Two (2) remedies of mortgagee in case of mortgagor's default

[W]here a debt is secured by a mortgage and there is a default in payment on the part of the mortgagor, the mortgagee has a choice of one (1) or two (2) remedies, but he cannot have both. The mortgagee may: 1) foreclosure the mortgage; or 2) file an ordinary action to collect the debt. When the mortgagee chooses the foreclosure of the mortgage as a remedy, he enforces his lien by the sale on foreclosure of the mortgaged property. The proceeds of the sale will be applied to the satisfaction of the debt. With this remedy, he has a prior lien on the property. In case of a deficiency, the mortgagee has the right to claim for the deficiency resulting from the price obtained in the sale of the real property at public auction and the outstanding obligation at the time of the foreclosure proceedings (Soriano vs. Enriquez, 24 Phil. 584; Banco de Islas Filipinas vs. Concepcion Hijos, 53 Phil. 86; Banco Nacional vs. Barreto, 53 Phil. 101). On the other hand, if the mortgagee resorts to an action to collect the debt, he thereby waives his mortgage lien. He will have no more priority over the mortgaged property. If the judgment in the action to collect is favorable to him, and it becomes final and executory, he can enforce said judgment by execution. He can even levy execution on the same mortgaged property, but he will not have priority over the latter and there may be other creditors who have better lien on the properties of the mortgagor. [Caltex Philippines, Inc vs. Intermediate Appellate Court, 176 SCRA 741] [G.R. No. 121158. December 5, 1996] [G.R. No. 121158. December 5, 1996]

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