4TH SET: THE FIRST NATIONAL CITY BANK OF NEW YORK, vs.

SILVIO CHENG TAN alias SILVIO CHENG PAN 1. FORECLOSURE OF MORTGAGES; NATURE OF DEFICIENCY JUDGMENT; SETTLEMENT OF ESTATE OF DECEASED; NECESSITY OF FILING CLAIM WITH PROBATE COURT. A deficiency judgment is a contingent claim and must be filed with the probate court where the settlement of the estate of the deceased mortgagor is pending, within the period of time fixed for the filing of claims. 2. ID.; ID.; ID.; ID.; WHEN JUDGMENT IN CIVIL ACTION REDUCED TO THE CONDITION OF A MERE RIGHT OF ACTION. While it is true that a judgment rendered in a civil action remaining unsatisfied after five (5) years from its date of entry, is reduced to the condition of a mere right of action (Cia. General de Tabacos, etc., vs. Martinez, et al., 29 Phil., 515), this does not argue against the proposition that it should be filed with the probate court for corresponding action. On the contrary, reduced as it has been to the condition of a mere right of action, it can well be likened to a promissory note, which should be submitted as a claim to the probate court where the settlement of the estate of the deceased debtor is pending. PNB VS CA AND ALLAN CHUA SYLLABUS 1. REMEDIAL LAW; EXTRAJUDICIAL FORECLOSURE OF MORTGAGE; PRUDENTIAL BANK v. MARTINEZ; NOT APPLICABLE IN CASE AT BAR. Prudential Bank vs. Martinez, 189 SCRA 612, 615 (1990), is particularly cited by petitioner as precedent for holding that in extrajudicial foreclosure of mortgage, when the proceeds of the sale are insufficient to pay the debt, the mortgagee has the right to recover the deficiency from the mortgagor. However, it must be pointed out that petitioner's cited cases involves ordinary debts secured by a mortgage. The case at bar, we must stress, involves a foreclosure of mortgage arising out of a settlement of estate, wherein the administrator mortgaged a property belonging to the estate of the decedent, pursuant to an authority given by the probate court. As the Court of Appeals correctly stated, the Rules of Court on Special Proceedings comes into play decisively. 2. ID.; SPECIAL PROCEEDINGS; SETTLEMENT OF ESTATE OF DECEASED PERSON; CLAIM AGAINST ESTATE; REMEDIES THAT CAN ALTERNATIVELY BE PURSUED BY THE MORTGAGEE FOR THE SATISFACTION OF HIS CREDIT IN CASE THE MORTGAGOR DIES. Case law now holds that Section 7, Rule 86 of the Rules of Court 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: (1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (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. 3. ID.; ID.; ID.; ID.; ID.; IF THE CREDITOR ADOPTED THE EXTRAJUDICIAL FORECLOSURE, HE WAIVES ANY FURTHER DEFICIENCY CLAIM. In Perez v. Philippine National Bank, reversing Pasno v. Ravina, we

held: The ruling is Pasno vs. 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; (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 vs. Ravina, in requiring a judicial foreclosure, virtually wipes out the third alternative conceded by the Rule to the mortgage creditor, and which would precisely included extrajudicial 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. The dissent in Pasno, as adopted in Perez, supports this conclusion, thus: "When account is further taken of the fact that a creditor who elects to foreclose by extrajudicial sale waives all right to recover against the estate of the deceased debtor for any deficiency remaining unpaid after the sale it will be readily seen that the decision in this case (referring to the majority opinion) will impose a burden upon the estate of deceased persons who have mortgaged real property for the security of debts, without any compensatory advantage." 4. ID.; ID.; ID.; ID.; ID.; ID.; APPLIED IN CASE AT BAR. Clearly, in our view, petitioner herein has chosen the mortgage creditor's option of extrajudicially foreclosing the mortgaged property of the Chuas. This choice now bars any subsequent deficiency claim against the estate of the deceased, Antonio M. Chua. Petitioner may no longer avail of the complaint for the recovery of the balance of indebtedness against said estate, after petitioner foreclosed the property securing the mortgage in its favor. It follows that this case no further liability remains on the part of respondents and the late Antonio M. Chua's estate. 5TH SET E. GASKELL & CO., INC., plaintiff-appellant, vs. TAN SIT, administratrix of the estate of Dy Poco, SYLLABUS 1. INSOLVENCY; DISCHARGE; CONTINGENT CLAIM. A contingent claim, being provable in insolvency proceedings, is barred by the discharge granted in such proceedings to the same extent as an absolute claim. 2. EXECUTORS AND ADMINISTRATORS; INSOLVENCY; WHEN ADMINISTRATOR NOT LIABLE FOR DEBTS PROVABLE IN INSOLVENCY. Where it happens that both insolvency proceedings and administration proceedings are conducted over the estate of a deceased insolvent, no claim that is provable in bankruptcy can be allowed against the estate in administration.

Intestate Estate of the late Florencio P. Buan and Rizalina Paras Buan, deceased. BIENVENIDO P. BUAN and A. NATIVIDAD PARAS, Co-administrators-appellees, vs. SYLVINA C. LAYA, ET AL., petitionersappellants. Jose W. Diokno and Augusto M. Ilagan for appellees. Rufino F. Mejia for appellants. SYLLABUS 1. ESTATE OF DECEASED PERSON; CONTINGENT CLAIM, CONCEPT OF. The petitioners filed with the CFI of Tarlac a contingent claim more than P500,000 against the intestate estate of the deceased spouses FB and RB based on the fact that a Philippine Rabbit Bus, owned and operated by said spouses collided in which JL and others were riding and the collision was caused by the negligence of the driver of the bus and as a consequence JL was killed whose surviving heirs are petitioners. The administrator filed an opposition to said claim on the ground that it was not filed before the death of said deceased and within the period as prescribed by the Rules. The Court finally dismissed the contingent claim. Held: that the dismissal of the said claim by the Court was based on incorrect and erroneous conception of a contingent claim. A contingent claim is one which, by its nature is necessarily dependent upon an uncertain event for its existence or validity. It may or may develop into a valid enforceable claim and its validity and enforceability depending upon uncertain event. 2. ID.; TEMPORARY DISMISSAL OF AN ACTION; CONTINGENT CLAIM NOT AFFECTED. A contingent claim does not follow the temporary orders of dismissal of an action upon which it is based; it awaits the final outcome thereof and only the final result can cause its termination. The rules provide that a contingent claim is to be presented in the administration proceedings in the same manner as any ordinary claim and that when the contingency arises which converts the contingent claim into a valid claim the Court should then be informed that the claim had already matured. (Secs. 5, 9, Rule 87.)

6TH SET ISIDORO SANTOS, plaintiff-appellant, vs. LEANDRA MANARANG, administratrix, defendant-appellee. W. A. Kincaid and Thomas L. Hartigan for appellant. Ramon Salinas for appellee. SYLLABUS 1. EXECUTORS AND ADMINISTRATORS; ALLOWANCE AND PAYMENT OF CLAIMS; TIME FOR PRESENTATION. If the property of the estate has been properly inventoried, the committee on claims regularly appointed, the publication of the notice required by law duly made, and there has been no fraud in the proceedings, claims or debts which the law requires shall be presented to the

committee on claims must be presented to it within the limitation of time provided in section 698 (Code Civ. Proc.) or they will be barred. 2. ID.; ID.; ID.; CONTRARY PROVISIONS IN THE WILL. Directions in the testator's will that such claims and debts, or any of them, shall be settled in some other manner as void as opposed to public policy, at least where there are heirs by force of law. 3. ID.; ID.; ACTION AGAINST ADMINISTRATOR. No action can be instituted directly against the administrator of the estate for the collection of claims and debts which the committee on claims is directed to pass upon. 4. ID.; ID.; ID.; DIRECTION IN WILL TO PAY DEBTS. An itemized list of debts in the will of the testator which he directs shall be paid does not obviate the necessity of presenting them to the committee for allowance. Nor do such directions in a will indicate that it was the testator's desire to have them paid without being probated in accordance with the probate procedure provided in Act No. 190. 5. ID.; ID.; ID.; ID.; MISTAKE OF LAW. If, because of such provisions in the will, a creditor fails to present such claims to the committee in the belief that it is unnecessary, he is laboring under a mistake of law for which no relief can be afforded by the courts. Intestate estate of the deceased Consuelo Syyap. FRANCISCO QUISUMBING, administrator-appellant, vs. MARIANO GUISON, claimant-appellee. Ramon Diokno for appellant. Paulino J. Sevilla for appellee. SYLLABUS 1. DESCENT AND DISTRIBUTIONS; CLAIM AGAINST ESTATE; ALLOWANCE BY COURT WITHOUT EXTENSION OF TIME FOR FILING CLAIM. The claim filed by the claimant may be allowed by the court after hearing both parties, without necessity on the part of the claimant to file a previous applications for, and on the part of the court to grant, an extension of time not exceeding one month within which the claim may be filed. The claim filed by the appellee may be considered as implying an application for time within which to file said claim, and the order of lower court allowing such claim impliedly granted said appellee on extension of time within which to file said claim. It would have been a waste of time on the part of the court and the parties in this case, if the court had dismissed the claim and required the appellee to file, first, an application for a period not exceeding one month within which to file his claim, and then to file his claim within the time granted by the court, when the latter would allow the claim after all. Strict compliance with the said requirement of section 2 of Rule 87 would be necessary if a claim had to be presented to and passed upon by the committee on claims according to the old law; but now as it is to be filed with and passed upon the court itself, no harm would be caused to the adverse party by such a procedure as was followed in the present case.

2. ID.; ID.; PERIOD FOR FILING APPLICATION FOR EXTENSION OF TIME OF FILE CLAIM. Under section 2 of Rule 87, there is no limitation as to the time within which a creditor who has failed to file his claim within the time previously limited, may file an application for extension of time within which to file his claim, and the court may for cause shown grant such application fixing a period not exceeding one month for that purpose, provided that the application is presented before an order of distribution has been entered. 3. ID.; ID.; DISCRETION OF COURT TO GRANT EXTENSION OF TIME FOR FILING CLAIM. The last sentence of section 2, Rule 87, provides that the court may, for cause shown and on such terms as are equitable, allow such claim to be filed within a time not exceeding one month. As it does not state what cause shall be considered sufficient for the purpose, it is clear that it is left to the discretion of the court to determine the sufficiency thereof; and when the court allows a claim to be filed for cause or causes which it considers as sufficient, on appeal this court can not reverse or set aside the action of the court below unless the latter has abused its discretion.