Inchausti v. Yulo

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

FACTS:           

This suit is brought for the recovery of a certain sum of money, the balance of a current account opened by the firm of Inchausti & Company with Teodor Yulo and after his death continued by Gregorio Yulo as principal representative of his children. On Aug.12, 1909, Gregorio Yulo, in representation of his 3 siblings, executed a notarial instrument, ratifying all the contents of the prior document of Jan.26, 1908, severally and joint acknowledged their indebtedness for P253,445.42, 10 % per annum, 5 installments. Plaintiff brought an action againsta Gregorio for the payment of the said balance due. But on May 12, 1911, 3 siblings executed another instrument in recognition of the debt, reduced to P225,000, interest reduced to 6% per annum, installments increased to 8.

They obligated themselves to pay but failed to pay right at the first instalment. An action was brought against Gregorio Yulo. However, another notarial instrument was executed by the Yulos inrecognition of the debt and the obligation of payment, and then asking plaintiff to include in the filed suit Pedro Yulo, and in that case, they’d procure all means for the judgment to be in favour of the plaintiff. However, the court ruled in favour of Gregorio instead. Court reversed the judgment and held that plaintiff cansue Gregorio Yulo alone since the Yulos obligated themselves in solidum.

ISSUE:

Whether or not the contract constitute novation.

RULING:

 The contract of May 12, 1911 does not constitute a novation of the former one of Aug.12, 1909, with respect to the other debtors who executed this contract. First, “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(art. 1292). It is always necessary to state that it is the intentionof the contracting parties to extinguish the former obligation by the new one.” The 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.

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 Art. 1215, 1222, the defendant has the right to enjoy the benefits of the partial remission. At present judgment can be rendered only as to P112,500.

 * Case digest by Lady Rubyge Denura,LLB-1, Andres Bonifacio Law School, SY 2017-2018

By | 2018-05-17T08:31:45+00:00 May 17th, 2018|Case Digests|0 Comments

Leave A Comment