Case Digest

I. Title of the Case:

INCHAUSTI & CO. vs GREGORIO YULO

G.R. No. L-7721 March 25, 1914

II. Parties:

INCHAUSTI & COMPANY (plaintiff-appellant) and GREGORIO YULO

(defendant-appellee)

III. Facts:

First. Of the nine children of T. Yulo, six executed the mortgage of August 12,

1909, namely, Gregorio, Pedro, Francisco, Manuel, Carmen, and Conception, admit-

ting 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 respecting the three aforesaid debtors,

Francisco, Manuel, and Carmen.

IV. Issue:

First, whether the plaintiff can sue Gregorio Yulo alone, there being other

obligors;

Second, if so, whether it lost this right by the fact of its having agreed with the

other obligors in the reduction of the debt, the proroguing of the obligation and the

extension of the time for payment, in accordance with the instrument of May 12, 1911;

Third, whether this contract with the said three obligors constitutes a novation of

that of August 12, 1909, entered into with the six debtors who assumed the payment of

two hundred fifty-three thousand and some odd pesos, the subject matter of the suit;

and

Fourth,, if not so, whether it does have any effect at all in the action brought, and

in this present suit.

V. Decision of the Court to the Issue:

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 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.

Gregorio Yulo cannot allege as a defense to the action that it is premature. When

the suit was brought on March 27, 1911, the first installment of the obligation had

already matured of June 30, 1910, and with the maturity of this installment, the first not

having been paid, the whole debt had become mature, according to the express

agreement of the parties, independently of the resolutory condition which gave the

creditor the right to demand the immediate payment of the whole debt upon the

expiration of the stipulated term of one week allowed to secure from Mariano Yulo the

ratification and confirmation of the contract of August 12, 1909.

Neither could he invoke a like exception for the shares of his solidary codebtors,

Pedro and Concepcion Yulo, they are being in identical condition as he.

But as regards Francisco, Manuel, and Carmen Yulo, none of the installments payable

under their obligation, contracted later, had yet matured.

The part of the debt for which these three are responsible is three-sixths of

P225,000 or P112,500, so that Gregorio Yulo may claim that, even acknowledging that

the debt for which he is liable is P225,000, nevertheless not all of it can now be

demanded of him, for that part of it which pertained to his codebtors is not yet due, a

state of affairs which not only prevents any action against the persons who were

granted the term which has not yet matured, but also against the other solidary debtors
who being ordered to pay could not now sue for a contribution, and for this reason the

action will be only as to the P112,500.

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 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. The defendant 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.

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

VI. Reason of the Court on the Decision:

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.

 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 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.)