FREE LEGAL ADVICE IN DEAR PAO COLUMN

Dear PAO,

My brother and I found out that our deceased mother had mortgaged a property in Caloocan City in 2000. The son of the mortgagee was acting in her behalf who wanted us to pay the loan in the amount of P120,000. I asked him if he was given a special power of attorney by his mother but it seems not real. Can he sell the said property? What can we do to have the title returned to us?

RAMON Dear Ramon,

An obligation to pay a sum of money is not extinguished by reason of the death of the debtor, with more reason if the said loan is secured by a real estate mortgage. Under the law, the estate of the debtor shall answer for the loan which he/she obtained during his/ her lifetime. However, the payment of the same shall be limited to the value of his/her estate.

Insofar as the loan of your deceased mother is concerned, her creditor may foreclose the mortgaged property, auction the same and the proceeds thereof be applied to the loan. In case of deficit, the same may still be charged against the estate. She may likewise file a case against the estate of your deceased mother for the payment of the said loan instead of foreclosure proceedings. Section 7, Rule 86 of the Revised Rules of Court of the Philippines provides:

“Sec. 7. Mortgage debt due from estate. - A creditor holding a claim against the deceased secured by mortgage or other collateral security, may abandon the security and prosecute his claim in the manner provided in this rule, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by action in court, making the executor or administrator a party defendant, and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may claim his deficiency judgment in the manner provided in the preceding section; or he may rely upon his mortgage of other security alone, and foreclose the same at any time within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, 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.”

It is clear therefore that there is a possibility that the abovementioned property of your deceased mother may be sold to answer for the loan which she incurred through a foreclosure proceedings. However, it must be done in accordance with law and initiated by the creditor or her authorized representatives.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to guide you with our opinion on the matter.