How to Recover Inherited Commission Payments from a Sibling
Philippine Legal Framework, Strategy, and Practical Tips
1. Why “Commission Payments” Are Estate Property
| Scenario | Do the commissions belong to the estate? | Key rule |
|---|---|---|
| Earned and payable before the decedent died | Yes. They are a “credit” (Civil Code art. 776) that vests in the estate upon death. | Civil Code arts. 774–777 |
| Generated by work done before death but collectible after | Yes, pro rata to work finished. | Art. 1538 (agency), jurisprudence on “apportioned commissions” |
| Generated entirely after death by the heirs’ own effort | No. They belong to the heir who earned them. | Art. 1318 (new contract) |
2. Establishing Your Right as an Heir
Show filial or testate status.
- Birth certificate or the will.
Prove the commissions existed.
- Contract of agency/brokerage, statement of account, OR and invoices.
Link commissions to the decedent.
- Proof the services were rendered by the deceased (e‑mails, sales reports).
3. Estate Settlement Pathways
| Settlement type | When possible | Procedure | Outcome |
|---|---|---|---|
| Extrajudicial Settlement (EJS) | No will or will not yet probated; no debts; heirs all of age | • Publish 3× in a newspaper | |
| • Execute a Deed of EJS with Waiver & Quitclaim | |||
| • File estate‑tax return (BIR Form 1801) | Estate assets (incl. commissions) can be transferred directly to heirs. | ||
| Judicial Probate / Letters of Administration | Will exists or heirs disagree or debts > assets | • File petition in RTC | |
| • Court appoints executor/administrator | |||
| • Inventory & accounting (Rule 87) | Court order partitions estate; administrator can compel sibling to account for commissions. |
4. Demand and Negotiation Steps
- Informal family talk. Often a sibling is simply “holding” the funds pending estate taxes.
- Written Demand Letter. Give 15 days to remit or account; send via registered mail with return card.
- Barangay Katarungang Pambarangay (KP). If siblings live in the same city/municipality, a KP mediation is mandatory before any civil suit ≤ ₱400 000 (Lupong Tagapamayapa Law).
- Document everything. Receipts, screenshots, bank statements—these become exhibits.
5. Civil Causes of Action
| Cause of action | When to use | Prescriptive period |
|---|---|---|
| Action for Accounting and Partition (Rule 69) | Administrator refuses to include commissions in inventory. | Imprescriptible while estate unsettled. |
| Reconveyance/Recovery of Property | Sibling already appropriated commissions. | 4 years from discovery if by fraud; 10 years if merely in possession. |
| Unjust Enrichment (Art. 22) | No contract but sibling holds the money. | 4 years. |
| Specific Performance | There is a Deed of EJS or compromise the sibling violated. | 10 years (written contract). |
6. Criminal Angle (Optional but Powerful)
Estafa under Art. 315(1)(b) Revised Penal Code. Elements:
- Money is received in trust or on commission.
- Misappropriation or conversion occurs.
- Demand to return is made and refused.
Effect: A criminal complaint in the prosecutor’s office often spurs settlement.
Note: Criminal action does not bar a separate civil action for recovery (Rule 111, Rules of Court).
7. Evidence Checklist
- Agency/brokerage contract, deal sheets.
- Death certificate.
- Proof of heirs (PSA birth certificates, marriage certs).
- Bank records showing deposit of commissions to sibling.
- BIR Certificate of Tax Withheld (if commissions already taxed).
- Any correspondence admitting the commissions exist.
8. Tax and Regulatory Compliance
- Estate Tax Return (BIR Form 1801). Include commissions’ gross value; pay within one year from death (NIRC sec. 90).
- Expanded Withholding Tax. If the payer already withheld 10/15 %, attach BIR 2307 to deduct from gross estate.
- Documentary Stamp Tax (DST). Applies to deeds of settlement and quitclaim (₱15.00 per ₱1 000 of value).
- Capital gains? None—commission is ordinary income, not capital.
9. Enforcement of Judgment
- Writ of Execution (Rule 39) against bank deposits, brokerage accounts, or real estate of sibling.
- Garnishment: Serve the writ on the payer of commissions (e.g., real‑estate developer or insurance company) to divert future payouts directly to you.
- Contempt: A recalcitrant sibling‑administrator who defies a probate order can be cited for indirect contempt (Rule 71).
10. Practical Timeline (Typical, Uncontested)
| Step | Duration |
|---|---|
| Gather docs & draft demand letter | 2 weeks |
| Barangay mediation (if applicable) | 15–30 days |
| File EJS + BIR processing | 1–2 months |
| Release of funds / transfer | 2–4 weeks after BIR CAR |
Contested estates or probate actions can run 1–3 years depending on court docket and complexity.
11. Sample Demand Letter Outline
Re: Recovery of Commission Payments due to the Estate of Juan Dela Cruz Dear [Sibling],
- Our late father earned commissions amounting to ₱ ___ evidenced by [docs].
- As co‑heirs we each hold an undivided share in the entire estate pursuant to Art. 777 of the Civil Code.
- Within 15 days please (a) remit our pro‑rata share, or (b) submit a full accounting. Failure will compel us to seek civil and criminal remedies, including estafa under Art. 315 RPC.
12. Key Take‑Aways
- Estate property vests immediately upon death. Commissions earned are part of the estate unless generated solely by an heir post‑mortem.
- Heirs own the estate in common until settlement; any heir may demand accounting.
- Start with negotiation, escalate strategically. Demand letter → barangay/KP → probate or civil suit → criminal action as last resort.
- Observe tax deadlines to avoid surcharges that can exceed the disputed commissions.
- Keep thorough records; the burden of proof often decides the case.
By following these legal and practical steps, an heir in the Philippines can effectively compel a sibling to turn over inherited commission payments and ensure a fair distribution of the estate.