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PNB vs. CA et al G.R. No. 121597 June 29, 2001 FACTS: The spouses Chua were the owners of a parcel of land covered by a TCT and registered in t heir names. Upon the husband’s death, the probate court appointed his son, private respondent Allan as special administrator of the deceased’s intestate estate. The court also authorized Allan to obtain a loan accommodation from PNB to be secured by a real estate mortgage over the above-mentioned parcel of land, which Allan did for P450,000.00 with interest. For failure to pay the loan in full, the bank extrajudicially foreclosed the real estate mortgage. During the auction, PNB was the highest bidder. However, the loan having a payable balance, to claim this deficiency, PNB instituted an action with the RTC, Balayan, Batangas, against both Mrs. Chua and Allan. The RTC rendered its decision, ordering the dismissal of PNB’s complaint. On appeal, the CA affirmed the RTC decision by dismissing PNB’s appeal for lack of merit. Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court. ISSUE: The WON it was er ror for the CA 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. HELD: petition is DENIED. The assailed decision of the CA is AFFIRMED. No Petitioner relies on Prudential Bank v. Martinez, 189 SCRA 612, 615 (1990), 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 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 CA correctly stated, the Rules of Court on Special Proceedings comes into play decisively. The applicable rule is Section 7 of Rule 86 of the Revised Rules of Court ( which PNB conte nds is not.) In the present case it is undisputed that the conditions under the aforecited rule have been complied with [see notes]. It follows that we must consider Sec. 7 of Rule 86, appropriately applicable to the controversy at hand, which in summary [and case law as well] 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 cr edit 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;

Property Cases 12-05 Digest

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