Government claiming properties from a person who died without a will

“Death is not the end,” said American journalist Ambrose Bierce. “There remains the litigation over the estate.”

This applies, whether the decedent or owner of the estate died with or without a will.

The Supreme Court has consistently held that from the moment of the decedent’s death, the heirs become absolute owners of his property, subject to his rights and obligations thereon, and even before judicial declaration of their being heirs in the corresponding proceedings.

Where the decedent died intestate, or without a will, his heirs shall inherit in the prescribed order under the Civil Code. Absent any of these heirs, the Philippine State shall inherit the entire estate pursuant to the law governing escheat proceedings.

In Republic v. Court of Appeals, the Supreme Court defined escheat as a proceeding where the State, by virtue of its sovereignty, steps in and claims the real or personal property of a person who has died intestate, leaving no heir. Absent any lawful owner, a property is claimed by the State to forestall an open “invitation to self-service by the first comers.”

Since escheat is one of the incidents of its sovereignty, the State may prescribe conditions and limits the time within which a claim to the estate may be made.

Under the Rules of Court, the Solicitor General or his representative may file a petition instituting escheat proceedings before the Regional Trial Court (RTC) where the decedent last resided or if he resided out the Philippines, where he had estate.

If the petition were sufficient in form and substance, the RTC shall issue an order fixing a date and place for the hearing thereof. This date shall not exceed six months after the entry of the order. Meanwhile, a copy of that order shall be published before the hearing at least once a week for six successive weeks in some newspaper of general circulation published in the province, as the court shall deem best.

At this hearing, the court shall pass on the sufficiency of proof that: (a) its earlier order was published, as directed; and (b) the decedent died intestate, seized of real or personal property in the Philippines, leaving no heir or person entitled to the same.

Afterwards, no sufficient cause being shown to the contrary, the RTC shall adjudge that the decedent’s estate in the Philippines shall escheat, after payment of just debts and charges. Moreover, pursuant to the applicable law, the RTC shall assign the personal estate to the municipality or city where he has last resided in the Philippines, and the real estate to the municipalities or cities, respectively, in which the same is situated.

If the decedent never resided in the Philippines, the whole estate may be assigned to the respective municipalities or cities where the same is located, for the benefit of similarly located public schools and public charitable institutions and centers. In this regard, the Civil Code authorizes the RTC, at the instance of an interested party, or on its own motion, to order the establishment of a permanent trust so that only the income from the property shall be used.

A devisee, legatee, heir, widow, widower, or other person entitled to the decedent’s estate should file a claim thereto with the same court within five years from the date of such judgment. Afterwards, this claimant shall have possession of and title to the same, or if sold, the municipality or city shall be accountable to him for the proceeds after deducting reasonable charges for the care of the estate.

A claim not made within this five-year period shall be forever barred, even when as alleged in the Republic case, the supposed claimant, a donee of a property belonging to the decedent’s estate, has only discovered the purported deed of donation beyond said period.

A judgment in escheat proceedings, when rendered by a court of competent jurisdiction, is conclusive against all persons with actual or constructive notice, absent dishonest intent on the part of petition to deprive such persons of any right, or in any way injure him.

Source: Inquirer

Dictionary of bank loans

Understanding the jargon of home loans can be confusing, overwhelming and a wee bit frustrating at times.

But you don’t have a choice: if you’re bent to make the most out of your loans and savings, you will need to at least make an effort to fully understand these terms commonly used by your bankers and brokers.

This way, you won’t feel cheated or forced into taking that huge leap as you work on your dream home. Remember, ignorance is not and will never be an excuse—more so in this day and age when it’s much easier to do research and look up banking jargon via the internet, whether through your laptops, tablets or even mobile phones.

In the Philippines, banks have comprehensive websites that usually contain most of the information you will need to know before taking out a loan—the products and features offered, processes involved, requirements and even definitions of some terms you have to be aware of.

Here are some of the most common terms you’ll likely come across with once you start looking for the right banking partner that will suit your loan needs.

Home Loan

A home loan refers to a sum of money borrowed from a financial institution or a bank, usually for the purpose of buying a lot, a house and lot or a condominium unit. Some institutions offer home loans that can also be used for home construction, renovations, or even for the refinancing of an existing home loan.

PRINCIPAL OF A LOAN

The principal of a loan refers to the actual amount borrowed.

INTEREST RATE

The interest rate, mainly expressed as a percentage of the principal, is used to compute the amount to be paid for the money borrowed. It can also be regarded as the “cost of borrowing” money from the bank, and depends on prevailing market rates.

Borrowers usually prefer lower interest rates, but these are offered when the repayment period is shorter.

REPAYMENT

Repayment is the “act of paying back money previously borrowed from a lender. Repayment is typically executed through periodic payments that include part principal plus interest.”

TENOR OR REPAYMENT PERIOD

Tenor commonly refers to the time or period set for the repayment of a loan or until a financial contract expires.

Usually, a shorter tenor means lower interest rates. A longer repayment period fetches higher interest rates because of the belief that there is a greater risk involved, meaning there is a bigger chance that something might go wrong i.e., borrower not being able to complete all due payments.

INTEREST FIXING PERIOD

Financial institutions offer a way to keep your investments in real estate protected via an interest fixing period. This refers to the length of time you want your interest rate to remain the same despite whatever movements the interest rate may experience in the future.

This will allow you to protect your loans from market volatility and shifts in the real estate market. If there is a hike in interest rates anytime within the interest fixing period, the rate on your loan will not be affected.

The interest rate will only be reviewed and changed when the fixing period expires.

It’s still best to consult a bank home loan expert and to do your own research about the current economic conditions before deciding on your preferred fixing period.

COLLATERAL

Collateral is defined as “a property or other asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender (bank) can seize the collateral to recoup its losses.”

The documentation to satisfy the collateral requirement can be: transfer certificate of title or condominium certificate of title and tax declaration (land, improvement, or condo unit. The bank may also ask for the following to evaluate the loan: contract to sell or reservation agreement if under developer tie up; and floor plan, bill of materials, or job specifications for house construction.

LOAN FEES

Remember, the cost of borrowing money from a bank does not end with paying the interest and the principal alone. There are other minimal fees that you should be aware of as well.

For home loans, these include fees for registration, notarial charges, appraisal, title investigation, handling, mortgage redemption and insurance.

Indeed, there are no shortcuts if you intend to be a well-informed home buyer and a responsible loan borrower. A little patience to go through all these minute details might prove to be more beneficial than you think in the long run.

Source: Inquirer

Ownership of mortgaged property does not pass to the creditor

The provision of Article 2088 of the New Civil Code, which states that:

"Art. 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void."

Based on the above-stated law, a creditor is prohibited from appropriating or disposing of the thing pledged or mortgaged to him or her. Any stipulation to the contrary on this matter is considered as null and void because this arrangement is in the nature of a pactum commissorium, which is prohibited by our law.

Further, in the case of Annaliza Singson vs. Spouses Nar Christian and Cecilia Carpio (GR 238714, Aug. 30, 2023), the Supreme Court, through Chief Justice Alexander Gesmundo, held that "Art. 2088 of the New Civil Code provides that a creditor cannot appropriate or consolidate ownership over a mortgaged property merely upon failure of the mortgagor to pay a debt obligation. The essence of pactum commissorium is that ownership of the security will pass to the creditor by the mere default of the debtor.

Incidentally, the only right of a mortgagee, in case of nonpayment of debt secured by mortgage, would be to foreclose the mortgage and have the encumbered property sold to satisfy the outstanding indebtedness. The mortgagor's default does not operate to automatically vest in the mortgagee the ownership of the encumbered property, for any such effect is against public policy."

To conclude a creditor is prohibited from appropriating the things given to him/her by way of mortgage, or from disposing of the same even if the mortgagor-owner defaults in payment of the debt owed to the creditor.

As the ownership of a mortgaged property is not transferred to the creditor upon the default of payment of the debt, the creditor may not sell the same.