#9 Southern Motors vs Eliseo Barbosa

SOUTHERN MOTORS VS ELISEO BARBOSA, GR # L-9306 FACTS: Plaintiff Southern Motors brought an action against defendant Barbosa to foreclose a real estate mortgage constituted by the latter in favor of 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 plaintiff cannot foreclose the mortgage property without a prior exhaustion of the principal’s properties. After the case transferred from one judge to another, the trial court rendered judgment 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 questions of law. ISSUE: WON plaintiff is required to exhaust debtor-principal’s property 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 given as special security for the payment of the principal obligation. Under the given facts of the case, a mortgage was executed as security for brillantes’ debt, hence, defendant’s reliance upon the 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.