Spouses Hiong Ngo were originally granted by a bank P945,000 loan in 1993 as additional capital for their general merchandise peddling business secured by Real Estate Mortgage. In 1995, the loan was increased by P675,000 subject to additional collateral over the chattel mortgage of one (1) unit Isuzu Forward truck. That year Mrs. Ngo was out of the country and the chattel mortgage was signed by Mr. Hiong Ngo only.

The account became past due in 1996 because of liquidity problems they experienced after the mortgaged Isuzu truck became involved in a collision accident with a passenger jeepney. They shouldered medical and burial expenses for passengers who were injured and died as a result of the accident.

On May 28, 1998, the bank foreclosed the Real Estate partially settling and reducing the balance to P200,000. Despite efforts and due diligence conducted by the handling Sheriff to foreclosed on the Chattel, the Isuzu Foward truck can no longer be located.

1.At the origination of additional loan granted to Spouses Ngo, what should be the secondary condition of the bank on credit secured by chattel ortgage? Discuss the creditor's advantages if such was required.

2.Discuss the remedy of the bank to enforce collection and the anticipated defenses of Spouses Ngo.