contract DOES NOT LEAD to conclusion that solidary
stipulation in 1st Contract is broken
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 the payment and adding other
obligations not incompatible with 1st Contract

AS TO SOLIDARITY OF CONTRACTS
Obligations are generally considered as 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 nature always solidary.
In a joint obligation, each obligor answers only for his
part of the whole liability.
In a solidary obligation, the relationship between the
active and passive subjects is so close that each of them
must comply with or demand the fulfillment of the whole obligation.
Liability of Continental specific performance and tort
Liablility of Lim and Mariano only based on tort
Art. 1211 Solidarity may exist although the creditors and the
debtors may not be bound in the same manner and by the same
periods and conditions.
Art. 1222 A solidary debtor may, in actions filed by the creditor,
avaiil 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 belongs to
others, he may avail himself thereof only as regards that part of the
debt for which the latter are responsible.

ROGERO, ALTHOUGH JUST A SURETY FOR DAYANDANTE, WAS


BOUND SOLIDARILY WITH HIM THE IN THE PAYMENT OF OBLIGATION
Being a surety and a solidary creditor, Rogero was liable
for the FULL AMOUNT of obligation WITHOUT any right to
demand the exhaustion of the property of the principal
debtor previous to its payment
Position of Rogero, even just a surety, was exactly the same
as if she had been the principal debtor
MEANING OF JOINTLY AND SEVERALLY
It enables the creditor to sue any one of the debtors
or all together at pleasure
PAYMENTS BY 3rd PERSONS
Payment may be made by any person, whether he has an interest
in the performance of the obligation or not, and whether the
payment is known and approved by the debtor or whether he is
unaware of it. One who makes a payment for the account of
another may recover from the debtor the amount of the
payment, unless it was made against his express will. In the
latter case he can recover from the debtor only in so far as the
payment has been beneficial to him.
PAYMENTS AGAINST WILL OF DEBTOR
The provision in Art 1158, that the payor "may only recover
from the debtor insofar as the payment has been beneficial
to him," when made against his express will, is a defense
that may be availed of only by the debtor, not by the
Bank-creditor, for it affects solely the rights of the former.
In order that the rights of the payor may be subject to
said limitation, the debtor must oppose the payments
before or at the time the same were made,
not subsequently thereto.
The question whether the payments were beneficial or not
to the debtor, depends upon the law, not upon his will.

Joint obligation each of the debtors is liable only for a


proportionate part of the debt and each creditor is entitled only to a
proportionate part of the credit
Solidary obligation each debtor is liable for the entire obligation
and each creditor is entitled to demand the whole obligation
Art. 1214 states that the debtor may pay any of the
solidary creditors; but if any demand, judicial or extrajudicial, has
been made by any one of them, payment should be made to him.

BECAUSE THE PROMISSORY NOTE INVOLVED EXPRESSLY


STATED THAT THE THREE SIGNATORIES ARE JOINTLY AND
SEVERALLY LIABLE, ANY ONE, OR SOME, OR ALL OF THEM MAY
BE PROCEEDED AGAINST FOR THE ENTIRE OBLIGATION. THE
CHOICE IS LEFT TO THE SOLIDDARY CREDITOR TO DETERMINE
AGAINST WHOM IT HE WILL ENFORCE THE OBLIGATION
Solidary or Joint and several obligation: one in which
each debtor is liable for the entire obligation and each
creditor is entitled to demand the whole obligation.
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
Solidary obligation exists when it expressly so states, when
the law provides, or when the nature of the obligation so requires.
Article 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 f or
which the latter may be liable.
DEFENSE AVAILABLE TO GREGORIO YULO
None of the installments payable under Parties of 2nd
Contracts obligation has yet matured (1st payment to
mature on June 30, 1912) - He can use this as defense.
Since the reduction of debt applied to him, then the
maturity date or terms should also be applied to him.
EFFECTS
Reduction of debt applied to him
The part of the debt for which Parties of the 2nd Contract is
3/6 of P225,000 or 112,500 (not yet demandable for them)
then it should also yet to be demanded to him wholly
even if hes on default.
He should not pay the additional interest
for the default of payment of P112,500.

The obligation of Sps. Alipio and Sps. Manuel is joint.


Art. 1207 - The concurrence of two or more creditors or of two or
more debtors in one and the same obligation does not imply
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. There is a solidary liability only when the obligation
expressly so states, or when the law or the nature of the obligation requires solidarity.
When there are 2 or more creditors/debtors, the obligation is presumed to be joint.
In joint obligations, the debt is divided into as many equal shares
as there are debtors, each debt considered distinct from one another.

ABB IS LIABLE TO PAY THE PENALTY STIPULATED IN THE


CONTRACT OF SERVICE
Based on the records, although Klin Drive Motor was done
on March 31, 1991, the said motor was actually delivered
to CCC as early as January 7,1991
The installation and testing was done only on March 13,
1991 upon the request of CCC; hence, the load testing
had to be postponed
Under Article 1226 of the Civil Code, the penalty clause
takes the place of indemnity for damages and the payment
of interests in case of noncompliance with the obligation,
unless there is a stipulation to the contrary.
In this case, since there is no stipulation to the contrary, the
penalty in the amount of P987.25 per day of delay covers
all other damages claimed by CCC against ABB
As a rule on damages, competent proof and a reasonable
degree of certainty are needed.
SPECIAL CONDITION IN DEED OF SALE WAS ACTUALLY AN
OBLIGATION; TO SECURE THIS, THE PENAL CLAUSE WAS INSERTED
The penal clause in this case was inserted not to
indemnify the MDC for any damage it might suffer as a
result of a breach of the contract but rather to compel
performance of the so-called "special condition" and
thus encourage home building among lot owners
in the Urdaneta Village.
While true, in obligations with a penal sanction, the penalty
takes the place of damages and the payment of interest in
case of non-compliance and that the obligee is entitled to
recover upon the breach of the obligation without the need
of proving damages, it is nonetheless true that in
certain instances a mitigation of the obligor's liability
is allowed (the lessening of the surety bond amount).
Article 1229 of the Civil Code states:
The judge shall equitably reduce the penalty when the
principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
The house had already been completed more than 50%
by April 1961, hence there was partial performance
and very little delay.

Art 1226 provides In obligations with a penal clause,


the penalty shall substitute the indemnity for damages and
the payment of interests in case of non-compliance, if there
is no stipulation to the contrary. Nevertheless, damages
shall be paid if the obligor refuses to pay the penalty or is
guilty of fraud in the fulfillment of the obligation. The
penalty may be enforced only when it is demandable in
accordance with the provisions of this Code.
PENALTY ON DIFFERENT FORMS:
If the parties stipulate penalty apart monetary interest,
two are different and distinct from each other
and may be demanded separately.
If stipulation about payment of an additional interest
rate partakes of the nature of a penalty clause which is
sanctioned by law:
Art 2209: If the obligation consists in the
payment of a sum of money, and the debtor incurs
in delay, the indemnity for damages, there being
no stipulation to the contrary, shall be the
payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is
six per cent per annum.
In case at bar, penalty charge 2% per month to accrue
from time of default. He is liable for both stipulated
monetary interest and stipulated penalty charge.
OBLIGATIONS WITH A PENAL CLAUSE
Penal clause an accessory obligation by which the
parties attach to a principal obligation for the purpose of
insuring the performance thereof by imposing on the
debtor special prestation in case the obligation is not
fulfilled or is irregularly or inadequately fulfilled.
General rule: The penalty shall substitute the indemnity
for damages and the payment of interests in case of noncompliance.
Exceptions:
1. When there is a stipulation to the contrary
2. Obligor is sued for refusal to pay the agreed penalty
3. Obligor is guilty of fraud
In all cases, the purpose of the penalty is to punish the
obligor
Obligee can recover from the obligor not only the penalty
but also the damages resulting from the non-fulfillment or
defective performance of the principal obligation

NARIC IN BAD FAITH HENCE LIABLE FOR DAMAGES


Liability stems not only from inability to meet the requirement
provided by the bank, but also from entering into contractual
obligations despite full awareness of its incapacity to
undertake the prestation.
When it agreed to pay immediately by means of irrevocable,
confirmed, and assignable letter of credit, despite its financial
capacity, it similarly bound itself to answer for all the
consequences that would result from the representation.
Article 1170: any manner contravene the tenor thereof
Includes any illicit act which impairs the strict and faithful
fulfillment of the obligation or every kind of defective performance.

Payment in US dollars not allowed


R.A. 529 prohibits payment in the form of other coins and/or
currencies that is not Philippine currency.
There is a difference as to the application of R.A. 529
between obligations incurred before the said laws passing and
obligations incurred after the said laws passing
OBLIGATIONS PRIOR TO R.A. 529 Payment in foreign
currency shall be made in Philippine pesos
on the basis of the current rate of exchange
at the time when the obligation is incurred.
OBLIGATIONS AFTER R.A. 529 was passed - Payment in
foreign currency shall be made in Philippine pesos
on the basis of the current rate of exchange
at the time of payment.
THE SALE HAD BEEN CONSUMMATED BY VIRTUE OF
PAYMENT BUT CHECK MADE BY THE PENARROYO AND VALENCIA;
NON-ENCASHMENT OF CHECK AFTER THE LAPSE OF 10 YEARS IS
TANTAMOUNT TO VALID PAYMENT
After more than ten (10) years from the payment in part by
cash and in part by check, the presumption is that
the check had been encashed.
Granting that petitioner had never encashed the check, his
failure to do so for more than ten (10) years undoubtedly
resulted in the impairment of the check through his
unreasonable and unexplained delay.
RULE ON EFFECT OF PAYMENT BY CHECK
While it is true that the delivery of a check produces the effect
of payment only when it is cashed, pursuant to Art. 1249 of
the Civil Code, the rule is otherwise if the debtor is prejudiced
by the creditors unreasonable delay in presentment.
This is in harmony with Article 1249 of the Civil Code under
which payment by way of check or other negotiable
instrument is conditioned on its being cashed, except when
through the fault of the creditor, the instrument is impaired.
PENARROYO AND VALENCIA CAN LAWFULLY COMPEL PAPA TO
DELIVER TO THEM THE TITLE OF THE SUBJECT PROPERTY
Since the buyers had fulfilled their part of the contract of sale
by delivering the payment of the purchase price, they can
lawfully compel Papa to deliver to them the title of the
property and the peaceful possession of the subject property.

PALS PAYMENT TO SHERIFF REYES DID NOT SATISFY DEBT TO


TAN; DID NOT EXTINGUISH OBLIGATION OF PAL
The checks were issued in the name of the MIA Sheriff Reyes.
It should have been in Tans name.
The payment made by the petitioner to the absconding sheriff
was not in cash or legal tender but in checks. The checks
were not payable to Amelia Tan or Able Printing Press but
to the absconding sheriff.
Art 1249 The delivery of promissory notes payable to order, or
bills of exchange or other mercantile documents shall produce the
effect of payment only when they have been cashed, or when
through the fault of the creditor they have been impaired.
FOR PAYMENT TO BE EFFECTIVE, MUST BE MADE TO PROPER
PERSON, ART 1240 OF CIVIL CODE
must be made to the obligee himself or to an agent having
authority, express or implied, to receive the particular payment.
The receipt of money due on a judgment by an officer
authorized by law to accept it will, therefore, satisfy the debt.
CHECK IS NOT A LEGAL TENDER; CHECK IN PAYMENT OF DEBT
NOT A VALID TENDER OF PAYMENT; CREDITOR MAY REFUSE
Since a negotiable instrument is only a substitute for
money and not money, the delivery of such an instrument
does not, by itself, operate as payment.
Art 1254 of the Civil Code which states that:
When the payment cannot be applied in accordance with
the preceding rules, or if application cannot be inferred
from other circumstances, the debt which is most
onerous to the debtor, among those due, shall be deemed
to have been satisfied.
If the debts due are of the same nature and burden, the
payment shall be applied to all of them proportionately.
However, the said provision only applies to a person owing several
debts of the same kind to a single creditor but CANNOT BE MADE
APPLICABLE to a person whose obligation as a mere surety is both
contingent and singular.

DEBTOR MUST SPECIFY WHICH AMONG HIS VARIOUS


OBLIGATIONS IS TO BE SATISTFIED
Article 1252. He who has various debts of the same kind in favor
of one and the same creditor, may declare at the time of making
the payment, to which of them the same must be applied. Unless
the parties so stipulate, or when the application of payment is
made by the party for whose benefit the term has been constituted
application shall not be made as to debts which are not yet due.
If the debtor accepts from the creditor a receipt in which an
application of the payment is made, the former cannot complain of
the same, unless there is a cause for invalidating the contract.
CONSENT MUST BE CLEAR AND SILENCE IS NOT
TANTAMOUNT TO CONSENT
There was no clear assent by Paculdo to the change in the
manner of application of payment.
No meeting of the minds. Though an offer may be made, the
acceptance of such offer must be unconditional and
unbounded in order that concurrence can give rise
to a perfected contract.
GUIDELINES IF THE DEBTOR DID NOT DECLARE, AT THE TIME OF
THE PAYMENT, TO WHICH OF HIS DEBTS WITH THE CREDITOR
IS TO BE APPLIED
No payment is to be made to a debt that is not yet due and
the payment has to be applied first to the debt most
onerous to the debtor.

ALR IS NOT PAYMENT BY CESSION UNDER ARTICLE 1255


There is only ONE creditor DBP
Article 1255 contemplates the existence of two or more
creditors and involves the assignment of all the debtors property.
ALR IS NOT A DATION IN PAYMENT ARTICLE 1245
Property is alienated to the creditor in satisfaction of a debt in
money, shall be governed by the law on sales.
It bears stressing that the ALR, being in its essence a
mortgage, was but a security and not a
satisfaction of indebtedness.
CONDITION NO. 12 OF ALR DID NOT CONSITUTE
PACTUM COMMISSORIUM
Elements of pactum commissorium:
1. There should be a property mortgaged by way of security for
the payment of the principal obligation
2. There should be a stipulation for automatic appropriation by
the creditor of the thing mortgaged in case of non-payment of
the principal obligation within the stipulated period.
DBPS ACT OF APPROPROATING CUBAS LEASEHOLD RIGHTS WAS
VIOLATIVE OF ARTICLE 2088
ART. 2088. The creditor cannot appropriate the things given by way of
pledge or mortgage, or dispose of them. Any stipulation to the contrary
is null and void.
The appropriation of the leasehold rights, being
contrary to Article 2088 of the Civil Code and to public policy,
cannot be deemed validated by estoppel.

DACION EN PAGO transmission of the ownership of a thing


by the debtor to the creditor as an accepted equivalent of the
performance of the obligation.
The essential elements of a contract of sale
(CONSENT, OBJECT, and CAUSE) must all be present
for a dacion en pago to exist.
IN THE PRESENT CASE, there is no consent on the part of
Filinvest that the return of the mortgaged car would
extinguish the obligation of Phil. Acetylene.

SINGH SUBSTANTIALLY COMPLIED WITH THE TERMS AND


CONDITIONS OF THE COMPROMISE AGREEMENT
The deposit of the balance of the purchase price was made in
good faith. The failure of Singh to deposit the purchase price
on the date specified was due to De Guzman who also
made no claim that they had sustained damages because of
the two days delay, there was substantial compliance with the
terms and conditions of the compromise agreement.

TENDER OF PAYMENT V CONSIGNATION


Tender an act preparatory to the consignation, which is the
principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain.
Consignation act of depositing the thing due with the court
whenever the creditor cannot accept/refuses to accept
payment, and generally requires a prior tender of payment.
Tender of payment = extrajudicial,
while consignation = judicial,
and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation
Tender and consignation, where validly made, produces
the effect of payment and extinguishes the obligation.
Civil Code 1256: If the creditor to whom tender of payment has
been made refuses without just cause to accept it, the debtor
shall be released from responsibility by the consignation
of the thing or sum due.
PRIOR TENDER BY PCGG FOR THE PAYMENT OF RENTALS WAS
UNJUSTLY REFUSED BY MCPC
MPCPs refusal to accept the same, on the ground merely
that its lease-purchase agreement with PIMECO
had been rescinded, was unjustified.

CONSIGNATION is the act of depositing the thing due with the court
or judicial authorities whenever the creditor cannot accept or refuses
to accept payment and it generally requires a prior tender of
payment. In order that consignation may be effective,
the debtor must show that:
1) There was a debt due;
2) The consignation of the obligation had been made because the
creditor to whom tender of payment was made refused to
accept it, or because he was absent or incapacitated, or because
several persons claimed to be entitled to receive the amount
due or because the title to the obligation has been lost;
3) Previous notice of the consignation had been given to the
person interested in the performance of the obligation;
4) The amount due was placed at the disposal of the court; and
5) After the consignation had been made the person interested
was notified thereof. Failure in any of these requirements is
enough ground to render a consignation ineffective
It is obvious that the reason for respondents non-acceptance
of the tender of payment was the alleged insufficiency thereof
and not because the said check was not tendered to
respondent, or because it was in the form of managers check.

THE CIVIL CODE AUTHORIZES THE RELEASE OF AN OBLIGOR


WHEN THE SERVICE HAS BECOME DIFFICULT AS TO BE
MANIFESTLY BEYOND THE CONTEMPLATION OF THE PARTIES
RATIONALE FOR ARTICLE 1267:
General Rule: Impossibility of performance releases the obligor.
Exception: When the services has become so difficult as to be
manifestly beyond the contemplation of the parties, the courts
should release the obligor in whole or in part.
Intention of the parties should govern and if it appears
that the service turns out to be so difficult as beyond their
contemplation, it would be doing violence to that intention
to hold the obligor still responsible.
Equity and good faith demand that when basis of the contract
disappears, the prejudiced party has a right to relief.
In the case at bar, the obligation of CASURESCO consists in
allowing NATELCO to use its post in Naga City. It is not
a requirement that the contract be for future services with
future unusual change. Rather, it speaks of unforeseen events
wherein parties stipulate in the light of certain prevailing
conditions and once these conditions cease to exist,
the contract also ceases.
Supervening event in this case: NATELCOS increase in subscribers
DOCTRINE OF REBUS SIC STANTIBUS
In public international law parties stipulate in light of
prevailing conditions and once these conditions cease to exist
the contract also ceases to exist.
Considering practical needs and the demands of equity and
good faith, the disappearance of the basis of a contract
gives rise to a right to relief in favor of the party prejudiced.

Art. 1266 The debtor in obligations to do shall also be


released when the prestation becomes legally or physically
impossible without fault of the obligor.
Art. 1267 When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the
obligor may also be released therefrom, in whole or in part.
Art. 1267, however, enunciates the doctrine of unforeseen
events and is not an absolute application of the principle
of rebus sic stantibus
As a general rule, the motive or particular purpose of a party
entering into the contract does not affect the validity
or existence of the contract.
The exception is when the realization of such motive
or purpose has been made a condition upon which
the contract is made to depend.
FOOD FEST IS NOT RELIEVED FROM ITS RESPONSIBILITY TO
PAY MONTHLY RENTS ON GROUND OF REBUS SIC STANTIBUS
Food Fest was able to secure the permits, licenses and
authority to operate when the lease contract was executed. Its
failure to renew these permits, licenses and authority for the
succeeding year, does not, however, suffice to declare the
lease functus officio, nor can it be construed as an unforeseen
event to warrant the application of Article 1267.
Contracts, once perfected, are binding between the
contracting parties. Obligations arising therefrom have the
force of law and should be complied with in good faith.

Article 1270, par 2:


One and the other kind shall be subject to the rules which govern
inofficious donations. Express condonation shall, furthermore,
comply with the forms of donation.
DONATION & ACCEPTANCE OF A MOVABLE,
IF VALUE is greater than P5K = MUST BE MADE IN WRITING OR ELSE VOID
Article 748, par 3:
If the value of the personal property donated exceeds P5K,
the donation and the acceptance shall be made in writing.
Otherwise, the donation shall be void.
Hence, if the remaining balance of P266K was actually
condoned by PR, it should have been made in writing.
If respondent corporation really condoned the disputed amount,
the petitioners should have asked for a certificate of full payment
from respondent corporation, as they did
in the case of their first IGLF loan.
CONDONATION; APPOINTMENT OF RECEIVER
SUSPENDS AUTHORITY OF CORPORATION
RECEIVER: person appointed by the court in behalf of all the parties to
the action for the purpose of promoting and conserving the property
in litigation and preventing its possible destruction or dissipation, if it
were left in the possession of any of the parties.
The guiding principle in the appointment of a receiver
is the prevention of imminent danger to the property.
The appointment of a receiver operates to suspend the
authority of a corporation and of its directors and officers over
its property and effects, such authority being reposed in the receiver.
Sobrepeas had no authority to condone the debt,
since the alleged agreement to condone the amount in question,
was supposedly entered into by the parties sometime in July 1986
which was AFTER respondent corporation had been placed under receivership.