Case Summary (G.R. No. 62415)

Loan Agreement and Foreclosure

• On June 19, 1980, Victorio Depositario and Jaime Guinhawa entered into a loan agreement with Bicol Savings and Loan Association (BISLA) for P10,622.00.
• The loan was to be repaid in monthly installments of P535.45, starting July 1980 and maturing on June 19, 1982.
• To secure the loan, Depositario provided a Yamaha Motorcycle as collateral through a chattel mortgage.
• Due to non-payment, the motorcycle was foreclosed, resulting in a deficiency of P5,158.06 as of July 31, 1981.

Legal Proceedings Initiated by BISLA

• On August 6, 1981, BISLA filed a complaint in the City Court of Naga against Depositario and Guinhawa for the recovery of the deficiency.
• A stipulation of facts was agreed upon, wherein Guinhawa admitted the deficiency and acknowledged his solidary liability under the promissory note.
• The stipulation clarified that Guinhawa was not a party to the chattel mortgage and that the only issue was his liability for the deficiency.

City Court Decision

• On December 4, 1981, the City Court ruled in favor of BISLA, affirming that both defendants were solidarily liable for the loan.
• The court cited Article 1216 of the Civil Code, which allows a creditor to pursue any solidary debtor for the full amount owed, regardless of prior actions taken against other debtors.
• The court emphasized that the foreclosure of the chattel mortgage did not preclude BISLA from seeking the deficiency from either solidary debtor.

Appeal and Reversal by the Court of First Instance

• Guinhawa appealed the City Court's decision, arguing that since he was not a party to the chattel mortgage, he should not be liable for the deficiency.
• The Court of First Instance reversed the City Court's ruling, stating that the foreclosure indicated BISLA's choice to collect from Depositario alone, thus releasing Guinhawa from liability for the deficiency.

Supreme Court's Ruling

• The Supreme Court found merit in BISLA's petition, stating that a deficiency after foreclosure allows for an independent civil action to recover the amount owed.
• The Court clarified that the chattel mortgage serves as security, not as the sole means of payment, and that the creditor retains the right to pursue solidary debtors for any remaining balance.
• The Court distinguished the case from Pascual v. Universal Motors, asserting tha...continue reading

Case Syllabus (G.R. No. 62415)

Case Background

• On June 19, 1980, Victorio Depositario and Jaime Guinhawa, as solidary co-makers, secured a loan of P10,622.00 from Bicol Savings and Loan Association (BISLA).
• The loan was to be repaid in monthly installments of P535.45, starting July 1980, and maturing on June 19, 1982.
• A Yamaha Motorcycle was offered as security through a chattel mortgage for the loan.

Foreclosure and Deficiency

• Due to non-payment of the loan, the motorcycle was foreclosed, resulting in a deficiency of P5,158.06 as of July 31, 1981.
• On August 6, 1981, BISLA filed a complaint in the City Court of Naga against both Depositario and Guinhawa for the recovery of this deficiency.

Stipulation of Facts

• A stipulation of facts was entered, where the parties agreed:
  • Acknowledgment of the deficiency amount post-foreclosure.
  • Guinhawa's capacity as a co-maker but not as a party to the chattel mortgage.
  • The sole issue was Guinhawa's liability for the deficiency.
  • Agreement on attorney's fees and costs contingent on the court's decisio...continue reading