ART 1207 – JOINT/SOLIDARY OBLIGATIONS  Doesn’t mean that surety cannot be held liable to the same extent as the

principal debtor
PACIFIC BANKING VS IAC, ROBERTO REGALA JR  Nature and extent of the liabilities of a guarantor or surety is determined

by the contract

24 Oct 75: Celia Regala applied and obtained credit card from Pacific Banking
Corp. INDUSTRIAL MGT. VS NLRC, ENRIQUE SULIT
 Roberto (spouse) executed “Guarantor’s Undertaking”: agreed JOINTLY

and SEVERALLY with Celia to pay PBC upon demand, any indebtedness… September 1984, private respondent Enrique Sulit, et. al. filed a complaint with
 This undertaking is a CONTINUING one and shall subsist until all liabilities the Department of Labor and Employment

are paid City against Filipinas Carbon Mining Corporation, Gerardo Sicat, Antonio
 PBC to advance cost of goods/services by card holders and Celia to pay Gonzales, Chiu Chin Gin, Lo Kuan Chin, and petitioner Industrial Management
within 30 days from date of statement of accts and any overdue will earn Development Corporation (INIMACO), FOR PAYMENT OF SEPARATION PAY

interest of 14%/annum AND UNPAID WAGES.

 March 10, 1987, Labor Arbiter Bonifacio B. Tumamak: ordered Filipinas
CELIA FAILED TO SETTLE ACCT (P92,803.98) Carbon and Mining Corp and INIMACO to pay Sulit et.al the total

 PBC sent demand letter to Celia and Roberto aggregate amount of P138,588.31

 Filed complaint for repeated failure to settle  No appeal. Decision became FINAL and EXECUTORY.
 Celia failed to file answer; Roberto filed answer, admitted execution of  Labor Arbiter issued writ of execution but was returned; issued Alias writ
Guarantor’s Undertaking but thought his liability is limited only to of execution – proceed to premises of INIMACO and/or FCMC to collect

P2000/mo (credit limit) amount (or to movable or immovable properties)

 (fire struck Manila City Hall, reconstitution of the case, blah blah)

INIMACO filed motion: the alias writ of execution altered and changed the

TC: in favor of PBC, ordered Regala spouses to pay JOINTLY AND SEVERALLY tenor of decision by changing the liability of INIMACO and FCMC from joint to

the amount to PBC, plus interests solidary

 Regala spouses appealed  LA denied motion

 Appealed to NLRC; NLRC dismissed – “no doubt in our mind that

CA: modified TC, Roberto is made liable only to the extent of the monthly respondents are called upon to pay, jointly and severally”
credit limit (P2000) and for the advances made during the one year period of  Filed case: alleged NLRC committed grave abuse of discretion in affirming

card’s effectivity Order of LA which declared the liability of petitioner to be solidary

 Pacificard filed petition: CA erred in limiting Roberto’s liability

ISSUE: WON INIMACO’s liability pursuant to decision of LA is solidary

ISSUE: WON Roberto is only liable to the extent of the monthly credit limit /

What is Roberto’s liability HELD: No, joint.

HELD: Solidary liability. SOLIDARY OBLIGATION CANNOT BE LIGHTLY INFERRED.

 There is a solidary liability only when the obligation expressly so states,

“GUARANTOR’S UNDERTAKING” WAS IN THE SUBSTANCE OF A SURETY when the law so provides or when the nature of the obligation so
 Guaranty: guarantor binds himself to the creditor to fulfil the obligation requires
of the principal debtor only in case the latter should fail  In the dispositive portion of the Labor Arbiter, the word "solidary" does

 Suretyship: surety binds himself solidarily with principal debtor not appear.

 As surety, he bound himself JOINTLY and SEVERALLY.

 Not only to CREDIT LIMIT: Roberto, as surety, bound himself UP TO THE When it is not provided in a judgment that the defendants are liable to pay

EXTENT OF CELIA’S INDEBTEDNESS jointly and severally a certain sum of money, none of them may be compelled
 Roberto made his commitment as surety a CONTINUING one, binding to satisfy in full said judgment.
himself until all liabilities are paid  LA committed mistake in failing to indicate solidary liability of INIMACO

 He had been made aware by the terms of the undertaking of future and FCMC, the correction can no longer be allowed because judgment
changes in terms and conditions and yet, he still bound himself has become final and executory.

 None of the parties appealed before LA

A GUARANTOR OR SURETY DOES NOT INCURE LIABILITY UNLESS THE  Alias writ of execution is null and void for altering the tenor of judgment

PRINCIPAL DEBTOR IS HELD LIABLE.

 A surety, although solidarily liable with the principal debtor, is DIFFERENT Resolution of NLRC is null and void. Liability of INIMACO and FCMC is joint.
from principal debtor

MARIVELES SHIPYARD CORP VS CA

 CONSTRUCTION DEVT CORP OF PH VS REBECCA ESTRELLA, RACHEL
October 1993: Mariveles Shipyard Corporation engaged the services of Longest FLETCHER, BATANGAS LAGUNA TAYABAS BUS CO.
Force Investigation and Security Agency, Inc to render security services at its

premises December 29, 1978: Rebecca G. Estrella and her granddaughter, Rachel E.

 MSC: religiously complied with the terms of the security contract with Fletcher, boarded in San Pablo City, a BLTB bus to Pasay
Longest Force, promptly paying its bills and the contract rates of the  never reached their destination because bus was rammed from behind by
latter, found the services being rendered by the assigned guards a tractor-truck of CDCP

unsatisfactory and inadequate; terminate its contract with Longest Force  brought to Makati Med
on April 1995  filed complaint for damages against drivers of CDCP, BLTB

 LFISA terminated the employment of the security guards it had deployed

at petitioner’s shipyard RTC: CDCP and BLTB liable for damages, JOINTLY and SEVERALLY
 para. 1: jointly and severally liable to pay actual damages

Private respondents files case for illegal dismissal, underpayment of wages,  para. 2: CDCP and Payunan (driver) pay 50k and 25k
non-payment of overtime pay, etc. against MSC and LFISA CA: affirmed RTC decision, modified amount of damages
 LFISA admitted liability as to non-payment of alleges wage differential but

passed this liability to MSC for paying service fee below the PNPSOSIA CDCP: CA erred in not holding BLTB and driver Wilfredo Datinguinoo solely

and PADPAO rate liable for damages sustained by Fletcher and Estrella
 MSC denied liability: no employer-employee relationship existed between  since it was made solidarily liable with BLTB for actual damages and
it and security guards attorney’s fees in paragraph 1 of the trial court’s decision, then it should

 LA: LFISA and MSC are JOINTLY and SEVERALLY liable to pay money no longer be held liable to pay the amounts stated in paragraph 2
claims of complainants  claims that the liability for actual damages and attorney’s fees is based on

 MSC appealed; NLRC affirmed decision of LA in toto culpa contractual, thus, only BLTB should be held liable

 MSC appealed to CA; dismissed

ISSUE: WON BLTB should be made solely liable for the damages

ISSUE: WON MSC should be held jointly and severally liable with LFISA for
underpayment of wages and overtime pay HELD: No, solidary liability between BLTB and CDCP.

HELD: Yes, pursuant to Arts. 106, 107 and 109 of Labor Code. The case filed is an action for culpa aquiliana or quasi-delict.

 CDCP solidarily liable with BLTB for the actual damages because of the

Art. 107: Indirect employer injuries respondents sustained

 When MSC contracted LFISA as security agency that hired respondents as  Payunan (CDCP driver) was driving recklessly because of the skid marks

guards, MSC became an indirect employer of respondents shown in the sketch of the police investigator

 OWNER OF THE OTHER VEHICLE WHICH COLLIDED WITH A COMMON

Art. 106: Contractor or subcontractor, “In the event that the CARRIER IS SOLIDARILY LIABLE TO THE INJURED PASSENGER OF THE
contractor/subcontractor fails to pay the wages of his employees in accordance SAME

with this Code, the employer shall be jointly and severally liable with his

contractor/subcontractor...” Universal doctrine: each joint tort feasor is not only individually liable for the
 when the agency as contractor failed to pay the guards, the corporation tort in which he participates, but is also jointly liable with his tort feasors
as principal becomes jointly and severally liable for the guards’ wages  Joint tort feasors are jointly and severally liable for the tort which they

 security agency is held liable by virtue of its status as direct employer, commit

while the corporation is deemed the indirect employer of the guards for  Each is liable for the whole damages caused by all, and all together are
the purpose of paying their wages in the event of failure of the agency to jointly liable for the whole damage

pay them  Joint tort feasors are not liable pro rata; damages cannot be apportioned
among them, except among themselves
The solidary liability of MSC with LFISA does not preclude the application of CC

provision on the RIGHT OF REIMBURSEMENT from his co-debtor by the one Petitioner’s claim that paragraph 2 of the dispositive portion of the trial court’s
who paid. decision is ambiguous and arbitrary and also entitles respondents to recover

twice is without basis.

Petitioner and Longest Force are held liable jointly and severally for  there could be no double recovery because the award in paragraph 2 is

underpayment of wages and overtime pay of the security guards, without for moral damages while the award in paragraph 1 is for actual damages
prejudice to petitioner’s right of reimbursement from Longest Force and attorney’s fees
Investigation and Security Agency, Inc.  Moral damages may be recovered in quasi-delicts causing physical

injuries
CDCP jointly and severally liable for actual damages, moral damages, exemplary 1226 – OBLIGATIONS WITH PENAL CLAUSE
damages, attorney’s fees.

TOLOMEO LIGUTAN, LEONIDAS DE LA LLANA VS CA, SECURITY BANK &

PERENA VS ZARATE TRUST CO.

Zarates contracted the Perenas to transport son Aaron to and from Don Bosco. 11 May 1981: Ligutan and dela Llana obtained loan (P120k) from SBTC,

 22 Aug 1996: van picked up Aaron (seated in the rear end) around 6am executed promissory note binding themselves, jointly and severally to pay the
 Students were due by 7:15am and they were running late because of borrowed sum with interest of 15.189%/annum upon maturity and pay penalty

traffic; Alfaro (driver) took an alternate route in a narrow path and the of 5% every month in case of default
railroad crossing had no warning signs or watchmen; the bamboo  8 Sept 81: obligation matured and SBTC granted extension up to 19 Dec
barandilla was up, leaving it open for motorists to cross  Despite several demands, petitioners failed to settle the debt (114,416.10)

 Loud music playing in the van; Alfaro tailed a passenger bus and view of  30 Sept 82: SBTC sent final demand letter – 5 days to make full payment
the oncoming train was blocked because he overtook the bus on its left; – still defaulted
train blew its horn  SBTC filed case against petitioners

 Alano (train driver) applied ordinary brakes and when it saw a collision is

imminent, applied emergency brakes RTC: petitioners are to pay jointly and severally the sum with interest and 5%
 Bus crossed the railroad tracks but van did not per month penalty charge – CA: affirmed
 Train hit the rear end of van and impact threw nine students, including  Motion for reconsideration

Aaron, out of van; Aaron died  Petitioners pray for reduction of 5% penalty charge
 SBTC asked that payment of interest and penalty be commenced from

Zarates filed case against Alfaro, Perenas, PNR, Alano the time petitioners defaulted and not from time of filing of complaint

 Against Perenas upon breach of contract of carriage  CA: payment must commence on date when obligation was due, 5%

 Against PNR based on quasi-delict penalty reduced to 3% pursuant to Art 1229 CC because of their partial

 RTC: in favor of Zarates, Perenas and PNR to pay jointly and severally compliance
 CA: affirmed, modification of damages

ISSUE: WON CA erred in not holding the 15.189% interest and 3% penalty
ISSUE: WON Perenas and PNR are jointly and severally liable charge as iniquitous and unconscionable

HELD: Yes. HELD: No.

Perenas are engaged in transporting passengers generally as a business Petitioners wanted to delete the penalty charge.

(therefore, not private but a common carrier), transporting students for a fee  A penalty clause, expressly recognized by law is an accessory undertaking
 Perenas alleged diligence of a good father: but should be to assume greater liability on the part of an obligor in case of breach of
extraordinary because common carrier an obligation.

 Pereñas were liable for the death of Aaron despite the fact that their  The obligor would then be bound to pay the stipulated indemnity without

driver might have acted beyond the scope of his authority or even the necessity of proof on the existence and on the measure of damages
in violation of the orders of the common carrier: traversed the caused by the breach
railroad tracks when PNR did not permit motorists to cross, driver

was fully aware of the risks, loud music was playing hence did not Court of Appeals, exercising its good judgment in the instant case, has reduced

hear the train’s horn, overtook the bus and lost view of the train, the penalty interest from 5% a month to 3% a month which petitioner still
did not slow down or stop before traversing the railroad tracks disputes

 essence or rationale for the payment of interest, quite often referred

Perenas and PNR are joint tort feasors. to as cost of money, is not exactly the same as that of a surcharge
 Although the basis of the right to relief of the Zarates (breach of contract or a penalty

of carriage) against the Pereñas was distinct from the basis of the Zarates’  penalty stipulation is not necessarily preclusive of interest, if there is
right to relief against the PNR (quasi-delict, Article 2176), they an agreement to that effect, the two being distinct concepts which

nonetheless could be held jointly and severally liable by virtue of their may separately be demanded
respective negligence combining to cause death of Aaron  What may justify a court in not allowing the creditor to impose full

 PNR also guilty of negligence because the PNR did not ensure the safety surcharges and penalties, despite an express stipulation therefor in a
of others through the placing of crossbars, signal lights, warning signs, valid agreement, may not equally justify the non-payment or
and other permanent safety barriers to prevent vehicles or pedestrians reduction of interest

from crossing there

  the interest prescribed in loan financing arrangements is a
fundamental part of the banking business and the core of a bank's Reduction of penalty (from P7M to P687k)
existence  PAGCOR’s breach was occasioned by events that, although not

fortuitous in law, were in fact real and pressing

Attorney’s fees: agreed to by the parties and intended to answer not only for  PAGCOR conducted series of negotiations and consultations before
litigation expenses but also for collection efforts as well entering into Contract; with PPC, local govt officials who assured the
 10% is reasonable problems are surmountable; took pains in contesting the

constitutionality of the Ordinances

PRYCE PROPERTIES CORP VS PAGCOR  PAGCOR had to suspend operations = PAGCOR suffered loss of

expected revenues
1992: representatives from PPC made representations with the PAGCOR to set
up a casino in Pryce Plaza Hotel in CDO ERMINDA FLORENTINO VS SUPERVALUE INC

 11 Nov 92: parties executed a Contract of Lease for 3 years (1 Dec

92 – 30 Nov 95) 8 March 99: Florentino and Supervalue executed three Contracts of Lease with
 But way back 1990: Sangguniang Panglungsod of CDO passed similar terms and conditions over the cart-type stalls for four months and

Resolution No. 2295 to prohibit and/or not to allow the renewable until 31 Mar 2000

establishment of a gambling casino  Before expiration, EF received two letters from Supervalue: charged
 7 Dec: SP enacted Ordinance No 3353 prohibiting the issuance of her for violating Sec 8 (not opening on 16, 26 Dec), of selling a new
business permits and canceling existing business permits to any variety of empanada and increasing its price without prior consent

establishment for using its premises for operation of a casino of Supervalue, frequently closing earlier than usual mall hours: NO
 18 Dec 92: before formal opening of casino, public rally was staged LONGER RENEWING CONTRACT OF LEASE

in front of hotel and PAGCOR suspended casino operations  Supervalue took possession of the store space and confiscated

 4 Jan 93: Ordinance No 3375-93 was passed, prohibiting operation equipment and personal belongings of EF

of casinos and providing for penalty for violation  EF demanded the release of equipment and return of security

 CA declared Ordinance Nos 3353 and 3375-93 as unconstitutional deposit (P192k) but Supervalue did not
 EF filed action for specific performance, sum of money

15 July 93: PAGCOR resumed operations, another rally was held  RTC in favor of EF; CA found Supervalue justified in forfeiting
 Decided to stop its operations security deposit and not liable for reimbursement

 PPC apprised PAGCOR of its outstanding account to collect full

rentals ISSUE: WON Supervalue is liable to return security deposit

 PAGCOR pre-terminated lease agreement due to oppositions and

asked for refund as reimbursement for rental deposits HELD: Yes, 50%.

 PPC terminated contract due to PAGCOR’s breach and exercises its

right under Art 20 of Contract: “LESSEE shall be fully liable to the Contract of Lease is in the nature of an obligation with penal clause
LESSOR for the rentals corresponding to the remaining term of the  Sec 18: Any breach…shall constitute default. In event that lessor

lease as well as for any and all damages, actual or consequential shall demand lessee to vacate, lessor shall forfeit in its favor the

resulting from such default and termination of this contract.” deposit tendered.
 GR: courts are not at liberty liberty to ignore the freedoms of the
ISSUE: WON Pryce was entitled to lease payments for the unexpired period of parties to agree on such terms and conditions as they see fit as

the Contract of Lease long as they are not contrary to law, morals, good customs, public

order or public policy

HELD: Yes.  Exception: courts may equitably reduce stipulated penalty when

obligation is partially or irregularly complied with or when it is

Art 20(c) was intended to be a penalty clause. iniquitous
 GR: penalty serves as a substitute for the indemnity for damages

and the payment of interests in case of noncompliance – Exceptions Forfeiture of entire amount of security deposit was excessive and
(3) unconscionable considering that the gravity of the breaches committed by the

 The contract stipulated that aside from the payment of the rentals petitioner is not of such degree that the respondent was unduly prejudiced
corresponding to the remaining term of the lease, the lessee shall thereby

also be liable “for any and all damages, actual or consequential,  equitable therefore to reduce the penalty of the petitioner to 50%
resulting from such default and termination of this contract” of the total amount of security deposits
 PAGCOR must be held bound to its obligations. It cannot evade

further liability for liquidated damages.