Estate Tax Compliance Workflow in the Philippines: EJS, CAR, and BIR Requirements

1) Big-picture overview

When a person dies, Philippine law treats the estate as a separate taxpayer. Before heirs can lawfully transfer titles—land, condo units, vehicles, bank deposits, or shares—the estate must (a) determine the taxable net estate, (b) file the estate tax return, (c) pay any estate tax due (or secure an approved extension/installment plan), and (d) obtain the BIR’s Certificate Authorizing Registration (CAR/eCAR) for each asset requiring registration. For small or uncontested estates with no unpaid debts, heirs commonly use Extrajudicial Settlement (EJS) under Rule 74 of the Rules of Court. Otherwise, settlement proceeds judicially.

This article explains the legal framework and the practical, step-by-step workflow—grounded in the National Internal Revenue Code (NIRC) as amended (including the TRAIN Law), civil procedure, and standard BIR practices.

2) Who is liable; who files

Taxpayer: the Estate of [Decedent] (a separate juridical taxpayer during settlement).
Filer: the executor/administrator named by the court; if none, any heir authorized by all the heirs may file.
Where to file: the BIR RDO having jurisdiction over the decedent’s last residence (or as the BIR directs for non-residents).
Return used: BIR Form 1801 (Estate Tax Return).
Registration/TINs:
- If the decedent had no TIN, one must be secured.
- The Estate itself must obtain a TIN (often via BIR Form 1904 for one-time transactions).
- The estate may also need to register if it will earn post-death income (rent, interest, etc.), in which case it files fiduciary income tax returns while the estate is under administration.

3) What is taxed: Gross estate and situs rules

The gross estate comprises all property, real or personal, tangible or intangible, owned or with sufficient incidents of ownership at death.

Citizens and resident aliens: taxed on worldwide assets.
Non-resident aliens: taxed only on Philippine-situs property (e.g., real property located in the Philippines; shares issued by a Philippine corporation; intangibles with Philippine situs), subject to reciprocity for intangibles (intangible personal property may be exempt if the decedent’s country both (i) does not impose transfer tax on Philippine intangibles of non-residents and/or (ii) grants a similar exemption to Filipinos).

Common inclusions

Real property (FMV at death).
Shares/stocks (see valuation rules below).
Bank deposits and receivables.
Personal property (vehicles, jewelry, artwork).
Proceeds of life insurance payable to the estate/administrator/executor or where the decedent retained the right to change the beneficiary (generally included). Proceeds irrevocably designated to a beneficiary are typically excluded.

Conjugal/community property Only the decedent’s net share (usually one-half of community/conjugal property after charging exclusive obligations) enters the gross estate; the surviving spouse’s share is excluded.

4) Valuation at time of death

Real property: higher of (a) BIR zonal value or (b) fair market value per latest tax declaration as of the date of death.
Listed shares: mean between the highest and lowest trading prices on the date of death (or the nearest trading day).
Unlisted common shares: book value based on the latest available audited financial statements nearest the date of death.
Unlisted preferred shares: usually par value (unless terms provide otherwise).
Other tangibles: fair market value at death.

5) Allowable deductions (to arrive at the net estate)

The TRAIN Law simplified deductions but retained several key items. Typical deductions include:

Standard deduction – ₱5,000,000 (no substantiation beyond proving death/relationship and that the asset belongs to the estate).
Family home deduction – up to ₱10,000,000 (the property must qualify as the family home; substantiation required such as title, tax declaration, and proof of actual residence).
Claims against the estate – valid, enforceable debts outstanding at death. Strong substantiation is required (e.g., notarized loan documents; evidence of the loan’s actual receipt and use; creditor certifications; for recent debts, proof of how proceeds were used).
Unpaid mortgages and taxes attributable to estate property.
Losses incurred during settlement under strict conditions.
Transfers for public use (bequests to the Government, etc.).
Vanishing deduction (property previously taxed) – for property received by the decedent from a prior decedent/donor within five years, subject to a decreasing scale.
Judicial/administration expenses necessary to settle the estate (court fees, necessary attorney’s fees, publication costs of EJS, etc.).
Share of the surviving spouse – deduct the surviving spouse’s net share of community/conjugal property to avoid double counting.
For non-resident aliens: allowable deductions are generally pro-rated by the ratio of the Philippine-situs gross estate to the worldwide gross estate (unless special rules apply).

Rate: After deductions, the estate tax is 6% of the net estate.

6) Deadlines, extensions, interest, and penalties

Filing deadline: generally within one (1) year from death.
Extensions: The BIR may grant reasonable extensions to file and/or extensions to pay where payment by the due date would cause undue hardship or the estate is illiquid. By statute, extensions to pay may be granted up to 5 years if the estate is under judicial settlement and up to 2 years if settled extrajudicially, subject to terms (including the possible requirement of a bond).
Installments: commonly allowed for illiquid estates under an approved plan.
Interest & surcharge: Statutory interest accrues on unpaid amounts after the due date pursuant to NIRC Sec. 249 (based on the prevailing legal interest), plus surcharge (e.g., 25% for late filing/payment; higher in cases of willful neglect or false return). Compromise penalties may also apply.

7) Extrajudicial Settlement (EJS): when and how

When allowed (Rule 74):

No will, or the will need not be probated for purposes of distribution;
No outstanding debts of the decedent (or all debts are fully settled); and
All heirs are of legal age (or minors are properly represented) and agree on the partition.

Forms

Deed of Extrajudicial Settlement (EJS) by multiple heirs;
Affidavit of Self-Adjudication if there is only one heir.

Publication & bond

Publication: A notice of the EJS must be published in a newspaper of general circulation once a week for three (3) consecutive weeks.
Bond: Where personal property is involved, Rule 74 contemplates a bond (typically equivalent to the value of the personal property) to protect creditors and other interested parties.
Creditor’s window: Properties distributed by EJS remain subject to claims of creditors and other heirs within a statutory period (commonly referenced as two years) under Rule 74.

Why EJS matters for tax: The EJS (or court order, if judicial) is a core document for the BIR and for registries (Register of Deeds, LTO, corporate transfer agents), as it proves who gets what.

8) The BIR ONETT workflow and the eCAR

Most estate transfers pass through the BIR’s One-Time Transactions (ONETT) process for estate tax leading to the issuance of an electronic Certificate Authorizing Registration (eCAR). Each registrable asset typically requires its own eCAR.

Typical ONETT/eCAR steps (practical sequence)

Secure TINs (decedent if none; Estate of [Decedent]; heirs).
Inventory & valuation as of date of death (realty, movables, shares, bank, vehicles).
Prepare the settlement document (EJS, self-adjudication, or court-approved project of partition).
Assemble documents (see checklists below).
File BIR Form 1801 with supporting schedules, compute tax, and pay (or apply for extension/installments).
Respond to BIR queries; submit any additional substantiation (especially for deductions and share valuations).
Obtain eCAR(s) from the BIR once cleared.
Present eCAR to the appropriate registry to complete retitling/transfer:
- Register of Deeds (TCT/CCT)
- LTO (vehicles)
- Corporate transfer agent/stock transfer book (shares)
- Banks (for closure/transfer; see special rules below)

9) Asset-specific transfer workflows & documents

Core identity & status docs (almost always required):

PSA-issued Death Certificate

Government IDs of heirs/administrator; TINs

Settlement document (EJS/self-adjudication/court order) – notarized

Birth/Marriage Certificates to prove filiation and marital regime

Tax clearance/RPT receipts for real property; Barangay/Assessor certifications as needed

Computation schedules and proof of payment of estate tax; eCAR(s)

A) Real property (land/condo)

BIR:
- BIR Form 1801; eCAR request; Certified true copy of title (TCT/CCT) and latest Tax Declaration (land and improvements); zonal value printout/assessment; Certificate of No Improvement (if applicable); RPT clearances; if claiming family home: proof of residence (e.g., barangay cert), title showing spouse/owner, tax decs.
LGU: Pay local transfer tax (rates and deadlines vary by LGU; many require payment within a set period from adjudication).
Register of Deeds: Present eCAR, EJS/court order, owner’s duplicate title, transfer-tax receipt, RPT clearances, and pay registration fees. New titles will be issued in the names of the adjudicated heirs or “Estate of …” as applicable.

B) Motor vehicles

BIR: eCAR covering the vehicle (submit OR/CR, valuation or appraisals if needed).
LTO: Present eCAR, EJS/court order, original OR/CR, stencils, IDs, and fees for change of ownership.

C) Shares of stock

Listed shares: Broker or transfer agent will require eCAR, death and heir documents, and the settlement instrument. Valuation follows market quotations at death.
Unlisted shares: Provide stock certificates, Secretary’s certificate on shareholdings, corporation’s audited FS nearest to date of death (for book value), and corporate transfer requirements (endorsements, board approvals if needed). The transfer book is updated upon presentation of eCAR and corporate documents.

D) Bank deposits & investments

Historically, banks required a BIR clearance before releasing deposits of a deceased person. Under current rules, banks may allow withdrawals subject to final withholding of estate tax on the withdrawn amount and compliance with BIR-prescribed certifications/filings; practices vary by bank. In all cases, for closure/transfer of the account to heirs or to the estate, banks will require the settlement document and usually the eCAR (or equivalent BIR clearance) before final retitling.

Tip: Coordinate early with each bank’s deceased-account unit; requirements differ, and interim withdrawals may affect the estate tax computation if not carefully tracked.

10) Checklists you can use

Estate Tax Filing (BIR Form 1801)

☐ TINs: Decedent (if none, obtain), Estate, all heirs
☐ PSA Death Certificate
☐ Settlement document (EJS/self-adjudication/court order), with publication proof for EJS
☐ Asset inventory with valuations as of date of death
- Real property: titles, tax declarations, zonal value printouts, RPT clearance
- Vehicles: OR/CR; valuation/appraisal if any
- Shares: stock certs/transfer statements; market quotes or audited FS (as applicable)
- Bank/investments: bank certifications of balances as of date of death
☐ Liabilities evidence (notarized loan contracts, statements, proof of proceeds/use)
☐ Deductions evidence (family home proofs; admin/judicial expenses; vanishing deduction worksheets; transfers for public use)
☐ Marital documents (PSA marriage certificate; pre-nup or proof of property regime)
☐ Computation schedules (gross estate, deductions, net estate, tax due)
☐ Payment proof / application for extension or installment plan with proposed schedule and security (if required)

eCAR issuance per asset

☐ Filed & paid Form 1801 with complete attachments
☐ eCAR request listing assets and adjudication per asset
☐ For each registrable asset: all registry-specific documents (RD, LTO, transfer agent, bank)
☐ IDs, SPA/board authorities where representatives act

11) EJS vs. judicial settlement—choosing the right path

Factor	EJS (Rule 74)	Judicial Settlement
Debts outstanding	Not allowed unless debts are fully paid/settled	Allowed; claims resolved under court supervision
Heirs’ agreement	Required (or single heir)	Court can resolve disputes among heirs
Publication	Mandatory (3 consecutive weeks)	Not required in the same manner; court notices apply
Bond	Contemplated for personal property	Court may require guardian’s or administrator’s bonds
Speed/cost	Generally faster and cheaper	Slower, higher costs but legal certainty
Best for	Small, uncontested, debt-free estates	Disputed estates, minors with conflicts, complex assets

If any heir objects, there are minor heirs without proper guardianship, or there are unpaid creditors, proceed judicially.

12) Computing the estate tax (simple template)

To avoid arithmetic pitfalls, use a clean worksheet:

Gross Estate (GE) = Sum of all assets at death (after valuing each under Sec. 4 rules).
Less: Allowable Deductions (AD) (standard deduction; family home; claims; etc.).
Less: Surviving Spouse’s Share (SS) (from conjugal/community assets).
Net Estate (NE) = GE − AD − SS.
Estate Tax Due (ETD) = 6% × NE.
Apply: Credits/withheld taxes (e.g., bank withholding on withdrawals) and compute balance or refund.

Keep a reconciliation if any bank withdrawals were subjected to final withholding tax so they are properly credited against ETD.

13) Post-death income and ongoing compliance

Post-death income (rent, interest, trading gains) is not part of the gross estate; it is income of the estate after death. The Estate (as a taxpayer) must:
- Register if necessary (books, official receipts if doing business);
- Withhold and remit taxes where applicable;
- File fiduciary income tax returns (e.g., BIR Form 1701 for estates and trusts) until dissolution.
After final distribution, the estate ceases to be a taxpayer and any residual income thereafter is taxed to the heirs.

14) Common pain points and how to de-risk them

Family home deduction disallowed due to poor substantiation → Prepare barangay residency certs, utility bills, IDs, marriage/family records, and clear title/tax declarations tying the decedent to the home.
Debt deduction disallowed → Ensure notarized loan agreements, independent creditor certifications, proof of fund flow (bank credits), and use of proceeds; for intra-family loans, expect heightened scrutiny.
Unlisted share valuation disputes → Obtain the corporation’s audited FS nearest the date of death; reconcile subsequent events separately.
Missed deadlines → Consider extension and installments early, with a realistic liquidity plan.
Multiple registries → Sequence the BIR eCAR first, then LGU transfer tax, then registry; some registries have appointment systems and idiosyncratic forms—confirm before lining up.

15) Practical timeline (indicative)

Weeks 1–4: Gather civil documents; open an estate file; freeze/notify banks; secure TINs.
Weeks 5–10: Full asset/ liability inventory; valuations; choose EJS vs. judicial; draft and notarize settlement; start EJS publication.
Weeks 8–16: Prepare and file Form 1801 with supporting documents; pay or apply for extension/installments.
Weeks 12–24: BIR review; respond to queries; eCAR issuance.
After eCAR: Pay LGU transfer tax and complete registry transfers (RD, LTO, brokers, banks).

Timelines vary with estate complexity, registry backlogs, and the completeness of documents.

16) Ethical and civil-law guardrails

Legitime: Compulsory heirs (spouse, legitimate/illegitimate children, ascendants) have reserved shares under the Civil Code. Your partition must respect legitimes regardless of the tax computation.
Minors and incapacitated heirs: Require guardianship or proper representation; court involvement is advisable if interests diverge.
Foreign assets: Check conflicts-of-laws and treaty/revenue regulations for valuation, proof, and deductibility.

17) Quick reference: documents by category

Identity & status

PSA Death, Birth, Marriage Certificates; IDs; TINs; pre-nup/ property regime proofs

Settlement

EJS / Self-Adjudication (notarized), Affidavits; Proof of publication; Bond (if applicable); or Court orders (letters of administration, project of partition, approval)

Assets

Realty: TCT/CCT, tax declarations (land & improvements), zonal value, RPT clearance, certificate of no improvement/improvement
Vehicles: OR/CR, stencils, dues
Shares: certificates, SOA, corporate certifications, audited FS (unlisted), market quotes (listed)
Banks: balance certifications at date of death; bank forms for deceased accounts
Other movables: appraisals/invoices/photos where helpful

Deductions

Debts: notarized contracts, proof of loan proceeds, creditor certifications, interest computations
Family home: barangay cert of residence, IDs, utility bills, title, tax decs
Admin/judicial expenses: official receipts, court payment proofs, publication invoices
Vanishing deduction: prior donor’s/decedent’s CAR/eCAR and prior tax proofs

BIR

Form 1801 + schedules; proof of payment; extension/installment approvals (if any)
eCAR(s) issued for each registrable asset

18) Final takeaways

Treat the estate as its own taxpayer and plan for both estate tax and post-death income tax.
Decide early between EJS and judicial settlement; EJS saves time but has eligibility and publication/bond requirements.
Build a substantiation file for deductions to protect the 6% computation.
eCAR is the key to retitling—no eCAR, no transfer at RD/LTO/transfer agents/banks.
Coordinate across BIR–LGU–registries to avoid circular requirements and expiry of clearances.

This article provides a comprehensive framework for Philippine estate tax compliance. Specific situations (overseas assets, disputed heirship, complex corporate holdings, mortgages close to death, etc.) warrant tailored legal and tax advice based on primary documents and the most current BIR rules and local registry practices.