[G.R. No. L-18936. May 23, 1967.

INTESTATE ESTATE OF ENCARNACION ELCHICO VDA. DE FERNANDO, deceased, NATIVIDAD E. IGNACIO and
LEONOR E. ALMAZAN, administratrices-appellants, v. PAMPANGA BUS COMPANY INC., Claimant-Appellee.

Paterno R. Canlas for administratrices-appellants.

Manuel O. Chan and A. G. Martinez for Claimant-Appellee.

SYLLABUS

1. REMEDIAL LAW; PHILOSOPHY BEHIND DISMISSAL OF CIVIL CASE UPON DEATH OF DEFENDANT. — The philosophy
behind the rule which provides for the dismissal of the civil case is that, upon the death of a defendant, all money
claims should be filed in the estate or intestate proceedings "to avoid useless duplicity of procedure" (Moran
Comments on the Rules of Court, Vol. 1, 1963 ed., pp. 180-181).

2. ID.; PROBATE CLAIMS MAY BE WAIVED. — Though presentment of probate claims is imperative, it is generally
understood that it may be waived by the estate’s representative (21 Am. Jur. 578; 34 CJS 679-680; 34 ALR 393-395).
And, waiver is to be determined from the administrator’s "acts and conduct" (21 Am. Jur. 618). Certainly, the
administrator’s failure to plead the statute of nonclaims, his active participation, and resistance to plaintiff’s claim,
in the civil suit amount to such waiver (34 CJS 680).

3. ID.; COURTS ARE LOATH TO OVERTURN A JUDGMENT. — Courts are loath to overturn a final judgment. Judicial
proceedings are entitled to respect. Non quieta movere (Banco-Espanol Filipino v. Palanca, 37 Phil., 921, 942).

4. ID.; REVIVAL OF CIVIL SUIT AGAINST ADMINISTRATOR IS EQUIVALENT TO PRESENTATION OF CLAIM IN PROBATE
COURT. — The revival of the civil action against the administrator, the decedent’s representative "is generally
considered equivalent to presentation" of such claim in the probate court (21 Am. Jur. 578). The soundness of this
proposition commands assent. Because the administrator represents the deceased’s estate itself, is an alter ego of
the heirs. More than this, he is an officer of the probate court (Lat v. Court of Appeals, L-17591, May 30, 1962.)

DECISION

SANCHEZ, J.:

The present case has its roots in the proceedings hereinafter to be recited:chanrob1es virtual 1aw library

August 29, 1951. Pampanga Bus Company, Inc. (referred to herein as Pambusco) lodged its complaint in the Court
of First Instance of Manila against two (2) defendants, Valentin Fernando and Encarnacion Elchico Vda. de
Fernando. The suit was to collect P105,000.00 upon a contractual obligation. 1

January 13, 1955 Encarnacion Elchico Vda. de Fernando died. By this time, Pambusco in the foregoing civil case had
already presented its evidence and submitted its case.

March 25, 1955. Intestate proceedings were filed. 2 Notice to the estate’s creditors was given for them to file their
claims within six (6) months from this date, the first publication of the notice.

April 16, 1955. On Pambusco’s motion, the court in the civil case ordered Jose Nicolas, then administrator, to
substitute for the deceased Encarnacion Elchico Vda. de Fernando as one of the defendants. No objection to this
order was registered.

July 15, 1955. Pambusco amended its complaint in the civil case, naming therein administrator Jose Nicolas and
original defendant Valentin Fernando, as defendants. The court, without objection, admitted this amended
complaint on August 27, 1955.

Jose Nicolas, as such administrator, filed an amended answer with counterclaim against Pambusco. The date of
filing said answer is not of record. In due course, Nicolas presented his evidence.

December 11, 1958. After trial on the merits, the Court of First Instance of Manila rendered judgment in the civil
case (Civil Case 14576), as follows:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, ordering the latter
to pay the former the sum of NINETY THREE THOUSAND PESOS P93,000.00) together with the costs of these
proceedings. Defendants’ counterclaim is hereby dismissed."cralaw virtua1aw library

The two defendants appealed.

May 28, 1960. The Court of Appeals affirmed the judgment, thus —

"As plaintiff’s complaint is well founded end meritorious and the evidence of record justify the award of P93,000.00
in its favor, it stands to reason that defendants’ counterclaims were correctly dismissed.

WHEREFORE, the judgment appealed from is hereby affirmed, without pronouncement as to costs." 3

Both defendants appealed by certiorari to this Court. Valentin Fernando’s appeal 4 was dismissed for having been
filed out of time. The appeal of the estate of Encarnacion Elchico Vda. de Fernando 5 , raising issues of fact was
likewise dismissed.

February 25, 1959. We go back to Special Proceedings 25256, Intestate Estate of Encarnacion Elchico Vda. de
Fernando. On this day, while defendants in Civil Case 14576 were perfecting their appeal from the judgment of the
Court of First Instance, Pambusco registered its "contingent" claim in these special proceedings — for whatever
money judgment may be rendered in its favor in the civil suit.

January 25, 1961. The judgment in the civil case having reached finality, Pambusco moved in the intestate
proceedings that the heirs and/or the present joint administratrices, Natividad E. Ignacio and Leonor E. Almazan, be
ordered to pay P46,500.00, the share of the deceased in the judgment debt.

The administratrices opposed. Ground: Pambusco’s claim is time- barred.

March 13, 1961. Resolving Pambusco’s motion, the probate court (in Sp. Proc. 25256) issued an order, the
dispositive part of which is as follows:jgc:chanrobles.com.ph

"Wherefore, the Court hereby allows said amount of P46,500.00 to be paid by the heirs and/or the Joint
administratrices; but no payment thereof shall be made until after the administratrices shall have informed the
Court in writing as to the existence of other unsettled money claims against the estate and of the sufficiency of the
assets available for payment of all the debts.

In harmony with the foregoing, the Court hereby orders said administratrices to inform the Court, within ten (10)
days from the notice of this order, of the other unsettled money claims, together with the amount of each, and of
the sufficiency or insufficiency of the assets available for payment of all debts."cralaw virtua1aw library
By order of May 24, 1961, the probate court denied the motion to reconsider the foregoing order.

The administratrices came to this Court on appeal.

Given the facts just recited, was Pambusco’s claim properly admitted by the probate court?

It will be remembered that at the time Encarnacion Elchico Vda. de Fernando died, the civil case against her and
the other defendant Valentin Fernando had not yet been decided by the Court of First Instance of Manila. That
case, however, was prosecuted — with the assent of the administrator of her estate — to final conclusion.

1. This situation brings to the fore a consideration of Section 21, Rule 3 of the Rules of Court, 6 which
reads:jgc:chanrobles.com.ph

"SEC. 21. Where claim does not survive. — When the action is for recovery of money, debt or interest thereon, and
the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the
manner especially provided in these rules."cralaw virtua1aw library

The philosophy behind the rule which provides for the dismissal of the civil case is that, upon the death of a
defendant, all money claims should be filed in the testate or intestate proceedings "to avoid useless duplicity of
procedure." 7 Obviously, the legal precept just quoted is procedural in nature. It outlines the method by which an
action for recovery of money, debt or interest may continue, upon the terms therein prescribed. Whether the
original suit for the recovery of money — as here — proceeds to its conclusion, or is dismissed and the claim
covered thereby filed with the probate court, one thing is certain: no substantial rights of the parties are
prejudiced.

But is there justification for the civil case to go on in spite of the death of Encarnacion Elchico Vda. de Fernando
"before final judgment in the Court of First Instance?"

2. At the time of the death of defendant Encarnacion Elchico Vda. de Fernando, plaintiff Pambusco had already
closed its evidence and submitted its case. Her administrator substituted. By this substitution, the estate had notice
of the claim. The estate was thus represented. The administrator did not complain of the substitution. At no time
did the estate of the deceased impugn the authority of the regular courts to determine the civil case. Much less did
it seek abatement of the civil suit. On the contrary, its administrator took active steps to protect the interests of the
estate. He joined issue with plaintiff. He filed an amended answer. He counterclaimed. He went to trial. Defeated in
the Court of First Instance, he appealed to the Court of Appeals. He even elevated that civil case to this Court. Now
that the judgment has become final, the estate cannot be heard to say that said judgment — reached after a full
dress trial on the merits — will now go for naught. The estate has thus waived its right to have Pambusco’s claim-
re-litigated in the estate proceedings. For, though presentment of probate claims is imperative, it is generally
understood that it may be waived by the estate’s representative. 8 And, waiver is to be determined from the
administrator’s "acts and conduct." 9 Certainly, the administrator’s failure to plead the statute of nonclaims, his
active participation, and resistance to plaintiff’s claim, in the civil suit, amount to such waiver. 10

3. Courts are loathe to overturn a final judgment. Judicial proceedings are entitled to respect. Non quieta movere.
11 Plaintiff’s claim has passed the test in three courts of justice; the Court of First Instance, the Court of Appeals
and this Court. The judgment in plaintiff’s favor should be enforced. Appellants’ technical objection — after
judgment had become final in the civil case — that plaintiff’s claim should have been litigated in the probate court
does not impair the validity of said judgment. For, such objection does not go into the court’s jurisdiction over the
subject matter.

In Laserna v. Altavas, 68 Phil. 703, suit was started by Jose Altavas against Jose Laserna Paro to recover P4,500.00 as
attorney’s fees. The Court of First Instance decided in plaintiff’s favor. During the pendency of Laserna’s appeal in
this Court, he died. Aristona Laserna, the administratrix of Laserna’s estate, substituted. This Court affirmed the
judgment. Altavas subsequently filed in the estate proceedings a motion to direct the administratrix to pay the
judgment for P4,500.00 in his favor. The court granted this motion. On appeal, the administratrix urged that
Altavas’ claim "was definitely barred by the statute of nonclaim," because of his failure "to present it before the
committee on claims and appraisal." 12 This Court there stated 13 —

". . . we are of the opinion and so hold that, upon the facts and circumstances of the present case, the claim of Jose
Altavas, although it did not survive the deceased, need not have to be presented before the committee on claims
and appraisal principally because that claim is already an adjudicated claim by final pronouncement by this Court in
G. R. No. 40038. To countenance appellant’s theory would be to convert a claim duly passed upon and determined
not only by the Court of First Instance but by this Court into a contested claim, once again, . . . and ‘obliging a
creditor whose claim had already been passed upon by the Court to submit himself to the committee on claims and
to pass over again through the endless process of presenting his evidence which he had already done.’ . . . It also
appears that the substitution of the defendant in civil case No. 2961, for the recovery of attorney’s fees, was
affected at the instance of the defendant and appellant herein, Aristona Laserna. She had an opportunity to contest
that claim, and when her contention was overruled she did not impugn the jurisdiction of the Supreme Court.
Neither does it appear that during the pendency of the appeal in the Supreme Court she moved for the abatement
or suspension of the proceedings because of the provisions of sections 119, 700 and 703 of the Code of Civil
Procedure. Under the circumstances it is unjust to defeat the claim of the appellee and to hold that it has been
barred by the statute of non claim." 14

4. Of course, it is correct to say that upon the demise of a defendant in a civil action planted on a claim which does
not survive, such claim should be presented to the probate for allowance, if death occurs before final judgment in
the Court of First Instance. But, procedural niceties aside, the revival of the civil action against the administrator,
the decedent’s representative, "is generally considered equivalent to presentation" of such claim in the probate
court, 15 and "dispenses with the actual presentation of the claim." 16 The soundness of this proposition
commands assent. Because, the administrator represents the deceased’s estate itself, is an alter ego of the heirs.
More than this, he is an officer of the probate court. 17 In the circumstances, presentment of Pambusco’s 1959
claim ad abundatiorem cautelam was at best reduced to a mere formality.

5. It matters not that Pambusco’s said claim was filed with the probate court without the six-month period from
March 25, 1955, set forth in the notice to creditors. For, Section 2, Rule 86, permits acceptance of such belated
claims. Says Section 2: 18

"SEC. 2. Time within which claims shall be filed. — In the notice provided in the preceding section, the court shall
state the time for the filing of claims against the estate, which shall not be more than twelve (12) nor less than six
(6) months after the date of the first publication of the notice. However, at any time before an order of distribution
is entered, on application of a creditor who has failed to file his claim within the time previously limited, 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 (1) month."cralaw virtua1aw library

Here, the claim was filed in the probate court on February 25, 1959, while the defendants in the civil case were still
perfecting their appeal therein. The record does not show that the administrator objected thereto upon the ground
that it was filed out of time. The pendency of that case, we are persuaded to say, is a good excuse for tardiness in
the filing of the claim. 19 And, the order of final distribution is still to be given.

Besides, the order of the lower court of March 13, 1961 allowing payment of appellee’s claim "impliedly granted
said appellee an extension of time within which to file said claim." 20 The probate court’s discretion has not been
abused. It should not be disturbed. 21

For the reasons given, we vote to affirm the orders of the lower court of March 13, 1961 and May 24, 1961, under
review. Costs against appellants. So ordered.
G.R. No. L-22451 December 22, 1924

TAN SEN GUAN, special administrator of the intestate estate of TAN PENG SUE, (alias TAN PENG CHO),
(alias CHAN BAI CHOO), plaintiff-appellee,
vs.
GO SUI SAN, administrator of the testate estate of ANTONIO TAMPOCO, defendant-appellant.

Rafael Palma for appellant.

Jesus G. Barrera and Paredes, Buencamino and Yulo for appellee.

VILLAMOR, J.:

The record shows that the plaintiff is the administrator of the intestate estate of Tan Peng Sue, just as the
defendant is the administrator in the testamentary proceeding for the settlement of the estate of Antonio
Tampoco; that, according to the books kept by the defendant administrator, Antonio Tampoco owed Tan Peng Sue,
about the month of January, 1920, the sum of P25,802.60, which with the interest stipulated by the two deceased
Tan Peng Sue and Antonio Tampoco in their lifetime at the rate of 9 6/10 per cent per year, amounted to
P30,272.89 at the end of the year 1922; that upon the death of Antonio Tampoco, which occurred on February 5,
1920, proceeding was instituted in the Court of First Instance of Manila for the settlement of his estate; that on
December 14 of that year commissioners were appointed to hear and decide whatever claim might be presented
against the estate; that said commissioners qualified as such in due time, and rendered their final report on June
27, 1921, which was approved by the court below on July 14 of said year; that about August 30, 1922, after the
approval by the court of the report of the committee on claims, the plaintiff, in his capacity as administrator of the
estate of Tan Peng Sue, moved the court that the committee on claims be again authorized, or a new committee
appointed, to hear and decide a claim that he had and which he was to present against the estate, alleging, among
other grounds, that the administrator Go Sui San had been assuring the heirs of Tan Peng Sue that they would not
lose their credit, were in no need of presenting their claim, and would be paid by the heirs of Antonio Tampoco as
soon as they should ask for it, and that in the meantime the credit might continue in the business of the deceased
Antonio Tampoco and thus earn interest.

Passing upon this motion, the Honorable Geo. R. Harvey, judge, on September 21, 1922, appointed new
commissioners, holding that the committee on claims did not comply with the imperative provisions of sections
687 and 693 of the Code of Civil Procedure in rendering its report, and that the motion of the plaintiff Tan Sen
Guan was in accordance with the provisions of section 690 of Act No. 190. After due proceeding the new
commissioners admitted the claim of the plaintiff, recommending its payment by the defendant administrator,
which was by agreement of the parties estimated at P30,272.89 at the end of the year 1922.

On December 22, 1923, the court presided over by Judge Anacleto Diaz rendered decision, absolving the defendant
administrator of the estate of Antonio Tampoco from the complaint, holding that the commissioners appointed on
September 21, 1922, had no authority under the law to hear and decide said claim, because the court that had
appointed them had on the said date no jurisdiction to appoint them in view of the fact that more than fourteen
months have elapsed since their final report was submitted by the former committee on claims in the aforesaid
testamentary proceeding and approved by the court. To this decision the plaintiff excepted on the 29th day of the
same month, and moved for the new trial on January 9, 1924, on the ground that said decision was against the law
and the facts proven at the trial.

On March 27, 1924, the lower court presided over by the Honorable Geo. R. Harvey, judge, after considering the
motion for new trial, rendered a new decision, setting aside that of December 22, 1923, and ordering the
administrator of the estate of Antonio Tampoco to pay the administrator of the estate of Tan Peng Sue the sum of
P28,802.60, with interest thereon at the rate of 9 6/10 per cent annum from March 28, 1920. From this decision
the administrator of the estate of Antonio Tampoco appealed, and his counsel in this court prays for the reversal of
the decision appealed from, alleging that the lower court erred: (a) In setting aside its former decision and in
entering a new decision entirely contrary to the preceding one, instead of granting a new trial; (b) in holding that
the claim presented was valid and effective at the time it was presented, and in not holding that the same was
extinguished at that time under the law; and (c) in not absolving the defendant from the complaint.

The first assignment of error raises the same question as that in issue in the case of Cordovero and Alcazar vs.
Villaruz and Borromeo, R.G. No. 21586, 1 recently decided by this court, as to the legal effect of a motion for new
trial under section 145, subsection 3, of the Code of Civil Procedure. In that case it was held that the discretionary
power granted the judges by section 145 of the Code of Civil Procedure to revise or amend their judgments, before
the same become final, may be exercised upon a motion based on section 145, subsection 3, jointly with, or
separately from the power to grant new trial, although the exercise of the power to grant new trial necessarily
requires the revocation of the former judgment; that under section 145, a judge may correct errors in his decisions,
and in revoking his original decision by amending it upon the motion a reopening of the case. Therefore this
assignment must be overruled.

Disregarding this feature of the case, what is important to decide is whether or not this action has prescribed, as
contended by the defendant.

The pertinent part of section 695 of the Code of Civil Procedure provides:

A person having a claim against a deceased person proper to be allowed by the committee, who does not,
after publication of the required notice, exhibit his claim to the committee as provided in this chapter,
shall be barred from recovering such demand or from pleading the same in offset to any action, except as
hereinafter provided.

Provisions similar to this are found in the statutes of many, if not all the, states of the Union, and are ordinarily
alluded to as statutes relative to claims not presented in due time. It was enacted in order to facilitate the speedy
liquidation of estates, and to that end, it bars all proceeding when the claim is one that was not presented after the
publication of the notice required.

To avoid the effect of section 695, the plaintiff lays stress on two circumstances. In the first place, he says that his
failure to present the claim to the committee appointed by the court on September 21, 1922, was due to the
machinations and fraudulent and false representations of the defendant. While it is easy to understand that the
interests of the plaintiff, in his capacity as administrator of the estate of Tan Peng Sue, were not duly protected, and
that his conduct was, to a certain extent, influenced by the unfavorable circumstances that surrounded him, yet we
hold that prescription cannot be avoided on the ground of fraud or undue influence. The failure of Tan Chu Lay, heir
of Tan Peng Sue, to present his claim was an omission committed by an heir who had knowledge of the existence of
the credit of his deceased father. The fact that Tan Chu Lay might have been induced by fraudulent machinations
and unlawful influence of the defendant administrator cannot affect the legal consequences of said act. And even if
it be admitted that the widow of Tan Peng Sue was in China while the committee on claims was acting in the
proceeding for the settlement of Antonio Tampoco's estate, still the result would be the same. The law does not
make any reservation or exception whatever, and this court cannot make either.

. . . Where the statute of non-claim makes no exception as to any persons or class of persons, the courts
can make none; and hence in the absence of some provision to the contrary, the statutes of non-claim run
against non-resident as well as resident, and infant as well as adult claimants, and also against insane
persons, and the estate of a deceased creditor. According to the weight of authority the statutes of non-
claim, unlike the general statutes of limitations, run against the state. . . . (18 Cyc., 468.)lawphi1.net
Secondly, to avoid the effect of section 695, the plaintiff alleges that the notice to the creditors was not published
in the manner prescribed by section 687 of the Code of Civil Procedure, which provides:

The committee so appointed shall appoint convenient times and places for the examination and allowance
of claims, and, within sixty days from the time of their appointment, shall post a notice in four public
places in the province stating the times and places of their meeting, and the time limited for creditors to
present their claims, and shall publish the same three weeks successively in a newspaper of general
circulation in the province, and give such other notice as the court directs. The court, in the commission
issued to the committee, shall designate the paper in which the notice shall be published, and the number
of places in the province in which it shall be posted, and any other mode of notice which the court directs.

Section 693 requires the committee to state in their report among other things, "the manner in which notice was
given to the claimants." The report of the committee was introduced as Exhibit L in the testamentary proceeding,
and really it was not written exactly in accordance with the technicality of the law. There is, however, attached to
said report, as a part thereof, the affidavit of the editor of the newspaper La Nacion, wherein it appears that the
committee on claims in the aforesaid proceeding had published for three consecutive weeks a notice to claimants,
stating that they might present their claims within the period of six months, the committee to hold meetings at the
office of Attorney M.G. Goyena, room No. 1, 34, Escolta, on the last Wednesday of each month at 3:30 p. m. for the
purpose of hearing and deciding claims. It, thus, appears that the committee complied with the requirements of
the law as to publication of notice, so much so that in the stipulation of facts it is stated that the commissioners
qualified, and under the date of December 14, 1920 published in the newspaper La Nacion the notice to claimants
prescribed by the law for three consecutive weeks. There are also attached to the report of the committee, the
appointment issued by the court, in which the places are designated where the notice should be posted, and the
newspaper in which it should be published for three weeks, giving the creditors the period of six months to present
their claims. We think that the documents attached to the report of said committee, the stipulation of facts and the
approval of said report by the trial court constitute a conclusive proof that the commissioners have complied with
the statute, requiring the publication of the notice to the creditors.

Before a credit may be held barred by our procedural statutes relative to liquidation of inheritance, it must appear,
among other things, that the committee have designated convenient hours and places for the holding of their
meetings for the examination and admission of claims, and that they have published this fact in the manner
provided by the law. Unless this is done, the right of a creditor cannot prescribe, and he who claims the benefit of
prescription has the burden of proof.

In these terms does the Supreme Court of Vermont comment on the statute of that State from which section 695
of our Code of Civil Procedure was taken. (Roberts vs. Estate of Burton, 27 Vt., 396.) Under general principles, there
can be no doubt but that, as the statutory provision in question has a tendency to destroy rights, it should not be
extended to cases distinct from those included in its language; and all the authorities, without exception, hold that
statutes of this character must be strictly construed, and the legal prescription of action will not be held to take
effect in a particular case unless the provision relative to the publication of notices have been entirely complied
with.lawphi1.net

Under section 690, a creditor who has failed to present his claim within the period fixed by the committee on
claims may apply to the court, within six months after the period previously fixed, for the renewal of the
commission for the purpose of examining his claim. Also a creditor may make such application even after six
months from the expiration of the period formerly fixed and before the final settlement of the estate, if the
committee shall have failed to give the notice required by section 687. The record shows that the application of the
plaintiff was presented fourteen months after the expiration of the period fixed for the filing of claims. And while it
was presented before the final settlement of the estate of Antonio Tampoco, yet, it having been proved that the
committee had published in the newspaper La Nacion the notice required by law, there was no possible ground for
granting said application. Even considering this application under section 113 of the Code of Civil Procedure, we
believe that the lapse of fourteen months is an unsurmountable barrier opposing the granting of said application.
It matters not that the defendant did not appeal from the order of the lower court appointing new commissioners,
if it is taken into consideration that it was entered beyond the authority given by section 690. And as the defendant
objected to said appointment, we believe that he is now entitled to raise the point in this court.

For the foregoing the judgment appealed from is reversed, and it is hereby declared that the plaintiff appellee has
lost his right to enforce his claim in this proceeding, without pronouncement as to costs. So ordered.

G.R. No. L-18107 August 30, 1962

MARIA G. AGUAS, FELIX GUARDINO and FRANCISCO SALINAS, plaintiffs-appellants,

vs.
HERMOGENES LLEMOS, deceased defendant substituted by his representatives,
PERPETUA YERRO-LLEMOS, HERMENEGILDO LLEMOS, FELINO LLEMOS and AMADO LLEMOS,defendants-
appellees.

Jesus M. Aguas for plaintiffs-appellants.

Serafin P. Ramento for defendants-appellees.

REYES, J.B.L., J.:

On 14 March 1960, Francisco Salinas and the spouses Felix Guardino and Maria Aguas jointly filed an action in the
Court of First Instance of Catbalogan, Samar (Civil Case No. 4824), to recover damages from Hermogenes Llemos,
averring that the latter had served them by registered mail with a copy of a petition for a writ of possession, with
notice that the same would be submitted to the said court of Samar on February 23, 1960 at 8: 00 a.m.; that in
view of the copy and notice served, plaintiffs proceeded to the court from their residence in Manila accompanied
by their lawyers, only to discover that no such petition had been filed; and that defendant Llemos maliciously failed
to appear in court, so that plaintiffs' expenditure and trouble turned out to be in vain, causing them mental anguish
and undue embarrassment.

On 1 April 1960, before he could answer the complaint, the defendant died. Upon leave of court, plaintiffs
amended their complaint to include the heirs of the deceased. On 21 July 1960, the heirs filed a motion to dismiss,
and by order of 12 August 1960, the court below dismissed it, on the ground that the legal representative, and not
the heirs, should have been made the party defendant; and that anyway the action being for recovery of money,
testate or intestate proceedings should be initiated and the claim filed therein (Rec. on Appeal, pp. 26-27).

Motion for reconsideration having been denied, the case was appealed to us on points of law.1äwphï1.ñët

Plaintiffs argue with considerable cogency that contrasting the correlated provisions of the Rules of Court, those
concerning claims that are barred if not filed in the estate settlement proceedings (Rule 87, sec. 5) and those
defining actions that survive and may be prosecuted against the executor or administrator (Rule 88, sec. 1), it is
apparent that actions for damages caused by tortious conduct of a defendant (as in the case at bar) survive the
death of the latter. Under Rule 87, section 5, the actions that are abated by death are: (1) claims for funeral
expenses and those for the last sickness of the decedent; (2) judgments for money; and (3) "all claims for money
against the decedent, arising from contract express or implied". None of these includes that of the plaintiffs-
appellants; for it is not enough that the claim against the deceased party be for money, but it must arise from
"contract express or implied", and these words (also used by the Rules in connection with attachments and derived
from the common law) were construed in Leung Ben vs. O'Brien, 38 Phil., 182, 189-194.

to include all purely personal obligations other than those which have their source in delict or tort.
Upon the other hand, Rule 88, section 1, enumerates actions that survive against a decedent's executors or
administrators, and they are: (1) actions to recover real and personal property from the estate; (2) actions to
enforce a lien thereon; and (3) actions to recover damages for an injury to person or property. The present suit is
one for damages under the last class, it having been held that "injury to property" is not limited to injuries to
specific property, but extends to other wrongs by which personal estate is injured or diminished (Baker vs. Crandall,
47 Am. Rep. 126; also 171 A.L.R., 1395). To maliciously cause a party to incur unnecessary expenses, as charged in
this case, is certainly injurious to that party's property (Javier vs. Araneta, L-4369, Aug. 31, 1953).

Be that as it may, it now appears from a communication from the Court of First Instance of Samar that the parties
have arrived at an amicable settlement of their differences, and that they have agreed to dismiss this appeal. The
settlement has been approved and embodied in an order of the Court of First Instance.

The case having thus become moot, it becomes unnecessary to resolve the questions raised therein. This appeal is,
therefore, ordered dismissed, without special pronouncement as to costs.

[G.R. No. 121597. June 29, 2001]

PHILIPPINE NATIONAL BANK, petitioner, vs. HON. COURT OF APPEALS, ALLAN M. CHUA as Special Administrator
of the Intestate Estate of the late ANTONIO M. CHUA and Mrs. ASUNCION M. CHUA, respondents.

DECISION
QUISUMBING, J.:

This petition assails the decision[1] of the Court of Appeals dated July 25, 1995 in CA-G.R. CV No. 36546,
affirming the decision dated September 4, 1991 of the Regional Trial Court of Balayan, Batangas, Branch 10 in Civil
Case No. 1988.
The facts, as found by the trial court and by the Court of Appeals, are not disputed.
The spouses Antonio M. Chua and Asuncion M. Chua were the owners of a parcel of land covered by Transfer
Certificate of Title No. P-142 and registered in their names. Upon Antonios death, the probate court appointed his
son, private respondent Allan M. Chua, special administrator of Antonios intestate estate. The court also authorized
Allan to obtain a loan accommodation of five hundred fifty thousand (P550,000.00) pesos from petitioner
Philippine National Bank to be secured by a real estate mortgage over the above-mentioned parcel of land.
On June 29, 1989, Allan obtained a loan of P450,000.00 from petitioner PNB evidenced by a promissory note,
payable on June 29, 1990, with interest at 18.8 percent per annum. To secure the loan, Allan executed a deed of
real estate mortgage on the aforesaid parcel of land.
On December 27, 1990, for failure to pay the loan in full, the bank extrajudicially foreclosed the real estate
mortgage, through the Ex-Officio Sheriff, who conducted a public auction of the mortgaged property pursuant to
the authority provided for in the deed of real estate mortgage. During the auction, PNB was the highest bidder with
a bid price P306,360.00. Since PNBs total claim as of the date of the auction sale was P679,185.63, the loan had a
payable balance of P372,825.63. To claim this deficiency, PNB instituted an action with the RTC, Balayan, Batangas,
Branch 10, docketed as Civil Case No. 1988, against both Mrs. Asuncion M. Chua and Allan Chua in his capacity as
special administrator of his fathers intestate estate.
 Despite summons duly served, private respondents did not answer the complaint. The trial court declared
them in default and received evidence ex parte.
On September 4, 1991, the RTC rendered its decision, ordering the dismissal of PNBs complaint. [2]
On appeal, the Court of Appeals affirmed the RTC decision by dismissing PNBs appeal for lack of merit. [3]
Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court. Petitioner cites two
grounds:
I

THE CA ERRED IN HOLDING THAT PNB CAN NO LONGER PURSUE ITS DEFICIENCY CLAIM AGAINST THE ESTATE
OF DECEASED ANTONIO M. CHUA, HAVING ELECTED ONE OF ITS ALTERNATIVE RIGHT PURSUANT TO SECTION
7 RULE 86 OF THE RULES OF COURT DESPITE A SPECIAL ENACTMENT (ACT. NO. 3135) COVERING
EXTRAJUDICIAL FORECLOSURE SALE ALLOWING RECOURSE FOR A DEFICIENCY CLAIM AS SUPPORTED BY
CONTEMPORARY JURISPRUDENCE.

II

THE CA ERRED IN HOLDING THAT ALLAN M. CHUA, AS SPECIAL ADMINISTRATOR OF THE INTESTATE ESTATE OF
HIS DECEASED FATHER ANTONIO M. CHUA ON ONE HAND, AND HIM AND HIS MOTHER ASUNCION CHUA AS
HEIRS ON THE OTHER HAND ARE NO LONGER LIABLE FOR THE DEBTS OF THE ESTATE. [4]

The primary issue posed before us is whether or not it was error for the Court of Appeals to rule that
petitioner may no longer pursue by civil action the recovery of the balance of indebtedness after having foreclosed
the property securing the same. A resolution of this issue will also resolve the secondary issue concerning any
further liability of respondents and of the decedents estate.
Petitioner contends that under prevailing jurisprudence, when the proceeds of the sale are insufficient to pay
the debt, the mortgagee has the right to recover the deficiency from the debtor. [5] It also contends that Act 3135,
otherwise known as An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real
Estate Mortgages, is the law applicable to this case of foreclosure sale and not Section 7 of Rule 86 of the Revised
Rules of Court[6] as held by the Court of Appeals.[7]
Private respondents argue that having chosen the remedy of extrajudicial foreclosure of the mortgaged
property of the deceased, petitioner is precluded from pursuing its deficiency claim against the estate of Antonio
M. Chua. This they say is pursuant to Section 7, Rule 86 of the Rules of Court, which states that:

Sec. 7. Rule 86. 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 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
hold as security, under the direction of the court if the court shall adjudge it to be for the interest of the estate that
such redemption shall be made.

Pertinent to the issue at bar, according to petitioner, are our decisions he cited. [8] Prudential Bank v.
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 petitioners cited cases involve 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.
To begin with, it is clear from the text of Section 7, Rule 89, that once the deed of real estate mortgage is
recorded in the proper Registry of Deeds, together with the corresponding court order authorizing the
administrator to mortgage the property, said deed shall be valid as if it has been executed by the deceased himself.
Section 7 provides in part:

Sec. 7. Rule 89. Regulations for granting authority to sell, mortgage, or otherwise encumber estate The court having
jurisdiction of the estate of the deceased may authorize the executor or administrator to sell personal estate, or to
sell, mortgage, or otherwise encumber real estate, in cases provided by these rules when it appears necessary or
beneficial under the following regulations:

xxx

(f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold, mortgaged, or
otherwise encumbered is situated, a certified copy of the order of the court, together with the deed of the
executor or administrator for such real estate, which shall be valid as if the deed had been executed by the
deceased in his lifetime.

In the present case, it is undisputed that the conditions under the aforecited rule have been complied with. It
follows that we must consider Sec. 7 of Rule 86, appropriately applicable to the controversy at hand.
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:
(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.[9]
In Perez v. Philippine National Bank, [10] reversing Pasno vs. Ravina,[11] we held:

The ruling in 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; 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 vs. 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. [12] 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
estates of deceased persons who have mortgaged real property for the security of debts, without any
compensatory advantage.

Clearly, in our view, petitioner herein has chosen the mortgage-creditors 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 in this case no further liability remains on the part of respondents and the late Antonio M. Chuas
estate.
WHEREFORE, finding no reversible error committed by respondent Court of Appeals, the instant petition is
hereby DENIED. The assailed decision of the Court of Appeals in CA-G.R. CV No. 36546 is AFFIRMED. Costs against
petitioner.
SO ORDERED.