YNCHAUSTI vs.

YULO [1916]
RFC vs. CA
Facts:
♦ June 7, 1948 – Dominguez signed a contract with Realty Investments,
Inc. to purchase a registered lot. He made a downpayment of 39.98
and promising to pay the balance in 119 monthly instalments.
♦ After 3 months he obtained a loan from RFC. RFC agreed to loan him
10,000 on the security of a mortgage upon the house and lot.
♦ September 17, 1948 – RFC requested that the necessary documents
for the transfer of title of the vendee be executed so that it can be
registered together with the mortgage, this with the assurance that as
soon as title to the lot had been issued in the name of Dominguez and
the mortgage in favour of RFC registered as first lien on the lot and
building thereon, the RFC would ay Realty Investments “the balance of
the purchase price of the lot in the amount of P3,086.98.”
♦ Relying on the assurance made by RFC, Realty investment deeded
over the lot to Dominguez “free of all liens and encumbrances” and
thereafter the mortgage deed was recorded in the Registry of Deeds in
Manila.
♦ Once the mortgage was recorded RFC released to Dominguez P6,500
but the remainder of the loan was never released because Dominguez
defaulted in the payment of the amortization due and as a
consequence RFC foreclosed the mortgage. RFC bought the
JAUCIAN vs. QUEROL [1918] mortgaged property in the foreclosure sale and obtain title for it.
♦ RFC refused to ay Realty Investments the balance of the purchase
price of the lot.
♦ TC allowed recovery from Dominguez
♦ CA reversed the verdict and sentenced RFC to pay.
♦ It is contended by RFC that its obligation to pay “has been modified if
not extinguished” by the letter dated September 20, 1948:
o We want to inform you that, at the request of Mr. Dominguez,
we are agreeable to have the amount paid us at the second
release of the proceeds of his loan.

Issue: WON RFC is liable for the balance of the purchase price of the lot? YES

Ratio:
♦ Dominguez and RFC kept the Realty Investment ignorant on the terms
and conditions of their agreement concerning the loan of 10,000 and
the manner that sum was to be released
♦ Realty Investment was induced to part with his title to a piece of realty
property upon the assurance of RFC that it would itself pay the balance
of the purchase price due from the Dominguez after its mortgage lien
thereon had been registered.
♦ If RFC was not to make any further release of funds on the loan, or if
such release was to subject to future developments, it was the duty of
 RFC to answer the letter dated September 20, and to inform Realty
Investment of the terms and conditions of the loan. The officers of
RFC failed to do this and cannot be upheld by the courts of justice.
♦ It was the RFC that induced Realty Investment to issue title to the lot
free from all encumbrances to Dominguez on its guaranty.
♦ Dominguez’s original obligation to pay realty was affirmed by RFC
upon the conveyance of the title of the lot to Dominguez and the
registration thereon of the mortgage in favour of RFC. This condition
was already fulfilled hence RFC’s obligation to pay the remaining
balance became due and demandable.
QUIOMBING vs. CA [1990]
Petitioner: Nicencio Tan Quiombing
Respondent: CA, Spouses Francisco and Manuelita Saligo
Petition to review CA decision
Cruz, J.
Facts:
On Aug. 30, 1983, a “Construction and Service Agreement” was entered into by
both parties wherein petitioner and Dante Biscocho jointly and severally bound
themselves to construct a house for the Saligo spouses for the contract price of
Php 137,940.
On Oct. 10, 1984, petitioner and Manuelita Saligo entered into a 2nd agreement
wherein the latter acknowledged the completion of the house and undertook to
pay the balance of the contract price.
On Nov. 19, 1984, Manuelita Saligo signed a promissory note for Php
125,363.50, representing the balance of the contract price, which she promised
to pay on or before Dec. 31, 1984
For failure to pay the balance of the contract price, petitioner filed a complaint
for recovery of the amount plus charges and interest.
The spouses moved to dismiss the complaint contending that Biscocho was an
indispensable party to the case and should be included as a co-plaintiff.
is liable for the entire obligation and each creditor is entitled to demand the
whole obligation. In accordance with this, active solidarity consists in the
authority of each creditor to claim and enforce the rights of all.
The Court said that the question as to who should sue the spouses was a
personal issue between Quiombing and Biscocho in which the spouses had no
right to interfere. It did not matter who filed the complaint because the spouses
were liable to either of the 2 as a solidary creditor. If they satisfied one
creditor, it would also discharge their obligation to the other.
Also according to Art 1212 of CC “Each one of the solidary creditors may do
whatever may be useful to the others, but not anything w/c may prejudicial to
the latter.” And to Art 1214 “the debtor may pay any of the solidary creditors; but
if any demand … payment should be made to him.”
Suing for recovery of the balance of the contract price is certainly useful. And if
Quiombing eventually collects, Biscocho may claim his share later on.
Here the Court also differentiated between indispensable and necessary
parties. Indispensable parties are those w/ such interest in the controversy that
a final decree will affect their rights therefore the court cannot proceed w/o them.
While necessary parties are those whose presence are necessary to adjudicate
the controversy but whose interests are so remote that a final decree won’t
affect them.
Held: Petition is Granted. CA decision finding for the spouses Saligo is Set
Aside.
INCIONG vs. CA [1996]

Issue:
1) WON the 2nd solidary creditor is an indispensable party in this case?
No
2) WON 1 of 2 solidary creditors may sue by himself alone for the
recovery of amounts due to both of them, w/o joining the other creditor
as co-plaintiff? Yes

Ratio:
The Court disagrees w/ the private respondents:
According to Tolentino, a joint obligation is one wherein each of the debtors is
liable only for a proportionate part of the debt and each creditor is entitled to
only a proportionate part of the credit, while in a solidary obligation each debtor

YNCHAUSTI vs. YULO, SUPRA
Purita ALIPIO, petitioner, vs. COURT OF APPEALS and Romeo Jaring,
represented by his Atorney-in-Fact Ramon Jaring [2000]
♥ Jaring (Romeo) was the lessee of a 14.5 hec fishpond in Barito, Mabuco,
Hermosa, Bataan. Lease was for 5 yrs ending on Sep. 12, 1990.
♥ June 19, 1987 til the end of the lease period, Jaring subleased the fishpond
to sps Alipio and sps Manuel. Stipulated rent: P485,600.00 payable in 2
installments of P300k and P185,600.00. 2nd installment due on June 30,
1989. They all signed the contract.
♥ Sublessees failed to pay entire 2nd installment, leaving a balance of
P50,600.00 w/c they failed to pay despite Alipio’s demands. Thus, he filed a
case against said sublessees asking for payment of the balance or
rescission of the contract should they fail to pay the balance.
♥ Defense of Purita Alipio: petitioned for the dismissal of the case invoking
Rule 3, Sec. 21 of the 1964 Rules of Court1, claiming that such was
applicable since her husband and co-sublessee passed away prior to the
filing of this action. Said rule has been amended by Rule 3, Sec. 20, 1997
Rules of Civil Procedure2.
♥ Trial court: denied Alipio’s petition. Ratio: she was a party to the contract &
should be independently impleaded together w/the Manuel sps. Death of
her husband merely resulted in his exclusion from the case. Petitioner &
Manuels ordered to pay balance + P10k atty’s fees and costs of suit.
♥ CA: dismissed appeal. Rule invoked is not applicable. The action for
recovery of a sum of money does not survive the death of the defendant,
thus the remaining defendants cannot avoid the action by claiming that
such death totally extinguished their obligation. When the action is solidary,
creditor may bring his action against any of the debtors obligated in
solidum. Alipio’s liability is independent of & separate from her husband’s.
(Climaco vs. Siy Uy, Imperial vs. David, and Agacoili vs. Vda de Agcaoili)
Issues & Ratio:
1
When the action is for recovery of money, debt or interest thereon, and the defendant dies before
final judgment in the CFI, it shall be dismissed to be prosecuted in the manner especially provided in
these rules.
2
When the action is for the recovery of money arising from contract, express or implied and the
defendant dies before entry of final judgment in the court in w/c action was pending at the time of
such death, it shall not be dismissed but shall instead be allowed to continue until entry of final
judgment A favorable judgment obtained by the plaintiff therein shall be enforced in the manner
especially provided in these Rules for prosecuting claims against the estate of a deceased person.
1. WON a creditor can sue the surviving spouse of a decedent in an
ordinary proceeding for the collection of a sum of money chargeable
against the conjugal partnership. – NO. Proper remedy would be to file a
claim in the settlement of the decedent’s estate or if none has been
commenced, he can file a petition either for the issuance of letters of
administration or for the allowance of will, depending on whether its
testate/intestate. No shortcut by lumping claim against Alipios w/those
against the Manuels.
♥ Alipio’s husband died before case was instituted. Thus, Rule 3, Sec. 20 of
the 1997 Rules of Civ Proc is not applicable since it only applies to
defendants who die during the pendency of the case.
♥ CC Art. 161 (1) provides that the obligation of the Alipios is chargeable
against their conjugal partnership since it was contracted by the spouses for
the benefit of the conjugal partnership. When petitioner’s spouse died, their
CP was dissolved & debts chargeable against it are to be paid in the
settlement of estate proceedings in accordance w/Rule 73, Sec. 2 w/c
provides that the community property will be inventoried, administered, &
liquidated and debts thereof paid, in the testate or intestate proceedings of
the deceased spouse.
♥ Calma vs.Tanedo: No complaint for collection of indebtedness chargeable
to the CP can be brought against the surviving spouse. Claim must be
made in the proceedings for the liquidation & settlement of the CP.
Surviving spouse’s powers of admin ceases & is passed on to court-
appointed administrator. Affirmed in Ventura vs. Militante where Court held
that lack of liquidation proceedings does not mean that the CP continues.
Creditor may apply for letters of admin in his capacity as a principal creditor.
♥ Cases invoked by CA are not applicable, being based on different set of
facts. In Climaco, claim was not against the CP & it did not survive the
death of the defendant but not as to the remaining defendant. Imperial, on
the other hand, involved spouses who were solidarily liable, thus, surviving
spouse could be independently sued in an ordinary action for the
enforcement of the entire obligation.
♥ Note that for marriages governed by CPG, obligations entered into by sps
are chargeable vs their CP & partnership is primarily bound for the
repayments. They’ll be impleaded as representatives of the CP and concept
of joint/solidary liability does not apply. At best, it will not be solidary but
joint.
2. WON trial court properly ordered Manuels & petitioner to pay the
balance w/o specifying whether it should be paid jointly or solidarily. –
NO. It should have specified the debtors’ liability.
♥ CC Art. 1207: Concurrence of 2 or more creditors or 2 or more debtors in
one & the same obligation does not imply a solidary liability. Solidary liability
only arises when the obligation expressly so states or when the law or
nature of the obligation requires solidarity. Otherwise, it’s presumed to be
joint, w/the debt divided into as many equal shares as there are debtors,
each debt distinct from one another.
♥ Should lessees/sublessees refuse to vacate leased property after expiration
of the leased period despite due demands, they can be held solidarily liable
to pay for the use of the property being joint tortfeasors. However, there’s’
no allegation that sublessees refused to vacate the fishpond after the
expiration of the term.
♥ Petitioner does not contend that nature of the lease w/more than 2
sublessees result into a solidary liability. Rather, contract provides that rent
will be paid to the sub-lessor by the sub-lessees, clearly indicating that
liability is merely joint.
♥ Since obligation of both couples is chargeable against their respective CPs,
balance of P50,600.00 should be divided into 2 so that each couple is liable
to pay P25,300.00
Holding: Petition is granted.
1. Manuels ordered to pay P25,300.00 + atty’s fees of P10k and costs of suit.
2. Complaint against ipio dismissed w/o prejudice to filing of claim by Jaring in
proceedings for the settlement of deceased’s estate for the collection of the
share of the Alipio sps amounting to P25,300.00
MAKATI DEV’T CORP. vs. EMPIRE INSURANCE CO. [1967]
 Makati Devt Corp (MDC) sold to Rodolfo P. Andal a lot in the Urdaneta
Village for P55,615 w/ a "special condition" contained in the deed of sale
providing that: "[T]he 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 and,
in the event of his/her/their/its failure to 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 wherein he, as principal, & the Empire Insurance
Co. (EIC) as surety, jointly & severally, undertook to pay the MDC P12K in
case Andal failed to comply w/ his obligation.
 Andal instead he sold the lot to Juan Carlos. As neither Andal nor Carlos
built a house on the lot w/in the stipulated period, the MDC timely sent a
notice of claim to the EIC advising it of Andal's failure to comply w/ his
undertaking.
 Demand for the payment of P12K was refused, whereupon the MDC filed a
complaint in CFI against EIC to recover on the bond in the full amount, plus
attorney's fees.
 EIC filed its answer w/ a 3rd-party complaint against Andal, asking that the
complaint be dismissed or, in the event of a judgment in MDC’s favor, that
judgment be rendered ordering Andal to pay the EIC whatever amount it
may be ordered to pay the MDC, plus interest at 12%, from the date of the
filing of the complaint until said amount was fully reimbursed, & attorney's
fees.
 Andal admitted execution of the bond but alleged that the "special
condition" in the deed of sale was contrary to law, morals & public policy. He
averred that, at any rate, Carlos had started construction of a house on the
lot.
 CFI sentenced EIC to pay MDC P1,500, w/ interest at 12% from the time of
the filing of the complaint until the amount was fully paid, plus pay
attorney's fees (P500), & the proportionate part of the costs. And in case
the judgment was paid by EIC, Andal should pay EIC P1,500 w/ interest at
12% from the time of the filing of the complaint to the time of payment plus
attorney's fees (P500) & proportionate part of the costs. MDC appealed
directly to SC.
 TC explained that it reduced Andal's liability from P12K to P1.5K because
while no building has actually been constructed before the target date, it is
also a fact that even before that date the entire area was already fenced w/
a stone wall & building materials were also stocked in the premises w/c are
clear indicia of the owner's desire to construct his house w/ the least
possible delay. In fact, Carlos had finished more than 50% of his house
barely a month after the expiration of the stipulated period.
 But appellant argues that Andal became liable for the full amount of his
bond upon his failure to build a house w/in the 2-year period & that TC had
no authority to reduce Andal's liability on the basis of Carlos' construction of
a house a month after the stipulated period as there was no privity of
contract between Carlos & MDC
WON TC may reduce Andal’s liability from P12K to P1.5K
 YES. The so-called "special condition" in the deed of sale is in reality an
obligation. It was to secure the performance of this obligation that a penal
clause was inserted.
 While it is true that in obligations with a penal sanction the penalty takes the
place of "damages and the payment of interest in case of non-compliance"
(Art. 1226, CC) & that the obligee is entitled to recover upon the breach of
the obligation w/o the need of proving damages, it is nonetheless true that
in certain instances a mitigation of the obligor's liability is allowed (Art.
1229, CC)
 The TC found that Carlos had finished more than 50% of his house barely a
month after the expiration of the stipulated period. There was therefore a
partial performance of the obligation within the meaning and intent of article
1229.
 General Ins. & Surety Corp. vs. Rep. can’t be invoked since in that case
there was no performance at all of any part of the obligation to secure the
payment of salaries to teachers. Indeed, it has been held that where there
has been partial or irregular compliance w/ the provisions in a contract for
special indemnification in the event of failure to comply w/ its terms, courts
will rigidly apply the doctrine of strict construction against the enforcement
in its entirety of the indemnification, where it is clear from the contract that
the amount or character of the indemnity is fixed w/o regard to the probable
damages w/c might be anticipated as a result of a breach of the terms of
the contract, or, in other words, where the indemnity provided for is
 essentially a mere penalty having for its object the enforcement of
compliance w/ the contract. The penal clause in this case was inserted to
compel performance of the so-called "special condition" & thus encourage
home building among lot owners in the Urdaneta Village.
 Still it is insisted that Carlos' construction of a house on the lot sold cannot
be considered a partial performance of Andal's obligation because Carlos
bears no contractual relation to the MDC. In the case Insular Gov't. vs.
Amechazurra, a similar claim was made by a party & rejected by this Court.
The stipulation in the instant case to commence the construction &
complete at least 50% of the vendee's house w/in 2 yrs can’t be construed
as imposing a strictly personal obligation on Andal. To adopt such a
construction would be to limit Andal's right to dispose of the lot.

Holding: Decision appealed from is affirmed, at appellant's cost.

ANTONIO TAN vs. CA [2001]