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Southern Motors v. Barbosa

Southern Motors brought an action to foreclose on a real estate mortgage granted by Eliseo Barbosa to secure a debt owed by Alfredo Brillantes to Southern Motors. Barbosa argued he could not be compelled to pay until Southern Motors exhausted all efforts to collect from Brillantes based on Article 2058. The Supreme Court affirmed the lower courts' ruling in favor of Southern Motors, holding that as Barbosa provided a mortgage as security, Article 2058 did not apply and Southern Motors could foreclose on the mortgage even without exhausting efforts against Brillantes first. The rights under Article 2058 only apply when no mortgage or pledge is provided as special security.

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269 views2 pages

Southern Motors v. Barbosa

Southern Motors brought an action to foreclose on a real estate mortgage granted by Eliseo Barbosa to secure a debt owed by Alfredo Brillantes to Southern Motors. Barbosa argued he could not be compelled to pay until Southern Motors exhausted all efforts to collect from Brillantes based on Article 2058. The Supreme Court affirmed the lower courts' ruling in favor of Southern Motors, holding that as Barbosa provided a mortgage as security, Article 2058 did not apply and Southern Motors could foreclose on the mortgage even without exhausting efforts against Brillantes first. The rights under Article 2058 only apply when no mortgage or pledge is provided as special security.

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Jewel
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SOUTHERN MOTORS v.

BARBOSA
G.R. No. L-9306 | May 25, 1956

Petitioners: Southern Motors, Inc.


Respondents: Eliseo Barbosa

Ponente: Concepcion, J.

DOCTRINE: The right to excussion does not apply when a pledge/mortgage has been given as security. The right of
guarantors under Article 2058 to demand exhaustion of the property of the principle debtor exists only when a
pledge/mortgage has not been given as a special security for the payment of the principal obligation.

FACTS:
Southern Motors, Inc. brought this action against Eliseo Barbosa, to foreclose a real estate mortgage constituted by
Barbosa in favor of Southern Motors, as security for the payment of P2,889.53 or the sum due to Southern Motors
from one Alfredo Brillantes who failed to settle his obligations in accordance with the terms & conditions of the
corresponding deed of mortgage.

The deed of mortgage executed by Barbosa in favor of Southern Motors provide that in the event Mr. Brillantes fail to
settle his debt, Southern Motors may foreclose judicially or extrajudicially the chattel mortgage referred to and/or the
mortgage to satisfy the full amount of P2,889.53 together with its 12% interest per annum.

In his “special and affirmative” defense, Barbosa alleges that he only executed the deed of mortgage for the
purpose of guaranteeing, as a surety and/or guarantor, the payment of Brillantes’ debt in favor of Southern Motors.
Barbosa claims that Southern Motors has no cause of action because Southern Motors did not intent or intent to
exhaust all recourses to collect from the true debtor, Mr. Brillantes.

According to Barbosa, this was in contrary to Article 2058 of the Civil Code which states that “[t]he guarantor cannot
be compelled to pay the creditor unless the latter has exhausted all the property of the debtor, and has resorted to all
the legal remedies against the debtor.”

PROCEDURAL HISTORY:
COURT OF FIRST INSTANCE. In favor of Southern Motors. Ordered Barbosa to pay to the Court for the benefit of
Southern Motors the sum of P2,889.53 plus interest.

COURT OF APPEALS. In favor of Southern Motors. Certified the record to the SC in view of the fact that the issues
raised in the appeal involve merely questions of law.

SUPREME COURT. In favor of Southern Motors. Affirmed the decision of the lower courts. Article 2058 not
applicable in the case at bar.

ISSUES:
Whether or not the mortgage in question could be foreclosed although Southern Motors had not exhausted, and did
not intend to exhaust, the properties of his principal debtor, Alfredo Brillantes? (YES)

HELD:
Yes, creditor Southern Motors can foreclose guarantor Barbosa’s mortgage even though the former had not yet
exhausted or even intended to exhaust the properties of his principal debtor, Alfredo Brillantes.

The rights of guarantors under Article 2058 of the Civil Code, which demands exhaustion of the property of the
principal debtor, exists only when a pledge/mortgage has not been given as special security for the payment
of the principal obligation.

Guarantees, without any such pledge or mortgage are governed by Title XV [Guaranty] of the said Code, while
pledges & mortgages fall under Title XVI [Pledge, Mortgage and Antichresis] of the same Code.

Under Articles 2087 & 2126 of Title XVI [Pledge, Mortgage and Antichresis] which governs the case at bar, when
the principal obligation becomes due, the things in which the pledge or mortgage consists may be alienated for the
payment to the creditor; the mortgage directly & immediately subjects the property upon which it is imposed
whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted.
Moreover, it has been held already in Saavedra v. Price that a mortgagor is not entitled to the exhaustion of the
property of the principal debtor. Although an ordinary personal guarantor—not a mortgagor/pledgor—may demand
the exhaustion, the creditor may, prior thereto, secure a judgment against said guarantor who shall be entitled to a
deferment of the execution of said judgment against him until after the properties of the principal debtor shall have
been exhausted to satisfy the obligation involved in the case.

DISPOSITION:
WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against Eliseo Barbosa.

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