What is my right under the law if I pay my friend’s loan, secured by a real estate mortgage? Can I foreclose the mortgage if he fails to pay me?
Under the law, any person who will pay the debt of another with the latter’s consent may demand from him/her the amount paid. However, if the payment is without the debtor’s consent or against his/her will, the payor shall only recover the amount he/she paid corresponding to the amount which benefited the debtor. This is according to the New Civil Code, to wit:
“Art. 1236. xxx
Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.”
Aside from being paid, if the debtor allowed the payment of his/her debt by a third person, the latter may likewise fill-in the shoes of the original creditor with regard to the security attached to the loan such as a real estate mortgage, among others, in case the debtor fails to pay him/her. Article 1237 of the New Civil Code explicitly provides:
“Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty, or penalty.”
It is clear therefore that if your friend allows you to pay his loan which is secured by a real estate mortgage, you may foreclose the mortgage in the event that no or incomplete payment is made to you by your friend.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to guide you with our opinion on the matter.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to firstname.lastname@example.org