A Philippine legal article on what happens to prepaid fees, deposits, and ongoing service contracts when the service provider dies—and how clients can recover what remains unearned.

1) The core idea: death rarely erases the duty to return unearned money

When a client has paid for a service that is not fully performed because the service provider dies, Philippine law generally pushes the situation toward restitution: each side should, as much as possible, be returned to the position before the exchange, or at least prevent unjust enrichment.

Two big questions control almost everything:

Was the obligation “purely personal” to the deceased? If yes, performance may become impossible and the contract may be extinguished as to future performance, but that does not automatically allow the estate to keep money for services not rendered.
Who is legally responsible now: the estate, the business, or someone else? If the provider was a sole individual (freelancer/sole proprietor), claims usually go against the estate. If the provider was a corporation/partnership (separate juridical entity), the entity typically continues and remains liable.

2) Key legal foundations in Philippine context (plain-language map)

A. Civil Code on obligations and contracts

Philippine civil law recognizes that obligations can be affected by impossibility and by the nature of the service:

Personal services: If the service requires the personal skill, judgment, or presence of the deceased (e.g., an artist commissioned for a unique piece, a specific professional engaged personally), death can make performance physically impossible.
Non-personal or delegable services: If the service can be performed by staff/agents or a business organization (e.g., events supplier with a team, a service company), death of one person may not excuse performance—especially if the contracting party is not the individual personally.

Even when the contract ends due to impossibility, the law strongly resists one party keeping payment without giving the corresponding value.

B. Restitution and “no one should unjustly benefit”

Philippine law recognizes broad principles that support recovery of unearned payments:

Unjust enrichment: A person should not be allowed to enrich themselves at another’s expense without legal ground. If the estate/business keeps money for work not done, the client typically has a claim to recover the unearned portion.
Quasi-contract concepts (like payment without basis): If money is retained despite failure of consideration, it can be recovered even when there is no longer a workable contract.

C. Death and the estate: obligations don’t vanish; they shift

A person’s death does not “erase debts.” Instead:

Claims become claims against the estate, subject to succession and procedural rules.
Heirs are generally not personally liable beyond what they inherit, but the estate can be made to pay valid claims.

This is crucial: recovery often depends as much on procedure as on substantive rights.

3) Identify the contract type: it changes everything

Category 1: Contracts “intuitu personae” (tied to the person)

These are agreements entered into because of the provider’s personal qualities (unique skill, trust, style, professional relationship). Examples:

Commissioned artwork by a specific artist
Talent/performer booked personally
Some professional engagements where personal confidence is central

Effect of death: Future performance may be extinguished due to impossibility. Refund principle: The client should recover the unearned part of fees (minus any fair value of partial performance, if any).

Category 2: Contracts for services that can be delegated or continued

Examples:

Wedding/event suppliers with staff
Cleaning companies
Subscription services run as an ongoing business
Construction or fabrication where the “provider” is really the business

Effect of death: If the contract is with a business entity (especially a corporation), the obligation generally continues. If it was a sole proprietorship but with an operating team, performance may still be possible through the business/estate’s administrator, depending on the contract and feasibility. Refund principle: If the service will not be completed, client can demand refund of the unperformed portion. If it can be completed by the business, client can demand performance—or treat it as breach if refused.

Category 3: Agency-type relationships

If the deceased was an agent (acting for a principal), agency generally ends upon death of agent in many cases, but consequences depend on what was already done, third-party rights, and the terms. Where the “service provider” was essentially an agent, death can end authority, but money held for the principal/client must still be accounted for and returned if not earned/spent for the client’s benefit.

4) What exactly can be refunded (and how it’s computed)

A. Full prepayment for a service not started

If nothing was delivered and the service can no longer be performed, the usual outcome is full refund.

B. Partial performance

If some work was completed before death:

The provider (or estate) may keep a reasonable amount corresponding to the value delivered.
The client can recover the excess—the part corresponding to services not performed.

Practical approach to computation:

Determine contract price and clear milestones (if any).
Identify deliverables actually received/accepted.
Assign value based on contract allocation or, if none, fair market/quantum meruit-type valuation (reasonable value of services actually rendered).
Refund = total paid − value of completed/accepted work − legitimately incurred reimbursable expenses (only if contract allows or expenses were authorized/benefited client).

C. Non-refundable deposits: are they always non-refundable?

“Non-refundable” labels are not automatically controlling. In Philippine practice, enforceability depends on:

Nature of the payment: Is it a true reservation fee meant to compensate for opportunity cost? Or is it essentially advance payment disguised as a “deposit”?
Reasonableness: Even where forfeiture is allowed (like liquidated damages or earnest money arrangements), courts may scrutinize excessive or unconscionable forfeitures.
Cause of non-performance: If performance became impossible by death and the provider delivered nothing and incurred minimal costs, retaining a large “non-refundable” amount may be attacked as unjust enrichment or inequitable.

D. Expenses already spent

If the provider can prove that certain expenses were:

authorized,
necessary,
and directly for the client’s project (e.g., purchased materials specifically for the client), then the estate may argue those should be deducted or delivered to the client instead of refunded.

5) Who should the client demand payment from?

Scenario 1: Provider was an individual (freelancer/professional)

The proper target is typically the estate of the deceased, represented by:

an executor (if there is a will and executor), or
an administrator (if intestate or no executor qualified).

Important: Suing “the heirs” personally is often problematic unless they are being sued in a representative capacity or special conditions apply. The clean path is a claim against the estate.

Scenario 2: Provider was a sole proprietorship business

A sole proprietorship is not a separate juridical person from the owner. Death means claims still funnel into the estate, but operations might continue temporarily under heirs/administrator. If the business continues, clients still usually pursue the estate/authorized representative for refunds or completion.

Scenario 3: Provider was a corporation or partnership

If the contract is with the entity, the entity remains liable and continues despite death of an owner/officer. The client should demand from the corporation/partnership, not the deceased’s estate (unless the contract was personally guaranteed by the deceased).

Scenario 4: Platform-mediated services (marketplaces)

If payment went through a platform that holds funds in escrow or provides buyer protection, recovery may be governed by the platform’s terms, but civil law principles still support refund for non-delivery.

6) Procedure matters: how to enforce a refund in the Philippines

Step 1: Gather proof

Typical evidence:

Contract, proposal, invoice, booking confirmation
Proof of payment (bank transfer, e-wallet screenshots, receipts)
Messages showing scope, deadlines, milestones
Proof of non-performance or partial performance
If relevant: obituary/notice of death (or credible confirmation)

Step 2: Make a written demand

A demand letter helps establish:

the amount claimed,
the basis (unrendered services),
a deadline to pay,
and willingness to settle.

Send it to:

the business address,
known heirs handling affairs,
or the executor/administrator if known.

Step 3: Barangay conciliation (when applicable)

Many civil disputes between individuals in the same city/municipality require Katarungang Pambarangay conciliation before filing in court, subject to exceptions (e.g., where parties are in different cities/municipalities, urgent legal action, etc.). If applicable, this can be a practical settlement route.

Step 4: If estate proceedings exist—file a claim in the estate case

If there is an ongoing settlement of estate (testate/intestate) in court, money claims are typically handled by filing a claim against the estate within the period set by the court’s notice to creditors.

Why this matters:

Missing the claim period can seriously harm recovery.
The estate process centralizes payment of debts from estate assets.

Step 5: If no estate proceeding exists—consider options

If there is no known settlement case:

Negotiation with heirs may still work, but heirs may hesitate without authority.
A court action may be needed to establish the claim, and sometimes to prompt estate administration if assets must be marshaled.

Step 6: Small claims (when appropriate)

For straightforward money claims within the allowed threshold and fitting the rules, small claims can be an efficient route (faster, simplified). A major complication arises if the defendant is deceased: the proper defendant should be the estate represented by an executor/administrator, not the deceased in their personal capacity.

7) Common defenses the estate/business may raise—and how they’re evaluated

Defense A: “Death is force majeure, so no refund is due.”

Death can excuse non-performance if the service was personal and became impossible, but it does not automatically justify keeping unearned payment. Force majeure typically removes liability for damages, not the duty to return what has no basis to be retained.

Defense B: “Deposit is non-refundable.”

Labels are not absolute. The question becomes whether retention is supported by the contract and equitable given what was delivered and what costs were truly incurred.

Defense C: “Work was already substantially done.”

If the provider can show substantial performance or deliverables already provided, the refund may be reduced to reflect the value received.

Defense D: “Client cancelled first.”

If the client cancelled before death, the case shifts into cancellation terms, liquidated damages, and breach analysis. If death happened after cancellation, the death may not be the legal cause of non-performance.

Defense E: “Payment covered reservations and opportunity costs.”

Sometimes valid—especially in events industries. Still, the amount must be reasonable and connected to real loss, not a windfall.

8) Special contexts worth knowing

A. Lawyers and “unearned fees”

If a lawyer dies with ongoing representation and has received fees for work not performed, there is a strong professional and equitable expectation that unearned fees are returnable (or at least accounted for), subject to the nature of the fee arrangement (acceptance fee vs appearance fee vs contingent fees) and services already rendered. Recovery is usually a claim against the estate; professional bodies may assist with administrative aspects, but money recovery still rests on civil claims.

B. Doctors/clinics and prepaid packages

If the contract is with a clinic (entity) and it continues operating, it may still be obligated to honor packages. If the contract was clearly for a specific doctor personally and cannot be substituted, refunds for remaining sessions are usually warranted, subject to services already delivered.

C. Contractors and construction

If the contractor is a sole proprietor who dies, and the contract depends on that person’s personal performance, impossibility may arise; but construction is often delegable and can be continued by the business team. The analysis turns on contract terms, licensing, and capacity to complete. Refunds, completion, or damages depend on whether the project can still be finished and whether materials were procured.

D. Tuition, training programs, and subscriptions

If the provider is a school/company, death of an owner does not end the entity’s duty. Refunds are typically governed by enrollment/consumer rules and contract terms, but non-delivery supports refund of unused periods.

9) Practical “client checklist” (Philippine-realistic)

Confirm who you contracted with: person, sole proprietorship, or corporation?
Check if the service was personal (non-delegable) or operational (delegable).
Compute the unearned amount with a clear, defensible method.
Send a written demand with attachments (proof of payment + contract).
Ask if an estate case exists and who is the executor/administrator.
If settlement is possible, document it with a signed agreement and payment schedule.
If escalation is needed: barangay (if required), then small claims/regular court or claim in estate proceedings.

10) A compact template structure for a demand (content outline)

Date, name/address of recipient (heir/administrator/business)
Statement of facts: contract, payment, expected service, death, non-performance
Amount demanded: show computation and basis
Legal basis: failure of consideration / unjust enrichment / restitution
Demand: refund by a specific date and payment method
Reservation of rights: escalation to barangay/court/estate claim if unpaid
Attachments: contract, receipts, conversation screenshots, etc.

11) Bottom line principles to remember

Death may end the duty to perform a strictly personal service, but it usually does not justify keeping money for services not delivered.
Recovery often depends on who the contracting party is (individual vs corporation) and whether estate proceedings exist.
The most legally “correct” defendant after death is typically the estate represented by an executor/administrator, not the deceased as a named party and not heirs personally (unless properly brought in under the rules).
Courts and equitable principles strongly favor avoiding unjust enrichment—refunds of unearned amounts are the default direction unless the provider can justify retention through value delivered or legitimate costs.

If a specific scenario is provided (e.g., “photographer booked for a wedding,” “prepaid review center,” “monthly subscription,” “contractor with 30% down”), the legal analysis can be precisely mapped to: (1) personal vs delegable obligation, (2) entity vs individual contracting party, (3) refund computation, and (4) best procedure (estate claim vs small claims vs negotiation).