CARLOS ALFARO AND MAGGIE CAPEN, PLAINTIFFS-APPELLANTS, VS. LLANES & COMPANY AND THE SHERIFF OF THE CITY OF MANILA, DEFENDANTS-APPELLANTS.

In Civil Case No. 51272 of the Court of First Instance of Manila
Judge Carmelino G. Alvendia
rendered a decision dated April 2, 1963,
ordering the spouses Carlos Alfaro and Maggie Capen
to pay Llanes & Company the sum of P16,778.94 plus six percent interest from August 15, 1962.

The court directed that, if the said amount was not paid within
ninety days from notice, the mortgaged property described in the complaint
should be sold at public auction to satisfy the mortgage obligation (See Llanes & Co. vs. Bocar,
L-26992, February 12, 1976, 69 SCRA 318).

The Alfaro spouses did not appeal from that decision.  The mortgaged property was sold at public
auction on October 25, 1963
for P18,950 to the judgment creditor, Llanes & Company. 
The court confirmed the sale in its order of November 4, 1963.

Later, the Alfaro spouses
filed in this Court a certiorari petition wherein they claimed that the
lower court acted without jurisdiction in ordering the foreclosure of the
mortgage to satisfy their obligation of P16,778.94,
considering that the mortgage was executed as security for their obligation up
to the amount of ten thousand pesos only.

That petition was
dismissed for lack of merit in this Court’s minute resolution of January
5, 1965 (L-23962,
Alfaro vs. Alvendia).

Thwarted in their effort
to nullify the foreclosure proceeding by means of certiorari, the Alfaro
spouses resorted to another recourse.  On March 1, 1965 they sued Llanes
& Company and the sheriff of Manila in the Court of First Instance of Manila
again for the purpose of setting aside the foreclosure sale.  They resuscitated their theory in the certiorari
case (L-23962) that the foreclosure was void because the mortgage was given as
security only for the sum of P10,000 and,
notwithstanding that contractual stipulation, the property was sold to the
mortgagee for P18,950, thus making it difficult for them to redeem the property
(Civil Case No. 60036).

The Alfaro spouses also
assailed the foreclosure on the ground of inadequacy of price.  They pointed out that at the foreclosure sale
only the land, Lot 26, with an area of 168 square meters, was
sold but not the improvements, and that, in spite of that fact, Llanes & Company wanted to assert dominical rights over
the residential house erected on that lot. 
The Alfaro spouses also claimed damages.

Llanes & Company filed a motion to dismiss the
complaint on the ground of lack of jurisdiction, lack of cause of action and res judicata.

The lower court in its
order of April 21, 1966 dismissed the complaint because it was
barred by the prior judgment in
Civil Case No. 51272.

From the order of
dismissal, the Alfaro spouses appealed to this Court.  The appeal involves only a question of law
(Sec. 2, Rule 42, Rules of Court).

The Alfaro spouses in
this appeal contend that the lower court erred in dismissing their complaint,
in holding that their complaint in Civil Case No. 60036 is merely an action for
damages arising from the proceedings in the foreclosure suit, Civil Case No.
51272, and in holding that their claims in Civil Case No. 60036 are barred by res judicata or by
the judgment in Civil Case No. 51272.

Considering the
antecedents related above, we find the appeal to be devoid of merit.  The matters raised by the Alfaro spouses
should have been ventilated in the foreclosure proceeding.

The fact that the
mortgage was a security for the obligation of the Alfaro spouses to Llanes & Company up to ten thousand pesos only and that
the trial court did not take that into account in the order of foreclosure did
not render void the foreclosure sale.  If
the Alfaro spouses wanted to stop the foreclosure, they should have paid the
P10,000 to the mortgagee before the auction sale was
held.  They failed to do so.

They did not appeal from
the judgment ordering the foreclosure of the mortgage.  That judgment became final and
conclusive.  It operated as a bar to any
subsequent action between the same parties involving issues which could have been litigated in that first case (Sec. 49[b], Rule 39, Rules of Court).

The judgment in the foreclosure
suit was fortified by this Court’s decision in Llanes
& Co. vs. Bocar, supra.  It was held in that case that
the lower court’s 1963 decision in the foreclosure suit, insofar as it was
construed as referring only to the mortgaged lot, could not be amended so as to
include the house in the foreclosure sale.

WHEREFORE, the lower court’s order is affirmed with
costs against the appellants.

SO ORDERED.

Fernando, (Chairman), Barredo,
Antonio, and Martin, JJ., concur.

Concepcion, Jr., J., on leave.