g. Sales, Mortgages, and Other Encumbrances of Estate Property (Rule 89)

Order of Confirmation

The title vests in the purchaser upon a valid confirmation of the sale and retroacts to the date of sale. (Grimalt vs. Valazquez, G.R. No. L-11721, 1918)

The order of confirmation is appealable and if not appealed within the period for appeal becomes final.

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 against the estate and share in the general distribution of the assets of thereof;
• 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; or
• Rely solely on his mortgage and foreclose (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. He will have no right to claim deficiency. (R86, S7; PNB v. CA, G.R. No. 121597, 2001)

The above remedies are distinct, independent, and exclusive of each other. (PNB v. CA, G.R. No. 121597, 2001).

This rule applies to mortgages entered into by the decedent prior to his death, but also to mortgages entered into by the administrator/executor for the benefit of the estate. Section 7, Rule 89 - that once the deed of real estate mortgage is recorded in the proper Registry of Deeds, together with the corresponding court order authorizing the administrator to mortgage the property, said deed shall be valid as if it has been executed by the deceased himself. (PNB v. CA, G.R. No. 121597, 2001).

Order of the Sale of Personal Property

• To pay the debts and expenses of administration.
• To pay legacies.
• To cover expenses for the preservation of the estate. (R89, S1)

Regulations for Granting Authority to Sell/Mortgage/Encumber Estates

• The executor / administrator shall file a written petition setting forth the debts due from the deceased, the expenses of administration, the legacies, the value of the personal estate, the situation of the estate to be sold / mortgaged / encumbered, and such other facts as show that the sale/mortgage/encumbrance is necessary or beneficial;
• The court shall fix a time and place for hearing such petition. There must be notice served on the time and place of the hearing to persons interested.
• The court may require that the executor / administrator shall give an additional bond conditioned that such executor/administrator will account for the proceeds of the sale / mortgage / encumbrance;
• The court may, by order stating compliance with the abovementioned requirements, authorize the executor / administrator to sell / mortgage / encumber, in proper cases, such part of the estate as is deemed necessary, and in case of sale the court may authorize it to be public or private, as would be most beneficial to all parties concerned. The executor / administrator shall be furnished with a certified copy of such order;
• If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shall be governed by the provisions concerning notice of execution sale;
• There shall be recorded in the registry of deeds of the province in which the real estate thus sold / mortgaged /encumbered is situated, a certified copy of the order of the court, together with the deed of the executor / administrator for such real estate, which shall be as valid as if the deed had been executed by the deceased in his lifetime. (R89, S7)

Sale of Property Acquired on Execution or Foreclosure

The court may authorize an executor / administrator to sell / mortgage / encumber real estate acquired by him on execution or foreclosure sale, under the same circumstances and under the same regulations as prescribed in this rule for the sale / mortgage/ encumbrance of other real estate. (R89, S6)

Sale Beneficial to Interested Persons

Sale of personal or real estate may be allowed when the court finds that it will be beneficial to the heirs, devisees and legatees although not necessary to pay debts, legacies or expenses of administration. This must be upon application of the executor or administrator and on written notice to interested persons. (R89, S4)

Opposition to Sale/Mortgage or Encumbrance of Estate

Any interested person may give a bond in an amount fixed by the court, conditioned to pay the debts, expenses of administration and legacies to prevent the court from granting the authority to sell/mortgage or encumber such property. (R89, S3)

Order of the Sale of Personal Property

• To pay the debts and expenses of administration.
• To pay legacies.
• To cover expenses for the preservation of the estate. (R89, S1)

Regulations for Granting Authority to Sell/Mortgage/Encumber Estates

• The executor / administrator shall file a written petition setting forth the debts due from the deceased, the expenses of administration, the legacies, the value of the personal estate, the situation of the estate to be sold / mortgaged / encumbered, and such other facts as show that the sale/mortgage/encumbrance is necessary or beneficial;
• The court shall fix a time and place for hearing such petition. There must be notice served on the time and place of the hearing to persons interested.
• The court may require that the executor / administrator shall give an additional bond conditioned that such executor/administrator will account for the proceeds of the sale / mortgage / encumbrance;
• The court may, by order stating compliance with the abovementioned requirements, authorize the executor / administrator to sell / mortgage / encumber, in proper cases, such part of the estate as is deemed necessary, and in case of sale the court may authorize it to be public or private, as would be most beneficial to all parties concerned. The executor / administrator shall be furnished with a certified copy of such order;
• If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shall be governed by the provisions concerning notice of execution sale;
• There shall be recorded in the registry of deeds of the province in which the real estate thus sold / mortgaged /encumbered is situated, a certified copy of the order of the court, together with the deed of the executor / administrator for such real estate, which shall be as valid as if the deed had been executed by the deceased in his lifetime. (R89, S7)

Sale of Property Acquired on Execution or Foreclosure

The court may authorize an executor / administrator to sell / mortgage / encumber real estate acquired by him on execution or foreclosure sale, under the same circumstances and under the same regulations as prescribed in this rule for the sale / mortgage/ encumbrance of other real estate. (R89, S6)

Sale Beneficial to Interested Persons

Sale of personal or real estate may be allowed when the court finds that it will be beneficial to the heirs, devisees and legatees although not necessary to pay debts, legacies or expenses of administration. This must be upon application of the executor or administrator and on written notice to interested persons. (R89, S4)

Opposition to Sale/Mortgage or Encumbrance of Estate

Any interested person may give a bond in an amount fixed by the court, conditioned to pay the debts, expenses of administration and legacies to prevent the court from granting the authority to sell/mortgage or encumber such property. (R89, S3)

Order of the Sale of Personal Property

• To pay the debts and expenses of administration.
• To pay legacies.
• To cover expenses for the preservation of the estate. (R89, S1)

Regulations for Granting Authority to Sell/Mortgage/Encumber Estates

• The executor / administrator shall file a written petition setting forth the debts due from the deceased, the expenses of administration, the legacies, the value of the personal estate, the situation of the estate to be sold / mortgaged / encumbered, and such other facts as show that the sale/mortgage/encumbrance is necessary or beneficial;
• The court shall fix a time and place for hearing such petition. There must be notice served on the time and place of the hearing to persons interested.
• The court may require that the executor / administrator shall give an additional bond conditioned that such executor/administrator will account for the proceeds of the sale / mortgage / encumbrance;
• The court may, by order stating compliance with the abovementioned requirements, authorize the executor / administrator to sell / mortgage / encumber, in proper cases, such part of the estate as is deemed necessary, and in case of sale the court may authorize it to be public or private, as would be most beneficial to all parties concerned. The executor / administrator shall be furnished with a certified copy of such order;
• If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shall be governed by the provisions concerning notice of execution sale;
• There shall be recorded in the registry of deeds of the province in which the real estate thus sold / mortgaged /encumbered is situated, a certified copy of the order of the court, together with the deed of the executor / administrator for such real estate, which shall be as valid as if the deed had been executed by the deceased in his lifetime. (R89, S7)

Sale of Property Acquired on Execution or Foreclosure

The court may authorize an executor / administrator to sell / mortgage / encumber real estate acquired by him on execution or foreclosure sale, under the same circumstances and under the same regulations as prescribed in this rule for the sale / mortgage/ encumbrance of other real estate. (R89, S6)

Sale Beneficial to Interested Persons

Sale of personal or real estate may be allowed when the court finds that it will be beneficial to the heirs, devisees and legatees although not necessary to pay debts, legacies or expenses of administration. This must be upon application of the executor or administrator and on written notice to interested persons. (R89, S4)

Opposition to Sale/Mortgage or Encumbrance of Estate

Any interested person may give a bond in an amount fixed by the court, conditioned to pay the debts, expenses of administration and legacies to prevent the court from granting the authority to sell/mortgage or encumber such property. (R89, S3)