Remedy of unpaid creditor
MyparentsobtainedaloanfromJose.Heis nowdemandingthepaymentofthedebt,but myparentsarehavingahardtimeproducing theamount.Joseclaimedthathewouldfilea collectionofsumofmoneyagainstmyparents andafterthathewouldforeclosethemortgage executedoverourhouseandlot.Iamworried thatwewillloseourhouseandlot.Please guideus.
Laila
Dear Laila,
For your information, an unpaid creditor has the remedy of collecting the unpaid debt or foreclosing the mortgage. These remedies are alternatives, and the creditor cannot exercise both because this will result to splitting a cause of action which is in contravention of Section 3, Rule 2 of the Q997 Revised Rules of Court, as amended, which states:
“A party may not institute more than one suit for a single cause of action.”
The legal remedies of the creditor which were mentioned in the immediately preceding paragraph were explained in the case of Bank ofAmerica,etal.vs.AmericanRealtyCorporation (GR Q33876, Dec. 29, Q999), where the Supreme Court through Associate Justice Arturo Buena stated:
“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. Though the debt and the mortgage constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the same obligation. Consequently, there exists only one cause of action for a single breach of that obligation. Plaintiff, then, by applying the rules above stated, cannot split up his single cause of action by filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of the mortgage. If he does so, the filing of the first complaint will bar the subsequent complaint. By allowing the creditor to file two separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, we will, in effect, be authorizing him plural redress for a single breach of contract at so much cost to the courts and with so much vexation and oppression to the debtor.”
Applying the above-quoted decision in your situation, Jose’s claim of filing the collection of sum of money and also foreclosing the mortgage has no legal basis. Although he has the right to choose which remedy to exercise, he cannot do both, as he would be splitting up a single cause of action which can cause so much cost to the courts and with so much vexation and oppression to the debtor.
We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.