The employer has actually died, the employee will make a claim of the backwages in a

claim against the estate during the settlement proceedings.

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In the 3rd one, you rely on the security alone. It is the same as the 2 nd. Yung 2nd natin
may foreclosure, pero sa 2 nd natin may deficiency judgment. Dito sa 3 rd natin, magfo-
foreclose ka but you rely on the security alone, meaning, if there is a deficiency you do
not claim it anymore in the settlement of estate.

To repeat, in the 3rd remedy, we do not anymore recover the deficiency so after the
auction kung may kulang pa – kunwari in our example P100K yung loan, tapos
finorclose P60K yung proceeds ng sale, may 40K na kulang – under the 3 rd remedy,
hindi mo na irerecover yung P40K, you will just rely on the mortgage.

Under the 3rd kind, this one includes extrajudicial foreclosure of mortgage, so kung sa
No. 2 natin – judicial foreclosure; sa No. 3 it includes extrajudicial foreclosure so if you
avail of this hindi ka na dapat magfa-file ng claim against the estate for any deficiency. If
you will remember, kapag meron kang deed of real estate mortgage with a right to
extrajudicially foreclose, if you will remember the difference, between judicial and
extrajudicial –
 Sa judicial hindi nyo kailangan ng special power ng mortgagor authorizing you to
foreclose
 Kapag extrajudicial, there has to be a special authority by the mortgagor
authorizing the mortgagee to extrajudicially foreclose. Kailangan may special
power.

You also learned in agency, nasa rule kapag namatay na, nawawala na yung authority.
But sabi ng jurisprudence, the power to foreclose a mortgage is not an ordinary agency
and therefore, the power to foreclose survives the death of the mortgagor. The right of
the mortgagee to extrajudicially foreclose exists even after the death. If you availed of
this, you are barred from making a claim for deficiency judgment. If the creditor avails of
No. 2 – judicial foreclosure with right to recover deficiency; or no. 3 just to foreclose
without recovery the deficiency, the executor or administrator may still redeem the
property that was foreclosed or mortgaged. Paano ire-redeem ng executor or
administrator ‘to? The EXECAD just needs to pay the debt. Pag binayaran mo yung
debt, obviously, mare-release na yung security, mare-recover nila yung property that is
the collateral or the security for the loan.

Let us move on to Sec. 7. As I’ve said, these remedies are independent and mutually
exclusive of each other, so the election of one, bar the exercise of the others. Sec. 7
also applies where the administrator who mortgages the property of the estate to secure
the loan obtained. So, we discussed the remedies. It presupposes these obligations
were incurred by the deceased prior to the death pero we can also apply these
remedies in cases where the EXECAD itself, acting as representative of the estate
obtains a loan during the settlement proceedings secured by mortgage. So yung the
same remedies ng creditor even if the loan was obtained after death by the EXECAD
available sya. Still, the election of one waives the others.

Question. X engaged the services of a lawyer to represent him in a civil case during his
lifetime. At that time X was the defendant. It was agreed that X will pay the attorney’s
fees at the amount of 20% of the market value of the property subject of litigation. This
payable upon final termination of the case.
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Recap on No. 1: Assets. Ano ibig sabihin nun? It means you will just file your claim in
the notice of claims for creditors under Sec. 5, Rule 86, but when you do this it is akin to
a collection of sum of money so it means you forego already your mortgage, di mo na a-
avail yung mortgage mo. This is similar to collection of sum of money.

Recap on No. 2: you foreclose the mortgage upon the security. Take note if you look at
the Rules on Sec. 7 ang pagkasabi ay “foreclose mortgage or realize upon his security
by action in court making executor or administrator a party defendant”. So if by the
wordings of the Rule, this 2nd option of foreclosing the mortgage is by action in court. It
presupposes or contemplates a judicial foreclosure of mortgage. Kung meron kang
deficiency, you pursue it as an ordinary claim. Yung deficiency ifi-file nyo sa Sec. 5,
Rule 86. Kunwari you have a loan secured by a real estate mortgage P100K. kapag
option 1, you claim the entire P100K in the settlement of estate pursuant to Sec. 5, Rule
86. Kung No. 2 tayo a special civil action for judicial foreclosure of mortgage. Kunwari
nabenta na yung property dun sa mortgage sa auction. So ang realized sale ng auction,
let’s say P60K, so may kulang ka pa na P40K. That is your deficiency. So the
deficiency, you avail of it as an ordinary claim, meaning, that P40K you file it as a claim
under Sec. 5, Rule 86 against the estate.

To repeat, sa No. 1, dedma mo yung mortgage. You fie the entire amount of P100K na
obligation sa estate, sa statement of claims under Sec. 5, Rule 86.

No. 2, hindi ka muna magfa-file ng claim sa estate. Ang gagawin mo is you bring a
special civil action for judicial foreclosure of mortgage. You foreclose the mortgage. And
you know in foreclosure after, one of the processes, after the first stage at di pa
nabayaran during the equity redemption period, there will be a sale of the property in
the public auction. So if the property is sold at the public auction and let us say that the
price of the property is P60K. So meron ka pang P40K deficiency because the
obligation is P100K. Ano gagawin mo dun sa P40K? You will claim it in the estate. Ifi-file
nyo sya sa estate, sa statement of claims under Sec. 5, Rule 86, yung P40K lang.

Who will be the defendant in your judicial foreclosure case? As I said, it should be the
executor or administrator. Kailangan yung EXECAD yung defendant mo. Pano kung
wala pang executor or administrator assigned? In one case, the court allowed the
special administrator to be the defendant because by that time wala pang appointed na
executor or administrator. And you know under the Rules, sinabi natin once na
magkaroon na ng EXECAD appointed, sila na yung magtutuloy ng kaso filed by or
against the special administrator.

To repeat, the foreclosure under No. 2 is a judicial foreclosure. You file it under, as if
you will file an independent action, a special civil action for judicial foreclosure.

Can you instead ask the probate court to foreclose the mortgage? You cannot. The
probate court is a court of limited jurisdiction. Wala syang power dyan. You need to file
a special civil action for foreclosure of mortgage. You will file sa probate court is yung
deficiency judgment.

The first remedy of the creditor is to file a claim against the estate. After you file a claim
for P100K against the estate, can you simultaneously bring an action for judicial
foreclosure of mortgage? Can you avail of two options together? You cannot avail both
remedies. If you elect one, you must abandon the other.

No. 3. The 3rd option. The 3rd option naman is you rely on the mortgage or the security
alone so in that instance it includes extrajudicial foreclosure of mortgage. So pag nag
extrajudicially foreclose kayo, you cannot anymore recover the deficiency under the 3 rd
remedy of the creditor. Again, all of these three remedies you can only avail of one; you
cannot avail of the others. Isa lang pwede. The difference between No. 2 and 3 is:
 No. 2 – judicial foreclosure; kasi it has to be an action in court and then you claim
the deficiency pursuant to Sec. Rule 86
 No. 3 – foreclose the mortgage pero hindi ka na magke-claim ng deficiency.
Even if it is an extrajudicial foreclosure, the death will not destroy the agency. It
survives the death. There is still a right to extrajudicially foreclose after the death.

The remedies that we mentioned, it also applies to instances during the settlement
proceedings the EXECAD obtains a loan for the estate and his loan is secured by a
mortgage. So, the remedies we discussed it can apply to loans obtained after the death
by the EXECAD in connection with the settlement of estate.
Again, in my question, X engaged the services of a lawyer to represent him in a civil
case during his lifetime. At that time X was the defendant. It was agreed that X will pay
the attorney’s fees at the amount of 20% of the market value of the property subject of
litigation. This payable upon final termination of the case. Judgment was rendered in
favor of X. the judgment attained finality kaya lang namatay na si X and testamentary
proceedings were initiated and the administrator was substituted in a civil case against
X as the defendant. Now, there is what you call a charging lien for a lawyer.
 Ang tanung saan ire-recover ng lawyer yung charging lien. Is it in the civil case
where the X is the defendant or in the probate court where there is testamentary
proceedings? It is in the civil case not in the probate court. Bakit? What is
applicable here is Sec. 7, Rule 86 because here you have a creditor who is the
lawyer holding a claim secured by collateral security. Yung collateral security na
yan is yung charging lien mo. So it is an ordinary action in court where the case
is pending, the civil case.
 Ano ba yung charging lien? A charging lien is an attorney’s lien. There are two
kinds:
1) Retaining lien – yan yung kapag may funds ka na ng kliyente in your
possession. So you retain the funds, documents and papers of the client
which have already lawfully (hindi ninakaw) come into the possession of
the lawyer for fees and disbursements paid
2) Charging lien – right upon the judgment for payment of money and
execution issued pursuant to the judgment
In our example, yung right nya is based on the judgment because it is a portion of the
value of the property. In that case, ang sabi natin sa Sec. 7, it applies to mortgages and
collaterals. So in this case, yung collateral nung lawyer is the property subject of
litigation, so may charging lien sya. In order for you to enforce a charging lien there has
to be notice to the other party and there has to be approval of the court.
 Ang tanung saan mo gagawin yung notice and approval of the court? Is it with
the probate court or is it with the civil case where that property is subject of
litigation? Sabi ng SC, dun sa civil case, in that ordinary action not with the
probate court kasi it is similar to a judicial foreclosure and in that instance, the
probate court has not jurisdiction for that. You execute the collateral in the case
where that is the subject; in this example, it is the civil case, where the property is
subject of the dispute.

The estate was already summarily distributed with the approval of the court. The
mortgagee decided to foreclose the mortgage under the 3 rd remedy. The property title is
already transferred to the first heir. So the property subject of the mortgage nalipat na
sya first heir. Ang tanung, pwede mo pa bang i-foreclose yun? Pwede pa but in this
instance, there is no executor or administrator appointed in summary settlement of
estate. (Mas mahal pa ang ibabayad mo s EXECAD kesa sa amount ng estate kaya
walang appointment ng EXECAD) In that instance, there is no EXECAD but we said
that if file an action for judicial foreclosure, dapat you file it against the EXECAD. In this
instance, since there is no EXECAD and the estate has been distributed, so walang
settlement of estate na procedure in accordance with the process we’ve discussed kasi
it is summary. So you can foreclose it against the heir who received the mortgaged
property.

So let’s move on to Sec. 8. What if your EXECAD mo naman ang may claim against the
estate that he represents? Pwede naman pero kailangan magbigay sya ng notice to the
court in writing. Tapos insofar as that claim of EXECAD, there will be a special
administrator who will be appointed. So meron kang magiging EXECAD for all other
claims and for the claim belonging to the EXECAD meron magiging special
administrator. This is an instance in addition to Rule 80, Sec. 1, where we will have
another special administrator. Di ba sabi natin dati, sa Sec. 1, Rule 80 – if the is delay in
the appointment of the EXECAD saka ka lang magsa-special administrator. Another
instance in addition to, yung nasa Rule 80, Sec. 1, that we will have a special
administrator but this is only insofar as only the claims of the EXECAD against the
estate.

Now, this claim of EXECAD against the estate, parang claim sya like, creditor sya, but it
cannot be a claim of ownership or title over the property. If the issue is ownership/title
over the property and this dispute did not arise from inheritance. As in kine-claim nya
talaga yan independent of the settlement proceedings, then your proper remedy is not
to file it against in the settlement of estate claims. It is, as we said, subject of a different
action in court for reinvindicatoria, an ordinary action because the probate court has no
jurisdiction over that.

Again, the claim na pinag-uusapan natin sa Sec. 8 is monetary claim. But if it is claim of
title or ownership over property, that’s a separate case that you need to file.

Let’s go to Sec. 9. How do you file the claim of debts and notice? (So medyo hindi ko na
uulitin yung codal nyo) Basta ang important dyan yung mga claims nyo it has to be
supported by and dapat nakalagay yung amount due, that no payment has been made
which are not credited and there are no off-sets to the same, if the claim is due. But if
the claim is not yet due or when it is contingent when it was filed, you need to have a
supporting affidavit stating particulars thereof.
 The one who makes the affidavit should be the claimant. Is it possible that the
one who makes the affidavit is not the claimant? Yes, pwede. But you need to
include in that affidavit why it is not the claimant who made the affidavit
So the claims, once it is filed, it will be attached to the record in the case where letters
testamentary or letters of administration were issued, pwedeng iba rin, in the discretion
of the court.

Sec. 10. Answer of executor or administrator. Offsets. Apart from filing the claim with
court you need serve the EXECAD a copy of the claim. Within 15 days na matanggap
nila yun, dapat magfa-file si EXECAD ng answer so just like an answer in ordinary
procedure, they will admit or deny the claim. But the denial must be specific and just like
in an ordinary case the basis for your specific denial the matters relied upon for an
admission or denial. Pwede rin ba yung denial for lack of knowledge? Pwede rin yan.
For lack of knowledge that is also considered as a specific denial.

Kung yung creditor may claim against the deceased, then si deceased may claim din
kay creditor, pwede nang i-offset yun. So, the EXECAD should mention that offset.
That’s the term we use in Civil Code diba, compensation – when one is the creditor of
the other and debtor of the other and both are due and demandable. Pwede magkaroon
ng offset. If hindi yan ni-raise, ang offset, maba-bar na yan. Dapat i-offset na yan agad

Can the 15-day period to file an answer be extended? Yes, the Court in its discretion
extend the time to answer.

Sec. 11. Kapag sa EXECAD, pwede ba nyang i-admit entirely yung claim? Hindi naman
bawal. Kapag in-admit nya entirely yung claim isu-submit nya sa clerk of court, sa court.
Tapos automatic ba yun na ia-approve ng court? The court will not automatically
approve kasi sabi ng Rules, the court ‘may’ approve without hearing. “May” so hindi
automatic. Even if it is an admitted claim, it is not automatic to be approved, but it may
be approved by the court even without the need for hearing pero pwede rin na in the
discretion of the court even if it is an admitted claim by the EXECAD, magpapa-hearing
muna yung court. The court will have a hearing and then the court will order the
legatees, devisees, heirs notified, so that they will be heard at the hearing. Tapos kapag
nagpa-hearing yung judge, tapos nag oppose yung heir, legatee, devisee. Ia-allow sila
ng 15days to file yung opposition nila. Kapag naman hindi mo pinansin, you did not
contest but you did not admit – so that is like an admission for not being contested.
 What if the court sets it for hearing but you did not attend to oppose the claim, is
that a violation of due process? No, because as you know, the right of due
process is not actual hearing, but it is the right to be heard. So that right can be
can be waived.

Sec. 12. So kaninang pinagusapan ko, hearing on uncontested claim. Pwedeng magka-
hearing, pwedeng hindi. The court will consider if it is admitted. Kapag naman contested
claim, definitely, magkakaroon yan ng trial with notice to parties. It is also possible that if
it is a contested claim, the court can refer the matter to a commissioner. You make
reference to Rule 32 of the ROC

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