G.R. No. L-24008, August 31, 1970
Quirino Soriano, Plaintiff-Appellant, v. Parsons Hardware Co., Inc., et al., Defendants-Appellees.

FACTS

Plaintiff Quirino Soriano, as administrator of the intestate estate of Claro Soriano, appealed the dismissal of his amended complaint seeking annulment of a foreclosure sale, recovery of mortgaged properties, and damages. The defendant, Parsons Hardware Company, Inc., held two mortgage deeds over four parcels of registered land executed by spouses Claro Soriano and Irene Quilao. After Claro Soriano’s death, the Company filed a “Contingent Claim Against the Estate” on January 14, 1958, in the intestate proceedings, stating it relied on the mortgages for satisfaction but reserved its right to claim any deficiency after judicial foreclosure. Four years later, on February 23, 1962, the Company requested the provincial sheriff to foreclose the mortgages extrajudicially. The sheriff scheduled a public auction for November 12, 1962. On November 9, 1962, the Company, the plaintiff administrator, and Irene Quilao Vda. de Soriano jointly requested a postponement of the sale to December 20, 1962, which was granted. The sale proceeded, and the Company purchased the properties as the sole bidder. One year after the sale, on December 20, 1963, the plaintiff filed the complaint, arguing the foreclosure sale was void because the Company, having elected to pursue its claim in the intestate proceedings, could not resort to extrajudicial foreclosure.

ISSUE

Whether under Section 7 of Rule 87 (now 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 subsequent extrajudicial foreclosure sale.

RULING

No. The Supreme Court affirmed the dismissal of the amended complaint. Section 7 of Rule 87 (now Rule 86) provides three distinct, independent, and mutually exclusive remedies for a mortgage creditor: (a) abandon the security and prosecute the claim for a share in the estate’s general distribution; (b) foreclose the mortgage by ordinary court action, with the executor or administrator as a party defendant, and claim any deficiency judgment; or (c) rely solely on the security and foreclose it within the statute of limitations, thereby forfeiting any claim as a creditor in the estate’s other assets. The Court found that the Company, by the terms of its “Contingent Claim,” explicitly indicated it would rely on the mortgages and reserve the right to seek a deficiency judgment after judicial foreclosure, thereby electing the second remedy. However, the election of an option is not jurisdictional, and as long as no positive step has been taken in pursuance of that election, the creditor is not precluded from resorting to another available option. The filing of the “Contingent Claim” merely served as notice to the intestate court and signified an election, but did not automatically initiate judicial foreclosure, which required an independent complaint. Moreover, the plaintiff administrator, by jointly requesting a postponement of the extrajudicial sale, consented to the foreclosure and took no action to question its validity for over a year and nine months, until the last day of the redemption period, thereby being estopped from challenging the sale.