STEP-BY-STEP PROCESS IN THE EXTRA-JUDICIAL SETTLEMENT OF ESTATE.

JANUARY 29, 2015 / LEGALMIND

The step by step procedure for extrajudicial partition of estate is as follows:
1. Prepare a Deed of Extrajudicial Settlement of Estate andAdjudication
of Estate to be signed by all of the heirs, which must contain the
following information:
That the decedent left no will;
That the decedent left no debt;
Each heirs relationship to the decedent (e.g. spouse, son, daughter,
father, mother etc.);
That they are the decedents only surviving heirs;
An enumeration and a brief description of the decedents properties,
both real and personal, which the heirs are now dividing among
themselves.
2. The Deed of Extrajudicial Settlement and Adjudication of Estate should
be notarized before a Notary Public after all the heirs have signed it.
3. Deed of Extrajudicial Settlement and Adjudication of Estate will be
published in a newspaper of general circulation once a week for three (3)
consecutive weeks.
4. Estate Taxes should be paid before the Bureau of Internal Revenue (BIR).
5. The notarized Deed of Extrajudicial Settlement and Adjudication of
Estate shall be registered with the Register of Deeds.

Not a lot of people know what an extrajudicial settlement of the estate is.
Well, not unless they have experienced losing a member of the family and
dividing his remaining properties.

Extrajudicial settlement of the estate simply means drafting a contract where

the properties are divided among the heirs, as the latter may see fit.
Enumerated in the contract are the properties left by the deceased,
collectively called the "estate". The properties may range from real
properties such as parcels of land, buildings, or personal properties such as
money left in the bank, cars, jewelry, furniture and even shares in a
corporation.
It should be well-noted that an extrajudicial settlement by agreement is only
possible if there is no will left by the deceased. Even if there is a will but the
will does not include all of the decedent's estate, then those not covered can
by extrajudicially partitioned by agreement.

Moreover, extrajudicial settlement is not possible if the heirs cannot agree on

how the properties will be divided. In that case, they can file and ordinary
action for partition.

Publication requirement

After the settlement agreement is signed, the heirs should cause the
publication of the agreement in a newspaper of general circulation to ensure
that interested parties, if there are any, such as creditors and unknown
heirs, will be given due notice.

Payment of Estate tax

After the publication, transfer of title may follow. Upon the transfer of the
estate, the Estate Tax must be paid in accordance with Section 84 of the
National Internal Revenue Code of the Philippines.

Estate tax is defined as a tax on the right of the deceased person to transmit
his estate to his lawful heirs and beneficiaries at the time of death and on
certain transfers, which are made by law as equivalent to testamentary
disposition. It is a form of transfer tax, not a property tax. More particularly,
it is a tax on the privilege of transferring the property of the decedent to the
heirs.

The Estate Tax Return must be filed within six (6) months from the
decedent's death. The deadline may be extended by the Commissioner of
the BIR, in meritorious cases, not exceeding thirty (30) days.

It is interesting to note that the estate itself will have its own Tax
Identification Number (TIN). The BIR treats the estate as a juridical person.

The Estate Tax Return is filed with Revenue District Office (RDO) having
jurisdiction over the place of residence of the decedent at the time of his
death.

If the decedent has no legal residence in the Philippines, then the return can
be filed with:

1. The Office of the Revenue District Officer, Revenue District Office No. 39,
South Quezon City; or

2. The Philippine Embassy or Consulate in the country where decedent is

residing at the time of his death.

For estate taxes, the BIR imposes the pay-to-file system which means that
you have to pay the estate tax at the same time the return is filed.

In cases involving a huge estate where the tax imposed can get too high, or
in cases where the decedent left properties which are difficult to liquidate
and they do not have the cash to pay the taxes, the BIR Commissioner can
extend the time of payment but the extension cannot be over two (2) years
if the estate is settled extrajudicially. If an extension is granted, the BIR
Commissioner may require a bond in such amount, not exceeding double the
amount of tax, as it deems necessary.

The estate tax is based on the value of the net estate as follows:

1. If not over P200,000, it is exempt

2. If over P200,000 but not over P500,000, then tax is 5% of the excess
over P200,000

3. If over P500,000 but not over P2,000,000, then tax is P15,000 PLUS 8%
of the excess over P500,000

4. If over P2,000,000 but not over P5,000,000, then tax is P135,000 PLUS
11% of the excess over P2,000,000

5. If over P5,000,000 but not over P10,000,000, then tax is P465,000 PLUS
15% of the excess over P5,000,000

6. If over P10,000,000, then tax is P1,215,000 PLUS 20% of the excess over
P10,000,000

In computing the net estate, allowable deductions shall always be

considered. These deductions include funeral expenses, share of the
surviving spouse, medical expenses incurred by the decedent within one (1)
year prior to his death, family home deduction of not more than
P1,000,000.00, standard deduction of P1,000,000.00, among others. It is
best to consult a lawyer or an accountant to determine to ensure that the
heirs can properly indicate the deductions and exemptions and thereby
determine the accurate net estate of the decedent.
Dear PAO,
My parents-in-law left a house and a parcel of land in Laguna. We used to live in that house, but
we left there and got a house of our own after our twin daughters were born. They passed away
in the late 1990s but their children did not divide the properties. Sometime last year, my sister-in-
law informed me that they are planning to sell those properties because my brother-in-law needs
the money for his medication. All I want to know is whether I have the right to represent my wife
in claiming her share in those properties. My wife passed away three years ago and I intend to
use her share for the schooling of our daughters. I hope you can enlighten me. Thank you and
best regards.
Mico

Dear Mico,
Your wife and her siblings are, by law, considered the compulsory heirs of your parents-in-law
(Article 887, New Civil Code). Thus, the rights, properties and obligations left by their parents
are transferred to them from the moment of their demise. This is in consonance with Article 774
of the said law which provides:
Succession is a mode of acquisition by virtue of which the property, rights and obligations to
the extent of the value of the inheritance, of a person are transmitted through his death to another
or others either by his will or by operation of law.

It bears stressing that the heirs may not be compelled to divide and distribute the properties
immediately after the death of the decedent if they all choose to maintain the said properties
under the regime of co-ownership. But, if any of the heirs desires to divide the properties left by
the decedent, the heirs may either come into an agreement as to the division and distribution and
proceed with the extrajudicial settlement of the estate of the decedent, if the latter left no will and
no debts, or ensue for the judicial partition of the said estate.

We want to emphasize, though, that you have no right to represent your deceased wife relative to
her successional rights. While our laws recognize the right of representation, that is, the
representative is raised to the place and the degree of the person represented, and acquires the
rights which the latter would have if he were living or if he could have inherited, such right is not
granted to a spouse. Pursuant to Article 972 of the New Civil Code, The right of representation
takes place in the direct descending line, but never in the ascending. x x x In the collateral line, it
takes place only in favor of the children of brothers or sisters, whether they be of the full or half
blood.

You may nevertheless assist or be the guardian of your daughters in asserting their rights over the
share of their mother in the properties left by their grandparents if they are not yet of legal age.
Being the children of the heir of the decedent, your daughters have the right to represent their
mother and claim her share from the estate of their grandparents.

At this point, it will be best for you and you siblings-in-law to discuss the possible settlement of
the estate of your deceased parents-in-law. It is more advisable for the heirs to proceed with the
extrajudicial settlement of estate as it will dispense with a formal court proceeding for the
partition of the estate.

We hope that we were able to answer your queries. Please be reminded that this advice is based
solely on the facts you have narrated and our appreciation of the same. Our opinion may vary
when other facts are changed or elaborated.

MANILA, Philippines Have you ever experienced difficulties in transferring ownership

of inherited land?
The process can be confusing, as one netizen pointed out in a complaint submitted to
Rappler's #NotOnMyWatch platform.
The netizen, along with his siblings, inherited property from their parents. They later
decided to sell the inherited property to a third party. While trying to transfer the property
deed to the buyer, they encountered problems processing their application for
extrajudicial settlement of property with the Register of Deeds in Tanauan City. The
application was filed almost two years ago. To date, the property deed has not yet been
released.
Instructions given were not clear, the informant said. An ordinary citizen will have to
scour websites and memorandum circulars to be able to know the correct process.
There were some requirements that were not specified early on.
To address the complaint, Rappler tried to reach the Register of Deeds in Tanauan City
but the number posted on their website is incorrect.
We called the Bureau of Internal Revenue (BIR) in Lipa City instead and was able to talk
to the Officer of the Day who explained the procedure.
Extrajudicial settlement
Properties of a deceased person cannot be transferred to anyone until it has been
legally settled. This process is called extrajudicial settlement of estate.
Under Rule 74, Section 1 of the Rules of Court, a Deed of Extrajudicial Settlement of
Estate and Adjudication of Estate should be submitted to the Register of Deeds.
This deed of settlement should indicate the following information:
That the deceased owner has left no will.
That the deceased owner has left no debt.
The name and relationship of the heirs to the deceased. The heirs should be of
legal age. Minors should be legally represented.
A brief description of the properties which will be divided among the parties.
Posting of a bond fixed by the court if there is personal property included.
The deed should be notarized before a Notary Public after all heirs have signed the
document. According to the Rules of Court, the document must be published in a
newspaper of a general circulation for 3 consecutive weeks.
Once estate taxes have been paid to the BIR, only then can the notarized deed be
registered with the Register of Deeds.
Following the Rules of Court, below is a step by step guide to transferring ownership
among heirs. If the heirs have decided to sell the property, the same process also
applies.
Step 1: Fill out BIR Form 1904 (Application for Registration). In filling out the
form, note that all parties should have a valid Tax Identification Number (TIN),
even the deceased. Some things to note:
o On the space provided for the taxpayer's name, the name of the deceased
should be written.
o The local address of the deceased should be the same as indicated on his
or her death certificate.
o If the person died abroad and has no official residence in the Philippines,
fill out the foreign address as indicated on the death certificate.
o Attach a photocopy of the Certified True Copy of the death certificate
 Step 2: Prepare mandatory documents to be submitted to the BIR. The BIR
should give a checklist of the documentary requirements to the applicant. Among
the mandatory requirements are:
o TIN of Estate
o Photocopy of the death certificate, subject to the presentation of the
original
o Official Receipt/Deposit Slip and duly validated return as proof of payment
o Any of the following:
Affidavit of Self Adjudication
Deed of Extrajudicial Settlement of the Estate (if the estate had
been settled extrajudicially)
Court Order (if settled judicially)
Sworn declaration of all properties of the estate
Step 3: Prepare BIR Form 1801 (Estate Tax Return). The Officer of the Day at
the BIR should assist in filling out the form as they will be the one computing the
taxes based on the documents submitted.
Step 4: Pay the computed estate tax. According to Revenue Memorandum
Order (RMO) No. 15-2003, it can be paid at:
o An authorized agent bank (AAB) by the BIR;
o To the Revenue Collection Officer;
o To a duly authorized Treasurer of the city or municipality in the Revenue
District Office where the residence of the deceased at the time of death is
located;
o If the person died abroad and cannot be represented in the Philippines,
the estate tax can be settled through an AAB under RDO No. 39 South
Quezon City
Step 5: Submit all documentary requirements and proof of payment to the
RDO. Once all requirements have been submitted, a claim stub with a reference
number will be given. A Certificate Authorizing Registration document will be
released once the processing is done.
Step 6: Release of Certificate of Authorizing Registration (CAR). According
to RMO No. 15-2003, CARs should be released for all one-time transactions
within 5 days from the date of receipt of tax returns with complete documentary
requirements.
Registering the land
Once the CAR is released, it is then possible to transfer the registration of the land title
either to the heirs or a third party.
According to the Land Registration Authority's website, the following documents are
required to register the sale of an inherited property:
Main Document:
o Deed of Extrajudicial Settlement of Estate
o Deed of Sale (if the property has been sold to a third party)
Supporting Documents:
o BIR CAR/tax clearance certificate
o Owner's Duplicate Copy of Title
o Realty Tax Clearance
o Tax Declaration (Certified Copy)
o Transfer Tax Receipt/Clearance
o Affidavit of Publication of Settlement
Registered Land Deed of Sale by Rappler Philippines on Scribd
When all the necessary documents have been submitted, fees can then be paid.
The Register of Deeds will issue the Transfer Certificate of Title either to the heir or the
new owners if the property has been sold to a third party.
According to the LRA's Citizen's Charter, the entire process once all documents have
been submitted should not take more than 10 days unless:
The titled property is not on the database;
There are multiple titles in one transaction;
Multiple transactions;
There are technical problems in the system;
Transactions with incomplete documents;
Other conditions beyond the control of the Registry.

Settlement of estate
By
 Atty. Lorna Patajo-Kapunan
-
OCTOBER 12, 2015
0
1022
Losing a loved one is difficult. Aside from the physical, mental, emotional and
financial exhaustion, one has to face taxes and/or debts. It is a common
occurrence in our country that the heirs do not settle the estate of a
decedent until such time that settlement has become inevitable, like when
the heirs need to dispose of the assets left behind by their loved ones or
when an insurance claim cannot be processed. This may be due to the fact
that the subject of death is taboo in our culture, or the lack of awareness of
the heirs, or they simply do not care.
To make settlement of estate more understandable to you, my dear readers,
and to make sure that you are given basic knowledge to prevent penalties
being imposed by the Bureau of Internal Revenue (BIR) for late payments, let
me give you a brief background and an introduction of some legal jargons.
First, let me define what an estate is. An estate is comprised of the real and
personal properties of the deceased. It should be remembered that once a
person dies, a Notice of Death should be filed with the Register of Deeds
(RD) having jurisdiction over the place of residence of the deceased at the
time of his death within two months after the date of death when the gross
value of the estate exceeds P20,000, while the payment and filing of the
estate tax return should be done within six months from the deceaseds
death, unless an extension of time is requested in cases where the payment
of the tax will result in undue hardship on the heirs, but such extension is
not to exceed five years, in case the estate is settled through the courts, or
two years in case the estate is settled extrajudicially. If an extension is
granted, the BIR commissioner may require a bond in such amount, not
exceeding double the amount of tax, as it deems necessary.
Estate tax is a tax imposed on the right of the deceased person to transmit
his estate to his lawful heirs. It is not a tax on property. The Estate Tax
Return is filed in the Revenue District Office (RDO) having jurisdiction over
the place of residence of the deceased at the time of his death. If the
deceased has no legal residence in the Philippines, then the return can be
filed with the Office of the Revenue District Officer, Revenue District Office
No. 39, South Quezon City, or the Philippine Embassy or consulate in the
country where the deceased is residing at the time of his death.
As already mentioned, there are two ways of settling an estate. It may be
settled judicially or extrajudicially. Extrajudicial settlement means
settlement of the estate outside of court. This means that the heirs do not
have to go to court to partition the properties left by the deceased. If the
deceased left no will and no debts, and the heirs are all of age, or the minors
are represented by their judicial or legal representatives duly authorized for
the purpose, the parties may, without securing letters of administration,
divide the estate among themselves as they see fit by means of a public
instrument filed in the office of the RD where the land is located after the
estate taxes are paid. If there is only one heir, he may adjudicate to himself
the entire estate by means of an affidavit filed in the office of the RD. The
parties to an extrajudicial settlement or the sole heir who adjudicates the
entire estate to himself, by means of an affidavit shall file, simultaneously
with, and as a condition precedent to, the filing of the public instrument or of
the affidavit in the office of the RD, a bond with the said RD in an amount
equivalent to the value of the personal property involved as certified to
under oath by the parties concerned. It shall be presumed that the deceased
left no debts if no creditor files a petition for letters of administration within
two years after the death of the deceased. However, if on the date of the
expiration of the period of two years herein prescribed, and the person
authorized to file a claim is a minor or mentally incapacitated or is in prison
or outside the Philippines, he may present his claim within one year after
such disability is removed.
The fact of the extrajudicial settlement or administration shall then be
published in a newspaper of general circulation once a week for three
consecutive weeks.
When the deceased left a will or debts and/or the heirs are in dispute, the
heirs would have no choice but to resort to judicial settlement. Judicial
settlement is initiated by filing an appropriate petition in court. If the
deceased was a resident of the Philippines at the time of his death, the
petition must be filed before the Regional Trial Court (RTC) in the place
where he resided at the time of his death. If the deceased was a resident of a
foreign country at the time of his death, the petition must be filed in any RTC
in the province where he had estate. The notice of the filing of the petition
for settlement of estate and the proceedings thereof are required to be
published in a newspaper of general circulation once a week for three
consecutive weeks.
If the value of the estate left by the deceased is worth P10,000 or less,
regardless of whether the deceased left a will, the heirs should file a petition
in court alleging that the estate is of small value and publish a notice of the
settlement proceedings in a newspaper of general circulation once a week
for three consecutive weeks. After completion of publication, the court may
set the case for hearing and proceed summarily to settle the estate.
If the deceased left a will, such must be probated, meaning a proceeding
should be conducted to
determine if the will will be allowed or disallowed by filing a petition in court
praying for the probate of the will and settlement of estate of the deceased.
The court will set a time and place for the probate and shall cause notice of
such to be published in a newspaper of general circulation once a week for
three consecutive weeks. On the hearing date, the court will proceed with
the probate of the will and distribute the estate to the heirs/legatees
accordingly.
If the deceased left no will, the steps are the same as the above, except that
the petition will pray for the settlement of the estate of the deceased.
In sum, no matter how painful it is to lose a loved one, the fact of death and
the payment of taxes cannot be avoided. As the great Benjamin Franklin
once wrote: [In] this world nothing can be said to be certain, except death
and taxes.

Estate Settlement in the Philippines

Some of us are lucky enough to inherit properties from our parents in the Philippines.
But in our hurry to come to the United States, we are unable to make the proper
arrangements to have them titled in our names. Then, we go back to the Philippines
only on short vacations, so we do not have enough time to attend to it. Despite the
many years that have lapsed, the properties remain in our parents names. Meanwhile,
we want to immediately sell our inheritance so we can use the proceeds to buy houses
here in the U.S. while they are still cheap.

Until only recently, most Filipinos did not bother to have a last will and testament, such
as perhaps your parents who left you properties in the Philippines. In such a case,
Philippine law says that the properties they left behind would go to their heirs which
include the spouse and children, and in some cases, the grandchildren, brothers,
sisters, nephews and nieces.

If there is no last will and testament, the procedure to distribute the properties (the
estate) to the heirs is called intestate succession. If the heirs all agree on how the
division will be done, and there are no debts and other claims against the estate (such
as mortgages), they can simply sign what we call an Extra-Judicial Settlement. It is like
an agreement signed before the notary public and published in the newspaper. Only the
notice of the settlement is published, and not the document itself. After paying the estate
taxes and complying with the other legal requirements, the heirs have the option to (a)
register themselves as co-owners in the title, (b) agree to partition the estate so they
can have separate properties under their separate names, or (c) sell the estate and
divide the proceeds among themselves. There is no need to go to the court in extra-
judicial settlement.

Still on extra-judicial settlement, the process becomes complicated when the registered
owners and even their spouses and some of their children are already dead. In my
many years as an attorney in the Philippines, I often come across clients who want my
legal help in selling or buying properties, but when I check the title, I would learn that it
was still in the name of the parents.
I always advise my clients or the sellers to first settle the estate of their parents so that
they can have the property titled in their own names. This is to protect the buyer and
also the seller against any future court suit from an omitted heir. Many of my clients had
the notion that the children of their dead brothers and sisters (their nephews and nieces)
did not anymore share in the estate. This is wrong because the children get what their
dead parents would get if they were still alive. If the nephews and nieces are omitted, no
matter how small their share is, they can question the sale in court. This will be a big
headache for both the seller and the buyer because the nephews and nieces can claim
that even if they had been notified, they would agree to the extra-judicial settlement,
They can then argue that the estate should have been judicially settled in court because
of the disagreement.

Indeed, in case the heirs do not agree on how to distribute the estate, they should go to
the court in what we call a petition for intestate estate. The Court will try to convince the
parties to agree, but if it does not succeed, the court will hear the case and decide how
to divide the estate among the heirs. The trial will be potentially long and complicated,
so it is really better for all the heirs to agree on how to divide the estate.

Finally, the heirs should be aware of the huge amount they will have to pay if they fail to
pay the estate tax on time, which is six months from the time the decedent died. Estate
tax rates can go up to 20% of the net estate. In case of late payment, there is a 25%
penalty and a 20% annual interest. Therefore, it is advisable for property owners to think
of estate planning while they are still alive, to spare their heirs of this huge burden.

Nothing is certain except death and taxes. ~Benjamin Franklin

Death and taxes are indeed the two constants in this world that we humans cannot
escape. While death may appear to be the end of a persons life story, nevertheless,
from a legal standpoint, the death of a person is only the beginning of various legal
obligations which if not taken cared of might cause bigger problems later on. This legal
obligation is otherwise known as the settlement of the decedents estate.
The procedure for the settlement of estate varies depending on whether or not the
decedent left a last and will and testament, otherwise known as the Will. However,
regardless of the presence or absence of a Will, generally, the first step is the filing of
the Notice of Death with the Revenue District Office (RDO) of Bureau of
Internal Revenue (BIR) that has jurisdiction over the place of residence of the
decedent.

If the decedent left a Will, then it must be probated first. In other words, the authenticity
and due execution of the purported Will of the decedent must be proven first in court. It
is only after the Wills authenticity and due execution has been proven in court that the
Will can be given effect, and the payment of the corresponding taxes, most important of
which is the estate tax, can be paid.

On the other hand, if the decedent did not leave a will before he passed away (which is
often the case in the Philippines), a document known as the Deed of Extrajudicial
Settlement of Estate (the Deed) ought to be executed by all of the heirs of the
decedent. The Deed basically contains the agreement of the heirs on how to partition
and/or dispose of the estate of the deceased. The Deed ought to be executed by all of
the heirs, notarized and published in a newspaper of general circulation for three (3)
consecutive weeks. The notarized Deed should be filed together with the Estate Tax
Return, and other documentary requirements, within six (6) months from the death of
the decedent, with the proper RDO. Otherwise, aside from the assessed estate tax
there will an additional charge for the penalties due to failure to file it within the
prescribed period.

After securing the Certificate Authorizing Registration (CAR) with the BIR,
the CAR together with the other documentary requirements should be filed with the
corresponding Register of Deeds which has jurisdiction over the properties to be settled.
It is only after submitting the corresponding documentary requirements with the Register
of Deeds and paying the corresponding fees therein that the properties could be finally
transferred under the names of the heirs, who will then become the new owners of the
properties left by the decedent.
The entire process of settlement of the estate may be quite overwhelming and a bit
tedious, especially here in the Philippines. The foregoing is merely an overview of the
process of settling an estate, additional steps or procedures may be required depending
on the particular circumstance surrounding the specific estate to be settled. Thus, it
would be wise to be assisted by a trusted legal consultant during the entire process.

WHAT TO DO WITH THE ESTATE OF PARENTS

WHO DIED WITHOUT A WILL
By Balita | November 1, 2011
0 Comment
Q. On behalf of my brothers and sisters, I am writing to you as the surviving legitimate children of our
late parents. We are all of legal age, married, citizens and residents of the Philippines, during the
years of the demise of our parents.

Our father died in 1972, while our mother died in 1987. They were both Filipino citizens and
residents of the Philippines when they passed away.

Unfortunately, they left no Will, neither important matter we failed to act on among us members of
the family. However, we discovered four photocopies of an Original Certificate of Title, duly
numbered, as well as, Free Patents Corresponding numbers on each of these four mentioned
documents. Across each of these documents, stamped on which read in bold letters, Owners
Duplicate Certificate.

Our agriculturist brother, in lieu of our deceased parents, at times attends to whatever official matters
he has to settle with the Bureau of Lands District Office in Legazpi City. The question of succession
rights to Real Property has never crossed his mind, nor among us siblings.

We shall appreciate your legal opinion on what we are to pursue to comply with our present National
Law and on family rights. Likewise, any of our governments charges, e.g. taxes, penalties, stamps,
fees, etc. that must be settled by us. Thank you. P.

Ans: The failure of your parents to execute their respective wills does not mean that their estate
cannot be settled or liquidated by the surviving heirs. Under the law and notwithstanding the
absence of a will by your parents, the surviving heirs can still settle their respective estates.

On the basis of the facts you have mentioned, there are two (2) ways in which the estate of
deceased person may be settled and liquidated by the heirs in the absence of a will .This is referred
to as in law as Intestate Succession, to wit:

In intestate succession, the estate of the deceased may be partitioned or subdivided either by:

1) Extrajudicial Settlement of Estate- Under this scheme the decedent did not have a will and does
not have unpaid creditors and minor children; and that all the heirs are in harmony as to the manner
in which the property is to be subdivided or partitioned. And without going to the court, the heirs
agreed amongst themselves to adjudicate the estate by means of instruments known Extrajudicial
Settlement of Estate duly signed and notarized and have it published in the newspaper of general
circulation for at least three (3) consecutive weeks. And of course to pay the required estate tax and
compliance of procedure and administrative matters with the concerned government agencies.

Pursuant to law, the estate is divided by first liquidating the conjugal/matrimonial property. The
legitimate spouse gets portion of her share of the conjugal/matrimonial property and the remaining
which constitute the estate shall be divided equally amongst the heirs including the surviving
spouse.

However, as all your parents are already deceased, their respective conjugal/matrimonial shares
shall accrue to the entire estate subject to distribution and partition amongst all the heirs in equal or
pro-rata proportion.

In case the child (heir) is illegitimate, his/her share is equivalent to only of the shares of the
legitimate child. Which are shares only?

2) Judicial Settlement of Estate- In contrast to the above, if the deceased left no will but there are
creditors or claimants or an heir is/are minor(s) or suffering from incapacity to act and/or the heirs
cannot agree amongst themselves in the manner of partition or distribution of the estate, the
liquidation of the estate shall be by means of Judicial Settlement. The sharing scheme of the heirs is
the same as aforesaid.

Thus, in the judicial settlement of estate, the heirs or creditors/claimants, as the case may be, have
to file a petition in the Court of Law for the settlement of estate. Judicial Settlement could be
adversarial and expensive especially if the heirs cannot agree amongst themselves how the estate is
to be partitioned or subdivided.

Aside from being adversarial, this is also costly as parties will have to engage the services of
lawyers. The process could take years to be resolved and could damage cordial and harmonious
relations amongst or between the heirs. It is strongly suggested that where possible and within the
bounds of law, this scheme should be avoided.

Payment of Estate Tax:

Furthermore, the Tax Code also requires that within two(2) months from the death of a decedent, it is
the obligation of the estate through the heirs to serve notice to Bureau of Internal Revenue(BIR) of
the fact of such death and not later than six(6) months thereafter, pay the corresponding Estate
Taxes thereof. Otherwise, penalty charges and interest of the tax due thereof shall be imposed for
late filing and payments of the estate tax.

Estate tax is normally assessed based on the net value of the estate, after all the allowable
deductions and expenses are deducted from the gross estate of the deceased.

Then there is also Documentary and Stamp taxes that you have to pay, as well as the transfer and
registration fees. The tax rates and the corresponding taxes due/amount thereof, varies according to
the value of the estate or properties. It is suggested that you confer with a tax practitioner who can
provide you professional information as regards the tax issues of the estate.

More delays mean more money would be wasted in the form of penalty charges and interest. These
charges could accumulate over the years if unattended. Obviously, it would be to the best interest of
the all the heirs to address the matter at the earliest time possible.

It is likewise suggested that you confer with your lawyer in the Philippines so that the proper courses
of action shall be undertaken accordingly, more particularly in the documentation and formality
requirements as prescribed by law in the settlement of the estate of the deceased person.

Thank for writing and looking forward youll find the above in order.
A death in the family, whether sudden or after a lingering illness, is always a shock and never fails to
cause immediate and overwhelming sorrow and grief. In most cases, the family members are unable to
live normally for a long period of time. Nevertheless, there are important legal matters to take care of and
it would be useful if everybody prepares himself beforehand for such eventuality by knowing what these
matters are.

First of all, a death certificate must be applied for and the entries correctly filled in. The hospital where the
death occurred usually assists the relatives in securing the death certificate. The representatives of the
funeral parlor are also able to assist in this regard. It would be advisable that upon issuance of the death
certificate, the relatives obtain at least one certified true copy since they would need to present the same
to the BIR, Registers of Deeds and/or the courts, as the case may be.

Although it does not seem proper to appear to be very eager in finding out what and how much one will
get upon the death of a parent or other relative, the Rules of Court do require that a person who has
custody of a will shall, within 20 days after he knows of the death of the testator, deliver the will to the
court of the place of residence of the testator, or to the executor named in the will. In other words, the
relatives must endeavor to find out if the deceased did leave a will and where it is. If, despite efforts,
nobody can find any will or if they are certain that the deceased did not leave any, the heirs can then
already start the process of settling his estate.

An initial step is to notify the BIR of the death within two months and to file the estate tax return and pay
the estate tax within six months from date of death. The latter period may be extended where payment of
the estate tax would impose undue hardship on the heirs, not to exceed five years in case the estate is
settled through the courts, or two years in case the estate is settled extra-judicially. Accordingly, it is
imperative that the heirs start gathering the original titles or the owner’s duplicates of the TCT and
other proofs of ownership of real and personal properties belonging to the deceased as well as taking
possession of the properties themselves. Only titles in the name of the deceased are involved. Where the
deceased was married, titles in the names of both spouses are included because the deceased’s
conjugal or community share therein is part of his estate. Apart from titles or TCTs, stock certificates, LTO
car registration, passbooks, bank certificates, investment papers, and the like, as long as the name of the
deceased appears therein, are the usual proofs of ownership the heirs must look for. Deeds of
assignment, contracts to sell, declarations of trust, insurance policies, pension plans and other forms or
documents showing a right, title, claim or interest in favor of the deceased must likewise be gathered.
Regarding real properties, the heirs must secure from the BIR, the zonal valuation of the same for estate
tax purposes. Likewise, shares of stock and other personal properties must be properly valued. In the
case of big corporations where the deceased may have had shares of stock, the office of the corporate
secretary can provide the stock price prevailing at the time of death. For close or family-owned
corporations, valuation may be secured from the finance officer, financial statements and/or auditors.
Where the deceased had a safety deposit box, the same may be opened in accordance with applicable
banking procedure which would generally involve a formal request of the person duly authorized by all the
heirs or the court and the presence of the bank manager and BIR representative.

Having gathered the assets, the heirs must also determine if the deceased left any liability or
indebtedness. They should look for promissory notes, real estate mortgage, chattel mortgage, credit
cards and other statements of account, and any other form or document whereby the deceased had
undertaken to repay, return or settle whatever in favor of another. In addition, the heirs must gather and
preserve proofs of allowable deductions from the estate tax. Among these are actual funeral expenses or
an amount equal to five percent of the gross estate, whichever is lower, but in no case to exceed
P200,000, judicial expenses of testamentary or intestate court proceedings and medical expenses
incurred by the deceased within one year prior to his death supported by receipts but in no case
exceeding P500,000.

Where the estate is large, the services of a lawyer and accountant need to be engaged as soon as
possible as they could help the heirs in their efforts to find out what and where are the properties
belonging to the deceased. However, a court proceeding is not indispensable in all instances of estate
settlement. The Rules of Court provide that where the deceased left no will and no debts and the heirs
are all of age, or the minors are represented by their judicial or legal representatives duly authorized for
the purpose, the heirs may divide the estate among themselves as they see fit by means of a public
instrument filed in the office of the Register of Deeds. In this simple situation, all the heirs have to do is
agree to, and sign, an extra-judicial settlement and partition of the estate in the presence of a notary
public. The extra-judicial settlement and partition of the estate must be published in a newspaper of
general circulation once a week for three consecutive weeks. After publication, the heirs can proceed to
prepare and file the estate tax return and pay the estate tax with the BIR. Upon securing a certification of
payment of the estate tax from the BIR, the next step would be for the heirs to transfer the titles to their
names. The Registers of Deeds all over the country have more or less the same requirements and these
entail the submission of the certified true copy of the death certificate, extra-judicial settlement and
partition, affidavit of publication, BIR certification of payment, the original owner’s duplicate of the
title, up to date realty tax payment certification, updated tax declaration, and the payment of the transfer
taxes registration fees and others. The heirs can also already claim other moneys due to the estate or
beneficiaries such as those from the SSS or GSIS, as the case may be, by filing the application therefore,
withdraw the balance, or change the account name, of bank accounts in the name of the deceased by
submitting to the bank the same documents as in the transfer of title, and/or availing of the insurance and
retirement benefits arising from the death of the deceased with the insurance companies and the
employer or work place of the deceased.

Where there is a will, and the same was not probated nor approved by a court during the lifetime of the
deceased, the same must first be probated by a court before any settlement of the estate and transfer of
real properties to the heirs can be done. A court proceeding may also be warranted, although there is no
will, where the heirs are in disagreement (violent or otherwise), there is a necessity for the appointment of
an administrator to take care of the estate since the heirs cannot do so or are locked in dispute, there are
creditors wanting to be paid, some heirs cannot be found or there are claimants such as illegitimate
children. Where the probate of the will is being contested or if the court proceeding is expected to
continue for some time, an administrator, usually an heir who is acceptable to the others, may be
appointed by the court to look after the estate pending settlement. Where the heirs are not in good terms,
the mere selection and appointment of an administrator would not only be difficult but painful. Where an
administrator has been appointed, then he becomes responsible for the inventory of the assets of the
estate, payment of the debts and taxes, managing the properties, suing on behalf of or defending the
estate against creditors, claimants or even heirs who may be fraudulently concealing estate properties,
selling some properties if necessary and ultimately seeing to it that the estate is finally distributed and
partitioned. The administrator, however, is obliged to seek the permission of the court before any major
undertaking of his duties and responsibilities. Where a will that has been probated names an executor,
the latter takes the place of an administrator.

Upon probate of the will and there are no other issues, then the court proceeding can terminate, even
without appointment of an administrator or executor, and the heirs can immediately proceed with the
execution of the partition agreement and follow the same procedure as in an extra-judicial settlement.
A: You and your fellow heirs can simply ask a lawyer to draw up a deed of extra-judicial settlement
of your father's estate. You can then have it notarized, and then have the notice published in a
newspaper of general circulation once a week for three weeks. After you pay the corresponding
taxes, you can then present the deed, the notarized affidavit of publication and the official receipts, to
the Register of Deeds so that new titles can be issued to your names (assuming of course that your
father left real properties).

Your mother gets one-half of the estate as her conjugal share. The remaining half will then be
divided among your mother, you and your two other siblings. However, nothing prevents any heir
from giving up his share of the inheritance or from choosing and getting a lesser amount. Thus, for
example, instead of getting the farm in the province, one of the heirs may choose to get as his
inheritance the brand new car.