CERNA VS. CA, 220 SCRA 517

Delgado borrowed money from Leviste.  As payment, he made a promissory note in favor of Leviste.  To secure the note, Delgado executed a chattel mortgage over a jeep owned by him and a car owned by the Cerna (under a special power of Attorney).

Delgado defaulted. Leviste filed a collection suit against Delgado and Cerna as solidarily debtors.  Cerna filed a motion against him.  The motion was denied and the CA held that Delgado and Leviste are solidarily debtors.

ISSUES:
1. Is Cerna solidarily bound with the principal debtor?
2. What is the extent of the mortgagor's liability?
3. Is Cerna a co-mortgagor?
4. If Cerna as co-mortgagor, would he be liable in an action for recovery of money?

HELD:
1. NO.  There is no legal provision nor jurisprudence in our jurisdiction which makes a third person who secures the fulfillment of another's obligation by mortgaging his own property to be solidarily bound with the principal obligor.  A chattel mortgagor may be an "accessory contract" to a contract of loan, but that fact alone does not make a third party mortgagor solidarily bound with the principal debtor in fulfilling the principal obligation of paying the loan.  Moreover, it is a basic precept that there is solidarily liability only when the obligation expressly so states or when the law or nature of the obligation requires solidarity.

2. A third party mortgagor becomes liable only to the extent of the property mortgaged. It is only upon default of the principal debtor that the creditor may have recourse on the mortgagor by foreclosing the mortgage properties in lieu of an action for the recovery of the amount of the loan.  And the liability of the third party mortgagor extends only to the property mortgaged.  Should there be any deficiency, the creditor has recourse on the principal debtor.

3.  NO. The special power of attorney authorizing Delgagdo to mortgage Cerna's property as security for Delgado's obligation does not itself make Cerna a co-mortgagor, especially so since only Delgagdo signed the chattel mortgage as mortgagor.  The special power of attorney did not make Cerna as mortgagor, all it did was to authorize Delgado to mortgage certain properties belonging to Cerna.  And this is in compliance with the requirement in Article 2085 of the New Civil Code, It is essential in mortgage xxx (3) That the person constituting the pledge or mortgage have the free disposal of their property, and IN ABSENCE THEREOF, THAT THEY BE LEGALLY AUTHORIZED FOR THE PURPOSE.  Thus, it is clear that only Delgado was the sole mortgagor regardless of the fact that he used properties belonging to a third person to secure the debt.

4.  And even if Cerna was a co-mortgagor, Cerna could not be held liable because the complaint was for recovery of a sum of money and not for the foreclosure, thereby abandoning the chattel mortgage as basis for relief, he clearly manifests his lack of desire and interest to go after the mortgaged property as security for the promissory note.