Cerna vs. Court of Appeals

"Solidary debtor" (D) vs. Creditor (P)
GR L-48359	[T]

Summary: A debtor used the property of a third person to secure his loan. Upon non-payment of the loan, the creditor sued for collection against the owner of the security alleging that the mortgage created a solidary relationship between the debtor and the owner of the security.

Rule of Law: There is solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.

Facts: Debtor Celerino Delgado entered into a loan agreement with creditor Conrad Leviste (P) covered by a promissory note. In addition to mortgaging his vehicle, Delgado also mortgaged another vehicle owned by Manolo Cerna (D) to secure his loan.

The period lapsed without Delgado paying the loan. Leviste (P) filed a collection suit against Delgado and Cerna (D) as solidary debtors. Cerna (D) filed a motion to dismiss case alleging lack of cause of action against him because he was not a debtor under the promissory note and secondly, that the case did not survive Delgado's death. However, Cerna's (D) motion was dismissed.

On appeal, the court ruled that Cerna (D) and Delgado were solidary debtors and that the mortgage created a joint and solidary obligation against Leviste (P).

Issues: Will the mortgage of a property owned by a third party to secure the debt of the debtor make this third party solidarily liable with the debtor?

Ruling: No. Only Delgado signed the promissory note and accordingly, he was the only one bound by the contract of loan. Nowhere did it appear in the promissory note that Cerna (D) was a co-debtor. The law is clear that "contracts take effect only between the parties ... " (Article 1311, Civil Code)

Cerna (D) was held solidarily liable for the debt allegedly because he was a co-mortgagor of the principal debtor, Delgado. This ignores the basic precept that "there is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity." (Article 1207, Civil Code)

There is also no legal provision nor jurisprudence in our jurisdiction which makes a third person who secures the obligation of another by mortgaging his own property to be solidarily bound with the principal obligor. A chattel mortgage may be "an accessory contract" (Banco de Oro vs. Bayuga, 93 SCRA 443, 1979) 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—that is, to pay the loan. The signatory to the principal contract loan remains to be primarily bound. It is only upon the default of the latter that the creditor may have recourse on the mortgagors by foreclosing the mortgaged properties in lieu of an action for the recovery of the amount of the loan. And the liability of the third-party mortgagors extends only to the property mortgaged. Should there be any deficiency, the creditor has recourse on the principal debtor.
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* Keywords: solidary obligations