Joint and Solidary Obligations

Functional Purpose
To correctly evaluate whether a person purported to be a guarantor of another is relieved from the fulfillment of the
obligation.
To correctly evaluate the extent of a person’s share in the fulfillment of an obligation.
Profile of clients: clients in severe indebtedness

Articles Simplified
Article 1207 Existence of Solidarity
The concurrence of multiple creditors or debtors in an obligation does note imply that each creditor may demand or
each debtor may pay the entire obligation. Solidarity exists only when expressly stated in the obligation or when the law
or the nature of the obligation requires it.

Article 1208 Existence of Jointness

If solidarity does not exist, the credit or debt is presumed to be equally divided among the creditors or debtors.

Article 1209 Joint Indivisible Obligations

If the division of the debt is impossible, the right of the creditors may not be prejudiced by one of them. It is prejudiced
only by their collective acts and the debt can be enforced only by proceeding against all the debtors. If one should be
insolvent, the others shall not be liable for his share.

Article 1210 Solidarity not necessarily Indivisibility and vice versa

Indivisibility does not imply solidarity nor does solidarity imply indivisibility.

Article 1211 Solidarity under dissimilar conditions

Solidarity may exist although the creditors and debtors may not be bound in the same manner and by the same periods
and conditions.

Article 1212 Actions of Solidarity Creditors

Each solidary creditor may do whatever may be useful to co-creditors but not anything prejudicial to them.

Article 1213 Solidary Creditor Cannot Assign Rights

A solidary creditor cannot assign his rights without the consent of others.

Article 1214 Payment to Solidary Creditors

The debtor may pay to any of the solidary creditors but if any judicial or extrajudicial demand has been made by one of
the solidary creditors, payment should be made to the one who made the demand.

Article 1215 Extinguishment of Solidary Obligation Other than Payment

Novation, compensation, merger and remission made by any solidary creditor or creditors shall extinguish the obligation
without prejudice to the provisions of article 1219.
The creditor who executed any of said acts and collected the debt shall be liable to the others for the share in the
obligation corresponding to them.

Tolentino Notes
Joint and Solidary Obligations
 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.

Terms Indicating Jointness and Solidarity

 Joint obligation
o mancomunada
o mancomunada simple
o pro rata
o “We promise to pay” used by two or more signers creates a pro rata liability

 Solidary obligation
o mancomunada solidaria
 o joint and several
o obligation in solidum
o juntos o separadamente
o “I promise to pay” followed by the signatures of two or more persons
o “Individually and collectively”

Presumptions of Jointness
 An obligation is presumed to be joint unless solidarity has been expressly agreed upon.
 When multiple persons are liable under a contract or judgment, and no words appear in the contract or the
judgment to make each liable for the entire obligation, the presumption is that their obligation is joint or
mancomunada and each debtor is liable only for a proportionate part of the obligation.
 It is not necessary that the agreement should use precisely the word “solidary” for an obligation to be so; it is
sufficient that the obligation states that each one of the debtors can be compelled to pay the totality of the debt,
or that each of them is obligated for the entire value of the obligation.

Effect of Joint Liability

 The demand by one creditor upon one debtor produces the effects of default only with respect to the creditor
who demanded and the debtor on whom the demand was made, but not with respect to the others
 The interruption of prescription by the judicial demand of one creditor upon a debtor does not benefit the other
creditors nor interrupt the prescription as to other debtors
 A partial payment or acknowledgment of a debt made by one of several joint debtors does not stop the running
of the state of limitations as to the others.
 The vices of each obligation arising from the personal defect of a particular debtor or creditor does not affect the
obligation or rights of the others
 The insolvency of a debtor does not increase the responsibility of his co-debtors nor does it authorize a creditor
to demand anything from his co-creditors.
 In the joint divisible obligation, the defense of res judicata is not extended from one debtor to another.

Instances where Solidarity Exists

 When there is an express stipulation in the contract that the obligation is solidary or words having the same
effect are used
 When a charge or condition is imposed upon heirs or legatees (receiver of a gift of personal property) and the
testament expressly makes the charge of condition in solidum
 When the law expressly provides for solidarity of the obligation of several obligors, as in the case of the liability
of co-participants in a crime, the liability of the captain and owner of a vessel engaged in maritime commerce for
damages to the goods or cargo on board, the liability of connecting carriers in commercial overland
transportation, and the liability of joint tortfeasors, which include all persons who command, instigate, promote,
encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it, after it
is done for their benefit.
 When a solidary responsibility is imposed by a final judgment upon several defendants
 When the nature of the obligation requires solidarity

Moral Wrong
 A moral wrong cannot be divided into parts; hence, the liability for it must be solidary.

Disjunctive Obligations
 When there are two creditors designated disjunctively, the application of the rules of alternative obligations would
entitle the debtor to choose the creditor to whom he would pay; on the other hand, the application of the rules on
solidarity will entitle either one of the creditors to demand full payment, and the debtor cannot refuse to pay to
the creditor who makes the demand by alleging that he chooses to pay to the other creditor.
 The intention of the parties should prevail, in determining whether the rules on solidarity or those on alternative
obligations should be applied. In case of doubt, solidarity should be favored as it is more conducive to the
fulfillment of the obligation.
 In French jurisprudence, bank deposits which can be withdrawn by either one of the joint depositors, has been
considered as an active solidarity.

Relations of Co-Parties
 The co-creditors or co-debtors may regulate their rights or liabilities in their internal relations with each other.
They may exclude a division and provide for sole responsibility or they may provide for total reimbursement or
for a division into unequal parts.
Dual Character of Obligation
 The obligation may be joint on the side of the creditors, and solidary on the side of the debtors, or vice versa. In
such cases, the rules appliable to each subject of the obligation should be applied, the character of the creditors
or the debtors determining their respective rights and liabilities. Thus, if the obligation is joint on the side of the
creditors, and solidary on the side of the debtors, each creditor can demand only his share in the obligation; but
each debtor may be compelled to pay the entire obligation to the creditors.

Joint Indivisible Obligations

 When there are multiple debtors or creditors and the prestation is indivisible, the obligation is joint, UNLESS
solidarity has been stipulated.
 Its fulfillment requires the concurrence of all the debtors, although each for his part.
 Collective action is expressly required for acts which may be prejudicial.
 Plurality of debtors:
o Where the plurality of subjects is among the debtors, the indivisible obligation can be performed by them
only by acting together. Hence all must be sued. If any of the debtors is not willing to perform, the
prestation is converted into an indemnification for damages. Once so converted, the creditor can sue the
debtors separately for their respective shares in the indemnity.

Difference Between Indivisibility and Solidarity

 In solidary obligations, each creditor may demand the full prestation and each debtor has likewise the duty to
comply with the entire prestation, while in indivisible joint obligations, each creditor cannot demand more than his
share and each debtor is not liable for more than his share.
 Indivisibility refers to the prestation which is not capable of partial performance, while solidarity refers to the legal
tie or vinculum defining the extent of liability.

Kinds of Solidarity
 Active solidarity – only creditors are in solidum
 Passive – only debtors are joint and several
 Mixed – solidarity exists in both creditors and debtors

Active Solidarity
 The essence of active solidarity consists in the authority of each creditor to claim and enforce the rights of all,
with the resulting obligation of paying every one what belongs to him; there is no merger, much less a
renunciation of rights, but only mutual representation. It is thus essentially a mutual agency. Its juridical effects
are the following:
o Since it is a reciprocal agency, the death of a solidary creditor does not transmit the solidarity to each of
his heirs but to all of them taken together.
o Each creditor represents the others in the act of receiving payment, and in all other acts which tend to
secure the credit or make it more advantageous. Hence, if he receives only a partial payment, he must
divide it among the other creditors. He can interrupt the period of prescription or render the debtor in
default, for the benefit of all other creditors.
o One creditor, however, does not represent the others in such acts as novation (even if the credit
becomes more advantageous), compensation and remission. In these cases, even if the debtor is
released, the other creditors can still enforce their rights against the creditor who made the novation,
compensation or remission.
o The credit and its benefits are divided equally among the creditors, unless there is an agreement among
them to divide differently. Hence, once the credit is collected, an accounting and a distribution of the
amount collected should follow.
o The debtor may pay to any solidary creditor, but if a judicial demand is made on him, he must pay only to
the plaintiff.
o Each creditor may renounce his right even against the will of the debtor, and the latter need not thereafter
pay the obligation to the former.

Passive Solidarity
 In passive solidarity, the essence is that each debtor can be made to answer for the others, with the right on the
part of the debtor-payor to recover from the others their respective shares. In so far as the payment is
concerned, this kind of solidarity is similar to a mutual guaranty. Its effects are as follows:
o Each debtor can be required to pay the entire obligation; but after payment, he can recover from the co-
debtors their respective shares.
o The debtor who is required to pay may set up by way compensation his own claim against the creditor, in
this case, the effect is the same as that of payment.
o The total remission of the debt in favor of a debtor releases all the debtors; but when this remission
affects only the share of one debtor, the other debtors are still liable for the balance of the obligation.
 o All the debtors are liable for the loss of the thing due, even if such loss is caused by the fault of only one
of them, or by fortuitous event after one of the debtors has incurred in delay.
o The interruption of prescription as to one debtor affects all the others; but the renunciation by one debtor
of prescription already had does not prejudice the others, because the extinguishment of the obligation
by prescription extinguishes also the mutual representation among the solidary debtors.
o The interests due by reason of the delay of one of the debtors are borne by all of them.

Solidarity with Dissimilar Terms and Conditions

 The legal bonds in solidarity may be uniform, when the debtors are bound by the same conditions and clauses,
or varied, where the obligors, although liable for the same prestation, are nevertheless not subject to the same
terms and conditions.
 In the latter case, before the fulfillment of the condition or the arrival of the term which affects a particular debtor,
an action may be brought against such debtor or any other solidary debtor for the recovery of the entire
obligation, minus the portion corresponding to the debtor affected by the condition or term; but this latter portion
cannot be demanded from anyone until the condition happens or the term arrives. Upon the happening of the
condition or the arrival of the term, however, the creditor may claim this remaining portion from any of the
debtors.
 Thus it was held that sureties, who are liable solidarily, may bind themselves to conditions distinct from those
under which their principal is liable; the only limitation upon this proposition is that the obligation of the surety
cannot be greater than that of the principal, either as to the amount or to the burdensome character of the
conditions.

Actions Beneficial to Co-Creditors in Solidum

 Each solidary creditor may interrupt prescription, constitute the debtor in default, or bring suit so that the
obligation may produce interest.

Actions Prejudicial to Co-Creditors in Solidum

 A solidary creditor cannot do anything prejudicial to others. Remission is particularly prejudicial to the co-
creditors and one solidary creditor alone cannot make it. But under Article 1215, it is authorized. Therefore, the
present provision can be understood to mean that the act of extinguishment, which is prejudicial to the co-
creditors will be valid so as to extinguish the claim against the debtors, but not with respect to the co-creditors
whose rights subsist and can be enforced against the creditor who performed the act alone.

Solidary Creditor Cannot Assign Rights

 The solidary creditor is an agent of his co-creditors. Hence, he cannot assign that agency to a third person
without the consent of the other creditors. Mutual agency, the essence of active solidarity, implies mutual
confidence which may take into account the personal qualification of each creditor; hence, it is only just to
require consent of the others when one transfers his rights to another.
 The law seems to imply, however, that since such assignment cannot be made, it produces no effect
whatsoever; the co-creditors and the debtor or debtors are not bound thereby, and the assignee cannot be
regarded as a solidary creditor. Thus, a payment made by the debtor to such an assignee would be a payment
to a third person and may not extinguish the obligation; and a suit filed by such assignee cannot interrupt
prescription.
 The assignment, however, would produce its effects if made to a co-creditor. The consent of the other creditors
would not be necessary because the assignee is one as to whom the confidence of the others already exist.

Judicial Demand
 The solidary creditors are tacitly mutual representatives of each other for demanding payment. The equality of
the rights of the solidary creditors by virtue of this mutual representation, however, lasts only until one of them
goes ahead of the others and sues the debtor. When one creditor makes a judicial demand for payment, the tacit
representation by the other creditors is considered revoked, and during the pendency of the action, the creditors
who did not sue lose their representation of the others.
 Up to the moment suit filed, the debtor could free himself from the debt by paying it to any creditor, but once
action is filed against him by one creditor, the relation with the plaintiff as creditor is fixed definitely; he can pay
only to the plaintiff in whom the representation of the other creditors is thus concentrated, and he can no longer
be sued by others.
 Hence, a payment to any of the creditors who did not sue would be a payment to a third person, in so far as the
shares of the others in the credit are concerned. If the payee does not turn over to the others their shares in the
payment, the debtor can still be required to pay to the plaintiff the full amount minus the share of the creditor to
whom payment was made.
 The action, however, does not definitely eliminate the other creditors, but only during the time that the effects of
the action exists. If the action is dismissed, the other creditors may in turn sue the debtor. If before such
dismissal the debtor pays to another creditor, he does so at his own risk.
Demand by Several Creditors
 If all or several solidary creditors demand payment separately, the debtor should pay to the one who first notified
him. If they demand at the same time or collectively, as when they join together in a single action or written
demand upon the debtor, the latter preserves his right to chose and may pay anyone of those demanding
payment.
 If a debtor has already paid the share of a creditor who made no demand upon him, his obligation to that extent
should be considered reduced. He can be required to pay to the creditor who made the demand the full amount
of the debt to the demanding creditor, because such payment would imply that the shares of all the creditors
would be given to them.
 Other debtors upon whom no demand has been made may pay to any creditor who may not be the one who
made the demand.

Extinguishment of Solidary Obligation by Novation

 The solidary debtor who effects the novation cannot by himself bind the others to a new debt without their
consent. If the creditor does not require the consent of the others, the other debtors will be released and only the
debtor who secured the novation will be bound under the new contract.
 The extension of time for payment given by the creditor to a solidary debtor does not release the others from the
obligation. Thus, where the creditor in a solidary obligation has by subsequent instrument covenanted with some
of the solidary debtors different periods of payment and different conditions, the solidarity stipulated in the
original contract is not thereby destroyed.
 In cases of suretyship, where the sureties are bound in solidum, a different rule applies. A material alteration of
the principal contract, effected by the creditor and the principal debtor, without the knowledge and consent of the
sureties, completely discharges the sureties from all liability on the contract of suretyship.
 Thus an extension of time granted by the creditor to the debtor without the consent of the sureties extinguishes
the liability of the latter but where the sureties are liable for different payments such as installments or rents, or
upon a series of promissory notes, an extension of time as to one or more will not affect the liability of the
sureties for the others.

Extinguishment of Solidary Obligation by Dation in Payment

 In so far as it concerns its effect upon the solidary relation, dation in payment should be treated as payment.

Extinguishment of Solidary Obligation by Merger or Compensation

 When the merger or compensation is partial, and there is doubt as to what part of the debt it should be applied,
the rules on application of payments should govern.
 When it is total, the obligation is extinguished, the relation between creditors as a group and debtors as another
group ceases, and there is left only the resulting liability for reimbursement within each group.

Extinguishment of Solidary Obligation by Remission

 When one creditor makes a remission, it extinguishes the obligation in the amount and to the extent in which it is
made but the creditor who made the remission becomes liable to his co-creditors for their shares. When several
but not all of the creditors make the remission, there can be no action as between those who made it; but all of
them will be liable for the shares of the creditors who did not remit and if one is insolvent, his share shall be
made up by the others who concurred in the remission.
 If the remission in favor of a debtor is partial, not covering his full share, his character as solidary debtor
continues with respect to the creditors and his co-debtors. But when the remission is for his full share in the
obligation, he ceases to have any relation with the creditors, from whom he is thereby released, unless the
continuation of his solidary relation has been expressly reserved, in which case he will be a surety for the other
debtors.
 Notwithstanding his release with respect to the creditors, however, he is still bound with respect to his co-
debtors, so that if one of the latter is made to pay the share of an insolvent, the released debtor will still have to
give his share in the portion of the insolvent. On the other hand, the debtor in whose favor the remission has
been made, even if it be of the whole obligation, cannot recover anything from his co-debtors, because the
remission is a gratuitous act.

Effects of Acts
 As between creditors and debtors, any of these acts will extinguish the obligation, so that no creditor may
thereafter sue any debtor, except in case of novation, where there may be no change or only a partial change of
parties; but in this last case, it is no longer the original obligation, but the new one, which would be sued upon.
 As among co-creditors, the act of any of them in extinguish the obligation with respect to the debtor or debtors
does not prejudice the rights of the other creditors to recover their respective shares in the obligation from the
creditor who effected the novation, confusion or remission.
 On the other hand, as among the co-debtors, the co-debtor as to whom the obligation was extinguished cannot
recover from his other co-debtors more than their respective shares in whatever he may have given up or lost as
the consideration for the extinguishment of the obligation.
  Thus, if there had been total compensation, since he had given his own credit to extinguish the obligation, he an
recover from the others their respective shares in the obligation. Or in case of merger, if one co-debtor acquires
the whole credit, then he can still demand from the other debtors their respective shares therein. But in case of
remission, since the co-debtor in whose favor the remission was made, gives or loses nothing, he cannot
recover anything from the other debtors.

Cases
Crystal v. BPI (2008)
HERMAN C. CRYSTAL, LAMBERTO C. CRYSTAL, ANN GEORGIA C. SOLANTE, and DORIS C.
MAGLASANG, as Heirs of Deceased SPOUSES RAYMUNDO I. CRYSTAL and DESAMPARADOS C.
CRYSTAL, vs. BANK OF THE PHILIPPINE ISLANDS
Story:
Spouses Crystal obtained a loan in behalf of the Cebu Contractors Consortium Co. from BPI-Butuan, securing it with a
chattel mortgage on heavy equipment and machinery of the Company. Spouses were sureties to the loan.
CCCC renewed a previous loan from BPI-Cebu City, evidenced by a promissory note signed by the spouses in their
personal capacities and as managing partners of CCCC. The note indicated that spouses are JOINTLY AND
SEVERALLY liable with CCCC. In order to secure the loan from BPI-Cebu City, the spouses executed a real estate
mortgage on their own property.
CCCC failed to pay its loans to both BPI-Butuan and BPI-Cebu City when these became due. CCCC and the spouses
failed to pay obligations despite demands. BPI foreclosed the chattel and real estate mortgages.
The foreclosure sale on chattel mortgage was consummated and the proceeds was less than the value of the
indebtedness. The Insular Bank of Asia and America (IBAA, a third person) offered to pay directly the spouses’
indebtedness in exchange for the release of the real estate mortgage by buying the lots that are subject of the
mortgage. BPI rejected the offer of payment.
BPI then filed in Court a complaint for the deficiency of the loan in the BPI-Butuan against CCCC and the spouses.
Petitioners, the heirs of the spouses, argue that the failure of the deceased spouses to pay the BPI-Cebu City loan was
due to BPI’s illegal refusal to accept payment for the loan unless the P300,000.00 loan from BPI-Butuan would also be
paid. Consequently, in view of BPI’s unjust refusal to accept payment of the BPI-Cebu City loan, the loan obligation of
the spouses was extinguished, petitioners contend. Petitioners rely on IBAA’s offer to purchase the mortgaged lot from
them and to directly pay BPI out of the proceeds thereof to settle the loan.
The Court ruled:

 BPI’s refusal to accept the payment of IBAA cannot extinguish the spouses’ loan obligation. Contracts take effect
only between the parties, their successors in interest, their heirs and assigns. IBAA is a third person to the
contract of loan. As creditor, BPI is not bound to accept payment or performance of a third person who has no
interest in the fulfillment of the obligation. The spouses alone should bear the responsibility for the obligation.
 When the obligor undertakes to be "jointly and severally" liable, it means that the obligation is solidary. A solidary
obligation is one in which each of the debtors is liable for the entire obligation, and each of the creditors is
entitled to demand the satisfaction of the whole obligation from any or all of the debtors. Therefore, in indicating
that they are jointly and severally liable, the spouses agreed to be sought out and be demanded payment from
BPI. BPI did demand payment from them, but they failed to comply with their obligation, prompting BPI’s valid
resort to the foreclosure of the chattel mortgage and the real estate mortgages.
 More importantly, the promissory note, wherein the spouses undertook to be solidarily liable for the principal
loan, partakes the nature of a suretyship and therefore is an additional security for the loan. It was held in one
case that if solidary liability was instituted to "guarantee" a principal obligation, the law deems the contract to be
one of suretyship. And while a contract of a surety is in essence secondary only to a valid principal obligation,
the surety’s liability to the creditor or promisee of the principal is said to be direct, primary, and absolute; in other
words, the surety is directly and equally bound with the principal. The surety therefore becomes liable for the
debt or duty of another even if he possesses no direct or personal interest over the obligations nor does he
receive any benefit therefrom.

International Finance Corporation v. Imperial Textile Mills, Inc. (2005)

Story:

 In a loan agreement, the International Finance Corporation (IFC) extended a loan to Philippine Polyamide
Industrial Corporation (PPIC).
  The loan was secured with a mortgage on real estate, buildings, machinery, equipment plant and all
improvements owned by PPIC.
 A “Guarantee Agreement” was entered into by the PPIC, the Imperial Textile Mills (ITM) and a company named
Grand Textile Manufacturing Corporation (Grandtex), wherein ITM and Grandtex agreed to jointly and severally
guarantee, as principal obligors and not merely as sureties, PPIC’s obligation to IFC.
 PPIC initially defaulted in its payments and subsequently failed to pay the loan and its interests.
 IFC, together with DBP, applied for extrajudicial foreclosure of mortgages. The proceeds from the foreclosure
sale were less than the total amount of the indebtedness.
 PPIC failed to pay the remaining balance.
 IFC demanded ITM and Grantex, as guarantors of PPIC, to pay the outstanding balance, which remained
unpaid.
 ITM field a complaint with the RTC against PPIC and ITM. The court held PPIC liable for the outstanding loans
but relieved ITM of its obligation as gurantor.
 In the Court of Appeals, the CA ruled that ITM was not discharged from its obligation as guarantor to PPIC but
held that ITM’s liability only arises if and when PPIC could not pay. Since PPIC’s inability to fulfill the obligation
was not sufficiently established, ITM could not immediately be made to assume liability.
The Court ruled:

 By stating that it jointly and severally guarantees the obligation of PPIC as a principal obligor and not merely a
surety thereto, ITM is a surety of PPIC.
 As surety, ITM can be directly proceeded against by IFC for the fulfillment of the (remaining) obligations of PPIC,
in accordance with Article 1216 of the Civil Code.

Industrial Management International Development Corporation (INIMACO) v. National Labor

Relations Commission – Cebu City, et al (2000)

Story:
 The Labor Arbiter ordered INIMACO and other respondents to pay complainants for payment of separation pay
and unpaid wages. The dispositive portion of the labor arbiter’s decision does not indicate that the obligation of
the respondents are solidary.
 The Labor Arbiter issued an Alias Writ of Execution ordering to collect from INIMACO AND/OR Filipinas Carbon
and Mining Corporation the aggregate award.
 INIMACO challenged the validity of the Alias Writ of Execution for changing the tenor of the decision by changing
the liability of respondents from joint to solidary.
The Court ruled:

 Solidarity is not lightly inferred. Solidarity exists if and only if the obligation so expressly stipulates or the law so
provides or the nature of the obligation so requires. (Inference: If the obligation is not solidary, then it is joint.)
 Since, there is no indication in the Labor Arbiter’s decision that the obligation to pay the unpaid wages and
separation pay was solidary, then the obligation of INIMACO (as well as the other respondents) is joint.
 Further, jurisprudence states that when it is not provided in a judgment that the defendants are liable to pay
jointly and severally a certain sum of money, none of them may be compelled to satisfy in full said judgment.
 Failure to indicate in the dispositive portion of the decision the obligation of the respondents as solidary can no
longer be corrected by clarifying it in the Alias Writ of Execution because the decision is already final and
executory.
 Once a decision becomes final and executory, it is removed from the power or jurisdiction of the court which
rendered it to further alter or amend it. It thereby becomes immutable and unalterable and any amendment or
alteration which substantially affects the judgment is null and void for lack of jurisdiction.
 An order of execution which varies the tenor of the judgment or exceeds the terms is a nullity.

Oriental Commercial Co., Inc. V. Quirico Abeto and Alejo Mabanag (1934)

Story:

 The Court of First Instance of Manila ordered only one of the three co-debtors to pay a certain sum with legal
interest thereon.
 Upon appeal, the Supreme Court held that all the defendants and appellees should pay the said sum.
 Oriental Commercial Co. obtained from the clerk of court an alias writ of execution against Mabanag and the
provincial sheriff of Rizal levied upon two prices of real property belonging to him, fixing their sale at public
auction at a certain date.
  Respondent Mabanag field a motion praying the court to enjoin sheriff from proceeding with the sale, alleging
that he was a mere joint obligor with Rosario and was not liable to satisfy in full the unpaid balance of the
judgement. He also contended that, being a surety, execution did not lie against him until after the property of
the principal debtor Gregorio Bugayong is exhausted.

The Court ruled:

 The previous judgment of the Supreme Court is binding upon the parties and superseded the action brought by
the petitioner. (A claim is swallowed up by the judgment)
 The final judgment determines and is the source of rights and obligations of the parties.
 The previous judgment of the Supreme Court failed to state whether the defendants should pay said sums jointly
and severally.
 When it is not provided in a judgment that the defendants are liable to pay jointly and severally a certain sum of
money, none of them may be compelled to satisfy in full said judgment.
 It follows that the respondent Mabanag is not in fact liable to satisfy in full the amount of the judgment rendered
against him and the other two co-defendants.

Inchausti & Co. v. Gregorio Yulo (1914)

Story:
 Inchausti & Co. sues Gregorio Yulo for the recovery of a certain sum of money, the balance of a current account
(bank account) opened by Inchausti & Company with Teodoro Yulo and subsisted after his death. Teodoro’s
share to the bank account was passed on to his widow and children, whose principal representative is Gregorio
Yulo.
 Teodoro Yulo was a property owner who borrowed money from Inchausti and Company. After his death, his
widow and children held property in common, including the interest to the current account.
 After the death of Teodoro’s widow, the current account was passed on to the Yulo children.
 The Yulo children owes Inchausti & Co. some 200,000 pesos for drawing said amount from the current account.
 In a 1908 notarial document, executed by Gregorio Yulo for himself and for his brothers and sister, admitting
their indebtedness. In order to secure payment for the latter, they mortgaged practically all their properties,
including that of their siblings which lack judicial capacity.
 In a 1909 notarial document, Gregiorio Yulo and his siblings with judicial capacity ratified the previous notarial
instrument and jointly and severally acknowledged their indebtedness of P253,445.42 with interest of 10 percent
per annum to Inchausti and Company and obligated themselves to pay annually the indebtedness in five
installments. Clauses in the instrument stipulate that default in any payment makes the other installments mature
(due and demandable), all obligations are understood to be contracted in solidum, and the instrument shall be
ratified by their brother, Mariano Yulo.
 Mariano did not ratify. The Yulo siblings who executed the 1909 document did not pay the first installment.
 Inchausti and Company brought an ordinary action against Gregorio Yulo for the payment of the said balance
due.
 On 1911, some of the Siblings (Francisco, Manuel, Carmen) executed in favor of Inchausti another notarial
instrument, indicating that the debt due them is reduced to P225,000, the interest is reduced to 6 percent per
annum and the number of installments has been increased from 5 to 8. Further, it was stipulated that Inchausti
and Company should include in their suit against Gregorio Yulo their brother Don Pedro and the Siblings shall
procure by all legal means and in the least time possible a judgment in Inchausti’s favor against Don Gregorio
and Don Pedro, sentencing the latter to pay the total amount of the obligation acknowledged by them in the 1909
instrument, and if in their interest, they shall appoint an attorney for Inchausti.
 Gregorio Yulo answered the complaint stating inter alia that the indebtedness already accumulated interest and
the compound interest asked was in to be paid in Mexican pesos, that Mariano did not ratify the 1909
instrument, and that the 1911 instrument novated the 1909 obligation.
 Judgment was decided in favor of Gregorio Yulo, stating that Inchausti has no right to sue Gregorio alone, he
being one of the conjoint and solidary debtors. The 1911 instrument novated the contract, thereby giving him the
same privileges that were given his conjoint and solidary debtors.

The Court ruled that:

 The debtors having obligated themselves in solidum, the creditor can bring its action in 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 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."
 And even though the creditor may have stipulated with some of the solidary debtors diverse installments and
conditions, as in this case, Inchausti & Company did with its debtors Manuel, Francisco, and Carmen Yulo
through the instrument of May 12, 1911, this does not lead to the conclusion that the solidarity stipulated in the
 instrument of August 12, 1909 is broken, as we already know the law provides that "solidarity may exist even
though the debtors are not bound in the same manner and for the same periods and under the same conditions."
 With respect to the third, there can also be no doubt that the contract of May 12, 1911, does not constitute a
novation of the former one of August 12, 1909, with respect to the other debtors who executed this contract, or
more concretely, with respect to the defendant Gregorio Yulo: First, because "in order that an obligation may be
extinguished by another which substitutes it, it is necessary that it should be so expressly declared or that the old
and the new be incompatible in all points"; and the instrument of May 12, 1911, far from expressly declaring that
the obligation of the three who executed it substitutes the former signed by Gregorio Yulo and the other debtors,
expressly and clearly stated that the said obligation of Gregorio Yulo to pay the two hundred and fifty-three
thousand and odd pesos sued for exists, stipulating that the suit must continue its course and, if necessary,
these three parties who executed the contract of May 12, 1911, would cooperate in order that the action against
Gregorio Yulo might prosper, with other undertakings concerning the execution of the judgment which might be
rendered against Gregorio Yulo in this same suit. "It is always necessary to state that it is the intention of the
contracting parties to extinguish the former obligation by the new one". There exist no incompatibility between
the old and the new obligation as will be demonstrated in the resolution of the last point, and for the present we
will merely reiterate the legal doctrine that an obligation to pay a sum of money is not novated in a new
instrument wherein the old is ratified, by changing only the term of payment and adding other obligations not
incompatible with the old one.
 On the nature of Don Gregorio Yulo’s obligation:
o Facts. — First. Of the nine children of T. Yulo, six executed the mortgage of August 12, 1909, namely,
Gregorio, Pedro, Francisco, Manuel, Carmen, and Concepcion, admitting a debt of P253,445.42 at 10
per cent per annum and mortgaging six-ninths of their hereditary properties. Second. Of those six
children, Francisco, Manuel and Carmen executed the instrument of May 12, 1911, wherein was
obtained a reduction of the capital to 225,000 pesos and of the interest to 6 per cent from the 15th of
March of the same year of 1911. Third. The other children of T. Yulo named Mariano, Teodoro, and Jose
have not taken part in these instruments and have not mortgaged their hereditary portions. Fourth. By the
first instrument the maturity of the first installment was June 30, 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 30, 1912, and Fifth, on March 27, 1911, the action against Gregorio Yulo was already filed and
judgment was pronounced on December 22, 1911, when the whole debt was not yet due nor even the
first installment of the same respective the three aforesaid debtors, Francisco, Manuel, and Carmen.

o In jure it would follow that by sentencing Gregorio Yulo to pay 253,445 pesos and 42 centavos of August
12, 1909, this debtor, if he should pay all this sum, could not recover from his joint debtors Francisco,
Manuel, and 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 May 12, 1911, to pay only 225,000 pesos, thus
constituting a violation of Gregorio Yulo's right under such hypothesis, of being reimbursed for the sum
paid by him, with the interest of the amounts advanced at the rate of one-sixth part from each of his five
codebtors. (Civ. Code, article 1145, par. 2). This result would have been a ponderous obstacle against
the prospering of the suit as it had been brought. It would have been very just then to have absolved the
solidary debtor who having to pay the debt in its entirety would not be able to demand contribution from
his codebtors in order that they might reimburse him pro rata for the amount advanced for them by him.
But such hypothesis must be put out of consideration by reason of the fact that occurred during the
pendency of the action, which fact the judge states in his decision. "In this contract of May last," he says,
"the amount of the debt was reduced to P225,000 and the attorney of the plaintiff admits in his plea that
Gregorio Yulo has a right to the benefit of 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, "could this contract have over the rights and obligations
of the defendant Gregorio Yulo with respect to the plaintiff company? In the first place, we are the first to
realize that it benefits him with respect to the reduction of the amount of the debt. The obligation being
solidary, the remission of any 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 doubt that, in accordance with the
provision of article 1143 of the Civil Code, the defendant has the right to enjoy the benefits of the partial
remission of the debt granted by the creditor."

o Wherefore we hold that although the contract of May 12, 1911, has not novated that of August 12, 1909,
it has affected that contract and the outcome of the suit brought against Gregorio Yulo alone for the sum
of P253,445.42; and in consequence thereof, the amount stated in the contract of August 12, 1909,
cannot be recovered but only that stated in the contract of May 12, 1911, by virtue of the remission
granted to the three of the solidary debtors in this instrument, in conformity with what is provided in article
1143 of the Civil Code, cited by the creditor itself.
 o The Gregorio Yulo cannot be ordered to pay the P253,445.42 claimed from him in the suit here, because
he has been benefited by the remission made by the plaintiff to three of his codebtors, many times
named above.

o Consequently, the debt is reduced to 225,000 pesos.

o But, as it cannot be enforced against the defendant except as to the three-sixths part which is what he
can recover from his joint codebtors Francisco, Manuel, and Carmen, at present, judgment can be
rendered only as to the P112,500 (total indebtedness divided by 6 children time 3 children not covered by
the 1911 notarial instrument) The obligations of Francisco, Manuel, and Carmen are with a period, to be
paid installments. None of these obligations are due yet.

Outcome:
 Don Gregorio Yulo was sentenced to pay the plaintiff Inchausti & Company 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.
Passages:

 Gregorio Yulo could not be freed from making any payment whatever but only from the payment of that part of
the debt which corresponds to his codebtors Francisco, Manuel, and Carmen. The same author, considering the
case of the opposing contention of two solidary debtors as to one of whom the obligation is pure and
unconditional and as to the other it is conditional and is not yet demandable, and comparing the disadvantages
which must flow from holding that the obligation is demandable with these which must follow if the contrary view
is adopted, favors this solution of the problem:

 There is a middle ground, (he says), from which we can safely set out, to wit, that the creditor may of course,
demand the payment of his credit against the debtor not favored by any condition or extension of time." And
further on, he decides the question as to whether the whole debt may be recovered or only that part
unconditionally owing or which has already matured, saying, "Without failing to proceed with juridical rigor, but
without falling into extravagances or monstrosities, we believe that the solution of the difficulty is perfectly
possible. How? By limiting the right of the creditor to the recovery of the amount owed by the debtors bound
unconditionally or as to whom the obligation has matured, and leaving in suspense the right to demand the
payment of the remainder until the expiration of the term of the fulfillment of the condition. But what then is the
effect of solidarity? How can this restriction of right be reconciled with the duty imposed upon each one of the
debtors to answer for the whole obligation? Simply this, by recognizing in the creditor the power, upon the
performance of the condition or the expiration of the term of claiming from any one or all of the debtors that part
of the obligation affected by those conditions. (Scaevola, Civil Code, 19, 800 and 801.)
 It does not seem just, Mucius Scaevola considers it "absurd," that, there being a debtor who is unconditionally
obligated as to when the debt has matured, the creditor should be forced to await the 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 fail to consider the special law of the contract, neither repealed nor novated, which cannot be omitted
without violating article 1091 of the Civil 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 holding that this action was premature but might be brought in the time,
regarded the contract of August 12, 1909, as having been expressly novated; but it is absolutely impossible in
law to sustain such supposed novation, in accordance with the legal principles already stated, and nevertheless
the obligation of the contract of May 12, 1911, must likewise be complied with in accordance with its tenor, which
is contrary in all respects to the supposed novation, by obliging the parties who signed the 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 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 said defendant was not party to the contract in question, yet because of the principle of solidarity he was
benefited by it.

Rehabilitation Finance Corporation v. Court of Appeals, Estelito Madrid and Jesus Anduiza (1954)

Story:

 In 1941, Estelito Madrid and Jesus Anduiza borrowed from the then Agricultural and Industrial Bank, now the
Rehabilitation Finance Corporation, the sum of PhP 13,800 which bears annual interest of 6 percent, payable on
or before October 30, 1951 and in 10 installments. The loan was secured by a mortgage of some property. In the
promissory note, they jointly and severally promised to pay the amount.
 Both failed to pay the 1st and 2nd installments in 1942 and 1943.
  In 1944, Estelito Madrid paid PhP 16,425.17 (Note that the Supreme Court did not check the amount of interest.
The effective interest rate became 19 plus percent).
 RFC did not release the property mortgaged. Anduiza contended that he did not authorize such payment.
 The Court of Appeals ordered RFC to cancel the mortgage and ordered Jesus Anduiza to pay plaintiff Estelito
Madrid.
 The Bank assails said decision of the Court of Appeals upon the ground that payments by respondent Estelito
Madrid had been made against the express will of Anduiza and over the objection of the Bank; that the latter
accepted said payments, subject to the condition that a written instrument, signed by Anduiza, authorizing the
same, would be submitted by Madrid, who has not done so; that the payments in question were made by Madrid
in the name of Anduiza and, therefore, through misrepresentation and without good faith; that said payments
were not beneficial to Anduiza; and that the obligation in question was not fully due and demandable at the time
of the payments aforementioned.
The Court Ruled that:

 Although the full amount of said obligation was not demandable prior to October 31, 1951, in view of the
provision of the note relative to the payment in ten (10) annual installments, it is clear, therefore, that the makers
or debtors were entitled to make a complete settlement of the obligation at any time before said date.
 Based on the following provisions of the original Civil Code, Madrid was entitled to pay the obligation of Anduiza
irrespective of the latter's will or that of the Bank, and even over the objection of either or both:
o Payment maybe made by any person, whether he has an interest in the performance of the obligation or
not, and whether the payment is known and approved by the debtor or whether he is unaware of it.
o One who makes a payment for the account of another may recover from the debtor the amount of the
payment, unless it was made against his express will.
o In the latter case he can recover from the debtor only in so far as the payment has been beneficial to him.
o El derecho de un acreedor se reduce en todo caso a pedir y a recibir lo que se le debe
 It may not be amiss to add that, contrary to petitioner's pretense, the payments in question were not made
against the objection either of Anduiza or of the Bank. And although, later on, the former questioned the validity
of the payments, subsequently, he impliedly, but clearly, acquiesced therein, for he joined Madrid in his appeal
from the decision of the Court of First Instance of Manila, referred to above. Similarly, the receipts issued by the
Bank acknowledging said payments without qualification, belie its alleged objection thereto. The Bank merely
demanded a signed statement of Anduiza sanctioning said payments, as a condition precedent, not to its
acceptance, which had already been made, but to the execution of the deed of cancellation of the mortgage
constituted in favor of said institution.

 Needless to say, this condition was null and void, for, as pointed out above, the Bank, as creditor, had no other
right than to exact payment, after which the obligation in question, as regards said creditor, and, hence, the
latter's status and rights as such, become automatically extinguished.

 Two other consequences flow from the foregoing, namely:

o The good or bad faith of the payor is immaterial to the issue before us. Besides, the exercise of a right,
vested by law without any qualification, can hardly be legally considered as tainted with bad faith. Again,
according to Sanchez Roman "para que el pago hecho por el tercero extinga la obligacion, es preciso
que se realice a nombre del deudor". (4 Sanchez Roman, 260.) Accordingly, the circumstance that
payment by Madrid had been effected in the name of Anduiza, upon which the Bank relies in support of
its aforesaid allegation of bad faith, does not prove the existence of the latter.

o The Bank can not invoke the provision that the payor "may only recover from the debtor insofar as the
payment has been beneficial to him," when made against his express will. This is a defense that may be
availed of by the debtor, not by the Bank, for it affects solely the rights of the former. At any rate, in order
that the rights of the payor may be subject to said limitation, the debtor must oppose the payments before
or at the time the same were made, not subsequently thereto.

 Indeed, it is only fair that the effects of said payments be determined at the time it was made, and that the rights
then acquired by the payor be not dependent upon, or subject to modification by, subsequent unilateral acts or
omissions of the debtor. At any rate, the theory that Anduiza had not been benefited by the payments in question
is predicated solely upon his original refusal to acknowledge the validity of said payments. Obviously, however,
the question whether the same were beneficial or not to Anduiza, depends upon the law, not upon his will.
Moreover, his former animosity towards Madrid sufficed to negate the beneficial effects of the payment under
consideration, the subsequent change of front of Anduiza, would constitute an admission and proof of said
beneficial effects.

Case Commentary:
  The Supreme Court did not acknowledge the fact that the obligation is solidary as both Madrid and Anduiza
promised to pay the indebtedness jointly and severally.

Passages:
 Capag nabayaran na ng taong nasa labas ng usapan ang obligación, hindi caagad magcacaroon ng obligación
ang deudor sa taong labas sa usapan. En efecto; el unico derecho del acreedor en las obligaciones es el de que
se le pague. No puede, por lo tanto, oponerse a que la obligacion le sea cumplida por una persona distinta del
deudor. Por otra parte, el deudor queda libre de su compromiso desde el momento en que el credito esta
satisfecho, puesto que, a partir de entonces, nada se debe. Podran, pues, discutirse los efectos del pago hecho
por una tercera persona en cuanto a la relacion que de esto se deduzca para lo sucesivo entre el tercero y el
deudor; pero negar que al deuda quede liberada, desatado el vinculado, perdida en el acreedor la facultad de
reclamar e insubsistente sobre el deudor el peso de su compromiso, seria de todo punto temerario.
 Lo presumible es que tenga interes en el cumplimiento de la obligacion quien trata de sustituirse al deudor en el
pago; es natural la defensa de los intereses propios, y poco corriente y poco acostumbrado que, por pura
generosidad, se satisfaga la deuda de otro sinalgun beneficio por parte del que de esta manera procede. En
este sentido, el fiador, que es, si no un deudor principal, deudor al fin, puesto que ha enlazado sus intereses,
con su cuenta y razon, a los de la persona obligada, y se ha comprometido subsidiriamente con ella a; pago de
lo que debia, se adelantara muchas veces, por distintos motivos, a pagar la deuda, teniendo en ello propio y
legitimo beneficio. Aparte del interes juridico, motivos particulares de otro orden, que implican un genero
cualquiera de provecho, pueden mover tambien el animo de una persona para sustituirse en el lugar del deudor.

 Pero ni siquiera se necesita que esto suceda. Las doctrinas juridicas han permitido que haga el pago cualquiera
persona, tenga o no interes en el cumplimiento de la obligacion, segun expresamentedetermina el art. 1158 del
Codigo. Es de suponer el interes, naturalmente, por lo que decimos mas arriba; pero la ley se reconoce sin
facultades para entrar en este terreno, y obedeciendo a las meras consideraciones juridicas de la satisfaccion
del compromiso por la entrega de la cosa o prestacion del hecho y de la liberacion consiguientedel deudor,
prescinde del genero de motivos interesados o desinteresados, incluso de mera liberalidad, que hayan polido
producir la determinacion de la tercer persona que ofrece al acreedor la realizacion del compromiso.

 Y no para en esto; sino que el mismo art. 1158 establece que podra hacer el pago cualquiera persona, ya lo
conozca o lo apruebe, ya lo ignore el deudor. Anticipandose, ademas, a la pregunta de loque sucedera en el
caso de que en deudor lo conozca y no lo apruebe, añade a continuacion que el que pague por cuenta de otro
podra reclamar del deudor lo que hubiese pagado, a no haberlo hecho contra su expresa voluntad. Es lo que se
decia en la ya citada Ley dePartidas: "aunque el deudor lo supiese y lo contradijese".

 Ahora bien; en algun caso de estos, podra acreedor negarse a recibar la deuda? Ya hemos dicho que no. Su
derecho se reduce en todo caso a pedir y a recibir lo que se le debe. Es indiferente para el la cualidad de la
persona que llega a su presencia, poniendo en sus manos el hecho o la cosa que son debidas. Habra
ocasiones en que, por motivos de endole particular, el acreedor se sienta contrariado en recibir la prestacion de
un tercero. El prestamista, por ejemplo, que crea haberse asegurado el disfructe perpetuo de las rentas de su
deudor, se vera amargamente sorprendido con el pago hecho por un tercero, que da al traste de esta manera
en un segundo con las risueñas esperanzas de toda la vida. Motivos de este orden, y tambien otras veces
algunos mas elevados, impulsaran al acreedor a resistir el pago de lo que se debe. Sin embargo, el derecho no
ha podido tomar en cuenta ninguna de tales consideraciones, con las que se iria en definitiva contra el principio
de haber de aceptarse todo aquello que resulte favorable para el deudor. Por lo tanto, en caso de resistencia, el
tercero que ofrece el pago tendra derecho a consignar la cosa debida como si fuese al deudor mismo, dando a
la consignacion cuantos efectos le estan asignados por la ley. (19 Scaevola, pp. 881-883; emphasis supplied.)
 Los terceros extraños a la obligacion pueden pagar, ignorandolo el deudor, sabiendolo y no contraciendolo o
sabiendolo y contradiciendolo. En el primer caso existe una gestion de negocios; en el segundo, un mandato
tacito; y en el tercero, se produce una cesion de crédito
 En el caso de pago hecho por un tercero, el acreedor no puede negarse a recibirlo, y cualquiera le contituira en
la responsibilidad de la mora accipiendi. Cierto que esta no es regla expresa de ley ni de jurisprudencia, pero es
buena doctrina de Derecho cientifico, generalizada entre los escritores, y de la cual dice Goyena, con razon: "La
ley no puede permitir que el acreedor se obstinemaliciosamente en conservar la facultad de atormenter a su
deudor, que un hijo no pueda extinguir la obligacion de su padre, ni este la de su hijo a su amigo, o un hombre
beneficio la de un desgraciado ausente. Y no se diga que el tercero no tiene mas que entregar el dinero al
deudor para que haga directamente el pago; pues en el caso de ausencia esto es imposible, y en otras
ocasiones la delicadeza frustraria las miras del hombre bienhechor.