G.R. No. L-48359 - Cerna vs. Court of Appeals

On or about October 16, 1972, Celerino Delgado (Delgado) and Conrad C. Leviste (Leviste) entered into a loan agreement evidenced by a promissory note where Delgado promised to pay Leviste P17,500.00 plus 12% interest per annum, payable in 90 days without necessity of demand.
On the same date, Delgado executed a chattel mortgage over a Willy's jeep owned by him. Acting as attorney-in-fact of Manolo P. Cerna (petitioner), Delgado also mortgaged a 'Taunus' car owned by Cerna by virtue of a Special Power of Attorney.

Delgado failed to pay the loan after 90 days, leading Leviste to file a collection suit (Civil Case No. 17507) against Delgado and petitioner as solidary debtors before the Court of First Instance of Rizal, Branch XXII.
On April 4, 1973, petitioner filed a first Motion to Dismiss citing lack of cause of action, the death of Delgado, and that Leviste’s election to collect on the note barred foreclosure of the mortgage. This was denied on August 15, 1973 by Judge Nicanor S. Sison.
Petitioner filed a special civil action for certiorari, mandamus, and prohibition with preliminary injunction before the Court of Appeals (CA-G.R. No. 03088) for grave abuse of discretion by the trial court. The Court of Appeals denied the petition on June 28, 1976 due to petitioner’s failure to prove Delgado's death and the validity of the Special Power of Attorney.

Petitioner filed a second Motion to Dismiss on February 18, 1977, alleging the trial court had no jurisdiction over Delgado (deceased) and continued to deny cause of action against him. This motion was denied on May 13, 1977 by Judge Nelly L. Romero Valdellon, reiterating the earlier denial.
Petitioner’s motion for reconsideration was denied. On October 17, 1977, he filed another petition for certiorari and prohibition (CA-G.R. No. SP-07237) which was dismissed by the Court of Appeals on March 31, 1978. The Court dismissed the petition insofar as allegations against petitioner were concerned but granted dismissal of the complaint against Delgado due to death.
Petitioner then filed the instant Petition for Review on Certiorari before the Supreme Court.

The complaint filed by Leviste is exclusively for collection based on a promissory note signed only by Delgado, and not against petitioner.
Petitioner is not a debtor under the promissory note and the filing of the collection suit constituted an abandonment of security of the chattel mortgage, thus barring foreclosure and further suit against petitioner.

The Court of Appeals found petitioner and Delgado were solidary debtors on the basis that the chattel mortgage contract showed joint and solidary obligation.
The court disregarded that only Delgado signed the promissory note and mortgage, holding the petitioner solidarily liable by virtue of being a co-mortgagor.

Whether Manolo P. Cerna can be held solidarily liable with Delgado although he did not sign the promissory note and was not a debtor in the loan contract.

Whether the filing of a collection suit bars foreclosure of the chattel mortgage as security and limits the creditor only to recovery on the note.

Whether the complaint against petitioner should be dismissed for lack of cause of action.

Whether the procedural doctrine of res judicata bars petitioner’s repeated motions and petitions related to the dismissal of the complaint against him.