Extrajudicial Settlement of Estate


It is of common knowledge that settling the estate of a deceased family member or relative judicially can be very costly and can take years. However, not all estates need to be settled judicially. Under Section 1 of Rule 74 of the Philippine Rules of Court, the extrajudicial settlement of an estate is possible as long as the following requisites are present:

  1. The decedent left no will;

  2. The decedent has no debts or his debts have been fully paid;

  3. The heirs are all of legal age or the minors are duly represented by their judicial or legal representatives;

  4. A public instrument is duly executed by the heirs and filed with the Register of Deeds.

The Supreme Court has held that it is not necessary to appoint an administrator to administer the estate and to deprive the real owners of their possession to which they are immediately entitled if the deceased dies without pending obligations (Spouses Butiong and Villafria v. Plazo, G.R. No. 187524, August 5, 2015).

To settle an estate extrajudicially, all the heirs need to execute an Extrajudicial Settlement of Estate or if there is only one heir, he or she needs to execute an Affidavit of Self-Adjudication. The Extrajudicial Settlement of Estate has to be notarized and has to include the following:

  1. That the decedent left no will and no debt;

  2. The decedents who signed are the only surviving heirs;

  3. Each heir’s relationship to the decedent;

  4. The properties of the decedent, both real and personal, including a description of each;

  5. How the properties are to be divided.

If personal property is involved, a bond should be obtained in an amount equivalent to the value of the personal property. Further, the fact of extrajudicial settlement should be published in a newspaper of general circulation once a week for three (3) consecutive weeks.

The Estate Tax Return (BIR Form 1801) is then filed with Bureau of Internal Revenue (BIR) Revenue District Office (RDO) having jurisdiction over the place of residence of the decedent at the time of his death, and should be filed within six (6) months from his death. This may be extended by the BIR in some cases not exceeding thirty (30) days. Estate taxes shall then be paid and settled with the Authorized Agent Bank of the RDO where the return is filed

The following are the documentary requirements to be submitted with the BIR:

1. Notice of Death duly received by the BIR, if gross estate exceeds P20,000 for deaths occurring on or after Jan. 1, 1998; or if the gross estate exceeds P3,000 for deaths occurring prior to January 1, 1998

2. Certified true copy of the Death Certificate

3. Deed of Extra-Judicial Settlement of the Estate, if the estate is settled extra judicially

4. Court Orders/Decision, if the estate is settled judicially;

5. Affidavit of Self-Adjudication and Sworn Declaration of all properties of the Estate

6. A certified true copy of the schedule of partition of the estate and the order of the court approving the same, if applicable

7. Certified true copy(ies) of the Transfer/Original/Condominium Certificate of Title(s) of real property(ies) (front and back pages), if applicable

8. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable

9. "Certificate of No Improvement" issued by the Assessor's Office declared properties have no declared improvement or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees

10. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if applicable

11. Photo copy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if applicable

12. Photo copy of certificate of stocks, if applicable

13. Proof of valuation of shares of stocks at the time of death, if applicable

For listed stocks - newspaper clippings or certification from the Stock Exchange

For unlisted stocks - Audited Financial Statements duly certified by an independent certified public accountant with computation of fair market value per share at the time of death

14. Proof of valuation of other types of personal property, if applicable

15. Proof of claimed tax credit, if applicable

16. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and the amount due if the gross value of the estate exceeds two million pesos, if applicable

17. Certification of Barangay Captain for claimed Family Home

18. Duly notarized Promissory Note for "Claims against the Estate" arising from Contract of Loan

19. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent

20. Proof of the claimed "Property Previously Taxed"

21. Proof of claimed "Transfer for Public Use"

22. Copy of Tax Debit Memo used as payment, if applicable

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

This article does not constitute and is not intended to be legal advice. If you have any question or need any assistance in the extrajudicial settlement of estate, please feel free to send us an email at roselle.jean@nonatolaw.com.

#ExtrajudicialSettlementofEstate #EstatePlanning #EstateTax #PartitionofProperty

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