Dear PAO,
My dad has a savings account with a certain bank. I also knew that he had obtained a loan from the same bank before his death, which had not yet been fully paid. When I inquired about the balance of my father’s loan, the bank informed me that it had already offset the remaining unpaid obligation against the funds in his savings account. Is this allowed?
Makset
Dear Makset,
Generally speaking, a creditor who wishes to collect an unpaid loan of the decedent should abide by provisions of the Revised Rules of Court, as amended. Section 5, Rule 86 of the same rule provides that:
“Section 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.”
Offsetting the unpaid loan obligation with the decedent’s deposit is not in accordance with the afore-stated rules, which require the filing of the claim with the probate court. This is backed by the pronouncement of the Supreme Court in Union Bank of the Philippines v. Tantoco and Arroyo, GR E-02776, July 7, 2026, penned by Associate Justice Henri Jean Paul Inting, which states:
“It is also worth noting that petitioner unilaterally offset Ignacio’s alleged liabilities against his deposits. Such action effectively circumvents the rules governing claims against the estate. As a creditor, petitioner is required to file its claims before the probate court and cannot simply ‘skip the line’ so to speak by appropriating estate assets to satisfy its claims. Regardless of any default clause triggered by the depositor’s death, such stipulation does not dispense with compliance with the Rules of Court. Neither does it justify petitioner’s refusal to comply with the directives of the RTC on the ground that doing so would convert the proceeding into an adversarial one. It is well within the jurisdiction of the probate court to determine whether such offsetting is proper.”
Applying the above-quoted decision to your situation, the claim for the unpaid loan of your father should be filed against his estate and in the appropriate probate proceedings. Offsetting the unpaid loan balance with the deposit kept by your father in the same bank is tantamount to “skipping the line” against the estate, and this is deemed a circumvention of the probate proceedings as provided under Rule 86 of the Revised Rules of Court, as amended.
We hope that we were able to answer your query. 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 trust and support.
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
