Connie P.

Pogay BSBA-FM-4 October 03, 2016

MTh 6:00 7:30 Credit and Collection

The Case of the Sole Heir

Jaime Bichavez, widower by 1995, acquired a 300 sq. m. residential lot
at Tiguma, Pagadian City. Jaime an only child has been a resident of Molave,
Zamboanga del Sur since his parents migrated there in 1940 and brought
him from Pangasinan at age 2.
Jaime got married and he had 2 children. In 1998, his eldest, an
accountant, migrated to the US. She has not come back since then; she
could not go back until she gets her green card. At that time, Miguel, the
younger one, was about to graduate at Aim Tech Colleges in Pagadian City.
In 1999 Jaime sold his house and lot in Molave and constructed a 3-
bedroom house in Tiguma, Pagadian City. He wanted Miguel, who seemed
unable to complete his BSBA degree, to enjoy the comforts of a real home.
Miguel has been in and out of many boarding houses for the past 5 years.
Thereafter, Jaime kept to himself, passing his days by tending to his small
vegetables plots at the back of his house. His neighbors just ignored him, but
occasionally they would politely say hello to him.
In 2003, Jaime died without a will, Miguel, unable to graduate and
financially strapped of his drug and alcohol problems, decided to mortgage
his fathers house and lot. He and a lawyer draw a document making him the
sole heir of the property. A notice in the local appears was posted for 3
consecutive weeks.
Thus, the credit application, he stated that he is the sole heir of his
father. He submitted the documents showing him as the sole heir. The banks
credit investigator interviewed the late Jaimes neighbors, who could not
offer much information except that Jaime had a son named Miguel., who
appears to be an only child.
Miguel got a loan for P200000 on a P700000 property.
How could this happen? Could this have been prevented? What
problems should the bank anticipate?
Answer:
Miguel was able to get a loan of P200000 since in the credit application
he stated that he is the sole heir of his fathers property. Since that property
is worth to be used as collateral the bank approved the said loan. Since in
every loan it requires credit investigation (CI), the lender still doesnt have
enough information about the applicant since the one being asked about the
reputation of the applicant dont have enough information on the character
of Miguel, who said to be the applicant.
A lender can avoid the deceitful acts and losses by making sure that
the applicant of credit has the potential to pay the said amount. The lender
should investigate thoroughly on the applicants background, whether he has
a good reputation in paying credit to be able to be approved by the lender. If
Miguel cant pay the said amount, the lender will lose its money.
 The Truth in Lending Act is designed to protect society as a whole, and
therefore does not provide the individual consumer with a personal Cause of
Action when a lender violates the law. Finally, the act does not consider
statements made by salespeople in the course of selling products or services
to be advertisements, therefore the law does not apply to those statements.