Extra-Judicial Settlement with Absolute Sale (Philippines): A Complete Guide

This article explains how heirs can settle an estate without court proceedings and simultaneously sell estate property through a single instrument often titled “Extra-Judicial Settlement of Estate with Absolute Sale” (EJS-AS). It is written for the Philippine context. It is general information, not legal advice.

1) What an EJS-AS is (and isn’t)

Extra-Judicial Settlement (EJS) is a deed where the heirs settle and partition a decedent’s estate outside of court.
With Absolute Sale means the heirs, immediately after adjudicating the property to themselves, sell it outright to a buyer in the same document.
It’s widely used to transfer real property (land/condo) from a deceased owner to heirs and, in the same step, to the buyer.

You can use EJS-AS when all of the following are true:

The decedent left no will (intestate).
The estate has no outstanding debts, or any debts have been fully paid.
All heirs are of legal age. If there are minors or incapacitated heirs, they must be properly represented (e.g., by a judicially appointed guardian) and, for the sale portion, court approval authorizing the guardian to sell the minor’s share is typically required.
All heirs consent to the settlement and sale.

If any of the items above is not met (e.g., there’s a will, unpaid estate liabilities, disputes among heirs, minors without authority), you normally cannot proceed via EJS-AS and must seek court processes (probate, guardianship, partition, or specific authority to sell).

2) Legal foundation & recurring features

Rule 74 of the Rules of Court allows extrajudicial settlement when there is no will and no outstanding debts.
Public instrument + publication. The EJS must be a notarized public document and the fact of extrajudicial settlement must be published in a newspaper of general circulation once a week for three (3) consecutive weeks.
Two-year lien. For two (2) years from the date of the extrajudicial settlement, the estate remains subject to claims of heirs, creditors, or other persons unduly deprived. This is commonly annotated on the title.
Bond (personal property). When the estate includes personal property distributed via EJS, a bond (typically equal to the value of the personal property) may be required to protect creditors and other interested parties.
Taxes & clearances. Philippine transactions require:
- Estate tax on transfer from decedent to heirs (with estate tax return and a Certificate Authorizing Registration or CAR for the estate).
- Capital Gains Tax (CGT) (commonly 6% of the higher of gross selling price or zonal/fair market value) or Creditable Withholding Tax (CWT) depending on the seller’s tax profile; plus Documentary Stamp Tax (DST) for the sale; and local transfer tax and registration fees. BIR typically issues separate CARs—one for the estate transfer and another for the sale.
- Not subject to VAT in most individual-to-individual realty sales (unless the seller is VAT-registered and the property forms part of business assets).
Spousal consent. If any heir is married and the property or its sale involves conjugal/community considerations, spousal consent is obtained to avoid later challenges.
Identification of all heirs. You must name and involve all compulsory heirs (surviving spouse; legitimate/illegitimate children or descendants; in their absence, ascendants). Failure to include a rightful heir can invalidate or expose the deed to challenge.

3) Typical timeline (high-level)

Assess eligibility (no will, no debts, all heirs, authority for minors if any).
Gather documents (see checklist below).
Secure TIN of the Estate and file estate tax return; pay estate tax; obtain Estate CAR.
Draft EJS-AS, get signatures of all heirs and buyer; notarize.
Publication (3 consecutive weeks).
Pay sale-related taxes (CGT/CWT, DST) and obtain Sale CAR.
City/Municipal Treasurer: pay local transfer tax.
Register with the Registry of Deeds (RD): submit CARs, EJS-AS, title, tax receipts; the RD cancels the old title and issues a new TCT/CCT in buyer’s name, usually with an annotation of the two-year Rule 74 lien.
Assessor’s Office: update Tax Declaration in the buyer’s name.
Post-registration: turn over new owner’s duplicate title, updated tax declarations, and receipts.

Notes:

Publication and annotation can occur in parallel with tax processing depending on local practice.
When minors are involved, expect extra steps (guardianship, authority to sell).

4) Document checklist

From the decedent:

Death Certificate.
Last title (Owner’s Duplicate TCT/CCT) and latest certified true copy (CTC) from the RD.
Latest Tax Declaration (land & improvements) and Real Property Tax clearance/receipts.
IDs, marriage certificate(s), birth certificates of heirs to establish filiation; CENOMAR/CEMAR as applicable.

From the heirs:

Government-issued IDs; Tax Identification Numbers (TINs).
Proof of civil status and filiation (PSA civil registry documents).
Special Power of Attorney (SPA) if any heir is abroad or represented; Court Appointment and Authority to Sell if representing a minor/incapacitated heir.

From the buyer:

Government-issued ID and TIN.
Source of funds as requested by the notary or for anti-money laundering compliance.

Transaction papers:

EJS-AS document (see template elements below).
Newspaper publication proofs (3 weekly issues + publisher’s affidavit).
Estate Tax Return and Estate CAR (BIR).
CGT/CWT, DST payment forms/receipts and Sale CAR (BIR).
Local transfer tax receipt.
RD receipts (registration fees, entry fees).

5) Structure & essential clauses of an EJS-AS

Below is a practical outline you can adapt with counsel. The exact language varies—keep it clear, complete, and consistent.

A) Title

EXTRA-JUDICIAL SETTLEMENT OF ESTATE WITH ABSOLUTE SALE

B) Parties

Heirs/Sellers: Full names, nationalities, civil status, ages, addresses, TINs; state relationship to the decedent.
Buyer: Full name, nationality, civil status, age, address, TIN.

C) Recitals (Whereases)

Death details of the decedent (name, date, place; intestate).
Statement that the decedent left no will and no debts (or debts paid).
Identification of all heirs (and, if applicable, their representatives and the court authority for minors/incapacitated).
Short description of the estate property—TCT/CCT number, lot/block, area, location, tax declaration numbers, improvements.
Statement that heirs voluntarily agree to settle and partition the estate extrajudicially.

D) Adjudication & Settlement

Adjudication: Heirs adjudicate the described property to themselves pro-indiviso or according to stated shares (e.g., equal shares; or specific aliquot portions).
Waiver/Conveyance among heirs (if any): If one heir waives in favor of others prior to the sale, include the waiver and consideration.

E) Absolute Sale to Buyer

Sale clause: The heirs, as adjudicatees/owners, sell, transfer, and convey the property to the Buyer for ₱[amount].
Payment terms: Receipt/acknowledgment of full payment; or schedule/escrow details (avoid delivering notarized deed until conditions are satisfied).
Warranties: Ownership, right to sell, freedom from liens/encumbrances except those disclosed (including the two-year Rule 74 lien).
Possession & delivery: When possession passes; turnover of owner’s duplicate title and other documents.
Taxes & fees allocation: Who pays estate tax, CGT/CWT, DST, transfer tax, registration fees, notarial, publication. (Common: Seller pays CGT/CWT & DST; Buyer pays transfer tax & registration, but parties may agree otherwise.)
As-is-where-is (optional) for improvements.

F) Rule 74 Undertakings

Acknowledgment of the two-year period for claims by excluded heirs/creditors.
Undertaking to publish the EJS notice once a week for 3 consecutive weeks.
If the estate includes personal property, acknowledgment of the bond requirement (if applicable) and reference to filing.

G) Special Provisions (as needed)

Spousal consent of married heirs.
Authority of representative/guardian (attach court order).
Relocation/technical description corrections and consent to reconstitution, if necessary.
Vacant possession clause; treatment of tenants/lessees.
Indemnity among heirs for undisclosed liabilities.
Dispute resolution (venue, governing law—Philippines).

H) Signatures & Notarial Acknowledgment

Signatures of all heirs and the buyer; initials on every page.
Attach “Competent Evidence of Identity” per 2004 Notarial Practice Rules (e.g., passport/UMID/driver’s license), with ID numbers and issuing agencies.
If any signatory signed via attorney-in-fact: attach SPA and validate.
Use acknowledgment (not jurat) for a deed of conveyance.

6) Model skeleton (for drafting)

EXTRA-JUDICIAL SETTLEMENT OF ESTATE WITH ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, [Name of Decedent], Filipino, died intestate on [date] in [place], leaving no will and no outstanding debts; WHEREAS, the compulsory heirs are: [Heir A], [Heir B], … with relationships [spouse/child/etc.], all of legal age (or duly represented as follows: [name of guardian/attorney-in-fact], under [Court Order/SPA] dated [date]); WHEREAS, the estate includes the real property described as follows: – TCT/CCT No. []; Lot/Block []; Area [] sq.m.; Location [Barangay/City/Province]; Tax Dec. Nos. []; Boundaries [optional text or “per title”].

NOW, THEREFORE, for and in consideration of the foregoing, the heirs hereby settle and adjudicate the above property unto themselves in the following undivided shares: [heir shares]; and thereafter, the SELLERS-HEIRS do hereby SELL, TRANSFER, and CONVEY absolutely unto [Buyer], Filipino, of legal age, with residence at [address], and TIN [____], the above-described property for and in consideration of P[amount], Philippine currency, the receipt of which is hereby acknowledged to the Sellers-Heirs’ full satisfaction.

The Sellers-Heirs warrant lawful ownership and right to sell; that the property is free from all liens and encumbrances except those annotated on title, including the Rule 74 two-year lien, and undertake to sign any document necessary to effect transfer and registration. Risk and possession shall pass to the Buyer upon [execution/full payment/registration—choose].

The parties agree that [allocate taxes/fees here].

The Heirs undertake to cause publication of the fact of this extrajudicial settlement once weekly for three (3) consecutive weeks in a newspaper of general circulation, and acknowledge any obligations under Rule 74; if applicable, the Heirs shall post the bond required by law for personal properties included herein.

IN WITNESS WHEREOF, the parties have signed this instrument this [date] at [place], Philippines.

[Signature blocks of all Heirs and Buyer, with names typed, TINs, and IDs indicated]

ACKNOWLEDGMENT (Standard Philippine notarial acknowledgment form, indicating competent evidence of identity, Doc. No., Page No., Book No., Series of [year])

Tip: Keep technical descriptions exactly as they appear on the CTC of title (attach as Annex “A”). Attach court orders, SPAs, and IDs as annexes.

7) Tax & fee overview (practical)

Estate Tax: Computed on the net estate (assets less allowable deductions). File the estate tax return and pay, then secure the Estate CAR. Late filing incurs surcharge/interest/penalties.
CGT vs CWT (sale portion): For most individual sellers of capital real property, CGT (final tax) applies; business sellers may have CWT/VAT considerations instead.
DST: Applies to deeds of sale of real property.
Local Transfer Tax: Paid to the LGU where the property is located.
Registration Fees: Payable to the RD upon issuance of new title.

Because tax rules change, ask your tax preparer or BIR officer what rates/forms are current for your specific case and whether the BIR will issue two CARs (estate + sale) for your EJS-AS.

8) Publication: form & proof

Publish a “Notice of Extrajudicial Settlement”—a short ad naming the decedent, heirs, and basic property identification—once weekly for 3 weeks.
Keep the newspaper clippings (all three issues) and the publisher’s affidavit; the RD and BIR often require these.

Sample Notice text (for the newspaper)

Notice is hereby given that the estate of the late [Decedent], who died on [date] in [place], has been extrajudicially settled among his/her heirs [Heir A, Heir B, …] and simultaneously sold to [Buyer] per document titled “Extra-Judicial Settlement of Estate with Absolute Sale” executed on [date] and to be filed with the Registry of Deeds of [City/Province]. All persons having claims against the estate are hereby notified to present the same within the period provided by law.

9) Common pitfalls (and how to avoid them)

Missing an heir. Do a thorough family tree + PSA record sweep. Obtain affidavits if there are no other heirs.
Minors’ shares sold without authority. Secure guardianship and court approval to sell beforehand.
Unpaid estate obligations. Check for loans, taxes, liens, and estate expenses. If there are debts, settle or secure creditor consents before executing the deed.
Wrong technical description. Use the exact metes and bounds from the latest CTC of title; attach as an annex.
Skipping publication or losing proofs. Publication is not a mere formality; keep all proofs.
Tax timing errors. BIR processing for two CARs on an EJS-AS requires correct sequencing and complete forms; mismatched values or dates cause delays.
Inconsistent consideration. The selling price must meet or exceed zonal/fair market value; otherwise taxes may be recomputed on the higher value.
No spousal consent. Obtain it whenever an heir’s property regime suggests the share is conjugal/community.
Undisclosed tenancy/occupants. Address possession and deliverability in the deed.
Assuming amnesties or special programs apply. Always confirm current BIR rules before relying on them.

10) Practical workflow you can follow

Step 1: Heirs’ conference. Confirm heirs, marital regimes, minors, debts; decide whether to sell now or first transfer to heirs then sell.
Step 2: Document gathering. Titles, tax declarations, PSA documents, IDs, court papers (if any).
Step 3: BIR (Estate). Get estate TIN, file return, pay estate tax, secure Estate CAR.
Step 4: Draft EJS-AS. Bake in all consents, representations, and annexes. Pre-clear with the BIR examiner if required locally.
Step 5: Notarize & Publish. Keep proofs.
Step 6: BIR (Sale). Pay CGT/CWT and DST; secure Sale CAR.
Step 7: LGU & RD. Pay local transfer tax; register the deed with RD to obtain new TCT/CCT in buyer’s name.
Step 8: Assessor. Update Tax Declarations.
Step 9: Handover. Deliver owner’s duplicate title & documents to buyer; arrange possession/turnover.

11) Buyer protections (what buyers should look for)

Chain of title (CTC of title, encumbrances section).
Complete heirs & authorities (minors, SPAs, court orders).
Publication proofs and Rule 74 annotation.
Two CARs (estate + sale) if the RD/BIR in that locality process them separately.
Tax clearance for real property taxes and up-to-date tax declarations.
Vacant possession terms and timeline.

12) Heirs’ protections

Indemnities among heirs re: undisclosed debts/heirs.
Allocation of taxes and costs stated clearly (avoid vague “shared equally” if shares differ).
Escrow or split signing (release of notarized originals only upon proof of tax payments or bank loan take-out).
Retention for move-out if property is occupied.

13) FAQ-style quick answers

Can we EJS-AS if there’s a will? No—wills generally require probate first.
What if one heir refuses? EJS requires unanimous consent; otherwise, consider judicial partition.
Is publication still needed if everyone agrees? Yes—publication is required.
Do we always need two CARs? Often yes for EJS-AS (one Estate, one Sale), but practices can vary—prepare for both.
Can we skip estate tax and go straight to sale taxes? No. The estate transfer must be taxed/cleared before (or together with) the sale.
When does the buyer’s title come out? After registration at the RD and issuance of new TCT/CCT; processing time varies by locality.

14) Smart drafting tips

Put the EJS (adjudication) and Sale in clearly separated sections within one deed.
Make the considerations (estate vs sale) and values consistent across BIR filings, deed, and tax declarations.
Enumerate all annexes and reference them (Annex “A” technical description, “B-1 to B-n” IDs, “C” SPA, “D” court order, “E-1 to E-3” publication proofs, etc.).
Include a catch-all further-assurances clause obligating parties to sign additional documents required by BIR/RD/LGU.

15) Closing note

An EJS with Absolute Sale is efficient when all statutory conditions are met, documentation is complete, publication is properly done, and taxes are paid in the right order. The most common causes of delay or rejection are missing heirs/authorities, publication lapses, tax miscomputations, and technical-description errors. A short consult with a Philippine lawyer and a tax preparer before signing will usually save weeks of rework.

If you’d like, I can turn this into a fill-in-the-blanks template tailored to your facts (names, title numbers, values, tax allocation, minors/guardianship, etc.).