G.R. No. L-23768 August 23, 1968
JOSE GARRIDO, plaintiff-appellant, vs. PILAR G. TUASON, defendant-appellee.

FACTS

On October 17, 1959, Jose Garrido filed a case (Civil Case No. 71763) in the Municipal Court of Manila for the foreclosure of a chattel mortgage executed by Pilar G. Tuason to secure a P1,000 debt. On November 14, 1959, the court rendered a decision ordering Tuason to pay Garrido P1,000 with 1% monthly interest from June 30, 1959, plus P100 attorney’s fees and costs. After the decision became final, a writ of execution was issued. On January 2, 1960, Tuason’s car was sold at public auction to Garrido as the highest bidder for P550. On January 28, 1960, Garrido filed motions to add P165 in execution expenses to the judgment and for an alias writ of execution for an alleged outstanding balance of P1,290.58. These motions were denied on February 27, 1960, and a motion for reconsideration was denied on March 19, 1960. Garrido did not appeal these orders. Instead, on April 1, 1960, he filed a new case (Civil Case No. 76462) against Tuason (and later her husband) to recover the alleged P1,290.58 deficiency. The Municipal Court dismissed the complaint. On appeal, the Court of First Instance of Manila dismissed the case, ruling that under Article 2115 of the Civil Code, the plaintiff had no cause of action. Garrido appealed.

ISSUE

Whether the Court of First Instance correctly dismissed Garrido’s action to recover a deficiency judgment after the foreclosure sale of the mortgaged chattel.

RULING

The Supreme Court affirmed the dismissal of the case, but on a different ground. It held that Article 2115 of the Civil Code, which states that a sale of a pledged thing extinguishes the principal obligation and the creditor cannot recover any deficiency, is inconsistent with the Chattel Mortgage Law (Act No. 1508). Under the Chattel Mortgage Law, a chattel mortgage creditor may maintain an action for a deficiency. Furthermore, the Court noted that the decision in the original foreclosure case (No. 71763) was not strictly a foreclosure judgment; it was an ordinary money judgment ordering payment of a sum, not specifically ordering the sale of the mortgaged property to satisfy the credit. Therefore, Articles 2115 and 2141 of the Civil Code were irrelevant to that judgment. The Municipal Court erred in denying Garrido’s motion for an alias writ of execution, as less than five years had passed since the original judgment. However, Garrido did not appeal that order of denial. By allowing it to become final and instead filing a separate action, the principle of res judicata barred the present suit. Thus, the dismissal of the case was proper.