Republic of the Philippines suffered losses and damages in the sum of P100,000 Philippine currency.

SUPREME COURT Said counsel therefore prayed that judgment be rendered against the
Manila defendant by sentencing him to pay to the plaintiff P137,000 Philippine
currency, and the interest thereon at the legal rate, in addition to the
EN BANC payment of the costs, together with such other equitable remedies as the
law allows.
G.R. No. L-8169 December 29, 1913
By an order of March 14, 1911, the Honorable A. S. Crossfield, judge
overruled the demurrer to the first cause of action, but sustained that to
ANTONIO M. A. BARRETTO, plaintiff-appellant, 
the second. Counsel for the plaintiff entered an exception to this order in
vs.
so far as it sustained the demurrer interposed by the defendant to the
JOSE SANTA MARINA, defendant-appellee.
second cause of action.

Hausserman, Cohn and Fisher, for appellant. 

By his written answer to the complaint, on July 19, 1911, counsel for the
W. A. Kincaid and Thos. L. Hartigan, for appellee.
defendant, reserving his exception to the order of the court overruling his
demurrer filed against the first cause of action, denied each and all of the
TORRES, J.: allegations contained in the complaint, relative to such first cause of
action.
These cases were appealed by counsel for the plaintiff, through a bill of
exceptions, from the judgment of January 17, 1912, and the order of As a special defense of the latter, he set forth that the plaintiff had no
February 5 of the same year, whereby the Honorable S. del Rosario, contract whatever with the defendant in which any period of time was
judge, sentenced the defendant to pay to the plaintiff the salary to which stipulated during which the former was to render his services as manager
he was entitled for the first eight days of January, 1910, also that for the of the La Insular factory; that the defendant revoked for just cause the
following month, at the rate of P3,083.33 per month, without special power conferred upon the plaintiff; that subsequent to the revocation of
finding as to costs, and dismissed the second cause of action contained in such power, and on the occasion of the plaintiff's having sold all his rights
the complaint presented in that case. and interests in the business of the La Insular factory to the defendant, in
consideration of the sum received by him, the plaintiff renounced all
On January 5, 1911, for the plaintiff Antonio M.a Barretto filed suit against action, intervention and claim that he might have against the defendant
Jose Santa Marina, alleging that the defendant, a resident of Spain, was relative to the business aforementioned, whereby all the questions that
then the owner and proprietor of the business known as the La Insular might have arisen between them were settled.
Cigar and Cigarette Factory, established in these Islands, which business
consisted in the purchase of leaf tobacco and other raw material, in the On December 19, 1911, counsel for each of the parties presented to the
preparation of the same, and in the sale of cigars and cigarettes in large court as stipulation of the following purport:
quantities; that on January 8, 1910, and for a long time prior thereto, the
plaintiff held and had held the position of agent of the defendant in the
In clause 11 of the will executed by Don Joaquin Santa Marina y
Philippine Islands for the management of the said business in the name
Perez in Madrid before a notary public on August 4, 1901, and duly
and for the account of the said defendant; that the plaintiff's services were
legalized in these Islands, there appears the following:
rendered in pursuance of a contract whereby the defendant obligated
himself in writing to hire the said services for so long a time as the plaintiff
should not show discouragement and to compensate such services at the "The testator provides that the testamentary executor who
rate of P37,000 Philippine currency per annum; that, on the aforesaid 8th is holding office as such shall enjoy a salary, allotment, or
day of January, 1910, the defendant, without reason, justification, or emolument of 4,000 pesos per annum which shall be paid
pretext and in violation of the contract before mentioned, summarily and out of the testator's estate; but that in case of
arbitrarily dispensed with the plaintiff's services and removed him from the consultation, the testamentary executors consulted shall
management of the business, since which date the defendant had refused not be entitled to this allotment, nor to any other, on
to pay him the compensation, or any part thereof, due him and payable in account of such consultation."
full for services rendered subsequent to December 31, 1909; and that, as
a second cause of action based upon the facts aforestated, the plaintiff had
According to the statement of the sums collected by Antonio M.a Barretto cause from his position as agent and manager of said factory, effected
as the judicial administrator of the estate of Joaquin Santa Marina from arbitrarily and in violation of the contract of hire of services between the
November, 1908, to March, 1910, and during twenty-three days of April of parties, the plaintiff claiming to be still entitled to hold the position from
the latter year, the total amount so collected was P5,923.28. which he was dismissed.

Antonio M.a Barretto ceased to manage the La Insular factory, as the The most important fact in this case, which stands out prominently from
judicial administrator of the estate of the deceased Joaquin Santa Marina, the evidence regarded as a whole, is that of the plaintiff Barretto's
in October, 1909, and not on November 7, 1908, as erroneously out in the renunciation or registration of the position he held as agent and manager
stenographic notes. of the said factory, which was freely and voluntarily made by him on the
occasion of the insolvency and disappearance of the Chinaman Uy Yan,
The remuneration paid to Barretto as judicial administrator of the estate of who had bought from the factory products aggregating in value the
Santa Marina was independent of that which pertained to him for his considerable sum of P97,000 and, without paying this large debt,
services as manager of the La Insular factory both before and after the disappeared and has not been seen since.
date on which he ceased to administer the said factory as such judicial
administrator. Antonio M.a Barretto the agent and manager of the said factory, said
among other things the following, in the letter, Exhibit 3, addressed by
In the stipulation before mentioned there also appears the following: "The him to Jose Santa Marina, on January 2, 1909:
facts above stated are true, but there is a controversy between the
attorneys for the plaintiff and the defendant, as to whether such facts are I have to report to you an exceedingly disagreeable matter. This
relevant as evidence in the said case. They therefore submit this question Chinaman Uy Yan, with whose name I begin this paragraph, has
to the court if it determines that they are relevant as evidence they should failed and owes the factory the considerable sum of P97,000. We
be admitted as such, with exception by the defendant, but if it determines will see that I can get from him, although when these Chinamen
that they are not relevant as evidence they should be excluded, with fail it is because they have spent everything. I will turned the
exception by the plaintiff." matter over to my attorney in order that he may sue the party. I
am not attempting to make light of this matter. I acknowledge that
After the hearing of the case, with the introduction of evidence by both I have been rather more generous with this fellow than I should
parties, the court, on January 17, 1912, rendered the judgment have been; but this is the way of doing business here. . . .
aforementioned, to which an exception was taken by counsel for the
plaintiff, who by written motion asked that the said judgment be set aside I have always thought that when the manager of a business trips
and a new trial granted, because such judgment was not sufficiently up in a matter like this he should tender his resignation, and I still
warranted by the evidence and was contrary to law and because the think so. The position is at your disposal to do as you like.
findings of fact therein contained were openly and manifestly contrary to
the weight of the evidence. This motion was denied, with exception by the This letter is authentic and was neither denied nor rejected by the plaintiff,
plaintiff. By an order of the 5th of the following month of February, issued Barretto.lawphil.net
in view of a petition presented by counsel for the plaintiff, the court
dismissed the second cause of action set out in the complaint, to which
Although Santa Marina did not immediately reply and tell him what opinion
order said counsel likewise excepted.
he may have formed and the decision he had reached in the matter, it is
no less true that the silence and lack of reply on the part of the chief
Upon presentation of the proper bill of exceptions, the same was owner of the factory were sufficient indications that the resignation had
approved, certified, and forwarded to the clerk of this court. been virtually accepted and that if he did not reply immediately it was
because he intended to act cautiously. As the addressee, the chief owner
Demand is made in this suit for the payment of the considerable sum of of the factory, knew of no one at that time whom he could appoint relieve
P137,000, together with the legal interest thereon. Two amounts make up the writer, who had resigned, it was to be presumed that he was
this sum: One of P37,000, as salary for the year 1910, claimed to be due thereafter looking for some trustworthy person who might substitute the
for services rendered by the plaintiff as agent and manager of the tobacco plaintiff in his position of agent and manager of the factory, communicated
factory known as La Insular; and the other of P100,000, as an indemnity to the plaintiff that he had revoked the power conferred upon him and had
for losses and damages, on account of the plaintiff's removal without just appointed Mr. J. McGavin to substitute him in his position of manager of
the La Insular factory, whereby the plaintiff's resignation, tendered in his which was presented to him by the bearer thereof, McGavin himself, the
aforesaid letter of January 2, 1909, Exhibit 3, was expressly accepted. new manager and agent appointed.

After the plaintiff had resigned the position he held, and notwithstanding Omitting consideration for the moment of the first error attributed to the
the lapse of several months before its express acceptance, it cannot be trial judge by his sustaining the demurrer filed against the second cause of
understood that he has any right to demand an indemnity for losses and action, relative to the collection of P100,000 as the amount of the losses
damages particularly since he ostensibly and frankly acknowledged that he and damages occasioned to the plaintiff, and turning our attention to the
had been negligent in the discharge of his duties and that he had second error imputed to him by his refusal to sentence the defendant, for
overstepped his authority in the management of the factory, with respect the first cause of action, to the payment of P37,000 or of any sum over
to the Chinaman mentioned. The record does not show that Santa Marina, P3,083.33, we shall proceed to examine the question whether any period
his principal, required him to resign his position as manager, but that or term for the duration of the position of agent and manager was fixed in
Barretto himself voluntarily stated by letter to his principal that, for the the verbal contract made between the deceased Joaquin Santa Marina, the
reasons therein mentioned, he resigned and placed at the latter's disposal defendant's predecessor in interest, and the plaintiff antonio M.a Barretto
the position of agent and manager of the La Insular factory; and if the — a contract which, after Joaquin Santa Marina's death was ratified by his
principal, Santa Marina, deemed it suitable to relieve the agent, for having brother and heir, the defendant Jose Santa Marina.
been negligent and overstepping his authority in the discharge of his
office, and furthermore because of his having expressly resigned his The defendant acknowledged the said verbal contract and also its
position, and placed it at the disposal of the chief owner of the business, it ratification by him after his brother's death; but he denied any stipulation
cannot be explained how such person can be entitled to demand an therein that Barretto should hold his office for any specific period of time
indemnity for losses and damages, from his principal, who merely fixed by and between the contracting parties, for the deceased Joaquin
exercised his lawful right of relieving the plaintiff from the position which Santa Marina, in conferring power upon the plaintiff, did not do so for any
he had voluntarily given up. specific time nor did he set any period within which he should hold his
office of agent and manager of the La Insular factory; neither did he fix
So, the agent and manager Barretto was not really dismissed or removed the date for the termination of such services, in the instrument of power of
by the defendant Santa Marina. What did occur was that, in view of the attorney executed by the defendant Santa Marina before a notary on the
resignation rendered by the plaintiff for the reasons which he himself 25th of September, 1908. (Record, p. 20.)
conscientiously deemed to warrant his surrender of the position he was
holding in the La Insular factory, the principal owner of the establishment, From the context of the instrument just mentioned it can not be concluded
the defendant Santa Marina, had to took for and appoint another agent that any time whatever was fixed during which the plaintiff should hold his
and manager to relieve and substitute him in the said employment — a position of agent. The defendant, in executing that instrument, whereby
lawful act performed by the principal owner of the factory and one which the agreement made between his brother Joaquin and Barretto was
cannot serve as a ground upon which to demand from the latter an ratified, did no more than accord to the plaintiff the same confidence that
indemnity for losses and damages, inasmuch as, in view of the facts that the defendant's predecessor in interest had in him; and so long as this
occurred and were acknowledged and confessed by Barretto in his letters, merely subjective condition of trust lodged in the agent existed, the time
Exhibits 3 and 6, the plaintiff could not expect, nor ought to have during which the latter might hold his office could be considered indefinite
expected, that the defendant should have insisted on the unsuccessful or undetermined, but as soon as that indespensable condition of a power
agent's continuance in his position, or that he should not have accepted of attorney disappeared and the conduct of the agent deceased to inspire
the resignation tendered by the plaintiff in his first letter. By the mere fact confidence, the principal had a right to revoke the power he had conferred
that the defendant remained silent and designated another person, Mr. J. upon his agent, especially when the latter, for good reasons, gave up the
McGavin, to, discharge in the plaintiff's stead the powers and duties of office he was holding.
agent and manager of the said factory, Barretto should have understood
that his resignation had been accepted and that if its acceptance was not
Article 1733 of the civil Code, applicable to the case at bar, according to
communicated to him immediately it was owing to the circumstance that
the provisions of article 2 of the Code of Commerce, prescribes: "The
the principal owner of the factory did not then have, nor until several
principal may, at his will, revoke the power and compel the agent to return
months afterwards, any other person whom he could appoint and place in
the instrument containing the same in which the authority was given."
his stead, for, as soon as the defendant Santa Marina could appoint the
said McGavin, he revoked the power he had conferred upon the plaintiff
and communicated this fact to the latter, by means of the letter, Exhibit D,
Article 279 of the Code of Commerce provides: "The principal may revoke salary for one month and some odd days, allowed in the judgment of the
the commission intrusted to an agent at any stage of the transaction, lower court.
advising him thereof, but always being liable for the result of the
transactions which took place before the latter was informed of the Article 302 of the Code of Commerce reads thus:
revocation."1awphi1.net
In cases in which no special time is fixed in the contracts of
From the above legal provisions it is clearly to be inferred that the contract service, any one of the parties thereto may dissolve it, advising
of agency can subsist only so long as the principal has confidence in his the other party thereof one month in advance.
agent, because, from the moment such confidence disappears and
although there be a fixed period for the excercise of the office of agent, a
The factor or shop clerk shall be entitled, in such case, to the
circumstance that does not appear in the present case the principal has a
salary due for one month.
perfect right to revoke the power that he had conferred upon the agent
owing to the confidence he had in him and which for sound reasons had
ceased to exist. From the mere fact that the principal no longer had confidence in the
agent, he is entitled to withdraw it and to revoke the power he conferred
upon the latter, even before the expiration of the period of the
The record does not show it to have been duly proved. notwithstanding the
engagement or of the agreement made between them; but, in the present
plaintiff's allegation, that a period was fixed for holding his agency or office
case, once it has been shown that, between the deceased Joaquin Santa
of agent and manager of the La Insular factory. It would be improper, for
Marina and the latter's heir, now the defendant, on the one hand, and the
the purpose of supplying such defect, to apply to the present case the
plaintiff Barretto, on the other, no period whatever was stipulated during
provisions of article 1128 of the Civil Code. This article relates to obligation
which the last-named should hold the office and manager of the said
for which no period has been fixed for their fulfillment, but, which, from
factory, it is unquestionable that the defendant, even without good
their nature and circumstances, allow the inference that there was an
reasons, could lawfully revoke the power conferred upon the plaintiff and
intention to grant such period to the debtor, wherefore the courts are
appoint in his place Mr. McGavin, and thereby contracted no liability
authorized to fix the duration of the same, and the reason why it is
whatever other than the obligation to pay the plaintiff the salary pertaining
inapplicable is that the rights and obligations existing between Barretto
to one month and some odd days, as held in the judgment below.
and Santa Marina are absolutely different from those to which it refers,
for, according to article 1732 of the Civil Code, agency is terminated:
Barretto himself acknowledged in his aforesaid letter, Exhibit 3, that he
had exceeded his authority and acted negligently in selling on credit to the
1. By revocation.
said Chinaman a large quantity of the products of the factory under the
plaintiff's management, reaching the considerable value of P97,000;
2. By withdrawal of the agent. whereby he confessed one of the causes which led to his removal, the
revocation of the power conferred upon him and the appointment of a new
3. By death, interdiction, bankruptcy, or insolvency of the principal agent in his place.
or of the agent.
The defendant, Jose Santa Marina, in his letter of December 2, 1909,
It is not incumbent upon the courts to fix the period during which whereby he communicated to the plaintiff the revocation of the power he
contracts for services shall last. Their duration is understood to be implicity had conferred upon him and the appointment of another new agent, Mr.
fixed, in default of express stipulation, by the period for the payment of McGavin, stated among other things that the loan contracted by the agent
the salary of the employee. Therefore the doctrine of the tacit renewal of Barretto, without the approval of the principal, caused a great panic
leases of property, established in article 1566 of the Civil Code, is not among the stockholders of the factory and that the defendant hoped to
applicable to the case at bar. And even though the annual salary fixed for allay it by the new measure that he expected to adopt. This, then, was still
the services to be rendered by the plaintiff as agent and manager of the La another reason the induced the principal to withdraw the confidence placed
Insular factory, was P37,000, yet, in accordance with the custom in the plaintiff and to revoke the power he had conferred upon him.
universally observed throughout the world, salaries fixed for the year are Therefore, even omitting consideration of the resignation before
collected and paid in monthly installments as they fall due, and so the mentioned, we find duly warranted the reasons which impelled the
plaintiff collected and was paid his remuneration; therefore, on the latter's defendant to revoke the said power and relieve the plaintiff from the
discontinuance in his office as agent, he would at most be entitled to the position of agent and manager of the La Insular factory.
In accordance with the provisions of article 283 of the Code of Commerce, DECISION
the manager of an enterprise or manufacturing or commercial
REYES, A., J.:
establishment, authorized to administer it and direct it, with more or less
powers, as the owner may have considered advisable, shall have the legal This action was commenced in the Municipal Court of Manila, in October,
qualifications of an agent. 1952, by 35 retired employees of the Defendant Manila Railroad Co. to
recover the sum of P7,275, the aggregate balance of salary differentials
Article 300 of the same code prescribes: "The following shall be special still due them under a memorandum of agreement signed by
reasons for which principals may discharge their employees, even though theDefendant and the unions representing its employees and laborers.
the time of service of the contract has not elapsed: Fraud or breach of After an unfavorable judgment in that court, the Defendant appealed to
trust in the business intrusted to them . . . " the Court of First Instance of Manila, and having again lost in that court it
brought the case here on appeal, raising only questions of law.
By reason of these legal provisions the defendant, in revoking the The memorandum of agreement above-mentioned, which was signed in
authority conferred upon the plaintiff, acted within his unquestionable October, 1948, and constitutes the basis of Plaintiffs’ claim, contains the
powers and did not thereby violate any statute whatever that may have following stipulations:
limited them; consequently, he could not have caused the plaintiff any
harm or detriment to his rights and interests, for not only had Santa “1.  That the Manila Railroad Company hereby reiterates its approval of
Marina a justifiable reason to proceed as he did, but also no period the standardized salaries provided for by the Standardization Committee
whatever had been stipulated during which the plaintiff should be entitled effective as of July 1, 1948, to be carried in all subsequent budgets of the
to hold his position; and furthermore, because, in relieving the latter and Company, payment to be made in accordance with Item 2; and immediate
appointing another person in his place, the defendant acted in accordance payment of said salaries will commence with the available funds of
with the renunciation and resignation which the plaintiff had tendered. If P400,000, already appropriated for this purpose;
the plaintiff is entitled to any indemnity in accordance with law, such was “2.  That we hereby further agree that upon the exhaustion of the amount
awarded to him in the judgment of the lower court by granting him the of P400,000, the employees and laborers affected by the standardized plan
right to collect salary for one month and some odd days. will receive their present salaries provided that any wage differential from
date of exhaustion will be paid when funds for the purpose are available.”
As for the other features of the case, the record does not show that the
It is agreed that Plaintiffs, who retired with gratuity in January, 1951, were
plaintiff has any good reason or legal ground upon which to claim an
entitled to collect the salary differentials, or increase in pay, resulting from
indemnity for losses and damages in the sum of P100,000, for it was not
the standardization of their salaries; that for salary differentials
proved that he suffered to that extent, and the judgment appealed from
corresponding to the period from July 1, 1948, to January 31, 1949, they
has awarded him the month's salary to which he is entitled. Therefore that
have already received a total of P9,906.05, but that there is still due them
judgment and the order of March 14 sustaining the demurrer to the
the total sum of P7,275, which has remained unpaid because of the
second cause of action are both in accordance with the law.
exhaustion of the P400,000 appropriated for the purpose.

For the foregoing reasons, whereby the errors assigned to the said In refusing to pay the balance still due the Plaintiffs, Defendant does not
judgment and order are deemed to have been refuted, both judgment and repudiate the above agreement, but contends in substance that pursuant
order are hereby affirmed, with costs against the appellant. to its terms payment of salary differentials after the exhaustion of the
P400,000 already appropriated is subject to the condition that “funds for
the purpose are available” and that no such funds are available
Arellano, C.J., Johnson and Carson, JJ., concur. 
because Defendant is losing in its business.
Moreland, J., concurs in the result.
The Defendant has, indeed, presented in evidence two summary
FIRST DIVISION statements of its accounting department, showing that it has sustained
losses in its operations during the fiscal year ending June 30, 1953, and
[G.R. No. L-7900.  January 12, 1956.] during the month of July next following. These statements, however, do
CIRIACO TIGLAO, ET AL., Plaintiffs-Appellees, vs. THE MANILA not necessarily prove that, in a multimillion-peso business such as that of
RAILROAD COMPANY, Defendant-Appellant. the Defendant funds for the payment of a debt of P7,275 due
the Plaintiffs could not have been raised or made available because of the
  losses suffered in one year and one month. The memorandum of
agreement does not stipulate that the salary differentials shall be paid only We may add that Defendant does not claim that if a separate action were
from surplus profits. In fact, the agreement provides that the standardized instituted to fix the duration of the term of its obligation, it could present
salaries — with the resulting salary differentials naturally — are “to be better proofs than those already adduced in the present case. Such
carried in all subsequent budgets of the company.” And we think it may be separate action would, therefore, be a mere formality and would serve no
admitted that in a going concern the availability of funds for a particular purpose other than to delay.
purpose is a matter that does not necessarily depend upon the cash
We, however, agree that the lower court should not have made the
position of the company but rather upon the judgment of its board of
interest adjudged run from October 21, 1948, the day the action was
directors in the choice of projects, measures or expenditures that should
commenced in the municipal court, but only from default of payment of
be given preference or priority, or in the choice between alternatives. So
the principal within the period of one year fixed by the court.
if Defendant was able to raise or appropriate funds to meet other
obligations notwithstanding the fact that it was losing, we think it could Wherefore, with the only modification as to the date the adjudged interest
have done likewise with respect to its debt to the Plaintiffs, an obligation is to commence to run, the judgment below is affirmed, with costs against
which is deserving of preferential attention because it is owed to the poor. the Defendant and Appellant.
Viewed in this light, that is, that the time to redeem Defendant’s promise Paras, C.J., Padilla, Montemayor, Bautista Angelo, Labrador,
to pay salary differentials, after the exhaustion of what had already been Concepcion and Reyes, J. B. L., JJ., concur.
appropriated for that purpose, really depended upon the judgment of its
board of directors — it not appearing that Defendant was bankrupt — the Republic of the Philippines
obligation to pay the said salary differentials may be considered as one SUPREME COURT
with a term whose duration has been left to the will of the debtor, so that Manila
pursuant to article 1128 of the old Civil Code (Art. 1197 of the new), the
duration of the term may be fixed by the courts. EN BANC
There is something to Defendant’s contention that in previous cases this
Court has held that the duration of the term should be fixed in a separate G.R. No. L-10056 December 24, 1915
action for that express purpose. But we think the lower court has given
good reasons for not adhering to technicalities in its desire to do SONG FO & CO., plaintiff-appellant, 
substantial justice. It says: vs.
MANUEL ORIA, defendant-appellant.
“(1)  The facts in the instant case are not disputed, the parties having
submitted the case for decision to be based on an agreed stipulation of
facts; Gutierrez Repide and Socias for plaintiff.
Sanz, Opisso and Luzuriaga for defendant.
“(2)  The fixing of a period for the payment of the obligation has been
amply discussed by the parties in their pleadings so that this Court may  
render judgment on that subject matter under the alternative prayer of
the Plaintiffs ‘for such further relief as this Honorable Court may deem just
and equitable’; CARSON, J.:

“(3)  To dismiss the present case and require the Plaintiffs to file another Song Fo & Co., the original plaintiff in this action, sold a launch to Oria, the
action for fixing the period of Defendant’s obligation, would entail defendant, for P16,500, payable in quarterly installments of P1,000,
multiplicity of suits; together with interest at the rate of ten per centum per annum. The
“(4)  In this case there are thirty-five Plaintiffs who were low salaried launch was delivered to Oria in Manila, but was shipwrecked and became a
employees of theDefendant Manila Railroad Company and the total loss while en route to Oria's place of business in Samar. No part of
said Plaintiffs have not been paid their salary differentials for the period of, the purchase price has ever been paid and this action was instituted for
from February 1 to June 30, 1948; and the recovery of the total amount of the purchase price with interest
thereon until paid. The trial court gave judgment in favor of the plaintiff
“(5)  To dismiss the present case and order the Plaintiffs to file another for P6,000 and interest, that being the amount of the unpaid installments
suit would open the door for dilatory tactics leading to a protracted due under the express terms of the contract at the date of the institution
litigation and in effect deny the benefits of social justice.” of the action; but declined to enter judgment for the balance of the
indebtedness on the ground that, under the express terms of the contract, the language of the contract, which authorized Song Fo & Co. to take out
it was not due and payable when the complaint was filed. insurance in their own name and to charge the amount of the premium to
Oria, when read in the light of the transaction of which it was a part,
From this judgment both parties appealed, and the record is now before us imposed at most, a duty upon Song Fo & Co. to take such reasonable
on their duly perfected bills of exceptions. measures looking to the insurance of the vessel as might be required of a
prudent man in connection with the insurance of his own property.
The defendant's contentions on this appeal are substantially limited to his
claim that under the terms of the deed of sale of the launch, Song Fo & The undisputed evidence of record shows that Song Fo & Co. did in fact
Co. had obligated themselves to insure the launch, and since they had make a bona fide attempt to insure the launch, and to that end did all in
failed and neglected to do so, they themselves should suffer the loss their power and adopted all available means which could reasonably be
resulting from the shipwreck of the launch without insurance.1awphil.net required of them. It appears, however, that partly due to the dangerous
nature of the coast of Samar along which Oria desired to operate the
launch, and partly due to the some lack of confidence in the character and
It cannot be denied that if the contract of sale did in fact impose on Song
reputation of the owner of the property for which application for insurance
Fo & Co. an imperative obligation to insure the launch, which under the
was made, the local agents of the marine insurance companies declined to
terms of the contract was mortgaged to secure the payment of the
accept the risk without previous communication within their foreign
purchase price, and if Song Fo & Co. did in fact fail and neglect to insure
principals: and the launch was lost before they could ascertain the wishes
the launch in compliance with the terms of the contract, Oria would be
of these principals as to the execution of an insurance contract. It appears
entitled to have the amount of his indebtedness reduced by the amount of
also that Oria, who had exclusive control of the operation of the vessel,
the insurance which he would have been entitled to have applied to the
sent her from Manila to Samar on the trip in the course of which she was
payment of the purchase price had Song Fo & Co. faithfully complied with
shipwrecked, well knowing that she had not yet been insured: and that
the terms of the contract.
Song Fo & Co. had no power to interfere, or to keep her in port pending
their application for insurance. Indeed it is evident that under the terms of
But an examination of the terms of the deed of sale of the launch discloses the deed of sale, they would not have had the right to detain the vessel in
that Song Fo & Co. did not expressly obligated themselves to insure and a place of safety, against the wishes of Oria, had the insurance agents
keep the launch insured, although it is true that the contract expressly definitely declined their insurance proposals.
authorized them to insure it in their own name.
Under these circumstances we are of opinion and so hold that Song Fo &
Counsel for Oria contend, however, that although the language of the Co. were in no wise responsible under the contract for the loss of the
contract did not in express terms obligate Song Fo & Co. to insure the launch without insurance and that the contentions of the defendant in this
launch, it was their duty so to do under all the circumstances, and it is regard furnish no defense to the action against him for the purchase
insisted that they should not be permitted to evade the loss resulting from agreed upon in the deed of sale.
their negligence in the performance of that duty.
Coming now to examine the contentions of the plaintiffs on their appeal,
The contract expressly authorized Song Fo & Co. to insure the launch in we think that the trial judge erred in declining to render judgment in their
their own name and to charge the estimated cost of the premiums with favor for the total amount of the purchase price of the launch. He appears
interest at the rate of ten per centum to Oria, and there is much force in to have relied upon the provisions of article 1125 of the Civil Code but to
the contention of counsel for Oria at least to extent that under all the have overlooked the co-related provisions of article 1129 of the same
circumstances, it was the duty of Song Fo & Co. to insure the vessel if they code.
could. But there is nothing in the record which would justify a holding that
Song Fo & Co. obligated themselves to insure the launch at all events.
These articles are as follows:itc-a1f
There is nothing in the written contract, examined in the light of all the
surrounding circumstances, which justifies an inference that there was any
thought in the mind of either of the parties that the vendor of the launch 1125. Obligations, the fulfillment of which has been fixed for a
would himself insure her against loss or damage during the long period certain day, are exigible only when such day arrives.
allowed for the payment of the purchase price; yet that substantially
would be the effect of the effect of the assumption of an obligation of an By a certain day is understood one which shall necessarily arrive,
obligation to insure and keep her insured at all events. On the contrary, even when the date of arrival is unknown.
 When the uncertainty consists in the arrival or non-arrival of the PABLO MANUEL, on his behalf and as guardian ad-litem of Romulo
day, then the obligations is conditional and shall be controlled by and Florencio, both surnamed Manuel, respondents.
the proceeding section.
Primicias, Abad, Mencias and Castillo for petitioner.
1129. The debtor shall lose all right to profit by the term: Fernandez, Unson and Patajo for respondents.

1. When, after the obligation has been contracted, it appears that MORAN, C.J.:
he is insolvent, unless he gives security for the debt.
This is an appeal by certiorari  from a decision of the Court of Appeals. The
2. When he does not give to the creditor the security he is bound facts are as follows:
to give.
On March 17, 1938, respondent Juliana Abalos and Carolina Abalos sold
3. When by his own acts, he acts, he has reduced such security the parcel of the land described in the complaint to Felipe Maneclang and
after giving it, or when it disappears through an unforeseen event Modesto Soriano at the price of P750, with option to repurchase the same
(vis major), unless it is immediately substituted by a new one "at anytime they have the money." Offer to repurchase was made in
equally safe. December, 1941, which could not be carried out because of the war. Felipe
Maneclang, in the meantime, ceded all his right to petitioner Modesto
The security for the payment of the purchase price of the launch itself Soriano, and in May, 1944, offer to repurchase was again made, but
having disappeared as a result of an unforeseen event (vis major), and no Modesto Soriano rejected the offer. Wherefore, vendors consigned the
other security having been substituted therefor, the plaintiffs were clearly price of P750 with the court and filed a complaint for repurchase.
entitled to recover judgment not only for the installments of the
indebtedness due under the terms of the contract at the time when the Juliana Abalos died and was substituted in this case by her heirs Romulo
instituted their action, but also for all installments which, but for the loss and Florencio, surnamed Manuel. It turned out that the property did not
of the vessel had not matured at that time. belong to the vendors Carolina and Juliana Abalos alone, but also to their
sisters, the intervenors and respondent Mercedes and Encarnacion Abalos.
The judgment entered in the court below should be modified by The Court of First Instance of Pangasinan rendered judgment ordering
substituting for so much thereof as provides for the recovery by the Modesto Soriano to execute a deed of reconveyance in favor, not only of
plaintiff of P6,000 together with interest of November 1911, a provision for Carolina Abalos and the heirs of Juliana Abalos, but also of the intervenors
the recovery of P16,500 together with interest at the rate of ten per Mercedes and Encarnacion Abalos; authorizing Modesto Soriano to collect
centum per annum, from the 15th day of November, 1911, and thus and receive as price for the reconveyance the sum of P750 consigned with
modified, the judgment appealed from should be affirmed with the costs of the court; and sentencing Modesto Soriano to pay the respondent the sum
this instance against the appellant. So ordered. of P3,200 as the value of the fruits of the land in 1944 obtained by
Modesto Soriano. This judgment was affirmed in toto by the Court of
Appeals.
Arellano, C.J., Torres, Johnson, Moreland, Trent and Araullo, JJ., concur.

Petitioner Modesto Soriano now maintains in this Court that respondent no

Republic of the Philippines
longer had any right to repurchase the property because, there being no
SUPREME COURT
express agreement as to the time within which the repurchase could be
Manila
made, that time should be, under the first paragraph, article 1508 of the
Civil Code, four years which in this case expired on March 17, 1942.
EN BANC
The stipulation, however, is that the vendors may repurchase the property
G.R. No. L-1525             July 27, 1949 "at any time  they have the money." There is, therefore, a time expressly
stipulated, which is "any time." It being, however, an unlimited or
MODESTO SORIANO, petitioner,  indefinite time, under the second paragraph of article 1508 of the Civil
vs. Code, it cannot exceed ten years. This is the ruling laid down in the cases
CAROLINA ABALOS, MERCEDES ABALOS, ENCARNACION ABALOS,
of heirs of Jumero vs. Lizares, 17 Phil., 112; Bandong vs. Austria, 31 Phil., Republic of the Philippines
479; andGonzaga vs. Go, No. 47061 (40 Off. Gaz [7th Supp.], 71). SUPREME COURT
Manila
In the first case, heirs of Jumero vs. Lizares, 17 Phil., 112, Chief Justice EN BANC
Arellano said: ". . . even admitting that it was stipulated that the right to DECISION
repurchase or redeem should last for an indefinite time, such period is
restricted to ten years, under paragraph 2 of article 1508 of the Civil Code, August 7, 1918
..." (p. 120). In the case of Bandong vs. Austria, 31 Phil., 479, the vendors
were given the right to repurchase "in the month of March of any year G.R. No. L-12611
after the date of the contract." In other words, the vendors were given the FELIPE AGONCILLO, and his wife, MARCELA MARIÑO, plaintiff-
right to repurchase again at anytime or any year. And this Court held that appellees,
the repurchase could be made within a period of not more than ten years. vs.
And in the case of Gonzaga vs. Go, G. R. No. 47061, the vendors were CRISANTO JAVIER, administrator of the estate of the late
given the right to repurchase "en cualquier tiempo devolviendo la cantidad Anastasio Alano. FLORENCIO ALANO and JOSE ALANO, defendants-
de P250 y los gastos que ocasione el contrato." And this Court held that appellants.
"en cualquier tiempo" meant not more than ten years.
Basilio Aromin for appellants.
Felipe Agoncillo for appellees.
We conclude, therefore, that in the instant case, the vendors had ten
years within which to repurchase the property and that the period did not
Fisher, J.:
expire until March 17, 1948. The offer to repurchase was made in May,
1944.
On the twenty-seventh day of February, 1904, Anastasio Alano, Jose
Alano, and Florencio Alano executed in favor of the plaintiff, Da. Marcela
It is also maintained by petitioner that the damages awarded to Mariño, a document of the following tenor:
respondent were based erroneously on a value equal with that of Japanese
war notes as were due in December, 1944. We believe that this contention We, the undersigned, Jose Alano and Florencio Alano (on our own behalf),
is well taken. Petitioner is not liable to pay now in Philippine currency the and Anastasio Alano (on behalf of his children Leonila, Anastasio and
same number of pesos in Japanese was notes to which he was sentenced Leocadio), the former and the latter testamentary heirs of the Rev.
in December, 1944. He is liable only to pay the equivalent which may be Anastasio C. Cruz, deceased, hereby solemnly promise under oath:
determined by means of the Ballantine scale of values, as held in Hilado
vs. De la Costa, G. R. No. L-150. According to that scale the value of 1. We will pay to Da. Marcela Mariño within one year from this date
Japanese military notes in relation to the peso in Philippine currency on together with interest thereon at the rate of 12 per cent per annum, the
December 1, 1944, was 90 to 1. Consequently, instead of the sum of sum of P2,730.50, Philippine currency, this being the present amount of
P3,200, petitioner should be sentenced to pay yearly P35.55 as damages indebtedness incurred in favor of that lady on the 20th of April 1897, by
beginning May, 1944 until the property is finally delivered to respondents. our testator, the Rev. Anastasio C. Cruz;

For all the foregoing, the judgment of the Court of Appeals is affirmed with 2. To secure the payment of this debt we mortgage to the said Da. Marcela
the only modification that the petitioner is sentenced to pay respondent, Mariño the house and lot bequeathed to us by the deceased, situated in
counting from May, 1944 until the property is delivered to respondents, as this town, on calle Evangelista, formerly Asturias, recorded in the register
damages, the amount of P35.55 yearly, plus costs. If the price consigned of deeds on the twenty-second of April, 1895, under number 730;
in court was destroyed, petitioner must bear the loss.
3. In case of insolvency on our part, we cede by virtue of these presents
Ozaeta, Paras, Feria, Bengzon, Tuason and Montemayor, JJ., concur. the said house and lot to Da. Marcela Mariño, transferring to her all our
Moran, J., Mr. Justice Pablo voted for this decision. rights to the ownership and possession of the lot; and if the said property
upon appraisal at the time of the maturity of this obligation should not be
of sufficient value to cover the total amount of this indebtedness, I,
Anastasio Alano, also mortgage to the said lady my four parcels of land
situated in the barrio of San Isidro, to secure the balance, if any; the title
deeds of said property, as well as the title deeds of the said house and lot
are this day delivered to Sr. Vicente Ilustre, general attorney-in-fact of Da. that, unless defendants pay the debt for the recovery of which the action
Marcela Mariño. was brought, they be required to convey to plaintiffs the house and lot
described in paragraph two of the said document; that this property be
In witness whereof we have signed these presents in Batangas, this appraised; and that if its value is found to be less than the amount of the
twenty-seventh day of February, 1904. debt, with the accrued interest at the stipulated rate, judgment be
rendered in favor of the plaintiffs for the balance. No relief is requested
(Sgd.) JOSE ALANO. with respect to the undertaking of Anastasio Alano expressed in the third
paragraph of the document in suit, as guarantor for the payment of the
(Sgd.) ANASTASIO ALANO. difference, if any, between the value of the said house and lot and the
total amount of the indebtedness.
(Sgd.) FLORENCIO ALANO.
The defendants answered denying generally the facts alleged in the
No part of the interest or of the principal due upon this undertaking has complaint, and setting up, as special defenses that (1) any cause of action
been paid, except the sum of P200 paid in the year 1908 by the late which plaintiff might have had against the estate of Anastasio Alano has
Anastasio Alano. been barred by failure of the plaintiff to present her claim to the
committee on claims for allowance; (2) that the document upon which
In 1912, Anastasio Alano died intestate. At the instance of one of his plaintiff relies does not constitute a valid mortgage; and (3) that as to all
creditors, proceedings upon the administration of his estate were had in of the defendants, the action is barred by the general statute of limitations
the Court of First Instance of Batangas. By order dated August 8, 1914, MWQltadQ.
the court appointed an administrator and a committee to hear claims.
Notices were published, as required, in a newspaper of general circulation, The findings of the trial court upon the evidence were substantially as
to inform the creditors of the time and place at which they might appear to follows:
present their claims against the estate of the deceased (Exhibit No. 1).
The time designated in the notice for the presentation of claims expired on 1. That the document set forth in paragraph two of plaintiffs' complaint
March 24, 1915. It appears that no claims whatever were presented to the was executed by the deceased, Anastasio Alano, and by the defendants
committee, and it having been shown to the court, by the statement of the Javier and Jose Alano, as alleged;
administrator, that the claim of the creditor at whose instance the
administration proceeding was commenced, had been settled by the heirs, 2. That one year after the execution of the document, plaintiffs made a
the administrator was discharged and the proceeding terminated by order demand upon Anastasio Alano, deceased, and the other two defendants
dated November 8, 1915. herein, to comply with the terms of the agreement by the execution of the
conveyance of the house and lot, but that they requested an extension of
On April 27, 1916, at the instance of the plaintiff, Da. Marcela Mariño, and time for the payment of the debt, which was granted them;
upon the statement, made on her behalf, that she was a creditor of the
deceased and that her claim was secured by mortgage upon real estate 3. That on March 27, 1908, the defendants paid P200 on account of the
belonging to the said deceased, the court reopened the intestate debt ZX9WRNe.
proceeding, and appointed one Javier to be administrator of the estate. No
request was made for a renewal of the commission of the committee on Upon these findings the court below gave judgment for plaintiffs, and from
claims. The appellants Jose and Florencio Alano objected to the that judgment the defendants have appealed to his court upon the law and
appointment of Javier, but their objection was overruled by the court. the facts.

On March 17, 1916, the plaintiffs filed the complaint in this action against The question raised by the appellants require us to analyze the document
Javier, as administrator of the estate of Anastasio Alano and against upon which this action is based, and to determine its legal effect.
Florencio Alano and Jose Alano personally. The action is based upon the Appellants contend that the contract evidenced by that instrument is
execution of the document of February 27, 1904, above set forth, which is merely a loan coupled with an ineffectual attempt to create a mortgage to
transcribed literally in the complaint. It is averred that defendants have effect the payment of debt. The court below regarded it as a conveyance
paid no part of the indebtedness therein acknowledged, with the exception of the house and lot described in the contract, which took effect upon the
of the P200 paid on account in 1908. It is further averred that on April 22, failure of the debtors to pay the debt.
1910, the debtors promised in writing that they would pay the debt in
1911, but that they had failed to do so. The prayer of the complaint is The principal undertaking evidenced by the document is, obviously, the
payment of money. The attempt to create a mortgage upon the house and arise only when it is expressly stipulated that they shall have this
lot described in the second clause of the contract is, of course, invalid, as character (Civil Code, art. 1137). That being so, the debt must be
it is admitted that the so-called mortgage was never recorded. Equally regarded as divided into as many equal parts as there are debtors, each
inefficacious, and for the same reasons, is the purported mortgage by part constituting a debt distinct from the others. (Civil Code, art. 1138.)
Anastasio Alano of his land in the barrio of San Isidro described in the third The result of this principle is that the extinction of the debt of one of the
paragraph of the document. (Compañia General de Tabacos vs. various debtors does not necessarily affect the debts of the others.
Jeanjaquet, 12 Phil. Rep., 195.)
It is contended on behalf of the administrator of the estate of Anastasio
The agreement to convey the house and lot at an appraised valuation in Alano that the failure of the plaintiff to present her claim for allowance to
the event of failure to pay the debt in money a t its maturity is, however, the committee on claims is a bar to her action so far as this defendant is
in our opinion, perfectly valid. It is simply an undertaking that if the debt concerned. We are of the opinion that this objection is well-taken. Section
is not paid in money, it will be paid in another way. As we read the 695 of the Code of Civil Procedure expressly requires that a claim of this
contract, the agreement is not open to the objection that the stipulation is kind be presented for allowance to the committee, and declares that the
a pacto comisorio. It is not an attempt to permit the creditor to declare a failure to do so operates to extinguish the claim. The operation of this
forfeiture of the security upon the failure of the debtor to pay the debt at statute and the absolute nature of the bar which it interposes against the
maturity. It is simply provided that if the debt is not paid in money it shall subsequent assertion of claims not presented in accordance with its
be paid in another specific was by the transfer of property at a valuation. requirements have frequently been considered by this court, and the
Of course, such an agreement, unrecorded, creates no right in rem; but as doctrines announced need not be here repeated. (Estate of De Dios, 24
between the parties it is perfectly valid, and specific performance of its Phil. Rep., 573; Santos vs. Manarang, 27 Phil. Rep., 209). While it is
terms may be enforced, unless prevented by the creation of superior rights true that under certain circumstances and within the statutory limits (sec.
in favor of third persons 1z5y. 690 of the Code of Civil Procedure) the probate court may renew the
commission of the committee on claims, and permit the presentation of
The contract now under consideration is not susceptible of the belated demands, in no case may a claim proper to be allowed by the
interpretation that the title to the house and lot in question was to be committee, such as is the one now under consideration, be enforced by an
transferred to the creditor ipso facto upon the mere failure of the debtors original action against the executor or administrator of the state. Our
to pay the debt at its maturity. The obligations assumed by the debtors opinion is, therefore, that the objection to the action interposed on behalf
were alternative, and they had the right to elect which they would perform of the administrator of the estate of Anastasio Alano was well-taken and
(Civil Code, art. 1132). The conduct of the parties (Civil Code, art. 1782) that the court erred in rejecting it.
shows that it was not their understanding that the right to discharge the
obligation by the payment of money was lost to the debtors by their failure This conclusion makes it unnecessary to consider the effect of the payment
to pay the debt at its maturity. The plaintiff accepted a partial payment made by Anastasio Alano in 1908 as regards the interruption of the period
from Anastasio Alano in 1908, several years after the debt matured. The of prescription with respect to him. In this connection, however, we feel
prayer of the complaint is that the defendants be required to execute a constrained to remark that a careful reading of the document makes it
conveyance of the house and lot, after its appraisal, "unless the extremely doubtful whether Anastasio Alano was ever personally bound by
defendants pay the plaintiff the debt which is the subject of this action." its terms. It will be noted that he purports to have signed it only as the
representative of his children, Leonina, Anastasio, and Leocadio, who are
It is quite clear, therefore, that under the terms of the contract, as we not parties to this suit.
read it, and as the parties themselves have interpreted it, the liability of
the defendants as to the conveyance of the house and lot is subsidiary and With respect to the defendants Florencio and Jose Alano, their original
conditional, being dependent upon their failure to pay the debt in money. liability admits of no dispute and the only question open for consideration
It must follow, therefore, that if the action to recover the debt has is that presented by their plea of prescription. The debt matured February
prescribed, the action to compel a conveyance of the house and lot is 27, 1905, and as the complaint was not filed within ten years from that
likewise barred, as the agreement to make such conveyance was not an date (Code of Civil Procedure, sec. 43), it is obvious that the plea of
independent principal undertaking, but merely a subsidiary alternative pact prescription is well-taken, unless the running of the statute was
relating to the method by which the debt might be paid. interrupted.

The undertaking to pay the debt, acknowledged by the contract in suit, is While it appears that some verbal and written demands for payment were
indisputably conjoint (mancomunada). The concurrence of two or more made upon these defendants, it has been recently decided, upon mature
debtors does not in itself create a solidary liability. Obligations in solido consideration, that an extrajudicial demand is not sufficient, under the law
as it now stands, to stop the running of the statute. (Pelaez vs. Abreu, 26 In the State of Louisiana, whose Civil Code, like ours, is largely taken from
Phil. Rep., 415). There must be either (1) a partial payment, (2) a the Code of Napoleon, the Supreme Court has established the same
written acknowledgment or (3) a written promise to pay the debt. It is not doctrine on the subject of the interruption of prescription.
contended that there has been any written acknowledgment or promise on
the part of the defendants Jose and Florencio Alano, or either of them — In the case of Buard vs. Lemee, Syndic (12 Robinson's Reports, 243), the
plaintiff relies solely upon the payment made in 1908 by Anastasio Alano. Supreme Court of Louisiana said:
But there is not the slightest foundation in the evidence for the belief that
the payment made by Anastasio was for the benefit of Jose or Florencio or It results . . . that when the acknowledgment of a debt is made by a joint
that it was authorized by either of them. Bearing in mind the express debtor, such acknowledgment does not interrupt the prescription with
declaration of article 1138 of the Civil Code that joint (mancomunada) regard to the others. Each is bound for his virile share of the debt; and,
obligations are, as regard each of the debtors, to be reputed as separate therefore, each is at liberty to act for himself, and the effect of his acts
debts with respect to each of the debtors, it follows of necessity that a cannot be extended to the benefit or prejudice of his co-debtors; so true is
payment or acknowledgment by one of such joint debtors will not stop the this that the law has never intended that a suit brought against one of the
running of the period of prescription as to the others. That such is the law several debtors should interrupt prescription with regard to all, unless they
may be demonstrated by ample authority. be debtors in solido.

In his commentaries on article 1138 and 1139 of the Civil Code, Manresa This doctrine was recognized and applied by the Supreme Court of
says that one of the effects of the rule established by the code that the Louisiana in the subsequent cases of Succession of Cornelius Voorhies (21
debt is to be regarded as "divided into as many parts . . . as there are La. Ann., 659) and Smith vs. Coon (22 La. Ann., 445).
debtors" is that "the interruption of prescription by the claim of a creditor
addressed to a single debtor or by an acknowledgment made by one of the There is no presumption that one conjoint ( pro-rata) debtor is authorized
debtors in favor of one or more of the creditors is not to be understood as to perform any act having the effect of stopping the running of the statute
prejudicial to or in favor of the other debtors or creditors." (Manresa, of limitations as to the others. When the act relied upon is performed by
Commentaries on the Civil Code, vol. 8, p. 182.) some person other than the debtor, the burden rests upon the plaintiff to
show that it was expressly authorized. (17 R.C.L., 911 and the cases there
The same doctrine is recognized in the Italian Civil Law, as stated by cited.) In this case there is no such evidence. The statement in the letter
Giorgi in his work on Obligations as follows: of Da. Maria Lontok, to whom the P200 payment was made, is that it was
a payment made on account of "the debt of Anastasio Alano." (Plaintiffs'
The obligation appears to be one, when as a matter of fact it is an Exhibit D.) Da. Maria Lontok in her testimony does not attempt to say that
aggregate of as many separate and independent obligations as there are the payment was made for the account of any one but Anastasio Alano,
creditors and debtors. Each creditor cannot demand more than his part; from whom she received it. The statement that Florencio Alano was with
each debtor cannot be required to pay more than his share. Prescription, Anastasio at the time is not in itself sufficient to constitute proof that the
novation, merger, and any other cause of modification or extinction does payment was made for his benefit. (Lichauco vs. Limjuco and Gonzalo,19
not extinguish or modify the obligation except with respect to the creditor Phil. Rep., 12.)
or debtor affected, without extending its operation to any other part of the
debt or of the credit. The obligation is, in a word, pro rata, or in partes Plaintiff argues that the undertaking to convey the house and lot
viriles. (Giorgi on Obligations, vol. 1, p. 83, Spanish translation.) constitutes an indivisible obligation, and that even where the promise is
not in solidum, the concurrence of two or more debtors in an obligation
The same view is taken by the French law writers. In the article on whose performance is indivisible creates such a relation between them
obligations in Dalloz' Encyclopedia (Jurisprudence Generale) vol. 33, p. that the interruption of prescription as to one of necessity interrupts it as
297, the author says: to all. The distinction is one which is well-established, although the
authorities cited do not fully support plaintiffs' contentions, but in this
The conjoint (pro rata) obligation is divided by operation of law among the particular case the question is academic, for the undertaking is in the
non-solidary co-debtors. It is as though there were many debts as there alternative to pay a sum of money — an essentially divisible obligation —
are persons bound. Hence it follows that if one of the debtors is insolvent or to convey the house. As the alternative indivisible obligation is imposed
the loss falls upon the creditor and not upon the other debtors, and that if only in the event that the debtors fail to pay the money, it is subject to a
prescription is interrupted with respect to one of the debtors, it is not suspensive condition, and the prescription of the obligation whose non-
interrupted with respect to the others. performance constitutes the condition effectively prevents the condition
from taking place.
We are, therefore, constrained to hold with defendants and to reverse the But even had it been proved that the late Reverend Cruz died before Act
decision of the lower court. We do this most regretfully, as the evidence in No. 190 took effect, and that the debt, by reason of its hereditary origin,
this case shows that plaintiff has been extremely lenient with defendants imposed upon the five Alano brothers the solidary obligation of paying it,
and has refrained from pressing her claim against them when it fell due, as the evidence does not show that the payment made by Anastasio Alano
and for a long period of years thereafter, purely out of consideration for in 1908 was authorized by any one of the solidary debtors, it cannot have
them. The defense of prescription interposed, particularly as regards Jose the effect of interrupting the prescription. It must be kept in mind that
and Florencio Alano, is an indefensible from the standpoint of fair dealing Anastasio Alano was in no sense a solidary debtor of the plaintiff, either
and honesty as it is unassailable from the standpoint of legal technicality. with respect to the origin of the obligation or by his participation in the
However, the law, as we see it, is clear and it is our duty to enforce it. execution of the document by which the indebtedness was acknowledged.
it is unquestionable that payment made by any one of the several solidary
The judgment of the lower court is reversed and the action is dismissed as debtors interrupts the running of the statute of limitations with respect to
to all the defendants. No costs will be allowed. So ordered. the others, and that a third person may make a payment without the
knowledge and even against the will of the debtor, but payments so made
Torres, Johnson, Street and Avanceña, JJ., concur. by a stranger to the debt do not interrupt the operation of the statute of
limitations VL3a5.
Malcolm, J., dissents.
The general rule is that an acknowledgment or new promise to pay must,
RESOLUTION in order to take a case out of the statute, be made by the person to be
charged or by some person legally authorized by him so to act. (17 Ruling
September 20, 1918. Case Law, p. 911.)

FISHER, J.: In the case of a part payment by a stranger, or by a person not authorized
to represent the debtor, it is obvious that there is no ground for assuming
Plaintiff seeks a consideration of the decision of this court rendered herein. any admission of an existing liability on his part or for inferring a new
With respect to plaintiff's contention concerning the action against the promise by him to pay the balance of the debt. (17 Ruling Case Law, p.
estate of Anastasio Alano, we have nothing to add to what was said in the 935.)
former decision. As regards the defendants, Florencio Alano and Jose
Alano, the principal argument advanced by plaintiff is that those Furthermore, it is to be observed that in accordance with the express
defendants, as testamentary heirs of the late Anastasio C. Cruz, are liable, terms of article 50 of the Code of Civil Procedure, payment in order to
in solidum, for the debt in suit, which is evidenced by the document signed have the effect of interrupting the running of the statute, must be made
by these defendants on February 27, 1904, set forth at length in our by the person to be charged oVul.
decision. Plaintiff argues that he obligation being solidary, by reason of its
hereditary origin (Fabie vs. Yulo, 24 Phil. Rep., 240) the running of the Independently of these considerations, it is obvious that this action was
statute of limitations was interrupted with respect to all the debtors, by not brought as though based upon an obligation which had accrued under
the payment of P200 made by the late Anastasio Alano in 1908. The whole the provisions of the Civil Code, formerly in force, relating to the
argument rests upon article 1084 of the Civil Code and the statement acceptance of an estate without benefit of inventory. The action has been
contained in the document of February 27, 1904, that the Alano brothers brought solely and exclusively for the enforcement of the obligation
are the "testamentary heirs" of the original debtor, and the assumption created by the execution of the document of credit of 1904. This is the
that the latter died, and that his inheritance was accepted, before the reason, no doubt, why plaintiff made no effort to prove the date of the
present Code of Civil Procedure was enacted. There is nothing in the death of Reverend Cruz; whether his heirs accepted the inheritance with or
record to indicate, even remotely, when the Reverend Cruz died. If he died without the benefit of inventory; if they were all adults at the time of the
after the new Code took effect, the acceptance of his inheritance did not death of the testator; whether they inherited in equal parts or in some
impose upon his testamentary heirs any personal obligation to respond to proportion. It is natural that she should have made no effort to produce
the payment of the debts of the deceased. (Pavia vs. De la Rosa, 8 Phil. evidence upon these points, as there is nothing in the allegations of the
Rep., 70.) There having been neither allegation nor proof with respect to complaint to support its admission. If the defendants had replied admitting
the date of the death of the original debtor, we cannot presume, to the the facts alleged, it is evident that it would have been necessary to decide
prejudice of the defendants, that he died and that his succession was the case in accordance with the law in force in 1904, considering the
opened under the old regime NNDgIJr. execution of the document in question as the act from which the obligation
 in suit originated, although it appears from the document that the This is an appeal to this Court from a decision rendered by the Court of
consideration for its execution was the debt of a third person FpZL. First Instance of Marinduque, wherein the defendants-appellants are
ordered to pay the plaintiff-appellee the sum of P550, with interest from
When the plaintiff deliberately adopts a certain theory with respect to the the time of the filing of the complaint, and from an order of the same court
basis of his right of action, and the case is tried and decided in the court denying a motion of the defendants-appellants for the reconsideration of
below and in this court upon that theory, plaintiff will not be permitted to the judgment on the ground that they were deprived of their day in court.
change the theory of his action upon a motion for rehearing. (Molina vs.
Somes, 24 Phil. Rep., 49.) To do so would be to deprive the defendant of The action was originally instituted in the justice of the peace court of Sta.
an opportunity to defend. The defendant naturally produces evidence Cruz, Marinduque, and the same is based on an actionable document
relating to the evidence offered on behalf of plaintiff. If the issue of the attached to the complaint, signed by the defendants-appellants on October
liability of Florencio and Jose Alano upon the theory now advanced by 4, 1948, and containing the following pertinent provisions:
plaintiff had been presented in the court below, it is possible that these
defendants might have been able to prove that their testator died after the Na alang-alang sa aming mahigpit na pangangailangan ay kaming
enactment of the new code or, if he died before, that they were minors at magasawa ay lumapit kay Ginang Martina Quizana, balo, at naninirahan sa
that time; that the inheritance was accepted by their guardian without the Hupi, Sta. Cruz, Marinduque, at kami ay umutang sa kanya ng halagang
intervention of the family council (Civil Code, art. 992), or that it was Limang Daan at Limang Pung Piso (P550.00), Salaping umiiral dito sa
expressly accepted with benefit of inventory, and that the value of the Filipinas na aming tinanggap na husto at walang kulang sa kanya sa
property inherited is less than the amount of the debt (Civil Code, art. condicion na ang halagang aming inutang ay ibabalik o babayaran namin
1023), or that the effect of the execution of the document of 1904 was a sa kanya sa katapusan ng buwan ng Enero, taong 1949.
novation of the obligation by which the latter was converted into a simple
joint indebtedness. The defendants Florencio and Jose Alano having had no Pinagkasunduan din naming magasawa sa sakaling hindi kami makabayad
opportunity to invoke any of these defenses, which might have been sa taning na panahon ay aming ipifrenda o isasangla sa kanya ang isa
available to them, it would be unjust to give judgment against them upon naming palagay na niogan sa lugar nang Cororocho, barrio ng Balogo,
the theory of their obligation now invoked by plaintiff. The motion for a municipio ng Santa Cruz, lalawigang Marinduque, Kapuluang Filipinas at ito
rehearing is denied Xzes7Rv. ay nalilibot ng mga kahanganang sumusunod:

Torres, Johnson, Street, and Avanceña, JJ., concur. Sa Norte, Dalmacio Constantino; sa este, Catalina Reforma; sa sur,
Dionisio Ariola; at sa Oeste, Reodoro Ricamora, no natatala sa gobierno sa
Malcolm, J., dissents. . ilalim ng Declaracion No. na nasa pangalan ko, Josefa Postrado.

The defendants-appellants admit the execution of the document, but

Republic of the Philippines claim, as special defense, that since the 31st of January, 1949, they
SUPREME COURT offered to pledge the land specified in the agreement and transfer
Manila possession thereof to the plaintiff-appellee, but that the latter refused said
offer. Judgement having been rendered by the justice of the peace court of
EN BANC Sta. Cruz, the defendants-appellants appealed to the Court of First
DECISION Instance. In that court they reiterated the defenses that they presented in
the justice of the peace court. The case was set for hearing in the Court of
First Instance on August 16, 1951. As early as July 30 counsel for the
May 7, 1954 defendants-appellants presented an "Urgent Motion for Continuance,"
G.R. No. L-6220 alleging that on the day set for the hearing (August 16, 1951), they would
MARTINA QUIZANA, plaintiff-appellee, appear in the hearing of two criminal cases previously set for trial before
vs. they received notice of the hearing on the aforesaid date. The motion was
GAUDENCIO REDUGERIO and JOSEFA POSTRADO, defendants- submitted on August 2, and was set for hearing on August 4. This motion
appellants. was not acted upon until the day of the trial. On the date of the trial the
Samson and Amante for appellants. court denied the defendants-appellants' motion for continuance, and after
Sabino Palomares for appellee. hearing the evidence for the plaintiff, in the absence of the defendants-
Labrador, J.: appellants and their counsel, rendered the decision appealed from.
Defendants-appellants upon receiving copy of the decision, filed a motion
for reconsideration, praying that the decision be set aside on the ground provides:
that sufficient time in advance was given to the court to pass upon their
motion for continuance, but that the same was not passed upon. This ART. 1206. When only one prestation has been agreed upon, but the
motion for reconsideration was denied. obligor may render another in substitution, the obligation is called
facultative.
The main question raised in this appeal is the nature and effect of the
actionable document mentioned above. The trial court evidently ignored xxxxxxxxx
the second part of defendants-appellants' written obligation, and enforced
its last first part, which fixed payment on January 31, 1949. The plaintiff- This is a new provision and is not found in the old Spanish Civil Code,
appellee, for his part, claims that this part of the written obligation is not which was the one in force at the time of the execution of the agreement.
binding upon him for the reason that he did not sign the agreement, and
that even if it were so, the defendants-appellants did not execute the There is nothing in the agreement which would argue against its
document as agreed upon, but, according to their answer, demanded the enforcement. it is not contrary to law or public morals or public policy, and
plaintiff-appellee to do so. This last contention of the plaintiff-appellee is notwithstanding the absence of any legal provision at the time it was
due to a loose language in the answer filed with the Court of First entered into government it, as the parties had freely and voluntarily
Instance. But upon careful scrutiny, it will be seen that what the entered into it, there is no ground or reason why it should not be given
defendants-appellants wanted to allege is that they themselves had effect. It is a new right which should be declared effective at once, in
offered to execute the document of mortgage and deliver the same to the consonance with the provisions of article 2253 of the Civil Code of the
plaintiff-appellee, but that the latter refused to have it executed unless, an Philippines, thus:
additional security was furnished. Thus the answer reads:
ART. 2253. . . . But if a right should be declared for the first time in this
5. That immediately after the due date of the loan Annex "A" of the Code, it shall be effective at once, even though the act or event which
complaint, the defendants made efforts to execute the necessary gives rise thereto may have been done or may have occurred under the
documents of mortgage and to deliver the same to the plaintiff, in prior legislation, provided said new right does not prejudice or impair any
compliance with the terms and conditions thereof, but the plaintiff refused vested or acquired right, of the same origin.
to execute the proper documents and insisted on another portion of
defendants' as additional security for the said loan; (emphasis ours.) In view of our favorable resolution on the important question raised by the
defendants-appellants on this appeal, it becomes unnecessary to consider
In our opinion it is not true that defendants-appellants had not offered to the other question of procedure raised by them.
execute the deed of mortgage VhGzBPO771.
For the foregoing considerations, the judgment appealed from is hereby
The other reasons adduced by the plaintiff-appellee for claiming that the reversed, and in accordance with the provisions of the written obligation,
agreement was not binding upon him also deserves scant consideration. the case is hereby remanded to the Court of First Instance, in which court
When plaintiff-appellee received the document, without any objection on the defendants-appellants shall present a duly executed deed of mortgage
his part to the paragraph thereof in which the obligors offered to deliver a over the property described in the written obligation, with a period of
mortgage on a property of theirs in case they failed to pay the debt on the payment to be agreed upon by the parties with the approval of the court.
day stipulated, he thereby accepted the said condition of the agreement. Without costs.
The acceptance by him of the written obligation without objection and
protest, and the fact that he kept it and based his action thereon, are Paras, C.J., Pablo, Bengzon, Montemayor, Jugo, Bautista Angelo, and
concrete and positive proof that he agreed and contested to all its terms, Concepcion, JJ., concur. .
including the paragraph on the constitution of the mortgage.

The decisive question at issue, therefore, is whether the second part of the
written obligation, in which the obligors agreed and promised to deliver a
mortgage over the parcel of land described therein, upon their failure to
pay the debt on a date specified in the proceeding paragraph, is valid and
binding and effective upon the plaintiff-appellee, the creditor. This second
part of the obligation in question is what is known in law as a facultative
obligation, defined in article 1206 of Civil Code of the Philippines, which
 Republic of the Philippines In other words, the appeal in the present case to this court was made and
SUPREME COURT perfected nearly a year and a half before said Act No. 1627 went into
Manila effect.
EN BANC
DECISION The question presented is, Did the above-quoted provision of Act No. 1627
have the effect of depriving this court of jurisdiction over said cause? It
will be noted that the language of said act is that the "judgments rendered
January 4, 1908 by the Court of First Instance on appeal shall be final and conclusive," etc.
The appellee relies especially upon Ex parte McCardle (74 U.S. 506). In
G.R. No. L-3128 that case the amended law expressly deprived the Supreme Court of the
UN PAK LEUNG, plaintiff-appellee, United States of jurisdiction in appeals in the class of cases mentioned in
vs. said law, and, of course, this law deprived the Supreme Court of such
JUAN NIGORRA, ET AL, defendants-appellants. jurisdiction immediately upon the taking effect of said law. It will be
observed, however, that there is nothing in the amendment upon which
Johnson, J.: the appellee relies which deprived this court of jurisdiction of cases
pending. In the case of Railroad Company vs. Grant (98 U.S. 398) a writ
MOTION FOR REHEARING. of error was granted by the Supreme Court of the United States on the 6th
day of December, 1875. The cause was not brought on for trial until some
time after the 25th day of February, 1879. On this latter date Congress
The plaintiff and appellee presents a motion for rehearing, basing the passed a law providing that thereafter no case of the character of the one
same upon the claim that this court was without jurisdiction to consider in question "may be reexamined and reversed or affirmed in the Supreme
and decide the cause, for reason that section 16 of Act No. 1627 of the Court of the United States upon the writ of error or appeal." Here again it
Philippine Commission deprived this court of jurisdiction in causes which will be noted that the law deprived the Supreme Court of its jurisdiction,
were originally commenced in the court of the justice of the peace, and and, of course, after the passage of that law, and having been deprived of
cites many cases in support of this contention. Said section 16, among its jurisdiction, it could no longer hear cases of the nature of that
other things, provides as follows: presented in the particular case.

Judgments rendered by the Court of First Instance on appeal (from the No doctrine is better settled than that a repeal of an act giving jurisdiction
court of the justice of the peace) shall be final and conclusive, except in of a pending suit is an express prohibition of the exercise of the
cases involving the validity or constitutionality of a statute or municipal jurisdiction conferred by the former law. In the present case, however, the
ordinance. appeal was perfected long before the new law went into operation, and we
are of the opinion, and so hold, that it was not the intention of the
The contention of the appellee is that this provision deprived this court of legislature to deprive persons who had perfected their appeals before that
jurisdiction to hear and determine the present cause. date of the right to have their appeals considered by the Supreme Court.
Act No. 1627 did not deprive this court of its jurisdiction over cases
The facts are as follows: appealed prior to the 1st day of July, 1907. The decision in the case
of Pavon vs. Philippine Islands Telephone and Telegraph
On the 31st day of March, 1905, the justice of the peace of the city of Company (5 O.G. 1076, 9 Phil. 247) is not in conflict with this
Manila rendered judgment in the present cause against the defendants and conclusion. The motion for rehearing is, therefore, hereby denied. So
in favor of the plaintiff. From this decision the defendants appealed to the ordered.
Court of First Instance. On the 2d day of September, 1905, the judge of
the Court of First Instance, after hearing the evidence in said cause, Arellano, C.J., Torres, Mapa, Carson, Willard and Tracey, JJ., concur. .
rendered judgment affirming the decision of the justice of the peace. From
this decision the defendants appealed to this court. The record was
received in this court on the 19th of January, 1906. The bill of exceptions
was printed and distributed on the 2d day of March, 1906. Act No. 1627
did not take effect until the 1st day of July, 1907. The briefs of both
parties were filed on or before the 29th day of August, 1906, and the
cause was duly submitted to this court on the 5th day of November, 1907.
 notarial document (Exhibit S) whereby all admitted their indebtedness to
Inchausti & Company in the sum of P203,221.27 and, in order to secure
Republic of the Philippines the same with interest thereon at 10 per cent per annum, they especially
SUPREME COURT mortgaged an undivided six-ninth of their thirty-eight rural properties,
Manila their remaining urban properties, lorchas, and family credits which were
listed, obligating themselves to make a forma inventory and to describe in
due form all the said properties, as well as to cure all the defects which
EN BANC
might prevent the inscription of the said instrument in the registry of
property and finally to extend by the necessary formalities the aforesaid
G.R. No. L-7721            March 25, 1914 mortgage over the remaining three-ninths part of all the property and
rights belonging to their other brothers, the incompetent Teodoro, and the
INCHAUSTI & CO., plaintiff-appellant,  minors Concepcion and Jose.
vs.
GREGORIO YULO, defendant-appellee. Second. On January 11, 1909, Gregorio Yulo in representation of Hijos de
T. Yulo answered a letter of the firm of Inchausti & Company in these
Hausserman, Cohn and Fisher for appellant. terms: "With your favor of the 2d inst. we have received an abstract of our
Rohde and Wright for appellee. current account with your important firm, closed on the 31st of last
Bruce, Lawrence, Ross and Block, Amici Curiae, for Manuel, Francisco and December, with which we desire to express our entire conformity as also
Carmen Yulo. with the balance in your favor of P271,863.12." On July 17, 1909,
Inchausti & Company informed Hijos de T. Yulo of the reduction of the said
ARELLANO, C.J.: balance to P253,445.42, with which balance 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
This suit is brought for the recovery of a certain sum of money, the was formalized.
balance of a current account opened by the firm of Inchausti & Company
with Teodoro Yulo and after his death continued with his widow and
children, whose principal representative is Gregorio Yulo. Teodoro Yulo, a Third. On August 12, 1909, Gregorio Yulo, for himself and in
property owner of Iloilo, for the exploitation and cultivation of his representation of his brother Manuel Yulo, and in their own behalf Pedro
numerous haciendas in the province of Occidental Negros, had been Yulo, Francisco Yulo, Carmen Yulo, and Concepcion Yulo, the latter being
borrowing money from the firm of Inchausti & Company under specific of age at the time, executed the notarial instrument (Exhibit X). Through
conditions. On April 9, 1903; Teodoro Yulo died testate and for the this, the said persons, including Concepcion Yulo ratified all the contents of
execution of the provisions of his will he had appointed as administrators the prior document of June 26, 1908, severally and jointly acknowledged
his widow and five of his sons, Gregorio Yulo being one of the latter. He and admitted their indebtedness to Inchausti & Company for the net
thus left a widow, Gregoria Regalado, who died on October 22d of the amount of two hundred fifty-three thousand four hundred forty-five pesos
following year, 1904, there remaining of the marriage the following and forty-two centavos (P253,445.42) which they obligated themselves to
legitimate children: Pedro, Francisco, Teodoro, Manuel, Gregorio, Mariano, pay, with interest at ten per cent per annum, in five installments at the
Carmen, Concepcion, and Jose Yulo y Regalado. Of these children rate of fifty thousand pesos (P50,000), except the last, this being fifty-
Concepcion and Jose were minors, while Teodoro was mentally three thousand four hundred forty-five pesos and forty-two centavos
incompetent. At the death of their predecessor in interest, Teodoro Yulo, (P53,445.42), beginning June 30, 1910, continuing successively on the
his widow and children held the conjugal property in common and at the 30th of each June until the last payment on June 30, 1914. Among other
death of this said widow, Gregoria Regalado, these children preserved the clauses, they expressly stipulated the following:
same relations under the name of Hijos de T. Yulo continuing their current
account with Inchausti & Company in the best and most harmonious Fifth. The default in payment of any of the installments established
reciprocity until said balance amounted to two hundred thousand pesos. In in clause 3, or the noncompliance of any of the other obligations
for the payment of the disbursements of money which until that time it which by the present document and that of June 26, 1908, we, the
had been making in favor of its debtors, the Yulos. Yulos, brothers and sisters, have assumed, will result in the
maturity of all the said installments, and as a consequence
First. Gregorio Yulo, for himself and in representation of his brothers Pedro thereof, if they so deem expedient Messrs. Inchausti & Company
Francisco, Manuel, Mariano, and Carmen, executed on June 26, 1908, a may exercise at once all the rights and actions which to them
 appertain in order to obtain the immediate and total payment of them for the payment of the debt or the part thereof which remains
our debt, in the same manner that they would have so done at the unpaid, and that Messrs. Inchausti & Company may consider the total
maturity of the said installments. obligation due and demandable, and proceed to collect the same together
with the interest for the delay above stipulated through all legal means."
Fifteenth. All the obligations which by this, as well as by the (4th clause.)
document of June 26, 1908, concern us, will be understood as
having been contradicted in solidum by all of us, the Yulos, Thus was it stipulated between Inchausti & Company and the said three
brothers and sisters. Yulos, brothers and sisters — by way of compromise so that Inchausti &
Company might, as it did, withdraw the claims pending in the special
Sixteenth. It is also agreed that this instrument shall be confirmed proceedings for the probate of the will of Don Teodoro Yulo and of the
and ratified in all its parts, within the present week, by our brother intestacy of Doña Gregoria Regalado — stipulating expressly however in
Don Mariano Yulo y Regalado who resides in Bacolod, otherwise it the sixth clause that "Inchausti & Company should include in their suit
will not be binding on Messrs. Inchausti & Company who can make brought in the Court of First Instance of Iloilo against Don Gregorio Yulo,
use of their rights to demand and obtain immediate payment of his brother and joint co-obligee, Don Pedro Yulo, and they will procure by
their credit without any further extension or delay, in accordance all legal means and in the least time possible a judgment in their favor
with what we have agreed. 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
Fourth. This instrument was neither ratified nor confirmed by Mariano
that if they should deem it convenient for their interests, Don Francisco,
Yulo.
Don Manuel, and Doña Carmen Yulo may appoint an attorney to cooperate
with the lawyers of Inchausti & Company in the proceedings of the said
Fifth. The Yulos, brothers and sisters, who executed the preceding case."
instrument, did not pay the first installment of the obligation.
Eighth. Matters being thus on July 10, 1911, Gregorio Yulo answered the
Sixth. Therefore, on March 27, 1911, Inchausti & Company brought an complaint and alleged as defenses; first, that an accumulation of interest
ordinary action in the Court of First Instance of Iloilo, against Gregorio had taken place and that compound interest was asked for the Philippine
Yulo for the payment of the said balance due of two hundred fifty-three currency at par with Mexican; second, that in the instrument of August 21,
thousand, four hundred forty-five pesos and forty-two centavos 1909, two conditions were agreed one of which ought to be approved by
P253,445.42) with interest at ten per cent per annum, on that date the Court of First Instance, and the other ratified and confirmed by the
aggregating forty-two thousand, nine hundred forty-four pesos and other brother Mariano Yulo, neither of which was complied with; third ,
seventy-six centavos (P42,944.76) that with regard to the same debt claims were presented before the
commissioners in the special proceedings over the inheritances of Teodoro
Seventh. But, on May 12, 1911, Francisco, Manuel, and Carmen Yulo y Yulo and Gregoria Regalado, though later they were dismissed, pending
Regalado executed in favor Inchausti & Company another notarial the present suit; fourth and finally, that the instrument of August 12,
instrument in recognition of the debt and obligation of payment in the 1909, was novated by that of May 12, 1911, executed by Manuel,
following terms: "First, the debt is reduce for them to two hundred twenty- Francisco and Carmen Yulo.
five thousand pesos (P225,000); second, the interest is likewise reduced
for them to 6 percent per annum, from March 15, 1911; third, the Ninth. The Court of First Instance of Iloilo decided the case "in favor of the
installments are increase to eight, the first of P20,000, beginning on June defendant without prejudice to the plaintiff's bringing within the proper
30, 1911, and the rest of P30,000 each on the same date of each time another suit for his proportional part of the joint debt, and that the
successive year until the total obligation shall be finally and satisfactorily plaintiff pay the costs." (B. of E., 21.)
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
The plaintiff appealed from this judgment by bill of exceptions and before
amount of the said partial payment together with its interest shall bear
this court made the following assignment of errors:
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 I. That the court erred in considering the contract of May 12, 1911, as
not made, they shall lose the right to make use of the period granted to constituting a novation of that of August 12, 1909.
II. That the court erred in rendering judgment in favor of the defendant. With respect to the first it cannot be doubted that, the debtors having
obligated themselves in solidum, the creditor can bring its action in
III. And that the court erred n denying the motion for a new trial. 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
"No one denies in this case," says the trial judge, "that the estate of
as a conjoint and solidary obligation each one of the debtors is bound to
Teodoro Yulo or his heirs owe Inchausti & Company an amount of money,
perform in full the undertaking which is the subject matter of such
the object of this action, namely, P253,445.42" (B. of E. 18). "The fact is
obligation." (Civil Code, articles 1137 and 1144.)
admitted," says the defendant, "that the plaintiff has not collected the
debt, and that the same is owing" (Brief, 33). "In the arguments of the
attorneys," the judge goes on, "it was really admitted that the plaintiff had And even though the creditor may have stipulated with some of the
a right to bring an action against Gregorio Yulo, as one of the conjoint and solidary debtors diverse installments and conditions, as in this case,
solidary obligors in the contract of August 12, 1909; but the defendant Inchausti & Company did with its debtors Manuel, Francisco, and Carmen
says that the plaintiff has no right to sue him alone, since after the present Yulo through the instrument of May 12, 1911, this does not lead to the
suit was brought, the plaintiff entered into a compromise with the other conclusion that the solidarity stipulated in the instrument of August 12,
conjoint and solidary debtors, the result being the new contract of May 12, 1909 is broken, as we already know the law provides that "solidarity may
1911, by virtue of which the payments were extended, the same exist even though the debtors are not bound in the same manner and for
constituting a novation of the contract which gave him the same privileges the same periods and under the same conditions." (Ibid, article 1140.)
that were given his conjoint and solidary codebtors. This (the judge Whereby the second point is resolved.
concludes) is the only question brought up by the parties." (B. of E., 19.)
With respect to the third, there can also be no doubt that the contract of
And this is the only one which the Supreme Court has to solve by virtue of May 12, 1911, does not constitute a novation of the former one of August
the assignments of errors alleged. Consequently, there is no need of 12, 1909, with respect to the other debtors who executed this contract, or
saying anything regarding the first three defenses of the answer, nor more concretely, with respect to the defendant Gregorio Yulo: First,
regarding the lack of the signature of Mariano Yulo ratifying and confirming because "in order that an obligation may be extinguished by another which
the instrument of August 12, 1909, upon which the appellee still insists in substitutes it, it is necessary that it should be so expressly declared or that
his brief for this appeal; although it will not be superfluous to state the the old and the new be incompatible in all points" (Civil Code, article
doctrine that a condition, such as is contained in the sixteenth clause of 1204); and the instrument of May 12, 1911, far from expressly declaring
the said contract (third point in the statement of facts), is by no means of that the obligation of the three who executed it substitutes the former
suspensive but a resolutory condition; the effect of the failure of signed by Gregorio Yulo and the other debtors, expressly and clearly
compliance with the said clause, that is to say, the lack of the ratification stated that the said obligation of Gregorio Yulo to pay the two hundred and
and confirmance by Mariano Yulo being not to suspend but to resolve the fifty-three thousand and odd pesos sued for exists, stipulating that the suit
contract, leaving Inchausti & Company at liberty, as stipulated, "to make must continue its course and, if necessary, these three parties who
use of its rights to demand and obtain the immediate payment of its executed the contract of May 12, 1911, would cooperate in order that the
credit." 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
The only question indicated in the decision of the inferior court involves,
always necessary to state that it is the intention of the contracting parties
however, these others: First, whether the plaintiff can sue Gregorio Yulo
to extinguish the former obligation by the new one" (Judgment in
alone, there being other obligors; second, if so, whether it lost this right
cassation, July 8, 1909). There exist no incompatibility between the old
by the fact of its having agreed with the other obligors in the reduction of
and the new obligation as will be demonstrated in the resolution of the last
the debt, the proroguing of the obligation and the extension of the time for
point, and for the present we will merely reiterate the legal doctrine that
payment, in accordance with the instrument of May 12, 1911; third,
an obligation to pay a sum of money is not novated in a new instrument
whether this contract with the said three obligors constitutes a novation of
wherein the old is ratified, by changing only the term of payment and
that of August 12, 1909, entered into with the six debtors who assumed
adding other obligations not incompatible with the old one. (Judgments in
the payment of two hundred fifty-three thousand and some odd pesos, the
cassation of June 28, 1904 and of July 8, 1909.)
subject matter of the suit; and fourth, if not so, whether it does have any
effect at all in the action brought, and in this present suit.
With respect to the last point, the following must be borne in mind:
Facts. — First. Of the nine children of T. Yulo, six executed the mortgage Code, the defendant has the right to enjoy the benefits of the partial
of August 12, 1909, namely, Gregorio, Pedro, Francisco, Manuel, Carmen, remission of the debt granted by the creditor."
and Concepcion, admitting a debt of P253,445.42 at 10 per cent per
annum and mortgaging six-ninths of their hereditary properties. Second. Wherefore we hold that although the contract of May 12, 1911, has not
Of those six children, Francisco, Manuel and Carmen executed the novated that of August 12, 1909, it has affected that contract and the
instrument of May 12, 1911, wherein was obtained a reduction of the outcome of the suit brought against Gregorio Yulo alone for the sum of
capital to 225,000 pesos and of the interest to 6 per cent from the 15th of P253,445.42; and in consequence thereof, the amount stated in the
March of the same year of 1911. Third. The other children of T. Yulo contract of August 12, 1909, cannot be recovered but only that stated in
named Mariano, Teodoro, and Jose have not taken part in these the contract of May 12, 1911, by virtue of the remission granted to the
instruments and have not mortgaged their hereditary portions. Fourth. By three of the solidary debtors in this instrument, in conformity with what is
the first instrument the maturity of the first installment was June 30, provided in article 1143 of the Civil Code, cited by the creditor itself.
1910, whereas by the second instrument, Francisco, Manuel, and Carmen
had in their favor as the maturity of the first installment of their debt, June
If the efficacy of the later instrument over the former touching the amount
30, 1912, and Fifth, on March 27, 1911, the action against Gregorio Yulo
of the debt had been recognized, should such efficacy not likewise be
was already filed and judgment was pronounced on December 22, 1911,
recognized concerning the maturity of the same? If Francisco, Manuel, and
when the whole debt was not yet due nor even the first installment of the
Carmen had been included in the suit, they could have alleged the defense
same respective the three aforesaid debtors, Francisco, Manuel, and
of the nonmaturity of the installments since the first installment did not
Carmen.
mature until June 30, 1912, and without the least doubt the defense would
have prospered, and the three would have been absolved from the suit.
In jure it would follow that by sentencing Gregorio Yulo to pay 253,445 Cannot this defense of the prematurity of the action, which is implied in
pesos and 42 centavos of August 12, 1909, this debtor, if he should pay all the last special defense set up in the answer of the defendant Gregorio
this sum, could not recover from his joint debtors Francisco, Manuel, and Yulo be made available to him in this proceeding?
Carmen their proportional parts of the P253,445.42 which he had paid,
inasmuch as the three were not obligated by virtue of the instrument of
The following commentary on article 1140 of the Civil Code sufficiently
May 12, 1911, to pay only 225,000 pesos, thus constituting a violation of
answers this question: ". . . . Before the performance of the condition, or
Gregorio Yulo's right under such hypothesis, of being reimbursed for the
before the execution of a term which affects one debtor alone proceedings
sum paid by him, with the interest of the amounts advanced at the rate of
may be had against him or against any of the others for the remainder
one-sixth part from each of his five codebtors. (Civ. Code, article 1145,
which may be already demandable but the conditional obligation or that
par. 2). This result would have been a ponderous obstacle against the
which has not yet matured cannot be demanded from any one of them.
prospering of the suit as it had been brought. It would have been very just
Article 1148 confirms the rule which we now enunciate inasmuch as in
then to have absolved the solidary debtor who having to pay the debt in
case the total claim is made by one creditor, which we believe improper if
its entirety would not be able to demand contribution from his codebtors in
directed against the debtor affected by the condition or the term, the latter
order that they might reimburse him pro rata for the amount advanced for
can make use of such exceptions as are peculiarly personal to his own
them by him. But such hypothesis must be put out of consideration by
obligation; and if against the other debtors, they might make use of those
reason of the fact that occurred during the pendency of the action, which
exceptions, even though they are personal to the other, inasmuch as they
fact the judge states in his decision. "In this contract of May last," he says,
alleged they are personal to the other, inasmuch as they alleged them in
"the amount of the debt was reduced to P225,000 and the attorney of the
connection with that part of the responsibility attaching in a special
plaintiff admits in his plea that Gregorio Yulo has a right to the benefit of
manner to the other." (8 Manresa, Sp. Civil Code, 196.)
this reduction." (B. of E., 19.) This is a fact which this Supreme Court
must hold as firmly established, considering that the plaintiff in its brief,
on page 27, corroborates the same in these words: "What effect," it says, Article 1148 of the Civil Code. — "The solidary debtor may utilize against
"could this contract have over the rights and obligations of the defendant the claims of the creditor of the defenses arising from the nature of the
Gregorio Yulo with respect to the plaintiff company? In the first place, we obligation and those which are personal to him. Those personally
are the first to realize that it benefits him with respect to the reduction of pertaining to the others may be employed by him only with regard to the
the amount of the debt. The obligation being solidary, the remission of any share of the debt for which the latter may be liable."
part of the debt made by a creditor in favor of one or more of the solidary
debtors necessarily benefits the others, and therefore there can be no Gregorio Yulo cannot allege as a defense to the action that it is premature.
doubt that, in accordance with the provision of article 1143 of the Civil When the suit was brought on March 27, 1911, the first installment of the
obligation had already matured of June 30, 1910, and with the maturity of holding that the obligation is demandable with these which must follow if
this installment, the first not having been paid, the whole debt had the contrary view is adopted, favors this solution of the problem:
become mature, according to the express agreement of the parties,
independently of the resolutory condition which gave the creditor the right There is a middle ground, (he says), from which we can safely set
to demand the immediate payment of the whole debt upon the expiration out, to wit, that the creditor may ofcourse, demand the payment
of the stipulated term of one week allowed to secure from Mariano Yulo of his credit against the debtor not favored by any condition or
the ratification and confirmation of the contract of August 12, 1909. extension of time." And further on, he decides the question as to
whether the whole debt may be recovered or only that part
Neither could he invoke a like exception for the shares of his solidary unconditionally owing or which has already matured, saying,
codebtors Pedro and Concepcion Yulo, they being in identical condition as "Without failing to proceed with juridical rigor, but without falling
he. into extravagances or monstrosities, we believe that the solution
of the difficulty is perfectly possible. How? By limiting the right of
But as regards Francisco, Manuel, and Carmen Yulo, none of the the creditor to the recovery of the amount owed by the debtors
installments payable under their obligation, contracted later, had as yet bound unconditionally or as to whom the obligation has matured,
matured. The first payment, as already stated, was to mature on June 30, and leaving in suspense the right to demand the payment of the
1912. This exception or personal defense of Francisco, Manuel, and remainder until the expiration of the term of the fulfillment of the
Carmen Yulo "as to the part of the debt for which they were responsible" condition. But what then is the effect of solidarity? How can this
can be sent up by Gregorio Yulo as a partial defense to the action. The restriction of right be reconciled with the duty imposed upon each
part of the debt for which these three are responsible is three-sixths of one of the debtors to answer for the whole obligation? Simply this,
P225,000 or P112,500, so that Gregorio Yulo may claim that, even by recognizing in the creditor the power, upon the performance of
acknowledging that the debt for which he is liable is P225,000, the condition or the expiration of the term of claiming from any
nevertheless not all of it can now be demanded of him, for that part of it one or all of the debtors that part of the obligation affected by
which pertained to his codebtors is not yet due, a state of affairs which not those conditions. (Scaevola, Civil Code, 19, 800 and 801.)
only prevents any action against the persons who were granted the term
which has not yet matured, but also against the other solidary debtors It has been said also by the trial judge in his decision that if a judgment be
who being ordered to pay could not now sue for a contribution, and for this entered against Gregorio Yulo for the whole debt of P253,445.42, he
reason the action will be only as to the P112,500. cannot recover from Francisco, Manuel, and Carmen Yulo that part of the
amount which is owed by them because they are obliged to pay only
Against the propriety and legality of a judgment against Gregorio Yulo for 225,000 pesos and this is eight installments none of which was due. For
this sum, to wit, the three-sixths part of the debt which forms the subject this reason he was of the opinion that he (Gregorio Yulo) cannot be
matter of the suit, we do not think that there was any reason or argument obliged to pay his part of the debt before the contract of May 12, 1911,
offered which sustains an opinion that for the present it is not proper to may be enforced, and "consequently he decided the case in favor of the
order him to pay all or part of the debt, the object of the action. defendant, without prejudice to the plaintiff proceeding in due time against
him for his proportional part of the joint debt." (B. of E., 21 and 22.)
It has been said in the brief of the appellee that the prematurity of the
action is one of the defenses derived from the nature of the obligation, But in the first place, taking into consideration the conformity of the
according to the opinion of the commentator of the Civil Code, Mucius plaintiff and the provision of article 1143 of the Civil Code, it is no longer
Scaevola, and consequently the defendant Gregorio Yulo may make use of possible to sentence the defendant to pay the P253,445.42 of the
it in accordance with article 1148 of the said Code. It may be so and yet, instrument of August 12, 1909, but, if anything, the 225,000 of the
taken in that light, the effect would not be different from that already instrument of May 12, 1911.
stated in this decision; Gregorio Yulo could not be freed from making any
payment whatever but only from the payment of that part of the debt In the second place, neither is it possible to curtail the defendant's right of
which corresponds to his codebtors Francisco, Manuel, and Carmen. The recovery from the signers of the instrument of May 12, 1911, for he was
same author, considering the case of the opposing contention of two justly exonerated from the payment of that part of the debt corresponding
solidary debtors as to one of whom the obligation is pure and to them by reason of there having been upheld in his favor the exception
unconditional and as to the other it is conditional and is not yet of an unmatured installment which pertains to them.
demandable, and comparing the disadvantages which must flow from
In the third place, it does not seem just, Mucius Scaevola considers it Republic of the Philippines
"absurd," that, there being a debtor who is unconditionally obligated as to SUPREME COURT
when the debt has matured, the creditor should be forced to await the Manila
realization of the condition (or the expiration of the term.) Not only is
there no reason for this, as stated by the author, but the court would even EN BANC
fail to consider the special law of the contract, neither repealed nor
novated, which cannot be omitted without violating article 1091 of the Civil
G.R. No. L-30111             February 23, 1929
Code according to which "the obligations arising from contracts have the
force of law between the contracting parties and must  be complied with in
accordance with the tenor of the same." Certain it is that the trial court, in THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellee, 
holding that this action was premature but might be brought in the time, vs.
regarded the contract of August 12, 1909, as having been expressly MAY MCCOY, as executrix of the Estate of H.B. McCoy, ET
novated; but it is absolutely impossible in law to sustain such supposed AL., defendants-appellants.
novation, in accordance with the legal principles already stated, and
nevertheless the obligation of the contract of May 12, 1911, must likewise William J. Rhode, Manuel Garcia Goyena, Ohnick and McFie and Camus
be complied with in accordance with its tenor, which is contrary in all and Delgado for appellants.
respects to the supposed novation, by obliging the parties who signed the Araneta and Zaragoza for appellee.
contract to carry on the suit brought against Gregorio Yulo. The contract of
May 12, 1911, has affected the action and the suit, to the extent that STREET, J.:
Gregorio Yulo has been able to make in his favor the defense of remission
of part of the debt, thanks to the provision of article 1148, because it is a
defense derived from the nature of the obligation, so that although the This action was originally intituted by the Bank of the Philippine Islands
said defendant was not party to the contract in question, yet because of against May McCoy, executrix of the estate of H. B. McCoy, deceased, for
the principle of solidarity he was benefited by it. the purpose of recovering upon a claim against the deceased in excess of
P16,000 which had been disallowed by the committee upon claims, the
plaintiff having appealed from the committee's action. In the amended
The defendant Gregorio Yulo cannot be ordered to pay the P253,445.42 complaint, by requirement of the court, the names of six individuals,
claimed from him in the suit here, because he has been benefited by the namely, C. H. Sleeper, A. G. Moody, Milton E. Springer, John B. McCord,
remission made by the plaintiff to three of his codebtors, many times George E. Brown, and B. A. Green, were introduced as codefendants with
named above. the executrix. After the case was about ready for hearing, the executrix
entered into a compromise with the plaintiff and paid the sum of P12,000
Consequently, the debt is reduced to 225,000 pesos. in satisfaction of the entire claim, after which the action proceeded with
the executrix substituted as plaintiff against her former codefendants, for
But, as it cannot be enforced against the defendant except as to the three- the purpose of compelling them to make contribution, to the extent of
sixths part which is what he can recover from his joint codebtors their proportionate shares, for her reimbursement. Upon hearing the cause
Francisco, Manuel, and Carmen, at present, judgment can be rendered the trial court gave judgment against the said six defendants, requiring
only as to the P112,500. each of them to pay to their former codefendant, but now plaintiff, the
sum of P1,714.28, being the proportional share of each in the P12,000
aforesaid, with the additional provision that each of the six should pay the
We therefore sentence the defendant Gregorio Yulo to pay the plaintiff
proportional part of any share or part of any share which could not be
Inchausti & Company P112,500, with the interest stipulated in the
made out either of the six, with legal interest from August 21, 1924. From
instrument of May 12, 1911, from March 15, 1911, and the legal interest
this judgment the six defendants have brought the present appeal.
on this interest due, from the time that it was claimed judicially in
accordance with article 1109 of the Civil Code, without any special finding
as to costs. The judgment appealed from is reversed. So ordered. Exception is taken by the appellants to the action of the court in permitting
May McCoy, executrix, to assume the role of plaintiff, after she had first
answered and denied the liability of her intestate for the claim sued upon.
Carson, Trent, and Araullo, JJ., concur.
But this suggestion is untenable. By paying off the claim which was
originally the subject of litigation, the executrix was subrogated to the
rights of the original palintiff, and if the situation was one involving a joint
and several liability on the part of all of the original defendants, the That you are to proceed to foreclose the mortgage you hold on the
executrix, upon paying of the claim, necessarily acquired the right to properties mortgaged to you and that you are to bid in the same
prosecute the action for contribution against her codefendants. But it is at the auction sale to be held for this purpose, for the amount due
said that the amendment by which the executrix was permitted to on said mortgage. If your bid is successful, you are to sell the
substitute the original plaintiff had the effect of changing the cause of properties to us for the sum of P65,114.99, plus interest from
action entirely, since the original action was founded upon a debt August 1st, 1992, at the rate of 9 per cent annum, insurance and
supposedly owing to the bank from the seven defendants, whereas after other expenses incurred and or to be incurred on the mortgaged
the instant the debt was paid, the only right of action vested in the properties untill the same is transferred to us, and the total cost of
executrix was right to obtain contribution. It must be remembered, sale (including costs, fees and other expenses), which we agree to
however, that if the original action had proceeded, to its end against all pay in the following manner:
the defendants the court, in giving judgment, would have taken account of
the obligation of each to contribute his proportionate share to the payment (a) Fifteen thousand pesos on the purchase by you, at public
of the judgment, and what has been finally done, as the case shaped itself auction of the properties mortgaged to you.
here, is to give effect to the same obligation. It was in our opinion a
proper case for substitution of parties resulting from the subrogation of
(b) The remainder, after deducting the first payment of P15,000,
one of the defendants to the right of action of the plaintiff.
we oblige ourselves to pay in three equal installments, we to sign,
jointly and severally, three promissory notes as follows: The first
The facts of the case, so far as effects the merits of the controversy, are for one-third of the remainder at six months date, the second for
substantially these: On and prior to June 19, 1919, H. B. McCoy, the other third of the remainder at twelve months date, and the
deceased, and the present six appellants, with three others, were last for the balance at eighteen months date. All these ntes are to
interested in a domestic corporation known as the Cooperative Coconut be sighned when the purchased properties are in your possession
Products Co., Inc., and became jointly and severally liable with it to the and said notes are to bear interest at the rate of 9 per cent per
Bank of the Philippine Islands for money advanced by the bank to said annum. It is understood that on payment of the last note, you are
corporation, to the extent of P235,000. In order further to secure this to transfer to us the properties purchased by you.
indebtedness said corporation, on June 19, 1919, executed in favor of the
bank a mortgage upon certain building and improvements belonging to it,
(c) It is also specifically understood that your actual right to take
and on June 30, 1919, the corporation executed still another mortgage
any action against the Cooperative Cocoanut Product Company
upon its interest in a contract of lease upon lands and properties in San
and against us as joint guarantors of their indebtedness, by virtue
Pablo, Laguna.
of certain documents signed by us and said concern, are to
continue in force notwithstanding the above further agreement.
The company apparently did not prosper; and the present six appellants
(with H. B. McCoy), foreseeing that the aforesaid mortgages would soon
If the above conditions are agreeable to you, kindly confirm same
be foreclosed, addressed to the bank the following letter, upon occasion of
by signing the duplicate to this letter and returning to us.
the receipt of a demand from the bank for the payment of the debt:

Yours very truly,

MANILA, August 16, 1922

(Sgd.) C. H. SLEEPER 
Mr. WILLIAM T. NOLTING, President, 
B. A. GREEN 
Bank of the Philippine Islands, 
A. G. MOODY 
Manila, P. I.
J. D. MCCORD 
H. B. MCCOY 
DEAR SIR: Referring to your letter of the 16th ultimo, addressed to GEORGE E. BROWN 
us to the Cooperative Cocoanut Products Company, demanding MILTON E. SPRINGER
payment of the indebtedness of that concern, which indebtedness
is guaranteed by us, we, the undersigned guarantors of the
Replying to this proposition under date of August 21, 1922, the President
Cooperative Cacoanut Products Company, make the following
of the Bank, in communication addressed to one of the appellants, said:
proposition to you:
 We beg to aknowledge receipt of your letter of this date together acceptance, by the separate note, was valid, notwithstanding the fact that
with proposal signed by Messrs. J. D. McCord, H. B. McCoy, A. G. in the final paragraph of the offer of the bank was requested, if the
Moody, George E. Brown, Milton E. Springer, C. H. Sleeper and B. proposition should be "agreeable," to indicate its conformity by signing the
A. Green, regarding the indebtedness of the Cooperative Cocoanut duplicate of the letter and returning it to the appellants. It was not
Products Company to this bank. necessary that acceptance should be in the precise form indicated, which
could not have been considered material to the writers of the letter.
You are advised that your proposition is accepted to us under the
terms and conditions stated therein. There was therefore no error on the part of the trial court in finding that
the appellants are bound to contribute to the estate of H. B. McCoy, in the
It is necessary, however, to invite your attention to the fact that if proportion of their respective shares in the principal obligation, in
someone else bids more than our claim (which amounts to accordance with article 1145 of the Civil Code. But inorder to prevent a
approximately P68,500) you should protect yourself in the biding. possible misunderstanding of the dispositive part of the appealed decision,
we may be permitted to point out that, in case the proportional share of
any of the appellants should not be paid and cannot be made effective by
In conformity with the understanding indicated in this correspondence, the
execution, the solvent appellants will be liable only for such portion of said
plaintiff bank instituted an action to foreclose its mortgages, and on or
shares as the number of the solvent appellants bears to such number plus
about April 20, 1923, the Court of First Instance found that the amount of
one; for it must not be overlooked that the executrix herself must share
the secured indebtedness was P67,377.77, plus interest and costs.
with the solvent appellants in bearing the burden arising from the
Thereafter, in due course, the mortgaged property was sold by the sheriff
insolvency of any of the appellants.
and bought in the bank for the full amount of its claim, or P75,590. The
bank then made demand upon the appellants and their associate McCoy to
comply with their agreement to take the property off the hands of the The judgment appealed from will be affirmed, and it is so ordered, with
bank, by making the initial payment of P15,000 and delivering to the bank costs against the appellants.
the three joint and several promissory notes mentioned in subsection (b)
of the letter of August 16, 1922. The subscribers to the letter, however, Johnson, Malcolm, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ.,
failed to comply with this demand; and for its own protection the bank, on concur.
April 15, 1924, sold the property to the Philippine Food Company, a
domestic corporation, for the sum of the property and, under the
conditions, a fair valuation for it. By this step the bank was loser to the
extent about P16,000, and for the recovery of this amount the present
action was originally begun.

Upon the facts sketched above we can discover no sufficient reason to

doubt the liability of all the individuals who signed the letter of August 16,
1922, to answer for the loss which has fallen upon the bank by reason of
their failure to comply with the terms of said letter; and as the executrix of
the estate of H. B. McCoy has settled the whole claim, she is in our opinion
entitled to contribution from the defendants. The letter of August 21,
1922, from the president of the bank to the appellants constituted in our
opinion a sufficient notification of acceptance by the bank of the
proposition made by the appellants; and when the bank acted pursuant to
that offer, the appellants and McCoy became obligated according to the
terms of the letter. The word "acceptable" in the letter of the president of
the bank was evidently used in the sense of "accepted;" and that the final
paragraph in the same letter, containing the suggestion that if the
property should not be awarded to the bank at the sale, the signatory
parties to the letter of August 16, 1922, should be prepared to protect
themselves in the bidding, did not constitute any additional condition
varying the terms of the offer. Again, we are of the opinion that the bank's