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    Foreclosure

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    Francisco T. Del Castillo
    1. A secured creditor has three options to pursue satisfaction of a debt from a deceased debtor's estate: abandon security, foreclose on security through court making executor a party, or rely solely on foreclosure without admission as creditor. 2. The remedies are distinct, independent and mutually exclusive - choosing one waives rights to the others. Foreclosure through extrajudicial means waives right to recover deficiency from estate. 3. Before foreclosing a mortgage on a deceased debtor, an intestate proceeding must be commenced through appointment of an administrator by court overseeing estate settlement.

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    Foreclosure

    Uploaded by

    Francisco T. Del Castillo
    21 views1 page
    1. A secured creditor has three options to pursue satisfaction of a debt from a deceased debtor's estate: abandon security, foreclose on security through court making executor a party, or rely solely on foreclosure without admission as creditor. 2. The remedies are distinct, independent and mutually exclusive - choosing one waives rights to the others. Foreclosure through extrajudicial means waives right to recover deficiency from estate. 3. Before foreclosing a mortgage on a deceased debtor, an intestate proceeding must be commenced through appointment of an administrator by court overseeing estate settlement.

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    1. A secured creditor has three options to pursue satisfaction of a debt from a deceased debtor's estate: abandon security, foreclose on security through court making executor a party, or rely solely on foreclosure without admission as creditor. 2. The remedies are distinct, independent and mutually exclusive - choosing one waives rights to the others. Foreclosure through extrajudicial means waives right to recover deficiency from estate. 3. Before foreclosing a mortgage on a deceased debtor, an intestate proceeding must be commenced through appointment of an administrator by court overseeing estate settlement.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    21 views1 page

    Foreclosure

    Uploaded by

    Francisco T. Del Castillo
    1. A secured creditor has three options to pursue satisfaction of a debt from a deceased debtor's estate: abandon security, foreclose on security through court making executor a party, or rely solely on foreclosure without admission as creditor. 2. The remedies are distinct, independent and mutually exclusive - choosing one waives rights to the others. Foreclosure through extrajudicial means waives right to recover deficiency from estate. 3. Before foreclosing a mortgage on a deceased debtor, an intestate proceeding must be commenced through appointment of an administrator by court overseeing estate settlement.

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    FORECLOSURE OF DECEASED’S REAL ESTATE MORTGAGE

    Under our jurisprudence based on Section 7, Rule 86 of the Rules of Court, the secured creditor has
    three options that he may alternatively pursue for the satisfaction of the obligation in his favor. He may EITHER
    choose to:
    (1) abandon the security and prosecute his claim against the estate and share in the general distribution of the
    assets thereof;
    (2) foreclose his mortgage or realize upon his security by action in court, making the executor or administrator a
    party defendant and if there is judgment for deficiency, he may file a contingent claim against the estate within
    the statute of non-claims;
    (3) Rely solely on his mortgage and foreclosure (judicial or extrajudicial) the same at anytime within the period
    of the statute of limitations but he cannot be admitted as creditor and shall not receive in the distribution of the
    other assets of the estate.

    It must be emphasized that according to the Supreme Court, the said remedies are distinct,
    independent and mutually exclusive from each other. Therefore, when the creditor makes his choice, he waves
    his right to exercise the other choices. When the creditor chooses, for example, extra-judicial foreclosure under
    Act No. 3135, the creditor waives his right to recover any deficiency from the estate.

    BUT before we can foreclose the mortgage, an intestate proceeding must have already commenced –
    because the debtor-mortgagor is already deceased. Under our laws, before we can successfully claim
    money/property from a deceased, an executor or administrator of the estate of the said deceased must have
    already been appointed by the court so that any claim against the estate shall be filed with the said executor or
    administrator. Usually, an intestate proceeding is commenced by the heirs of the deceased and one of them is
    appointed as an administrator. The creditors of the deceased are then notified so that they can also notify the
    executor/administrator of whatever claim they may have against the estate of the deceased.

    The ordinary procedure by which to settle claims of indebtedness against the estate of a deceased
    person is for the claimant to present a claim before the probate court so that said court may order the
    administrator to pay the amount thereof. (Domingo vs Carlitos; GR NO. L-18994)

    However, in this case, since there was no will executed by the deceased, there is also no executor.
    Instead, an administrator may be appointed by the court, the order of preference in the appointment is as
    follows:
    1. Surviving spouse;
    2. Next of kin;
    3. Person requested by the surviving spouse or next of kind;
    4. Principal creditors; or
    5. Other persons selected by the court.

    So, what do you need to do to initiate an intestate proceeding? This is only a summary ---

    1. File a petition for letters of administration for the appointment of an administrator, the contents of which are
    as follows:
    (a) The jurisdictional facts; (the fact of death of the deceased and his residence at time of death)
    (b) The names, ages, and residences of the heirs, and the names and residences of the creditors, of
    the decedent;
    (c) The probable value and character of the property of the estate;
    (d) The name of the person for whom letters of administration are prayed.
    - as creditor, you may opt to be appointed as administrator. But then you’d have to file a bond.
    2. Publication and notice through publication of the petition.
    3. If there’s no opposition, you may be appointed as the administrator.
    4. Only then can you file a claim against the estate of the deceased.

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