This article explains how the Philippine estate tax works, what must be filed, how to value assets, available deductions, deadlines, payment and installment options, electronic channels, clearances, and the practical steps heirs and practitioners follow from death up to transfer of title. It reflects the National Internal Revenue Code (NIRC), as amended (notably by the TRAIN Law), and long-standing BIR procedures. It is general information, not a substitute for personalized legal or tax advice.

1) What the Estate Tax Is

Estate tax is an excise tax on the privilege of transmitting property at death. It is imposed on the net estate of the decedent (the total value of includible property minus allowable deductions), not on the recipients.

Who is taxed
- Citizens and resident aliens: on worldwide property.
- Non-resident aliens: on Philippine-situs property only. Intangibles of a non-resident alien may be exempt under the reciprocity rule if the decedent’s country likewise exempts similar intangibles of non-residents.
Rate: 6% of the net estate (TRAIN Law reform). The tax is computed once across the whole net estate, not by brackets.

2) What Is Included in the Gross Estate

Real property (land/condominiums/houses) wherever located, subject to situs limits for non-residents.
Personal property
- Tangible (vehicles, jewelry, art).
- Intangible (bank deposits; stocks and other securities; debts receivable; interests in partnerships and corporations).
Transfers in contemplation of death and certain transfers with retained interests.
Proceeds of life insurance if the beneficiary designation is revocable or if the beneficiary is the estate/executor/administrator. If the beneficiary is irrevocably designated, proceeds are generally excluded.
Accruals and claims due to the decedent as of date of death.

3) Valuation Rules (as of date of death)

Real property: the higher of (a) BIR zonal value or (b) the fair market value per the local assessor’s Schedule of Market Values.
Listed shares: the closing price nearest the date of death.
Unlisted common shares: book value (net asset value) as of date of death, based on the latest financial statements adjusted to death date where appropriate.
Unlisted preferred shares: often at par value or redemption value per terms (check corporate charter).
Bank deposits/cash: actual balances at date of death, including accrued interest up to that date.
Foreign currency assets: translated to PHP at the relevant exchange rate on date of death.
Unique assets (art, jewelry, closely held businesses, IP): rely on appraisals and defensible valuation methodologies (market, income, or cost approaches).

Practice tip: Fix the valuation date early, obtain zonal value printouts and assessor certifications, demand financial statements from private companies, and secure bank certifications showing balances and accrued interest as of the date of death.

4) Allowable Deductions (to arrive at net estate)

Standard deduction: ₱5,000,000 (no substantiation beyond the death and relationship documents).
Family home deduction: up to ₱10,000,000 for the family home (requires proof it is/was the family home and valuation documents).
Surviving spouse’s net share: exclude the spouse’s conjugal/community share before computing the net estate.
Claims against the estate (debts): valid, enforceable obligations incurred by the decedent prior to death, supported by loan documents notarized at or near the time incurred, with proof of disbursement and, if to a related party, further substantiation of bona fides and capacity to lend.
Claims of the estate (e.g., mortgaged properties): if property is mortgaged, the outstanding mortgage may be deductible (subject to documentation and limitations).
Transfers for public use and qualified charitable bequests: subject to statutory requisites.
Losses: those arising from casualty/theft/robbery not compensated by insurance, occurring within six months after death, may be deductible if properly substantiated.
Vanishing/Diminishing deduction: for property received by the decedent by donation or inheritance within five years before death and subjected to donor’s or estate tax, the estate may claim a phased deduction.
Foreign estate of citizens/residents: foreign estate taxes paid may be creditable under foreign tax credit rules (subject to per-country and overall limits and documentation).
Note on formerly itemized deductions: Under TRAIN, items like medical and funeral expenses as separate deductions were effectively subsumed/streamlined (the standard deduction applies instead).

5) Filing Obligations, Forms, and Deadlines

Return: BIR Form 1801 (Estate Tax Return).
When to file: Within one (1) year from the decedent’s death.
Where to file: At the RDO (Revenue District Office) having jurisdiction over the decedent’s domicile at death (or over the executor/administrator), or electronically if eligible.
Extensions:
- To file: limited extensions may be granted for meritorious cases.
- To pay: the Commissioner may grant an extension (typically up to 5 years if the estate is under judicial settlement; up to 2 years if extrajudicial) where immediate payment would impose undue hardship. Bonds and/or liens may be required. Extension avoids surcharge, but interest may still accrue.

Late filing/payment consequences: surcharge (usually 25%, or 50% in cases of willful neglect or false return) plus interest (statutory rate per annum) and possible compromise penalties.

6) Documentary Checklist (core set)

Identity/Status

PSA Death Certificate of decedent.
TIN of the Estate (obtain a new TIN for “Estate of [Name]”) and TINs of heirs.
PSA Birth/Marriage Certificates (to establish relationships).
If testate/intestate proceedings exist: court orders, letters testamentary/administration.
If extrajudicial settlement: notarized Deed of Extrajudicial Settlement/Affidavit of Self-Adjudication and proof of publication (once a week for three consecutive weeks in a newspaper of general circulation), and bond if required.

Asset Valuation

Real property: Certified true copies of titles (TCT/CCT), tax declarations (land & improvements), current real property tax clearance/receipts, zonal value and assessor’s FMV certifications.
Bank accounts: bank certifications with balances and accrued interest as of date of death; passbooks/statements.
Shares/securities: stock certificates, certification of outstanding shares and value from the corporate secretary, financial statements for unlisted companies; brokerage statements for listed.
Vehicles: OR/CR and appraisals if needed.
Life insurance: policy documents indicating beneficiary designation (revocable/irrevocable) and proceeds.
Other assets: appraisals, contracts, IP certificates, partnership agreements.

Liabilities & Deductions

Loan/mortgage agreements notarized when incurred; proof of loan proceeds and payments; schedules of outstanding balances at death; if related party, extra evidentiary support.
Documents proving family home status (barangay certification, IDs, utility bills).
Evidence for vanishing deduction (prior CARs, donor’s/estate tax proof).
Receipts/certifications for charitable or public use bequests.

7) Step-by-Step Procedure (Practical Flow)

Stage A — Organize & Register

Appoint a point person (executor/administrator/authorized heir).
Secure the Estate TIN at the RDO and update registration details.
Open an estate bank account (optional but practical for transparency).

Stage B — Inventory & Valuation 4) Prepare a Statement of Assets, Liabilities, and Net Worth (SALN) of the estate as of date of death. 5) Gather valuation documents per Section 3 above. 6) Identify deductions and prepare supporting papers (debts, vanishing deduction, family home proof).

Stage C — Compute & File 7) Complete BIR Form 1801 with schedules. 8) File the Estate Tax Return within 1 year (apply for extension if truly needed and justifiable). 9) Pay the estate tax (see Section 8), or apply for extension/instalments if eligible.

Stage D — Post-Payment Clearances and Transfers 10) Submit proof of payment and documents to the ONETT/estate tax processing unit of the RDO for issuance of Electronic Certificate Authorizing Registration (eCAR) per asset (e.g., one eCAR per parcel of land, per condominium unit, per vehicle, per block of shares). 11) Transfer titles/registrations using the eCAR:

Real property: Registry of Deeds + Assessor’s Office.
Shares: corporate secretary/transfer agent; reflect new ownership on the stock and transfer book.
Vehicles: LTO.
Bank deposits: bank releases funds once tax issues are cleared (see Section 9).

8) Payment Solutions & Channels

A. Over-the-Counter (OTC)

Authorized Agent Banks (AABs) of the RDO.
Revenue Collection Officers (RCOs) for areas without AABs (typically using the BIR’s payment forms and official receipts).

B. Electronic Payment (e-Payment) Ecosystem

eFPS (for enrolled taxpayers).
eBIRForms filers may pay through accredited online gateways (e.g., Land Bank Link.BizPortal, DBP PayTax Online, UnionBank Online) and widely used digital wallets/insta-pay channels that serve BIR payments.
Payment proofs (transaction reference numbers or e-ORs) must be retained and submitted to the ONETT unit for eCAR processing.

C. Manager’s Check/Cashier’s Check

If paying by check, it should be payable to “Bureau of Internal Revenue” with correct details; verify current formatting rules at the RDO.

D. Partial/Installment Payments

Installments may be allowed when the estate lacks sufficient liquidity. Typically, you will:
- Apply for extension to pay (see Section 5), explaining cash constraints.
- Post a surety bond or collateral if required.
- Observe the approved schedule strictly; interest applies as provided by law for unpaid balances.

E. Offsetting/Tax Credits

Foreign estate tax credits (for citizens/residents) must be documented (official receipts, certified translations) and are subject to statutory ceilings.
Creditable withholding (rare in estates) must be evidenced by valid certificates to be creditable.

9) Special Banking Rules on Deceased Persons’ Accounts

Banks generally freeze accounts upon notice of death.
Withdrawals may be allowed subject to BIR rules, including withholding on certain withdrawals and the presentation of BIR clearances/authorizations.
After eCAR and relevant bank requirements are met, banks release funds to the estate/heirs in accordance with the settlement documents (court order or extrajudicial deed).

Practice tip: Coordinate early with the bank’s legal/compliance desk to learn its internal checklist (they often require the estate TIN, the filed return, and the eCAR, plus IDs and settlement papers).

10) The eCAR and Transfers of Title

The eCAR is the BIR’s proof that transfer taxes on a specific asset have been settled.
No transfer at the Registry of Deeds, LTO, or corporate books may be registered without an eCAR for that asset.
Expect one eCAR per asset; assemble a submission per asset (complete sets avoid back-and-forth).
After issuance, proceed to the relevant registry/agency to update ownership, pay local transfer fees, and obtain new titles/registrations.

11) Common Scenarios and How to Handle Them

A. Mostly real estate; little cash

Seek installment/extension; consider estate loans secured by real property to create liquidity; time your registry transfers after eCAR issuance.

B. Large closely-held company shares

Ensure up-to-date financial statements to compute book value; consider obtaining a professional valuation to support positions on unusual assets or significant adjustments.

C. Life insurance

Check whether beneficiaries were irrevocably designated; if yes, exclude proceeds; if no, include proceeds.

D. Overseas property (citizens/resident aliens)

Include in gross estate; claim foreign estate tax credits with documentation.
For non-resident aliens, limit to Philippine-situs property; test reciprocity for intangibles.

E. Old unsettled estates

Regular estate tax rules apply. Where prior estate tax amnesty programs were available, heirs needed to check eligibility and deadlines. If those windows have lapsed, compute under ordinary rules or consider abatement/compromise avenues where legally permissible.

12) Compliance Tips to Avoid Delays

Calendar the 1-year filing deadline immediately.
Register the Estate TIN before dealing with banks or buyers.
Bundle documents per asset (each future eCAR packet is self-contained).
Substantiate debts: notarized loan papers at time of incurrence + fund flow proof.
Track dates carefully (date of death drives all valuations).
Preserve originals; submit certified copies when requested.
Reconcile names on titles, IDs, tax records (middle names vs. maternal surnames) to avoid registry issues.
Publish the extrajudicial settlement as required and keep the affidavit of publication and newspaper issues/attestation.
Coordinate with the RDO’s ONETT unit early—clarify any local formatting preferences.
Keep a master index: asset list, valuation basis, deduction support, and payment/e-OR references.

13) Worked Mini-Example (illustrative only)

Gross estate (as of death):
- Family home (FMV ₱12,000,000; zonal higher at ₱12,500,000) → ₱12,500,000
- Vacant lot (higher value) → ₱3,500,000
- Bank deposits → ₱1,000,000
- Unlisted company shares (book value) → ₱8,000,000
- Gross estate = ₱25,000,000
Deductions:
- Standard deduction = ₱5,000,000
- Family home (cap ₱10,000,000) → ₱10,000,000
- Debts (properly substantiated) → ₱2,000,000
- Surviving spouse share (say conjugal; spouse share in conjugal assets determined then excluded) → assume ₱3,000,000
- Total deductions (illustrative) = ₱20,000,000
Net estate = ₱25,000,000 − ₱20,000,000 = ₱5,000,000
Estate tax (6%) = ₱300,000

14) Records Retention

Maintain a complete file for at least the statutory period (keep longer in practice): the filed BIR Form 1801, e-ORs, bank e-payments, eCARs, valuation proofs, settlement documents, and registry confirmations.

15) Quick FAQ

Is the one-year deadline extendible? Yes, for meritorious cases upon application; similarly, payment extensions (up to 5 years judicial / 2 years extrajudicial) may be granted where immediate payment causes undue hardship.
Do I still need a Notice of Death? Under current streamlined rules post-TRAIN, the focus is the estate tax return within one year rather than a separate “notice” threshold that existed historically.
Can heirs sell assets before paying? Buyers and registries will require an eCAR; practically, you must file and pay/secure extension first.
What if the decedent had no assets except a modest family home? With the standard deduction and family home deduction, many small estates fall below taxable thresholds; filing may still be necessary to obtain the eCAR and transfer title.

16) Practitioner’s Closing Notes

The 6% on net estate regime simplified planning but placed great weight on valuation and documentation.
e-payments and the eCAR sped up transfers, but local RDO practices still matter—engage early and present clean, paginated bundles.
For cross-border estates, evaluate situs, treaty/reciprocity, and foreign tax credits at the outset to avoid double taxation.

Minimal Working Checklist (tear-off)

Estate TIN obtained; heirs’ TINs on file
Asset inventory + death-date valuations (zonal/assessor; bank certs; share valuations)
Deduction proofs (debts substantiated; family home certification; vanishing deduction support)
BIR Form 1801 completed and filed within 1 year (or extension filed)
Estate tax paid (or extension/instalments approved) via AAB/e-payment
eCAR(s) received per asset
Titles/registrations transferred (RD, Assessor, LTO, corporate books, bank release)
File retained (return, e-ORs, eCARs, publication proofs, court/extrajudicial papers)

If you want, I can turn this into a fill-in-the-blanks compliance pack (asset inventory worksheet, deduction substantiation checklist, and a per-asset eCAR packet index) you can use for a real case.