As discussed, here are the remedies available to the mortgage creditor:

The creditor in his acti ons may make two demands: (1) the payment of the debt
and (2) foreclosure of his mortgage. The remedies available to any mortgage creditor
are alternative, not cumulative or successive. Notably, an election of one remedy
operates as a waiver of the other.

1. COLLECTION SUIT

The mere act of filing a collection suit for the recovery of a debt secured by a
mortgage constitutes waiver of the other remedy of foreclosure (Bank of America NT &
SA vs. American Realty Corp; Caltex Phil., inc., vs IAC)

Based on the foregoing, the mere fi ling of the collecti on suit precludes the
remedy of foreclosure. Further, if the collecti on suit will not result in
favorable outcome, the mortgagee can no longer foreclose the mortgage.

2. FORECLOSURE OF CHATTEL MORTGAGE

As emphasized in Bachrach Motors Co. vs. Icarangal, one effect of respondent’s

election of the remedy of extra-judicial foreclosure is its waiver of the remedy of
collection of the unpaid loan.

We may pursue the remedy of extra-judicial foreclosure, using the writ of replevin as a
tool to get hold of the mortgaged properties as a preliminary to the sale contemplated
in Section 14 of Act No. 1508.

It is my opinion that the most effi cient and practi cal remedy of the mortgagee is to
foreclose the mortgage fi rst, and then sue for defi ciency,  for the full sati sfacti on of
the mortgagor’s enti re obligati on to the mortgagee.

DEFICIENCY:

If in an extrajudicial foreclosure of chattel mortgage a deficiency exists, an

independent civil action may be instituted for recovery of said deficiency, the chattel
mortgage being given only as security and not as payment for debt in case of failure of
payment (Bicol Savings & Loan Assn. v. Guinhawa, Superlines v. ICC)
FORECLOSURE OF CHATTEL MORTGAGE

 Extrajudicial Foreclosure of Chatt el Mortgage under Sec 14, Act 5108

 Defi ciency Judgment

If in an extrajudicial foreclosure of chattel mortgage a deficiency exists, an

independent civil action may be instituted for recovery of said deficiency, the
chattel mortgage being given only as security and not as payment for debt in case
of failure of payment (Bicol Savings & Loan Assn. v. Guinhawa, Superlines v. ICC)

Alande Sportsline vs Good Development Corp. citing  Bachrach Motor Co., Inc. v.
Icarangal, the Court held that the remedies available to any mortgage creditor
are alternative, not cumulative or successive, viz.:

For non-payment of a note secured by mortgage, the creditor has a single

cause of action against the debtor. This single cause of action consists in the
recovery of the credit with execution of the security. In other words, the
creditor in his action may make two demands, the payment of the debt and
the foreclosure of his mortgage. But both demands arise from the same
cause, the non-payment of the debt, and for that reason, they constitute a
single cause of action. xxx

Xxx As emphasized in Bachrach, one effect of respondent’s election of the

remedy of extra-judicial foreclosure is its waiver of the remedy of collection
of the unpaid loan.

REMEDIES OF A MORTGAGEE

The mere act of filing a collection suit for the recovery of a debt secured by a
mortgage constitutes waiver of the other remedy of foreclosure. The rationale behind
this was adequately explained in the Bachrach case, supra:

... a rule that would authorize the plaintiff to bring a personal action
against the debtor and simultaneously or successively another action
against the mortgaged property, would result not only in multiplicity of
suits so offensive to justice (Soriano vs. Enriques, 24 Phil. 584) and
obnoxious to law and equity (Osorio vs. San Agustin, 25 Phil. 404), but also
 in subjecting the defendant to the vexation of being sued in the place of
his residence or of the residence of the plaintiff, and then again in the
place where the property lies

DEFICIENCY AFTER EXTRAJUDICIAL FORECLOSURE SALE OF REM

it is settled that if the proceeds of the sale are insufficient to cover the debt in an
extrajudicial foreclosure of the mortgage, the mortgagee is entitled to claim the
deficiency from the debtor. For when the legislature intends to deny the right of a
creditor to sue for any deficiency resulting from foreclosure of security given to
guarantee an obligation it expressly provides as in the case of pledges [Civil Code, Art.
2115] and in chattel mortgages of a thing sold on installment basis [Civil Code, Art.
1484(3)]. Act No. 3135, which governs the extrajudicial foreclosure of mortgages,
while silent as to the mortgagee’s right to recover, does not, on the other hand,
prohibit recovery of deficiency. Accordingly, it has been held that a deficiency claim
arising from the extrajudicial foreclosure is allowed. (RABAT vs. PNB)

NOTE: The rule is that deficiency can no longer be collected after foreclosure of
pledges or foreclosure of chattel mortgages  sold on installment. Act No. 3135 is silent
on the right to collect deficiency but does not prohibit it.

JUDICIAL FORECLOSURE OF REAL ESTATE MORTGAGE UNDER RULE 68, RULES OF

COURT

Section 6. Deficiency judgment. — If upon the sale of any real property as provided in
the next preceding section there be a balance due to the plaintiff after applying the
proceeds of the sale, the court, upon motion, shall render judgment against the
defendant for any such balance for which, by the record of the case, he may be
personally liable to the plaintiff, upon which execution may issue immediately if the
balance is all due at the time of the rendition of the judgment; otherwise; the plaintiff
shall be entitled to execution at such time as the balance remaining becomes due under
the terms of the original contract, which time shall be stated in the judgment.
Comments:

The remedies available to the mortgagee whether in a real or chatt el

mortgage agreement in case of debtor’s default are prett y straightf orward.
He may either fi le an acti on for collecti on or foreclose the mortgage.
However, in case the mortgagee resorts to collecti on suit, he is deemed to
have given up his mortgage lien and stands in equal footi ng with the other
creditors of the mortgagor. So, if the collecti on suit did not result in
favorable outcome, the mortgagee can no longer foreclose the mortgage. In
fact, the mere fi ling of the collecti on suit precludes the remedy of
foreclosure.  The most effi cient and practi cal remedy of the mortgagee is to
foreclose the mortgage fi rst, and then sue for defi ciency,  if the proceeds of
the foreclosure sale are not enough to sati sfy the loan. (DIVINA LAW)

ACT 1508, Sec. 14. Sale of property at public auction; Officer's return; Fees; Disposition of
proceeds. — The mortgagee, his executor, administrator, or assign, may, after thirty days from
the time of condition broken, cause the mortgaged property, or any part thereof, to be sold at
public auction by a public officer at a public place in the municipality where the mortgagor
resides, or where the property is situated, provided at least ten days' notice of the time, place,
and purpose of such sale has been posted at two or more public places in such municipality,
and the mortgagee, his executor, administrator, or assign, shall notify the mortgagor or person
holding under him and the persons holding subsequent mortgages of the time and place of sale,
either by notice in writing directed to him or left at his abode, if within the municipality, or sent
by mail if he does not reside in such municipality, at least ten days previous to the sale.

The officer making the sale shall, within thirty days thereafter, make in writing a return of his
doings and file the same in the office of the register of deeds where the mortgage is recorded,
and the register of deeds shall record the same. The fees of the officer for selling the property
shall be the same as in the case of sale on execution as provided in Act Numbered One hundred
and ninety, 4 and the amendments thereto, and the fees of the register of  deeds for registering
the officer's return shall be taxed as a part of the costs of sale, which the officer shall pay to the
register of deeds. The return shall particularly describe the articles sold, and state the amount
received for each article, and shall operate as a discharge of the lien thereon created by the
mortgage. The proceeds of such sale shall be applied to the payment, first, of the costs and
expenses of keeping and sale, and then to the payment of the demand or obligation secured by
such mortgage, and the residue shall be paid to persons holding subsequent mortgages in their
order, and the balance, after paying the mortgages, shall be paid to the mortgagor or person
holding under him on demand.
In sum, an election to bring a personal action will leave open to the mortgage creditor all the
properties of the debtor for attachment and execution, even including the mortgaged property
itself. And, if he waives such personal action and pursues his remedy against the mortgaged
property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency
judgment, in which case, all the properties of the defendant, other than the mortgaged
property, are again open to him for the satisfaction of the deficiency