Corporation". It was also agreed that "any changes of or novation in the terms and conditions in connection with the issuance or use of the Pacificard, or any extension of time to pay such obligations, charges or liabilities shall not in any manner release me/us from responsibility hereunder, it being understood that I fully agree to such charges, novation or extension, and that this understanding is a continuing one and shall subsist and bind me until the liabilities of the said Celia Syjuco Regala have been fully satisfied or paid.. In view of defendant Celia Regala's failure to settle her account for the purchases, a written demand was sent to the latter and also to the defendant Roberto Regala, Jr under his "Guarantor's Undertaking."A complaint was subsequently filed in Court for defendant's (sic) repeated failure to settle their obligation. Defendant Celia Regala was declared in default for her failure to file her answer within the reglementary period. Defendant-appellant Roberto Regala, Jr., on the other hand, filed his Answer with Counterclaim admitting his execution of the "Guarantor's Understanding", "but with the understanding that his liability would be limited to P2,000.00 per month." ISSUE: W/N husband is a surety and is solidarily liable. Yes.
HELD:
The pertinent portion of the "Guarantor's Undertaking" which private respondent Roberto Regala, Jr. signed in favor of Pacific Banking Corporation provides:
I/We, the undersigned, hereby agree, jointly and severally with Celia Syjuco Regala to pay the Pacific Banking Corporation upon demand any and all indebtedness, obligations, charges or liabilities due and incurred by said Celia Syjuco Regala with the use of
the Pacificard or renewals thereof issued in his favor by the Pacific Banking Corporation. Any changes of or Novation in the terms and conditions in connection with the issuance or use of said Pacificard, or any extension of time to pay such obligations, charges or liabilities shall not in any manner release me/us from the responsibility hereunder, it being understood that the undertaking is a continuing one and shall subsist and bind me/us until all the liabilities of the said Celia Syjuco Regala have been fully satisfied or paid. (p. 12,Rollo)
SURETY V. GUARANTY. The undertaking signed by Roberto Regala, Jr. although denominated "Guarantor's Undertaking," was in substance a contract of surety. As distinguished from a contract of guaranty where the guarantor binds himself to the creditor to fulfill the obligation of the principal debtor only in case the latter should fail to do so, in a contract of suretyship, the surety binds himself solidarily with the principal debtor (Art. 2047, Civil Code of the Philippines).
We need not look elsewhere to determine the nature and extent of private respondent Roberto Regala, Jr.'s undertaking. As a surety he bound himself jointly and severally with the debtor Celia Regala "to pay the Pacific Banking Corporation upon demand, any and all indebtedness, obligations, charges or liabilities due and incurred by said Celia Syjuco Regala with the use of Pacificard or renewals thereof issued in (her) favor by Pacific Banking Corporation." This undertaking was also provided as a condition in the issuance of the Pacificard to Celia Regala, thus:
5. A Pacificard is issued to a Pacificard-holder against the joint and several signature of a third party and as such, the Pacificard holder and the guarantor assume joint and several liabilities for any and all amount arising out of the use of the Pacificard. (p. 14, Rollo)
The respondent appellate court held that "all the other rights of the guarantor are not thereby lost by the guarantor becoming liable solidarily and therefore a surety." It further ruled that although the surety's liability is like that of a joint and several debtor, it does not make him the debtor but still the guarantor (or the surety), relying on the case of Government of the Philippines v. Tizon. G.R. No. L- 22108, August 30, 1967, 20 SCRA 1182. Consequently, Article 2054 of the Civil Code providing for a limited liability on the part of the guarantor or debtor still applies.
It is true that under Article 2054 of the Civil Code, "(A) guarantor may bind himself for less, but not for more than the principal debtor, both as regards the amount and the onerous nature of the conditions. 2 We do not agree however, that Roberto Jr.'s liability should be limited to that extent. Private respondent Roberto Regala, Jr., as surety of his wife, expressly bound himself up to the extent of the
debtor's (Celia) indebtedness likewise expressly waiving any "discharge in case of any change or novation of the terms and conditions in connection with the issuance of the Pacificard credit card." Roberto, in fact, made his commitment as a surety a continuing one,
binding upon himself until all the liabilities of Celia Regala have been fully paid. All these were clear under the "Guarantor's Undertaking" Roberto signed. As in guaranty, a surety may secure additional and future debts of the principal debtor the amount of which is not yet known (see Article 2053, supra)..
A guarantor or surety does not incur liability unless the principal debtor is held liable. It is in this sense that a surety, although solidarily liable with the principal debtor, is different from the debtor. It does not mean, however, that the surety cannot be held liable to the same extent as the principal debtor. The nature and extent of the liabilities of a guarantor or a surety is determined by the clauses in the contract of suretyship.
(INIMACO), v. NLRC BUENA, J.:
FACTS: This is a petition for certiorari assailing the Resolution dated September 4, 1991 issued by the National Labor Relations Commission in RAB-VII-0711-84 on the alleged ground that it committed a grave abuse of discretion amounting to lack of jurisdiction in upholding the Alias Writ of Execution issued by the Labor Arbiter which deviated from the dispositive portion of the Decision dated March 10, 1987, thereby holding that the liability of the six respondents in the case below is solidary despite the absence of the word "solidary" in the dispositive portion of the Decision, when their liability should merely be joint. S-jcj
In September 1984, 6 PRs filed a complaint with DOLE against (INIMACO)et al, for payment of separation pay and unpaid wages. The labor arbiter ordered respondents (INIMACO) et al, to pay complainants to be deposited with this Commission within ten (10) days from receipt of this Decision for appropriate disposition. No appeal was filed within the reglementary period thus, the above Decision became final and executory. On June 16, 1987, the Labor Arbiter issued a writ of execution but it was returned unsatisfied. On August 26, 1987, the Labor Arbiter issued an Alias Writ of Execution which ordered to proceed to the premises of INIMACO et al to collect the aggregate award in favor of complainants. Petitioner filed a "Motion to Quash Alias Writ of Execution and Set Aside Decision,"[3] alleging among others that the alias writ of execution altered and changed the tenor of the decision by changing the liability of therein respondents from joint to solidary, by the insertion of the words "AND/OR" between "Antonio Gonzales/Industrial Management Development
Kristine Confesor
Corporation and Filipinas Carbon and Mining Corporation, et al." However, in an order dated September 14, 1987, the Labor Arbiter denied the motion. The respondent NLRC dismissed the appeal. Dissatisfied with the foregoing, petitioner filed the instant case, alleging that the respondent NLRC committed grave abuse of discretion in affirming the Order of the Labor Arbiter dated August 15, 1989, which declared the liability of petitioner to be solidary.ISSUE: W/N liability is joint/solidary?
HELD: JOINT. A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, and each creditor is entitled to demand the whole obligation.[9] In a joint obligation each obligor answers only for a part of the whole liability and to each
obligee belongs only a part of the correlative rights.[10] Well-entrenched is the rule that solidary obligation cannot lightly be inferred. [11] There is a solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the
obligation so requires.[12]
In the dispositive portion of the Labor Arbiter, the word "solidary" does not appear. The said fallo expressly states the following respondents therein as liable, namely: Filipinas Carbon and Mining Corporation, Gerardo Sicat, Antonio Gonzales, Industrial Management Development Corporation (petitioner INIMACO), Chiu Chin Gin, and Lo Kuan Chin. Nor can it be inferred therefrom that the liability of the six (6) respondents in the case below is solidary, thus their liability should merely be joint.
Moreover, it is already a well-settled doctrine in this jurisdiction 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. In Oriental Commercial Co. vs. Abeto and Mabanag[13] this Court held:
"It is of no consequence that, under the contract of suretyship executed by the parties, the obligation contracted by the sureties was joint and several in character. The final judgment, which superseded the action for the enforcement of said contract, declared the obligation to be merely joint, and the same cannot be executed otherwise."[14]
Granting that the Labor Arbiter has committed a mistake in failing to indicate in the dispositive portion that the liability of respondents therein is solidary, the correction -- which is substantial -- can no longer be allowed in this case because the judgment has already become final and executory.
Sec. 5
DIVISIBLE AND INDIVISIBLE OBLIGATIONS (See Arts 1223-1225)
Art. 1223. The divisibility or indivisibility of the things that are the object of obligations in which there is only one debtor and only one creditor does not alter or modify the provisions of Chapter 2 of this title.
KINDS OF DIVISION
1) QUANTITATIVE DIVISION (depends on quantity: Example — if 10 chairs are equally divided between two brothers.)
- In the next following example, if the inheritance consists only of a ricefield its partition by metes and bounds into two equal parts is a quantitative division. Another example, is when A and B divide 300 cavans of palay harvested from the ricefield or the P100,000.00 cash.
2) QUALITATIVE DIVISION (depends on quality, irrespective of quantity. Example: If one child inherits land, and another inherits cash.)
- A and B are heirs of C. They agreed to divide the inheritance as follows: to A — a house and lot and home appliances and to — a ricefield, a car and P100,000.00 cash.
3) INTELLECTUAL OR MORAL
DIVISION (one that exists merely in the mind, and not in physical reality. Example: My brother and I own in common a car. My one-half share is only in the mind.)
KINDS OF INDIVISIBILITY. They are:
(1) LEGAL INDIVISIBILITY. — where a specific provision of law declares as indivisible, obligations which, by their nature, are divisible (Art. 1225, par. 3.);
(2) CONVENTIONAL
INDIVISIBILITY. — where the will of the parties makes as indivisible, obligations which, by their nature, are divisible (Ibid.); and
(3) NATURAL INDIVISIBILITY. — where the nature of the object or prestation does not admit of division, e.g., to give a particular car, to sing a song, etc. (Ibid., par. 1.)
INDIVISIBILITY V. SOLIDARITY (See page, 67)
1224. A joint indivisible obligation gives rise to indemnity for damages
from the time anyone of the debtors does not comply with his undertaking. The debtors who may have been ready to fulfill their promises shall not contribute to the indemnity beyond the corresponding portion of the price of the thing or of the value of the service in which the obligation consists.
JOINT INDIVISIBLE OBLIGATION Here the object is indivisible and yet the parties are merely bound jointly. Example: Mila and Ligaya are jointly bound to give a specific car to Jose. EFFECT OF NON-COMPLIANCE The obligation is converted into a monetary one for indemnity.
Example: Mila and Ligaya promised jointly to give a specific car worth P2,400,000 to Jose. In the meantime,
the car is with Honda Motors Co. Mila’s share is, therefore, P1,200,000. If Mila, because of gambling, does not have the money, but Ligaya has P1,200,000 it is clear that they cannot get the car from Honda Motors Co. So they also cannot comply with their obligation of delivering the car to Jose. Here, the obligation to give the car is converted to a monetary obligation to give P2,400,000 to Jose. Ligaya is not responsible for Mila’s insolvency, so she is duty bound to give only P1,200,000. Mila will be indebted to Jose for her share of P1,200,000. (c) Suppose in the preceding problem, the obligation was SOLIDARY and INDIVISIBLE, what would be the effect?
ANS.: Jose can demand the whole car or its price of P2,400,000 from Ligaya alone, but Ligaya can later recover reimbursement from Mila.
EFFECTS OF NONCOMPLIANCE BY A DEBTOR
JOINT INDIVISIBLE SOLIDARY INDIVISIBLE
the obligation is transformed into one for damages. NOT specific performance/rescission because there is no cause of action against the other debtors who are willing to fulfill their promises. ALL debtors liable for damages but the innocent debtors shall not contribute beyond their respective shares of the obligation. The obligation becomes a divisible one.
breach by a co-debtor makes all debtors liable for damages. The obligation REMAINS SOLIDARY without prejudice to their right against the guilty or negligent debtor. (Art. 1221, par. 2.)
1225. For the purposes of the preceding articles, obligations - to give definite things and
- those which are not
susceptible of partial performance shall be
Kristine Confesor
deemed to be
INDIVISIBLE.
When the obligation has for its object the
- execution of a certain number of days of work,
- the accomplishment of work
by metrical units, or - analogous things which by
their nature are susceptible of partial performance, shall be DIVISIBLE.
However, even though the object or service may be physically divisible, an obligation is indivisible if so provided by law or intended by the parties. In obligations not to do, divisibility or indivisibility shall be determined by the character of the prestation in each particular case
(1) Obligations That Are Deemed Indivisible
a. Obligations to give definite things.
(Example: to give this car) b. Those which are not
susceptible of partial performance.
(Example: to conduct the orchestra in a single rendition of Buencamino’s “Mayon Concerto”)
c. Even if the thing is physically divisible, it may be indivisible if so provided by law. d. Even if the thing is physically
divisible, it may be indivisible if such was the intention of the parties concerned. (2) Obligations That Are Deemed Divisible
a. Execution of certain number of days work
Example: When a laborer is hired to work for 10days. b. Expressed by metrical units
Example: When a laborer is hired to construct a street 3 meters wide and 50 meters long.
c. Nature of obligation- susceptible of partial fulfillment
Example: When a debtor is required to pay in ten annual installments
d. When the object of the obligation is the accomplishment of work susceptible of partial performance.
[NOTE: The character of the prestation or obligation will determine the divisibility or indivisibility
(3) Effect of Illegality on a Divisible Contract
In case of a divisible contract, if the illegal terms can be separated from the legal ones, the latter may be enforced. (Art. 1420, Civil Code) CASES
Blossom & Co. v. Manila Gas Corp. 55 Phil. 226
FACTS: P and D entered into a contract whereby D will supply P with gas tar at the price of P65 per ton. The contract was to run for 10 years, to start from the year 1919. D began delivering but later on he refused to continue. In 1923, P brought an action for damages against D and asked for damages. P was awarded damages up to 1923. The judgment became final, and P did not then ask for more. Later, P brought an action to recover damages from 1923 to 1929. Issue: Is he allowed to do so?
HELD: No, P is not allowed to recover any more damages. He should have questioned the judgment before it became final, but he did not. He had brought the first action to recover damages for the contract, the whole contract, and because the judgment in that case had already become final it cannot be changed although what he had obtained was only partial recovery. As a general rule, a contract to do several things at several times is divisible, and a judgment for a single breach of a continuing contract is not a bar to a suit for the subsequent breach. “When the defendant (D) terminated a continuing contract by absolute refusal in bad faith to perform (absolute, because he refused not only a single delivery but all subsequent deliveries — Author’s comments), a claim for damages for a breach is an indivisible demand, and where as in this case, a former final judgment was rendered, it is a bar to any damages which the plaintiff may thereafter sustain.”
L. Buck & Son Lumber Co. v. Atlantic Lumber Co.
109 Federal 411
FACTS: A contract was made for the sale of a large quantity of logs to be delivered in monthly installments during a period of 8 years, payments to be made also in installment, at times having relations to the deliveries. It contained stipulations as to such payments, and guaranties as to the average size of the logs to be delivered in each installment. The seller terminated the contract for alleged breaches by the buyer and brought suit for damages, among them payments due for installments of the logs already delivered. The seller got some damages. Later, he wanted to recover for the other installments.
ISSUES:
(a) Is this a divisible or indivisible obligation?
(b) After recovery has been had of prior installments in a court action, may another court action prosper for the recovery of the remaining installments?
HELD:
(a) “This is an indivisible contract, and not a number of separate and independent agreements for the sale of the quantity to be delivered and paid for each month, although there might be breaches of the minor stipulations and warranties with
reference thereto which would warrant suits with a termination of the contract.”
b) The later court action for the recovery of the remaining installments cannot prosper. “The judgment in such action was conclusive as to all claims or demands of either party against the other, growing out of the indivisible contract.’’
Sec. 6
OBLIGATIONS WITH A PENAL CLAUSE
(See Arts 1226-1230)
1226. In obligations with a penal clause, the penalty shall substitute
the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the provisions of this code. 1227. The debtor cannot exempt
himself from the performance of the obligation by paying the penalty, save in the case where this right has been expressly reserved for him. Neither can the creditor demand the fulfillment of the obligation and the satisfaction of the penalty at the same time, unless this right has been clearly granted him. However, if after the creditor has decided to require the fulfillment of the obligation, the performance thereof should become impossible without his fault, the penalty may be enforced.
1228. Proof of actual damages