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  370SUPREME COURT REPORTS ANNOTATED  Philippine National Bank vs. Court of Appeals 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 ANTONIOM. CHUA and Mrs. ASUNCION M. CHUA, respondents. Mortgages; Foreclosure of Mortgage; Settlement of Estates; Itis 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 theadministrator to mortgage the property, said deed shall be valid asif it has been executed by the deceased himself  .—To begin with, itis 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 theadministrator to mortgage the property, said deed shall be validas if it has been executed by the deceased himself. Section 7provides in part: Sec. 7.  ______________  *  SECOND DIVISION. 371  VOL. 360, JUNE 29, 2001371  Philippine National Bank vs. Court of Appeals Rule 89. Regulations for granting authority to sell, mortgage, orotherwise encumber estate.  —The court having jurisdiction of theestate of the deceased may authorize the executor oradministrator to sell personal estate, or to sell, mortgage, orotherwise encumber real estate, in cases provided by these rules  when it appears necessary or beneficial under the followingregulations: x x x (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 copyof the order of the court, together with the deed of the executor oradministrator for such real estate, which shall be valid as if thedeed had been executed by the deceased in his lifetime.Same; Same; Same; Section 7, Rule 86 grants to themortgagee three distinct, independent and mutually exclusiveremedies that can be alternatively pursued by the mortgagecreditor for the satisfaction of his credit in case the mortgagor dies.  —In the present case, it is undisputed that the conditions underthe aforecited rule have been complied with. It follows that wemust consider Sec. 7 of Rule 86, appropriately applicable to thecontroversy at hand. Case law now holds that this rule grants tothe mortgagee three distinct, independent and mutually exclusiveremedies that can be alternatively pursued by the mortgagecreditor for the satisfaction of his credit in case the mortgagordies, among them: (1) to waive the mortgage and claim the entiredebt from the estate of the mortgagor as an ordinary claim; (2) toforeclose the mortgage judicially and prove any deficiency as anordinary claim; and (3) to rely on the mortgage exclusively,foreclosing the same at any time before it is barred byprescription without right to file a claim for any deficiency.Same; Same; Same; The plain result of adopting the last modeof foreclosure under Section 7, Rule 86 is that the creditor waiveshis right to recover any deficiency from the estate.  —The plainresult of adopting the last mode of foreclosure is that the creditorwaives his right to recover any deficiency from the estate.Following the  Perez  ruling that the third mode includesextrajudicial foreclosure sales, the result of extrajudicialforeclosure is that the creditor waives any further deficiencyclaim. The dissent in  Pasno,  as adopted in  Perez,  supports thisconclusion, thus: When account is further taken of the fact that acreditor who elects to foreclose by extrajudicial sale waives allright to recover against the estate of the deceased debtor for anydeficiency remaining unpaid after the sale  it will be readily seenthat the decision in this case (referring to the majority opinion)will impose a burden upon the estates of deceased persons whohave mortgaged real property for the security of debts, withoutany compensatory advantage. 372 372SUPREME COURT REPORTS ANNOTATED  Philippine National Bank vs. Court of Appeals  PETITION for review on certiorari of a decision of theCourt of Appeals.The facts are stated in the opinion of the Court.  The Chief Legal Counsel  for PNB.  Ricardo T. Diaz  for private respondents.QUISUMBING, J. :This petition assails the decision 1  of the Court of Appealsdated July 25, 1995 in CA-G.R. CV No. 36546, affirmingthe decision dated September 4, 1991 of the Regional TrialCourt 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. Chuawere the owners of a parcel of land covered by TransferCertificate of Title No. P-142 and registered in their names.Upon Antonio’s death, the probate court appointed his son,private respondent Allan M. Chua, special administrator of  Antonio’s intestate estate. The court also authorized Allanto obtain a loan accommodation of five hundred fiftythousand (P550,000.00) pesos from petitioner PhilippineNational Bank to be secured by a real estate mortgage overthe above-mentioned parcel of land.On June 29, 1989, Allan obtained a loan of P450,000.00from petitioner PNB evidenced by a promissory note,payable on June 29, 1990, with interest at 18.8 percent perannum. To secure the loan, Allan executed a deed of realestate 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 estatemortgage, through the Ex-Officio  Sheriff, who conducted apublic auction of the mortgaged property pursuant to theauthority provided for in the deed of real estate mortgage.During the auction, PNB was the highest bidder with a bidprice P306,360.00. Since PNB’s total claim as of   ______________  1  Rollo, pp. 28-36. 373  VOL. 360, JUNE 29, 2001373  Philippine National Bank vs. Court of Appeals  the date of the auction sale was P679,185.63, the loan hada 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 hiscapacity as special administrator of his father’s intestateestate.Despite summons duly served, private respondents didnot answer the complaint. The trial court declared them indefault and received evidence ex parte. On September 4, 1991, the RTC rendered its decision,ordering the dismissal of PNB’s complaint. 2 On appeal, the Court of Appeals affirmed the RTCdecision by dismissing PNB’s appeal for lack of merit. 3 Hence, the present petition for review on certiorariunder Rule 45 of the Rules of Court. Petitioner cites twogrounds: ITHE CA ERRED IN HOLDING THAT PNB CAN NO LONGERPURSUE ITS DEFICIENCY CLAIM AGAINST THE ESTATE OFDECEASED ANTONIO M. CHUA, HAVING ELECTED ONE OFITS ALTERNATIVE RIGHT PURSUANT TO SECTION 7 RULE86 OF THE RULES OF COURT DESPITE A SPECIALENACTMENT (ACT. NO. 3135) COVERING EXTRAJUDICIALFORECLOSURE SALE ALLOWING RECOURSE FOR A DEFICIENCY CLAIM AS SUPPORTED BY CONTEMPORARY JURISPRUDENCE.IITHE CA ERRED IN HOLDING THAT ALLAN M. CHUA, ASSPECIAL ADMINISTRATOR OF THE INTESTATE ESTATE OFHIS DECEASED FATHER ANTONIO M. CHUA ON ONEHAND, AND HIM AND HIS MOTHER ASUNCION CHUA ASHEIRS ON THE OTHER HAND ARE NO LONGER LIABLEFOR THE DEBTS OF THE ESTATE. 4  ______________  2   Id ., at 28. 3   Id ., at 36. 4   Id ., at 17. 374 374SUPREME COURT REPORTS ANNOTATED  Philippine National Bank vs. Court of Appeals
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