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Case Digest: Ouano Arrastre Service, Inc. vs Aleanor, et. al. G.R. No 97664

Ouano Arrastre Service, Inc. vs Aleanor, et. al. GR No 97664, October 10, 1991

Subject: Obligations and Contracts

FACTS

Private respondent International Pharmaceuticals, Inc. ("IPI") filed a complaint before the Regional Trial Court of Cebu City against Mercantile Insurance Company, Inc. ("Mercantile") and petitioner Ouano Arrastre Service, Inc. ("OASI") for replacement of certain equipment imported by IPI which were insured by Mercantile but were lost on arrival in Cebu City, allegedly because of mishandling by petitioner OASI.

On 12 January 1990, after trial which Atty. Manalo handled for OASI, the trial court rendered a decision holding Mercantile and petitioner OASI jointly and severally liable for the cost of replacement of the damaged equipment plus damages, totaling P 435,000.00.

Only Mercantile appealed from the decision.

On 19 June 1990, IPI filed a motion for execution of the decision against petitioner OASI which public respondent judge granted on 25 June 1990.

On 26 June 1990 petitioner's counsel, through Atty. Catipay of the Cebu Branch of the LSA, filed a notice of appeal veclaiming that the decision was "mistakenly sent" by the trial court to the law firm's Head Office in Makati.

On 27 June 1990, petitioner, through the same counsel, filed a motion for reconsideration of the order granting the writ of execution alleging that: (1) the failure seasonably to file an appeal was due to excusable neglect and slight "oversight" claiming that there was miscommunication between LSA-Cebu and LSA main office as to who would file the notice of appeal; and (2) Mercantile's timely notice of appeal should benefit petitioner OASI, a solidary co-debtor.

On 2 July 1990, public respondent judge denied OASI's motion for reconsideration declaring that the appeal cannot be given due course for lack of merit and ordered that the writ of execution be enforced.

On appeal, the Court of Appeals dismissed petitioner's appeal upon the grounds that: (1) there had been a valid service of the decision; (2) the decision had become final and executory as to petitioner OASI; and (3) Mercantile's appeal does not inure to the benefit of petitioner as they do not share common defenses.

ISSUE

Whether or not CA erred in ruling that the undisputed timely appeal taken by Mercantile Insurance does not inure the benefit of petitioner, on the ground that they do not share common defense and is contrary to the provision of Article 1222 of the Civil Code of the Philippines.

RULING

No, CA did not err in ruling that the undisputed timely appeal taken by Mercantile Insurance does not inure the benefit of petitioner, on the ground that they do not share common defense.

Under the law (Art 1222), a solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertain to his own share. With respect to thise which personally belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible.

In this case, the petition lacks merit. Ouano has only itself to blame. It allowed the period for appeal to lapse without appealing. Petitioner also argues that under the Civil Code, a solidary co-debtor can raise the defenses personal to his co-debtor and that, therefore, Ouano should be exempt from paying the portion of the judgment corresponding to Mercantile. SC has rejected a similar claim made to delay execution of trial court’s decision. Moreover, Ouano argues that defenses personal to co-debtors are available to the other co-debtors because “the rights and liabilities of the parties are so interwoven and dependent on each other, as to be inseparable”, i.e., the rights and liabilities to be “interwoven” in their defenses must be “similar”. Ouano’s and Mercantile’s defenses actually conflict with each other. Ouano claims that the goods were received by it from the carrier vessel in bad conditions. Mercantile, upon the other hand, maintains that the goods did not sustain any damage or loss during the voyage. Furthermore, Mercantile claims that, in any case, the insurance contract with IPI has already lapsed, a defense with Ouano, as the arrastre company responsible for the damage, cannot invoke tp avoid liability. Finally, failing to appeal, Ouano effectively waived any right if might have had to assert, as against the judgment creditor, any defense pertaining to Mercantile. In other wirds, Ouano by its own act or inaction, is no longer in a position to benefit from the provision of Article 1222.

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