Extrajudicial Settlement with Sale of a Deceased Owner’s Land in the Philippines
(A practitioner‑oriented explainer—Philippine law and procedure, updated to July 27 2025)
1. Concept and Legal Roots
| Key Point | Core Authority | Essence |
|---|---|---|
| Extrajudicial settlement (EJS) | Rule 74, Rules of Court; Arts. 777‑784, 960‑1100 Civil Code | Heirs may divide an estate without court supervision when specific conditions are met. |
| Simultaneous Sale | Same Rules + Civil Code on sales | Heirs may settle and sell in a single instrument—commonly titled “Deed of Extrajudicial Settlement of Estate with Sale.” |
| Estate Tax Clearance | NIRC (1997) as amended; latest with RA 11956 (estate‑tax amnesty extension to 14 June 2025) | No transfer or registration of real property may occur until estate tax is paid and a BIR Certificate Authorizing Registration (CAR) is issued. |
2. When Extrajudicial Settlement Is Allowed
- No will (intestate) or the will has been disallowed/renounced.
- No outstanding debts of the decedent or all debts have been fully paid.
- All heirs are of legal age or minors are represented by legal guardians.
- Heirs agree to partition and (if desired) sale.
- Real property must be registered with the Register of Deeds (RD); agricultural land often also needs DAR clearance.
⚠️ If any requirement is missing—e.g., a contested heirship or unpaid creditor—a judicial settlement (special proceeding) is mandatory.
3. Pre‑Closing Checklist
| Document | Source | Notes |
|---|---|---|
| PSA‑issued Death Certificate | PSA | Needed for BIR and RD. |
| Owner’s Duplicate TCT/OCT | Heir in custody / RD | If lost, petition for re‑issuance first. |
| Latest Real Property Tax (RPT) receipts | LGU Treasurer | Confirm no arrears. |
| Barangay & City/Municipal tax clearances | LGU | Some RDs require. |
| Tax Identification Nos. (TINs) of all heirs & buyers | BIR | Mandatory on deeds. |
| BIR Form 1801 (Estate Tax Return) + attachments | BIR | Prepare even if estate‑tax amnesty will be availed. |
4. Drafting the Instrument
A single notarized document usually titled “Deed of Extrajudicial Settlement of Estate with Sale” contains:
Recitals
- Decedent’s name, citizenship, marital status, last residence, date/place of death.
- Full description of land (TCT/OCT number, Lot & Block, Area, Technical description).
Statement of Heirs & Relationship
- List of compulsory/legal heirs under the Civil Code/Family Code.
- Affirmation that they are the only heirs.
Compliance Declarations
- No will left / will waived.
- Debts fully paid / none exist.
Partition Clause
- Either enumerate aliquot shares or expressly waive in favor of buyer.
Sale Clause
- Identification of buyer(s), purchase price (both in figures & words), earnest/total payment.
- Warranty of title & peaceful possession.
Signatures & Acknowledgment
- All heirs (or their attorneys‑in‑fact) and buyer sign; notarization is essential.
- Attach community tax certificates (CTCs) or government IDs.
Conformity of Spouses
- Required if heirs/buyers are married and subject land forms part of conjugal property.
5. Publication Requirement
Under Rule 74 §1, the partition or settlement must be published in a newspaper of general circulation once a week for three consecutive weeks. Tip: Obtain the publisher’s affidavit and three sets of newspaper issues; present these to the RD.
6. Taxes, Fees, and Deadlines
| Levy | Base | Rate | Cut‑off / Reference |
|---|---|---|---|
| Estate Tax | Net estate (worldwide properties of resident decedent) | 6 % | Pay within 1 year from death; extensions require BIR approval. |
| Documentary Stamp Tax (DST) on EJS | Fair Market Value (FMV) of property share transferred | ₱15 flat on deed | If simultaneous sale, DST on EJS often waived; focus on sale DST. |
| DST on Sale | Higher of zonal value or consideration | 1.5 % | Pay with BIR Form 2000 OT. |
| Capital Gains Tax (CGT) | Same base as DST | 6 % | Sale of principal residence may qualify for substitution (Sec 24(D)(2), NIRC). |
| Local Transfer Tax | Same base | 0.5 % (≤ Cities/Municipalities) or 0.75 % (Metro Manila) | Pay to Treasurer before RD registration. |
| Registration Fees | LRA‑RD Table | ≈ ₱8,000–₱20,000 typical | Based on value; plus ₱400 entry fee. |
| Publication Cost | By page | ₱2,500–₱6,000 | Varies by locality. |
Estate‑Tax Amnesty: RA 11213 (2019) as extended by RA 11956 allows payment of 6 % on net undeclared estate without penalties/surcharges until 14 June 2025. For deaths on or before May 31 2022.
7. Step‑by‑Step Process
| Stage | Responsible Party | Deliverable |
|---|---|---|
| 1. Gather documents & secure TINs | Heirs | Death cert., titles, tax decs., IDs. |
| 2. Compute & pay estate tax (or amnesty) | Heirs/Tax agent → BIR | CAR for estate (purple). |
| 3. Draft, sign, notarize EJS‑with‑Sale | Lawyer/Notary | Original deed + copies. |
| 4. Publish for 3 weeks | Heirs → Newspaper | Publisher’s affidavit + clippings. |
| 5. Pay DST + CGT + Transfer Tax | Heirs/Buyer → BIR + LGU | CAR for sale (blue) + Tax clearance. |
| 6. Secure DAR Clearance (if agri) | Heirs/Buyer | DAR Form CARP‑II/EPC. |
| 7. Register with RD | Heirs/Buyer | • Annotate old TCT/OCT with EJS‑with‑Sale • Cancel old title • Issue new TCT in buyer’s name. |
| 8. Transfer Tax Declaration & RPT | New Owner | Update Assessor & Treasurer records. |
Average timeframe (absent complications): 8‑12 weeks.
8. Common Pitfalls & How to Avoid Them
| Pitfall | Why It Happens | Prevention |
|---|---|---|
| Omitted heir | Overlooked illegitimate or after‑born child | Publish diligently; secure birth certificates; require sworn declaration from all heirs. |
| Unpaid creditor emerges | Affidavit untrue | Creditors may sue within 2 years from publication (§4, Rule 74). Post a surety bond if unsure. |
| Wrong FMV used | Outdated zonal values | Check latest BIR Revenue Regulations; when multiple FMVs exist, use highest. |
| Estate‑tax penalties | Late filing | File for extension within 1 year (Sec 91, NIRC) before due date. |
| RD refuses registration | Missing CAR or mismatched names | Ensure deed names = CAR names = IDs; spelling counts. |
9. Frequently Asked Questions
Q1: Can we still do EJS if only one heir? Yes; it becomes an Affidavit of Self‑Adjudication (Rule 74 §1‑last para.). Publication and registration rules still apply.
Q2: Must the buyers sign during EJS? Not strictly for settlement, but for EJS‑with‑Sale they must be parties to manifest consent and transfer obligations (taxes, warranties).
Q3: Are minors barred from EJS? No, but a court‑appointed guardian must sign for them, and any sale of their hereditary share needs court approval (Art. 225, Family Code).
Q4: What if the decedent left a small urban lot < ₱300k? The Small Estate affidavit (A.M. No. 03‑02‑05‑SC) can bypass many formalities, but only if value ≤ ₱300,000 (rural) or ≤ ₱500,000 (urban) and estate tax is settled.
Q5: Is publication needed if estate is personal property only? No—publication applies only when real property is involved.
10. Practical Drafting Tips
- Use full technical description copied verbatim from the title—and attach a certified true copy (CTC).
- State a single consideration for the sale; avoid “per heir” amounts to simplify DST/CGT.
- Insert a contingent‑claim indemnity clause (“Heirs jointly and solidarily warrant payment of any lawful claims…”).
- In large estates, execute a Separate Deed of Undertaking for BIR to allow CAR issuance pending minor documentary gaps.
- Keep extra signed copies—BIR takes at least two, RD keeps one, LGU one, and each party keeps one.
11. Enforcement and Litigation Risks
| Scenario | Possible Action |
|---|---|
| Creditor appears within 2 years | File action to recover against heirs/buyer; property may be liened. |
| Co‑heir later claims share | Action for reconveyance/annulment within 4 years (fraud) or 10 years (voidable contracts). |
| Forged signature on deed | Criminal falsification (Art. 172 RPC) + civil annulment of deed. |
| Non‑payment of CGT/DST | BIR may assess deficiency tax, 25 % surcharge + 12 % interest p.a. |
12. Comparative: Judicial vs Extrajudicial Settlement
| Feature | Extrajudicial | Judicial |
|---|---|---|
| Duration | 2–6 months | 2–5 years (probate takes time) |
| Cost | Lower (taxes + notarization) | Higher (filing fees, lawyer’s acceptance, bond) |
| Flexibility | High (heirs decide) | Court‑controlled |
| Protection vs. claims | Limited (creditor action window) | Strong—court settles debts & heirship |
13. Take‑Away Checklist for Practitioners
- Verify eligibility (no will, no debts, full‑age heirs).
- Settle or amnesty estate tax first.
- Prepare Deed of EJS‑with‑Sale → notarize correctly.
- Ensure newspaper publication (3 weeks).
- Pay DST, CGT, transfer tax; obtain BIR CARs.
- Present complete bundle to Register of Deeds; track issuance of new TCT.
14. Disclaimer
This article is for informational purposes only and does not constitute legal advice. Laws change, and procedural nuances vary by locality and fact pattern. Always consult a Philippine lawyer or the relevant government offices for current requirements.
Updates as of July 27 2025
- Estate‑tax amnesty last day to file and pay: June 14 2025 (RA 11956).
- BIR eCAR system now fully online in Metro Manila and Region IV‑A; paper CAR still issued in rural RDOs.
- LRA Memo 2024‑12 requires QR‑coded notarial seals; deeds without QR may be rejected.
With these guidelines, you’re equipped to navigate—or advise on—the complete extrajudicial settlement‑with‑sale pathway for Philippine land titles.