Inheritance Rights and Unclaimed Property of a Deceased Relative under Philippine Law
An Overview

When a family member or relative passes away in the Philippines, questions about inheritance rights, distribution of assets, and possible unclaimed property inevitably arise. Philippine law provides a set of detailed rules, primarily found in the Civil Code of the Philippines, which governs how the estate (the totality of a decedent’s property, rights, and obligations not extinguished by death) is to be settled. It also establishes what happens when property remains unclaimed or when there are no legal heirs. This article aims to provide a comprehensive overview of inheritance rights in the Philippines and the rules concerning unclaimed property of a deceased person.

1. Legal Framework Governing Inheritance

1.1. The Civil Code of the Philippines

Book III, Title III (Succession) of the Civil Code (Republic Act No. 386) sets out the rules on both testate (with a valid will) and intestate (no will or invalid will) succession.
Succession covers the transmission of the deceased’s property, rights, and obligations to his or her lawful heirs or beneficiaries.

1.2. Other Relevant Laws and Regulations

Family Code of the Philippines (Executive Order No. 209) impacts the rights of spouses and legitimate/illegitimate children.
Rules of Court, particularly on the settlement of estates, guide the judicial or extrajudicial processes involved in estate distribution.
Unclaimed Balances Law (Act No. 3936, as amended) governs the disposition of bank deposits or funds that remain dormant for a specific period.

2. Testate vs. Intestate Succession

2.1. Testate Succession

When the decedent leaves a valid will, the distribution of the estate follows the terms set out in the will, subject to the rules on forced heirship (i.e., legitimes of compulsory heirs).

Forced/Compulsory Heirs: Under Philippine law, certain heirs (such as legitimate children, illegitimate children, and surviving spouse) are entitled to a portion of the estate called their legitime—which cannot be reduced or taken away by the will.
Free Portion (Disposable Portion): After the legitimes are satisfied, the testator is free to distribute any remaining portion of the estate as they wish, in accordance with the will.

2.2. Intestate Succession

If there is no will, or if the will is declared invalid, or if it does not dispose of all the decedent’s property, intestate succession rules apply. The Civil Code provides an order of preference for the heirs:

Legitimate Children and Their Descendants. If the deceased is survived by legitimate children, they inherit in equal shares. Children also represent any deceased child through the right of representation.
Illegitimate Children (if there are no legitimate children or as co-heirs with legitimate children, subject to certain rules).
Surviving Spouse. The spouse shares with legitimate or illegitimate children, or inherits solely if there are no children or parents.
Parents and Ascendants. If there are no children or spouse, the parents or other ascendants inherit.
Collateral Relatives (brothers, sisters, nephews, nieces).
State (Escheat). If no legal heirs exist, or none come forward, the property reverts to the State.

3. Forced Heirship and Legitimes

3.1. Concept of Legitimes

Philippine law adopts the concept of forced heirship, wherein certain relatives, called compulsory heirs, cannot be deprived of their minimum share, known as the legitime. These forced heirs typically include:

Legitimate children and descendants
Illegitimate children (entitled to half the share of legitimate children)
Surviving spouse
Legitimate parents and ascendants (in the absence of descendants)

3.2. Effects on the Will

Even if a person dies leaving a last will and testament, any provision violating the legitime of compulsory heirs can be challenged and potentially nullified.

4. Settlement of the Estate

4.1. Judicial vs. Extrajudicial Settlement

The process of dividing and transferring the estate to heirs can proceed in two ways:

Judicial Settlement:
- Required when there is a contest, dispute, or if not all heirs can agree.
- Required if there is a valid will that needs probate (court approval) to establish its authenticity and validity.
- Overseen by a court, which ultimately approves the distribution of the estate.
Extrajudicial Settlement:
- Permissible when there is no will (intestate) or the will does not affect the entire estate, and there is complete agreement among all heirs.
- All heirs must be of legal age (or represented by a judicial guardian if there are minors).
- The heirs execute a Deed of Extrajudicial Settlement, which is published once a week for three consecutive weeks in a newspaper of general circulation, and the settlement becomes effective thereafter.
- The document is then filed with the Register of Deeds for real property transfer and other relevant offices for the transfer of personal properties (e.g., banks, stock certificates).

4.2. Estate Tax and Other Obligations

Before distribution, the estate must pay the appropriate estate tax to the Bureau of Internal Revenue (BIR) within the prescribed period (usually within one year from the date of death; subject to extensions under certain conditions).
Other obligations, such as debts of the decedent, funeral expenses, and administration costs, must also be settled from the estate before the heirs receive their shares.

5. Unclaimed Property in a Deceased Person’s Estate

5.1. What Constitutes Unclaimed Property?

Unclaimed property typically includes:

Bank Accounts and Deposits that remain dormant or unclaimed for a certain number of years.
Stocks, Dividends, and Other Investments in which no claimant has come forward.
Safe Deposit Box Contents that remain untouched.
Insurance Proceeds that are not claimed.
Real Properties that heirs fail to occupy, register, or assert ownership over.

5.2. Duty of Banks and Financial Institutions

Under the Unclaimed Balances Law (Act No. 3936, as amended by Presidential Decree No. 679):

Banks and other financial institutions are required to report dormant accounts and unclaimed balances that have been inactive for at least 10 years.
If no rightful owner or heir appears to claim these balances, they may be subject to escheat proceedings, where the State takes custody of the funds until claimed or permanently if no claimant appears.

5.3. The Concept of Escheat

Escheat is a legal process whereby ownership of property reverts to the State when:

There are no known heirs or claimants to the property.
The owner or heirs do not assert their claim within the time period set by law.

In the context of the Philippines:

Judicial Escheat Proceedings: The Office of the Solicitor General typically files an escheat case. If, after due publication, no legitimate claimant appears, the property is declared forfeited in favor of the government.
Even after escheat, if a rightful heir eventually surfaces and can prove entitlement, Philippine jurisprudence allows for a possible claim—though certain prescriptive periods and legal hurdles must be overcome.

6. How Heirs Can Claim Unclaimed Property

6.1. Checking for Bank Accounts, Insurance, and Other Financial Assets

Compile Documents: Gather the deceased’s documents—bank statements, insurance policies, passbooks, certificates of stocks, etc.
Inquire with Banks and Insurance Companies: Write formal letters or visit the institutions to check any dormant accounts.
Search for Escheat Notices: Check if escheat proceedings have been initiated (through court notices or public announcements).

6.2. Conducting a Title Search for Real Property

Heirs can visit the Registry of Deeds in the city or province where real property is located to confirm ownership, encumbrances, or liens.
If the property is still under the deceased’s name and no other party has made a claim, the heirs can institute the extrajudicial or judicial settlement process to transfer the property.

6.3. Filing the Appropriate Legal Actions

For Bank Deposits: If the account is under escheat proceedings, the heirs may need to intervene or file a petition to recover the funds before a final judgment is rendered.
For Other Assets: Heirs may need to file an intestate (or testate) proceeding if the property was never administered or distributed. This ensures debts, taxes, and other obligations are settled before distribution.

7. Special Considerations

7.1. Prescriptive Periods

Certain claims may prescribe (expire) if not pursued within statutory periods, especially if the State has initiated escheat. It is crucial that heirs act promptly upon learning of a decedent’s unclaimed property.

7.2. Minors and Incapacitated Heirs

Where an heir is a minor or legally incapacitated:

A legal guardian or representative must safeguard that heir’s rights.
In extrajudicial settlements, minors must be duly represented and protected, sometimes requiring court approval.

7.3. Overseas Filipino Heirs

Filipinos or dual citizens living abroad also have inheritance rights. They need to comply with Philippine law (including estate taxes and relevant procedures), even if they are not physically in the Philippines.

8. Practical Steps for Heirs

Secure Death Certificates and other essential documents (birth certificates of heirs, marriage certificates, etc.).
Consult with a Lawyer experienced in Philippine succession law to determine the best settlement procedure (judicial or extrajudicial).
Identify and Inventory All Assets and obligations of the decedent.
Pay Estate Taxes within the prescribed period to avoid penalties.
Execute Settlement Documents (if extrajudicial) and publish the required notice.
Transfer Titles and update ownership records (Register of Deeds, bank accounts, share registries, etc.).
Claim Dormant Accounts before they revert to the government under escheat proceedings.

9. Conclusion

Inheritance rights and the management of unclaimed property in the Philippines involve a detailed interplay of Civil Code provisions on succession, the Family Code on marital rights and obligations, and various statutes like the Unclaimed Balances Law. Ensuring compliance with forced heirship rules, paying the correct estate taxes, and observing strict legal procedures (judicial or extrajudicial) are paramount to properly distributing a deceased relative’s assets.

When property is overlooked—be it real estate, bank deposits, or financial instruments—it risks falling into escheat and eventually transferring to the State if no rightful heir comes forward. Thus, heirs should actively assert their rights, conduct diligent searches, and promptly institute legal proceedings to safeguard their inheritance. Consulting with a qualified attorney remains the best course of action for individuals faced with estate settlement issues or uncertainties in claiming unclaimed property.

Disclaimer:
This article is provided for general informational purposes and does not constitute legal advice. For specific cases and personalized guidance, readers are advised to consult a licensed attorney or legal expert in Philippine succession law.