G.R. No. L-11755; April 23, 1958
FLORENCIO SENO, plaintiff-appellant, vs. FAUSTO PESTOLANTE and TELESFORO BARIMBAO, defendants-appellees.

FACTS

Plaintiff Florencio Seno filed an action in the Court of First Instance of Cebu to recover from defendant Fausto Pestolante the sum of P600 (the unpaid balance of an original P1,900 debt), plus interest and attorney’s fees. The complaint also sought the foreclosure of a chattel mortgage executed by Pestolante to secure the obligation, covering personal properties valued at P2,500. Defendant Telesforo Barimbao was included as a party because he was in possession of the mortgaged property and refused to surrender it, claiming to have purchased it from Pestolante via a notarial deed of sale. Pestolante filed a motion to dismiss, contending the court lacked jurisdiction since the action was essentially for collecting P600, an amount within the original jurisdiction of the Justice of the Peace Court of Oroquieta, Misamis Occidental. The trial court sustained the motion and dismissed the complaint, reasoning that the case was merely for collection of a P600 balance and that the chattel mortgage was executed in Oroquieta, making its justice of the peace court the proper forum. The court also held that the rule on foreclosure of real property mortgages was inapplicable.

ISSUE

Whether the Court of First Instance has jurisdiction over the action, which seeks both the collection of a monetary sum (P600) and the judicial foreclosure of a chattel mortgage over properties valued at more than P2,000, particularly where a third party (Barimbao) refuses to surrender the mortgaged chattel.

RULING

Yes. The Supreme Court set aside the order of dismissal and remanded the case to the trial court. While the collection of P600 fell within the jurisdiction of the justice of the peace court, the action also involved the judicial foreclosure of a chattel mortgage. Citing Moran, the Court explained that a chattel mortgage may be foreclosed judicially, especially when the mortgagor (or a third person in possession) refuses to surrender the mortgaged chattel, necessitating an action for judicial foreclosure or replevin. Here, the plaintiff had to institute the action in the Court of First Instance because defendant Barimbao refused to surrender the chattel, claiming ownership, and the value of the mortgaged property (P2,500) exceeded P2,000, placing it within the court’s jurisdiction. The action was therefore not merely for collection but for foreclosure, which the Court of First Instance properly could take cognizance of.