SECOND DIVISION
G.R. No. 171206, September 23, 2013
HEIRS OF THE LATE SPOUSES FLAVIANO MAGLASANG AND SALUD ADAZA-MAGLASANG, NAMELY, OSCAR A. MAGLASANG, EDGAR A. MAGLASANG, CONCEPCION CHONA A. MAGLASANG, GLENDA A. MAGLASANG-ARNAIZ, LERMA A. MAGLASANG, FELMA A. MAGLASANG, FE DORIS A. MAGLASANG, LEOLINO A. MAGLASANG, MARGIE LEILA A. MAGLASANG, MA. MILALIE A. MAGLASANG, SALUD MAGLASANG, AND MA. FLASALIE A. MAGLASANG, REPRESENTING THE ESTATES OF THEIR AFORE-NAMED DECEASED PARENTS, Petitioners, v. MANILA BANKING CORPORAT ON, NOW SUBSTITUTED BY FIRST SOVEREIGN ASSET MANAGEMENT [SPV-AMC], INC. [FSAMI], Respondent.
D E C I S I O N
PERLAS-BERNABE, J.:
SEC. 7. Mortgage debt due from estate. – A creditor holding a claim against the deceased secured by a mortgage or other collateral security, may abandon the security and prosecute his claim in the manner provided in this rule, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by action in court, making the executor or administrator a party defendant, and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may claim his deficiency judgment in the manner provided in the preceding section; or he may rely upon his mortgage or other security alone, and foreclose the same at any time within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if the court shall adjudged it to be for the best interest of the estate that such redemption shall be made. (Emphasis and underscoring supplied)As the foregoing generally speaks of “[a] creditor holding a claim against the deceased secured by a mortgage or other collateral security” as above-highlighted, it may be reasonably concluded that the aforementioned section covers all secured claims, whether by mortgage or any other form of collateral, which a creditor may enforce against the estate of the deceased debtor. On the contrary, nowhere from its language can it be fairly deducible that the said section would – as the CA interpreted – narrowly apply only to mortgages made by the administrator over any property belonging to the estate of the decedent. To note, mortgages of estate property executed by the administrator, are also governed by Rule 89 of the Rules, captioned as “Sales, Mortgages, and Other Encumbrances of Property of Decedent.”
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not cumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon the filing of the complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon filing of the petition not with any court of justice but with the Office of the Sheriff of the province where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended by Act No. 4118.47 (Emphasis supplied)Anent the third remedy, it must be mentioned that the same includes the option of extra-judicially foreclosing the mortgage under Act No. 3135, as availed of by respondent in this case. However, the plain result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency from the estate.48 These precepts were discussed in the PNB case, citing Perez v. Philippine National Bank49 which overturned the earlier Pasno v. Ravina ruling:50
Case law now holds that this rule grants to the mortgagee three distinct, independent and mutually exclusive remedies that can be alternatively pursued by the mortgage creditor for the satisfaction of his credit in case the mortgagor dies, among them:chanrobles virtua1aw 1ibraryTo obviate any confusion, the Court observes that the operation of Act No. 3135 does not entirely discount the application of Section 7, Rule 86, or vice-versa. Rather, the two complement each other within their respective spheres of operation. On the one hand, Section 7, Rule 86 lays down the options for the secured creditor to claim against the estate and, according to jurisprudence, the availment of the third option bars him from claiming any deficiency amount. On the other hand, after the third option is chosen, the procedure governing the manner in which the extra-judicial foreclosure should proceed would still be governed by the provisions of Act No. 3135. Simply put, Section 7, Rule 86 governs the parameters and the extent to which a claim may be advanced against the estate, whereas Act No. 3135 sets out the specific procedure to be followed when the creditor subsequently chooses the third option – specifically, that of extra-judicially foreclosing real property belonging to the estate. The application of the procedure under Act No. 3135 must be concordant with Section 7, Rule 86 as the latter is a special rule applicable to claims against the estate, and at the same time, since Section 7, Rule 86 does not detail the procedure for extra-judicial foreclosures, the formalities governing the manner of availing of the third option – such as the place where the application for extra-judicial foreclosure is filed, the requirements of publication and posting and the place of sale – must be governed by Act No. 3135.(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:
(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and
(3) to rely on the mortgage exclusively, foreclosing the same at any time before it is barred by prescription without right to file a claim for any deficiency.
The ruling in Pasno v. Ravina not having been reiterated in any other case, we have carefully reexamined the same, and after mature deliberation have reached the conclusion that the dissenting opinion is more in conformity with reason and law. Of the three alternative courses that section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to wit, (1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2) foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and (3) to rely on the mortgage exclusively, foreclosing the same at any time before it is barred by prescription, without right to file a claim for any deficiency, the majority opinion in Pasno v. Ravina, in requiring a judicial foreclosure, virtually wipes out the third alternative conceded by the Rules to the mortgage creditor, and which would precisely include extra-judicial foreclosures by contrast with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency from the estate. Following the Perez ruling that the third mode includes extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that the creditor waives any further deficiency claim. x x x.51 (Emphases and underscoring supplied; italics in the original)
It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction sale shall be held at the capital of the province if the property is within the territorial jurisdiction of the province concerned, or shall be held in the city if the property is within the territorial jurisdiction of the city concerned; x x x.55Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the agreed forum, the stipulated place should only be as an additional, not a limiting venue.56 As a consequence, the stipulated venue and that provided under Act No. 3135 can be applied alternatively.
SEC. 2. Said sale cannot be made legally outside of the province which the property sold is situated; and in case the place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated. (Italics supplied)In this regard, since the auction sale was conducted in Ormoc City, which is within the territorial jurisdiction of the Province of Leyte, then the Court finds sufficient compliance with the above-cited requirement.
Endnotes:
1Rollo, pp. 3-25.cralawnad
2 Id. at 39-50. Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Vicente L. Yap and Enrico A. Lanzanas, concurring.cralawnad
3 Id. at 52-53.cralawnad
4 Id. at 71-76. Penned by Judge Francisco C. Pedrosa.cralawnad
5 Id. at 401-402. Now substituted in these proceedings by First Sovereign Asset Management (SPV-AMC), Inc. (FSAMI). See Resolution dated October 4, 2010.cralawnad
6 Id. at 54-55.cralawnad
7 Id. at 56-57.cralawnad
8 Id. at 6 and 40.cralawnad
9 Id. at 7.cralawnad
10 Id. at 40-41.cralawnad
11 Records, pp. 325-327. See Bill of Exhibits and Minutes.cralawnad
12Rollo, p. 97.cralawnad
13 Id. at 41.cralawnad
14 CA rollo, pp. 146-147. Penned by Judge Numeriano G. Estenzo.cralawnad
15 Id. at 148.cralawnad
16 Id. at 149.cralawnad
17 Records, p. 344. See Bill of Exhibits and Minutes.cralawnad
18 Id. at 328-342.cralawnad
19 Id. at 346.cralawnad
20 Id. at 344.cralawnad
21Rollo, p. 42.cralawnad
22 Id.cralawnad
23 Ibid.cralawnad
24 Id. at 71-76.cralawnad
25 Id. at 76.cralawnad
26 Id.cralawnad
27Rollo, p. 43.cralawnad
28 Id. at 10.cralawnad
29 Id. at 39-50.cralawnad
30 Id. at 45-46.cralawnad
31 Id. at 46.cralawnad
32 Id.cralawnad
33 “AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES.” Effective March 6, 1924.cralawnad
34Rollo, pp. 46-49.cralawnad
35 Id. at 52-53.cralawnad
36 Id. at 214.cralawnad
37 Id. at 11-14.cralawnad
38 Id. at 14-18.cralawnad
39 Id. at 18-20.cralawnad
40 Id. at 22-24.cralawnad
41 See Metropolitan Bank & Trust Company v. Absolute Management Corporation, G.R. No. 170498, January 9, 2013, 688 SCRA 225, 237.cralawnad
42 Section 2, Rule 72 of the Rules provides:chanrobles virtua1aw 1ibrarySEC. 2. Applicability of rules of civil actions. — In the absence of special provisions, the rules provided for in ordinary actions shall be, as far as practicable, applicable in special proceedings.43 412 Phil. 807 (2001).cralawnad
44 See id. at 812-815.cralawnad
45 Id. at 814.cralawnad
46 378 Phil. 1279 (1999).cralawnad
47 Id. at 1291.cralawnad
48 Id. at 1289-1304.cralawnad
49 124 Phil. 260 (1966).cralawnad
50 54 Phil. 378 (1990).cralawnad
51Philippine National Bank v. CA, supra note 43, at 814-815.cralawnad
52 Records, p. 344. See Bill of Exhibits and Minutes.cralawnad
53 To note, petitioners did not file a claim against the estate since its notice deviates from the proper characterization under Section 9, Rule 86 of the Rules of Court which sets forth the manner through which a claim against the estate may be filed, to wit:chanrobles virtua1aw 1ibrarySEC. 9. How to file a claim. Contents thereof. Notice to executor or administrator. – A claim may be filed by delivering the same with the necessary vouchers to the clerk of court and by serving a copy thereof on the executor or administrator. If the claim be founded on a bond, bill, note, or any other instrument, the original need not be filed, but a copy thereof with all indorsements shall be attached to the claim and filed therewith. On demand, however, of the executor or administrator, or by order of the court or judge, the original shall be exhibited, unless it be lost or destroyed, in which case the claimant must accompany his claim with affidavit or affidavits containing a copy or particular description of the instrument and stating its loss or destruction. When the claim is due, it must be supported by affidavit stating the amount justly due, that no payments have been made thereon which are not credited, and that there are no offsets to the same, to the knowledge of the affiant. If the claim is not due, or is contingent, when filed, it must also be supported by affidavit stating the particulars thereof. When the affidavit is made by a person other than the claimant, he must set forth therein the reason why it is not made by the claimant. The claim once filed shall be attached to the record of the case in which the letters testamentary or of administration were issued, although the court, in its discretion, and as a matter of convenience, may order all the claims to be collected in a separate folder. (Emphases supplied)54Rollo, pp. 54-55.cralawnad
55 Id. at 55.cralawnad
56 “[T]he doctrine that absent qualifying or restrictive words, the venue shall either be that stated in the law or rule governing the action or the one agreed in the contract, was applied to an extra-judicial foreclosure sale under Act No. 3135.” (Auction in Malinta, Inc. v. Luyaben, 544 Phil. 500, 505 [2007].)