Let us assume that a good friend of yours borrowed a huge amount of money from you in 2016. And because you know the guy for a very long time, you did not ask for security or for the two of you execute a mortgage over one of his properties. The next year, that friend died.
Now, you are faced with the problem how to get the money owed to you.
Collecting loans from a deceased person can be tricky and highly technical. If this is the case, it is advised to get a lawyer because there is high probability that the heirs will not acknowledge that their predecessor had gotten some money from you. Oftentimes, the heirs would ask why are you collecting from them? That question is warranted because ideally, debt is a personal obligation of the debtor. However, there are exceptions.
You must take note that this problematic scenario may branch out from one problem to the other. The legal remedy/remedies may also differ depending on the circumstances. Hence, detail of the transaction is important. In this post, I will attempt to discuss a specific scenario only.
Let's proceed.
Here are the things you need to know or you must do:
1. Get a lawyer. A lawyer has its arsenal of tactics which will force the heirs to want to sit down and talk to you and settle the matter outside of court. It is inexpensive and practical, provided that the lawyer you hire is not minded in handling the matter between the parties. Otherwise, it will have to cost you some money pursuing the collection case in court with no guarantee you will be able to collect.
Determine where the money was used. If it was used for the last sickness of the deceased friend or you have proof that it redounded to the benefit of the family, then most probably, you will have a case against the heirs even if the indebtedness has no collateral or mortgage. This is very hard to prove especially if the heirs has their own source of subsistence or not dependent to the deceased;
2. The indebtedness being unsecured or no mortgage over any personal or real property of the deceased was executed, the indebtedness is extinguished.
In the given situation, your action is a personal action. A personal action can be directed only to the person concerned. If he's dead, who would you complain? how could a court acquire jurisdiction over a dead person?
These are the money claims expressly allowed under the Revised Rules of Court Rule 87, Sec. 1:
1. "actions to recover real and personal property against the estate". Money is neither real or personal property;
2. "actions to enforce lien thereon". Since no mortgage was executed, your claim is not included;
3. "actions to recover from injury to the person or property by reason of tort or delict committed by the deceased". This is unavailing under the circumstances.
The exemption to the money claim which is unsecured or no mortgage has been executed are:
a. if you have already commenced a collection case against the deceased friend prior to his death and a favorable judgment has been obtained therefrom. In such a case, it may be filed as a claim before the probate court;
b. a money judgment in your favor;
c. depending where the money was used. You better consult a lawyer about this.
3. It does not mean that you cannot file a claim in the intestate or testate court under the circumstances. Ideally, the court should dismiss the case on its face based on Rule 87, Section 1 alone. However, there are courts who allow such petition to go on. Maybe because it entertains the possibility of compromise among the parties. I might be jumpring to conclusion because there are still many variables to consider but in my opinion, winning the case with a monetary claim similar to this example has a slim chance of winning and if ever granted, there is always a backlash from the aggrieved party for rendering such erroneous decision.