Dear PAO,
My friend took out a Home Development Mutual Fund (Pag-IBIG) Housing Loan, but due to financial constraints, I voluntarily agreed to assume the obligation of paying the remaining balance. My friend told me that there was no need to execute a written contract between us, and promised that she would transfer the property to me once I had completed all the loan payments. Should I trust her on this?
Raissa
Dear Raissa,
Your situation is termed colloquially as a “pasalo” arrangement, where one party agrees to shoulder the remaining payments of the original borrower as a more convenient means to secure a home. Now, the answer to your question depends on the nature of the agreement between you, your friend, and Pag-IBIG.
Before delving into this further, it is practical to revisit Article 1293 of the New Civil Code, which provides:
“Article 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237.”
In novation, the original debtor is replaced by a new one. However, it is never presumed, and the consent of the creditor is necessary. In Garcia vs. Llamas, G.R. No. 154127, December 8, 2003, penned by Honorable Chief Justice Artemio V. Panganiban Jr., the Supreme Court emphasized that novation must be established by clear and convincing evidence and that the creditor’s consent is indispensable when there is a substitution of debtors. Absent such consent, the original obligation remains in force.
In your case, you mentioned that your friend told you that there was no need to execute a written contract and merely promised to transfer the property to you after full payment with Pag-IBIG. This situation is concerning because, for novation to take place where you are validly substituted as the new debtor, your friend should have processed the assumption of the loan with Pag-IBIG, who is the creditor in this scenario. Pag-IBIG must then agree and approve the loan assumption before you are validly substituted as debtor. Only then may your legal rights to the property be recognized and protected.
Our advice is that you should first comply with the requirements of Republic Act (RA) 9679 or the “Home Development Mutual Fund Law of 2009,” as well as the applicable Pag-IBIG policies, concerning assumption of loan or substitution of debtor. We likewise remind you that failing to comply with this legal process exposes you to risks. You will have no right to intervene if problems arise such as title issues, foreclosure, and other concerns, since your friend will remain as the lawful borrower and therefore, the one who has legal interest over the property.
We hope that we were able to answer your queries. This advice is 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.
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
