Extrajudicial Settlement of Estate (Philippines)

An Extrajudicial Settlement of Estate in the Philippines sets out the testator's wishes for their property on death, naming beneficiaries and the executors responsible for carrying them out.

Rule 74, Section 1 of the Rules of Court imposes mandatory procedural requirements for a valid Extrajudicial Settlement. The instrument must be published in a newspaper of general circulation in the province or city where the settlement is filed, once a week for three consecutive weeks. This publication requirement protects creditors and other claimants who may have valid claims against the estate. The failure to publish renders the Extrajudicial Settlement ineffective against third parties for a period of two years, during which creditors may still file claims under Rule 74, Section 4.

Estate Tax under Section 84 of the National Internal Revenue Code (NIRC, RA 8424 as amended by the TRAIN Law, RA 10963) is imposed at 6% of the net estate (gross estate minus allowable deductions) of every decedent who was a citizen or resident of the Philippines. Estate Tax must be paid to the Bureau of Internal Revenue (BIR) within one year from the decedent's death, though an extension of up to five years may be granted by the BIR for meritorious cases. The BIR issues a Certificate Authorizing Registration (CAR) upon payment of Estate Tax, authorizing the Register of Deeds to transfer titles from the decedent's name to the heirs.

The Estate Tax Amnesty under Republic Act No. 11213 (as extended by RA 11956 to June 14, 2025) covers estates of decedents who died on or before May 31, 2022, allowing heirs to settle estate tax at 6% of the net undeclared estate without surcharges, penalties, and interest — a significant relief for families with long-pending estate tax obligations. The BIR Form for the Estate Tax Amnesty Return is BIR Form 2118-EA.

Under Article 962 of the Civil Code of the Philippines (RA 386), legitimate children and their descendants are the primary intestate heirs, inheriting by right of representation. The surviving spouse also has a share in the estate under Article 996 of the Civil Code. The shares of compulsory heirs (the legitime) are protected under Articles 887-914 of the Civil Code and cannot be impaired by the extrajudicial settlement — any allocation that defeats a compulsory heir's legitime is subject to reduction through the action of preterition under Article 854.

An Extrajudicial Settlement of Estate in the Philippines is required whenever heirs of a deceased person need to transfer inherited property — particularly titled real estate — from the decedent's name to the heirs' names, and all conditions for extrajudicial settlement are met.

An Extrajudicial Settlement is needed when a parent dies leaving land, a house, or a condominium registered in the LRA Torrens system, and the surviving heirs (spouse, children) need to transfer the titles to their names to sell, mortgage, or otherwise deal with the properties.

An Extrajudicial Settlement is required when bank accounts, time deposits, or investments in the decedent's name need to be released to the heirs. BSP-regulated banks require an Extrajudicial Settlement with BIR estate tax clearance before releasing funds exceeding PHP 20,000 per BSP rules, or a small estate affidavit for amounts within the threshold.

An Extrajudicial Settlement is needed when a decedent owned shares of stock in a Philippine corporation registered with the SEC, and the heirs need to have the shares transferred in the Stock and Transfer Book to the surviving heirs or estate.

An Extrajudicial Settlement is required when heirs wish to take advantage of the Estate Tax Amnesty (RA 11213 as extended by RA 11956) for estates of decedents who died on or before May 31, 2022, where estate taxes were unpaid or underpaid. The settlement document supports the BIR estate tax amnesty filing.

An Extrajudicial Settlement is needed when Overseas Filipino Workers (OFWs) or their families need to settle the Philippine estate of a deceased OFW, where the OFW owned property in the Philippines. The settlement may be executed by the heirs in the Philippines, with OFWs abroad signing through Special Powers of Attorney (SPA) apostilled under RA 11002.

A valid Extrajudicial Settlement of Estate in the Philippines must contain the following essential elements under Rule 74 of the Rules of Court and the Civil Code (RA 386).

Decedent's Information: Full name of the deceased (decedent), date and place of death, and citizenship. The Philippine Statistics Authority (PSA) death certificate — an authenticated copy — must accompany the settlement for BIR and LRA processing.

Heirs: Full legal names, civil status, citizenship, addresses, and relationship to the decedent of all heirs. For legitimate children, the PSA birth certificates confirming filial relationship are required. For the surviving spouse, the PSA marriage certificate is required. Minors must be represented by their surviving parent or a court-appointed guardian under Articles 225-231 of the Family Code.

Declaration of No Will and No Debts: An express declaration by all heirs that the decedent left no will (or that a will was left and probated), that the decedent left no outstanding debts (or that all debts have been paid), and that the heirs are the only heirs of the decedent — as required by Rule 74, Section 1 of the Rules of Court.

Inventory of Estate: A thorough list of all properties included in the estate — real property with TCT/CCT numbers from the LRA, personal property, bank accounts, shares of stock, vehicles with LTO details, and other assets. BIR estate tax is computed based on the gross estate declared in the inventory.

Partition of Estate: The agreed allocation of estate properties among the heirs, clearly stating which specific properties or fractional shares each heir receives. The allocation must respect the legitime of compulsory heirs under Articles 887-914 of the Civil Code.

BIR Estate Tax Compliance: Reference to the BIR estate tax return (BIR Form 1801) or Estate Tax Amnesty Return (BIR Form 2118-EA) filed, and the Certificate Authorizing Registration (CAR) or Electronic CAR (eCAR) issued by the BIR.

Newspaper Publication: Acknowledgment that the settlement will be published in a newspaper of general circulation in the province or city once a week for three consecutive weeks, as required by Rule 74, Section 1 of the Rules of Court.

Notarization: Execution before a notary public under the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC). All heirs of legal age must sign; minors sign through their guardians.

Additional compliance elements for a Extrajudicial Settlement of Estate (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.