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Southern Motors vs.

Barbosa

Facts: Plaintiff southern motors brought an action against defendant Barbosa to foreclose
a real estate mortgage constituted by the latter in favor pf the former, as security for the
payment of a sum extended by plaintiff to one Alfredo Brillantes, because the latter failed to
settle his obligation in accordance with the terms and conditions corresponding with the
deed of mortgage.

Defendant filed an answer admitting the allegations of the complaint and alleging
by way of special and affirmative defense that he executed the deed of mortgage for the
sole purpose of guaranteeing the above mentioned debt of Brillantes and that therefore
palintiff cannot foreclose the mortgage property without a prior exhaustion pf the
principal’s properties.

After the case transferred from one judge to another, the trial court rendered
judgement on the pleadings in favor of plaintiff that prompted respondent to appeal before
the CA who certified the case to the SC in view of the fact that the appeal raises purely
question of law.

Issue: WON plaintiff is required to exhaust debtor-principal before he can proceed to


foreclose the mortgage.

Held: No, 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 givenas special security
for the payment of the principal obligation.

Under the given facts of the case, a mortgage was executed as security for Brillante’s
debt,hence ,defendant’s reliance upon aforementioned provision cannot be sustained, for
what governs in this case are the provisions under title XVI of the Civil Code concerning
pledge and mortgages.
Wise & Co. Tanglao

Facts: Atty. Dionisio Tanglao ( Cornelio David’s atty.) by power of attorney mortgaged two
real properties belonging to him to secure the payment of judgment credit of P640 obtained
by Wise & co. against Cornelio David ( agent of W&C). As Cornelio David paid only a part of
the indebtedness , Wise & Co. filed an action against Atty. Tanglao to recover the unpaid
balance.

Issue: WON Atty. Tanglao is liable for the balance.

Held: No, nothing is stated in the compromise agreement to the effect that Atty. Tanglao
becaome David’s surety for the payment of the judgment debt.

Tanglao did not contract any personal responsibility for the payment of the sum of
P640. The only obligation which he contracted as that resulting from the mortgage.
However, a foreclosure suit was not instituted against Atty. Tanglao but a purely personal
action for the recovery of the amount still owned by Atty. Tanglao.

Even granting that Atty. Tanglao may be considered a surety/guatprantor, the action
does not lie against hin on the ground that all the legal remedies against him have
preciously been asked for and David has property sufficient to pay the balance of the debt
the payment of which is sought of Tanglao in his alleged capacity as surety.

A guaranty or surety must be expressed and cannot be resumed. Art. 2058, the
guarantor cannot be compelled to pay the creditor unless the legal has exhausted all the
property of the debtor, and has resorted to all legal remedies against the debtor.
COMPROMISE

Come now the parties, plaintiff by the undersigned attorneys and defendants
in his own behalf and respectfully state:

I. That the defendant confesses judgment for the sum of six hundred
forty pesos (P640), payable at the rate of eighty pesos (P80) per
month, the first payment to be made on February 15, 1932 and
successively thereafter until the full amount is paid; the plaintiff accepts
this stipulation.

II. That as security for the payment of said sum of P640, defendant
binds in favor of, and pledges to the plaintiff, the following real
properties:

1. House of light materials described under tax declaration No.


9650 of the municipality of Angeles, Province of Pampanga,
assessed at P320.

2. Accesoria apartments with a ground floor of 180 sq. m. with


the first story of cement and galvanized of iron roofing located
on the lot belonging to Mariano Tablante Geronimo, said
accesoria is described under tax declaration No. 11164 of the
municipality of Angeles, Province of Pampanga, assessed at
P800.

3. Parcel of land described under Transfer Certificate of Title No.


2307 of the Province of Pampanga recorded in the name of
Dionisio Tanglao of which defendant herein holds a special
power of attorney to pledge the same in favor of Wise & Co.,
Inc., as a guarantee for the payment of the claim against him in
the above entitled cause. The said parcel of land is bounded as
follows: NE. lot No. 517 "Part" de Narciso Garcia; SE. Calle
Rizal; SW. lot No. 517 "Part" de Bernardino Tiongco; NW. lot
No. 508 de Clemente Dayrit; containing 431 sq. m. and
described in tax declaration No. 11977 of the municipality of
Angeles, Pampanga, assessed at P423.

That this guaranty is attached to the properties above mentioned as first lien
and for this reason the parties agree to register this compromise with the
Register of Deeds of Pampanga, said lien to be cancelled only on the
payment of the full amount of the judgment in this case.

Wherefore, the parties pray that the above compromise be admitted and that
an order issue requiring the register of Deeds of Pampanga to register this
compromise previous to the filing of the legal fees.