IN THE MATTER OF THE ESTATE OF HENRY W. ELSER, DECEASED. VICENTE E. REYES, CLAIMANT AND APPELLEE, VS. C. W. ROSENSTOCK, EXECUTOR AND APPELLANT.

On
or about April 30, 1923, the plaintiff obtained a judgment against
Henry W. Elser, who was then living, for the sum of P64,242.69, and for
the foreclosure of a certain real mortgage on property in Manila and
the sale thereof to satisfy the judgment. Pending proceedings to appeal
to this court from the judgment, Elser died June 18, 1923, and in the
ordinary course of business C. W. Rosenstock was appointed as executor
of his estate, and later the appeal was perfected by him as executor,
and the judgment of the lower court was affirmed by this court and the
case returned to the court of its origin for further proceedings.^[1]
Execution was issued, and on May 17, 1924, the mortgaged property was
sold by the sheriff of Manila at public auction for P13,000. On June 2,
1924, the sale was duly confirmed, and no appeal was taken from the
order of confirmation. The plaintiff duly applied for and on July 25,
1924, obtained a deficiency judgment against the Elser estate for the
sum of P68,700.88, with interest at 12 per cent per annum on P64,242.69
of said sum from July 8,1924. After obtaining the deficiency judgment,
the plaintiff at once applied to the Court of First Instance for the
appointment of a committee on claims to examine and approve his claim
against the Elser estate, of which the defendant was duly notified, and
to which he duly objected.

After a hearing the court appointed Jose de Guzman and P. D. Carman as commissioners.

August 29, 1924, the plaintiff, based upon his deficiency judgment,
filed with the commissioners his proof of claim, to which the defendant
objected. September 19, 1924, the plaintiff’s claim was allowed in full
by the commissioners, as a claim against the Elser estate, to which the
defendant excepted. December 8, 1924, the defendant filed a motion for
a reconsideration, which was denied, and from an order approving the
allowance of the committee on claims, the defendant prosecutes this
appeal, assigning the following errors:

“I.
The Court of First Instance erred and exceeded its jurisdiction in
entering the order of August 21, 1924, reappointing the committee on
claims and appraisals in the above-entitled proceeding, for the purpose
of hearing and deciding the claim of Vicente E. Reyes against the
estate.

“II. The Court of First Instance erred in
entering the order of November 18, 1924, declaring the appeal of the
executor from the decision of the committee allowing the claim of
Vicente E. Reyes to have been presented out of time, and ordering the
executor to pay the said claim of Vicente E. Reyes out of the funds of
the estate.”

JOHNS, J.:

There is no dispute about any material fact. The question presented is
a legal one which involves the construction of section 708 of the Code
of Civil Procedure, which is as follows:

“Mortgage debt due from estate.—A
creditor holding a claim against the deceased, secured by mortgage or
other collateral security, may abandon the security and prosecute his
claim before the committee, and share in the general distribution of
the assets of the estate; or he may 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 prove his deficiency judgment before the committee
against the estate of the deceased; 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 adjudge
it to be for the best interest of the estate that such redemption shall
be made.”

It is important to note that the
original judgment against Elser was rendered on April 30, 1923, and
that he was living at the time it was rendered, and that he died on
June 18, 1923, pending his appeal to this court, or forty-nine days
after the rendition of the judgment.

This section provides
for three separate distinct proceedings. First, a creditor holding a
claim against the deceased, secured by mortgage or other collateral
security, may abandon his security and prosecute his claim before the
committee and share in the general distribution of the assets of the
estate; or, second, he may foreclose his mortgage or realize upon his
security, by an ordinary action in court, making the executor or
administrator a party defendant; and if there is a deficiency judgment,
after the sale of the mortgaged property, he may prove his deficiency
judgment before the committee on claims against the estate of the
deceased, or, third, he may rely exclusively upon his mortgage and
foreclose it at any time, within the period of the statute of
limitations, and if he relies exclusively upon the mortgage, he shall
not be admitted as a creditor of the estate, and shall not share in the
distribution of the assets of the estate.

In the instant
case, the plaintiff proceeded under and fully complied with all of the
requirements of the second provision. He obtained his judgment and
decree of foreclosure during the lifetime of the deceased.

On his own motion and as executor of the estate, Rosenstock was
substituted as a defendant and prosecuted the appeal. After the
judgment was affirmed, the plaintiff promptly issued an execution and
sold the property. After applying the proceeds of the sale to the
satisfaction of the judgment, the plaintiff promptly applied for and
obtained a deficiency judgment. When the deficiency judgment was
obtained, the plaintiff petitioned the court to appoint a committee on
claims. His petition was granted and the committee was appointed. The
plaintiff then appeared before the committee and presented his claim
based upon the deficiency judgment, and it was allowed, and the
allowance of his claim was confirmed by the court. The defendant had
notice of all of such proceedings, to all of which he objected and duly
excepted. Hence, plaintiff’s claim comes, squarely under the second
provision of section 708 of the Code of Civil Procedure above quoted.

Defendant contends that the claim in question is a contingent claim,
and that as such it should have been presented to the original
committee on claims of the estate, and that because it was not
presented it is barred.

In his brief appellant says:

“At all times prior to May 17, 1924, his deficiency judgment, his present claim, was a mere contingent claim. The holder of a contingent claim is not a creditor
and it is not known until the happening of the contingency, that he
will ever become one; the Code nowhere calls him a ‘creditor;’ he is
merely ‘a person’ who has a contingent claim (see section 746,
Code of Civil Procedure). It is true that claimant-appellee during all
of ‘the time previously limited’ was a mortgage creditor of the estate,
but as such creditor, he elected not to surrender and prove his claim
as he might have done under section 708, or to present the possibility
of his requiring a deficiency judgment, to the committee in the form of
a contingent claim. But claimant-appellee, on August 2, 1924, when he
applied to the court to have the committee recommissioned did not apply
as a creditor with a mortgage credit which he had failed to present,
but he applied as the holder of a claim which had been contingent
during all of ‘the time previously limited’ and had not been presented
as required by section 746 of the. Code of Civil Procedure, and which
had then become absolute, after the expiration of ‘the time previously
limited.’ There is no remedy in section 690 for a holder of a
contingent claim who has not presented it before ‘the time previously
limited’ has expired. Section 690, as we have seen, is a remedy for a
‘creditor’ of an estate, who was a creditor before the expiration of
‘the time previously limited;’ but to have been a creditor, he must
have had a claim which he could have presented and proved, before the
committee; moreover, it must have been the same claim which he now
seeks to have allowed and not a mere contingent claim. The holder of a
contingent claim is not a creditor. Therefore it must be
concluded that section 690 does not provide for recommissioning the
committee to hear a contingent claim that has become absolute.
Provision for that proceeding is made in section 748 of the Code of
Civil Procedure, but a jurisdictional fact required by that section is
that the contingent claim must have been presented to the committee
before the expiration of ‘the time previously limited’ and mentioned in
the committee’s report as provided in section 746 of the Code.

“Let
it be said again that before the court can have jurisdiction under
section 690 to recommission the committee, an application must be made
by a creditor who was a creditor before the expiration of
‘the time previously limited,’ and is a creditor at the time the
application is made, by virtue of one and the same claim. But
claimant-appellee does not fit that requirement. In so far as his
present claim was concerned, he was a mere contingent claimant and
therefore not a creditor of the estate, prior to the expiration of ‘the
time previously limited.’ “

Words & Phrases, volume 2, page 1498, says:

“A ‘contingent claim’ is one which has not accrued, and which is dependent on the happening of some future event.

“A
‘contingent claim,’ within the rule that claims against an estate which
are not contingent are barred if not presented within a certain time,
is one depending upon something thereafter to happen. Such a claim is
not contingent after the happening of the event.

“A ‘contingent claim,’ within Comp. St., c. 23, secs. 258 et seq.,
is a claim against a decedent, not absolute or certain, but depending
upon some event after the death of the testator or intestate which may
or may not happen. A subsisting demand against the estate of a deceased
person which had matured and was capable of being enforced during the
lifetime of the deceased is not a contingent claim.”

Plaintiff’s claim comes squarely within the last definition.

Defendant’s contention that the claim of the plaintiff is a contingent one is not tenable.

In Hinlo vs. De Leon (18 Phil., 221), this court, on page 230 of the opinion, says:

”
‘If there is a judgment for a deficiency continues the section above
quoted, ‘after the sale of the mortgaged premises, or the property
pledged, in the foreclosure or other proceeding to realize upon the
security, he may prove his deficiency judgment, before the committee
against the estate of the deceased * * * *’ “

In Osorio vs. San Agustin (25 Phil., 404), this court, on page 409 of the opinion, says:

” * * * In view of the fact that the plaintiff had elected to abandon the security given him by his mortgage and to prosecute his claim before the committee, he forfeited his right to bring an action upon the security in another separate and distinct action. * * *”

There is a clear distinction between the facts in that and this case.
In pointing out the distinction, Justice Carson, in his concurring
opinion on page 409, says:

“I concur in the disposition of this case.

“Merely
to avoid possibility of misunderstanding, I think it well to point out
that under the provisions of section 708 of Act No. 190, part of which
is quoted in the opinion, it would appear that in case a creditor
elects to rely upon his mortgage he may foreclose his mortgage or
realize upon the security by an 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 other
property pledged in the foreclosure or other proceeding, he may prove
his deficiency judgment before the committee and to that amount he may
share in the general assets of the estate of the deceased. In other
words, a creditor holding a claim against the deceased person secured
by mortgage or other collateral security may rely upon his security and
institute an ordinary action based thereon without abandoning his right
to present his claim to the committee should the security not be
sufficient to pay the debt.”

That is this
case. The construction for which the defendant contends would nullify
the second provision of section 708 of the Code of Civil Procedure, and
leave it without any legal force and effect.

The Code of Civil Procedure provides as follows:

“Sec. 689. Court to limit time for presenting claims.—The
court shall allow such time as the circumstances of the case require
for the creditors to present their claims to the committee for
examination and allowance; but not, in the first instance, more than
twelve months, or less than six months; and the time allowed shall be
stated in the commission. The court may extend the time as
circumstances require, but not so that the whole time shall exceed
eighteen months.

“Sec. 690. When time may be extended.—On
application of a creditor who has failed to present his claim, if made
within six months after the time previously limited, or, if a committee
fails to give the notice required by this chapter, and such application
is made before the final settlement of the estate, the court may, for
cause shown, and on such terms as are equitable, renew the commission
and allow further time, not exceeding one month, for the .committee to
examine such claim, in which case it shall personally notify the
parties of the time and place of hearing, and as soon as may be make
the return of their doings to the court.”

The contention of the defendant that the petitioner was not a creditor
within the meaning of section 690 is not tenable. Petitioner’s claim
was based upon a judgment rendered in a court of competent jurisdiction
forty-nine days before the death of Elser, and pending the appeal
Rosenstock, as executor, on his own motion, was made defendant as such,
and the final judgment upon which the property was sold was rendered
against Rosenstock as executor of the Elser estate.

The
defendant has filed an able and exhaustive brief, but has overlooked
the fundamental fact that the original judgment in this case was
personally rendered against the deceased while he was still living.

The judgment of the lower court is affirmed, with costs. So ordered.

Avanceña, C. J., Street, Malcolm, Villamor, Ostrand, and Villa-Real, JJ., concur.