Dear PAO, My father recently passed away, leaving behind an unpaid loan from an e-wallet company amounting to P130,000. He barely earned enough to support our family. Given our family’s financial constraints, we did not inherit any assets from him. Now, the e-wallet company is attempting to collect the unpaid loan from our family. I am writing to inquire whether the e-wallet company can collect my father’s unpaid loan from us?

Anna Dear Anna,

No, the e-wallet company that extended a loan to your father cannot collect his unpaid loan from your family since he died without leaving any assets.

Article 774 of the New Civil Code provides that: “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 his will or by operation of law.” Moreover, pursuant to Article 776 of the same Code, “the inheritance includes all the property, rights, and obligations of a person which are not extinguished by his death.” In Estate of Hemady vs. Luzon Surety Co. Inc., G.R. No. L-8437, November 28, 1956, Ponente: Associate Justice Jose Benedicto Luis L. Reyes, the Supreme Court stated that: “While in our successional system the responsibility of the heirs for the debts of their decedent cannot exceed the value of the inheritance they receive from him, the principle remains intact that these heirs succeed not only to the rights of the deceased but also to his obligations.” An unpaid loan is an obligation, therefore, it survives the death of the decedent. However, it does not necessarily mean that the heirs of the decedent are compelled to pay the unpaid loans from their personal assets. Under the law, heirs are not personally liable for the debts of the decedent beyond the value of the inheritance they may receive from the latter. Hence, the heirs, through the estate left by the decedent, may only be compelled to pay the latter’s unpaid loans to the extent of what they may inherit from the estate. Applying the foregoing discussions to your situation, the e-wallet company can only claim up to the value of the estate your father has left behind. However, since your father died without leaving any assets to your family, you cannot be compelled by the e-wallet company to pay his unpaid loan because an unpaid debt is chargeable or collectible only from the estate of the deceased. To reiterate, heirs are not directly required to pay the debt from their personal assets if the estate of the deceased is insufficient or no estate was left behind by the one who contracted the loan contract.

We hope that we were able to answer your queries. This advice was solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.