Estate Tax Payment Without Extrajudicial Settlement in the Philippines
(A practitioner-oriented overview as of 8 July 2025)
Quick take-away You may file and pay estate tax even when the heirs are still quarreling, the properties remain unnamed in an extrajudicial settlement (EJS), or probate is pending. Doing so stops interests, surcharges, and civil or even criminal exposure. BIR will accept the return and issue a Certificate Authorizing Registration (CAR) “in the name of the Estate of the Decedent,” to be replaced later once settlement papers emerge.
1. Statutory & Regulatory Framework
| Source | Key point |
|---|---|
| National Internal Revenue Code (NIRC), as amended — §§84–97 | Imposes estate tax and fixes filing/payment within one (1) year from death (extendible). |
| Revenue Regulations (RR) 12-2018 (consolidated in RR 17-2023) | Modernized estate-tax return (BIR Form 1801) and documentary requirements. |
| Revenue Memorandum Circulars (RMCs) 68-2023, 24-2024 | Clarify “payment without settlement” and the form of provisional CARs. |
| Rules of Court, Rule 73 §1 | Settlement of estates (judicial or extrajudicial). |
| Civil Code, Arts. 777, 1051 | Heirs acquire ownership at the moment of death, subject to settlement. |
(Estate Tax Amnesty: RA 11213 in 2019; extended by RA 11956 to 14 June 2025; no new extension as of this writing.)
2. Why Pay Before Settlement?
- Stop the meter. Interest (20 % p.a.) and surcharge (25 %–50 %) accrue after the one-year deadline.
- Unfreeze bank deposits. Many banks release deposits upon proof the tax is paid, even if the estate is unsettled.
- Facilitate loans or corporate actions. Companies holding shares in the decedent’s name often require a CAR before transferring dividends/interests into an “Estate” account.
- Avoid criminal referral. BIR inspectors may recommend prosecution (NIRC §255) if no return is filed.
3. Who Signs & Files?
| Scenario | Authorized filers |
|---|---|
| All heirs cooperate | Any heir under sworn “Return on behalf of all” (RR 12-2018 §3). |
| Heirs disagree / heirs unknown | Executor, administrator, or any heir “in representation of the Estate,” attaching an Explanation Letter why no settlement yet. |
| No administrator appointed yet | The “most responsible” heir usually steps up; BIR rarely refuses so long as documentary requirements are met. |
Failing to obtain co-heirs’ signatures does not invalidate the return; it merely binds the filers personally as agents of the estate.
4. Computing the Tax Without Settlement
Determine gross estate at Fair Market Value (FMV) or Zonal Value as of death:
- Real property, shares, personalty, claims in action, etc.
Apply allowable deductions even absent EJS:
- Standard deduction ₱5 million (automatic).
- Family home deduction up to ₱10 million.
- Debts & funeral expenses (substantiated).
- Vanishing deduction if property was previously taxed.
Compute net estate × 6 % flat rate (RA 10963).
Allocate payment (optional) by property if heirs informally agree; otherwise pay the total from an estate account or personal funds of a volunteer heir (reimbursable later).
5. Documentary Requirements (No-Settlement Version)
| Required by BIR | Notes |
|---|---|
| BIR Form 1801 (Estate Tax Return) | Indicate “Estate of Juan Dela Cruz, deceased mm/dd/yyyy,” Status of Settlement: Pending. |
| Death certificate (PSA-issued) | Xerox + certified copy. |
| Taxpayer Identification Number (TIN) of the Estate | Apply via BIR Form 1904 if not yet issued. |
| List & valuation of real properties | Certified True Copies of Transfer Certificates of Title (TCT) or Tax Declarations; appraised at whichever is higher between zonal and FMV. |
| Government-issued IDs of filer(s) | plus Special Power of Attorney if not an heir. |
| Affidavit explaining absence of EJS | Cite ongoing negotiations/probate; state that payment is to stop penalties. |
| Proof of payment | Bank-validated BIR Form 0605 or eFPS confirmation. |
No extrajudicial settlement deed, no court order, and no publication are required at this stage, but will be needed for transfer of title.
6. Filing & Paying
Within one year from death (or BIR-granted extension), submit the packet to the Revenue District Office (RDO) where the decedent resided.
Pay through:
- Authorized Agent Banks (AABs) in the RDO;
- eFPS or e-BIR Forms with GCash, PayMaya, etc.;
- If insolvent, request to pay in installment under NIRC §91.
BIR issues a Provisional CAR: “For the account of the ESTATE of ⁎Decedent⁎ — transfer subject to future settlement documents.”
- Valid for unlocking bank deposits and selling movable assets.
- A separate CAR per real property can be requested but annotated as provisional.
7. After You Finally Settle
| Later step | What happens |
|---|---|
| Execute EJS / receive probate decree | Heirs sign public deed (if no minor/heir contest) or court issues partition. |
| DST & transfer fees | Deed now liable to documentary-stamp tax (DST) and local transfer fees. |
| Replace CAR | Present new deed/probate order + original provisional CAR → BIR amends CAR naming individual heirs and specific shares. |
| Register titles/shares | Registry of Deeds, SEC (for shares), or LTO (for vehicles) now accept the amended CAR to issue titles in heirs’ names. |
Provisional CARs remain valid proof of tax payment even decades later; only replacement and DST are outstanding.
8. Estate Tax Amnesty & Relief
| Law | Coverage | Deadline* | Rate |
|---|---|---|---|
| RA 11213 (2019); extended by RA 11956 (2023) | Estates of decedents who died on or before 14 June 2021 | 14 June 2025 | 6 % on net undeclared estate or on FMV per asset; penalties waived |
*No new extension has been legislated as of July 2025; taxpayers should assume expiry stands.
If the decedent died after 14 June 2021, regular rules apply; but BIR still honors payment without settlement.
9. Frequently-Asked Practical Questions
| FAQ | Short answer |
|---|---|
| Can BIR refuse my return because the heirs are fighting? | No. BIR’s only concern is that the tax is computed and paid; settlement is a civil matter. |
| Who shoulders the tax if the estate has no liquid assets? | Any heir may pay and later claim reimbursement out of the estate (Civil Code §1311 analogy). |
| Can we sell property immediately after provisional CAR? | Yes, but buyers/registrars will require the formal settlement or a court-approved deed of sale by the executor. |
| What if we discover new property later? | File an Amended Estate Tax Return; pay incremental tax only. |
| Is interest suspended once provisional CAR is issued? | Yes; BIR treats payment date as final for previously disclosed assets. |
10. Selected Administrative Issuances & Rulings
| Citation | Gist |
|---|---|
| BIR Ruling DA-025-18 | Estate tax may be paid and CAR issued while probate is pending; later CAR replacement is ministerial. |
| RMC 68-2023 | Checklist of documentary requirements when no extrajudicial settlement yet exists. |
| RMO 15-2021 §3.2 | Banks may unfreeze deposits upon provisional CAR plus proof of tax payment. |
11. Pitfalls & Best Practices
- Undervaluation — Use correct zonal/FMV; BIR routinely cross-checks with LGU assessor data.
- Missed deductions — Claim family home only if OCT/TCT designates it and value ≤ ₱10 million.
- Heirs abroad — Get apostilled SPA so a local agent can sign.
- Late filing — Secure BIR extension letter before the one-year mark, else interest/surcharge run.
- Forget probate bonds — If judicial settlement, include filing fees and bonds in estate expenses deduction.
12. Comparative Snapshot
| Aspect | With EJS/Probate up-front | Payment-first, settlement-later |
|---|---|---|
| Filing deadline | Same (1 year) | Same |
| BIR processing | One-time; CAR in heirs’ names | Two-stage (provisional → final) |
| Ability to transfer titles | Immediate | After settlement |
| Risk of penalties | Low if filed; same | Interest stops once paid |
| Flexibility when heirs dispute | Low (must settle first) | High (can pay while litigating) |
13. Conclusion
Paying the estate tax even before executing an extrajudicial settlement is not only legally permissible under Philippine tax law—it is often the prudent course when heirs cannot yet agree. It halts the growth of liabilities, unlocks frozen assets, and preserves goodwill with the Bureau of Internal Revenue. Once settlement documents or a court order become available, the provisional compliance seamlessly converts to final compliance by presenting the deed or decree and securing an updated CAR.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Estate matters are highly fact-sensitive; consult a Philippine tax or estate practitioner for advice tailored to your situation.