Do Children Have to Pay a Dead Parent's Debts?

The rules are in the articles on succession and contracts:

Article 1311 states the limit on the heir's liability in its first paragraph: "The heir is not liable beyond the value of the property he received from the decedent."

So the obligations of the deceased pass to the heirs, but only "to the extent of the value of the inheritance".

In Estate of Hemady v. Luzon Surety (1956), the Court explained: "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." There, a surety's obligations under bonds he had signed passed to his estate.

Some obligations end with death because of their nature, a stipulation or the law (Article 1311). Which ones depends on the obligation.

Article 777 says "The rights to the succession are transmitted from the moment of the death of the decedent." Until the estate is divided, Article 1078 says "the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased."

It depends on how the estate is settled. The Rules of Court, as printed in the 1964 text on the E-Library, provide the following (later amendments to these rules are not covered here):

• Court settlement. The court issues a notice requiring all persons with money claims against the deceased to file them. Under Rule 86, Section 2, the period "shall not be more than twelve (12) nor less than six (6) months after the date of the first publication of the notice". Section 5 says claims for money arising from contract, funeral expenses, expenses of the last sickness and money judgments "must be filed within the time limited in the notice; otherwise they are barred forever". Section 2 allows a late claim, for cause, within a time not exceeding one month, before distribution.
• Distribution only after debts. Under Rule 90, Section 1, the remaining estate is distributed to the heirs when the debts, funeral charges, expenses of administration and other charges listed in the rule have been paid.
• [Extrajudicial settlement](/law/glossary/extrajudicial-settlement). Rule 74, Section 1 allows heirs to divide the estate without going to court "If the decedent left no will and no debts and the heirs are all of age, or the minors are represented". It presumes there are no debts "if no creditor files a petition for letters of administration within two (2) years after the death of the decedent." Under Section 4, for two years after the distribution, the court may order how much each heir must contribute to debts left unpaid, and the property stays answerable to creditors.

For the steps of an extrajudicial settlement, see Extrajudicial settlement of estate.

This is a made-up example to show how the rules work. It is not advice for any real case.

Mang Dado dies leaving a small house worth less than his unpaid loans. His children, Liza and Jun, have their own savings. Under Article 1311 and Hemady, the creditors may be paid from the house and anything else in the estate, but Liza and Jun are not liable beyond the value of what they receive from their father. Their own savings are not part of the estate.

If instead Liza had signed her father's loan as co-maker, she would be liable on her own signature, not as an heir. See Are you liable as co-maker of someone's loan?

Talk to a lawyer if a creditor asks you to pay a dead relative's debts, if the estate has debts and the heirs want to divide the property, or if you are a creditor of someone who died. The right steps depend on the estate, the debts and how the estate is settled.

If you cannot afford a lawyer, see Free legal help in the Philippines. For more on inheritance, see Inheritance.