Hasemeyer v. Philippine National Bank
REITERATIONFacts
The Antecedents: This case concerns the estate of the deceased J. F. H. Hasemeyer. A committee was appointed to settle the estate and received various claims from creditors. Among these claims was one from the Philippine National Bank for P66,313.61, which was secured by a mortgage on all properties of the estate. The committee initially allowed this claim, along with others, in its report filed on October 17, 1922. The court subsequently ordered the administratrix to pay the approved debts. Procedural History: On October 24, 1922, the committee filed an amendatory report, praying for the exclusion of the Philippine National Bank's claim. The bank's agent had decided to withdraw the claim because it was already secured by a registered mortgage. The court, after a hearing and noting the agreement of the bank's fiscal and no objection from the administratrix's attorney, approved this additional report on October 28, 1922. Subsequently, several creditors (Paris-Zamboanga, Philippine Refining Corporation, Compania Maritima, et al.) filed a motion to annul this order, arguing that by presenting the claim to the committee, the bank had waived its mortgage security, citing relevant Supreme Court decisions. The court denied this motion on April 28, 1923, finding that the bank had not made a conclusive election of remedies and had relied on its mortgage security. The Petition: The appellants, Compania Maritima, et al., appealed the trial court's order of April 28, 1923. They contend that the lower court erred in not holding that the Philippine National Bank waived its mortgage by presenting the claim to the committee, in permitting the withdrawal of the claim after it was approved and payment ordered, and in denying their motion to annul the order. Their argument hinges on Section 708 of the Code of Civil Procedure, as interpreted by prior Supreme Court rulings, which they believe mandates that a creditor must choose between presenting a claim to the committee or foreclosing a mortgage, but not both. They seek the annulment of the order and a directive for the administratrix to recover any payments made to the bank on account of the mortgage.
Issue(s)
Whether the Philippine National Bank, by presenting its claim to the committee on claims and appraisal, waived the mortgage security in its favor. Whether the trial court erred in permitting the withdrawal of the PNB's claim after it was initially approved by the committee and its payment ordered by the court. Whether the trial court erred in entering the order appealed from. Whether the administratrix should have been ordered to recover amounts paid to the Philippine National Bank on account of said mortgage.
Ruling
The Supreme Court affirmed the order of the trial court dated April 28, 1923, denying the motion to annul the approval of the amendatory report. The Court held that the Philippine National Bank did not waive its mortgage security and that the withdrawal of its claim was permissible under the circumstances.
Ratio Decidendi
On the issue of waiver of mortgage security: The Court held that the Philippine National Bank did not waive its mortgage security. The committee's original report explicitly stated that the indebtedness was secured by a first mortgage. The amendatory report clarified that the bank merely desired to have the mortgage taken into consideration if the properties of the estate were to be sold later, and that it was relying on the mortgage. The Court found no proof of collusion between the committee and the bank, and the presumption that the committee acted in good faith remained unrebutted. Therefore, the bank's intention was not to present the claim as an ordinary claim but to have its secured status acknowledged, thus not constituting a conclusive election of remedy that would waive the mortgage. On the issue of permitting the withdrawal of the claim: The Court found no reason to prevent the withdrawal of the claim, which had been included in the original report under specific circumstances and was subsequently amended. The amendment was filed before the order approving the first report became final. The court possessed full jurisdiction and ample authority to amend its order of approval to conform with the facts and the requirements of justice. Thus, the court acted correctly in approving the amendment. On the applicability of cited cases: The Court distinguished the present case from Osorio vs. San Agustin (25 Phil., 404) and Veloso vs. Heredia (33 Phil., 306). In those cited cases, the creditors made a conclusive and final election of both remedies (presenting the claim and foreclosing the mortgage). In the instant case, the filing of the claim with the committee, which was lawfully withdrawn on time, did not constitute a final or conclusive election. The attention of the committee was called to the error in time, and the report was amended accordingly. On the remaining assignments of error: The Court found that the other assignments of error were consequential to the preceding ones and thus also lacked merit. The order appealed from was affirmed.
Main Doctrine
A mortgage creditor who presents a claim to the committee on claims and appraisal in an estate settlement proceeding does not waive their mortgage security if it is expressly stated that the claim is secured by a mortgage, and the claim is subsequently withdrawn or amended before the order approving the committee's report becomes final. The election of a remedy is not conclusive until it is final.