Beyond the grave: Debt survives death | Inquirer Business

Beyond the grave: Debt survives death

12:17 PM June 23, 2021

Serge, husband of Ana and father of Jen, obtained a loan from a bank. As security for the loan, Serge mortgaged two parcels of land, one of which is co-owned and registered in his name and that of his siblings namely, Lean, Domeng and Dora. Serge’s siblings executed a Special Power of Attorney authorizing him to mortgage the said property. The other mortgaged parcel of land, covered by OCT No. 10271, was registered in the name of Serge and Ana.

Serge died without being able to pay his obligations with DBP. Since the loan was nearing its maturity and the mortgaged properties were in danger of being foreclosed, Lean paid Serge’s loan obligations. Considering that Ana and Jen were unable to reimburse Lean for the advances he made in Serge’s favor, Ana and Jen agreed that Serge’s share in the lot which he co-owned with his siblings and the other parcel of land in the name of Serge and Julie, shall be assigned in favor of Lean and Ana. Serge’s other brother, Domeng, was tasked to facilitate the transfer of ownership of the subject properties in favor of Lean and his wife, Julie. Domeng, however, died without being able to cause such transfer.

Subsequently, despite demands and several follow-ups made by Lean and Julie, Ana and Jen failed and refused to honor their undertaking.


Ana and Jen denied any such obligation to pay for Serge’s alleged loan on the following grounds: (a) they are not parties to the contract between Serge and the bank; (2) there is neither verbal nor written agreement between them and Lean and Julie for the mother and daughter to reimburse whatever payment was made by Lean and Julie; (3) Jen was only a minor during the execution of the alleged agreement and is not a party thereto; (4) that whatever liability or obligation of Ana and Jen is already barred by prescription, laches and estoppel; (5) Ana and Jen are not duty-bound to reimburse whatever alleged payments were made by Lean and Julie; and (6) there is no contract between the parties to the effect that Ana and Jen are under obligation to transfer ownership in Lean’s and Julie’s favor as reimbursement for the alleged payments made by petitioners to the bank.


Q: In the absence of any written or verbal agreement, are Ana and Jen liable to reimburse Lean and Julie?

A: Yes, they are liable to reimburse the amount paid by Leandro for the payment of the said obligation even if such payment was made without their knowledge or consent.

Article 1236 of the Civil Code clearly provides that “The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

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.

Q: Can Ana and Jen evade liability by arguing that they were not parties to the contract between Serge and the bank?

A: No. As earlier stated, the fact remains that, in an Extrajudicial Settlement Among Heirs, Ana and Jen clearly acknowledged Serge’s loan obligations with the bank. Being Serge’s heirs, they succeed not only to the rights of Sergio but also to his obligations.

The following provisions of the Civil Code clearly provide that:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by will or by operation of law.


Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death.

Art. 781. The inheritance of a person includes not only the property and the transmissible rights and obligations existing at the time of his death, but also those which have accrued thereto since the opening of the succession.

Being heirs of Serge, Ana and Jen are now liable to settle his transmissible obligations, which include the amount due to Lean and Julie, prior to the distribution of the remainder of Serge’s estate to them.

(Source: Heirs of Leandro and Juliana Natividad vs. Juana Natividad, et al., G.R. No. 198434, February 29, 2016)

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Ma. Soledad Deriquito-Mawis is Dean, College of Law at the Lyceum of the Philippines University; Chairman of Philippine Association of Law Schools; founder of Mawis Law Office

TAGS: Business, column, heirs, inheritance, property, Property Rules

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