The distribution of real property upon death is a significant pillar of Philippine Civil Law. Governed primarily by the Civil Code of the Philippines (Republic Act No. 386), succession is the legal process by which the property, rights, and obligations of a deceased person (the decedent) are transmitted to others.
When a person passes away, their estate—specifically land and buildings—is divided based on whether they left a written will or died without one.
1. The Two Types of Succession
In the Philippines, the law recognizes two primary ways real property is distributed:
- Testamentary Succession: This occurs when the decedent leaves a valid Last Will and Testament. While the owner has the freedom to designate heirs, they cannot bypass "compulsory heirs" (legitimes).
- Legal or Intestate Succession: This occurs when there is no will, or if the will is void. The law steps in to provide a default distribution scheme based on the presumed will of the decedent.
2. The Concept of the Legitime
The most unique aspect of Philippine succession law is the Legitime. This is the portion of the testator’s estate which is reserved by law for certain heirs, called compulsory heirs.
Important Note: You cannot disinherit a compulsory heir without a legally specified cause (such as an attempt on the life of the testator). You cannot simply "write someone out" of the legitime through a will.
Primary Compulsory Heirs:
- Legitimate Children and Descendants: They have the primary right to the estate.
- Surviving Spouse: Always entitled to a share alongside the children.
- Legitimate Parents and Ascendants: They only inherit if there are no legitimate children.
- Illegitimate Children: They are entitled to a legitime, though it is smaller than that of legitimate children.
3. How the Shares are Divided
The division of real property depends on the combination of surviving heirs. Below is a simplified breakdown of the common distribution patterns under Intestate Succession (no will):
| Surviving Heirs | Distribution Ratio / Share |
|---|---|
| Legitimate Children Only | Divided equally among them. |
| One Legitimate Child + Spouse | 1/2 to the child; 1/2 to the surviving spouse. |
| Multiple Legitimate Children + Spouse | The spouse gets a share equal to that of one child (the "child's share"). |
| Legitimate Children + Illegitimate Children | An illegitimate child receives 1/2 of the share of a legitimate child. |
| Legitimate Parents (No Children) | Entire estate goes to the parents. |
| Spouse Only (No Children/Parents) | The spouse inherits the entire estate. |
4. Formalities and Transfer of Title
Owning real property through inheritance does not automatically update the Land Title. Heirs must undergo a specific legal process to transfer the property into their names.
A. Extrajudicial Settlement (EJS)
If there is no will and no debts, the heirs can settle the estate privately.
- Agreement: All heirs must agree on the division.
- Public Instrument: They sign a "Deed of Extrajudicial Settlement of Estate."
- Publication: A notice of the settlement must be published in a newspaper of general circulation for three consecutive weeks.
- Taxes: The Estate Tax must be paid to the Bureau of Internal Revenue (BIR).
B. Judicial Settlement
If the heirs cannot agree on how to divide the land, or if there is a will that must be "probated" (proven in court), the case goes to court. This process is often longer and more expensive.
5. Estate Tax Requirements
Before the Register of Deeds issues a new title in the name of the heirs, the BIR must issue a Certificate Authorizing Registration (CAR).
- Tax Rate: Under the TRAIN Law (as of 2018), the estate tax is a flat rate of 6% of the value of the net estate.
- Standard Deduction: The law provides a standard deduction of ₱5 million, which can significantly reduce the taxable amount for many families.
6. Common Complications
- Co-ownership: Until a specific lot is subdivided, all heirs are co-owners of the "undivided" whole. Any heir can demand partition at any time.
- Preterition: If a compulsory heir in the direct line is totally omitted from a will, the institution of heirs may be annulled, effectively reverting the process back to Intestate Succession.
Would you like me to draft a sample outline for a Deed of Extrajudicial Settlement of Estate?