RCBC v.
CA - Insurance Proceeds denied for the same reasons that AGCO
289 SCRA 292 (1998)
Facts:
> GOYU applied for credit facilities and
accommodations with RCBC. After due
evaluation, a credit facility in the amount of
P30 million was initially granted. Upon
GOYU's application increased GOYU's credit
facility to P50 million, then to P90 million,
and finally to P117 million
> As security for its credit facilities with
RCBC, GOYU executed two REM and two CM
in favor of RCBC, which were registered with
the Registry of Deeds at. Under each of these
four mortgage contracts, GOYU committed
itself to insure the mortgaged property with
an insurance company approved by RCBC,
and subsequently, to endorse and deliver the
insurance policies to RCBC.
> GOYU obtained in its name a total of 10
insurance policies from MICO. In February
1992, Alchester Insurance Agency, Inc., the
insurance agent where GOYU obtained the
Malayan insurance policies, issued nine
endorsements in favor of RCBC seemingly
upon instructions of GOYU
> On April 27, 1992, one of GOYU's factory
buildings in Valenzuela was gutted by fire.
Consequently, GOYU submitted its claim for
indemnity.
> MICO denied the claim on the ground that
the insurance policies were either attached
pursuant to writs of
attachments/garnishments issued by various
courts or that the insurance proceeds were
also claimed by other creditors of GOYU
alleging better rights to the proceeds than
the insured.
> GOYU filed a complaint for specific
performance and damages. RCBC, one of
GOYU's creditors, also filed with MICO its
formal claim over the proceeds of the
insurance policies, but said claims were also
denied GOYU's claims.
> However, because the endorsements do
not bear the signature of any officer of GOYU,
the trial court, as well as the Court of
Appeals, concluded that the endorsements
are defective and held that RCBC has no
right over the insurance proceeds.
Issue:
Whether or not RCBC has a right over the
insurance proceeds.
Held:
RCBC has a right over the insurance
proceeds.
It is settled that a mortgagor and a
mortgagee have separate and distinct
insurable interests in the same mortgaged
property, such that each one of them may
insure the same property for his own sole
benefit. There is no question that GOYU could
insure the mortgaged property for its own
exclusive benefit. In the present case,
although it appears that GOYU obtained the
subject insurance policies naming itself as
the sole payee, the intentions of the parties
as shown by their contemporaneous acts,
must be given due consideration in order to
better serve the interest of justice and
equity.
It is to be noted that 9 endorsement
documents were prepared by Alchester in
favor of RCBC. The Court is in a quandary
how Alchester could arrive at the idea of
endorsing any specific insurance policy in
favor of any particular beneficiary or payee
other than the insured had not such named
payee or beneficiary been specifically
disclosed by the insured itself. It is also
significant that GOYU voluntarily and
purposely took the insurance policies from
MICO, a sister company of RCBC, and not just
from any other insurance company. Alchester
would not have found out that the subject
pieces of property were mortgaged to RCBC
had not such information been voluntarily
disclosed by GOYU itself. Had it not been for
GOYU, Alchester would not have known of
GOYU's intention of obtaining insurance
coverage in compliance with its undertaking
in the mortgage contracts with RCBC, and
verify, Alchester would not have endorsed
the policies to RCBC had it not been so
directed by GOYU.
On equitable principles, particularly on the
ground of estoppel, the Court is constrained
to rule in favor of mortgagor RCBC. RCBC, in
good faith, relied upon the endorsement
documents sent to it as this was only
pursuant to the stipulation in the mortgage
contracts. We find such reliance to be
justified under the circumstances of the
case. GOYU failed to seasonably repudiate
the authority of the person or persons who
prepared such endorsements. Over and
above this, GOYU continued, in the
meantime, to enjoy the benefits of the credit
facilities extended to it by RCBC. After the
occurrence of the loss insured against, it was
too late for GOYU to disown the
endorsements for any imagined or contrived
lack of authority of Alchester to prepare and
issue said endorsements. If there had not
been actually an implied ratification of said
endorsements by virtue of GOYU's inaction in
this case, GOYU is at the very least estopped
from assailing their operative effects.
To permit GOYU to capitalize on its non-
confirmation of these endorsements while it
continued to enjoy the benefits of the credit
facilities of RCBC which believed in good
faith that there was due endorsement
pursuant to their mortgage contracts, is to
countenance grave contravention of public
policy, fair dealing, good faith, and justice.
Such an unjust situation, the Court cannot
sanction. Under the peculiar circumstances
obtaining in this case, the Court is bound to
recognize RCBC's right to the proceeds of the
insurance policies if not for the actual
endorsement of the policies, at least on the
basis of the equitable principle of estoppel.
GOYU cannot seek relief under Section 53 of
the Insurance Code which provides that the
proceeds of insurance shall exclusively apply
to the interest of the person in whose name
or for whose benefit it is made. The
peculiarity of the circumstances obtaining in
the instant case presents a justification to
take exception to the strict application of
said provision, it having been sufficiently
established that it was the intention of the
parties to designate RCBC as the party for
whose benefit the insurance policies were
taken out. Consider thus the following:
1. It is undisputed that the insured pieces
of property were the subject of mortgage
contracts entered into between RCBC and
GOYU in consideration of and for securing
GOYU's credit facilities from RCBC. The
mortgage contracts contained common
provisions whereby GOYU, as mortgagor,
undertook to have the mortgaged property
properly covered against any loss by an
insurance company acceptable to RCBC.
2. GOYU voluntarily procured insurance
policies to cover the mortgaged property
from MICO, no less than a sister company of
RCBC and definitely an acceptable insurance
company to RCBC.
3. Endorsement documents were
prepared by MICO's underwriter, Alchester
Insurance Agency, Inc., and copies thereof
were sent to GOYU, MICO and RCBC. GOYU
did not assail, until of late, the validity of said
endorsements.
4. GOYU continued until the occurrence
of the fire, to enjoy the benefits of the credit
facilities extended by RCBC which was
conditioned upon the endorsement of the
insurance policies to be taken by GOYU to
cover the mortgaged properties.
Jaucian vs. Querol
Creditor (D) vs. Estate of "solidary" debtor (P)
GR L-11307, October 5, 1918 [T]
Summary: A surety signed a debt instrument
binding herself "jointly and severally" with
the debtor. The surety sued for cancellation
of the instrument, but it was ruled by the
court as valid. When the surety died, the
creditor filed a claim with the estate, but was
refused because the creditor did not exhaust
his claim against the principal debtor.
Rule of Law: A creditor may sue any of the
joint and several (solidarios) debtors or all of
them simultaneously. The claims instituted
against one shall not be an obstacle for
those that may be later presented against
the others, as long as it does not appear that
the debt has been collected in full.
Facts: Lino Dayandante and Hermenegilda
Rogero (P) acknowledged themselves to be
indebted to Roman Jaucian (D) "jointly and
severally".
Rogero (P) signed the document in the
capacity of surety for Dayandante, but the
instrument showed that both debtors bound
themselves jointly and severally to the
creditor. There was nothing in the terms of
the obligation itself to show that the relation
between the two debtors was that of
principal and surety.
Rogero (P) sued Jaucian (D) for fraud. But in
his answer, Jaucian (D) asked for judgment
against the Rogero (P) for the amount due
upon the obligation. The court ruled in favor
of Jaucian (D).
While the case was pending, Rogero (P) died
and her estate was substituted as plaintiff.
Meanwhile, the Supreme Court ruled that the
document was valid and Rogero (P) was a
surety of the debtor.
Jaucian (D) filed a claim against the estate of
Rogero (P). Francisco Querol (P), the
administrator of Rogero's (P) estate,
demanded a judgment from the court of his
claim against Dayandante that he is indeed
insolvent and that Jaucian (D) exhausted all
means to collect from the principal debtor.
Issues: Is the surety solidary liable with the
principal debtor? May the creditor sue a
"surety" without exhausting all means
against the primary debtor?
Ruling: Yes. Rogero (P), though a surety for
Dayandante, was nevertheless bound jointly
and severally with him in the obligation.
Article 1822 of the Civil Code provides:
By security a person binds himself to pay or
perform for a third person in case the latter
should fail to do so.
Article 1144 of the Civil Code provides:
A creditor may sue any of the joint and
several (solidarios) debtors or all of them
simultaneously. The claims instituted against
one shall not be an obstacle for those that
may be later presented against the others,
as long as it does not appear that the debt
has been collected in full.
Rogero (P) was solidary liable for the full
amount of the obligation without any right to
demand the exhaustion of the property of
the principal debtor. Her position so far as
the creditor was concerned was exactly the
same as if she had been the principal
debtor.
Quiombing vs. Court of Appeals
Creditor (P) vs. Debtor (D)
GR 93010, 189 SCRA 325
Summary: Spouses Saligo (D) contended that
the other solidary creditor must be included
as co-plaintiff being an indispensable party
to the claim.
Rule of Law: Either one of the solidary
creditors my file a claim against the debtor.
Facts: Spouses Saligo (D) contracted
Quiombing (P) and his co-creditor Bischoco
to construct a house for them. The
Construction and Service Agreement
between the parties stated that the creditors
Quiombing (P) and Bischoco "jointly and
severally" bound themselves to construct a
house for the debtors. Upon completion,
Quiombing (P) was paid partially, but was
unable to collect the balance after repeated
demands. Quiombing (P) alone filed for
recovery of the balance plus charges and
interests.
Issues: (1) May one of the two solidary
creditors sue by himself alone for the
recovery of amounts due to both of them
without joining the other creditor as a co-
plaintiff?
(2) In such a case, is the defendant entitled
to the dismissal of the complaint on the
ground of non-joinder of the second creditor
as an indispensable part? (3) More to the
point, is the second solidary creditor an
indispensable party?
Ruling: Yes. The question of who should sue
the private respondents was a personal issue
between creditors Quiombing and Biscocho.
It did not matter who as between them filed
the complaint because the private
respondents were liable to either of the two
as a solidary creditor for the full amount of
the debt. Full satisfaction of a judgment
obtained against them by Quiombing would
discharge their obligation to Biscocho, and
vice versa; hence, it was not necessary for
both creditors Quiombing and Biscocho to file
the complaint. Inclusion of Biscocho as a co-
plaintiff when Quiombing was competent to
sue by himself alone, would be a useless
formality.
Necessary parties are those whose presence
is necessary to adjudicate the whole
controversy, but whose interests are so far
separable that a final decree can be made in
their absence without affecting them.
(Necessary parties are now called proper
parties.)
Wyoga Gas and Oil Corp. v. Schrack, I Fed.
Rules Service, 292.
Where the obligation of the parties is
solidary, either one of the parties is
indispensable, and the other is not even
necessary (now proper) because complete
relief may be obtained from either.
Feria, Civil Procedure, 1969, p. 153.
A joint obligation is one in which each of the
debtors is liable only for a proportionate part
of the debt, and each creditor is entitled only
to a proportionate part of the credit.
A solidary obligation is one in which each
debtor is liable for the entire obligation, and
each creditor is entitled to demand the whole
obligation.
Hence, in the former, each creditor can
recover only his share of the obligation, and
each debtor can be made to pay only his
part; whereas, in the latter, each creditor
may enforce the entire obligation, and each
debtor may be obliged to pay it in full.
Tolentino, Civil Code of the Philippines, Vol.
IV. 1985, p. 218.
Makati Developmental Corp vs. Empire advising it of Andal's failure to comply with
Insurance Corp his undertaking.

iv. Demand for

Makati Developmental Corp vs. Empire
Insurance Corp
GR No. L-21780
FACTS:
MAKATI SOLD TO Rodolfo P. Andal a lot
SPECIAL CONDITION:
i. VENDEE/S
shall commence the construction and
complete at least 50% of his/her/their/its
residence on the property within two (2)
years from March 31, 1959 to the satisfaction
of the VENDOR
ii. Failure
do so, the bond which the VENDEE/S has
delivered to the VENDOR in the sum of
P11,123.00 and evidenced by a cash bond
receipt dated April 10, 1959 will be forfeited
in favor of the VENDOR by the mere fact of
failure of the VENDEE/S to comply with this
special condition."
ANDAL GAVE A SURETY BOND, he as
principal, and the Empire Insurance
Company, as surety, jointly and severally,
undertook to pay the Makati Development
Corporation the sum of P12,000 in case
Andal failed to comply with his obligation
under the deed of sale.
i. Did not
build his house; instead he sold the lot to
Juan Carlos
the payment of P12,000 was refused
MAKATI FILED COMPLAINT against the
Empire.
EMPIRE filed answer with a third-party
complaint against Andal.
i. To order
Andal to pay the Empire Insurance Co.
whatever amount it maybe ordered to pay
the Makati Development Corporation, plus
interest at 12%, from the date of the filing of
the complaint until said amount was fully
reimbursed, and attorney's fees.
ii. Andal
admitted the execution of the bond but
alleged that the "special condition" in the
deed of sale was contrary to law, morals and
to public policy.
1. He averred that Juan Carlos had started
construction of a house on the lot.
LOWER COURT SENTENCED Empire to pay
MAKATI P1,500, with interest at the rate of
12% from the time of the filing of the
complaint until the amount was fully paid,
and to pay attorney's fees in the amount of
P500, and the proportionate part of the
costs.
Andal should in turn pay EMPIRE P1,500 with
interest at 12% from the time of the filing of
the complaint to the time of payment and to
pay attorney's fees in the sum of P500 and
proportionate part of the costs.
MAKATI APPEALED.

ii. Neither COURT REDUSED ANDALS LIABILITY

built a house on the lot within the stipulated BECAUSE THERE WAS ONLY REALLY A LITTLE
period DELAY.

iii. MAKATI sent There was indication of owner's desire to

a notice of claim to the Empire Insurance Co. construct his house with the least possible
delay.
MAKATI argues that Andal became liable for
the full amount of his bond upon his failure
to build a house within the two-year period
which expired on March 31, 1961
Trial court has no authority to reduce Andal's
liability on the basis of Carlos' construction of
a house a month after the stipulated period
because there was no contract between
Carlos and the Makati Development
Corporation.
ISSUE:
WON court erred in mitigating the obligors
liability considering obligor failed to commit
obligation within stipulated time.
WON 3rd partys commencement of
stipulated condition can be counted in
commitment of the contract.
HELD:
Accordingly, the decision appealed from is
affirmed, at appellant's cost.
SPECIAL CONDITION = OBLIGATION
MITIGATION OF OBLIGORS LIABILITY IS
ALLOWED:
ART 1229 of the Civil Code states:
i. The judge
shall equitably reduce the penalty when the
principal obligation has been partly or
irregularly complied with by the debtor. Even
if there has been no performance, the
penalty may also be reduced by the courts if
it is iniquitous or unconscionable.
JUAN CARLOS FINISHED 50% OF HOUSE ONE
MONTH AFTER EXPIRATION OF STIPULATED
PERIOD.
The penal clause in this case was inserted
not to indemnify for any damage but rather
to compel performance of the so-called
"special condition" and encourage home
building among lot owners in the Urdaneta
Village.
ON CARLOS NO CONTRACTUAL RELATION
WITH MAKATI:
Indeed the stipulation in this case to
commence the construction and complete at
least 50 per cent of the vendee's house
within two years cannot be construed as
imposing a strictly personal obligation on
Andal BECAUSE IT WOULD ANDALS RIGHT
TO DISPOSE THE LOT.
There is nothing in the deed of sale
restricting Andal's right to sell the lot at least
within the two-year period.
Such limitation should be expressed if ever
and not left to mere inference.
EMILIO TAN vs. COURT OF APPEALS
EMILIO TAN vs. COURT OF APPEALS G.R. No.
48049, 29 June 1989
FACTS: Tan Lee Siong, father of herein
petitioners, applied for life insurance in the
amount of P80,000.00 with respondent
company Philippine American Life Insurance
Company. Said application was approved and
a corresponding policy was issued effective
November 5, 1973, with petitioners as the
beneficiaries. On April 26, 1975, Tan Lee
Siong died of hepatoma. Hence, petitioners
filed with respondent company their claim for
the proceeds of the life insurance policy.
However, the insurance company denied the
said claim and rescinded the policy by
reason of the alleged misrepresentation and
concealment of material facts made by the
deceased Tan Lee Siong in his application for
insurance. The premiums paid on the policy
were thereupon refunded. The petitioners
contend that the respondent company no
longer had the right to rescind the contract
of insurance as rescission must allegedly be
done during the lifetime of the insured within
two years and prior to the commencement of
action.
ISSUE: Whether or not the insurance
company has the right to rescind the
contract of insurance despite the presence of
an incontestability clause
HELD:
YES. The so-called incontestability clause
precludes the insurer from raising the
defenses of false representations or
concealment of material facts insofar as
health and previous diseases are concerned
if the insurance has been in force for at least
two years during the insureds lifetime. The
phrase during the lifetime found in Section
48 of the Insurance Law simply means that
the policy is no longer considered in force
after the insured has died. The key phrase in
the second paragraph of Section 48 is for a
period of two years. The policy was issued
on November 6, 1973 and the insured died
on April 26, 1975. The policy was thus in
force for a period of only one year and five
months. Considering that the insured died
before the two-year period has lapsed,
respondent company is not, therefore, barred
from proving that the policy is void ab initio
by reason of the insureds fraudulent
concealment or misrepresentation. Moreover,
respondent company rescinded the contract
of insurance and refunded the premiums
paid on November 11, 1975, previous to the
commencement of this action on November
27, 1975. WHEREFORE, the petition is hereby
DENIED for lack of merit. The questioned
decision of the Court of Appeals is AFFIRMED.
LAFARGE CEMENT PHILIPPINES, INC vs
CONTINENTAL CEMENT CORPORATION (CCC)
G.R. No. 155173, November 23, 2004
PANGANIBAN, J.:
FACTS:
On August 11, 1998, a letter of intent was
executed by both parties, Lafarge and CCC.
Lafarge agreed to purchase the cement
business of CCC. On October 21, 1998, they
entered into a Sale and Purchase Agreement
(SPA). The petiitioners, at the time of such
transactions were aware of the pending case
of CCC with the Supreme Court entitled Asset
Privatization Trust (APT) v. Court of Appeals
and Continental Cement Corporation. In
anticipation of the liability that the High
Tribunal might adjudge against CCC, the
parties, under Clause 2 (c) of the SPA,
allegedly agreed to retain from the purchase
price a portion of the contract price in the
amount of P117,020,846.84 -- the equivalent
of US$2,799,140. This amount was to be
deposited in an interest-bearing account in
the First National City Bank of New York
(Citibank) for payment to APT.However,
petitioners allegedly refused to apply the
sum to the payment to APT, after the finality
of the judgment in the case of CCC. Fearful
that nonpayment to APT would result in the
foreclosure, of several properties, CCC filed
before the RTC a Complaint with Application
for Preliminary Attachment" against
petitioners. The Complaint prayed, that
petitioners be directed to pay the "APT
Retained Amount" referred to in Clause 2 (c)
of the SPA.
Petitioners moved to dismiss the Complaint
on the ground that it violated the prohibition
on forum-shopping. Respondent CCC had
allegedly made the same claim it was raising
in another action, which involved the same
parties and which was filed earlier before the
International Chamber of Commerce. After
the trial court denied the Motion to Dismiss
in its November 14, 2000 Order, petitioners
elevated the matter before the Court of
Appeals .
In the meantime, to avoid being in default
and without prejudice to the outcome of their
appeal, petitioners filed their Answer and
Compulsory Counterclaims ad Cautelam
before the trial court. In their Answer, they
denied the allegations in the Complaint. They
prayed -- by way of compulsory
counterclaims against Respondent CCC, its
majority stockholder and president Gregory
T. Lim, and its corporate secretary Anthony
A. Mariano -- for the sums of (a) P2,700,000
each as actual damages, (b) P100,000,000
each as exemplary damages, (c)
P100,000,000 each as moral damages, and
(d) P5,000,000 each as attorney's fees plus
costs of suit.
Petitioners alleged that CCC, through Lim
and Mariano, had filed the "baseless"
Complaint andprocured the Writ of
Attachment in bad faith. Relying on this
Court's pronouncement in Sapugay v.
CA,5 petitioners prayed that both Lim and
Mariano be held "jointly and solidarily" liable
with Respondent CCC.On behalf of Lim and
Mariano who had yet to file any responsive
pleading, CCC moved to dismiss petitioners'
compulsory counterclaims on grounds that
essentially constituted the very issues for
resolution in the instant Petition.
RTC ruled that the counterclaims of the
petitioners against Lim and Mariano were not
compulsory, that the ruling in Sapugay was
not applicable and that the petitioners
answer with counterclaims violated the
procedural rules on joinder of actions.
ISSUES:
Whether or not the counterclaims of the
petitioners against Lim and Mariano were not
compulsory.
Whether or not the ruling in Sapugay was not
applicable.
Whether or not the petitioners answer with
counterclaims violated the procedural rules
on joinder of actions.
Whether or not CCC has the personality to
move to dismiss the compulsory counter
claims on behalf of Lim and Mariano.
HELD:
1st issue: Petitioners counterclaims
Compulsory.
A counterclaim may either be permissive or
compulsory. It is permissive "if it does not
arise out of or is not necessarily connected
with the subject matter of the opposing
party's claim." A permissive counterclaim is
essentially an independent claim that may
be filed separately in another case.A
counterclaim is compulsory when its object
"arises out of or is necessarily connected
with the transaction or occurrence
constituting the subject matter of the
opposing party's claim and does not require
for its adjudication the presence of third
parties of whom the court cannot acquire
jurisdiction." Unlike permissive
counterclaims, compulsory counterclaims
should be set up in the same action;
otherwise, they would be barred forever.
NAMARCO v. Federation of United Namarco
Distributors:
Criteria to determine whether a counterclaim
is compulsory or permissive:
1) Are issues of fact and law raised by the
claim and by the counterclaim largely the
same?
2) Would res judicata bar a subsequent suit
on defendant's claim, absent the compulsory
counterclaim rule?
3) Will substantially the same evidence
support or refute plaintiff's claim as well as
defendant's counterclaim?
4) Is there any logical relation between the
claim and the counterclaim?
A positive answer to all four questions would
indicate that the counterclaim is compulsory.
Quintanilla v. CA:
"Compelling test of compulsoriness"
characterizes a counterclaim as compulsory
if there should exist a "logical relationship"
between the main claim and the
counterclaim. There exists such a impleaded in the counterclaim. We disposed
relationship when conducting separate trials
of the respective claims of the parties would
entail substantial duplication of time and
effort by the parties and the court; when the
multiple claims involve the same factual and
legal issues; or when the claims are offshoots
of the same basic controversy between the
parties.
Tiu Po vs Bautista
"Compensatory, moral and exemplary
damages, allegedly suffered by the creditor
in consequence of the debtor's action, are
also compulsory counterclaim barred by the
dismissal of the debtor's action. They cannot
be claimed in a subsequent action by the
creditor against the debtor."
The allegations of the petitioner show that its
conterclaims for damages were the result of
respondents (Lim and Mariano) act of filing
the Complaint and securing the Writ of
attachment in bad faith. Furthermore, using
the "compelling test of compulsoriness," we
find that, clearly, the recovery of petitioners'
counterclaims is contingent upon the case
filed by respondents; thus, conducting
separate trials thereon will result in a
substantial duplication of the time and effort
of the court and the parties.Since the
counterclaim for damages is compulsory, it
must be set up in the same action.
2nd issue: Sapugay vs CA is applicable to the
case at bar.
The inclusion of Lim and Mariano is based on
the allegations of fraud and bad faith on the
part of the corporate officer or stockholder.
These allegations may warrant the piercing
of the veil of corporate fiction, so that the
said individual may not seek refuge therein,
but may be held individually and personally
Sapugay vs CA
Among the issues raised in Sapugay was
whether Cardenas, who was not a party to
the original action, might nevertheless be
of this issue as follows:
"A counterclaim is defined as any claim for
money or other relief which a defending
party may have against an opposing party.
However, the general rule that a defendant
cannot by a counterclaim bring into the
action any claim against persons other than
the plaintiff admits of an exception under
Section 14, Rule 6 which provides that 'when
the presence of parties other than those to
the original action is required for the
granting of complete relief in the
determination of a counterclaim or cross-
claim, the court shall order them to be
brought in as defendants, if jurisdiction over
them can be obtained.' The inclusion,
therefore, of Cardenas in petitioners'
counterclaim is sanctioned by the rules."
3rd issue: The the procedural rules on joinder
of actions were not violated.
In joining Lim and Mariano in the compulsory
counterclaim, petitioners are being
consistent with the solidary nature of the
liability alleged therein. The procedural rules
are founded on practicality and convenience.
They are meant to discourage duplicity and
multiplicity of suits.
4th issue: CCC has no personality to move to
dismiss the compulsory counter claims on
behalf of Lim and Mariano.
A perusal of CCCs Motion to Dismiss the
counterclaims shows that Respondent CCC
filed it on behalf of Co-respondents Lim and
Mariano; it did not pray that the counterclaim
against it be dismissed. While Respondent
CCC can move to dismiss the counterclaims
against it by raising grounds that pertain to
individual defendants Lim and Mariano, it
lacks the requisite authority to do so. A
corporation has a legal personality entirely
separate and distinct from that of its officers
and cannot act for and on their behalf,
without being so authorized. Thus, unless
expressly adopted by Lim and Mariano, the
Motion to Dismiss the compulsory
counterclaim filed by Respondent CCC has no
force and effect as to them.
MENCHAVEZ v. TEVES, 26 January 2005
FACTS: Menchavez and Teves entered into a
Contract of Lease for an area covered for a
fishpond application for a period of five
years. During this period, Cebu RTC sheriffs
demolished the fishpond dikes constructed
by Teves. As a consequence, Teves filed for
damages with application for preliminary
attachment against Menchavez. In his
Complaint, he alleged that the lessors had
violated their Contract of Lease, specifically
the provision on peaceful and adequate
enjoyment of the property for the entire
duration of the Contract.Respondent further
asserted that the lessors had withheld from
him the findings of the trial court in Civil
Case No. 510-T, entitled "Eufracia Colongan
and Paulino Pamplona v. Juan Menchavez Sr.
and Sevillana S. Menchavez." In that case
involving the same property, subject of the
lease, the Menchavez spouses were ordered
to remove the dikes illegally constructed and
to pay damages and attorney's fees.
ISSUE: Whether or not Menchavez is liable
for Teves for the sheriffs act of demolishing
the constructed dikes.
HELD: No. A void contract is deemed legally
non-existent. It produces no legal effect. As a
general rule, courts leave parties to such a
contract as they are, because they are in pari
delicto or equally at fault. Neither party is
entitled to legal protection.
RATIO: The defendants ought to have known
that they cannot lease what does not belong
to them for as a matter of fact, they
themselves are still applying for a lease of
the same property under litigation from the
government. On the other hand, Florentino
Teves, being fully aware that petitioners were
not yet the owners, had assumed the risks
and under the principle of VOLENTI NON FIT
INJURIA NEQUES DOLUS He who
voluntarily assumes a risk, does not suffer
damages thereby. As a consequence, when
Teves leased the fishpond area from
petitioners who were mere holders or
possessors thereof, he took the risk that it
may turn out later that his application for
lease may not be approved. Unfortunately
however, even granting that the lease of
petitioners and their application in 1972
were to be approved, still they could not
sublease the same. In view therefore of
these, the parties must be left in the same
situation in which the court finds them,
under the principle IN PARI DELICTO NON
ORITOR ACTIO, meaning: Where both are at
fault, no one can found a claim.
Laguesma, AbrilliusRaffy C.
Art. 1207, Civil Code of the Philippines
The concurrence of two or more creditors or
of two or more debtors in one and the same
obligation does not imply that each one of
the former has a right to demand, or that
each one of the latter is bound to render,
entire compliance with the prestation. There
is a solidary liability only when the obligation
expressly so states, or when the law or the
nature of the obligation requires solidarity.
Salvador P. Escaoand Mario M. Silos vs.
Rafael Ortigas, Jr.
G. R. No. 151953, June 29, 2007
Facts:
On April 28, 1980, Private Development
Corporation of the Philippines (PDCP) entered
into a loanagreement with Falcon Minerals,
Inc. (Falcon) amounting to $320,000.00
subject to terms and conditions
On the same day, three (3) stockholder-
officers of Falcon: Ortigas Jr., George A.
Scholey, and George T. Scholeyexecuted an
Assumption of Solidary Liability to assume
in their individual capacity, solidary liability
with Falcon for due and punctual payment
of the loan contracted by Falcon with PDCP.
Two (2) separate guaranties were executed
to guarantee payment of the same loan by
other stockholdersand officers of Falcon,
acting in their personal and individual
capacities.
One guaranty was executed byEscao, Silos,
Silverio, Inductivo and Rodriguez. Two years
later, an agreement was developed to cede
control of Falcon to Escao, Silos and Matti.
Contractswere executed whereby Ortigas,
George A. Scholey, Inductivo and the heirs of
then already deceasedGeorge T. Scholey
assigned their shares of stock in Falcon to
Escao, Silos and Matti.
An Undertakingdated June 11, 1982 was
executed by the concerned parties, namely:
with Escao, Silos and Matti as sureties
and Ortigas, Inductivo and Scholeys as
obligors. Falcon eventually availed of the
sum of $178,655.59 from the credit line
extended by PDCP. It would alsoexecute a
Deed of Chattel Mortgage over its personal
properties to further secure the loan.
However, Falcon subsequently defaulted in
its payments. After PDCP foreclosed on the
chattel mortgage, thereremained a
subsisting deficiency of Php 5,031,004.07
which falcon did not satisfy despite
demands.
Issue:
Whether the obligation to repay is solidary,
as contended by respondent and the lower
courts, ormerely joint as argued by
petitioners.
Ruling:
The obligation to repay is only jointly as
declared by the Court. In case there is a
concurrence of two or more creditors or of
two or more debtors in one and thesame
obligation, Article 1207 of the Civil Code
states that among them, there is a solidary
liability onlywhen the obligation expressly so
states, or when the law or the nature of the
obligation requiressolidarity. Article 1210
supplies further caution against the broad
interpretation of solidarity by providing:The
indivisibility of an obligation does not
necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility. These
Civil Code provisions establish that in case of
concurrence of two or morecreditors or of
two or more debtors in one and the same
obligation, and in the absence of express
andindubitable terms characterizing the
obligation as solidary, the presumption is
that the obligation is only joint. It thus
becomes incumbent upon the party alleging
that the obligation is indeed solidary in
characterto prove such fact with a
preponderance of evidence.Note that Article
2047 itself specifically calls for the
application of the provisions on joint
andsolidary obligations to suretyship
contracts. Article 1217 of the Civil Code thus
comes into play,recognizing the right of
reimbursement from a co-debtor (the G.R. No. 171660 October 17, 2011
principal debtor, in case of suretyship) CONTINENTAL CEMENT
infavor of the one who paid (i.e. the surety). CORPORATION Petitioner,
However, a significant distinction still lies vs.
between a joint andseveral debtor, on one ASEA BROWN BOVERI, INC., BBC BROWN
hand, and a surety on the other. Solidarity BOVERI, CORP., AND TORD B.
signifies that the creditor can compelany one ERIKSON,** Respondents.
of the joint and several debtors or the surety
alone to answer for the entirety of the
principal debt. The difference lies in the DECISION
respective faculties of the joint and several
debtor and the surety to seekreimbursement
for the sums they paid out to the creditor. In
DEL CASTILLO, J.:
the case of joint and several debtors,
Article1217 makes plain that the solidary
debtor who effected the payment to the
creditor may claim from hisco-debtorsonly FACTS:
the share which corresponds to each, with
Sometime in July 1990, petitioner Continental
the interest for the payment alreadymade.
Cement Corporation (CCC), a corporation
Such solidary debtor will not be able to
engaged in the business of producing
recover from the co-debtors the full amount
cement, obtained the services of
already paid tothe creditor, because the right
respondents Asea Brown Boveri, Inc. (ABB)
to recovery extends only to the proportional
and BBC Brown Boveri, Corp. to repair its 160
share of the other co-debtors,and not as to
KW Kiln DC Drive Motor (Kiln Drive Motor).
the particular proportional share of the
solidary debtor who already paid. In contrast, On October 23, 1991, due to the repeated
even asthe surety is solidarily bound with the failure of respondents to repair the Kiln Drive
principal debtor to the creditor, the surety Motor, petitioner filed with Branch 101 of the
who does pay the creditorhas the right to Regional Trial Court (RTC) of Quezon City a
recover the full amount paid, and not just Complaint for sum of money and damages,
any proportional share, from the principal docketed as Civil Case No. Q-91-10419,
debtoror debtors. Such right to full against respondent corporations and
reimbursement falls within the other rights, respondent Tord B. Eriksson (Eriksson), Vice-
actions and benefits which pertainto the President of the Service Division of the
surety by reason of the subsidiary obligation respondent ABB. Petitioner alleged that:
assumed by the surety.
On July 11, 1990, the plaintiff delivered the
160 KW Kiln DC Drive Motor to the
defendants to be repaired under PO No.
Decision:
17136-17137,
Petitioners and Matti are jointly liable to
The defendant, Tord B. Eriksson, was
Ortigas, Jr. in the amount of P1.3M; Legal
personally directing the repair of the said Kiln
interest of 12% per annum on P 1.3M
Drive Motor. He has direction and control of
computed from March 14, 1994. Assailed
the business of the defendant corporations.
rulings are affirmed. Costsagainst
Apparently, the defendant Asea Brown
petitioners.
Boveri, Inc. has no separate personality
because of the 4,000 shares of stock, 3996
shares were subscribed by Honorio Poblador,
Jr. The four other stockholders subscribed for
one share of stock each only.
After the first repair by the defendants, the
160 KW Kiln Drive Motor was installed for
testing on October 3, 1990. On October 4,
1990 the test failed. The plaintiff removed
the DC Drive Motor and replaced it with its
old motor. It was only on October 9, 1990
that the plaintiff resumed operation. The
plaintiff lost 1,040 MTD per day from October
5 to October 9, 1990.
On November 14, 1990, after the defendants
had undertaken the second repair of the
motor in question, it was installed in the kiln.
The test failed again. The plaintiff resumed
operation with its old motor on November
19, 1990. The plaintiff suffered production
losses for five days at the rate of 1,040 MTD
daily.
The defendants were given a third chance to
repair the 160 KW Kiln DC Drive
Motor.1avvphi1 On March 13, 1991, the
motor was installed and tested. Again, the
test failed. The plaintiff resumed operation
on March 15, 1991. The plaintiff sustained
production losses at the rate of 1,040 MTD
for two days.
As a consequence of the failure of the
defendants to comply with their contractual
obligation to repair the 160 KW Kiln DC Drive
Motor, the plaintiff sustained the following
losses:
Production and opportunity losses
- P10,600,000.00
This amount represents only about 25% of
the production losses at the rate of P72.00
per bag of cement.
(b) Labor Cost and Rental of Crane -
26,965.78
(c) Penalties (at P987.25 a day) for failure to
deliver the motor from
Aug. 29, 1990 to July 31, 1991. - 331,716.00
(d) Cost of money interest of the P987.25 a
day from July 18, 1990 to
April 5, 1991 at 34% for 261 days -
24,335.59
Total Damages 10,983,017.42
The plaintiff has made several demands on
the defendants for the payment of the
above-enumerated damages, but the latter
refused to do so without valid justification.
10. The plaintiff was constrained to file this
action and has undertaken to pay its counsel
Twenty Percentum (20%) of the amount
sought to be recovered as attorneys fees.
ISSUES:
Hence, the present recourse where petitioner
interposes the following issues:
1. Whether the [CA] gravely erred in applying
the terms of the "General Conditions" of
Purchase Orders Nos. 17136 and 17137 to
exculpate the respondents from liability in
this case.
2. Whether the [CA] seriously erred in
applying the concepts of implied warranty
and warranty against hidden defects of the
New Civil Code in order to exculpate the
respondents from its contractual obligation.
Ruling of the Regional Trial Court
On August 30, 1995, the RTC rendered a
Decision in favor of petitioner. The RTC
rejected the defense of limited liability
interposed by respondents since they failed
to prove that petitioner received a copy of
the General Conditions.16 Consequently, the
RTC granted petitioners claims for
production loss, labor cost and rental of
crane, and attorneys fees.17 Thus:
WHEREFORE, premises above considered,
finding the complaint substantiated by
plaintiff, judgment is hereby rendered in
favor of plaintiff and against defendants,
hereby ordering the latter to pay jointly and
severally the former, the following sums:
P10,600,00.00 for loss of production;
P 26,965.78 labor cost and rental of crane;
P 100,000.00 attorneys fees and cost.
SO ORDERED.
Ruling of the Court of Appeals
On appeal, the CA reversed the ruling of the
RTC. The CA applied the exculpatory clause
in the General Conditions and ruled that
there is no implied warranty on repair work;
thus, the repairman cannot be made to pay
for loss of production as a result of the
unsuccessful repair. The fallo of the CA
Decision reads:
WHEREFORE, premises considered, the
assailed August 30, 1995 Decision of the
Regional Trial Court of Quezon City, Branch
101 is hereby REVERSED and SET ASIDE. The
October 23, 1991 Complaint is hereby
DISMISSED.
SO ORDERED.
Our Ruling (Supreme Court)
The petition has merit.
Petitioner and respondent ABB entered into a
contract for the repair of petitioners Kiln
Drive Motor, evidenced by Purchase Order
Nos. 17136-37,33 with the following terms
and conditions:
a) Total Price: P197,450.00
b) Delivery Date: August 29, 1990 or six (6)
weeks from receipt of order and down
payment34
c) Penalty: One half of one percent of the
total cost or Nine Hundred Eighty Seven
Pesos and Twenty five centavos (P987.25)
per day of delay.
WHEREFORE, the petition is hereby
GRANTED. The assailed Decision dated
August 25, 2005 and the Resolution dated
February 16, 2006 of the Court of Appeals in
CA-G.R. CV No. 58551 are hereby REVERSED
and SET ASIDE. Respondent ABB is ORDERED
to pay petitioner the amount of P129,329.75,
with interest at 6% per annum to be
computed from the date of the filing of the
complaint until finality of this Decision and
12% per annum thereafter until full payment.
SO ORDERED.
INCHAUSTI v YULO
GR No. 7721
Plaintiff-Appellant: Inchausti & Co
Defendant-Appellee: Gregorio Yulo
Ponente:Arrelano, J.
March 25, 1914
TOPIC Solidary Obligations Kinds As to
uniformity Varied/Non-uniform
Article 1211: Solidarity may exist although
the creditors and the debtors may not be
bound in the same manner and by the same
periods and conditions.
DOCTRINE
"When the obligation is constituted as a
conjoint and solidary obligation each one of
the debtors is bound to perform in full the
undertaking which is the subject matter of
such obligation."(Old Civil Code, articles
1137 and 1144)
Article 1148 of the Old Civil Code."The
solidary debtor may utilize against the claims
of the creditor all the defences arising from
the nature of the obligation and those which
are personal to him. Those personally
pertaining to the others may be employed by
him only with regard to the share of the debt
f or which the latter may be liable."
SHORT VERSION
Teodoro Yulo has been borrowing money from
Inchausti & Co under specific conditions for
the exploitation of his hacienda. When he
and his wife died, his sons continued their
account with plaintiff. Gregorio Yulo and his
brothers then had a series of letters,
transactions documents, and instruments
with the plaintiff admitting their
indebtedness and expressing their
conformity regarding the amount of their
debts and their balance. They obligated
themselves to play but failed to pay right at
the first instalment. An action was brought
against Gregorio Yulo. However, another
notarial instrument was executed by the
Yulos in recognition of the debt andthe
obligation of payment, and then asking
plaintiff to include in the filed suit Pedro Yulo,
and in that case, theyd procure all means for
the judgment to be in favour of the plaintiff.
However, the court ruled in favour of
Gregorio instead.
Court reversed the judgment and held that
plaintiff can sue Gregorio Yulo alone since
the Yulos obligated themselves in solidum.
FACTS
Teodoro Yulo, a property owner of Iloilo, for
the exploitation and cultivation of
hishaciendas in Negros Occidental, had been
borrowingmoney from Inchausti & Co under
specific conditions.
April 9, 1903: Teodoro Yulo died testate and
for the execution of the provisionsof his will,
he had appointed as administrators his
widow and five of his sons, including
Gregorio Yulo.
Gregoria Regalado the wifedied the
following year on October 22nd. The
remaining were the following legitimate
children: Pedro, Francisco, Teodoro
(incompetent), Manuel, Gregorio,Mariano,
Carmen, Concepcin (minor), and Jose
(minor)Yulo. The children preserved the same
relations under the name of Hijos de T.Yulo
continuing their current account with
Inchausti & Co until said balanceamounted to
P200,000 upon which the creditor firm tried
to obtain security for thepayment of the
money.
First June 26, 1908:Gregorio Yulo, for himself
and in representation of his brothers
executed a notarial document admitting their
indebtedness to Inchausti & Co. in the sum
ofP203,221.27 and, in order to secure the
same with interest thereon at 10%
perannum, they especially mortgaged an
undivided six-ninth of their 38
ruralproperties, their remaining urban
properties,lorchas, and family credits which
werelisted.
Second January 11, 1909: Gregorio Yulo
inrepresentation of Hijos de T. Yulo
answereda letter of the firm of Inchausti &
Co saying that they received the abstract of
their current account, expressing their
conformity with the balance of P271,863.12.
This was reduced to P253,445.42 on July
17,1909, to which the brothers expressed
conformity. Regardingthis conformity a new
document evidencing the mortgage credit
was formalized.
Third August 12, 1909: Gregorio Yulo, for
himself and in representation of his
brotherManuel Yulo, and in their own behalf
Pedro, Francisco, Carmen, and Concepcion
ratified all the contents of theprior document
of June 26, 1908, severally and jointly
acknowledged and admittedtheir
indebtedness to Inchausti & Co for the net
amount of P253,445.42which they obligated
themselves to pay, with interest at 10% per
annum, in fiveinstallments at the rate of
P50,000, except the last, this being
P53,445.42,beginning June 30, 1910,
continuing successively on the 30th of each
June until thelast payment on June 30, 1914.
Among other clauses, they expressly
stipulated the following:
The default in payment of any of the
installments or the noncompliance of anyof
the other obligations will result in the
maturity of all the said instalmentsand
Inchausti & Co. may exercise at once all the
rights and actions in order toobtain the
immediate and total payment of our debt
All the obligations will be understood as
having been contracted in solidum
The instrument shall be confirmed and
ratified in all its parts, within the
presentweek, by their brother Mariano,
otherwiseit will not be binding on Inchausti &
Co. who can make use of their rights
todemand and obtain the immediate
payment of their credit without any
furtherextension or delay.
Fourth This instrument was neither ratified
nor confirmed by Mariano Yulo.
FifthThe Yulos did not pay the first
installment of the obligation.
Sixth March 27, 1911: Inchausti & Co.
brought an ordinary action against Gregorio
Yulo for the payment of the balance of
P253,445.42 with interestat 10% per annum,
on that date aggregating to P42,944.76.
Seventh May 12, 1911: Francisco, Manuel,
and Carmen Yulo executed infavor of
Inchausti & Co. another notarial instrument
in recognition of the debt andthe obligation
of payment.1Stipulated in addition was that
1Debt is reduced forthem to P225,000Interest is likewise
reduced for them to 6% perannum, from March 15, 1911
Installments are increased to 8, the first ofP20,000, beginning
on June 30, 1911, and the rest of P30,000 each on the
samedate of each successive year until the total obligation
shall be finally andsatisfactorily paid on June 30, 1919 (xxx)
Inchausti & Co. should include in their suit
brought against Gregorio Yulo, his brother
and joint co-obligee, Pedro Yulo, andthey will
procure by all legal means and in the least
time possible a judgment intheir favor
against Gregorio and Pedro.
Eighth July 10, 1911: Gregorio Yulo
answered the complaint and alleged as
defenses:
That an accumulation of interest had taken
place and that compound interestwas asked
for in Philippine currency at par with
Mexican;
That in theinstrument of August 12, 1909,
two conditions were agreed one of which
ought tobe approved by the CFI, and the
other ratified and confirmed by the other
brotherMariano Yulo, neither of which was
complied with;
That with regard to thesame debt claims
were presented before the commissioners in
the specialproceedings over the inheritances
of Teodoro Yulo and Gregoria Regalado,
thoughlater they were dismissed, pending
the present suit
That theinstrument of August 12, 1909, was
novated by that of May 12, 1911, executed
byManuel, Francisco and Carmen Yulo.
The Court decided the case in favor of the
defendant without prejudice tothe plaintiff's
bringing within the proper time another suit
for his proportional part of the joint debt, and
that the plaintiff pay the costs.
ISSUES/HELD
(1) WON the plaintiff can sue Gregorio Yulo
alone, there being other obligors - YES
(2) WON plaintiff lost this right by the fact of
its having agreed with the otherobligors in
the reduction of the debt, the proroguing of
the obligation and theextension of the time
for payment, in accordance with the
instrument of May 12,1911NO
(3) WON the contract with the three obligors
constitutesa novation of that of August12,
1999, entered into with the six debtors who
assumed the payment ofP253,445.42NO
(3.1) If in the negative, WON it has any effect
in the actionbrought and in this presentsuit
YES[Total amount and amount due and
demandable, respectively.]
RATIO
(1) It was stated in the stipulation that the
debtors obligated themselves in
solidum.Having done so, the creditor can
bringits action in toto against any one of
them.
This was surely the purpose in demanding
that the obligationcontracted should be
solidary having in mind the principle of law
that, "when theobligation is constituted as a
conjoint and solidary obligation each one of
thedebtors is bound to perform in full the
undertaking which is the subject matter
ofsuch obligation."(Doctrine)
2. Solidarity may exist even though the
debtors are not bound in the samemanner
and for the same periods and under the
same conditions.(Doctrine)

Even though the creditor may have
stipulated with someof the solidarydebtors
diverse installments and conditions, as in
this case, Inchausti & Co. did withits debtors
Manuel, Francisco, and Carmen Yulo
throughthe instrument of May 12,1911, this
does not lead to the conclusion that the
solidarity stipulated in theinstrument of
August 12, 1909 is broken.
3. An obligation to pay a sum of money is not
novated in a new instrumentwherein the old
is ratified, by changing only the term of
payment and adding otherobligations not
incompatible with the old one.
The contract of May 12, 1911, does not
constitute a novation of theformer one of
August 12, 1909, with respect to the other
debtors who executed thiscontract, or more
concretely, with respect to the defendant
Gregorio Yulo because in order that an
obligation may be extinguished by another
whichsubstitutes it, it is necessary that it
should be so expressly declared or that the
oldand the new be incompatible in all points.
Moreover, the instrument of May 12, 1911
expressly and clearlystated that the said
obligation of Gregorio Yulo to pay the
P253,445.42 sued forexists, stipulating that
the suit must continue its course and, if
necessary, thesethree parties would
cooperate in order that the action against
Gregorio Yulo mightprosper.
It is always necessary to state that it is the
intention of the contractingparties to
extinguish the former obligation by the new
one. There exist noincompatibility between
the old and the new obligation.
(3.1) The obligation being solidary, the
remission of any part of the debt made bya
creditor in favor of one or more of the
solidary debtors necessarily benefits
theothers.
Although the contract of May 12, 1911, has
not novated that of August12, 1909, it has
affected that contract and the outcome of
the suit brought againstGregorio Yulo alone
for the sum of P253,445.42; and in
consequence, the amountstated in the
contract of August 12, 1909, cannot be
recovered but only that statedin the contract
of May 12, 1911, by virtue of the remission
granted to the three ofthe solidary debtors in
this instrument.
He cannot be ordered to pay theP253,445.42
claimed from him in the suit here, because
he has been benefited bythe remission made
by the plaintiff to three of his co-debtors.
Consequently, thedebt is reduced to 225,000
pesos.
DECISION
Judgment appealed from reversed.
Defendant to pay Inchausti & Co. P112,500
with the interest stipulated in the instrument
of May 12,1911, from March 15, 1911, and
the legal interest on this interest due, from
thetime that it was claimed, without any
special finding as to costs.
INCIONG VS CA
CASE DIGESTS
FACTS
In February 1983, Rene Naybe took out a
loan from Philippine Bank of Communications
(PBC) in the amount of P50k. For that he
executed a promissory note in the same
amount. Naybe was able to convince
Baldomero Inciong, Jr. and Gregorio
Pantanosas to co-sign with him as co-
makers. The promissory note went due and it
was left unpaid. PBC demanded payment
from the three but still no payment was
made. PBC then sue the three but PBC later
released Pantanosas from its obligations.
Naybe left for Saudi Arabia hence cant be
issued summons and the complaint against
him was subsequently dropped. Inciong was
left to face the suit. He argued that that
since the complaint against Naybe was
dropped, and that Pantanosas was released
from his obligations, he too should have
been released.
ISSUE: Whether or not Inciong should be held
liable.
HELD: Yes. Inciong is considering himself as a
guarantor in the promissory note. And he
was basing his argument based on Article
2080 of the Civil Code which provides that
guarantors are released from their
obligations if the creditors shall release their
debtors. It is to be noted however that
Inciong did not sign the promissory note as a
guarantor. He signed it as a solidary co-
maker.
A guarantor who binds himself in
solidum with the principal debtor does not
become a solidary co-debtor to all intents
and purposes. There is a difference between
a solidary co-debtor and a fiador in
solidum (surety). The latter, outside of the
liability he assumes to pay the debt before
the property of the principal debtor has been
exhausted, retains all the other rights,
actions and benefits which pertain to him by
reason of the fiansa; while a solidary co-
debtor has no other rights than those
bestowed upon him.
Because the promissory note involved in this
case expressly states that the three
signatories therein are jointly and severally
liable, any one, some or all of them may be
proceeded against for the entire
obligation. The choice is left to the solidary
creditor (PBC) to determine against whom he
will enforce collection. Consequently, the
dismissal of the case against Pontanosas
may not be deemed as having discharged
Inciong from liability as well. As regards
Naybe, suffice it to say that the court never
acquired jurisdiction over him. Inciong,
therefore, may only have recourse against
his co-makers, as provided by law.