Short answer. They are given priority, though not the highest. In the Article 2244 ranking of an insolvent debtor's preferred claims, expenses of the debtor's last illness — and of a spouse or children under his authority who have no property of their own — are listed third, ahead of ordinary creditors but behind funeral costs and certain employees' wages.
What the law says
Expenses during the last illness of the debtor or of his or her spouse and children under his or her parental authority, if they have no property of their own
Civil Code, Article 2244 — Order of Preference on Other Property. Read the full provision →
Last-illness expenses are a preferred claim
Medical costs from a debtor's final illness are not left to compete with ordinary debts. Article 2244, which ranks the claims paid first out of an insolvent debtor's general property, expressly includes expenses during the last illness of the debtor or of his or her spouse and children under his or her parental authority, if they have no property of their own. Because the item sits on the preferred list, these expenses are satisfied ahead of unsecured creditors when the estate is distributed. The law treats the cost of caring for the dying as a claim that should not be defeated by the debtor's insolvency.
Where it ranks in the order
Article 2244 pays its listed claims in the sequence given, and last-illness expenses appear third. Ahead of them are proper funeral expenses and, next, a year's wages of the insolvent's employees, labourers, or household helpers. Behind them come many other claims, including support advanced to the debtor, criminal indemnities, taxes, and ordinary documented credits. So a family that shouldered the debtor's final medical bills has a strong, early claim on the estate — better than most creditors — but it still yields to burial costs and to the wages of those who worked for the debtor.
Who is covered, and the property condition
The preference is not limited to the debtor's own illness. It also reaches the last-illness expenses of the debtor's spouse and of children under his or her parental authority — but only where those family members have no property of their own to answer for the cost. If the spouse or child had assets that could cover the expense, the claim against the insolvent's estate for it does not enjoy this preference. As with the other preferred items, the amounts must be genuine expenses of the last illness, not unrelated debts dressed up to gain priority.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Philippine Deposit Insurance Corporation vs. Bureau of International Revenue, G.R. No. 172892, June 13, 2013 — read the decision on LawPhil →
- Strategic Alliance Development Corporation vs. Radstock Securities Limited and Philippine National Construction corporation, G.R. No. 178158 / G.R. No. 180428, December 4, 2009 — read the decision on LawPhil →
- Abundio Barayoga, et al. vs. Asset Privatization Trust, G.R. No. 160073, October 24, 2005 — read the decision on LawPhil →