TOPIC Guarantee and Surety; Art 2058

CASE NO. G.R. No. L-9306. May 25, 1956

CASE NAME Southern Motors v. Barbosa
MEMBER Jop

DOCTRINE

1.) The right of guarantors, under article 2058 of the Civil Code of the Philippines, to demand exhaustion of the
property of the principal debtor, exists only when a pledge or a 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 of said Code, whereas pledges and mortgages fall under title XVI thereof, in which articles 2087
and 2126 of same code among others are found.

2.) Although an ordinary personal guarantor, NOT a mortgagor or pledgor, may demand exhaustion, the creditor may,
prior thereto, secure a judgement against said Guarantor, who shall be entitled, however, to a deferment of the
execution of said judgement against him, until after the properties of the principal debtor shall have been exhausted,
to satisfy the obligation in the case.

RECIT-READY DIGEST

Facts: Southern Motors (SM) wanted to immediately foreclose a real estate mortgage made by Barbosa as a
security/Guarantee for Brillantes’ debt of 2,889.53 PHP to SM. Barbosa argued that SM can’t foreclose the real estate
mortgage as the they have yet to exhaust all properties and legal remedies against Brillantes. RTC said that SM can
foreclose, and CA elevated the case to the SC as the case raises a pure question of law.

Issue: W/N the mortgage in question could be foreclosed although the plaintiff has not exhausted, and did not intend to
exhaust, the properties of his Brillantes. YES

Held: 2058 does not apply as what governs in this case are the provisions under title XVI of the Civil Code concerning
pledge and mortgages, Art. 2087 and 2126 of same code among others are found (see notes for the arts) and the case
concluded with Doctrines 1 and 2

FACTS
• Cast of Characters:
o Southern Motors (SM): Plaintiff, Creditor
o Alfredo Brillantes (Brillantes): Principal debtor
o Eliseo Barbosa (Barbosa): Defendant, Guarantor of ^
• SM brought this action against Barbosa to foreclose a real estate mortgage constituted as a security for the
payment of 2,889.53 PHP due to SM from the debt of Brillantes who had failed to settle his obligation in
accordance with the terms and conditions of the corresponding deed of mortgage.
• Main contention of Barbosa that under art. 2058 SM has no cause of action as it has not yet
o Exhausted all legal remedies against Brillantes
o Did not exhaust all recourses to collect from Brillantes
▪ As Brillantes is still solvent and has “many properties within the province of Ilo2
• Judge Ibanez ruled that the case was premature and then SM filed for an a motion to Reconsideration
• The case transferred to another judge
o Because Judge Ibanez was so busy with cadastral cases that he stopped entertaining all other civil cases
in order to:
o CADASTRALTHELANDS

1
 • The Trial Court: rendered judgment on the pleadings in favor of plaintiff that prompted respondent to appeal
before the CA
• CA: certified the case to the SC to review it as the appeal raises purely questions of law.

ISSUE/S and HELD

1.) W/N the mortgage in question could be foreclosed although the plaintiff has not exhausted, and did not intend to
exhaust, the properties of his Brillantes. YES

RATIO

1.) YES. Defendant’s invocation of article 2058 of the Civil Code is misplaced because the right of the guarantors to
demand exhaustion of the property of the principal debtor under said provision exists only when a pledge or mortgage
has not been given as special security for the payment of the principal obligation.
a. The case involved a mortgage that was executed as security for Brillantes’ debt,
b. hence, defendant’s reliance upon the provision cannot be sustained, for what governs in this case are the
provisions under title XVI of the Civil Code concerning pledge and mortgages. (see case end notes)
c. “It has been held already (Saavedra vs. Price, 68 Phil., 688), that a mortgagor is not entitled to the exhaustion
of the property of the principal debtor”

DISPOSTIVE PORTION

Wherefore, the decision appealed from is hereby affirmed, with costs against the defendant-appellant. It is so ordered

NOOTS

ART. 2087. "It is also of the essence of these contracts that when the principal obligation becomes due, the things in
which the pledge or mortgage consists may be alienated for the payment to the creditor."

ART. 2126. "The mortgage directly and 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.

The deed of mortgage executed by him specifically provides:

"That if said Mr. Alfredo Brillantes or herein mortgagor, his heirs, executors, administrators and assigns shall well and
truly perform the full obligations above stated according to the terms thereof, then this mortgage shall be null and void,
otherwise it shall remain in full force and effect, in which event herein mortgagor authorizes and empowers herein
mortgagee-company to take any of the following actions to enforce said payment;.

"(a) Foreclose, judicially or extrajudicially, the chattel mortgage above referred to and/or also this mortgage, applying the
proceeds of the purchase price at public sale of the real property herein mortgaged to any deficiency or difference between
the purchase price of said chattel at public auction and the amount of P2,889.53, together with its interest hereby secured;

or

"(b) Simply foreclose this mortgage judicially in accordance with the provisions of section 2, Rule 70, Rules of Court, or
extra- judicially under the provisions of Act No. 3135 and Act No. 4118, to satisfy the full amount of P2,889.53, together
with its interest of 12 per cent per annum."