Case Summary (G.R. No. 62415)

Case Background

This case involves a loan agreement between Bicol Savings and Loan Association (BISLA) and Victorio Depositario, with Jaime Guinhawa acting as a solidary co-maker. The loan of P10,622.00 was secured by a chattel mortgage on a Yamaha Motorcycle. Due to non-payment, the motorcycle was foreclosed, leaving a deficiency of P5,158.06. BISLA subsequently sued both Depositario and Guinhawa for the deficiency.

• Loan Amount: P10,622.00
• Monthly Payment: P535.45
• Maturity Date: June 19, 1982
• Deficiency Amount: P5,158.06 after foreclosure

Legal Issues

The core legal issue revolves around whether Guinhawa, as a solidary co-maker, is liable for the deficiency after the foreclosure of the chattel mortgage executed by Depositario.

• Solidary Obligation: Guinhawa is solidarily liable for the debt alongside Depositario.
• Foreclosure of Mortgage: The mortgage was foreclosed without notice to Guinhawa, raising questions about his liability for the deficiency.

Court Decisions

1. City Court Ruling: The City Court ruled in favor of BISLA, holding that:

   • The obligation under the promissory note is joint and several.
   • The right to claim for the deficiency post-foreclosure is valid.

2. Court of First Instance Ruling: The appellate court reversed the City Court's decision, stating:

   • By choosing to foreclose on the mortgage, BISLA could only collect from Depositario, not Guinhawa.
   • The deficiency cannot revert to Guinhawa since he was not a party to the mortgage.

Legal Principles

Solidary Liability

• Definition: Solidary liability means that each co-debtor is liable for the entire obligation and the creditor may pursue any one or more of the co-debtors.
• Civil Code Reference: Article 1216 allows the creditor to pursue any solidary debtor for the full amount.

Chattel Mortgage Foreclosure

• Legal Principle: A chattel mortgage serves as security for a loan, and foreclosure allows the creditor to recover the owed amount through the property sold.
• Rights of the Creditor: If a deficiency exists post-foreclosure, the creditor retains the right to pursue the remaining balance from any solidary debtor.

Cross-References to Other Laws

• Civil Code of the Philippines: Articles 1216 (on solidary obligations) and 2047 (on suretyship) are crucial in determining the rights and obligations of the parties involved.

Key Takeaways

• Guinhawa, as a solidary co-maker, is liable for the loan despite not being part of the mortgage agreement.
• The foreclosure of the chattel mortgage does not absolve Guinhawa of liability for the deficiency; he can still be pursued for the unpaid balance.
• The court confirmed that the creditor can choose which s

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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 decision.

City Court Decision

• On
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