Title
Cacho vs. Valles
Case
G.R. No. 19493
Decision Date
Aug 27, 1923
A guarantor contested liability for a debt, arguing for proportional responsibility among cosureties; the Supreme Court ruled sureties are liable only for their share unless solidary liability is explicitly stated.
cosureties
liability
debt
A

Case Summary (A.C. No. 7961)

Key Dates and Procedural Posture

  • Promissory note: October 29, 1920.
  • Trial court initial judgment holding each guarantor liable for his pro rata share if the Club did not satisfy the debt: May 9, 1922.
  • Trial court modified order making solvent sureties liable for insolvent cosurety’s share: June 20, 1922.
  • Appeal by Baldomero Roxas to the Supreme Court followed the June 20 order.

Central Legal Issue Presented

Whether, where several persons have signed a guaranty without words of solidarity, the insolvency (as distinct from judicial declaration of bankruptcy) of one or more of those cosureties renders the remaining solvent cosureties liable for the insolvent cosurety’s proportionate share of the debt.

Facts Relevant to Liability and Defense

Only Baldomero Roxas interposed a defense; he denied the complaint generally and asserted (1) the right to division among cosureties so that each would be responsible only for his aliquot share, and (2) that the property of the principal debtor (the National Sporting Club) should first be exhausted before any guarantor be required to pay his proportionate share. No cosurety had been judicially declared bankrupt according to the record.

Applicable Statutory Provisions and Doctrines Cited

  • Civil Code general rule on multiple debtors: arts. 1137 and 1138 — where two or more simple debtors concur, each is liable only for his aliquot part.
  • Article 1837 (quoted in the decision): where there are several sureties for the same debt, liability is divided among them; the creditor may claim from each only his proportional part unless liability in solido is expressly stipulated; the right to division ceases in the same cases and for the same reasons as the right to require exhaustion of the principal debtor’s property.
  • Article 1831 (referred to): sets conditions under which exhaustion of the principal’s property is required as a condition precedent to surety liability; the paragraph of interest refers to the principal’s bankruptcy (quiebra o concurso del deudor).
  • Articles 1843 and 1844 (discussed): deal with a surety’s right of recourse against cosureties after paying the creditor and conditions under which a paying surety may claim contribution; the quoted provisions require payment by the surety (often by virtue of judicial proceedings) and refer to situations like bankruptcy or insolvency in those limited contexts.
  • Article 1827: the obligation of the surety cannot be extended beyond its specified terms.
  • Authoritative commentary (Manresa) and secondary commentary were invoked to clarify the intended scope and timing of invoking the benefit of division.

Court’s Legal Analysis — Benefit of Division and Distinction Between Bankruptcy and Insolvency

The Court began from the Civil Code principle that, absent an express stipulation for solidarity, cosureties are simple and thus each liable only for his aliquot share. Article 1837 embodies this rule and expressly ties the forfeiture of the benefit of division to the same cases in which the creditor could require exhaustion of the principal debtor’s property, as specified in article 1831. Article 1831’s relevant condition is bankruptcy (quiebra), not mere insolvency. The Court emphasized the legal distinction between declared bankruptcy and the factual condition of insolvency (exhaustion of assets or practical inability to satisfy execution). Because none of the cosureties had been judicially declared bankrupt, the statutory prerequisite for loss of the benefit of division under article 1837 was not satisfied.

Rejection of the Trial Court’s Reliance on Contribution Provisions (Articles 1843, 1844)

The Court found the trial judge’s amendment — making solvent sureties bear the share of insolvent cosureties — to be unsupported by the contribution articles relied upon. Article 1844, on which the trial judge likely relied, contemplates the situation in which a cosurety has paid the debt and seeks contribution; it presupposes payment by at least one guarantor. In the case at bar, no guarantor had paid the creditor. Further, the third paragraph of article 1844 requires that payment by the surety be made by virtue of judicial proceedings or in circumstances such as the principal’s insolvency or bankruptcy; that procedural and substantive context was absent here. Thus those provisions were inapplicable.

Constraints on Extending Surety Liability and Timeliness of Claiming Benefit of Division

Citing article 1827 and authoritative commentary, the Court reiterated that a surety’s obligation cannot be expanded by implication beyond what was contracted. Doubtful intendments cannot be made against a surety. The Court noted commentary suggesting that the benefit of division may be asserted when the surety is first sued; Roxas raised the benefit of division in his answer, which the Court found timely and sufficient.

Consideration of Commentaries and Comparative Law Remarks

The Court observed that certain commentators and foreign-law echoes (notably some French commentary) might suggest that solvent cosureties may be required to absorb the shares of insolvent cosureties; however, the Court determined those references stem from a different statutory framework (e.g., French Code provisions) and thus are not controlling under the Spanish-derived Civil Code provisions applicable here. Manresa’s exposition, when read in full, was consistent with the Court’s interpretation that ban

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