Death does not erase debts of the dead

Death does not erase debts of the dead "MY mother-in-law passed away last September 17, 2010. We learned that she incurred debt from two credit card companies and one from a loan institution. I would like to know if we, the immediate family, have the liability or obligation to pay for the debt that she left. The credit card company is calling everyday asking us who is handling her accounts. It seems that they want us to settle whatever debt my mother-in-law has with them. ArnelDear Arnel, Article 42 of the New Civil Code of the Philippines provides that:“Art. 42. Civil personality is extinguished by death. The effect of death upon the rights and obligations of the deceased is determined by law, by contract and by will.”The rights and obligations of a deceased can still be regulated by contract he entered into during his lifetime, by his will or by the law. At this juncture, you may look into the stipulations of the contract entered into by your mother-in-law with the credit card companies and the loan institution. As a rule, the parties to a contract may stipulate such terms and conditions, which they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. These stipulations serve as the law between the parties, and thus govern the relationship that exists between her and the credit card companies and the loan institution.If the contract states that upon the death of the borrower his or her obligation is extinguished or will be considered as paid in full, then his or her heir will not be held liable to satisfy the remaining balance, interests and penalties. In which case, the heirs of your mother-in-law need not pay said amount. However, if their contract does not provide for such means of extinguishment of liability, the credit card companies and the loan institution may file their claim against the estate of your mother-in-law in accordance with Rule 86 of the Revised Rules of Court of the Philippines. The pertinent sections of Rule 86 are the following:“Sec.1. Notice to creditors to be issued by court. - Immediately after granting letters testamentary or of administration, the court shall issue a notice requiring all persons having money claims against the decedent to file them in the office of the clerk of said court.“Sec. 2. Time within which claims shall be filed. - In the notice provided in the preceding section, the court shall state the time for the filing of claims against the estate, which shall not be more than twelve (12) nor less than six (6) months after the date of the first publication of the notice. However, at any time before an order of distribution is entered, on application of a creditor who has failed to file his claim within the time previously limited, the court may, for cause shown and on such terms as are equitable, allow such claim to be filed within a time not exceeding one (1) month. “Sec. 3. Publication of notice to creditors. - Every executor or administrator shall, immediately after the notice to creditors is issued, cause the same to be published three (3) weeks successively in a newspaper of general circulation in the province, and to be posted for the same period in four public places in the province and in two public places in the municipality where the decedent last resided.X x x“Sec. 5. Claims which must be filed under the notice. - If not filed, barred exceptions. All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and expenses for the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice otherwise they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. Where an executor or administrator commences an action, or prosecutes an action already commenced by the deceased in his lifetime, the debtor may set forth by answer the claims he has against the decedent, instead of presenting them independently to the court as herein provided, and mutual claims may be set off against each other in such action and if final judgment is rendered in favor of the defendant, the amount so determined shall be considered the true balance against the estate, as though the claim had been presented directly before the court in the administration proceedings. Claims not yet due or contingent, may be approved at their present value.X x x”The credit card company might have been calling you and asking who is handling the accounts of your mother-in-law in order to demand the payment of debts from the said person so as to avoid filing a claim before the courts. Thus, in the event that your mother-in-law has left an estate, we deem it necessary for her heirs to settle her debts since her heirs cannot extrajudicially adjudicate among themselves whatever was left by your mother-in-law unless and until her debts are settled.Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net" - https://www.affordablecebu.com/