Case Digest (G.R. No. 7721) Core Legal Reasoning Model
Facts:
In Inchausti & Co. v. Gregorio Yulo, G.R. No. 7721, decided on March 25, 1914 by Chief Justice Arellano, the creditor firm Inchausti & Co. sought to recover P253,445.42, the balance of a current account originally opened with Teodoro Yulo—who borrowed to cultivate his haciendas in Occidental Negros—and continued after his death on April 9, 1903, and that of his widow Gregoria Regalado on October 22, 1904. Teodoro’s nine children, administered by his widow and five sons including Gregorio, held the conjugal property in common. On June 26, 1908, six of these heirs (excluding minors and an incompetent sibling) executed Exhibit S, admitting indebtedness of P203,221.27 and mortgaging six-ninths of their properties to secure it. Account closures on January 11 and July 17, 1909 confirmed a balance of P253,445.42, and on August 12, 1909 (Exhibit X) six heirs jointly ratified that debt at 10% interest, payable in five annual installments from June 30, 1910 to June 30, 1914, with
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Case Digest (G.R. No. 7721) Expanded Legal Reasoning Model
Facts:
- Establishment and continuation of indebtedness
- Teodoro Yulo borrowed from Inchausti & Company to cultivate his haciendas; upon his death on April 9, 1903, his widow and nine children (Hijos de T. Yulo) continued the current account, which grew to roughly ₱200,000.
- After the widow’s death on October 22, 1904, the nine heirs (including minors and one mentally incompetent) held property in common and maintained the account.
- Initial security agreements
- June 26, 1908: Gregorio Yulo, for himself and five adult siblings, admitted a debt of ₱203,221.27 and mortgaged an undivided 6/9 interest in rural estates, all urban assets, lorchas, and family credits; they agreed to inventory properties, cure title defects, and extend the mortgage to cover the shares of minors and the incompetent sibling.
- January 11 & July 17, 1909: Hijos de T. Yulo confirmed account abstracts—initially ₱271,863.12, later reconciled to ₱253,445.42—and formalized a confirming mortgage.
- Notarial instrument of August 12, 1909
- Gregorio Yulo and five siblings ratified the June 1908 instrument, admitted the ₱253,445.42 debt at 10% per annum, and agreed to pay in five annual installments of ₱50,000 (last ₱53,445.42) from June 30, 1910 to June 30, 1914; default would accelerate the entire debt, and they bound themselves in solidum, subject to ratification by Mariano Yulo within one week.
- Mariano Yulo did not ratify; the first installment was not paid.
- Suit and subsequent compromise
- March 27, 1911: Inchausti & Company sued Gregorio Yulo alone for ₱253,445.42 plus interest (aggregating ₱42,944.76).
- May 12, 1911: Francisco, Manuel, and Carmen Yulo executed a compromise reducing the capital to ₱225,000 and interest to 6% per annum from March 15, 1911; they agreed to eight installments (₱20,000 on June 30, 1911; seven of ₱30,000 to June 30, 1919), 15% penalty on default, withdrawal of probate claims, and cooperation in the suit against Gregorio and Pedro.
Issues:
- May a creditor sue one solidary debtor alone when multiple debtors exist?
- Does the May 12, 1911 compromise with three co‐debtors novate the August 12, 1909 obligation as to Gregorio Yulo?
- If not a novation, what effect does the compromise have on enforcement of the original obligation?
- Can Gregorio Yulo invoke defenses relating to unmatured installments contracted by his co‐debtors?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)