G.R. No. L-47869; April 8, 1941
MANILA TRADING & SUPPLY COMPANY, plaintiff-appellee, vs. CO KIM and SO TEK, defendants-appellants.

FACTS

On July 6, 1938, defendants Co Kim and So Tek purchased a truck from plaintiff Manila Trading & Supply Company for P807.20. They paid P200 in advance and executed a promissory note for the balance. To secure payment of the note, the defendants executed a chattel mortgage on the truck in favor of the plaintiff. Upon the defendants’ default in paying three installments, the plaintiff waived its right under the mortgage and instead instituted an ordinary action on the promissory note. In this action, the plaintiff sought to attach the defendants’ properties, including the mortgaged truck. The lower court rendered judgment in favor of the plaintiff, prompting the defendants’ appeal.

ISSUE

Whether the attachment of the mortgaged truck in an ordinary action on the debt, after the creditor waived the chattel mortgage, is equivalent to a foreclosure proceeding such that Act No. 4122 should be applied in favor of the defendants.

RULING

No. The attachment of the mortgaged property in an ordinary action is not equivalent to a foreclosure of the chattel mortgage. A creditor has the right to elect to waive the security (the chattel mortgage) and bring an ordinary action to recover the indebtedness. In such an action, the creditor has the right to execute the judgment on all properties of the debtor, including the subject matter of the waived mortgage, as established in Manila Trading & Supply Co. vs. Alba and Bachrach Motor Co. vs. Millan (61 Phil., 409). This election is subject to the qualification that if the creditor fails in the chosen remedy, he cannot then pursue the waived remedy. The Court affirmed the lower court’s judgment, with costs against the appellants.