Manalansan vs. Castañeda

An action to enforce a lien on property, such as a mortgage foreclosure, survives the death of a party and may be prosecuted and enforced independently of the testate or intestate proceedings, because the mortgaged property does not, except insofar as its value may exceed the debt, belong to the estate. The saving clause in Section 7, Rule 86 of the Revised Rules of Court does not confer jurisdiction upon the probate court to enforce a mortgage lien, nor may it be relied upon to delegate the execution of a foreclosure judgment to the probate court.

The petitioners, spouses Benito Manalansan and Ines Vitug-Manalansan, were mortgagees of a fish-pond and residential lot situated at Lubao, Pampanga, owned by spouses Dominador and Adoracion Danan. The mortgage was constituted on June 22, 1962, to guarantee payment of P62,574.80 within one year, with 12% interest compounded annually. When the mortgagors failed to pay despite demands, the mortgagees filed an action for foreclosure of mortgage with the Court of First Instance of Pampanga. The case involves the interplay between the rules on execution of judgments and the settlement of estates of deceased persons, specifically whether a foreclosure judgment against a mortgagor who dies during the pendency of the appeal may be enforced by writ of execution or must instead be presented as a money claim in the intestate proceedings.

On June 22, 1962, spouses Dominador and Adoracion Danan constituted a mortgage over their fish-pond and residential lot situated at Lubao, Pampanga, in favor of petitioners spouses Benito Manalansan and Ines Vitug-Manalansan, to guarantee the payment of P62,574.80 within one year, with 12% interest compounded annually. As the mortgagors did not pay notwithstanding demands, an action for the foreclosure of the mortgage was filed with the Court of First Instance of Pampanga on April 2, 1966. After trial, judgment was rendered on April 23, 1969, ordering the defendants to pay the plaintiffs, jointly and severally, within a period of ninety days from date, the sum of P62,574.80 with interest at 12% compounded annually from June 2, 1962 until the full obligation is paid, plus attorney's fees equivalent to ten percent of the amount due and unpaid, moral damages of P5,000.00, and costs of suit. In the event that the defendants failed to make payment within the period stated, the mortgaged properties were to be sold at public auction, with the proceeds applied to the payment of the mortgage indebtedness and other sums adjudged.

The defendant spouses appealed to the Court of Appeals, which modified the judgment by eliminating the portion ordering the payment of moral damages. Dissatisfied, the defendant spouses filed a petition for review with the Supreme Court, but their petition was denied on September 25, 1974. In due time, the records of the case were remanded to the court below, and upon application, a writ of execution was issued on January 13, 1975.

When the sheriff was about to levy upon the mortgaged properties, private respondent Adoracion Danan opposed the levy on execution and filed a motion to set aside the writ of execution on the grounds that the properties are in custodia legis and that the judgment should be presented as a money claim in the Intestate Estate of Dominador Danan, pursuant to Section 5, Rule 86 of the Revised Rules of Court, since Dominador Danan had died on November 7, 1970, while the case was pending appeal before the Court of Appeals, and intestate proceedings for the settlement of his estate had already been instituted. Acting upon the motion, the respondent Judge issued an order on April 24, 1975, directing the sheriff to desist from enforcing the writ of execution and setting the incident for hearing. After hearing the parties, the respondent Judge issued an order on November 4, 1975, setting aside the writ of execution and ordering that a copy of the order embodying the judgment be served on the administratrix of the estate of the late Dominador Danan through the intestate court, with the indorsement of the coordinate branch of the court for the execution of the judgment. The petitioners filed a motion for reconsideration, which was denied on March 31, 1976.

• Grave Abuse of Discretion: The petitioners contended that the respondent Judge abused his discretion, amounting to lack of jurisdiction, in delegating the execution of a judgment to the probate court, which has no jurisdiction to enforce a lien on property.

• Custodia Legis and Money Claim: The private respondent opposed the levy on execution and moved to set aside the writ of execution on the grounds that the properties are in custodia legis and that the judgment should be presented as a money claim in the Intestate Estate of Dominador Danan, pursuant to Section 5, Rule 86 of the Revised Rules of Court, since Dominador Danan had died while the case was pending appeal and intestate proceedings had already been instituted.

• Jurisdiction of the Probate Court: Whether the respondent Judge gravely abused his discretion in setting aside the writ of execution and delegating the execution of the foreclosure judgment to the probate court.
• Effect of Death of Mortgagor: Whether the death of the mortgagor during the pendency of the appeal nullifies the writ of execution issued in the foreclosure case.

• Jurisdiction of the Probate Court: Yes. The respondent Judge committed grave abuse of discretion in setting aside the writ of execution and in ordering that the judgment be served on the administratrix of the estate through the intestate court. The saving clause in Section 7, Rule 86 of the Revised Rules of Court does not confer jurisdiction upon the probate court to enforce a mortgage lien, nor can it be relied upon to delegate the execution of the judgment of foreclosure to the probate court.
• Effect of Death of Mortgagor: No. The fact that the defendant died before, and not after, the decision of the Court of Appeals became final and executory will not nullify the writ of execution already issued. The writ may yet be enforced against his executor or administrator, if there be any, or his successors-in-interest.

• Jurisdiction of the Probate Court: The action filed was for the foreclosure of a mortgage, or an action to enforce a lien on property. Under Section 1, Rule 87 of the Revised Rules of Court, it is an action which survives. Being so, the judgment rendered therein may be enforced by a writ of execution. Citing Testamentaria de Don Amadeo Matute Olave vs. Canlas, the Court ruled that an action to enforce a lien on property may be prosecuted by the interested person against the executor or administrator independently of the testate or intestate proceedings, for the reason that such claims cannot in any just sense be considered claims against the estate, but the right to subject specific property to the claim arises from the contract of the debtor whereby he has during life set aside certain property for its payment, and such property does not, except insofar as its value may exceed the debt, belong to the estate. Since the mortgaged property does not belong to the estate of the late Dominador Danan, the probate court has no jurisdiction over the property, and the respondent Judge abused his discretion in delegating the execution of the judgment to the probate court. The saving clause in Section 7, Rule 86 merely reserves a right to the executor or administrator of an estate to redeem a mortgaged or pledged property of a decedent which the mortgagee or pledgee has opted to foreclose, instead of filing a money claim with the probate court. While the redemption is subject to the approval of the probate court, the exercise of the right is discretionary upon the executor or administrator and may not be ordered by the probate court upon its own motion.

• Effect of Death of Mortgagor: Citing Miranda vs. Abbas, the Court noted that judgment was rendered two months before the death of the defendant in that case, and since neither the defendant nor his heirs after his death appealed from the judgment, the writ of execution was issued as a matter of course. The successors of the decedent contended that the writ of execution issued was void because contrary to Section 7, Rule 39, the defendant died before, not after, the entry of judgment. The Court rejected the theory, saying that the provision cannot be so construed as to invalidate the writ of execution already issued insofar as service thereof upon the heirs or successors-in-interest of the defendant is concerned. It merely indicates against whom the writ of execution is to be enforced when the losing party dies after the entry of judgment or order. Nothing therein, nor in the entire Rule 39, intimates that a writ of execution issued after a party dies, which death occurs before entry of the judgment, is a nullity. The writ may yet be enforced against his executor or administrator, if there be any, or his successors-in-interest.

• Action to Enforce a Lien Survives Death — An action to enforce a lien on property, such as a mortgage foreclosure, is not a mere claim for money against the estate but an action which survives the death of the party. Such action may be prosecuted by the interested person against the executor or administrator independently of the testate or intestate proceedings, because the right to subject specific property to the claim arises from the contract of the debtor whereby he has during life set aside certain property for its payment, and such property does not, except insofar as its value may exceed the debt, belong to the estate.

• Limited Jurisdiction of Probate Court — The probate court is a court of limited jurisdiction and has no jurisdiction to enforce a mortgage lien. The saving clause in Section 7, Rule 86 of the Revised Rules of Court merely reserves a right to the executor or administrator of an estate to redeem a mortgaged or pledged property of a decedent which the mortgagee or pledgee has opted to foreclose, instead of filing a money claim with the probate court. The exercise of the right is discretionary upon the executor or administrator and may not be ordered by the probate court upon its own motion.

• Execution After Death of Party — Section 7, Rule 39 of the Revised Rules of Court merely indicates against whom the writ of execution is to be enforced when the losing party dies after the entry of judgment or order. It does not invalidate a writ of execution issued after a party dies, which death occurs before entry of the judgment. The writ may yet be enforced against his executor or administrator, if there be any, or his successors-in-interest.

• "An action to enforce a lien on property may be prosecuted by the interested person against the executor or administrator independently of the testate or intestate proceedings 'for the reason that such claims cannot in any just sense be considered claims against the estate, but the right to subject specific property to the claim arises from the contract of the debtor whereby ha has during life set aside certain property for its payment, and such property does not, except in so far as its value may exceed the debt, belong to the estate.'" — This passage states the ratio decidendi: a mortgage foreclosure action is not a claim against the estate but an action to enforce a lien on specific property, which survives the death of the mortgagor.

• "The provision (Section 7 of Rule 39) relied upon by the petitioners cannot be so construed as to invalidate the writ of execution already issued in so far as service thereof upon the heirs or successors-in-interest of the defendant is concerned. It merely indicates against whom the writ of execution is to be enforced when the losing party dies after the entry of judgment or order. Nothing therein, nor in the entire Rule 39, to our mind, even as much as intimates that a writ of execution issued after a party dies, which death occurs before entry of the judgment, is a nullity. The writ may yet be enforced against his executor or administrator, if there be any, or his successors-in-interest." — This passage, quoted from Miranda vs. Abbas, establishes that the death of a party before entry of judgment does not nullify a subsequently issued writ of execution.

• Testamentaria de Don Amadeo Matute Olave vs. Canlas, G.R. No. L-12709, February 28, 1962, 4 SCRA 463 — Controlling precedent holding that an action to enforce a lien on property may be prosecuted independently of the testate or intestate proceedings, because such claims are not claims against the estate but rights to subject specific property to the claim.
• Miranda vs. Abbas, L-25070, January 27, 1967, 19 SCRA 117 — Followed, holding that Section 7, Rule 39 does not invalidate a writ of execution issued after a party dies, which death occurs before entry of the judgment; the writ may be enforced against the executor or administrator or successors-in-interest.

• Section 7, Rule 86, Revised Rules of Court — The saving clause provides that nothing therein shall prohibit the executor or administrator from redeeming the mortgaged or pledged property of a decedent 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. The Court held that this provision does not confer jurisdiction upon the probate court to enforce a mortgage lien, nor may it be relied upon to delegate the execution of a foreclosure judgment to the probate court.
• Section 1, Rule 87, Revised Rules of Court — Provides that no action upon a claim for the recovery of money or debt or interest thereon shall be commenced against the executor or administrator, but actions to recover real or personal property, or an interest therein, from the estate, or to enforce a lien thereon, and actions to recover damages for an injury to person or property, real or personal, may be commenced against him. The Court applied this provision to hold that a foreclosure action is an action to enforce a lien on property which survives the death of the mortgagor.
• Section 7, Rule 39, Revised Rules of Court — Provides for execution in case of death of a party, indicating against whom the writ of execution is to be enforced when the losing party dies after the entry of judgment or order. The Court held that this provision does not invalidate a writ of execution issued after a party dies, which death occurs before entry of the judgment.

Fernando (Chairman), Barredo, and Santos, JJ., concurred. Justice Aquino wrote a separate concurring opinion, in which Justice Antonio concurred.

N/A — There were no dissenting opinions. Justice Aquino's separate concurring opinion agreed with the majority's disposition but added observations: the trial court's interpretation of Section 7, Rule 86 was erroneous; the action for foreclosure was not extinguished by the death of the mortgagor because it is an action to enforce a mortgage lien, not a pure money claim; the surviving spouse, Mrs. Danan, who is also the administratrix of her husband's estate, should be substituted for her deceased husband in the foreclosure case; and the contention that the mortgaged properties cannot be sold at public auction because they are in custodia legis in the intestate proceeding is wrong, as it is the San Fernando branch where the foreclosure case is pending that has custody of the properties.