Facts:

Petitioner Bank of America, NT, and SA (BANTSA), is an international banking and financing institution duly licensed
to do business in the Philippines, and was organized and existing under the laws of the USA. Bank of America
International Limited (BAIL), on the other hand, is a limited liability company organized and existing under the laws of
England. BANTSA and BAIL granted multi-million US dollar loans to three corporate borrowers. When these
borrowers defaulted in their amortization payments, BANTSA entered into restructuring agreements with them.
As security for these restructured loans, herein respondent American Realty Corporation (ARC), a domestic
corporation and affiliate of the three borrowers, made itself a third party mortgagor and executed two real estate
mortgages over its parcels of land situated in Bulacan.
Even after the restructuring, the borrowers still defaulted in their payments. This prompted BANTSA to file civil
actions for the collection of the principal loan. Two cases were filed in England, and two more in Hong Kong.
While these four civil actions were still pending, BANTSA filed before the Office of the Provincial Sheriff of Bulacan an
application for extrajudicial foreclosure of real estate mortgage. The parcels of land were eventually sold at an auction
to Integrated Credit and Corporation Services Co. (ICCS) for P24,000,000.00.
In the succeeding month, ARC filed before the Pasig RTC an action for damages against BANTSA for its extrajudicial
foreclosure of the parcels of land despite the pendency of the civil suits filed before the foreign courts. It also filed a
motion to suspend the redemption period for the properties on the ground that “it cannot exercise said right of
redemption without at the same time waiving or contradicting its contentions in the case that the foreclosure of the
mortgage on its properties is legally improper and therefore invalid.”, which the trial court granted.
Meanwhile, ICCS has already sold the parcels of land to Stateland Investment Corporation for P39,000,000.00 After
trial, the trial court rendered its decision in favor of private respondent ARC and ordered BANTSA to pay the following
sums, all with legal interest from the date of the filing of the complaint up to the date of the actual payment:
1. Actual or compensatory damages in the amount of P99,000,000.00;
2. Exemplary damages in the amount of P5,000,000.00;and
3. Costs of suit
On appeal, the Court of Appeals affirmed the same, and denied BANTSA’s subsequent motion for reconsideration.
Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court was filed before this Court.

Issues:
1. Whether or not the petitioner’s act of filing a collection suit against the principal debtors for the recovery of
the loan before foreign courts constituted a waiver of the remedy of foreclosure.
2. Whether or not the award by the lower court of actual and exemplary damages in favor of private respondent
ARC, as third-party mortgagor, is proper.

Held:
1. In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and NOT
cumulative. It is either a civil action for collection, OR the foreclosure of the mortgaged property. It CANNOT
be civil action for collection PLUS foreclosure, or civil action THEN foreclosure (if civil action fails). An
election of one remedy operates as a waiver of the other. BANTSA contends that this rule does not apply in
this case because two requisites must concur: (1) a civil action for collection must have been filed; and (2) a
final judgment must be rendered therein. This Court does not agree. The mere act of filing an ordinary action
for collection operates as a waiver of his remedy to foreclose the mortgage. The reason for the remedies’
alternative nature is that each of the remedies is complete in itself. If the creditor elects to file a suit for
collection, it also includes the attachment and execution of the debtor’s properties including the mortgaged
property. On the other hand, if the creditor elects the foreclosure of the mortgage, he also has the right to
sue for a deficiency judgment for the debtor’s all other properties if the proceeds of the foreclosure is not
enough to satisfy the amount to be recovered. Incidentally, BANTSA also alleges that the law of England
must govern the case because in this law, the creditor does not lose its right with the remedy of foreclosure
just by filing a suit for collection. The Court rules in the negative. Our domestic prohibitive laws concerning
persons, their acts or properties shall not be rendered ineffective by laws or conventions agreed upon in a
foreign country, especially so if such foreign laws are obviously unjust. The Philippine public policy that is
sought to be protected in this case is the principle prohibiting the splitting up of a single cause of action.
2. As to the second issue, the Court ruled that ARC is entitled to the actual or compensatory damages because
BANTSA’s extrajudicial foreclosure of the parcels of land is clearly violative of the former’s rights. Actual or
compensatory damages are those recoverable because of pecuniary loss in business, trade,
property,profession, job or occupation and the same must be proved. The Court reasoned that ARC has
properly proved the same based on the trial court’s factual findings after ARC’ submission of a 23-page
appraisal report corroborated by Mr Reynaldo Flores, a licensed real estate broker, appraiser and director of
Philippine Appraisal Company, Inc since 1990. The trial judge also made an ocular inspection in order to
appraise himself of the characteristics and condition of the property. Based on these considerations and
evidence submitted, the Court affirmed the ruling of the trial court as regards the valuation of the property.
The instant petition is therefore denied for lack of merit. The decision of the CA is affirmed with modification.
BANTSA is hereby ordered to pay ARC P99,000,000.00 as actual or compensatory damages; P50,000.00
as exemplary damages and the cost of suit.