G.R. No. L-24008. August 31, 1970
QUIRINO SORIANO, PLAINTIFF-APPELLANT, VS. PARSONS HARDWARE CO., INC., ET AL., DEFENDANTS-APPELLEES.
CASTRO, J.:
This is an appeal from the order of June 5, 1964 of the Court of First Instance of Cavite, in its civil case N-639, dismissing the plaintiff Quirino Soriano’s amended
complaint for annulment of a foreclosure sale, recovery of the mortgaged properties
subject of the said sale, and damages.
The defendant Parsons Hardware Company, Inc. (hereinafter
referred to as the Company) was the holder of two mortgage deeds over four
parcels of registered land, all located in the province
of Cavite,
executed in 1955 by the spouses Claro Soriano and Irene Quilao. After Soriano’s death,
Quirino Soriano was
appointed administrator of the former’s estate in
special proceeding 6107 of the same court.
(The date of death of Claro Soriano and the date of appointment of Quirino
Soriano as administrator are nowhere to be found in
the record.)
On January 14, 1958
the Company filed a “Contingent Claim Against the
Estate” on the basis of various debts owing to it by the Soriano spouses, including the ones covered by the two
aforementioned real estate mortgage deeds.
Paragraph 5 of the said pleading recites: “That the herein creditor-claimant
relies upon the above-mentioned mortgages for the satisfaction f its claims
against the defendant Claro Soriano,
but nevertheless reserves its right to file, as it hereby files, a Contingent
claim for whatever amount that may be left unsatisfied after full exhaustion of
all of the above-mentioned securities or for whatever deficiency judgment that
may accrue in favor of creditor-claimant rising from the non-satisfaction of
the above-referred to claims after judicial foreclosure of the above
mortgages.” In the same pleading, the Company prayed that its
“contingent claim … be approved, and upon verification of the amount of
the said claim to direct the administrator to pay the same.”
Four years later, or more precisely on February 28, 1962, the Company sent a letter to
the provincial sheriff of Cavite,
requesting him to foreclose the mortgages extra-judicially, pursuant to the
terms of the mortgage deeds. Acting on
this letter, the she scheduled the public auction sale of the encumbered properties
for November 12, 1962.
On November 9, 1962,
three days prior to the scheduled date of the sale, a “Joint Request For Transfer Of Extrajudicial Sale,” executed by the
Company, by the plaintiff administrator, and by Irene Quilao
Vda. de Soriano,
was filed with the sheriff. The burden
of this joint request was the postponement of the auction sale to December 20, 1962. This request was granted.
Thereafter the public sale was held as scheduled, and to the
Company, which was the only bidder, were sold the mortgaged properties in the
amount of P62,624.36.
One year after the public sale, or more precisely on December 20,
1963, the plaintiff, in his capacity as administrator of the intestate estate
of Claro Soriano, lodged
the present complaint, claiming that the foreclosure sale was void as the
Company, having priorly elected to pursue its claim
in the intestate proceedings, could not in law be permitted to turn around and
instead pursue the remedy of extra-judicial foreclosure. He therefore asked that the foreclosure sale
be annulled and the properties subject thereof be ordered reverted to the
estate of Claro Soriano.
The court a quo dismissed the amended complaint;
hence this appeal.
The issue tendered for resolution is, whether under section 7 of
Rule 87 (now Section 7 of Rule 86) of the Rules of Court the filing of the
“Contingent Claim” by the Company in the intestate proceeding
constituted a bar to the extrajudicial foreclosure sale thereafter had.
Section 7 of Rule 87 (now section 86) enumerates three distinct,
independent and mutually exclusive remedies available to a mortgage creditor
for the satisfaction of his credit. He
may (a) “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 (b) “foreclose his mortgage or realize upon his
security, by ordinary 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 (c) “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.”
It seems rather clear, in this case before us, that the Company
never intended to abandon its securities because by the very terms of its
“Contingent Claim” it explicitly and unequivocally indicated that it
would rely, basically, upon the mortgages, reserving its right to ask for a
deficiency judgment, if, after a judicial foreclosure of its securities, a
portion of the loan remained unsatisfied.
No doubt, the Company elected the second remedy. But election by the creditor of any of the
three options is not jurisdictional, and as long as no positive forward step
has been taken by him in pursuance of the option selected, he is not precluded
from dropping the option already chosen and resorting to any of the two other
options available to him.
It is also obvious that the primary objective of the Company in
filing its “Contingent Claim” was to serve notice to the intestate
court – before such notice became time-barred – that it might have to ask the court to have its remaining receivables
satisfied in the intestate proceeding.
Such notice was indubitably necessary to enable the intestate court, at
the proper time, to take appropriate action thereon.
Section 7 of Rule 87 (now Rule 86) does no more than provide the
mortgage-creditor, in the interest of speedy, orderly and inexpensive
settlement of the estate of a decedent, a choice of one of three courses of
action for the satisfaction of its loan portfolio. An entirely distinct and independent act, to
be performed in conformity with procedures laid down
by the Legislature or by this Court, is still necessary to effectuate and
achieve the remedy elected. Thus, in
this case, the mere fact that the Company formally informed the intestate court
that it was electing foreclose judicially its mortgages did not automatically
operate as authority for the court motu proprio to-put into motion the machinery necessary
for the judicial foreclosure of the said securities. It was indispensable for the Company to file
an independent complaint for that specific purpose. The Company did no more than signify its
election of an option.
The plaintiff, upon the other hand, even after the Company turned
around and actually announced an extra-judicial foreclosure of the properties,
did nothing to prevent or impede the foreclosure. In fact, in a positive way, he even
encouraged the sheriff to proceed with the auction sale, by expressly requesting
the latter to re-schedule the date of the sale.
And after the sale had taken place, the plaintiff slumbered at a
distance, until the, very last day allowed him for redemption of the properties
sold.
From February 28, 1962
when the extrajudicial foreclosure of the mortgages was commenced, up to December 23, 1963, the last day of
the period for redemption – a total period of one year, nine months and
twenty-two days – the plaintiff administrator never lifted a finger to question
the validity of the foreclosure proceedings.
In point of fact, as has already been stated, he even consented to the
extrajudicial foreclosure by seeking
the postponement of the sale. It is now
too late in the day for the plaintiff to assert that the indelible taint of estoppel that has irretrievably and unmistakably stained
the totality of his actuations may still be erased.
WHEREFORE, the judgment a quo, dismissing
the amended complaint, is affirmed. No
pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo, and Villamor, JJ., concur.
Makasiar, J., took no part.