Salido v. Court of Appeals
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the claim of petitioner Susana Salido as a secured creditor against the insolvent estate of spouses Jose and Adelaida Perez. The spouses executed a promissory note for P252,200.00 in favor of Salido, secured by a chattel mortgage over leasehold rights and goodwill of stalls. However, the chattel mortgage was not properly executed by both spouses and was not registered at the time the Perez spouses filed for voluntary insolvency due to business losses. 2. Procedural History: Following the declaration of insolvency and the appointment of Corazon Reyes as assignee, Salido registered the chattel mortgage and sought to foreclose. The trial court initially held her motion in abeyance, and later denied her claim to exclude the mortgaged properties from the assignee's inventory. The assignee realized P86,000.00 from the surrender of the stalls' goodwill. Salido's subsequent motions to be recognized as a secured creditor, first based on the chattel mortgage and then on Article 2244 of the Civil Code for the obligation being in a public instrument, were denied by the trial court. These denials led to two separate petitions for certiorari before the Court of Appeals. 3. The Petition: This petition for review on certiorari seeks to reverse the Court of Appeals' resolutions denying due course to Salido's second petition for certiorari (CA-G.R. SP No. 04629) and her subsequent motion for reconsideration. Salido argues that even if the chattel mortgage is invalid, she should still be considered a preferred creditor under Article 2244 of the Civil Code because her claim is evidenced by a public instrument, citing McMicking v. Kimura. The Court of Appeals dismissed her second petition, holding that the issue was barred by res judicata due to a prior ruling in CA-G.R. SP No. 15350, and that the trial court's alleged error was one of judgment, correctible by appeal, not certiorari. The Supreme Court is asked to determine if Article 2244 can be raised for the first time on appeal and if the second petition was indeed barred by res judicata.
Issue(s)
Whether the Court of Appeals erred in denying due course to petitioner's second petition for certiorari. Whether petitioner's claim for preference as a secured creditor under Article 2244 of the Civil Code can be raised for the first time in the appellate court or is barred by res judicata. Whether the subsequent registration of a chattel mortgage, executed before insolvency proceedings but unregistered at the time of filing, retroacts to grant preference over other creditors.
Ruling
The Supreme Court affirmed the resolutions of the Court of Appeals dated September 15, 1986, and November 21, 1986, and denied the petition. The Court held that the second petition for certiorari was barred by res judicata, as the issue of petitioner's status as a preferred creditor had already been passed upon in a prior certiorari case before the Court of Appeals. The Court found that the petitioner's attempt to raise the applicability of Article 2244 of the Civil Code was belated and constituted an afterthought, which could not be raised for the first time on appeal or in a subsequent petition when it could have been raised earlier. The Court also reiterated that the registration of a chattel mortgage is essential for its validity and cannot retroact to gain preference over other creditors in insolvency proceedings.
Ratio Decidendi
On the issue of res judicata: The Court held that the petitioner's second petition for certiorari before the Court of Appeals was barred by res judicata. The prior ruling in CA-G.R. SP No. 15350, which rejected the petitioner's claim for preference, precluded a re-litigation of the same issue, even if presented on a different ground. The Court emphasized that a party cannot escape the principle of res judicata by varying the form of action or method of presenting the case. The petitioner's attempt to claim preference under Article 2244 of the Civil Code, based on the document being a public instrument, was considered an afterthought, as it was not raised before the trial court or in her first petition for certiorari. Allowing such belated claims would lead to piecemeal and endless litigation, which the law seeks to avoid. On the applicability of Article 2244 of the Civil Code and belatedly raised issues: While acknowledging that Article 2244 of the Civil Code provides for preferences among creditors based on public instruments, the Court found that this issue was not properly raised before the lower courts or in the first petition for certiorari. The Court of Appeals, in its initial ruling, explicitly stated that the issue of whether the petitioner could be considered a secured creditor within the meaning of Article 2244 was not in issue and declined to rule on it. Therefore, the Supreme Court found that the petitioner's attempt to invoke this provision in subsequent proceedings was belated and barred by the principle of res judicata, as it pertained to the same fundamental issue of her preferred creditor status. On the effect of subsequent registration of a chattel mortgage: The Court reiterated the ruling in its first petition for certiorari that under Article 2140 of the Civil Code, registration is essential to the validity of a chattel mortgage. The subsequent registration of the chattel mortgage in favor of the petitioner, which occurred after the filing of the insolvency proceedings, could not retroact to the date of the institution of the insolvency proceedings. Therefore, it could not give the petitioner an advantage or preference over the other creditors who had acquired rights prior to the registration. The Court clarified that the validity of the chattel mortgage itself was the primary issue in the first petition, and the subsequent registration did not cure the defect of non-registration at the time of the insolvency filing.
Main Doctrine
A subsequent registration of a chattel mortgage, executed prior to insolvency proceedings but not registered at the time of filing, cannot retroact to give the mortgagee preference over other creditors. Furthermore, issues that were not raised in the trial court or in a prior certiorari petition before the Court of Appeals may be barred by res judicata when raised in a subsequent petition, especially if the second petition merely rehashes the basic issue of whether the petitioner is a preferred creditor.