PNB MADECOR vs. GERARDO C.
UY
G.R. No. 129598
AUGUST 15, 2001
FACTS:
Guillermo Uy assigned to respondent Gerardo Uy his receivables due from Pantranco
North Express Inc. (PNEI). The deed of assignment included sales invoices containing
stipulations regarding payment of interest and attorney’s fees. On January 23, 1995, Gerardo Uy
filed with the RTC a collection suit against PNEI. He alleged that PNEI was guilty of fraud in
contracting the obligation sued upon, hence his prayer for a writ of preliminary attachment. The
sheriff issued a notice of garnishment addressed to the Philippine National Bank (PNB) and PNB
MADECOR attaching the “goods, effects, credits, monies and all other personal properties” of
PNEI in the possession of the bank. PNB MADECOR however claimed that the receivables of
Guillermo Uy have been applied to PNEI’s unpaid rentals to the bank thru compensation, thus
private respondent is no longer entitled to such. Respondent pointed out that the demand letter
sent by PNEI to petitioner was made before petitioner’s obligation to PNEI became due. This
being so, respondent argues that there can be no compensation since there was as yet no
compensable debt in 1984 when PNEI demanded payment from petitioner.
ISSUE:
Whether or not PNB MADECOR is correct in its contention that compensation is
applicable to its receivables from and its payables to PNEI.
RULING:
Petitioner’s obligation to PNEI appears to be payable on demand. However, the Court
found that the letter sent by PNEI to PNB MADECOR was not one demanding payment, but one
that merely informed petitioner of the conveyance of a certain portion of its obligation to PNEI.
Since petitioner’s obligation to PNEI is payable on demand, and there being no demand made, it
follows that the obligation is not yet due. Therefore, this obligation may not be subject to
compensation for lack of a requisite under the law. Without compensation having taken place,
petitioner remains obligated to PNEI to the extent stated in the promissory note. This obligation
may undoubtedly be garnished in favor of respondent to satisfy PNEI’s judgment debt.
As regards respondent’s averment that there was as yet no compensable debt when PNEI
sent petitioner a demand letter on September 1984, since PNEI was not yet indebted to petitioner
at that time, the law does not require that the parties’ obligations be incurred at the same time.
What the law requires only is that the obligations be due and demandable at the same time.
INCIONG VS. COURT OF APPEALS
G.R. No. 96405, June 26, 1996
FACTS:
On February 3, 1983, petitioner Baldomero L. Inciong, Jr. together with Rene C. Naybe
and Gregorio D. Pantanosas signed a promissory note in the amount of P50, 000.00 holding
themselves jointly and severally liable to private respondent Philippine Bank of
Communications. The promissory note was due on May 5, 1983. Said due date expired without
the promissors having paid their obligation.
On November 14, 1983 and on June 8, 1984, private respondent sent petitioner telegrams
demanding payment thereof. On December 11, 1983, private respondent also sent registered mail
a final letter of demand to Rene C. Naybe. Since both obligors did not respond to the demand
made, private respondent filed on January 24, 1986 a complaint for collection of the sum of P50,
000.00 against the three (3) obligors. On January 27, 1987, the lower court dismissed the case
against defendant Pantanosas as prayed by herein private respondent. Meanwhile, only the
summons addressed to petitioner was served for the reason that defendant Naybe had gone to
Saudi Arabia.
The lower court rendered its decision holding petitioner solidarily liable and to pay
herein respondent bank the amount of P50, 000.00 plus interest thereon. Petitioner appealed the
said decision to the Court of Appeals. The respondent court, however, affirmed the decision of
the lower court. The petitioner moved for reconsideration, which was later on denied by the
respondent Court of Appeals.
ISSUE:
Whether or not the dismissal of the complaint against Naybe, the principal debtor, and
against Pantanosas, his co-maker, constituted a release of his obligation.
HELD:
The dismissal of the complaint against Naybe and Pantanosas did not constitute a
release of petitioner’s obligation, especially because the dismissal of the case against Pantanosas
was upon the motion of private respondent itself. 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. 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. The choice is left to the solidary creditor to determine
against whom he will enforce collection
Under Article 1207 of the Civil Code, 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 solidary liability only when the
obligation expressly so states, when the law so provides or when the nature of the obligation so
requires.
REPUBLIC GLASS CORPORATION v. QUA
G.R. No. 14413 July 30, 2004
FACTS:
Petitioners and respondent were stockholders of Ladtek, Inc., which obtained loans from
Metrobank and PDCP where they stood as sureties. Among themselves they executed
Agreements for Contribution, Indemnity and Pledge of shares of Stocks, stating that in case of
default in the payment of loans, the parties would reimburse each other the proportionate share of
any sum that any might pay to creditors. Ladtek defaulted on its loan obligations, hence
Metrobank filed a collection case. During the pendency thereof, RGC and Gervel paid
Metrobank where a waiver and quitclaim in favor of the two was executed. Upon Qua’s refusal
to reimburse, RGC and Gervel foreclosed the pledged shares of stocks owned by Qua at a public
auction. On appeal, the CA issued the assailed decision and held that there was an implied
novation of the agreement and that the payment did not extinguish the entire obligation and did
not benefit Qua. Hence, the petition, where the petitioners claim the following: (1) Qua is
estopped from claiming that the payment made was not for the entire obligation, due to his
judicial admissions; (2) payment of the entire obligation is a condition sine qua non for the
demand of reimbursement under the indemnity agreements; and (3) there is no novation in the
instant case.
ISSUE:
(1)Whether payment of the entire obligation is an essential condition for reimbursement;
and (2) Whether there was no novation.
RULING:
The petition is denied. Although the Agreement does not state that payment of the entire
obligation is an essential condition for reimbursement, RGC and Gervel cannot automatically
claim for indemnity from Qua because Qua himself is liable directly to Metrobank and PDCP.
The elements of novation are not established in the instant case. Contrary to RGC and Gervel’s
claim, payment of any amount will not automatically result in reimbursement. If a solidary
debtor pays the obligation in part, he can recover reimbursement from the co-debtors only in so
far as his payment exceeded his share in the obligation. This is precisely because if a solidary
debtor pays an amount equal to his proportionate share in the obligation, then he in effects pays
only what is due from him. If the debtor pays less than his share in the obligation, he cannot
demand reimbursement because his payment is less than his actual debt.
CEREZO VS. TUAZON
GR No. 141538 March 23, 2004
FACTS:
Country Bus Lines passenger bus collided with a tricycle. Tricycle driver Tuazon filed a
complaint for damages against Mrs. Cerezo, as owner of the bus line, her husband Attorney Juan
Cerezo, and bus driver Danilo A. Foronda.
After considering Tuazon’s testimonial and documentary evidence, the trial court ruled
in Tuazon’s favor. The trial court made no pronouncement on Foronda’s liability because there
was no service of summons on him. The trial court did not hold Atty. Cerezo liable as Tuazon
failed to show that Mrs. Cerezo’s business benefited the family, pursuant to Article 121(3) of the
Family Code. The trial court held Mrs. Cerezo solely liable for the damages sustained by
Tuazon arising from the negligence of Mrs. Cerezo’s employee, pursuant to Article 2180 of the
Civil Code.
ISSUE:
Whether petitioner is solidarily liable.
RULING:
Contrary to Mrs. Cerezo’s assertion, Foronda is not an indispensable party to the case.
An indispensable party is one whose interest is affected by the court’s action in the litigation, and
without whom no final resolution of the case is possible. However, Mrs. Cerezo’s liability as an
employer in an action for a quasi-delict is not only solidary, it is also primary and direct. Foronda
is not an indispensable party to the final resolution of Tuazon’s action for damages against Mrs.
Cerezo.
The responsibility of two or more persons who are liable for a quasi-delict is solidary.
Where there is a solidary obligation on the part of debtors, as in this case, each debtor is liable
for the entire obligation. Hence, each debtor is liable to pay for the entire obligation in full.
There is no merger or renunciation of rights, but only mutual representation. Where the
obligation of the parties is solidary, either of the parties is indispensable, and the other is not
even a necessary party because complete relief is available from either. Therefore, jurisdiction
over Foronda is not even necessary as Tuazon may collect damages from Mrs. Cerezo alone.
Moreover, an employer’s liability based on a quasi-delict is primary and direct, while the
employer’s liability based on a delict is merely subsidiary. The words “primary and direct,” as
contrasted with “subsidiary,” refer to the remedy provided by law for enforcing the obligation
rather than to the character and limits of the obligation. Although liability under Article 2180
originates from the negligent act of the employee, the aggrieved party may sue the employer
directly.
When an employee causes damage, the law presumes that the employer has himself
committed an act of negligence in not preventing or avoiding the damage. This is the fault that
the law condemns. While the employer is civilly liable in a subsidiary capacity for the
employee’s criminal negligence, the employer is also civilly liable directly and separately for his
own civil negligence in failing to exercise due diligence in selecting and supervising his
employee. The idea that the employer’s liability is solely subsidiary is wrong.
To hold the employer liable in a subsidiary capacity under a delict, the aggrieved party
must initiate a criminal action where the employee’s delict and corresponding primary liability
are established. If the present action proceeds from a delict, then the trial court’s jurisdiction over
Foronda is necessary.
However, the present action is clearly for the quasi-delict of Mrs. Cerezo and not for the
delict of Foronda.
Thus, the petition was denied ordering the defendant Hermana Cerezo to pay the plaintiff.
ALONZO VS SAN JUAN
GR No. 137549 February 11, 2005
FACTS:
A complaint for recovery of possession was filed by Aurelio P. Alonzo and Teresita A.
Sison against Jaime and Perlita San Juan docketed as Civil Case No. Q-96-29415 before the
Regional Trial Court (RTC) of Quezon City, Branch 77. In their Complaint, plaintiffs alleged
that they are the registered owners of a parcel of land. At around June of 1996, plaintiffs
discovered that a portion on the left side of the said parcel of land with an area of one hundred
twenty-five (125) square meters, more or less, was occupied by the defendants for more than a
year, without their prior knowledge or consent. A demand letter was sent to the defendants in
August of 1996 requiring them to vacate the property but they refused to comply; hence, the
filing of the Complaint. During the pendency of the case, the parties agreed to enter into a
Compromise Agreement which the trial court approved in a Judgment.
Alleging that they failed to abide by the provisions of the Compromise Agreement by their
failure to pay the amounts due thereon, plaintiffs sent a letter demanding that the defendants
vacate the premises. Plaintiffs subsequently filed an Amended Motion for Execution. Acting on
the motion, the trial court issued its Order dated 11 August 1998 denying the motion.
ISSUE:
Is the RTC decision correct?
RULING:
In herein case, the respondents failed to discharge their burden of proving payment. Even
assuming that payments were made, it has not been shown to the full satisfaction of this Court
whether the payments were made specifically to satisfy respondents’ obligation under the
Compromise Agreement, nor were the circumstances under which the payments were made
explained, taking into consideration the conditions of the Compromise Agreement.
Respondents’ contract with the petitioners have the force of law between them.
Respondents are thus bound to fulfill what has been expressly stipulated therein. Items 11 and 12
of the Compromise Agreement provided, in clear terms, that in case of failure to pay on the part
of the respondents, they shall vacate and surrender possession of the land that they are occupying
and the petitioners shall be entitled to obtain immediately from the trial court the corresponding
writ of execution for the ejectment of the respondents. This provision must be upheld, because
the Agreement supplanted the Complaint itself. When the parties entered into a Compromise
Agreement, the original action for recovery of possession was set aside and the action was
changed to a monetary obligation. Once approved judicially, the Compromise Agreement can
not and must not be disturbed except for vices of consent or forgery.
ESTATE OF MOTA V SERRA
[Link]. 22825 February 14, 1925
FACTS:
On February 1, 1919, plaintiffs and defendant entered into a contract of partnership,
marked Exhibit A, for the construction and exploitation of a railroad line from the "San Isidro"
and "Palma" centrals to the place known as "Nandong". The original capital stipulated was
P150,000. It was covenanted that the parties should pay this amount in equal parts and the
plaintiffs were entrusted with the administration of the partnership.
January 29, 1920, the defendant entered into a contract of sale with Venancio
Concepcion, Phil. C. Whitaker, and Eusebio R. de Luzuriaga, whereby he sold to the latter the
estate and central known as "Palma" with its running business, as well as all the improvements,
machineries and buildings, real and personal properties, rights, choses in action and interests,
including the sugar plantation of the harvest year of 1920 to 1921, covering all the property of
the vendor. Before the delivery to the purchasers of the hacienda thus sold, Eusebio R. de
Luzuriaga renounced all his rights under the contract of January 29, 1920, in favor of Messrs.
Venancio Concepcion and Phil. C. Whitaker.
Afterwards, on January 8, 1921, Venancio Concepcion and Phil. C. Whitaker bought from the
plaintiffs the one half of the railroad line pertaining to the latter executing therefor the document
Exhibit 5. The price of this sale was P237,722.15, excluding any amount which the defendant
might be owing to the plaintiffs.
ISSUE:
Whether or not there was confusion of the rights of the creditor and debtor
RULING:
The purchasers, Phil. C. Whitaker and Venancio Concepcion, to secure the payment of
the price, executed a mortgage in favor of the plaintiffs on the same rights and titles that they had
bought and also upon what they had purchased from Mr. Salvador Serra. In other words, Phil C.
Whitaker and Venancio Concepcion mortgaged unto the plaintiffs what they had bought from the
plaintiffs and also what they had bought from Salvador Serra. If Messrs. Phil. C. Whitaker and
Venancio Concepcion had purchased something from Mr. Salvador Serra, the herein defendant,
regarding the railroad line, it was undoubtedly the one-half thereof pertaining to Mr. Salvador
Serra. This clearly shows that the rights and titles transferred by the plaintiffs to Phil. C.
Whitatker and Venancio Concepcion were only those they had over the other half of the railroad
line. Therefore, as already stated, since there was no novation of the contract between the
plaintiffs and the defendant, as regards the obligation of the latter to pay the former one-half of
the cost of the construction of the said railroad line, and since the plaintiffs did not include in the
sale, evidenced by Exhibit 5, the credit that they had against the defendant, the allegation that the
obligation of the defendant became extinguished by the merger of the rights of creditor and
debtor by the purchase of Messrs. Phil. C. Whitaker and Venancio Concepcion is wholly
untenable.
SONNY LO v. KJS ECO-FORMWORK SYSTEM
G.R. No. 149420 October 8, 2003
FACTS:
KJS is engaged in the sale of steel scaffoldings while Lo is a building contractor. On
February 22, 1990, petitioner ordered scaffolding equipments from respondent worth
P540,425.80. He paid a downpayment in the amount of P150,000. The balance was made
payable in 10 monthly installments. Respondent delivered the equipments. Petitioner was able to
pay the first two monthly installments. His business suffered financial difficulties and he was
unable to settle his obligations despite demands. On October 11, 1990, the parties executed a
Deed of Assignment whereby petitioner assigned to respondent his receivables from Jonero
Realty. However, Jonero refused to honor the Dees of Assign,nt because it claimed that
petitioner was indebted to it. Petitioner refused to pay claiming that that his obligation had been
extinguished when they executed the deed of assign,ent. RTC dismissed the complaint on the
ground that the assignment of credit extinguished the obligation. Court of appeals reversed the
decision and ordered Lo to pay the plaintiff KJS with legal interests of 6% per annum until fully
paid.
ISSUE:
Whether or not the Deed of Assignment extinguished the obligation
RULING:
An assignment of credit, by virtue of which the owner of the credit, the assignor, by a
legal cause, such as sale, dacion en pago, exchange or donation and without the consent of the
debtor transfers his credit and accessory rights to another, the assignee, who acquires the power
to enforce it against the debtor. Petitioner, as assignor, is bound to warrant the existence and
legality of the credit at the time of the sale or assignment. When Jonero claimed that it was no
longer indebted to petitioner since the latter had also as unpaid obligation to it, it essentially
meant that its obligation to the petitioner has been extinguished by compensation. Petitioner was
found in breach of his obligation under the Deed of assignment. Court of Appeals decision is
affirmed.
REPUBLIC GLASS CORPORATION v. QUA
G.R. No. 14413 July 30, 2004
FACTS:
Petitioners and respondent were stockholders of Ladtek, Inc., which obtained loans from
Metrobank and PDCP where they stood as sureties. Among themselves they executed
Agreements for Contribution, Indemnity and Pledge of shares of Stocks, stating that in case of
default in the payment of loans, the parties would reimburse each other the proportionate share of
any sum that any might pay to creditors. Ladtek defaulted on its loan obligations, hence
Metrobank filed a collection case. During the pendency thereof, RGC and Gervel paid
Metrobank where a waiver and quitclaim in favor of the two was executed. Upon Qua’s refusal
to reimburse, RGC and Gervel foreclosed the pledged shares of stocks owned by Qua at a public
auction. On appeal, the CA issued the assailed decision and held that there was an implied
novation of the agreement and that the payment did not extinguish the entire obligation and did
not benefit Qua. Hence, the petition, where the petitioners claim the following: (1) Qua is
estopped from claiming that the payment made was not for the entire obligation, due to his
judicial admissions; (2) payment of the entire obligation is a condition sine qua non for the
demand of reimbursement under the indemnity agreements; and (3) there is no novation in the
instant case.
ISSUE:
(1)Whether payment of the entire obligation is an essential condition for reimbursement;
and (2) Whether there was no novation.
RULING:
The petition is denied. Although the Agreement does not state that payment of the entire
obligation is an essential condition for reimbursement, RGC and Gervel cannot automatically
claim for indemnity from Qua because Qua himself is liable directly to Metrobank and PDCP.
The elements of novation are not established in the instant case. Contrary to RGC and Gervel’s
claim, payment of any amount will not automatically result in reimbursement. If a solidary
debtor pays the obligation in part, he can recover reimbursement from the co-debtors only in so
far as his payment exceeded his share in the obligation. This is precisely because if a solidary
debtor pays an amount equal to his proportionate share in the obligation, then he in effects pays
only what is due from him. If the debtor pays less than his share in the obligation, he cannot
demand reimbursement because his payment is less than his actual debt.
